Legislature(2017 - 2018)HOUSE FINANCE 519

04/17/2017 01:30 PM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4/18/17 at 9:45 AM --
Heard & Held
Heard & Held
Heard & Held
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 17, 2017                                                                                            
                         1:26 p.m.                                                                                              
1:34:53 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Seaton  called the House Finance  Committee meeting                                                                    
to order at 1:26 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
Representative Mark Neuman (Alternate)                                                                                          
MEMBERS ABSENT                                                                                                                
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
ALSO PRESENT                                                                                                                  
Representative   Sam   Kito;    Crystal   Koeneman,   Staff,                                                                    
Representative   Sam   Kito;   Tom  Lucas,   Paralegal   II,                                                                    
Administration,  Alaska  Public Offices  Commission  (APOC);                                                                    
Bianca  Carpeneti,  Staff,  Representative Sam  Kito;  Terry                                                                    
Bannister,   Legislative   Legal  Services,   Alaska   State                                                                    
Legislature; Stephen Trimble, Founder  and CEO, Arctic Solar                                                                    
Ventures,  Anchorage;  William   Clark,  Attorney,  Drinker,                                                                    
Bindle,  and   Realth,  Pennsylvania;   Representative  Matt                                                                    
Claman, Sponsor;  Lizzie Kubitz, Staff,  Representative Matt                                                                    
Claman; Margaret  Brodie, Director, Division of  Health Care                                                                    
Services, Department of Health  and Social Services; Michele                                                                    
Michaud, Chief Health Official,  Division of Retirements and                                                                    
Benefits, Department of  Administration; Anna Latham, Deputy                                                                    
Director, Insurance Division,  Department of Commerce; Sarah                                                                    
Bailey,   Insurance  Specialist   III,  Insurance  Division,                                                                    
Department of Commerce;  Alyson Currey, Legislative Liaison,                                                                    
Planned  Parenthood Votes  Northwest  and Hawaii;  Elizabeth                                                                    
Figus, Self,  Sitka; Elizabeth  Eilers, Self,  Juneau; Alica                                                                    
Cargill,  Policy  Specialist,  Alaska  Network  on  Domestic                                                                    
Violence and Sexual Assault; Pamela Samash   Self,  Right to                                                                    
Life, Nenana;  Paige Hogson,  Self, Anchorage;  Robin Smith,                                                                    
Self,  Anchorage;  Justine  Webb,  Self,  Fairbanks;  Vhemia                                                                    
Peterson, Self, Anchorage.                                                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
HB 25     INSURANCE COVERAGE FOR CONTRACEPTIVES                                                                                 
          HB 25 was HEARD and HELD in committee for further                                                                     
HB 91     APOC REGISTRATION FEES; LOBBYIST TAX                                                                                  
          HB 91 was HEARD and HELD in committee for further                                                                     
HB 124    BENEFIT CORPORATIONS                                                                                                  
          HB 124 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SB 88     AK MENTAL HEALTH TRUST LAND EXCHANGE                                                                                  
          SB 88 was SCHEDULED but NOT HEARD.                                                                                    
          [See meeting held on April 18, 2017 at 9:45 a.m.                                                                      
          for detail]                                                                                                           
Co-Chair Foster reviewed the agenda for the day.                                                                                
HOUSE BILL NO. 91                                                                                                             
     "An  Act relating  to fees  for certain  persons filing                                                                    
     disclosure statements or other  reports with the Alaska                                                                    
     Public  Offices  Commission;  relating   to  a  tax  on                                                                    
     legislative lobbyists;  and providing for  an effective                                                                    
1:34:53 PM                                                                                                                    
REPRESENTATIVE  SAM KITO,  introduced  HB  91. He  explained                                                                    
that the Alaska Public  Office Commission (APOC) was granted                                                                    
increased receipt authority but  not the statutory authority                                                                    
to  adjust  its  fees.  The   bill  provided  the  statutory                                                                    
authority, a  $50 financial disclosure  form filing  fee per                                                                    
legislative or  public official, a $100  fee for candidates,                                                                    
and a  fee schedule  for lobbyist  registrations based  on a                                                                    
contracted amount.  The fees added up  to approximately $280                                                                    
thousand of additional receipt authority.                                                                                       
CRYSTAL KOENEMAN,  STAFF, REPRESENTATIVE SAM KITO,  read the                                                                    
sectional analysis:                                                                                                             
     Section   1:   Amends  AS   15.13.054.   Administrative                                                                    
     registration fee.  Adds a new  section that  requires a                                                                    
     candidate,  group, or  nongroup  entity to  pay a  $100                                                                    
     registration   fee.  This   does   not  apply   judges,                                                                    
     constitutional  convention delegates,  exempt municipal                                                                    
     candidates,  or  nongroup  entities with  an  operating                                                                    
     budget of $250 or less.                                                                                                    
     Section 2: Amends AS  15.13.390(a). Civil penalty; late                                                                    
     filing   of   required   reports.   Includes   language                                                                    
     referencing the administrative registration fee.                                                                           
     Section  3:  Amends  AS 24.45.041(g)  Include  language                                                                    
     referencing  the  administrative registration  fee  and                                                                    
     removes the  current $250 registration  fee and  sets a                                                                    
     fee of  $350 for a contract  with a value of  less than                                                                    
     $30,000; $650  for a contract  with a value  of between                                                                    
     $30,000 and  $60,000; and  $850 for  a contract  with a                                                                    
     value of over $60,000.                                                                                                     
     Section 4: Amends AS 24.60  to include a new section AS                                                                    
     24.60.238.  Administrative  registration fee.  Requires                                                                    
     legislators,  public  members  or  the  committee,  and                                                                    
     legislative directors  filing financial  disclosures to                                                                    
     pay an administrative registration fee of $50.                                                                             
     Section  5: Amends  24.60.240. Civil  penalty for  late                                                                    
     filing. Allows  APOC to assess  a civil penalty  of not                                                                    
     more  than   $10  a   day  for   failure  to   pay  the                                                                    
     administrative   registration  fee   as  levied   under                                                                    
     section 4 of the bill.                                                                                                     
     Section 6:  Amends 37.03.146(c). Definition  of program                                                                    
     receipts  and  non-general   fund  receipts.  Add  fees                                                                    
    collected by APOC to the list of program receipts.                                                                          
     Section 7: Amends AS 39.50  to include a new section AS                                                                    
     39.50.132  Administrative  registration  fee.  Requires                                                                    
     governors  and  lieutenant governors  filing  financial                                                                    
     disclosures to  pay an administrative  registration fee                                                                    
     of $50.                                                                                                                    
     Section  8:  Civil  penalty; late  filing  of  required                                                                    
     reports. Allows APOC  to assess a civil  penalty of not                                                                    
     more  than   $10  a   day  for   failure  to   pay  the                                                                    
     administrative   registration  fee   as  levied   under                                                                    
     section 7 of the bill.                                                                                                     
     Section  10: Establishes  a January  1, 2018  effective                                                                    
1:40:43 PM                                                                                                                    
Co-Chair Foster noted that  Representative Neuman joined the                                                                    
Co-Chair Foster asked whether the fees were payable online.                                                                     
TOM  LUCAS,  PARALEGAL  II,  ADMINISTRATION,  ALASKA  PUBLIC                                                                    
OFFICES  COMMISSION (APOC),  responded in  the negative  and                                                                    
indicated  that the  reason was  due to  a lack  of funding.                                                                    
Currently,   payments  were   mailed  or   brought  to   the                                                                    
commission's   office.  Co-Chair   Foster   asked  how   the                                                                    
collection  system   worked.  Mr.  Lucas  answered   that  a                                                                    
provision in  the legislation required payment  on or before                                                                    
Representative Kawasaki  asked what  amount of  funding APOC                                                                    
needed to operate each year.  Mr. Lucas was unable to answer                                                                    
the question  due to lost  positions caused by the  last two                                                                    
fiscal year's budget cuts. He  noted that the commission was                                                                    
"struggling to hire a data person."                                                                                             
1:44:08 PM                                                                                                                    
Representative  Kito replied  that  APOC's  FY17 budget  was                                                                    
$1.05  million. He  detailed that  $800 million  was general                                                                    
funds (GF)  and $245 thousand in  program receipt authority.                                                                    
However,  the   current  statutory  authority   for  program                                                                    
receipts was limited to $107 thousand.                                                                                          
Representative   Kawasaki   asked   in  regards   to   APOCs                                                                    
historical budget,  what the highest  level of  full funding                                                                    
was.  Ms. Koeneman  replied that  in  FY 15  the budget  was                                                                    
approximately $1.3  million GF resulting in  actuals of $1.1                                                                    
million GF and $119 thousand in program receipts.                                                                               
Representative  Kawasaki  asked  whether the  bill  impacted                                                                    
"representational"  lobbyists. Representative  Kito answered                                                                    
in the  negative and added that  a fee was also  not charged                                                                    
to volunteer lobbyists.  Representative Kawasaki appreciated                                                                    
the bracketing  for lobbyist  fees, which  he thought  was a                                                                    
fairer  system.  He  suggested a  smaller  fee  bracket  for                                                                    
lobbyists  making a  very small  fee. He  asked whether  the                                                                    
fiscal  note reflected  the fee  brackets. Ms.  Koeneman was                                                                    
aware that  APOC was working  on a revised fiscal  note. She                                                                    
added that  the fiscal note  from the Department  of Revenue                                                                    
(DOR)  FN  2 (REV)  was  no  longer  applicable due  to  the                                                                    
changes in the House State Affairs Committee version.                                                                           
Representative  Guttenberg commented  that  he thought  APOC                                                                    
had  suffered from  budget cuts.  He  wondered whether  APOC                                                                    
differentiated   between   program   receipts   and   fines.                                                                    
Representative Kito replied that  currently the only program                                                                    
receipts available  were the  lobbying registration  fees of                                                                    
$250 and were used for  the commission's work. The penalties                                                                    
that were  assessed by APOC  were deposited into the  GF and                                                                    
were  not used  to  support  the commission.  Representative                                                                    
Guttenberg  asked whether  the additional  fees in  the bill                                                                    
were program receipts. Representative  Kito responded in the                                                                    
affirmative.  Representative  Guttenberg asked  whether  the                                                                    
program  receipts resulting  from the  bill would  cover the                                                                    
additional administrative  costs or  were more  available to                                                                    
cover  other APOC  functions. Representative  Kito responded                                                                    
that the  legislation allowed for a  slightly higher receipt                                                                    
authority in  anticipation of the same  budget. He indicated                                                                    
that the objective  was for APOC to  eventually hire another                                                                    
person with  policy experience  to address  lobbying issues.                                                                    
He  wanted the  commission  to  ultimately strengthen  their                                                                    
1:50:24 PM                                                                                                                    
Vice-Chair  Gara  asked what  proportion  of  the fess  were                                                                    
generated  from  lobbying  and what  proportion  from  other                                                                    
fees.  Representative  Kito  was   uncertain  of  the  exact                                                                    
percentages  but  relayed that  a  much  higher portion  was                                                                    
received  from  lobbying and  a  much  smaller portion  from                                                                    
candidate and financial disclosure fees.                                                                                        
Ms. Koeneman  shared that an  updated fiscal note  from APOC                                                                    
was not available. However, she  confirmed that the previous                                                                    
fiscal  note  reported that  APOC  expected  to receive  $15                                                                    
thousand  from  candidates,  $18 thousand  from  groups,  $3                                                                    
thousand   from  entities,   $67.6   thousand  from   public                                                                    
officials,  and   $3  thousand  from   legislators  totaling                                                                    
$106,600.  The figure  did not  included  the $120  thousand                                                                    
from lobbying. Vice-Chair Gara  had received complaints from                                                                    
school  board members  and  "public  officials from  smaller                                                                    
governmental  entities" that  they  had to  comply with  the                                                                    
same  reporting  requirements  as  legislators.  He  queried                                                                    
whether the entities were subject  to the fees. Ms. Koeneman                                                                    
responded  in   the  affirmative.   She  offered   that  she                                                                    
completed a  historical review of  the genesis of  APOC. The                                                                    
commission  was established  via a  citizens' initiative  in                                                                    
1974 and  was upheld by  a court decision,  which determined                                                                    
that the citizens  had the right to know  whether a conflict                                                                    
of interest  existed with any  elected official,  "no matter                                                                    
how  great or  small"  the position.  Vice-Chair Gara  asked                                                                    
whether  the  financial   disclosures  included  information                                                                    
regarding sources  of income  and investments.  Ms. Koeneman                                                                    
responded in the affirmative.                                                                                                   
Vice-Chair  Gara commented  that  the reporting  requirement                                                                    
became more stringent after  the 2006 legislative corruption                                                                    
issue. He did  not agree with charging  school board members                                                                    
for  financial  disclosure  reporting.  Representative  Kito                                                                    
responded that the  fees were a legislative  policy call. He                                                                    
elaborated  that  some  of the  financial  disclosures  were                                                                    
reviewed  and  reported  on  and  he  wanted  the  reporting                                                                    
supported  by fees.  Currently,  the  Division of  Elections                                                                    
charged  a  $30  registration  fee  for  its  administrative                                                                    
costs. Campaigns  and candidates were currently  not charged                                                                    
an APOC fee.                                                                                                                    
1:54:54 PM                                                                                                                    
Representative  Neuman asked  whether APOC  was planning  to                                                                    
hire additional personnel in the  future. Mr. Lucas answered                                                                    
that APOC was currently seeking  an individual to fill an IT                                                                    
position. Representative  Neuman asked whether  the position                                                                    
was  funded   but  unfilled.  Mr.   Lucas  replied   in  the                                                                    
Representative Neuman referred to FN  2 (REV) and noted that                                                                    
DOR  would  have  to  alter its  tax  management  system  to                                                                    
accommodate  the fee  collection and  wondered how  it would                                                                    
integrate  into  the  department's existing  tax  collection                                                                    
system.  He  wondered  whether   HB  91  created  additional                                                                    
administrative  costs  for  the  department.  Representative                                                                    
Kito recounted  that the State Affairs  Committee discovered                                                                    
complications with implementing  a tax instead of  a fee. In                                                                    
response,   the  committee   substitute   removed  the   tax                                                                    
component, which  eliminated the need for  DOR's fiscal note                                                                    
and  a forthcoming  updated APOC  fiscal note  would reflect                                                                    
the change from a tax  to a fee. Representative Neuman asked                                                                    
whether  the APOC  fee collection  could be  integrated into                                                                    
DOR's tax  system. Representative Kito relayed  that another                                                                    
issue identified with  a tax was the  inability to designate                                                                    
the  revenue  to  APOC.  He   preferred  to  leave  the  tax                                                                    
component  out  of  the  bill due  to  the  difficulties  of                                                                    
administering a  dedicated tax  and ensuring  APOC's receipt                                                                    
authority from the fee revenue.                                                                                                 
1:59:25 PM                                                                                                                    
Co-Chair Seaton  had a question  on page  1, line 11  of the                                                                    
bill and read the following:                                                                                                    
     …a candidate  shall pay an  administrative fee  of $100                                                                    
     to  the commission  when the  candidate files  the name                                                                    
     and  address  of  the  candidate's  campaign  treasurer                                                                    
     under AS 15.13.060(c).                                                                                                     
Co-Chair Seaton assumed that the  fee was in addition to the                                                                    
fee  charged by  the Division  of Elections.  Representative                                                                    
Kito responded in the affirmative.                                                                                              
Co-Chair  Seaton  asked  whether  the  fee  applied  if  the                                                                    
candidate  was acting  as her  own  campaign treasurer.  Ms.                                                                    
Koeneman  responded that  all  candidates  were required  to                                                                    
register  with  APOC  and  pay   the  fee  regardless  if  a                                                                    
candidate  was  acting  as  their  own  treasurer.  Co-Chair                                                                    
Seaton   wondered   whether   the  provision   was   written                                                                    
adequately  to ensure  that a  candidate acting  as his  own                                                                    
treasurer  was  required  to  pay   the  fee.  Ms.  Koeneman                                                                    
