Legislature(2001 - 2002)
02/20/2001 03:40 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 93-ARCTIC WINTER GAMES TEAM ALASKA TRUST SENATOR PHILLIPS, prime sponsor of SB 93, said that he has been involved with the Arctic Winter Games and Team Alaska for more than 15 years and consistent funding has always been a problem. He explained that the games were established 32 years ago with an agreement between the Premiers from the Yukon and Northwest Territories and then Alaska Governor, Walter Hickel providing winter sporting events every two years. There are over 2000 participants and 18 sporting events featured. The competition will be held in Greenland next year with participation from Northern Alberta, Northern Quebec, Northwest Territories, Yukon, Alaska and Greenland and observers from two Russian provinces. This legislation was introduced in an effort to provide consistent funding. It is modeled after the Alaska Children's Trust Fund so, if passed, an endowment would be established. The athletes come from all parts of the state and are expected to pay about one third of the associated costs of participation, which is in contrast to their competitors who have all their expenses paid by their governments. SENATOR PHILLIPS believes that endowing the games will not only provide consistent funding it will also send a positive message that Alaska is a bold and willing participant in the Arctic Winter Games. In 2006 it is Alaska's turn to host the games and Kenai and the Mat Su areas are competing for the bid. CHAIRMAN THERRIAULT asked whether the current board of directors would be used if the trust was established. SENATOR PHILLIPS said the current board would be used. CHAIRMAN THERRIAULT referred to page 2 line 5 and asked if income from the trust would be put into the general fund and then require yearly legislative appropriation. SENATOR PHILLIPS said that it was set up that way and that a letter from Dan Sullivan suggests that tobacco settlement money is a possible funding source. Number 434 CHAIRMAN THERRIAULT asked whether the interest earnings would be general fund without yearly legislative appropriation. SENATOR PHILLIPS said his intent is to keep the money with the fund itself. It's modeled exactly the same as the Alaska Children's Trust and it now has about $9 million. He said that the games need about $200,000 every year because the games cost between $200,000 and $300,000 every two years and international dues are $25,000. DAN SULLIVAN, Development Director Arctic Winter Games/Team Alaska (AWGTA), has been involved with the games for over 30 years and strongly supports SB 93. AWGTA is a non-profit corporation that is trying to develop a guaranteed revenue source to ensure the viability and longevity of the event. Over 40 communities send athletes to the games and all winter games are included. There are many well-known Alaskans who have participated in the games. There is one paid employee and numerous volunteers working for AWGTA and it is a very efficient and cost effective entity. Every two years 300 or more athletes are assembled, uniforms are purchased, travel is arranged and the games are conducted. MR. SULLIVAN went on to describe AWGTA as more than a non-profit. He said that it is actually `an entity of the State of Alaska and therefore should have a stable funding source. If the trust is properly endowed, it would generate sufficient revenues to finance the future costs of Team Alaska and provide revenue for host cities when it is Alaska's turn to stage the games. It costs between $800,000 and $1 million every decade to fund the host city. It is modeled after the Alaska Children's Trust with monies managed by the Department of Revenue. Number 951 CHAIRMAN THERRIAULT asked if the games were referenced or established in statute. MR. SULLIVAN said he believes so because they were established through the Governor's office and the Lieutenant Governor is the official representative to the international committee. CHAIRMAN THERRIAULT said that there would still have to be annual appropriations of income back into the trust so AWGTA would still need to come before the legislature every year. MR. SULLIVAN said yes, but they would be asking for the earnings from the trust and not a general fund appropriation. CHAIRMAN THERRIAULT asked for the reasoning for having this done in state statute rather than using a private lending institution with administration from the board of directors. MR. SULLIVAN said they wanted to maintain the connection with the state and that management by the Department of Revenue and oversight by the legislature is advantageous. SENATOR PHILLIPS said that the governments from the other jurisdictions are directly involved in supporting their athletes and AWGTA feels it is important for the State of Alaska to show its support as well. MR. SULLIVAN said that in most of the Canadian provinces there is a minister of sport whose full function is to provide athletic opportunities to youths in their province or territory. AWGTA serves this function for the State of Alaska. CHAIRMAN THERRIAULT asked whether economic models have been run to ensure that a $5 million endowment would provide sufficient revenue for not only annual expenses but also a periodic 20 percent draw for the years that Alaska hosts the games. MR. SULLIVAN said they had. In a given year they would draw about $150,000 for team purposes so in an 8-year period there would be an additional $100,000 per year to go into the account to cover host city expenses. CHAIRMAN THERRIAULT asked how they had accounted for inflation. MR. SULLIVAN said that all estimates in their economic model are conservative and that account earnings will probably be greater than 5 percent. If the trust doesn't have sufficient funds available without tapping principle then it is the responsibility of the host community to come up with the additional funds. SENATOR DAVIS asked about host city local government participation every ten years. MR. SULLIVAN said local governments make a contribution when they host the games. When Anchorage last hosted the games, the municipality gave AWGTA a $150,000 grant and those funds were returned to the municipality in full. SENATOR PEARCE arrived. SENATOR DAVIS asked where international funds come