Legislature(1995 - 1996)

04/03/1996 03:28 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                          
                         April 3, 1996                                         
                           3:28 p.m.                                           
 MEMBERS PRESENT                                                               
 Representative Pete Kott, Chairman                                            
 Representative Norman Rokeberg, Vice Chairman                                 
 Representative Jerry Sanders                                                  
 Representative Brian Porter                                                   
 Representative Kim Elton                                                      
 Representative Gene Kubina                                                    
 MEMBERS ABSENT                                                                
 Representative Beverly Masek                                                  
 COMMITTEE CALENDAR                                                            
 CS FOR SENATE BILL NO. 197(L&C)                                               
 "An Act relating to insurance covering an insured who is a victim             
 of domestic violence and requiring certain disclosures by an                  
      - MOVED HCSCSSB 197(L&C) OUT OF COMMITTEE                                
 HOUSE BILL NO. 436                                                            
 "An Act relating to purchase and sale of mobile homes by mobile               
 home dealers or agents; to mobile home titles; and providing for an           
 effective date."                                                              
      - MOVED CSHB 437(TRA) OUT OF COMMITTEE                                   
 HOUSE BILL NO. 524                                                            
 "An Act relating to insurance pooling."                                       
      - HEARD AND HELD                                                         
 HOUSE BILL NO. 544                                                            
 "An Act relating to the use of the terms `health' and `disability'            
 in the context of insurance coverage."                                        
      - MOVED HB 544 OUT OF COMMITTEE                                          
 SENATE BILL NO. 300                                                           
 "An Act relating to the Uniform Commercial Code, primarily to                 
 investment securities; amending Rule 8(d), Alaska Rules of Civil              
 Procedure; and providing for an effective date."                              
      - MOVED SB 300 OUT OF COMMITTEE                                          
 SENATE BILL NO. 261                                                           
 "An Act relating to the release of employment security records;               
 relating to an injunction or an employer's security for delinquent            
 unemployment insurance contributions; extending time periods for              
 redeterminations and appeals for unemployment insurance; relating             
 to the overpayment or the redetermination of unemployment insurance           
 benefits; relating to availability for work, seeking work, and the            
 calculation of wages for unemployment insurance purposes; relating            
 to voluntary federal tax withholding from unemployment insurance              
 benefits; relating to the binding effect of unemployment                      
 compensation decisions; relating to the definition of `waiting                
 week' for employment security purposes; and providing for an                  
 effective date."                                                              
      - MOVED SB 261 OUT OF COMMITTEE                                          
 HOUSE BILL NO. 345                                                            
 "An Act relating to the procurement of investment and brokerage               
 services by the Alaska State Pension Investment Board."                       
      - HEARD AND HELD                                                         
 CS FOR SENATE BILL NO. 305(L&C)                                               
 "An Act relating to the regulation of accountants; and amending the           
 effective date for sec. 6, ch. 62, SLA 1991."                                 
      - PASSED CSSB 305(L&C) OUT OF COMMITTEE                                  
 PREVIOUS ACTION                                                               
 BILL:  SB 197                                                               
 SPONSOR(S): SENATOR(S) DONLEY, Ellis, Salo, Duncan, Pearce,                   
 Zharoff, Lincoln;                                                             
 REPRESENTATIVE(S) Davies, Robinson, Rokeberg                                  
 JRN-DATE     JRN-PG                  ACTION                                   
 01/05/96      2058    (S)   PREFILE RELEASED - 1/5/96                         
 01/08/96      2058    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 01/08/96      2058    (S)   LABOR & COMMERCE                                  
 01/16/96      2144    (S)   COSPONSOR(S):  DUNCAN                             
 02/15/96              (S)   L&C AT  1:30 PM BELTZ ROOM 211                    
 02/15/96              (S)   MINUTE(L&C)                                       
 02/20/96              (S)   MINUTE(L&C)                                       
 02/23/96      2512    (S)   L&C RPT  CS  5DP          NEW TITLE               
 02/23/96      2513    (S)   ZERO FISCAL NOTE TO SB & CS (DCED)                
 02/26/96              (S)   RLS AT 12:45 PM FAHRENKAMP RM 203                 
