Legislature(2005 - 2006)CAPITOL 106

05/03/2005 08:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
Moved CSHB 283(STA) Out of Committee
Moved CSHB 189(STA) Out of Committee
Heard & Held
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
HB 283-AK HOUSING FINANCE CORP BOARD COMP.                                                                                    
8:23:40 AM                                                                                                                    
CHAIR SEATON announced that the  next order of business was HOUSE                                                               
BILL  NO. 283,  "An Act  relating to  the compensation  for board                                                               
members of the Alaska Housing  Finance Corporation; and providing                                                               
for an effective date."                                                                                                         
8:23:48 AM                                                                                                                    
MIKE  O'HARE, Staff  to Representative  Pete  Kott, Alaska  State                                                               
Legislature, presented  HB 283 on behalf  of Representative Kott,                                                               
sponsor.   He  said the  bill  would increase  the board  meeting                                                               
compensation  levels for  public board  members from  the current                                                               
level of $100 to  $400 per meeting.  The $100  amount has been in                                                               
place  since  the inception  of  the  corporation  in 1971.    He                                                               
explained  that the  Alaska  Housing  Finance Corporation  (AHFC)                                                               
Board is  asked to consider and  review topics having to  do with                                                               
bonding, the  mortgage industry,  public housing, and  many other                                                               
complex technical  financial matters.   The board members  do not                                                               
draw  a salary  from  AHFC.   They  are  tasked  to consider  and                                                               
approve  bond  programs  valued   between  $600  million  and  $1                                                               
MR.  O'HARE  said that  with  such  responsibility, members  must                                                               
spend  a   considerable  amount  of  time   educating  themselves                                                               
regarding  the issues.   He  said the  proposed legislation  will                                                               
allow the  corporation to ensure  having the most  capable people                                                               
on the board.  He stated  that the per board meeting compensation                                                               
is  applicable only  to  the  four public  board  members of  the                                                               
seven-member board of  directors.  The fiscal note  is $14,400 in                                                               
corporate receipts per fiscal year.                                                                                             
8:25:52 AM                                                                                                                    
BRIAN   BUTCHER,  Director,   Government  Relations   and  Public                                                               
Affairs, Alaska  Housing Finance  Corporation (AHFC),  added that                                                               
AHFC is  a completely self-supporting  corporation that  does not                                                               
receive any state general funds  and pays a $103 million dividend                                                               
to the  state annually.   In  response to  a question  from Chair                                                               
Seaton regarding information pertaining  to compensation rates of                                                               
other boards  that he had  requested at  the prior hearing  of HB
283, Mr. Butcher affirmed that  he provided that information with                                                               
Chair Seaton's staff [included in the committee packet].                                                                        
8:27:10 AM                                                                                                                    
REPRESENTATIVE GARDNER  noted that the sponsor  statement reveals                                                               
that board  members spend a  lot of  their own time  studying and                                                               
preparing  for meetings.   She  asked for  confirmation that  the                                                               
bill proposes  to increase the  amount of reimbursement  for only                                                               
the members' meeting time.                                                                                                      
8:27:26 AM                                                                                                                    
MR.  BUTCHER  answered  that's   correct.    He  offered  further                                                               
details.  In response to  Representative Gatto, he said the board                                                               
usually  meets   in  Anchorage,   but  sometimes  in   Juneau  or                                                               
"different  places  where we  have  public  housing units."    In                                                               
response  to follow-up  questions from  Representative Gatto,  he                                                               
said a  board member's airfare and  hotel rate is covered  by the                                                               
corporation; the  stipend in question  is above and  beyond those                                                               
costs and  is considered compensation  pay for the  board meeting                                                               
time.  He  agreed with Representative Gatto that  the stipend is,                                                               
essentially,  like a  salary.   However, he  pointed out  that in                                                               
many  cases board  members have  to  take a  day off  work for  a                                                               
meeting.  He clarified that in  many cases it costs board members                                                               
to participate in meetings.   He reminded the committee that $400                                                               
is currently what Permanent Fund  Corporation and Alaska Railroad                                                               
Board  members receive.   He  said, comparatively,  AHFC receives                                                               
less than most in terms of compensation.                                                                                        
8:29:58 AM                                                                                                                    
REPRESENTATIVE RAMRAS offered his  belief that the Permanent Fund                                                               
Corporation trustees are paid annually,  and he asked if the AHFC                                                               
Board members are.                                                                                                              
8:30:13 AM                                                                                                                    
MR. BUTCHER  answered no.   In response  to a  follow-up question                                                               