responded that  AS 15.13.060 (a)  required the  candidate or                                                                    
group to designate a campaign treasurer.                                                                                        
Co-Chair Seaton referred  to page 3, Section 4  and read the                                                                    
     A person  required to report  under this  chapter shall                                                                    
     pay an  administrative registration  fee of $50  to the                                                                    
     Alaska Public  Offices Commission each year  in which a                                                                    
     report is due.                                                                                                             
Co-Chair  Seaton  queried  whether   the  fee  included  the                                                                    
candidate.  He cited  page 3,  line  26 [27  through 29]  as                                                                    
     … a public official  or former public official required                                                                    
     to  file a  report  under AS  39.50.020  shall pay  the                                                                    
     commission  an annual  administrative registration  fee                                                                    
     of $50 each year in which a report is due.                                                                                 
Co-Chair Seaton wanted to ensure  that candidates and public                                                                    
officials were  both covered under the  bill. Representative                                                                    
Kito  answered   that  the   bill  contained   two  separate                                                                    
provisions:  candidates were  required to  register and  pay                                                                    
the $100  fee and public  officials were required to  file a                                                                    
financial  disclosure  form  costing  $50.  Co-Chair  Seaton                                                                    
asked whether  the $50  fee in section  4 was  an additional                                                                    
fee.  Representative Kito  responded  in  the negative.  The                                                                    
section  addressed a  different group  of filers  other than                                                                    
candidates or elected officials.                                                                                                
2:03:32 PM                                                                                                                    
Representative Wilson asked whether  the fees collected were                                                                    
deposited  into a  specific designated  fund. Representative                                                                    
Kito replied that the fees  were designated program receipts                                                                    
which enabled APOC to receive and expend the funds.                                                                             
Ms. Koeneman  interjected that the fees  were deposited into                                                                    
fund code 1005 program receipts.                                                                                                
Representative  Wilson  wondered  whether  program  receipts                                                                    
were  able  to  be   spent  as  needed  without  legislative                                                                    
appropriation.  Representative   Kito  explained   that  the                                                                    
legislature  authorized  the  receipt  and  expenditure  for                                                                    
program receipts via the fund source  code on a line item in                                                                    
the appropriation bill.  Representative Wilson asked whether                                                                    
the sponsor intended to back  out undesignated general funds                                                                    
(UGF) and replace them with  the additional fees or the fees                                                                    
were  in addition  to  UGF. Ms.  Koeneman  replied that  the                                                                    
intent was  to offset a  portion of APOC UGF.  She furthered                                                                    
that   the  amount   depended  on   the  level   of  funding                                                                    
appropriated by the legislature.  Ms. Koeneman detailed that                                                                    
any amount  collected in fees  that were above the  level of                                                                    
funding  APOC  needed to  function  could  replace UGF  with                                                                    
program receipts.                                                                                                               
2:06:24 PM                                                                                                                    
Representative Kito added  that the legislature appropriated                                                                    
GF  and  an  amount   for  program  receipt  authority.  The                                                                    
legislation enabled APOC to increase  its ability to collect                                                                    
the higher amount  of program receipts in order  to meet its                                                                    
budget   obligations.  Representative   Wilson  provided   a                                                                    
hypothetical scenario  where APOC collected a  higher amount                                                                    
in fees than  the amount authorized by  the legislature. She                                                                    
deduced that  APOC could  not expend  the amount  above what                                                                    
was  authorized.  Representative  Kito  answered  that  APOC                                                                    
could expend  the additional fee  revenue through  a request                                                                    
for  authorization approved  by the  Legislative Budget  and                                                                    
Audit Committee.  Representative Wilson  asked what  the fee                                                                    
schedule   was   for   state   and   municipal   candidates.                                                                    
Representative  Kito  indicated   that  the  bill  contained                                                                    
separate provisions for state  and municipal candidates. The                                                                    
state  candidates were  required to  pay a  $30 fee  for the                                                                    
Division of Elections  and an additional $100  fee for APOC.                                                                    
Candidates were not required to  file a financial disclosure                                                                    
form; only elected  officials were mandated to  file the $50                                                                    
fee for financial disclosures. He  noted that aside from the                                                                    
APOC and  Division of Elections  fee, a  municipal candidate                                                                    
was required to file an  APOC financial disclosure form that                                                                    
carried the $50 filing fee  in some municipalities where the                                                                    
disclosure was mandated by law.                                                                                                 
2:09:15 PM                                                                                                                    
Representative  Grenn thought  APOC  provided  a low  income                                                                    
exemption for  the candidates filing  fee and  asked whether                                                                    
the  bill covered  the exemption.  Ms. Koeneman  answered in                                                                    
the affirmative and elucidated that  the legislation did not                                                                    
remove or alter the exemption.                                                                                                  
Representative  Pruitt  asked  about the  fiscal  notes  and                                                                    
whether  they  were current.  Ms.  Koeneman  relayed that  a                                                                    
revised APOC fiscal note was  forthcoming and the DOR fiscal                                                                    
note  would be  zeroed out.  Representative Pruitt  spoke to                                                                    
the difficulties  for some  public officials  especially for                                                                    
certain  boards and  commissions that  had a  difficult time                                                                    
finding members.  He asked about  the sponsor's  thoughts on                                                                    
every public  official paying  the $100  fee. Representative                                                                    
Kito  corrected that  the applicable  fee would  be the  $50                                                                    
financial disclosure fee. He  acknowledged that although the                                                                    
legislature  was trying  to protect  the public  from "undue                                                                    
outside   interests,"  on   "low  level   boards"  financial                                                                    
disclosures  and  conflicts of  interest  "might  not be  as                                                                    
pertinent." He reported that the  issue was discussed in the                                                                    
previous committee and  they were unable to  determine a way                                                                    
to equitably identify what public  officials could be waived                                                                    
from the  filing fees. The  process to separate  out certain                                                                    
public    officials   became    "unbelievably   cumbersome."                                                                    
Representative  Pruitt asked  whether the  fee would  hinder                                                                    
the  ability  of boards  and  commissions  to find  members.                                                                    
Representative  Kito  believed   that  the  requirement  for                                                                    
financial disclosure was  more of an obstacle  than the fee.                                                                    
He  opined  that  once  the   individual  committed  to  the                                                                    
requirement  for  financial disclosure  the  $50  fee was  a                                                                    
negligible determinate.  Representative Pruitt  relayed that                                                                    
APOC was  not able to  collect fees online. He  wondered how                                                                    
the  inability   to  pay  APOC  fees   online  would  affect                                                                    
potential  filers. Representative  Kito  was concerned  with                                                                    
the  issue and  wanted to  address the  issue with  APOC. He                                                                    
felt online filing was preferred.                                                                                               
2:14:32 PM                                                                                                                    
Representative  Pruitt  questioned  the  potential  for  all                                                                    
people to be able  to run for office with a  fee of $100. He                                                                    
wondered what impact the fee  would have on people's ability                                                                    
to   run    for   office.   Representative    Kito   thought                                                                    
Representative Pruitt  brought up a fair  point and revealed                                                                    
that the  issue was  discussed in  a previous  committee. He                                                                    
explained that  a candidate who  planned to raise  less than                                                                    
$5 thousand  were exempted from  the APOC fees.  He believed                                                                    
that the  APOC fees were  nominal, once a  candidate reached                                                                    
the  $5  thousand  threshold  and  was  still  raising  more                                                                    
campaign  funds.  Representative  Pruitt asked  whether  the                                                                    
APOC fees could be  paid with campaign funds. Representative                                                                    
Kito responded  in the affirmative  and added that  the fees                                                                    
were "an  eligible campaign expense."  Representative Pruitt                                                                    
inquired  about  the  lobbyist's  fees  and  the  number  of                                                                    
lobbyists in  each of the  listed fee brackets in  the bill.                                                                    
He  asked how  many  lobbyists in  the  lower brackets  were                                                                    
required to pay the  APOC fees. Representative Kito answered                                                                    
that the  fee was  based on the  "client value"  or contract                                                                    
amount. He  explained that  if the  lobbyist had  10 clients                                                                    
the contracts might  vary from $10 thousand  to $60 thousand                                                                    
or more.  The fees had  been split  up in order  to minimize                                                                    
the costs  for clients paying  a lower lobbying  contract as                                                                    
opposed   to  the   clients  paying   the  higher   lobbying                                                                    
contracts.  He  indicated that  changing  the  fees were  in                                                                    
recognition that clients  who could pay more  for a lobbying                                                                    
contract  could  pay  a  higher  registration  fee  for  its                                                                    
2:19:29 PM                                                                                                                    
Representative  Pruitt thanked  Representative Kito  for the                                                                    
clarification.    He   asked    for   the    definition   of                                                                    
"Representational  Lobbyist." Representative  Kito explained                                                                    
that a representational lobbyist  was a lobbyist who lobbied                                                                    
on behalf  of an organization without  receiving any payment                                                                    
for    services,   including    per   diem    and   lodging.                                                                    
Representative Pruitt wondered how  the APOC fees applied to                                                                    
lobbyists  who received  a salary  from and  worked for  the                                                                    
organization    she    represented.   Representative    Kito                                                                    
communicated that  the employee  lobbyist had to  report how                                                                    
much of their salary was  attributed to lobbying and the fee                                                                    
was calculated on the amount.                                                                                                   
Representative Pruitt  asked whether  the language in  HB 91                                                                    
covered the  employee salary situation  and what  the amount                                                                    
the fees were based on.  Ms. Koeneman related that currently                                                                    
the  lobbyist  reported their  entire  salary  but the  bill                                                                    
required that the lobbyist would  have to determine how much                                                                    
of the  lobbyists salary was  related to  lobbying services.                                                                    
The  registration fee  was  based on  the  amount of  salary                                                                    
related to lobbying.                                                                                                            
Representative Pruitt  restated his  concern about  the term                                                                    
"Lobbying  Contract"   covering  the   situation  described.                                                                    
Representative   Kito   stated   he   would   confirm   with                                                                    
Legislative  Legal Services  that the  language matched  the                                                                    
intent of the provision.                                                                                                        
2:23:21 PM                                                                                                                    
Representative Kawasaki queried whether  a lobbyist with two                                                                    
$10 thousand  contracts would pay the  $350 registration fee                                                                    
for   each  $10   thousand  contract.   Representative  Kito                                                                    
responded  in   the  affirmative.   Representative  Kawasaki                                                                    
wondered whether a lobbyist would  ask for a contract fee of                                                                    
$59,999  in  order   to  save  $200  for   the  higher  fee.                                                                    
Representative  Kito deduced  that the  fee would  be up  to                                                                    
negotiations    between    the    client    and    lobbyist.                                                                    
Representative  Kawasaki  remembered  that  members  of  the                                                                    
planning  commission in  the  Fairbanks  North Star  Borough                                                                    
were required to  fill out a financial  disclosure. He asked                                                                    
whether  the  intent  of  the   sponsor  was  for  municipal                                                                    
planning  commission members  to pay  the $100  registration                                                                    
fee.  Representative Kito  relayed that  they would  not pay                                                                    
the $100  registration fee required of  candidates but would                                                                    
pay the $50 fee for  the financial disclosure form. He added                                                                    
that the previous committee discussed  the burden for public                                                                    
officials serving voluntarily but could  not find a fair way                                                                    
to exempt them. The members  determined that the $50 fee was                                                                    
nominal  and   that  actually  filling  out   the  financial                                                                    
disclosure  was "a  higher hurdle."  Representative Kawasaki                                                                    
assumed  that lobbyists  were not  supportive  of the  bill.                                                                    
Representative  Kito  replied  that he  heard  "very  little                                                                    
opposition" but  was aware of  some who were opposed  to the                                                                    
Ms.  Koeneman interjected  that some  lobbyists acknowledged                                                                    
the  state's financial  situation and  were "willing  to pay                                                                    
their fair share" to keep APOC in operation.                                                                                    
Representative Wilson  cited page  3, lines  1 through  5 of                                                                    
the  bill  relating to  the  fee  schedule. She  provided  a                                                                    
hypothetical scenario where the  client divided the contract                                                                    
into two $30  thousand contracts and offered  the second one                                                                    
at  a  later date  in  order  to  save  money in  fees.  She                                                                    
wondered whether the language  applied to the scenario since                                                                    
the  bill   provision  was  by  contract   and  not  client.                                                                    
Representative   Kito  responded   that  the   scenario  was                                                                    
possible under the bill. He  did not anticipate the scenario                                                                    
in actual  practice. Representative  Wilson opined  that the                                                                    
scenario was likely to occur due to cost savings.                                                                               
Vice-Chair  Gara thought  that  APOC  required lobbyists  to                                                                    
report their  annual income from lobbying.  He asked whether                                                                    
an  alternative fee  schedule could  be based  on lobbyists'                                                                    
yearly  income to  quell the  concern over  split contracts.                                                                    
Representative  Kito relayed  that the  original bill  based                                                                    
fees  on  yearly  compensation   therefore;  the  fees  were                                                                    
considered  a   tax.  He  delineated   that  a   tax  became                                                                    
problematic  for   reasons  previously   discussed.  Revenue                                                                    
collection based  on compensation  might be realized  in the                                                                    
future through inception of a statewide income tax.                                                                             
2:29:26 PM                                                                                                                    
Vice-Chair Gara  was "struggling with charging  someone" for                                                                    
financial  disclosures.  Representative  Kito  reminded  the                                                                    
committee that  someone running an  exempt campaign  - $5000                                                                    
or less  - was excused  from paying a registration  fee. The                                                                    
sponsor felt that  the fee was nominal in  support of APOC's                                                                    
function.  Vice-Chair   Gara  asked   whether  all   of  the                                                                    
Political  Action Committees  (PACS) were  required to  pay.                                                                    
Representative  Kito  responded   that  anyone  required  to                                                                    
register would pay the same  fees. Vice-Chair Gara wanted to                                                                    
see  additional  fees  towards PACs  or  other  groups  that                                                                    
contributed "soft money."  He stated that 65  percent of all                                                                    
soft   money  was   spent   for   negative  campaign   adds.                                                                    
Representative  Kito  thought  a  "carve  out"  for  certain                                                                    
groups created "constitutional equitability issues."                                                                            
2:31:35 PM                                                                                                                    
Co-Chair Foster OPENED Public Testimony.                                                                                        
Co-Chair Foster CLOSED Public Testimony.                                                                                        
Co-Chair Foster  reported that amendments  were due  by 5:00                                                                    
p.m. on Wednesday, April 19, 2017.                                                                                              
HB  91  was   HEARD  and  HELD  in   committee  for  further                                                                    
HOUSE BILL NO. 124                                                                                                            
     "An Act relating to corporations, including benefit                                                                        
     corporations, and other entities; and providing for an                                                                     
     effective date."                                                                                                           
2:32:25 PM                                                                                                                    
Representative  Kito briefly  reviewed  the legislation.  He                                                                    
summarized that  the bill  established a  separate corporate                                                                    
classification  called  "benefit  corporations."  He  voiced                                                                    
that  benefit corporations  allowed  corporations to  follow                                                                    
direction other  than fiduciary and perform  other functions                                                                    
besides  profit driven  objectives in  order to  operate and                                                                    