 02/26/96              (S)   MINUTE(RLS)                                       
 02/28/96      2568    (S)   RULES TO CALENDAR & 1NR      2/28/96              
 02/28/96      2571    (S)   READ THE SECOND TIME                              
 02/28/96      2572    (S)   L&C  CS ADOPTED UNAN CONSENT                      
 02/28/96      2572    (S)   COSPONSOR(S):  PEARCE, ZHAROFF, LINCOLN           
 02/28/96      2572    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 02/28/96      2572    (S)   READ THE THIRD TIME  CSSB 197(L&C)                
 02/28/96      2572    (S)   PASSED Y18 N- E2                                  
 02/28/96      2579    (S)   TRANSMITTED TO (H)                                
 02/29/96      2955    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/29/96      2956    (H)   LABOR & COMMERCE, FINANCE                         
 03/18/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/18/96              (H)   MINUTE(L&C)                                       
 03/18/96      3186    (H)   CROSS SPONSOR(S): DAVIES                          
 03/20/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/20/96              (H)   MINUTE(L&C)                                       
 03/22/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/22/96              (H)   MINUTE(L&C)                                       
 03/27/96              (H)   MINUTE(L&C)                                       
 04/01/96      3552    (H)   CROSS SPONSOR(S): ROBINSON                        
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 BILL:  HB 436                                                               
 SHORT TITLE: MOBILE HOME DEALERS & TITLES                                     
 SPONSOR(S): REPRESENTATIVE(S) MARTIN                                          
 JRN-DATE     JRN-PG                  ACTION                                   
 01/19/96      2489    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/19/96      2489    (H)   TRANSPORTATION, L&C, FINANCE                      
 03/20/96              (H)   TRA AT  1:00 PM CAPITOL 17                        
 03/20/96              (H)   MINUTE(TRA)                                       
 03/27/96              (H)   TRA AT  1:00 PM CAPITOL 17                        
 03/27/96              (H)   MINUTE(TRA)                                       
 04/01/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 04/01/96              (H)   MINUTE(L&C)                                       
 04/02/96      3557    (H)   TRA RPT  CS(TRA) NT 1DP 5NR                       
 04/02/96      3558    (H)   DP: G.DAVIS                                       
 04/02/96      3558    (H)   NR: MASEK, LONG, BRICE, SANDERS                   
 04/02/96      3558    (H)   NR: WILLIAMS                                      
 04/02/96      3558    (H)   FISCAL NOTE (DCED)                                
 04/02/96      3558    (H)   ZERO FISCAL NOTE (DPS)                            
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 BILL:  HB 524                                                               
 SPONSOR(S): LABOR & COMMERCE BY REQUEST                                       
 JRN-DATE     JRN-PG                  ACTION                                   
 02/21/96      2834    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/21/96      2834    (H)   LABOR & COMMERCE, FINANCE                         
 03/13/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 03/13/96              (H)   MINUTE(L&C)                                       
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 BILL:  HB 544                                                               
 SHORT TITLE: HEALTH INSURANCE NOMENCLATURE                                    
 SPONSOR(S): LABOR & COMMERCE                                                  
 JRN-DATE     JRN-PG                  ACTION                                   
 03/19/96      3197    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/19/96      3197    (H)   LABOR & COMMERCE, FINANCE                         
 04/01/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 04/01/96              (H)   MINUTE(L&C)                                       
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 BILL:  SB 300                                                               
 SPONSOR(S): LABOR & COMMERCE                                                  
 JRN-DATE     JRN-PG                  ACTION                                   
 02/19/96      2470    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/19/96      2470    (S)   LABOR & COMMERCE                                  
 02/27/96              (S)   L&C AT  1:30 PM FAHRENKAMP RM 203                 
 02/27/96              (S)   MINUTE(L&C)                                       
 02/29/96              (S)   MINUTE(L&C)                                       
 03/08/96      2656    (S)   L&C RPT  3DP 1NR                                  
 03/08/96      2656    (S)   ZERO FISCAL NOTE (DCED)                           
 03/13/96              (S)   RLS AT 11:00 AM FAHRENKAMP RM 203                 
 03/13/96              (S)   MINUTE(RLS)                                       
 03/25/96      2865    (S)   RULES TO CAL & 1 OTHER   3/25/96                  
 03/25/96      2867    (S)   READ THE SECOND TIME                              
 03/25/96      2867    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 03/25/96      2867    (S)   READ THE THIRD TIME  SB 300                       
 03/25/96      2867    (S)   PASSED Y19 N- A1                                  
 03/25/96      2868    (S)   EFFECTIVE DATE(S) SAME AS PASSAGE                 
 03/25/96      2868    (S)   COURT RULE(S) SAME AS PASSAGE                     