from Representative Ramras, he said  the aggregate fund that AHFC                                                               
manages is $5 billion.                                                                                                          
8:30:46 AM                                                                                                                    
REPRESENTATIVE RAMRAS stated his support of the bill.                                                                           
8:31:33 AM                                                                                                                    
REPRESENTATIVE GRUENBERG asked  if any other boards  use the term                                                               
"or  portion  of  the  day"   [on  page  1,  line  6,]  regarding                                                               
compensation, and if the board would  be paid for meeting only 15                                                               
8:31:51 AM                                                                                                                    
MR.  BUTCHER, to  the  first question,  replied  that he  doesn't                                                               
know.   Regarding the second  question, he said  the compensation                                                               
is  applied "to  the date  of the  board meeting."   He  said the                                                               
meetings tend to last 3-5 hours.                                                                                                
[VICE CHAIR GATTO was handed the gavel.]                                                                                        
8:32:26 AM                                                                                                                    
DANIEL  R.   FAUSKE,  Chief  Executive   Officer  (CEO)/Executive                                                               
Director,  Alaska Housing  Finance Corporation  (AHFC), said  the                                                               
length  of  meetings  are  five  to six  hours.    Sometimes  the                                                               
meetings carry  over to the  next day.  Sometimes  a subcommittee                                                               
will meet the  day before a regular meeting, so  that it can make                                                               
a  recommendation to  the board  the next  day.   He said  he has                                                               
never heard of  a meeting that has lasted only  15 minutes and it                                                               
would  not be  proper to  pay someone  $400 for  stopping by  the                                                               
office to sign a paper, for example.                                                                                            
8:33:57 AM                                                                                                                    
VICE  CHAIR  GATTO asked  if  that  means  Mr. Fauske  would  act                                                               
negatively on any request.                                                                                                      
8:34:13 AM                                                                                                                    
MR. FAUSKE  responded that  he has a  good relationship  with the                                                               
board and  would deny someone if  he felt that the  intent of the                                                               
compensation was being abused.                                                                                                  
8:34:36 AM                                                                                                                    
VICE CHAIR  GATTO offered a  scenario whereby board  members meet                                                               
for dinner  and talk business, have  a meeting the next  day, and                                                               
meet for  breakfast the  next morning and  conduct business.   He                                                               
asked if that would be an unlikely scenario.                                                                                    
8:35:11 AM                                                                                                                    
MR. FAUSKE said he cannot envision that happening.                                                                              
8:35:22 AM                                                                                                                    
REPRESENTATIVE ELKINS asked,  "So, you're telling me  on the days                                                               
they travel they get no per diem?"                                                                                              
8:35:31 AM                                                                                                                    
MR. FAUSKE answered  in the affirmative.  He said  the purpose of                                                               
the  bill  is to  increase  the  amount  of money  board  members                                                               
receive solely for the meetings they attend.                                                                                    
8:36:21 AM                                                                                                                    
REPRESENTATIVE  ELKINS pointed  out that  a member  from Wrangell                                                               
[attending  a meeting  in  Anchorage] loses  three  days pay  for                                                               
attending a meeting.  He said  he doesn't think it's right not to                                                               
be reimbursed  for days  of travel.   He stated,  "I have  a hard                                                               
time supporting the  $400, but not supporting the  travel days is                                                               
harder for me than supporting the $400."                                                                                        
8:36:37 AM                                                                                                                    
REPRESENTATIVE  GARDNER   noted  that  the  bill   refers  to  AS                                                               
39.20.180,  which  she  said is  legislation  that  provides  for                                                               
transportation  and  per  diem  expenses.   She  added,  "So,  my                                                               
understanding is  that members would  get transportation  and per                                                               
diem on  the days they're traveling  as well as the  days they're                                                               
actually meeting."                                                                                                              
8:36:57 AM                                                                                                                    
MR.  FAUSKE  offered the  following  correction  to his  previous                                                               
statements:  "They  do get paid that day for  travel.  If they're                                                               
traveling on  corporate business coming  here, they do  get their                                                               
pay for the day."                                                                                                               
[CHAIR SEATON took back the gavel.]                                                                                             
8:37:24 AM                                                                                                                    
CHAIR SEATON  stated, "I  would like to  note on  another portion                                                               