provide benefits to other organizations.                                                                                        
BIANCA CARPENETI, STAFF, REPRESENTATIVE SAM KITO, read from                                                                     
a prepared statement:                                                                                                           
     My  testimony will  start with  the aim  of this  bill,                                                                    
     some   of  the   arguments  in   favor  of   a  benefit                                                                    
     corporation,  and then  offer an  overview of  the bill                                                                    
     itself.     After  my   presentation,  there   are  two                                                                    
     individuals online for invited  testimony.  Also, Janey                                                                    
     Hovenden,   Director  of   Division  of   Corporations,                                                                    
     Business  &  Professional  Licensing is  here  to  take                                                                    
     questions   for  the   department.     Finally,   Terry                                                                    
     Bannister  from Legislative  Legal is  on the  phone to                                                                    
     answer drafting questions.                                                                                                 
     The  purpose of  HB 124  is to  expand the  options for                                                                    
     Alaskan entrepreneurs  and investors  by placing  a new                                                                    
     type  of corporate  entity, a  benefit corporation,  in                                                                    
     Alaska statute.  A benefit corporation is  a for-profit                                                                    
     corporation  that  incorporates   public  benefits  and                                                                    
     community improvements  into their  business practices,                                                                    
     no matter the principal  services or products provided.                                                                    
     Corporate  law   generally  requires   corporations  to                                                                    
     consider the financial impact  to their shareholders as                                                                    
     the  top priority  when making  decisions.   Maximizing                                                                    
     corporate  returns can  interfere with  other corporate                                                                    
     goals, such as electing  to do something beneficial for                                                                    
     the community by enhancing social benefits.                                                                                
     A benefit corporation is a  corporate entity that would                                                                    
     have an expanded purpose  beyond maximizing share value                                                                    
     to  explicitly  include  general  and  specific  public                                                                    
        · Considers/balances the impact of their decisions                                                                      
          not  only  on  shareholders   but  also  on  their                                                                    
        · Must make available to the public a regular                                                                           
          benefit report that  assesses their overall social                                                                    
          and  environmental  performance  against  a  third                                                                    
          party standard.                                                                                                       
     Three arguments in support  of laws establishing public                                                                    
     benefit corporations:                                                                                                      
        · Creates    legal   requirements    that   regulate                                                                    
          corporations  claiming  to   work  towards  social                                                                    
          good: Becoming  a benefit  corporation as  a legal                                                                    
          entity means a business  that says it is dedicated                                                                    
          to the public good  will have to substantiate this                                                                    
          claim,  similar to  how  qualifying as  tax-exempt                                                                    
          helps define  nonprofits as  charitable. Moreover,                                                                    
          benefit  corporations'  reporting requirements  to                                                                    
          shareholders, the state, and  the public provide a                                                                    
          degree  of  transparency that  corporations  could                                                                    
          otherwise refuse to provide.                                                                                          
        · Promotes    societal   benefits    by   clarifying                                                                    
          fiduciary duty:  Entrepreneurs are more  likely to                                                                    
          pursue lines of business  in a socially beneficial                                                                    
          way when  the law ensures that  pursuit of profits                                                                    
          does  not   need  to  be  the   highest  priority.                                                                    
          Likewise,  investors  concerned  with  the  public                                                                    
          good are given an alternative.                                                                                        
        · Provides legal protection for companies that seek                                                                     
          purpose-driven  partnerships  Benefit  corporation                                                                    
          legislation    allows   entities    to   undertake                                                                    
          beneficial    partnerships    that    conventional                                                                    
          corporations   might  shun   out   of  fear   that                                                                    
          shareholders would not see it  as a venture likely                                                                    
          to be profitable.                                                                                                     
Ms. Carpeneti read the sectional analysis of HB 124:                                                                            
     Section  1  10.06.633(a) Establishes  how  corporations                                                                    
     may  be dissolved  and is  amended  to include  benefit                                                                    
     corporations; (a8) declares  that a benefit corporation                                                                    
     is  dissolved if  delinquent for  6 months  or more  in                                                                    
     including its benefit report in  the biennial report or                                                                    
     in paying the benefit report filing fee.                                                                                   
     Section  2  Adds   a  new  chapter  to   AS  10  Alaska                                                                    
     corporations code, chapter 60- Benefit Corporations.                                                                       
     Article 1                                                                                                                  
     Establishes how a  business corporation may incorporate                                                                    
     or amend  its status  to become a  benefit corporation;                                                                    
     that the  benefit corporation shall  have a  purpose of                                                                    
     creating  general public  benefit from  all effects  of                                                                    
     its  business   and  operations  and  may   identify  a                                                                    
     specific  public  benefit;  requires  that  any  status                                                                    
     change  must  be  approved by  the  minimum  two-thirds                                                                    
     Section  10.60.010  Establishes   how  a  new  business                                                                    
     corporation or an existing entity  may become a benefit                                                                    
     corporation; declares that an  amendment of an existing                                                                    
     corporation  must be  adopted by  at least  the minimum                                                                    
     two-thirds vote.                                                                                                           
     Section  10.60.020 States  that if  an existing  entity                                                                    
     that is not a benefit  corporation will become one as a                                                                    
     result of a merger or  other status change, the plan of                                                                    
     merger or  status change must  be approved by  at least                                                                    
     the minimum required vote.                                                                                                 
     Section 10.60.030 In addition  to its corporate purpose                                                                    
     under  existing corporate  statute  AS 10.06.005,  this                                                                    
     states that a benefit  corporation shall have a purpose                                                                    
     of creating general public benefit  from all effects of                                                                    
     its  business  and  operations   and  creation  of  the                                                                    
     general public benefit is determined  to be in the best                                                                    
     interest of the benefit corporation.                                                                                       
     Section  10.60.040  Allows  a  benefit  corporation  to                                                                    
     identify or  amend its articles  to include  a specific                                                                    
     public  benefit  purpose  in addition  to  its  general                                                                    
     public benefit  purpose and lists examples  of specific                                                                    
     public benefits.                                                                                                           
     Section   10.60.050  Clarifies   that  a   professional                                                                    
     corporation  formed under  AS  10.45  does not  violate                                                                    
     this  statute  by  being a  benefit  corporation  under                                                                    
     Section 10.60.060  Provides that a  benefit corporation                                                                    
     may  terminate  its  benefit  status  by  amending  its                                                                    
     articles,  or  by being  party  to  a merger  or  other                                                                    
     status  change,  which   would  terminate  its  benefit                                                                    
     corporation status;  both must be approved  by at least                                                                    
     the minimum required vote.                                                                                                 
     Section 10.60.070 States that  if a benefit corporation                                                                    
     disposes of all or substantially  all of its assets the                                                                    
     transaction,  unless it  is in  the  usual and  regular                                                                    
     course  of business,  must be  approved by  the minimum                                                                    
     status vote required.                                                                                                      
     Article 2                                                                                                                  
     Establishes the  duties of the board  and the directors                                                                    
     and enumerates  seven factors  that must  be considered                                                                    
     while making decisions; clarifies  that a director of a                                                                    
     benefit corporation  is not  personally liable  for the                                                                    
     failure to create a general  public benefit if they are                                                                    
     acting  in  compliance with  the  chapter  and in  good                                                                    
     Section  10.60.100 Establishes  seven factors  that the                                                                    
     board  of  directors  and  individual  directors  of  a                                                                    
     benefit  corporation shall  consider while  discharging                                                                    
     their duties. The directors  of the benefit corporation                                                                    
     are not required  to give priority to any  one of these                                                                    
     listed factors  unless the intention to  prioritize has                                                                    
     been identified  in the benefit  corporation's articles                                                                    
     of incorporation.                                                                                                          
     Section  10.60.110 States  that consideration  of these                                                                    
     factors is not a  violation of existing Alaska statutes                                                                    
     regarding  the duties  and rights  of corporate  boards                                                                    
     (AS 10.06.450).                                                                                                            
     Section 10.60.120  Except as  provided in  the articles                                                                    
     of  incorporation, this  states  that a  director of  a                                                                    
     benefit  corporation  is   not  personally  liable  for                                                                    
     monetary damages  for action,  inaction, or  failure of                                                                    
     the  benefit corporation  to  create  a general  public                                                                    
     benefit if  the duties  of the director  were performed                                                                    
     in compliance with this chapter or AS 10.06.450.                                                                           
     Section  10.60.130  Clarifies  that  a  director  of  a                                                                    
     benefit corporation  does not have  a duty to  a person                                                                    
     solely  because that  person is  a  beneficiary of  the                                                                    
     benefit  corporation's   general  or   specific  public                                                                    
     benefit purpose.                                                                                                           
     Section  10.60.140  Declares  that   a  director  of  a                                                                    
     benefit corporation  who makes  a business  judgment in                                                                    
     good faith fulfills their duties  under this chapter if                                                                    
     they are  not personally  invested in the  subject, are                                                                    
     informed  on the  subject of  the judgment,  rationally                                                                    
     believe the  business judgment is in  the best interest                                                                    
     of the benefit corporation,  and consider the interests                                                                    
     and factors listed under AS 10.60.100 (above).                                                                             
     Article 3                                                                                                                  
     Directs  how  the board  of  a  benefit corporation  my                                                                    
     designate  a benefit  director,  who shall  not have  a                                                                    
     material  relationship with  the corporation;  outlines                                                                    
     the  benefit director's  role,  especially relating  to                                                                    
     the biennial  benefit report;  allows that  the benefit                                                                    
     director shall  have the  same role  and rights  as any                                                                    
     other director of the benefit corporation.                                                                                 
     Section 10.60.150  Allows that a board  of directors of                                                                    
     a benefit corporation may  include a designated benefit                                                                    
     director.  A  benefit  director  shall  have  the  same                                                                    
     duties  and rights  as other  directors but  shall also                                                                    
     have additional  duties (described below), such  as the                                                                    
     preparation of the annual compliance statement.                                                                            
     Section 10.60.160  States that  the board of  a benefit                                                                    
     corporation will  elect and  remove a  benefit director                                                                    
     following the  manner of  general Alaska  corporate law                                                                    
     under AS 10.06.453.                                                                                                        
     Section  10.60.170  Directs  that  a  benefit  director                                                                    
     shall not  have a material relationship  (defined under                                                                    
     AS.10.60.220)  with  the  benefit  corporation  or  its                                                                    
     subsidiaries   and   allows  for   additional   benefit                                                                    
     director     qualifications    under     the    benefit                                                                    
     corporation's articles or bylaws.                                                                                          
     Section  10.60.180  Declares  that a  benefit  director                                                                    
     shall  prepare a  biennial compliance  statement to  be                                                                    
     included  in the  benefit corporation's  annual report.                                                                    
     The  compliance  statement  will  include  the  benefit                                                                    
     director's   opinion  on   the  benefit   corporation's                                                                    
     achievement of its general  public benefit purpose, any                                                                    
     specific   public  benefit   purpose,  the   director's                                                                    
     compliance  with  their  duties, and  any  failures  in                                                                    
     these sections.                                                                                                            
     Section 10.60.190  Equates the actions or  inactions of                                                                    
     a  benefit director  with actions  or inactions  of any                                                                    
     director of the benefit corporation.                                                                                       
     Section  10.60.200 States  that a  benefit director  is                                                                    
     not  personally  liable  for   actions  done  in  their                                                                    
     capacity   as  benefit   director  unless   the  action                                                                    
    constitutes willful misconduct or violation of law.                                                                         
     Section 10.60.210  Provides that a benefit  director of                                                                    
     a  professional  corporation  that is  also  a  benefit                                                                    
     corporation is  not prohibited  from having  a material                                                                    
     relationship   with  the   benefit  corporation   or  a                                                                    
     Section  10.60.220   Establishes  the   guidelines  for                                                                    
     determining  whether a  benefit director  of a  benefit                                                                    
     corporation  has  a   material  relationship  with  the                                                                    
     benefit corporation or a subsidiary.                                                                                       
     Article 4                                                                                                                  
     Directs  an   officer  of  a  benefit   corporation  to                                                                    
     consider  the factors  enumerated  under  the board  of                                                                    
     directors; clarifies  the duties  of an  officer acting                                                                    
     in good  faith; and  allows that a  benefit corporation                                                                    
     may designate a benefit  officer, who shall have duties                                                                    
     similar to the benefit director.                                                                                           
     Section  10.60.230  Directs  an officer  of  a  benefit                                                                    
     corporation  to  consider  the  factors  listed  in  AS                                                                    
     10.60.100 (duties  of the directors) if  the officer is                                                                    
     in the position to act in  a way that may influence the                                                                    
     creation of  general public benefit or  specific public                                                                    
     Section  10.60.240  States  that an  officer  does  not                                                                    
     violate  current general  corporate statutes  regarding                                                                    
     duties of officers (AS  10.06.483) when considering the                                                                    
     factors previously mentioned above.                                                                                        
     Section 10.60.250  Except as  provided in  the articles                                                                    
     of  incorporation, this  states  that an  officer of  a                                                                    
     benefit  corporation  is   not  personally  liable  for                                                                    
     monetary  damages if  their  duties  were performed  in                                                                    
     compliance with Alaska statutes.                                                                                           
     Section  10.60.260  Clarifies  that  an  officer  of  a                                                                    
     benefit corporation  does not have  a duty to  a person                                                                    
     solely  because that  person is  a  beneficiary of  the                                                                    
     corporation's general or specific public benefit.                                                                          
     Section  10.60.270  Declares  that   an  officer  of  a                                                                    
     benefit corporation  who makes  a business  judgment in                                                                    
     good faith fulfills their duties  under this chapter if                                                                    
     they are  not personally  invested in the  subject, are                                                                    
     informed  on the  subject of  the judgment,  rationally                                                                    
     believe  it is  in  the best  interest  of the  benefit                                                                    
     corporation, and  if they  consider the  factors listed                                                                    
     in AS 10.60.100.                                                                                                           
     Section  10.60.280 Allows  that  a benefit  corporation                                                                    
     may  designate an  officer as  a  benefit officer,  who                                                                    
     shall have duties  that are related to  the creation of                                                                    
     general public  benefits and specific  public benefits.                                                                    
     The benefit  officer shall  prepare the  annual benefit                                                                    
     report required in Article 6.                                                                                              