 03/25/96      2886    (S)   TRANSMITTED TO (H)                                
 03/26/96      3361    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/26/96      3361    (H)   LABOR AND COMMERCE                                
 04/01/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 04/01/96              (H)   MINUTE(L&C)                                       
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 BILL:  SB 261                                                               
 SHORT TITLE: UNEMPLOYMENT COMPENSATION                                        
 SPONSOR(S): LABOR & COMMERCE BY REQUEST                                       
 JRN-DATE     JRN-PG                  ACTION                                   
 02/02/96      2285    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/02/96      2286    (S)   L&C, JUD                                          
 02/13/96              (S)   L&C AT  1:30 PM FAHRENKAMP RM 203                 
 02/13/96              (S)   MINUTE(L&C)                                       
 02/22/96              (S)   L&C AT  1:30 PM FAHRENKAMP RM 203                 
 02/22/96              (S)   MINUTE(L&C)                                       
 03/07/96              (S)   MINUTE(L&C)                                       
 03/08/96      2655    (S)   L&C RPT  3DP                                      
 03/08/96      2655    (S)   ZERO FISCAL NOTE (LABOR)                          
 03/22/96              (S)   JUD AT  9:00 AM BELTZ ROOM 211                    
 03/22/96              (S)   MINUTE(JUD)                                       
 03/25/96              (S)   RLS AT  7:00 PM FAHRENKAMP RM 203                 
 03/25/96              (S)   MINUTE(RLS)                                       
 03/25/96      2862    (S)   JUD RPT  3DP                                      
 03/25/96      2863    (S)   PREVIOUS ZERO FN (LABOR)                          
 03/26/96      2903    (S)   RULES TO CALENDAR 3  1NR    3/26/96               
 03/26/96      2904    (S)   READ THE SECOND TIME                              
 03/26/96      2904    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 03/26/96      2904    (S)   READ THE THIRD TIME  SB 261                       
 03/26/96      2905    (S)   PASSED Y20 N-                                     
 03/26/96      2905    (S)   EFFECTIVE DATE(S) SAME AS PASSAGE                 
 03/26/96      2913    (S)   TRANSMITTED TO (H)                                
 03/27/96      3387    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/27/96      3388    (H)   LABOR & COMMERCE                                  
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 BILL:  HB 345                                                               
 SPONSOR(S): REPRESENTATIVE(S) FOSTER, Ivan                                    
 JRN-DATE     JRN-PG                  ACTION                                   
 05/10/95      2088    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 05/10/95      2088    (H)   STATE AFFAIRS, L&C, FINANCE                       
 03/21/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 03/21/96              (H)   MINUTE(STA)                                       
 03/21/96      3259    (H)   COSPONSOR(S): IVAN                                
 03/26/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 03/26/96              (H)   MINUTE(STA)                                       
 03/27/96      3390    (H)   STA RPT  CS(STA) 2DNP 4NR                         
 03/27/96      3391    (H)   DNP:  ROBINSON, WILLIS                            
 03/27/96      3391    (H)   NR: JAMES, PORTER, GREEN, OGAN                    
 03/27/96      3391    (H)   FISCAL NOTE (REV)                                 
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 BILL:  SB 305                                                               
 SHORT TITLE: REGULATION OF ACCOUNTANTS                                        
 SPONSOR(S): LABOR & COMMERCE                                                  
 JRN-DATE     JRN-PG                  ACTION                                   
 03/08/96      2659    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 03/08/96      2659    (S)   LABOR AND COMMERCE                                
 03/19/96              (S)   L&C AT  1:30 PM FAHRENKAMP RM 203                 
 03/25/96              (S)   RLS AT  7:00 PM FAHRENKAMP RM 203                 
 03/25/96              (S)   MINUTE(RLS)                                       
 03/25/96      2863    (S)   L&C RPT  CS  4DP          SAME TITLE              
 03/26/96      2901    (S)   ZERO FISCAL NOTE (DCED)                           
 03/26/96      2903    (S)   RULES TO CALENDAR  3/26/96                        
 03/26/96      2905    (S)   READ THE SECOND TIME                              
 03/26/96      2905    (S)   L&C  CS ADOPTED UNAN CONSENT                      
 03/26/96      2905    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 03/26/96      2905    (S)   READ THE THIRD TIME  CSSB 305(L&C)                
 03/26/96      2906    (S)   PASSED Y20 N-                                     
 03/26/96      2906    (S)   EFFECTIVE DATE(S) SAME AS PASSAGE                 
 03/26/96      2913    (S)   TRANSMITTED TO (H)                                
 03/27/96      3388    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/27/96      3388    (H)   LABOR & COMMERCE                                  
 04/01/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 04/01/96              (H)   MINUTE(L&C)                                       
 04/03/96              (H)   L&C AT  3:00 PM CAPITOL 17                        
 WITNESS REGISTER                                                              