that we are looking at the  same compensation rate for the Alaska                                                               
Retirement Board.   That's built into that  piece of legislation,                                                               
as well."                                                                                                                       
8:37:34 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG suggested  standardizing  the rate  for                                                               
all boards  and incorporating  into HB 283  a section  asking the                                                               
administration  or appropriate  entity to  review all  the boards                                                               
and submit  a report to the  legislature at the beginning  of the                                                               
next session.                                                                                                                   
8:38:35 AM                                                                                                                    
CHAIR SEATON recommended  the committee make that  request of the                                                               
administration in a separate piece of legislation.                                                                              
8:38:44 AM                                                                                                                    
REPRESENTATIVE  GARDNER noted  that the  fiscal note  states that                                                               
the  members would  receive the  $400  compensation per  meeting.                                                               
She  said  that  is  incorrect, because  members  would  actually                                                               
receive the reimbursement per day.                                                                                              
8:39:03 AM                                                                                                                    
MR.  BUTCHER confirmed  that Representative  Gardner is  correct,                                                               
and he said he would change that.                                                                                               
8:39:15 AM                                                                                                                    
REPRESENTATIVE  GARDNER questioned  whether  that would  increase                                                               
the [amount of the fiscal note].                                                                                                
8:39:21 AM                                                                                                                    
CHAIR SEATON asked,  "Were the calculations based on  the way the                                                               
compensation was  ... actually done,  or [were]  the calculations                                                               
in the fiscal note based just on an anticipated meeting date?"                                                                  
8:39:46 AM                                                                                                                    
MR. BUTCHER  replied that  it was based  on what  the anticipated                                                               
cost to the corporation would  be should the proposed legislation                                                               
CHAIR  SEATON asked  if  that  was based  on  the  idea that  the                                                               
compensation would be only on the  day of the meeting, or whether                                                               
that included the travel days, as well.                                                                                         
MR. BUTCHER answered  that of the four public  members, one lives                                                               
in   Anchorage  and   two   others   frequently  participate   by                                                               
teleconference;   therefore,  multiple-day   meetings  are   "not                                                               
applicable in most cases."  He  said, "I don't know that it would                                                               
be a  big difference; maybe  a difference of a  thousand dollars,                                                               
or so, depending on how you looked at it."                                                                                      
8:40:17 AM                                                                                                                    
CHAIR SEATON said  he would not hold the bill  up, but would like                                                               
Mr. Butcher to  ensure that the issue is revised  before the bill                                                               
is heard  before the House Finance  Committee.  He said  he would                                                               
like the House  State Affairs Standing Committee to  focus on the                                                               
policy issue of  whether $400 is adequate for  someone serving on                                                               
the  board, rather  than looking  at  the absolute  terms of  the                                                               
fiscal note.                                                                                                                    
8:41:23 AM                                                                                                                    
REPRESENTATIVE GRUENBERG  said, "If we decide  that, for example,                                                               
...  $400 a  day is  more than  we should  be spending  for these                                                               
folks, we're not  going to be able  to roll this board  back.  By                                                               
doing this now,  we are setting a precedent for  what we're going                                                               
to be quite possibly doing with these other boards."                                                                            
8:42:16 AM                                                                                                                    
CHAIR SEATON closed public testimony.                                                                                           
8:42:26 AM                                                                                                                    
REPRESENTATIVE LYNN  declared a  potential conflict  of interest;                                                               
he revealed  that he is  a licensed real estate  associate broker                                                               
who has done business  with AHFC in the past and  may do so again                                                               
in the future.                                                                                                                  
8:42:44 AM                                                                                                                    
CHAIR SEATON noted Representative  Lynn's conflict and stated, "I                                                               
make a ruling that it's not significant at this time."                                                                          
8:42:57 AM                                                                                                                    
REPRESENTATIVE GARDNER  moved Amendment 1, to  delete "or portion                                                           
of a  day".  She explained  that she is troubled  by that phrase.                                                           
She said she  read AS 18.56.030 and doesn't know  that "a day" is                                                               
defined anywhere.                                                                                                               