2:37:39 PM                                                                                                                    
Ms. Carpeneti continued reading prepared remarks:                                                                               
     Article 5                                                                                                                  
     Identifies  the  persons  that  may  bring  actions  or                                                                    
     claims against  a benefit corporation for  a failure to                                                                    
     pursue general or specific public benefit.                                                                                 
     Section 10.60.300 States  that persons identified under                                                                    
     AS 10.60.320  may bring  an action  or claim  against a                                                                    
     benefit corporation for a failure  to pursue general or                                                                    
     specific public  benefits as set out  in their articles                                                                    
     or for a violation of duties under this chapter.                                                                           
     Section 10.60.310 Clarifies  that a benefit corporation                                                                    
     is not  liable for  monetary damages  for a  failure to                                                                    
     create a general or specific public benefit.                                                                               
     Section  10.60.320 Identifies  the persons  or entities                                                                    
     that  may bring  a claim  or action  against a  benefit                                                                    
     corporation under AS 10.60.300.                                                                                            
     Article 6                                                                                                                  
     Defines  what   must  be  contained  in   the  required                                                                    
     biennial  benefit  report;  requires that  the  benefit                                                                    
     report  must be  held against  a third  party standard;                                                                    
     establishes a  timeline for the delivery  of the report                                                                    
     to  shareholders; requires  public availability  of the                                                                    
     report;  and directs  the benefit  corporation to  file                                                                    
     the  benefit  report with  the  department  as part  of                                                                    
     their biennial report.                                                                                                     
     Section  10.60.500 Requires  a  benefit corporation  to                                                                    
     file  a  biennial  benefit  report as  a  part  of  the                                                                    
     biennial report required by AS 10.06.805.                                                                                  
     Section 10.60.510  Declares what  must be  contained in                                                                    
     the biennial  benefit report.  The report  will include                                                                    
     descriptions  of how  the  benefit corporation  pursued                                                                    
     the   general   and   any  specific   public   benefit,                                                                    
     circumstances that  hindered that pursuit, and  why the                                                                    
     third-party  standard  was   selected  or  changed;  an                                                                    
     assessment of  the overall  performance of  the general                                                                    
     public  benefit  purpose  held  against  a  third-party                                                                    
     standard; the name and address  of the benefit director                                                                    
     and benefit  officer, if any; the  compensation paid to                                                                    
     each director; the compliance  statement of the benefit                                                                    
     director;  and any  connection between  the creator  of                                                                    
     the third-party standard and the benefit corporation.                                                                      
     Section 10.60.520 Requires that,  if a benefit director                                                                    
     resigns  or  is  removed,   the  benefit  report  shall                                                                    
     include  any   written  correspondence   regarding  the                                                                    
     resignation or removal.                                                                                                    
     Section 10.60.540  Establishes a timeline  for delivery                                                                    
     of the benefit report to the shareholders.                                                                                 
     Section  10.60.550 Directs  the benefit  corporation to                                                                    
     post  all  of  its   benefit  reports  on  the  benefit                                                                    
     corporation's  public website,  if the  website exists.                                                                    
     The  posted  reports  may omit  director  compensation,                                                                    
     financial or proprietary  information that was included                                                                    
     in the report to the shareholders.                                                                                         
     Section 10.60.560  Requires a benefit  corporation that                                                                    
     does not have  a website to provide a copy  of the most                                                                    
     recent benefit report free of  charge to any person who                                                                    
     requests   it.    The   report   may    omit   director                                                                    
     compensation,  financial   or  proprietary  information                                                                    
     that was included in the report to the shareholders.                                                                       
     Section 10.60.570  Requires the benefit  corporation to                                                                    
     provide  the  Department  of Commerce,  Community,  and                                                                    
     Economic  Development  with  a  copy  of  the  biennial                                                                    
     benefit report  for filing  as a  part of  its biennial                                                                    
     reports   (AS   10.06.805),   omitting   any   director                                                                    
     compensation, financial  or propriety  information, and                                                                    
     requires  the department  to establish  a  fee for  the                                                                    
     filing of the benefit report.  A failure to deliver the                                                                    
     report or pay the filing  fee within six months or more                                                                    
     constitutes a basis for  involuntary dissolution of the                                                                    
     benefit  corporation  (AS  10.06.633).  Subsection  (c)                                                                    
     allows that the department  may file the benefit report                                                                    
     in hard copy, rather than electronically.                                                                                  
     Article 7                                                                                                                  
     Identifies   the  process   necessary  for   a  benefit                                                                    
     corporation  to  effect  a status  change;  allows  for                                                                    
     shareholder  dissent  under  a status  change;  defines                                                                    
     guidelines  for  the third-party  standards;  clarifies                                                                    
     that a benefit corporation is  not eligible for any tax                                                                    
     exemptions  beyond those  available  for a  traditional                                                                    
     corporation;  and states  that  this  chapter does  not                                                                    
     prevent   a    non-benefit   corporate    entity   from                                                                    
     considering a general or specific public benefit.                                                                          
     Section  10.60.700  Establishes  that a  status  change                                                                    
     (merger, amendment, etc.) for  a benefit corporation or                                                                    
     domestic entity other than  a business corporation must                                                                    
     be  approved  by at  least  a  two-thirds vote  of  all                                                                    
     shareholders entitled to vote.                                                                                             
     Section 10.60.710  Allows a  shareholder to  dissent if                                                                    
     the business  corporation amends its article  to become                                                                    
     a benefit  corporation. Shareholder dissent  is covered                                                                    
     under   current   business    corporate   statutes   AS                                                                    
     Section 10.60.720 Establishes  statutory guidelines for                                                                    
     third-party  standards used  as an  assessment tool  in                                                                    
     the required annual benefit report.                                                                                        
     Section 10.60.730 Clarifies  that a benefit corporation                                                                    
     is not eligible  for any tax exemptions  beyond what is                                                                    
     available   to  corporations   that  are   not  benefit                                                                    
     Section 10.60.740 Clarifies that  this chapter does not                                                                    
     prevent a  non-benefit corporate entity  from including                                                                    
     the  consideration  of  or donation  to  a  general  or                                                                    
     specific public benefit in its general powers.                                                                             
2:38:29 PM                                                                                                                    
Ms. Carpeneti continued reading prepared remarks:                                                                               
     Article 8                                                                                                                  
     Allows  from  the  creation  of  regulations  for  this                                                                    
     chapter; clarifies  that this  chapter does  not affect                                                                    
     non-benefit corporate  entities; declares  that benefit                                                                    
     corporations  are  subject   to  Alaska  corporate  law                                                                    
     unless specifically  addressed; and defines  terms used                                                                    
     in the chapter.                                                                                                            
     Section  10.60.910  Allows   the  department  to  adopt                                                                    
     regulations to implement chapter 10.60.                                                                                    
     Section 10.60.920 Clarifies that  this chapter does not                                                                    
     affect  statutes   or  laws  that  apply   to  business                                                                    
     corporations that are not benefit corporations.                                                                            
     Section 10.60.930 Clarifies  that a benefit corporation                                                                    
     is subject  to general  Alaska corporate law  (AS 10.06                                                                    
     and  AS 10.45)  unless specifically  addressed by  this                                                                    
     chapter,  in which  case  this  chapter takes  priority                                                                    
     over previsions in previous chapters.                                                                                      
     Section  10.60.940  States  that  a  provision  of  the                                                                    
     articles  or bylaws  of a  benefit corporation  may not                                                                    
     limit, be inconsistent with,  or superseded a provision                                                                    
     of this chapter.                                                                                                           
     Section  10.60.990 Defines  terms  used throughout  the                                                                    
     Section   3   Allows   the  Department   of   Commerce,                                                                    
     Community,   and   Economic    Development   to   adopt                                                                    
     regulations to  implement this Act, not  to take effect                                                                    
     before July 1, 2018.                                                                                                       
     Section 4 Implements Section 3 immediately.                                                                                
     Section 5  Provides an effective  date of July  1, 2018                                                                    
     for this Act except for Section 4 (above).                                                                                 
2:38:40 PM                                                                                                                    
Ms.  Carpeneti   provided  closing  remarks   about  benefit                                                                    
corporations. She delineated  that benefit corporations were                                                                    
formed voluntarily and had the  same tax status of any other                                                                    
for-profit  corporation.  The   required  bi-annual  benefit                                                                    
report was  meant to provide accountability  to shareholders                                                                    
and offer transparency to investors.  She concluded that the                                                                    
bill   established   a   strong   foundation   for   benefit                                                                    
corporations  to   achieve  "mission  alignment   and  value                                                                    
creation"  and  "created  more flexibility  when  evaluating                                                                    
potential sale and liquidity actions."                                                                                          
Vice-Chair Gara asked where the  Alaska Statutes addressed a                                                                    
corporation's   duty    to   maximize   the    benefit   for                                                                    
TERRY  BANNISTER, LEGISLATIVE  LEGAL SERVICES,  ALASKA STATE                                                                    
LEGISLATURE, replied  that she was  not aware of  a specific                                                                    
provision  in the  state's corporate  code. She  pointed out                                                                    
that the  issue was  addressed in  a number  of out-of-state                                                                    
court  cases  that decided  the  only  allowable goal  of  a                                                                    
corporation   was    "improving   the   finances    of   the                                                                    
2:40:56 PM                                                                                                                    
Representative Neuman asked  whether an existing corporation                                                                    
could  become  a  benefit  corporation   and  how  it  would                                                                    
accomplish  the   change.  Ms.  Carpeneti  replied   in  the                                                                    
affirmative. She  detailed that  the transition  process was                                                                    
delineated   in   Section   10.60.010,  which   included   a                                                                    
two/thirds vote by its shareholders.                                                                                            
Representative Neuman  stated that  throughout the  bill and                                                                    
on page 16 there was  language related to a "specific public                                                                    
benefit." He  wondered how public  benefits were  defined in                                                                    
regulation.  He  felt  that excessive  regulation  would  be                                                                    
necessary to  ensure a  public benefit.  Representative Kito                                                                    
replied that  public benefits would be  defined by corporate                                                                    
boards  and  shareholders  and  clearly  identified  in  the                                                                    
corporate  bylaws. Representative  Neuman asked  whether the                                                                    
benefit  corporations  could  write their  own  regulations.                                                                    
Representative Kito  clarified that  the benefits  and goals                                                                    
would be included  in the corporation's bylaws  and the only                                                                    
guideline  in  Alaska  Statute  required  that  the  benefit                                                                    
corporation would  provide a public  benefit. Representative                                                                    
Neuman  asked  how  a   "benefit  partnership"  would  form.                                                                    
Representative Kito clarified whether  he was referring to a                                                                    
type  of a  corporation. Representative  Neuman answered  in                                                                    
the  affirmative. Representative  Kito  understood that  the                                                                    
bill  created  a  separate  type   of  corporation  and  was                                                                    
uncertain whether a partnership was applicable.                                                                                 
Ms. Carpeneti  did not believe  a partnership  would qualify                                                                    
as a benefit corporation.                                                                                                       
Representative  Neuman  provided   a  hypothetical  scenario                                                                    
where another  for-profit corporation provided funds  to the                                                                    
benefit  corporation  for   its  public  benefit  objective.                                                                    
Representative  Kito   thought  Representative   Neuman  was                                                                    
suggesting  that  one  corporation  could  provide  monetary                                                                    
support to  another corporation.  He offered that  a benefit                                                                    
corporation's  goal was  not to  receive  grants from  other                                                                    
corporations but to generate  revenue from business services                                                                    
or  products and  "interact with  the  community, state,  or                                                                    
other   customers  or   partners"  based   on  its   bylaws.                                                                    
Representative  Neuman  was  concerned   if  there  was  any                                                                    
opportunity  for  money  to flow  from  one  corporation  to                                                                    
another  by  entering  into a  partnership  with  a  benefit                                                                    
corporation that  could write their  own rules on what  is a                                                                    
public benefit or  not a public benefit.  He queried whether                                                                    
the scenario  was possible. Representative  Kito ascertained                                                                    
that  a benefit  corporation could  enter into  an agreement                                                                    
with any  other corporation as a  standard business practice                                                                    
and  supposed  that  any  agreements  would  be  implemented                                                                    
through a  contract just like  any corporation could  have a                                                                    
contract with another. The legislation  would not change any                                                                    
existing  laws regarding  how  corporations could  interact.                                                                    
The  legislation only  allowed a  corporation to  have other                                                                    
"goals,  values,  or  directions"  other  than  a  fiduciary                                                                    
responsibility  to its  shareholders. Representative  Neuman                                                                    
suggested  that  the for-profit  corporation's  shareholders                                                                    
might  be  opposed to  the  public  benefit of  the  benefit                                                                    
corporation.   Representative   Kito    thought   that   the                                                                    
shareholders   of   the  for-profit   corporation   approved                                                                    
distribution of its monetary assets  or profits and the non-                                                                    
benefitted  corporation had  to proceed  in accordance  with                                                                    
shareholder wishes.  He thought  the scenario  was unlikely.                                                                    
Representative  Neuman   believed  that  his   scenario  was                                                                    
possible.  Representative Kito  judged  that "a  corporation                                                                    
was  not able  to violate  its fiduciary  responsibility [to                                                                    
its   shareholders]   in   order  to   support   a   benefit                                                                    
2:50:14 PM                                                                                                                    
Co-Chair  Seaton  suggested  a  scenario  where  a  sporting                                                                    
outfitters benefit  corporation had  a benefit  of extending                                                                    
trails or supported little league  or other community sports                                                                    
teams. He  surmised that the  benefit corporation  could not                                                                    
be  sued  by  its  shareholders for  supporting  its  public                                                                    
benefit  goal.  He  asked   whether  his  understanding  was                                                                    
accurate.  Representative  Kito   answered  that  a  benefit                                                                    
corporation  could  act  even more  broadly  and  allow  its                                                                    
employees  to  participate  in  trail  building,  which  was                                                                    
"counter to  the fiduciary  responsibility" of  a for-profit                                                                    
corporation. He  furthered that if trail  building supported                                                                    
the activity  of the  benefit corporation's  bylaws allowing                                                                    
employees to help build trails,  the activity was allowable.                                                                    
Co-Chair  Seaton  added   that  corporations  could  provide                                                                    
community  benefits  as  long  as it  was  justified  as  an                                                                    
activity   that    would   ultimately   boost    profit   to                                                                    
shareholders. He deduced that  a benefit corporation allowed                                                                    
social  benefits   without  risking   shareholder  lawsuits.                                                                    
Representative Kito answered in the affirmative.                                                                                
2:53:38 PM                                                                                                                    
Representative  Pruitt  cited  Section 10.60.730  [page  15,                                                                    
line 3] and read the following:                                                                                                 
     Sec. 10.60.730.  Tax exemptions. A  benefit corporation                                                                    
     may not  claim a tax  exemption under AS  43.20 (Alaska                                                                    