 SENATOR DAVE DONLEY                                                           
 Alaska State Legislature                                                      
 Capitol Building, Room 11                                                     
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-3892                                                    
 POSITION STATEMENT:  Sponsor of SB 197.                                       
 TOM ANDERSON, Legislative Assistant                                           
   to Representative Terry Martin                                              
 Alaska State Legislature                                                      
 Capitol Building, Room 502                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-3783                                                    
 POSITION STATEMENT:  Gave sponsor statement for HB 436.                       
 LEONARD GROSS, President                                                      
 Alaska Manufactured Home Owners Association                                   
 9599 Brayton Drive, Number 68                                                 
 Anchorage, Alaska 99507                                                       
 Telephone:  (907) 349-9599                                                    
 POSITION STATEMENT:  Testified on HB 436.                                     
 BEN MARSH, Executive Secretary                                                
 Alaska Manufactured Housing Association                                       
 2550 Denali Street, Suite 1310                                                
 Anchorage, Alaska 99503                                                       
 Telephone:  (907) 278-3615                                                    
 POSITION STATEMENT:  Testified on HB 436.                                     
 DAVE CAREY, Vice President                                                    
 Carey Homes; Past President                                                   
 Alaska Manufactured Housing Association                                       
 3317 Mountain View Drive                                                      
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 337-9464                                                    
 POSITION STATEMENT:  Testified on HB 436.                                     
 TERRY DUSZYNSKI, President                                                    
 Alaska State Homebuilders' Association                                        
 1464 Birchwood Drive                                                          
 Fairbanks, Alaska                                                             
 POSITION STATEMENT:  Testified on HB 424.                                     
 KEN MITCHELL, Executive Vice President                                        
 North Carolina Homebuilders' Association                                      
 Address and telephone number not provided                                     
 POSITION STATEMENT:  Testified on HB 424.                                     
 JOHN GEORGE                                                                   
 National Association of Independent Insurers                                  
 3328 Fritz Cove Road                                                          
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 789-0172                                                    
 POSITION STATEMENT:  Testified on HB 424.                                     
 MARIANNE BURKE, Director                                                      
 Division of Insurance                                                         
 Department of Commerce and                                                    
   Economic Development                                                        
 P.O. Box 110805                                                               
 Juneau, Alaska 99811-0805                                                     
 Telephone:  (907) 465-2515                                                    
 POSITION STATEMENT:  Testified on HB 424 and HB 544.                          
 PAUL GROSSI, Director                                                         
 Division of Workers' Compensation                                             
 Department of Labor                                                           
 P.O. Box 25512                                                                
 Juneau, Alaska 99802-5512                                                     
 Telephone:  (907) 465-2790                                                    
 POSITION STATEMENT:  Testified on HB 424.                                     
 SHERMAN ERNOUF, Legislative Assistant                                         
   to the Senate Labor and Commerce Committee                                  
 Alaska State Legislature                                                      
 Capitol Building, Room 101                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-3822                                                    
 POSITION STATEMENT:  Gave sponsor statement for SB 300, SB 261 and            
                      CSSB 305(L&C).                                           
 ART PETERSON, Uniform Law Commissioner                                        
 National Conference of Commissioners                                          
   on Uniform State Laws                                                       
 350 North Franklin Street                                                     
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-400                                                     
 POSITION STATEMENT:  Testified in support of SB 300.                          