8:43:32 AM                                                                                                                    
CHAIR  SEATON  said  he  would  like  Representative  Gardner  to                                                               
clarify if  the intent of  the amendment is  to say that  a board                                                               
member has to work for a specific  amount of time for it to count                                                               
as a  day.   He indicated that  that is the  problem he  has with                                                               
Amendment 1.                                                                                                                    
8:44:49 AM                                                                                                                    
REPRESENTATIVE GARDNER  asked if a  breakfast meeting on  the day                                                               
of departure would be counted as a workday.                                                                                     
8:45:01 AM                                                                                                                    
CHAIR  SEATON  reminded  Representative Gardner  that  since  the                                                               
travel  day is  compensated,  it doesn't  matter  whether or  not                                                               
there  is  a  breakfast  meeting.     He  said  the  $400  a  day                                                               
compensation rate is  not really high when  consideration is made                                                               
to the caliber of people being  asked to make decisions for AHFC.                                                               
He said, "So, I think we  may be getting into more technicalities                                                               
than we really want to."                                                                                                        
8:45:47 AM                                                                                                                    
REPRESENTATIVE ELKINS  said he has  a hang  up with any  board or                                                               
commission member being paid more than  a legislator.  He said he                                                               
thinks it  would be proper "that  their per diem rate  be tied to                                                               
8:46:26 AM                                                                                                                    
CHAIR SEATON  clarified that  although the  money in  question is                                                               
called  a per  diem,  it really  is a  salary,  not just  expense                                                               
compensation.   He added, "So,  you'd have  to compare it  to our                                                               
salary, and I don't think we  want to compare very many people to                                                               
our   salaries,  otherwise   we  wouldn't   have  anybody   doing                                                               
8:47:29 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG asked  if  any other  statutes for  any                                                               
other boards use the phrase, "or portion of a day".                                                                         
8:48:09 AM                                                                                                                    
MR. BUTCHER responded that he doesn't  know.  He said the request                                                               
to  Legislative Legal  and Research  Services was  to change  the                                                               
amount from $100 to $400 and "this is how it was drafted."                                                                      
8:48:32 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG  said  he  supports Amendment  1.    He                                                               
explained that if  the phrase "or portion of a  day" is used only                                                           
in HB 283  and not in other statutes pertaining  to other boards,                                                               
the   result  may   be  that   "this   statute"  is   interpreted                                                               
REPRESENTATIVE  GARDNER restated  Amendment  1 for  clarification                                                               
purposes.   She  added, "And  I'd like  to say,  if 'day'  is not                                                               
defined, a 'portion of a day' is covered."                                                                                  
REPRESENTATIVE GRUENBERG  added, "I would  ask that that  be done                                                               
with the understanding that I'll be offering that motion."                                                                      
8:50:18 AM                                                                                                                    
CHAIR SEATON, upon  a query from the  committee secretary, stated                                                               
that he had objected to Amendment 1.                                                                                            
8:50:28 AM                                                                                                                    
A roll call vote was  taken.  Representatives Gardner, Gruenberg,                                                               
Gatto,  Elkins,  and   Lynn  voted  in  favor   of  Amendment  1.                                                               
Representatives Ramras  and Seaton voted against  it.  Therefore,                                                               
Amendment 1 passed by a vote of 5-2.                                                                                            
CHAIR  SEATON  asked Representative  Gruenberg  if  he wanted  to                                                               
restate his request.                                                                                                            
REPRESENTATIVE GRUENBERG said, "I will  do that after we move the                                                               
bill; if you're going to move the bill."                                                                                        
8:51:36 AM                                                                                                                    
REPRESENTATIVE GARDNER interpreted:                                                                                             
     My reading  of this, because it  includes AS 39.20.180,                                                                    
     means that  they do  get per  diem rate  at essentially                                                                    
     the  same rate  as  the legislature,  according to  the                                                                    
     regulations, on the  travel date.  So,  what they would                                                                    
     now get  is $400 a day  for travel day, as  well as the                                                                    
     same  per  diem that  everybody  else  gets.   Is  that                                                                    
8:51:40 AM                                                                                                                    
MR.  BUTCHER responded  that's correct.   He  said, "For  the day                                                               
they're in Anchorage, they receive  $40, or whatever the meal per                                                               
diem is for that day."                                                                                                          
8:51:47 AM                                                                                                                    