     Net Income  Tax Act) if  the tax exemption is  not also                                                                    
     available   to  corporations   that  are   not  benefit                                                                    
Representative  Pruitt  asked whether  benefit  corporations                                                                    
were taxed the same as  other corporations. He asked for the                                                                    
best comparison to  other types of corporations  in terms of                                                                    
taxation.   Ms.   Carpeneti   responded   that   a   benefit                                                                    
corporation would  either be  a C or  S corporation  and the                                                                    
benefit  designation   did  not   affect  its   tax  status.                                                                    
Representative  Pruitt  asked  if the  position  of  benefit                                                                    
director had  the same voting  authority as  other directors                                                                    
on  corporate   matters.  Ms.  Carpeneti  answered   in  the                                                                    
Representative Pruitt  asked about specific  language listed                                                                    
in Article  2 under standards  of conduct for  directors. He                                                                    
queried  whether a  benefit  director  was the  professional                                                                    
equal to  and subject  to the same  Alaskan statutes  as any                                                                    
other  type  of   corporate  director.  Representative  Kito                                                                    
understood that  the one duty  a benefit  director performed                                                                    
that was different from a  regular corporate director was to                                                                    
"manage  and  oversee  the   beneficial  operations  of  the                                                                    
corporation as identified in the  bylaws." He continued that                                                                    
the  benefit   director  carried  out  duties   without  the                                                                    
fiduciary  goal  but  in   accordance  with  the  beneficial                                                                    
purpose   of   the    corporation.   Representative   Pruitt                                                                    
hypothesized  a scenario  where the  benefit director  was a                                                                    
"minority  shareholder." He  asked what  the "rights  of the                                                                    
shareholders were  to determine  whether or not  the benefit                                                                    
director  was operating  within its  bylaws." Representative                                                                    
Kito  replied that  the articles  of  incorporation for  the                                                                    
benefit     corporation     designated    the     directors'                                                                    
responsibilities.  He elaborated  that  the other  directors                                                                    
had the  ability to remove  a questioned  or underperforming                                                                    
director  and  all directors  had  a  responsibility to  the                                                                    
corporation and  its bylaws. Representative  Pruitt inquired                                                                    
about  the burden  imposed  on the  other  directors in  the                                                                    
process of removing the questioned  benefit director and the                                                                    
ability  to determine  his performance.  Representative Kito                                                                    
restated  that  the  corporation's structure  was  contained                                                                    
within its bylaws.                                                                                                              
Ms. Carpeneti  interjected that Article 5,  Section 10.63.20                                                                    
outlined the  process and the  right to bring action  by the                                                                    
shareholders.  Representative Pruitt  remarked that  current                                                                    
statute   was  "pretty   extensive"  regarding   removing  a                                                                    
director  that was  not operating  within the  corporation's                                                                    
bylaws  and  wanted  to ensure  the  provisions  applied  to                                                                    
benefit corporations to protect the shareholders.                                                                               
Representative Pruitt  questioned the definition  of general                                                                    
public benefit.  He wondered who  determined what  a general                                                                    
public  benefit   meant  and   who  wrote   the  regulations                                                                    
regarding what  a public  benefit was.  He referred  to page                                                                    
16, line 8 and read the following:                                                                                              
     (7) "general public benefit" means a material positive                                                                     
     effect on people and their surroundings, taken as a                                                                        
     whole, assessed against a third-party standard;                                                                            
Representative Kito  replied that  a national  B corporation                                                                    
organization  existed and  worked with  benefit corporations                                                                    
around  the country.  He  elaborated  that the  organization                                                                    
identified standards  and clearly  identified what  types of                                                                    
public purposes  a benefit corporation could  participate in                                                                    
or support.                                                                                                                     
Ms. Carpeneti added that B  Lab Corporation was the national                                                                    
organization  that  provided  third party  consultation  and                                                                    
lists  of  third party  standards.  She  exemplified that  a                                                                    
third party standard existed for  agriculture and offered to                                                                    
provide  the  list. She  informed  the  committee that  many                                                                    
kinds of third  party standards existed in  many other areas                                                                    
that a benefit corporation  evaluated itself against for the                                                                    
purpose of its biannual report.                                                                                                 
3:02:22 PM                                                                                                                    
Representative  Pruitt requested  a  copy  of the  standards                                                                    
list. He wondered whether the  benefit had to correlate with                                                                    
the  type of  business the  benefit corporation  engaged in.                                                                    
Ms. Carpeneti  responded that  the benefit  did not  have to                                                                    
correlate  with  the  product or  services  the  corporation                                                                    
provided.  Representative   Kito  provided   a  hypothetical                                                                    
example to illustrate the point.                                                                                                
3:03:59 PM                                                                                                                    
Vice-Chair Gara appreciated  the representative bringing the                                                                    
bill forward and reminded the  committee that a similar bill                                                                    
was heard  last year. He  spoke of a philosopher  who stated                                                                    
that "the  reward is  the deed itself."  He surmised  that a                                                                    
corporation who did perform public  benefits to gain profits                                                                    
from  its good  works, but  did not  alert the  public could                                                                    
expose it to shareholder law  suits. He wondered whether the                                                                    
benefit corporation could engage  in public benefits without                                                                    
the  threat of  shareholder law  suits. Representative  Kito                                                                    
indicated  that  the "disposition  of  profits"  for a  for-                                                                    
profit corporation  was at the discretion  of the directors.                                                                    
However,  without  shareholders"   support  the  corporation                                                                    
could be  sued. The  benefit corporation was  largely immune                                                                    
to  fiduciary shareholder  lawsuits  as long  as the  public                                                                    
benefit  was  consistent   with  its  identified  beneficial                                                                    
purpose. Vice-Chair Gara alluded  to comparisons with Alaska                                                                    
National  Interest  Lands  Conservation  Act  (ANILCA)  that                                                                    
allowed native corporations  to "benefit their shareholders"                                                                    
and were  also protected  from lawsuits for  creating social                                                                    
service  organizations. He  believed  the  bill allowed  for                                                                    
more  freedom and  stated his  support. Representative  Kito                                                                    
deduced that  HB 124 offered additional  benefits for native                                                                    
corporations.  He suggested  that  an  Alaska Native  Claims                                                                    
Settlement   Act  (ANCSA)   corporation   might  choose   to                                                                    
designate some  beneficial functions to support  cultural or                                                                    
shareholder  activities as  a benefit  corporation that  was                                                                    
restricted under current corporate statute.                                                                                     
Co-Chair Foster welcomed invited testifiers.                                                                                    
3:08:12 PM                                                                                                                    
STEPHEN  TRIMBLE, FOUNDER  AND CEO,  ARCTIC SOLAR  VENTURES,                                                                    
ANCHORAGE,  spoke in  favor of  the legislation.  He relayed                                                                    
that  his  company  was  a  solar  design  and  installation                                                                    
company  serving  residential  and  commercial  clients.  He                                                                    
remarked  that  his  company  wanted  to  become  a  benefit                                                                    
corporation and  he thoroughly examined  the bills  and laws                                                                    
in  other  states  pertaining to  benefit  corporations.  He                                                                    
shared that  30 states enacted legislation  allowing benefit                                                                    
corporations. He  thought that the legislation  was integral                                                                    
to  his   company's  survival.  He  mentioned   the  growing                                                                    
interest  in   benefit  corporations  and   reported  having                                                                    
coached at least  5 companies that wanted  to peruse benefit                                                                    
corporation designation out of  many others that desired the                                                                    
designation in Alaska. He elaborated  on the involvement and                                                                    
function of B  Lab Corporation and explained  that they were                                                                    
the  third  party international  certification  organization                                                                    
that helped  benefit corporations who were  accountable from                                                                    
a reporting  perspective. The company  offered the  "B Corp.                                                                    
Certification"  that   was  a  business   certification  and                                                                    
offered a  compendium for the legal  protections for benefit                                                                    
corporations by  state. He shared that  his company received                                                                    
the  certification  out  of  only two  in  Alaska  and  four                                                                    
thousand worldwide. The  certification and recording process                                                                    
was  extremely  rigorous.  He   detailed  that  his  company                                                                    
enacted  changes  to  its bylaws  to  state  its  beneficial                                                                    
purpose and  acted in  the manner  of a  benefit corporation                                                                    
but lacked  the legal  protection in  the state.  He pointed                                                                    
out   that   "mission   driven  businesses   were   becoming                                                                    
increasingly  important  to  the  future  of  business  both                                                                    
inside and  outside of Alaska."  He spoke of  the millennial                                                                    
workforce  that  would comprise  78  percent  of the  active                                                                    
workforce  by  2025.  He  relayed that  77  percent  of  the                                                                    
millennial workforce  considered mission driven  business as                                                                    
a  factor for  employment. He  relayed that  all of  his job                                                                    
candidates applied  due to the  fact that the company  was a                                                                    
certified  B corporation  and had  a "commitment  to society                                                                    
and  the  environment.' He  felt  the  B corporation  status                                                                    
attracted quality employees and investment.                                                                                     
3:14:04 PM                                                                                                                    
Representative  Pruitt asked  what type  of corporation  his                                                                    
company was  registered as in Alaska.  Mr. Trimble responded                                                                    
that the company  was a C corporation  that elected taxation                                                                    
as an  S corporation. Representative Pruitt  asked about the                                                                    
number  of  shareholders.  Mr.   Trimble  replied  that  his                                                                    
corporation had  5 shareholders and was  small and privately                                                                    
held. Representative  Pruitt assumed that the  percentage of                                                                    
ownership  among shareholders  varied. Mr.  Trimble answered                                                                    
in the affirmative.                                                                                                             
3:15:04 PM                                                                                                                    
WILLIAM  CLARK,  ATTORNEY,   DRINKER,  BINDLE,  AND  REALTH,                                                                    
PENNSYLVANIA,  reported that  he was  a corporate  lawyer in                                                                    
Philadelphia and  worked in  support of  benefit corporation                                                                    
enactment in  a number of  states pro bono. He  offered that                                                                    
Washington D.C. adopted the legislation  along with 30 other                                                                    
states. He delineated that the  first law permitting benefit                                                                    
corporations  passed  in 2010  and  now  over 5000  were  in                                                                    
existence. He reported  that Delaware who "set  the tone for                                                                    
all  United States  (U.S.) [corporate]  law" authorized  the                                                                    
legislation  four  years ago  and  had  almost one  thousand                                                                    
registered  B corporations.  The Chief  Justice of  Delaware                                                                    
supported  the   concept  in  order  to   avoid  shareholder                                                                    
lawsuits. He  spoke to  the discussion  concerning corporate                                                                    
governance  issues   and  the   removal  of   directors.  He                                                                    
emphasized  that  "the   benefit  corporate  statute  relied                                                                    
completely   on   the   normal  existing   rules   for   all                                                                    
corporations  with   respect  to   the  governance   of  the                                                                    
corporation."   How  the   benefit  director   was  elected,                                                                    
removed,  or  whether  the   shareholders  approved  of  the                                                                    
director's decisions  were controlled by  existing corporate                                                                    
law.  The  B  Corporations  were  "run  exactly  like  other                                                                    
business corporations" which was why  the tax status was the                                                                    
same as for-profit corporations.  Therefore, the only change                                                                    
was the  new rules concerning governance  and not structure.                                                                    
He appreciated the committee discussion.                                                                                        
3:19:25 PM                                                                                                                    
Representative Ortiz  asked whether  there were  any general                                                                    
opposition in the country to  benefit corporation. Mr. Clark                                                                    
replied  in   the  negative.  He  qualified   that  the  one                                                                    
persistent  question  was  whether the  law  establishing  B                                                                    
Corporations  was   necessary.  He  elucidated   that  legal                                                                    
challenges to  director's decisions were rare.  The lawsuits                                                                    
that often occurred related to  the change in control of the                                                                    
corporation  due to  sale.  In that  scenario,  the law  was                                                                    
"very  clear"  that  the director's  duty  was  to  maximize                                                                    
profit  over  mission  in  the  transaction.  He  thought  a                                                                    
widespread  understanding of  the  positive consequences  of                                                                    
the concept  was evident  due to the  unanimous votes  in 13                                                                    
states in support of the legislation.                                                                                           
Representative Wilson asked about  the tax status. She asked                                                                    
whether a "C" Corporation that  became a "B" Corporation was                                                                    
taxed  as  a "C"  Corporation.  Mr.  Clark answered  in  the                                                                    
3:21:56 PM                                                                                                                    
Vice-Chair  Gara recalled  a situation  where a  corporation                                                                    
created  a daycare  for its  employees and  the shareholders                                                                    
sued the  company. He asked  whether Mr. Clark was  aware of                                                                    
the  case.  Mr.  Clark  was unaware  of  the  situation  but                                                                    
maintained  that  the  situation was  what  "B"  Corporation                                                                    
status addressed.                                                                                                               
Representative Neuman  asked whether there were  any current                                                                    
lawsuits from the general public  that questioned the public                                                                    
benefit of  the benefit corporation. Mr.  Clark responded in                                                                    
the negative and  added that the law  prohibited the general                                                                    
public to  challenge the actions of  its directors. However,                                                                    
shareholders   had    sued   directors    of   corporations.                                                                    
Representative   Neuman  wondered   about   the  amount   of                                                                    
shareholder challenges  for benefit corporations.  Mr. Lucas                                                                    
responded that he was unaware  of any shareholder challenges                                                                    
to   benefit  corporations   but  they   were  common   with                                                                    
traditional  corporations.   He  named  Revlon,   eBay,  and                                                                    
Representative   Pruitt    inquired   whether    a   benefit                                                                    
corporation  that wanted  to benefit  its  employees had  to                                                                    
list the  benefit in its  bylaws. Mr. Clark answered  in the                                                                    
negative  and offered  that  two concepts  in  the law  were                                                                    
significant.  He detailed  that  one concept  was a  general                                                                    
public benefit  that produced  a "material  positive effect"                                                                    
for the  company's stakeholders.  The other concept  was the                                                                    
"ability  to  specify"  an   explicit  public  benefit.  The                                                                    
corporation  that did  not elect  a specific  public benefit                                                                    
but  was committed  to  a material  positive  effect on  its                                                                    
stakeholders  could  include  activities  or  benefits  that                                                                    
benefitted its employees  and how it acted  in the community                                                                    
as  a corporate  citizen.  He summarized  that  there was  a                                                                    
general  benefit   approach  and  in  addition   a  "precise                                                                    
mission"  if elected.  Representative Pruitt  clarified that                                                                    
general  benefits  to  the  public   were  specific  to  "B"                                                                    
corporations but  benefits to  employees were  not exclusive                                                                    
to  benefit   corporations.  He  asked  whether   a  regular                                                                    
corporation could  include employee  benefits in  its bylaws                                                                    
or  had to  register  as a  benefit  corporation to  provide                                                                    
benefits   to  its   employees  in   order  to   shield  the                                                                    
corporation from  litigation. Mr. Clark speculated  that two                                                                    
different concepts were under  discussion. He expounded that                                                                    
every  benefit  corporation  was   committed  to  the  first                                                                    
concept as  stated on  page 3, [lines  1 through  9] Section                                                                    
10.60.030 that  was derived from the  business and operation                                                                    
of  the  benefit  corporation  and  intended  to  result  in                                                                    
