04/13/1994 09:09 AM Senate STA

 CHAIRMAN LEMAN brings up SB 244 (PERMANENT FUND INVESTMENTS - LTD             
 PARTNERS) as the next order of business before the Senate State               
 Affairs Committee and calls the first witness.                                
                                                                               
 Number 555                                                                    
                                                                               
 CARL BRADY, Jr., Trustee, Alaska Permanent Fund Corporation,                  
 introduces Mr. Scott and Mr. Seekins.  Mr. Brady describes the                
 impetus behind SB 244.  The corporation's and Mr. Brady's reasoning           
 is contained in a memorandum and six attachments which were                   
 submitted to the Senate State Affairs Committee.                              
                                                                               
 TAPE 94-26, SIDE B                                                            
 Number 594                                                                    
                                                                               
 MR. BRADY continues his dissertation on SB 244.                               
                                                                               
 Number 581                                                                    
                                                                               
 CHAIRMAN LEMAN asks if there are any questions of Mr. Brady.                  
 Hearing none, the chairman calls Mr. Scott to testify.                        
                                                                               
 Number 580                                                                    
                                                                               
 BILL SCOTT, Executive Director, Alaska Permanent Fund Corporation,            
 adds that SB 244 would provide for greater security and analysis of           
 an investment.  It is not a liberalization of how the corporation             
 invests, but rather a greater concentration of analysis.                      
                                                                               
 Number 555                                                                    
                                                                               
 RALPH SEEKINS, Trustee and Current Chairman of the Board, Alaska              
 Permanent Fund Corporation, states he takes his responsibility as             
 a member of the board very seriously.  He says the corporation is             
 constantly grading itself on how well it is doing against other               
 institutional investors.  Mr. Seekins tells of a conference on                
 alternative investments he recently attended in Colorado.                     
                                                                               
 Number 498                                                                    
                                                                               
 CHAIRMAN LEMAN comments he remains cautious about investments due             
 to the Executive Life situation.                                              
                                                                               
 Number 490                                                                    
                                                                               
 MR. SCOTT states that the Executive Life investments were made with           
 virtually no supervision and outside control.  The permanent fund             
 has excellent and very restrictive internal controls in making                
 investments.  So Mr. Scott does not believe that one could compare            
 the Executive Life investments with those made by the Permanent               
 Fund Corporation in any way, shape, or form.                                  
                                                                               
 Number 476                                                                    
                                                                               
 MR. BRADY adds that Washington and Oregon have over three billion             
 dollars between them invested in this type of investment.                     
                                                                               
 Number 464                                                                    
                                                                               
 CHAIRMAN LEMAN notes the committee has an amendment to SB 244, and            
 asks Mr. Scott to describe what the amendment would do.                       
                                                                               
 Number 461                                                                    
                                                                               
 MR. SCOTT states the amendment would substitute an entire new                 
 version for the original bill that was introduced.  The first                 
 version was hastily drafted, and the corporation came up with what            
 it believes would be a better definition of the limitations of the            
 sort of investment that might be done under SB 244.  It more                  
 clearly addresses the investment, as opposed to the vehicle for the    he   
 investment.  Mr. Scott believes that "limited partnership" has                
 negative connotations.                                                        
                                                                               
 MR. SCOTT states the original bill principally addressed limited              
 partnerships.  The corporation asks that the committee amend SB 244           
 by substituting the amendment for the original version.                       
                                                                               
 Number 444                                                                    
                                                                               
 CHAIRMAN LEMAN states there would be several complications involved           
 in doing what Mr. Scott is asking the committee to do.  The first             
 is that the original title is not valid in relation to the new                
 version being proposed by the corporation; the new version does not           
 have an effective date.  Secondly, the connotation of "limited                
 partnership" will still carry through, because the short title of             
 the bill will not be changed.                                                 
                                                                               
 MR. SCOTT asks the chairman if there is a solution to this minor              
 impasse.                                                                      
                                                                               
 Number 429                                                                    
                                                                               
 CHAIRMAN LEMAN responds that Legislative Legal Services could                 
 handle the problem.                                                           
                                                                               
 JIM KELLY, Research & Liaison Officer, Alaska Permanent Fund                  
 Corporation, suggests a simple title of "An Act relating to equity            
 investments of the Permanent Fund."                                           
                                                                               
 Number 418                                                                    
                                                                               
 SENATOR MILLER makes a motion to adopt amendment #1.                          
                                                                               
 Number 407                                                                    
                                                                               
 CHAIRMAN LEMAN asks if there is any objection to amendment #1.                
 Hearing none, he states the amendment has been adopted.  The                  
 chairman asks if there is anyone else who wishes to testify on                
 SB 244.                                                                       
                                                                               
 Number 400                                                                    
                                                                               
 SENATOR TAYLOR makes a motion to discharge SB 244 from the Senate             
 State Affairs Committee with individual recommendations.                      
                                                                               
 Number 398                                                                    
                                                                               
 CHAIRMAN LEMAN, hearing no objection, orders SB 244 released from             
 committee with individual recommendations.