 L. S. (JERRY) KURTZ, JR., Member                                              
 Code Revision Commission                                                      
 1050 Beech Lane                                                               
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 258-6051                                                    
 POSITION STATEMENT:  Testified in support of SB 300.                          
 WILLIS KIRKPATRICK, Director                                                  
 Division of Banking Securities and Corporations                               
 Department of Commerce and Economic Development                               
 P.O. Box 110807                                                               
 Juneau, Alaska 99811-0907                                                     
 Telephone:  (907) 465-2521                                                    
 POSITION STATEMENT:  Testified in support of SB 300.                          
 DWIGHT PERKINS, Special Assistant                                             
 Office of the Commissioner                                                    
 Department of Labor                                                           
 P.O. Box 21149                                                                
 Juneau, Alaska 99802-1149                                                     
 Telephone:  (907) 465-2700                                                    
 POSITION STATEMENT:  Testified in support of SB 261.                          
 RON TORGERSON, Chief Hearing Officer                                          
 Division of Employment Security                                               
 Department of Labor                                                           
 P.O. Box 25509                                                                
 Juneau, Alaska 99801-5509                                                     
 Telephone:  (907) 465-2775                                                    
 POSITION STATEMENT:  Answered questions on SB 261.                            
 CHRIS CHRISTENSEN, Staff Counsel                                              
 Office of the Administrative Director                                         
 Alaska Court System                                                           
 303 "K" Street                                                                
 Anchorage, Alaska 99501-2084                                                  
 Telephone:  (907) 264-8228                                                    
 POSITION STATEMENT:  Testified on SB 261.                                     
 JOHN WALSH, Legislative Assistant                                             
   to Representative Richard Foster                                            
 Alaska State Legislature                                                      
 Capitol Building, Room 410                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-3789                                                    
 POSITION STATEMENT:  Gave sponsor statement on HB 345.                        
 MICHAEL KIRK                                                                  
 P.O. Box 20844                                                                
 Juneau, Alaska 99802                                                          
 POSITION STATEMENT:  Testified against HB 345.                                
 TIM VOLWILER                                                                  
 8030 North Douglas Highway                                                    
 Juneau, Alaska 99801                                                          
 Telephone:  Not provided                                                      
 POSITION STATEMENT:  Testified against HB 345.                                
 MILT BARKER                                                                   
 206 Seventh Street                                                            
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-4301                                                    
 POSITION STATEMENT:  Testified against HB 345.                                
 WILLIE ANDERSON                                                               
 114 Second Street                                                             
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 586-3090                                                    
 POSITION STATEMENT:  Testified against HB 345.                                
 BOB STORER, Chief Investment Officer                                          
 Treasury Division                                                             
 Department of Revenue                                                         
 P.O. Box 110405                                                               
 Juneau, Alaska 99811-0405                                                     
 Telephone:  (907) 465-4399                                                    
 POSITION STATEMENT:  Testified on HB 345                                      
 TOM BARTLETT, President                                                       
 Alaska Society of Certified Public Accountants                                
 1095 Bruhn Road                                                               
 Fairbanks, Alaska 99709                                                       
 Telephone:  (907) 457-2495                                                    
 POSITION STATEMENT:  Testified in support of CSSB 305(L&C).                   
 CHARLES "CHUCK" GRIFFIN, Certified Public Accountant                          
 Box 670                                                                       
 Palmer, Alaska 99645                                                          
 Telephone:  (907) 745-3239                                                    
 POSITION STATEMENT:  Testified in Support of CSSB 305(L&C).                   
 ACTION NARRATIVE                                                              
 TAPE 96-32, SIDE A                                                            
 Number 001                                                                    
 The House Labor and Commerce Standing Committee was called to order           
 by Chairman Pete Kott at 3:28 p.m.  Members present at the call to            
 order were Representative Sanders, Kubina, Elton, Rokeberg and                
 Kott.  Representative Kubina arrived at 3:40 p.m. and                         
 Representative Porter arrived at 3:45 p.m.                                    
 SB 197 - INS:DOMESTIC VIOL. VICTIMS & DISCLOSURES                           
 Number 128                                                                    
 CHAIRMAN PETE KOTT announced the first order of business would be             
 CSSB 197(L&C), "An Act relating to insurance covering an insured              
 who is a victim of domestic violence and requiring certain                    
 disclosures by an insurer."  He said the bill had been heard at               
 least on three occasions.  There is currently a committee                     
 substitute that is before the committee.  Chairman Kott explained             
 there was a proposed amendment before the committee.                          