material positive  impact. The corporation could  also elect                                                                    
to specify  a particular  mission [Section  10.60.040., page                                                                    
3, line  10]. Both the  general commitment and  the specific                                                                    
commitment were  part of a  benefit corporation.  He pointed                                                                    
out  that a  normal corporation  could amend  its bylaws  to                                                                    
include a  specific benefit but  was not subject  to benefit                                                                    
corporation statutes.                                                                                                           
Co-Chair Seaton OPENED Public Testimony.                                                                                        
Co-Chair Seaton CLOSED Public Testimony.                                                                                        
HB  124  was  HEARD  and   HELD  in  committee  for  further                                                                    
HOUSE BILL NO. 25                                                                                                             
     "An   Act   relating    to   insurance   coverage   for                                                                    
     contraceptives  and   related  services;   relating  to                                                                    
     medical  assistance  coverage  for  contraceptives  and                                                                    
     related  services;  and   providing  for  an  effective                                                                    
3:31:21 PM                                                                                                                    
REPRESENTATIVE  MATT   CLAMAN,  SPONSOR,  read   a  prepared                                                                    
     Good  afternoon  members  of  the  Committee,  for  the                                                                    
     record,  my name  is Matt  Claman, and  I am  the State                                                                    
     Representative   for   House   District  21   in   West                                                                    
     Anchorage. First  off, I  would like  to thank  you all                                                                    
     for hearing House Bill 25 this afternoon.                                                                                  
     All  across  Alaska, women  do  not  always have  ready                                                                    
     access  to women's  health services.  Women living  and                                                                    
     working  in  rural  areas, the  tourism  industry,  the                                                                    
     military,  and  on  the  North  Slope  face  additional                                                                    
     barriers,  geographical  and  otherwise,  to  obtaining                                                                    
     greater access to family planning options.                                                                                 
     Currently, women  who use hormonal  contraceptives must                                                                    
     return to the  pharmacy every month to  three months to                                                                    
     refill  their  prescriptions.  House Bill  25  requires                                                                    
     health  insurers  to  offer  consumers  the  option  to                                                                    
     receive a 12-month supply  of hormonal contraception at                                                                    
     a time. The  women in my family support  House Bill 25,                                                                    
     and  that tells  me a  lot.  They support  it not  only                                                                    
     because it is often  time consuming and inconvenient to                                                                    
     obtain a prescription contraceptive  every 3 months or,                                                                    
     in  some  cases,  every  month,  but  they  support  it                                                                    
     because   they    know   that   improved    access   to                                                                    
     contraceptives  means  huge  reductions  in  unintended                                                                    
     Unintended  pregnancy  has  a profound  effect  on  the                                                                    
     overall  well-being  of  Alaskan  families.  Unintended                                                                    
     pregnancy  is  associated  with  adverse  maternal  and                                                                    
     child  health  outcomes.  Along with  health  concerns,                                                                    
     unintended  pregnancy  is  a dramatic  cost  driver  to                                                                    
     public  health  programs. I  believe,  and  I hope  the                                                                    
     members  of   the  committee  will  agree,   that  with                                                                    
     Alaska's financial challenges, we  should look for ways                                                                    
     to reduce  costs in the  short-term and  long-term, and                                                                    
     this bill does exactly that.                                                                                               
     House  Bill  25  makes  sense  for  Alaskan  women  and                                                                    
     families. With that,  I will turn it over  to my staff,                                                                    
    Lizzie Kubitz, to explain the details of the bill.                                                                          
LIZZIE KUBITZ, STAFF, REPRESENTATIVE MATT CLAMAN, read from                                                                     
a prepared statement:                                                                                                           
     Thank you members of the  committee, for the record, my                                                                    
     name is Lizzie Kubitz and  I am staff to Representative                                                                    
     Claman. Thank you all for hearing House Bill 25 today.                                                                     
     House Bill 25 would  require health insurance companies                                                                    
     to, at  the request  of the consumer,  provide coverage                                                                    
     for  a 12-month  supply of  contraceptives at  one time                                                                    
     and provide reimbursement to a  health care provider or                                                                    
     dispensing   entity.   In    the   bill,   prescriptive                                                                    
     contraceptives include  hormonal contraceptives, namely                                                                    
     oral  contraceptives,  commonly  known as  "the  pill."                                                                    
     Section 1  of the  bill lays this  out. Section  1 also                                                                    
     gives  health  care  insurers   the  ability  to  enact                                                                    
     reasonable  cost  containment measures.  In  subsection                                                                    
     (d), cost  containment is defined as  incentivizing the                                                                    
     use of generic or lower  cost medications or the use of                                                                    
     health   care  providers   or  pharmacies   that  offer                                                                    
     services or prescriptions at a lower rate.                                                                                 
     The  inclusion  of  this language  gives  insurers  the                                                                    
     ability   to  steer   towards   generics   as  a   cost                                                                    
     containment  strategy-a provision  that the  Department                                                                    
     of  Administration  has  advocated   for  as  it  could                                                                    
     substantially  reduce their  costs  in  covering a  12-                                                                    
     month supply of birth control.                                                                                             
     However,   subsection  (e)   states   if  the   covered                                                                    
     therapeutically  equivalent version  of a  prescription                                                                    
     contraceptive  is   not  available  or   is  considered                                                                    
     medically inadvisable  by the  health care  provider of                                                                    
     the  insured,  a  health care  provider  shall  provide                                                                    
     coverage  without  cost   sharing  for  an  alternative                                                                    
     therapeutically equivalent version  of the prescription                                                                    
     contraceptive that is prescribed for the insured.                                                                          
     The  inclusion of  this language  makes  it clear  that                                                                    
     even though  insurers will be allowed  to steer towards                                                                    
     generics,  if   a  particular   generic  or   brand  is                                                                    
     determined medically  inappropriate by the  health care                                                                    
     provider,  then   the  insurer  must   accommodate  the                                                                    
3:35:55 PM                                                                                                                    
Ms. Kubitz continued to read a prepared statement:                                                                              
     Finally,   Section   1   also  includes   a   religious                                                                    
     exemption, so health plans  sponsored by certain exempt                                                                    
     religious   employers   are    not   subject   to   the                                                                    
     requirements of Section 1.                                                                                                 
     Section  2 amends  AS  39.30.090(a),  which relates  to                                                                    
     policies of group insurance covering state employees-                                                                      
     by  adding  a  new  subsection (13)  to  capture  group                                                                    
     health  insurance  policies  covering  employees  of  a                                                                    
     participating governmental unit.                                                                                           
     Section 3 amends AS 39.30.091, which relates to self-                                                                      
     insurance and excess  loss insurance-by adding language                                                                    
     to capture  a self-insured group medical  plan covering                                                                    
     active state employees.                                                                                                    
     Sections  2  and 3  clarify  that  the requirements  of                                                                    
     Section 1 apply to active  state employees. I will note                                                                    
     for   the  record   that  Michele   Michaud  from   the                                                                    
     Department  of  Administration  is  present  to  answer                                                                    
     questions relating to Title 39.                                                                                            
     Section 4  directs the Department of  Health and Social                                                                    
     Services to  cover the 12-month supply  of prescription                                                                    
     contraceptives  for  eligible   recipients  of  medical                                                                    
     Section 5  directs the Department of  Health and Social                                                                    
     Services  to amend  and submit  for federal  approval a                                                                    
     state plan  for medical assistance  coverage consistent                                                                    
     with Section 4.                                                                                                            
     Section 6 is  a conditional effect of Section  4 of the                                                                    
     bill, and                                                                                                                  
     Sections 7 and 8 pertain to effective dates.                                                                               
     One major  premise behind  House Bill  25 is  that when                                                                    
     women   have  greater   access   and  availability   to                                                                    
     contraceptives,  unintended  pregnancies  are  reduced.                                                                    
     Reductions  in  unintended  pregnancies have  a  direct                                                                    
     cost savings  to the state,  which is reflected  in the                                                                    
     fiscal notes  from the Department of  Health and Social                                                                    
     Services. And I will note  for the record that Margaret                                                                    
     Brodie from  the Department is online  and available to                                                                    
    answer questions about the department fiscal notes.                                                                         
     According to a  study, which I believe is  in your bill                                                                    
     packets,  in 2010,  48% of  all  pregnancies in  Alaska                                                                    
     were  unintended.  Additionally,  the  study  estimates                                                                    
     that 64.3%  of the unintended pregnancies  in 2010 were                                                                    
     publicly  funded.  As  a  State,  Alaska  spent  $113.7                                                                    
     million  on  unintended  pregnancies.  Of  that,  $70.8                                                                    
     million  was paid  for by  the  federal government  and                                                                    
     $42.9 million was paid by the state.                                                                                       
     An additional study, included in  your packet, looks at                                                                    
     84,000  women  in  California who  were  given  various                                                                    
     supplies-1  month,  3   months,  and  yearlong-of  oral                                                                    
     contraceptives   .  The   researchers  of   that  study                                                                    
     observed a 30%  reduction in the odds  of conceiving an                                                                    
     unintended pregnancy when given  the yearlong supply of                                                                    
     oral contraceptives.  That study also showed  that over                                                                    
     the course  of the  year, California's  family planning                                                                    
     program paid  $99 more annually for  women who received                                                                    
     3  cycles, and  $44  more for  women  who received  one                                                                    
     cycle, than  it did for  women who received  a yearlong                                                                    
     supply all  at once. This  was mostly due to  the costs                                                                    
     of associated  visits and the  higher use  of pregnancy                                                                    
     tests among women who received  fewer cycles. Women who                                                                    
     received 3 cycles were almost  twice as likely as women                                                                    
     who received the  12-month supply to visit  a clinic to                                                                    
     get a pregnancy test.                                                                                                      
     It is important to note  that this bill does not change                                                                    
     who is  eligible for  coverage. What  the bill  does is                                                                    
     allow   women,  who   already   receive  coverage   for                                                                    
     prescription  contraceptives,  to  receive, if  she  so                                                                    
     chooses, 12 months of that prescription at one time.                                                                       
     I wanted to  take a moment to address  some concerns we                                                                    
     have received  from the  Alaska National  Federation of                                                                    
     Independent  Business   (NFIB)  and   America's  Health                                                                    
     Insurance Plan (AHIP).                                                                                                     
     The  NFIB has  brought forward  concerns about  whether                                                                    
     this bill  would apply to the  state employee programs.                                                                    
     We have  addressed that concern  with the  inclusion of                                                                    
     language found in Sections 2 and 3 of the bill.                                                                            
     An additional concern from the  NFIB is the cost burden                                                                    
     of supplying  12 months of  contraception at  one time.                                                                    
     In response to that  concern, multiple studies over the                                                                    
     past   two  decades   have  found   that  contraceptive                                                                    
     coverage  does not  raise insurance  premiums and  that                                                                    
     employers providing  such coverage  can, in  fact, save                                                                    
     money  by  avoiding  costs associated  with  unintended                                                                    
     pregnancy. The  average commercial insurer  payment for                                                                    
     all maternal  and newborn care  ranges from  $18,000 to                                                                    
     $28,000.  The  average  hormonal  birth  control  costs                                                                    
     range from $100 to $600  a year. By preventing just one                                                                    
     unintended pregnancy, an insurer  can save a minimum of                                                                    
     $17,000.  That   is  enough  savings  to   pay  for  29                                                                    
     additional years of contraception.                                                                                         
     AHIP also brought forward concerns.                                                                                        
     Their  initial concern  is that  a  12-month supply  of                                                                    
     contraceptives could compromise  patient safety, due to                                                                    
     potential decreased visits  to a prescribing physician,                                                                    
     and efficacy,  due to potential  improper storage  of a                                                                    
     12-month supply of birth control.                                                                                          
     To address  the concern  of safety-research  shows that                                                                    
     birth control  pills can be safely  prescribed based on                                                                    
     a  careful review  of your  medical  history and  blood                                                                    
     pressure measurement. For most  women, no further exams                                                                    
     are necessary. A Centers for  Disease Control and World                                                                    
     Health   Organization   study   in   2013   recommended                                                                    
     dispensing  a   year's  supply  of   contraception  and                                                                    
     advising women  to return at  any time to  discuss side                                                                    
     effects, other  problems, or changing the  method being                                                                    
     used, but that no routine follow-up is required.                                                                           
3:41:21 PM                                                                                                                    
     To  address the  concern of  efficacy-according to  the                                                                    
     Centers  for  Disease   Control  and  Prevention,  oral                                                                    
     contraceptives  have  a shelf  life  of  three to  five                                                                    
     years,  depending on  the manufacturer.  This timeframe                                                                    
     can be diminished depending  on things like temperature                                                                    
     and moisture,  but we  trust that  women who  would opt                                                                    
     for a 12-month  supply (women who are  regular users of                                                                    
     hormonal  contraception)  know  how to  properly  store                                                                    
     their medication.                                                                                                          
     Additional  concerns from  AHIP  include waste,  fraud,                                                                    
     and abuse.                                                                                                                 
     To address  the concern of waste-in  the study included                                                                    
     in your  bill packets, researchers in  California found                                                                    
     that  women who  were  dispensed a  yearlong supply  on                                                                    
     average  "wasted"  about   one  cycle  of  prescription                                                                    
     contraceptives. Wasting  one cycle  of pills  is fairly                                                                    
     insignificant in  comparison to the cost  savings, such                                                                    
     as  fewer  total  clinician and  pharmacy  visits,  the                                                                    
     costs associated with pregnancy, and so on.                                                                                
     Overall, House  Bill 25 would have  huge advantages for                                                                    
     Alaskan  women. From  eliminating the  inconvenience of                                                                    
     refilling their prescription  every 1 or 3  months at a                                                                    
     time, to the  real inability for some  Alaskan women to                                                                    
     make it to the clinic,  hospital, or pharmacy to refill                                                                    
     that prescription  at all. Fisherwomen  sometimes spend                                                                    
     3 to 4 months out on a  boat at one time. Women who are                                                                    
     attending college  often have busy  schedules balancing                                                                    
     school  and a  job. Women  in rural  Alaska often  have                                                                    
     trouble  making it  to the  clinic or  hospital due  to                                                                    
     lack  of transportation  and  limited operating  hours.                                                                    
     This  bill ensures  the freedom  for  Alaskan women  to                                                                    
     make decisions about their health and their futures.                                                                       
Ms. Kubitz offered to answer any committee questions.                                                                           
3:43:50 PM                                                                                                                    
Representative   Wilson   asked   for  the   definition   of                                                                    
unintended pregnancy. Ms. Kubitz  replied that the pregnancy                                                                    
was   not   planned   or    desired   by   the   individual.                                                                    
Representative  Wilson countered  that it  was necessary  to                                                                    
know which definition applied -  unplanned or undesired. She                                                                    
spoke  to  concern  about  the fiscal  note.  She  spoke  to                                                                    
statistics  and   the  distinction  between   unplanned  and                                                                    