REPRESENTATIVE  GATTO   referred  to  the  language:     "may  be                                                               
reimbursed   by  the   corporation  for   actual  and   necessary                                                               
expenses".   He indicated  that the  language "sounds  like we're                                                               
telling them we're going to  reimburse their hotel cost - 'actual                                                               
and necessary  expense' -  and their food  cost."   He continued,                                                               
"But what  you told us was  that that's already covered  and this                                                               
is  more of  a  salary.   And yet,  the  language conflicts  with                                                               
8:52:54 AM                                                                                                                    
MR.  BUTCHER explained  that  the corporation  pays  for the  air                                                               
fare, hotel rate,  and meal allowance, all of  which are separate                                                               
from the $100  [or $400 if the bill is  adopted] compensation for                                                               
the board meeting.                                                                                                              
8:54:31 AM                                                                                                                    
REPRESENTATIVE   GARDNER    noted   that   the    language   that                                                               
Representative Gatto  is asking about already  exists in statute.                                                               
She said, "The only change we're making is the dollar amount."                                                                  
8:54:51 AM                                                                                                                    
REPRESENTATIVE RAMRAS  asked Mr. Butcher  to remind him  how much                                                               
the dividend is that AHFC "throws off annually."                                                                                
MR.  BUTCHER answered  that it's  been  $103 million  a year  for                                                               
about the last 8-10 years.                                                                                                      
8:55:15 AM                                                                                                                    
REPRESENTATIVE RAMRAS responded:                                                                                                
     So, a billion  dollars over the last 10  years has gone                                                                    
     to the general fund and  we're arguing about moving the                                                                    
     per diem  from $100 a  day to $400  a day for  a fiscal                                                                    
     note of $14,000 a year?   For over 10 years, that would                                                                    
     be  $140,000  dollars,  and [AHFC]  has  thrown  off  a                                                                    
     billion dollars  into the general  fund for the  use of                                                                    
     the state.  Is that right?                                                                                                 
8:55:28 AM                                                                                                                    
MR. BUTCHER  replied, "In  the last 10-15  years it's  been about                                                               
$1.5 billion."                                                                                                                  
8:55:41 AM                                                                                                                    
REPRESENTATIVE  RAMRAS remarked,  "We're  probably  not going  to                                                               
change the per diem for awhile  ..., so it could be $140,000 over                                                               
the next  10 years.   And we  may see another  billion or  two in                                                               
dividends over the next 10 years?"                                                                                              
8:55:48 AM                                                                                                                    
MR. BUTCHER responded that that's a possibility.                                                                                
8:55:58 AM                                                                                                                    
REPRESENTATIVE GARDNER said, "Point taken."                                                                                     
REPRESENTATIVE GARDNER  moved to report  HB 283, as  amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying fiscal note that will  also be amended.  There being                                                               
no objection  CSHB 283(STA) was  reported out of the  House State                                                               
Affairs Standing Committee.                                                                                                     
8:57:01 AM                                                                                                                    
REPRESENTATIVE GRUENBERG presented  a concept for a  letter to be                                                               
transmitted from the committee as follows:                                                                                      
     The   House  State   Affairs  Committee   requests  the                                                                    
     administration  ... to  provide a  written response  to                                                                    
     the  following  questions  concerning  all  boards  and                                                                    
     commissions, compensated and noncompensated ....                                                                           
     1)  Should   any  [other]  noncompensated   boards  and                                                                    
     commissions be compensated?                                                                                                
     2) Should  the compensation  rate or rates  be adjusted                                                                    
     or standardized and, if so, at what rates?                                                                                 
     3)  Should the  following  language be  added to  those                                                                    
     statutes that provide compensation  at a daily rate "or                                                                    
     a portion of a day"?                                                                                                       
     ... If  legislation is  warranted, the  committee would                                                                    
     welcome proposed legislation.                                                                                              
8:58:41 AM                                                                                                                    
CHAIR SEATON  said unless the  committee has a burning  desire to                                                               
address the  letter with a  committee action, he would  prefer to                                                               
transmit the letter individually and "get the information back."                                                                
8:58:49 AM                                                                                                                    

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