from. MR. SULLIVAN said John Rodda, Alaska representative to the international committee, could answer that type of question. GARY MATHEWS, board member for AWGTA, said that the financial issues facing the non-profit are critical. This is a very well run organization and he urged the committee to move the legislation forward. Number 1463 JOHN RODDA has been involved with the games for 27 years in various capacities. Specifically, Alaska is the only jurisdiction that must look for funding on a yearly basis. All others have full and ongoing government support. CHAIRMAN THERRIAULT asked whether Mr. Rodda understood that the legislation sets up the trust but does not fund the trust. He also said that he doesn't believe that Alaskan residents expect the same level of support as that provided by the Canadian provinces. MR. RODDA said perhaps not, but that this is an opportunity to support young Alaskans. It's a long-term investment that is well intended and worthwhile. Number 652 CHAIRMAN THERRIAULT asked whether corporate contributions are anticipated to fund the trust. MR. RODDA said they have been involved with corporations for many years and they will continue to solicit contributions. Number 1744 WENDELL SHIFFLER, northern region international member for the Arctic Winter Games, said these games "provide an exciting, international sporting event and a lifetime learning experience for residents north of the 60th parallel." Participation has increased from three to nine jurisdictions, from 600 to over 2000 members and the games are now televised across the Arctic. SB 93 will bring consistency of support to the games that is needed on an ongoing basis. It will neither take the place of efforts to gain private financial support nor end the practice of athletes contributing a portion of the costs from their own pocket. It will however, "establish a basis of continuing monetary commitment by the State of Alaska to support our youth in a positive way." PHYLLIS TATE, AWGTA director, has been involved with the games for 30 years as a parent, an official and now as director. She strongly supports SB 93 because sports enhance self-esteem and status of young people who may not otherwise have enough to do to keep themselves productively involved. She encouraged members to support SB 93 thus establishing an endowment trust for Arctic Winter Games Team Alaska. Number 2017 SENATOR PHILLIPS showed framed medals from previous games. Number 2065 JIM POWELL, AWGTA board member, said he would be brief because much that he could say had already been covered in previous testimony. He said that an economic report from the 2000 Arctic Winter Games showed that host city, Whitehorse, netted 5 million Canadian dollars from the games. In 2006 when Alaska hosts the games there is the same opportunity for a similar economic boost. He emphasized that the cost of the games isn't born solely by public monies. Rather, it is a three-way participation with corporations, the State and the athletes all contributing. The athletes contribute one third of the monies. The original vision and intent of the games was to bring Arctic regions together for a cultural and sporting exchange. To maintain this vision, there needs to be more stability in financing. His final point was that many communities are affected by the games. This includes small communities, statewide, that would not otherwise have an opportunity "to participate in such a wonderful cultural and athletic event." He wanted members to remember this when making their decisions. CHAIRMAN THERRIAULT said that, as a general rule, there is a desire to separate from state government and its bureaucracy. With this in mind, he wondered why AWGTA wants the trust set into state statutes. MR. RODDA said that actually it is the state that is the member and that AWGTA is the non-profit entity that does the work. The State of Alaska is a founding member and in endowing the trust it is saying that they are committed to the continuation of the games. GARY MATHEWS said that in attending the opening ceremonies and the games themselves, it is clear that the athletes are representing their governments. Lieutenant Governor Ulmer was present in Whitehorse, as were Canadian premiers and other officials, lending a definite governmental presence. Number 2336 SENATOR DAVIS asked if anyone could give her the total amount of money given to AWGTA since inception. SENATOR PHILLIPS thought it was about $225,000 every two years. MR. RODDA said that was a close estimate but he hasn't ever tabulated those figures. SENATOR PHILLIPS said he thought that $100,000 per year is a defensible average. SENATOR DAVIS said that it's a wonderful program but she doesn't understand why there's an urgency to put this into state statute when the non-profit has been doing so well over the 30 plus years. AWGTA is estimating that the trust would need about $5 million and is modeled after the Children's Trust but she remembers when the Children's Trust was started and lay dormant for years due to lack of funding. She thinks that pulling $5 million from the general fund to fund the trust will short other worthwhile programs such as schools. SENATOR PHILLIPS said that one suggestion to fund the trust is to use the tobacco settlement monies and another is for corporate participation. It isn't strictly state dollars but a consistent and stable funding source is necessary for the State to maintain its presence. The State of Alaska is viewed as a standard bearer. Number 2236 SENATOR DAVIS said she's not against the Arctic Winter Games, she believes it's a wonderful program and she supports it wholeheartedly. Nonetheless, she thinks it's unusual that AWGTA has chosen this method rather that private funding. CHAIRMAN THERRIAULT asked for additional testimony and there was none. He said that the fiscal note says zero but the explanation points out that the referral to finance is needed. As a former member of the finance committee, he suggested that projections of fund earnings, inflation and draws be provided to the committee. He asked for the will of the committee. SENATOR HALFORD made a motion to move the bill and accompanying fiscal note from committee with individual recommendations. There were no objections so SB 93 was moved from committee.