unwanted. She  believed that  not all  unplanned pregnancies                                                                    
were unwanted.                                                                                                                  
Co-Chair    Seaton   asked    Representative   Wilson    for                                                                    
clarification.  He  provided  the  scenario  where  a  woman                                                                    
misses taking  the pill due  to a  one month or  three month                                                                    
prescription  and  wondered  what distinction  she  inquired                                                                    
about.  Representative Wilson  referred to  analysis in  the                                                                    
fiscal  note and  expected savings  regarding the  number of                                                                    
unintended   pregnancies    due   to   the    twelve   month                                                                    
prescription.  She deduced  that the  "whole premise  behind                                                                    
the savings  in the  fiscal notes"  was based  on unintended                                                                    
pregnancies. She  relayed from  personal experience  that it                                                                    
was not a  problem to obtain contraceptives  for an extended                                                                    
period. She  believed the distinction between  unplanned and                                                                    
"unwanted" was germane to the fiscal notes.                                                                                     
3:46:13 PM                                                                                                                    
Ms. Kubitz replied  that the statistics only  applied to the                                                                    
rates  of  unintended  pregnancies.   She  cited  the  study                                                                    
["Increased Contraceptive Supply  linked to Fewer Unintended                                                                    
Pregnancies"  University of  California San  Francisco (copy                                                                    
on file)]  statistics that reported  a 30  percent reduction                                                                    
in the odds of a pregnancy  and a 46 percent decrease in the                                                                    
odds of  an abortion  for women given  a one-year  supply of                                                                    
birth control. She noted that  the "whole point" of the bill                                                                    
was  for  women   to  receive  the  entire   supply  of  the                                                                    
contraceptive  prescription  for   a  12-month  period.  She                                                                    
stated that  if women  had access they  were more  likely to                                                                    
use   it   which   limited    the   chance   of   pregnancy.                                                                    
Representative Wilson  reiterated her belief that  women had                                                                    
access to  contraceptives. She asked  whether the  bill made                                                                    
contraceptives available for men as well.                                                                                       
Representative   Claman   replied  that   "sadly"   hormonal                                                                    
prescription contraceptives were not available for men.                                                                         
Representative Wilson opined that  condoms could be provided                                                                    
for men. She  remarked that women must remember  to take the                                                                    
pill on a scheduled basis  or they risk pregnancy. The issue                                                                    
did not  apply to condom  use. She believed  the legislation                                                                    
placed the burden  and fault on women.  Ms. Kubitz discerned                                                                    
that  adding condoms  would erode  the cost  savings in  the                                                                    
fiscal  note.  The  cost  savings in  the  fiscal  note  was                                                                    
predicated on  the amount of unintended  pregnancies avoided                                                                    
when  women  were  prescribed  a   twelve  month  supply  of                                                                    
contraceptives.   Representative  Wilson   wondered  whether                                                                    
current statute prohibited a twelve month prescription.                                                                         
MARGARET   BRODIE,  DIRECTOR,   DIVISION   OF  HEALTH   CARE                                                                    
SERVICES,   DEPARTMENT  OF   HEALTH  AND   SOCIAL  SERVICES,                                                                    
responded  that currently  all prescriptions  were available                                                                    
for  the maximum  of 90  days.  Representative Wilson  asked                                                                    
where she  could find the  provision in statute.  Ms. Brodie                                                                    
was uncertain and offered to provide the information later.                                                                     
Representative Wilson  referred to  Page 1,  line 11  of the                                                                    
bill  concerning  voluntary   sterilization  procedures  and                                                                    
wondered  whether  the provision  applied  to  both men  and                                                                    
women.  Ms. Kubitz  thought the  provision  applied to  both                                                                    
sexes. She  stated that  the provision  was added  to ensure                                                                    
sterilization was a covered service.                                                                                            
Ms. Brodie conveyed that sterilization  was covered for both                                                                    
3:52:24 PM                                                                                                                    
Representative  Neuman understood  that contraceptive  pills                                                                    
were  also used  for other  purposes such  as migraines.  He                                                                    
inquired  whether  other  uses   were  covered.  Ms.  Kubitz                                                                    
answered  in the  affirmative.  Representative Neuman  asked                                                                    
Representative Claman about facts  in the sponsor statement.                                                                    
He  referred to  the $42.9  million  cost to  the state  for                                                                    
unintended pregnancies  and asked for a  breakdown of costs.                                                                    
Ms. Kubitz  reported that  the number was  based on  a study                                                                    
included  in  members  bill   packets  from  the  Guttmacher                                                                    
Institute titled,  "State Facts About  Unintended Pregnancy"                                                                    
(copy on  file). She  informed the  committee that  the data                                                                    
was from 2010 and was  the most recent available. In Alaska,                                                                    
the state  and federal governments spent  $113.7 million for                                                                    
unintended pregnancies  broken down  to $70.8 million  or 52                                                                    
percent  was  spent  by the  federal  government  and  $42.9                                                                    
million was spent by the state.                                                                                                 
Co-Chair Seaton  verified that the cost  savings resulted in                                                                    
the  avoidance of  the  unintended  pregnancies. Ms.  Kubitz                                                                    
nodded affirmatively.                                                                                                           
Representative  Neuman maintained  that he  wanted a  better                                                                    
understanding of the costs associated  with the savings. Ms.                                                                    
Kubitz deferred to Ms. Brodie to clarify the numbers.                                                                           
3:57:10 PM                                                                                                                    
Ms. Brodie  relayed that  the cost  savings to  the Medicaid                                                                    
program was $1.355 million that  represented the cost of 420                                                                    
unintended  pregnancies for  the cost  of delivery,  medical                                                                    
services, and prenatal  doctor visits. Representative Neuman                                                                    
was "trying to add validity" to the statements provided.                                                                        
Representative   Grenn  quoted   the   following  from   the                                                                    
Guttmacher Institute document:                                                                                                  
     In 2010, 3000 or 64.3% of unplanned births in Alaska                                                                       
     were publically funded…                                                                                                    
Representative Grenn calculated from  the $43 million figure                                                                    
that  the cost  was  roughly $14.3  thousand per  unintended                                                                    
pregnancy.  He deduced  that the  amount was  approximate to                                                                    
the  cost  per delivery  from  his  personal experience.  He                                                                    
deemed  that the  facts provided  in  the sponsor  statement                                                                    
were  accurate.  He  thought that  complicated  births  were                                                                    
factored into  the calculations. Ms. Brodie  answered in the                                                                    
Co-Chair Seaton  wondered whether the fiscal  note reflected                                                                    
the  cost  of the  contraceptives  or  savings from  avoided                                                                    
births. Ms. Brodie explained that  the fiscal note reflected                                                                    
the   savings  from   unintended   pregnancies.  The   state                                                                    
currently  paid  for the  cost  of  the contraceptives  four                                                                    
times  a   year  along  with   dispensing  fees   each  time                                                                    
therefore;  no  additional  funding for  the  contraceptives                                                                    
were necessary. She added that  the costs for contraceptives                                                                    
would likely decrease due to fewer dispensing fees.                                                                             
Representative Grenn  suggested that the intent  of the bill                                                                    
was to provide access. He  wondered whether the intent of HB
25  was providing  access  or  cost savings.  Representative                                                                    
Claman responded  that the intent  was both, a  cost savings                                                                    
to the state and better access.                                                                                                 
4:02:02 PM                                                                                                                    
Representative Kawasaki agreed with  the underlying bill. He                                                                    
had  personally  obtained  a  90-day  prescription  for  the                                                                    
legislative session and  had to go to Fred Meyer  to have it                                                                    
refilled.   He  wondered   whether  a   physician  typically                                                                    
prescribed for twelve months or  did length of prescriptions                                                                    
correspond with  refills. Ms. Kubitz understood  that length                                                                    
of  prescription   was  dependent  on  what   the  insurance                                                                    
companies covered. Representative  Kawasaki wondered whether                                                                    
there might be  some situations where a  physician would not                                                                    
want  to   prescribe  a  12-month  prescription   for  birth                                                                    
control. Ms. Kubitz  responded that the purpose  of the bill                                                                    
allowed  a woman  to  opt for  a  12-month prescription  but                                                                    
ultimately   the   decision    belonged   to   the   doctor.                                                                    
Representative  Kawasaki  inquired  whether the  choice  was                                                                    
ultimately up  to the patient  if the  12-month prescription                                                                    
was  advisable. Ms.  Kubitz responded  that  a twelve  month                                                                    
supply was an option rather than mandatory.                                                                                     
Representative Guttenberg relayed  information from personal                                                                    
experience  about the  difficulty of  obtaining the  refills                                                                    
for his personal prescriptions that  was prescribed every 30                                                                    
and 90 days. He suggested  that the way pharmaceuticals were                                                                    
prescribed was  part of the  inherent problem  of escalating                                                                    
costs.  He thought  that the  way drugs  were prescribed  by                                                                    
statute  was  burdensome and  expensive  for  the state.  He                                                                    
remarked that  Alaska was doing  health care by  statute. He                                                                    
asked   for  clarification.   Ms.   Brodie  responded   that                                                                    
prescribing had to be addressed  in statute so the insurance                                                                    
company  would know  coverage was  possible  for the  entire                                                                    
period of time.                                                                                                                 
4:07:44 PM                                                                                                                    
Vice-Chair Gara appreciated and supported the bill.                                                                             
Representative Wilson  asked whether Alaska  Care prohibited                                                                    
a  woman   from  receiving   a  12-month   prescription  for                                                                    
MICHELE   MICHAUD,  CHIEF   HEALTH  OFFICIAL,   DIVISION  OF                                                                    
RETIREMENTS  AND  BENEFITS,  DEPARTMENT  OF  ADMINISTRATION,                                                                    
replied that currently the plan  allowed for 90 days but the                                                                    
plan  administrator   who  was   the  Commissioner   of  the                                                                    
Department  of Administration  could  change  the amount  of                                                                    
coverage.    Representative   Wilson    asked   whether    a                                                                    
contraceptive prescription  could be extended before  the 90                                                                    
day  period  ran  out  through a  phone  call.  Ms.  Michaud                                                                    
responded  in the  affirmative and  added  that Alaska  Care                                                                    
allowed for vacation  overrides. Representative Wilson asked                                                                    
whether  any type  of contraceptive  coverage was  available                                                                    
for  men.   Ms.  Michaud  responded  in   the  negative  and                                                                    
elucidated  that condoms  were not  covered under  the plan.                                                                    
Representative Wilson  asked whether she was  aware of other                                                                    
provider's  practices  regarding  contraceptive  extensions.                                                                    
Ms. Michaud  responded that she  was uncertain of  how other                                                                    
providers handled the situation.  She assumed other insurers                                                                    
had  similar  provisions.  Representative  Wilson  requested                                                                    
more information  identifying the problem and  wondered what                                                                    
the bill was "trying to fix."                                                                                                   
Representative  Guttenberg  asked  for  a  definition  of  a                                                                    
vacation override.  Ms. Michaud explained that  the vacation                                                                    
override  was variable  and was  based  on the  individual's                                                                    
circumstances and  needs. She  elaborated that  the override                                                                    
had  to be  requested each  time it  was necessary,  even if                                                                    
work travel was  routine and overrides were  needed for each                                                                    
90-day prescription.                                                                                                            
Vice-Chair  Gara also  mentioned problems  when getting  his                                                                    
personal  prescriptions  refilled.  He  wondered  whether  a                                                                    
person's  doctor had  to be  contacted when  a contraceptive                                                                    
prescription  needed to  be refilled.  Ms. Kubitz  responded                                                                    
that  it  depended  on  whether refills  were  part  of  the                                                                    
prescription. She  reminded the committee that  the point of                                                                    
the bill  was access to a  twelve month supply all  at once.                                                                    
She  pointed out  that other  circumstances interfered  with                                                                    
women getting  to a pharmacy and/or  obtaining refills every                                                                    
90 days.                                                                                                                        
4:13:41 PM                                                                                                                    
Representative  Pruitt asked  what  percentage of  insurance                                                                    
plans  were separate  from  Alaska Care  in  the state.  Ms.                                                                    
Kubitz  responded that  the  bill  encompassed Alaska  Care,                                                                    
Medicaid recipients,  and private  health insurers.  She did                                                                    
not know actual percentages.                                                                                                    
Representative Pruitt asserted that  the state was unable to                                                                    
regulate all  private insurers. He wondered  what percentage                                                                    
of  private  insurances  the bill  affected.  Representative                                                                    
Claman  responded that  the bill  applied to  private sector                                                                    
insurers  and  underwriters  who covered  employees  in  the                                                                    
ANNA LATHAM    DEPUTY    DIRECTOR,    INSURANCE    DIVISION,                                                                    
DEPARTMENT OF  COMMERCE COMMUNITY AND  ECONOMIC DEVELOPEMNT,                                                                    
replied that roughly  50 percent of the  plans were captured                                                                    
under the  bill. She detailed  that the  Employee Retirement                                                                    
Income Security Act (ERISA) plans  and the self-insured were                                                                    
exempt but large  and small group plans and  State of Alaska                                                                    
plans  were covered  under  the legislation.  Representative                                                                    
Pruitt  asked that  if Alaska  Care and  Medicaid recipients                                                                    
were carved out what percentage  of covered plans were left.                                                                    
He felt  the legislation's  mandate affected small  "mom and                                                                    
pop" companies.                                                                                                                 
4:17:30 PM                                                                                                                    
SARAH BAILEY   INSURANCE   SPECIALIST    III   -   INSURANCE                                                                    
DIVISION,  DEPARTMENT   OF  COMMERCE,  responded   that  the                                                                    
division regulated  approximately 20  percent of  the health                                                                    
care  market  in  Alaska including,  individual,  small  and                                                                    
large employer.                                                                                                                 
Representative Pruitt asked whether  there was anything that                                                                    
prevented  private  insurers  from implementing  the  twelve                                                                    
month contraceptive  coverage. Ms.  Bailey responded  in the                                                                    
Representative Pruitt determined that  the bill mandated 12-                                                                    
month contraceptive coverage to  20 percent of the insurance                                                                    
market in the  state. He wondered whether  his statement was                                                                    
accurate.   Ms.   Latham   answered  in   the   affirmative.                                                                    
Representative  Pruitt asked  about the  religious exemption                                                                    
in the bill. He read the  following [page 3, lines 1 through                                                                    
     the state a health care insurance plan in the group                                                                        
     market 1 to a religious employer is  exempt from the                                                                       
     requirements  of  this  section  with  respect  to  the                                                                    
     health care  insurance  plan of  the religious employer                                                                    
     if   the  religious   employer  opposes   the  coverage                                                                    
     required  under this section and is an                                                                                     
    (1) organization that meets the criteria set out in                                                                         
     26 U.S.C. 6033(a)(3)(A)(i) or (iii) (Internal                                                                              
     Revenue Code of  1986), as amended; or                                                                                     
     (2) eligible organization that has self-certified in                                                                       
    the form and manner specified by the United States                                                                          
     Secretary of Labor or has provided notice to the                                                                           
     United States Secretary of Health and Human Services,                                                                      
     under the requirements set out in 45 C.F.R.                                                                                
     147.131(b)(1) - (3).                                                                                                       
Representative  Pruitt commented  that there  were employers                                                                    
that  had legitimate  religious concerns.  He wondered  what                                                                    
protections  the  legislation  provided  to  employers  with                                                                    
religious affiliations.  Ms. Latham responded that  based on                                                                    
her assessment religious groups were exempt.                                                                                    
Ms. Kubitz pointed  out that the bill was  tailored to match                                                                    
provisions  in  the  Affordable  Care  Act  (ACA)  regarding                                                                    
religious  employers   and  organizations   exemptions.  She                                                                    
believed  that the  12-month contraceptive  mandate did  not                                                                    
apply to the religiously exempt group.                                                                                          
Representative Pruitt  remarked that ACA could  be repealed.                                                                    
He  asked  whether  religious  entities  would  be  able  to                                                                    
maintain their exemptions. Ms. Latham  responded that if the                                                                    
ACA  was repealed  so would  the  contraception mandate  and                                                                    
religious   organizations  and   would  "probably   need  an                                                                    
exemption."  Representative Pruitt  suggested that  the bill                                                                    
created a  mandate regardless of  the ACA. He  disagreed and                                                                    
asserted that HB  25 was based on the ACA  as a guideline to                                                                    
some of  the provisions  in the bill.  Representative Claman                                                                    
was  unsure  how a  court  would  handle the  situation.  He                                                                    
predicted  that  the  department and  courts  would  provide                                                                    
exceptions. The  intent in the  bill provided  for religious                                                                    
exemptions and he  thought that a court  would interpret the                                                                    
exemption to apply even if the ACA was repealed or altered.                                                                     
4:24:41 PM                                                                                                                    
Representative Pruitt  remembered that years ago  a previous                                                                    
proposed  constitutional  amendment  meant  to  protect  the                                                                    
Permanent Fund  Dividend referenced  an existing  statute. A                                                                    
legal  opinion  regarding   the  amendment  determined  that                                                                    
attaching it to existing statute  that was possible to alter                                                                    
was tenuous. He  believed that the same  argument applied to                                                                    
the religious  exemption provision in HB  25. Representative                                                                    
Claman  thought that  the number  of hypothetical  arguments                                                                    
were limitless and maintained that  he answered the question                                                                    
to the best of his ability.                                                                                                     
Vice-Chair  Gara recommended  adding a  date to  the statues                                                                    
that referenced the ACA provisions  and noted that there was                                                                    
precedent  for that  type of  clarification. He  exemplified                                                                    
the language, "as existed on  January 1, 2017" and suggested                                                                    
that the  language could be  added later by amending  HB 25.                                                                    
Representative Claman agreed to examine the issue.                                                                              
Co-Chair  Seaton  surmised  that  Section  1  contained  the                                                                    
language,  "the   health  care  insurer  that   offers"  and                                                                    
interpreted  that if  the ACA  was  repealed the  provisions                                                                    
would  not   apply.  If  the   insurer  no   longer  offered                                                                    
contraceptive  coverage due  to  the repeal  the statute  no                                                                    
longer  applied  to  those insurers.  He  thought  that  the                                                                    
scenario was  "frustrating." Healthcare was driving  much of                                                                    
the budget  and economy of  the state. He believed  that the                                                                    
discussion should  focus on passing bills  that help control                                                                    
costs and improve efficiency in the health care system.                                                                         
4:28:32 PM                                                                                                                    
Representative Wilson  shared her  concern that  Alaska Care                                                                    
and Medicaid could  change the policy on its own  and if so,                                                                    
why  it  wasn't changed.  She  wondered  if the  legislation                                                                    
would force a  doctor to prescribe a  12 month prescription.                                                                    
She stated  that some doctors  wanted to see  patients every                                                                    
three  months. Ms.  Kubitz  replied that  the  bill did  not                                                                    
place a mandate on the  doctors. Most doctors who prescribed                                                                    
contraceptives would  not think that numerous  checkups were                                                                    
necessary.  Representative   Wilson  inquired   whether  any                                                                    
insurance  company could  provide information  regarding the                                                                    
necessity of the legislation and  what if anything prevented                                                                    
them from covering a 12 month supply of contraceptives.                                                                         
Vice-Chair  Gara was  given the  gavel to  temporarily chair                                                                    
the meeting.                                                                                                                    
Vice-Chair Gara OPENED Public Testimony.                                                                                        
ALYSON CURREY LEGISLATIVE    LIAISON,   PLANNED   PARENTHOOD                                                                    
VOTES NORTHWEST AND HAWAII, read a prepared statement:                                                                          
     Thank you, Mr.  Chair and members of  the committee for                                                                    
     the opportunity  to testify today.   My name  is Alyson                                                                    
     Currey.   I  am a  resident of  Juneau and  I represent                                                                    
     Planned Parenthood Votes Northwest & Hawaii.                                                                               
     Planned  Parenthood  has  provided  birth  control  and                                                                    
     other high-quality  health care  across the  nation for                                                                    
     more than 100  years and we strongly support  HB 25. In                                                                    
     Alaska, we  currently serve  more than  7,700 patients,                                                                    
     which includes providing birth  control to nearly 3,000                                                                    
     women.  There   are  many  different  kinds   of  birth                                                                    
     control, and no  one method will work  for every person                                                                    
     at  every  stage  of  their life.  Women  who  are  not                                                                    
     satisfied  with their  contraceptive  method, are  less                                                                    
     likely to use it  consistently. Therefore, every person                                                                    
     should  have full  access to  the birth  control method                                                                    
     that  works best  for them,  without barriers  based on                                                                    
     cost and  regardless of their insurance  plan, in order                                                                    
     to  increase  consistent  use.   House  Bill  25  would                                                                    
     remove such barriers.                                                                                                      
     Family  planning is  a basic  economic issue  for women                                                                    
     and  families.  Unintended  pregnancies  put  women  at                                                                    
     greater  risk  of  homelessness,  family  hunger,  poor                                                                    
     birth  outcomes, and  long-term dependence  on publicly                                                                    
     funded  programs. Family  planning  also creates  costs                                                                    
     savings  for   public  and  private   insurance  plans.                                                                    
     Allowing women  to access a full  range of FDA-approved                                                                    
     contraceptives and  providing a year's supply  of birth                                                                    
     control instead of limiting dispensing  to one or three                                                                    
     cycles  lowers   direct  costs  on   follow-up  visits,                                                                    
     pregnancy  tests, and  long-term costs  associated with                                                                    
     unintended pregnancies.                                                                                                    
     Eight other  states have passed legislation  similar to                                                                    
     HB 25,  including Washington, Virginia  and California.                                                                    
     In  an analysis  of California's  bill, the  California                                                                    
     Health   Benefits  Review   Program   found  that   the                                                                    
     reduction in  unintended pregnancies and  doctor visits                                                                    
     would result in about $42.8  million in savings for the                                                                    
     state  in  its  first  year of  existence.  AK's  cost-                                                                    
     savings analysis  of HB 25  shows a higher  savings per                                                                    
     By  taking steps  to  decrease unintended  pregnancies,                                                                    
     the state  will decrease  its long-term  social service                                                                    
     spending and  save money. Please  support comprehensive                                                                    
     birth control access  for all women and vote  yes on HB
4:35:23 PM                                                                                                                    
ELIZABETH FIGUS, SELF,  SITKA, spoke in favor of  HB 25. She                                                                    
shared that she was a  doctoral student at the University of                                                                    
Alaska in  Fairbanks and Juneau  resident and in  the summer                                                                    
months she skippered  a troll fishery tender.  She felt that                                                                    
the bill was a "no brainer"  in a state where so many people                                                                    
worked in  remote locations seasonally. She  spoke about the                                                                    
unnecessary expense  and difficulty in finding  any time for                                                                    
doctor's  appointments or  pharmacy visits  during her  busy                                                                    
fishing  season.  She  believed  the  bill  was  only  about                                                                    
streamlining  prescription pick-ups.  She  was certain  that                                                                    
the  committee   "understood  the  importance   of  economic                                                                    
efficiency for all Alaska residents."   She urged members to                                                                    
vote "yes" on the bill.                                                                                                         
4:37:04 PM                                                                                                                    
ELIZABETH EILERS,  SELF, JUNEAU,  spoke in  favor of  HB 25.                                                                    
She  stated that  "politicians cannot  grow the  economy and                                                                    
simultaneously limit  access to  birth control"  and thought                                                                    
that the  "state's economic health and  women's reproductive                                                                    
health  were linked."  She indicated  that she  paid a  high                                                                    
amount for birth control and  believed that created numerous                                                                    
challenges to  access. She  spoke of the  high costs  of all                                                                    
types  of  birth  control  in  out-of-pocket  expenses.  She                                                                    
thought  meaningful  access  to  a variety  of  methods  was                                                                    
"critical" and a women's right.  She maintained that without                                                                    
insurance   coverage  the   cost   of   birth  control   was                                                                    
unattainable. She  urged members to  support HB 25  and "not                                                                    
leave women behind."                                                                                                            
4:38:58 PM                                                                                                                    
ALICA   CARGILL,  POLICY   SPECIALIST,  ALASKA   NETWORK  ON                                                                    
DOMESTIC   VIOLENCE  AND   SEXUAL  ASSAULT,   supported  the                                                                    
legislation. She spoke  to "contraceptive coercion," access,                                                                    
and equity. She relayed that  in FY16 her agency served over                                                                    
6,300  women  and  was  "heavily  invested  in  reproductive                                                                    
health, access,  and equity." She explained  that "power and                                                                    
control  was  the overall  basis  of  domestic violence  and                                                                    
sexual assault."  She stated that  "a victim's  autonomy was                                                                    
fundamental  in both  preventing and  responding to  violent                                                                    
acts. One  critical element of  this autonomy was  access to                                                                    
both  affordable  and consistent  reproductive  healthcare."                                                                    
She  felt that  the  bill enabled  a  women's autonomy.  She                                                                    
explained  that contraceptive  coercion was  when an  abuser                                                                    
controlled  a woman's  ability to  contraceptive access  and                                                                    
use.  She  explained that  the  bill  expanded coverage  for                                                                    
long-acting reversible  contraceptives such  as intrauterine                                                                    
devices  and  implants  and assisted  the  woman  living  as                                                                    
safely  as  possible  in  the   short-term.  She  felt  that                                                                    
unintended pregnancies  could occur without  the long-acting                                                                    
reversible   contraceptives.  She   noted  the   correlation                                                                    
between  unintended pregnancies  and domestic  violence that                                                                    
imposed "an even greater vulnerability  for the victim." She                                                                    
added that the bill  increased women's access in underserved                                                                    
rural populations.                                                                                                              
4:41:25 PM                                                                                                                    
Representative  Wilson  asked   whether  she  was  concerned                                                                    
because  the  bill  only applied  to  insurers  who  already                                                                    
covered  contraceptives  and  some   might  choose  to  halt                                                                    
coverage due  to increased  costs related  to the  bill. She                                                                    
wondered if she  was concerned with the  possibility of less                                                                    
coverage. Ms. Cargill responded  that she had not considered                                                                    
the  scenario and  would like  to do  further research.  She                                                                    
guessed  that  her  agency would  still  support  the  bill.                                                                    
Representative  Wilson was  concerned  about any  unintended                                                                    
4:42:53 PM                                                                                                                    
PAMELA SAMASH  SELF, RIGHT  TO LIFE, NENANA, opposed  HB 25.                                                                    
She  expressed concern  over the  discussion regarding  cost                                                                    
savings  from unintended  pregnancies  in rural  populations                                                                    
and  equated  it to  a  discussion  about "rural  population                                                                    
control." She  talked about doctors wanting  to have routine                                                                    
follow-ups as  a way  to prevent  serious side  effects. She                                                                    
believed   that    unintended   pregnancies    were   called                                                                    
"miracles."  She said  children  were the  "future" and  not                                                                    
"dollar signs."   She restated her opposition to  HB 25. She                                                                    
did not believe  in giving women 12 months  of birth control                                                                    
and did not want to pay for emergency contraceptives.                                                                           
4:45:56 PM                                                                                                                    
PAIGE HOGSON,  SELF, ANCHORAGE, spoke  in support of  HB 25.                                                                    
She offered  that a lot  of research existed  that supported                                                                    
the benefits of the  legislation; for women, their families,                                                                    
cost saving  for the  state, and  society. She  related that                                                                    
the access delayed child bearing  until planned. She thought                                                                    
Alaska needed to be proactive.  She urged members to support                                                                    
the bill.                                                                                                                       
4:47:04 PM                                                                                                                    
ROBIN  SMITH,  SELF,  ANCHORAGE,   indicated  that  she  was                                                                    
driving and would prefer to testify the following morning.                                                                      
Vice-Chair Gara agreed to the request.                                                                                          
4:47:38 PM                                                                                                                    
JUSTINE WEBB, SELF,  FAIRBANKS, spoke in favor of  HB 25 She                                                                    
shared that she was a  social work student at the University                                                                    
of Alaska  in Fairbanks  and grew up  in Sitka.  She relayed                                                                    
from  personal   experience  the  issues   and  difficulties                                                                    
regarding  her limited  access  to contraceptives  receiving                                                                    
only a 30  day supply at a time. She  had missed classes and                                                                    
experienced  other  inconveniences accessing  contraception.                                                                    
She  conveyed   that  she  was   not  able  to   refill  her                                                                    
prescription with only  2 days of pills left.  She could not                                                                    
imagine the  added difficulties  of accessing  birth control                                                                    
in remote  areas of  the state in  light of  her experiences                                                                    
living  in urban  areas. She  asked members  to support  the                                                                    
4:50:04 PM                                                                                                                    
VHEMIA    PETERSON,   SELF,    ANCHORAGE,   supported    the                                                                    
legislation.  She  relayed  that   she  graduated  from  the                                                                    
University of  Alaska in Anchorage and  currently worked two                                                                    
jobs and volunteered and participated  in the community. She                                                                    
felt that her access to a  long term supply of birth control                                                                    
contributed  to  her  success. She  noted  the  high  sexual                                                                    
assault and abuse rate for women  as well as a wide wage gap                                                                    
between  men and  women. She  urged members  to support  the                                                                    
4:51:38 PM                                                                                                                    
Vice-Chair Gara indicated the meeting would recess until                                                                        
April 18, 2017 at 9:45 a.m. He relayed the agenda for the                                                                       
afternoon meeting.                                                                                                              
^RECESSED UNTIL TUESDAY, APRIL 18, 2017 AT 9:45 A.M.                                                                          
4:52:31 PM                                                                                                                    
The meeting was adjourned at 4:52 p.m.                                                                                          

Document Name Date/Time Subjects
HB124 Explanation of changes from ver A to ver D 4.6.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 124
HB124 Sectional Analysis ver D 4.6.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 124
HB124 Sponsor Statement 3.22.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 124
HB124 Support Documents - Letters of Support 4.11.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 124
HB091 Supporting Document - APOC Funding 031317.pdf HFIN 4/17/2017 1:30:00 PM
HB 91
HB091(STA) Sectional Analysis.pdf HFIN 4/17/2017 1:30:00 PM
HB 91
HB091(STA) Sponsor Statement.pdf HFIN 4/17/2017 1:30:00 PM
HB 91
HB025 Opposing Document-Emails 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Opposing Document-Letter NFIB 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Sectional Analysis ver O 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Sponsor Statement 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Summary of Changes 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-ADN Commentary 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-Cost Savings Study 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-Emails 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-Guttmacher Alaska Statistics 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-Guttmacher Public Costs from Unintended Pregnancies 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-Letters 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-UCSF Study Newspaper Article 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB025 Supporting Document-Unintended Pregnancies Study 4.14.17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
SB88_Oppose_041417.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
HF SB 88 4-15-17 v1_0.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 revised Maps - 4.3.2017.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - Sponsor Statement - version R.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - Sectional Analysis.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - Letters of Support.PDF HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - letters of opposition.PDF HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - letters of opposition.PDF HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - federal bill.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - Fact Sheet.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
CSSB 88 - Explanation of Changes version J to version R.pdf HFIN 4/17/2017 1:30:00 PM
SB 88
HB25_Support_04172017.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB25_Oppose_04172017.pdf HFIN 4/17/2017 1:30:00 PM
HB 25
HB 25 - Support Document Letter 3-3-17.pdf HFIN 4/17/2017 1:30:00 PM
HB 25