 REPRESENTATIVE NORMAN ROKEBERG made a motion to rescind the                   
 amendment he had offered.                                                     
 CHAIRMAN KOTT explained the amendment wasn't adopted and that                 
 Representative Rokeberg should move to withdraw the amendment as it           
 wasn't adopted.                                                               
 REPRESENTATIVE ROKEBERG moved to withdraw the amendment.  Hearing             
 no objection, it was so ordered.                                              
 Number 205                                                                    
 REPRESENTATIVE ROKEBERG moved to adopt the new committee                      
 substitute, Version R, dated 4/3/96, Ford.                                    
 CHAIRMAN KOTT asked if there was an objection to the adoption of              
 the new committee substitute.  Hearing none, HCSCSSB 197(L&C) was             
 before the committee.                                                         
 Number 250                                                                    
 REPRESENTATIVE ROKEBERG said, "In section - excuse me - subsections           
 (1) and (2) this was a area that we discussed in committee.  I                
 think there was general concurrence, including with the sponsor and           
 industry that this would be acceptable because it required notice             
 to an applicant for insurance if they were turned down - the reason           
 they were being turned down, only upon written request.  The                  
 purpose of that particular revision was to provide -- to ease the             
 burden on industry and to make sure that any consumer that was                
 refused any insurance, and for the record, this include all                   
 insurance, not just those related to domestic violence Mr.                    
 Chairman, would be duly notified of the reason for the refusal to             
 write a policy of insurance.  Then in addition, this Version R                
 deletes the provisions on confidentiality that were in the last               
 version of the bill, as provided by the sponsor of the bill,                  
 related to records and so forth.  We've heard testimony that this             
 would be a burden on industry and that the -- it really wasn't                
 necessary because of existing procedures.  I would draw the                   
 committee's attention to a letter from the law firm of Lessmeier              
 and Winters.  It was distributed today and dated April 3.  It                 
 outlines some burdens that would be placed on industry if that                
 clause were to be left in.  And a -- I'm sure the committee has had           
 an opportunity to read this.  And I've talked to the sponsor of the           
 bill and he's agreed to accept that particular revision.                      
 Basically, that is the gist of the changes.  Mr. Chairman, we                 
 should keep in mind the original concept of the bill, which was to            
 ensure that victims of domestic violence would not be refused                 
 insurance or denied coverage or have any premium adjustments and so           
 forth.  That language has been retained in the bill which is really           
 the heart of the legislation."                                                
 Number 436                                                                    
 CHAIRMAN KOTT informed the committee there is a proposed amendment            
 to the new committee substitute which will be labeled Amendment 1.            
 Chairman Kott moved the amendment be adopted.                                 
 REPRESENTATIVE KIM ELTON objected for the purpose of discussion.              
 CHAIRMAN KOTT explained Amendment 1 makes it clear that you can               
 adjust rates for a condition but not a cause.                                 
 Number 498                                                                    
 SENATOR DAVE DONLEY, sponsor of SB 197, said, "I'm concerned about            
 section (c) of this proposed amendment.  It says the above section,           
 which is basically the guts of the bill I would think - since I               
 didn't draft this I'm not exactly sure, but the nondiscrimination             
 provision would only apply to an insured or an applicant for                  
 insurance.  That would allow discrimination against third party               
 beneficiaries of policies and I just don't that language is                   
 necessary.  Section (b), I don't think it's necessary but it                  
 doesn't seem to be contrary to what the bill already says."                   
 REPRESENTATIVE ROKEBERG said he thinks the provision was to allow             
 insurance companies to do their rating underwriting without regard            
 to the cause.  They could do rating based on something like a                 
 preexisting condition or another condition, notwithstanding the               
 fact that there was domestic violence.                                        
 SENATOR DONLEY said he doesn't think section (b) conflicts with the           
 bill as it is currently written.  He said he doesn't think it is              
 necessary, but noted he doesn't think it is in conflict with what             
 the bill says.  Senator Donley explained section (c) concerns him             
 because it narrows the scope of the bill to insure an applicant for           
 insurance and it would cut out any third party beneficiary or                 
 anybody else that may be a beneficiary of an insurance policy.  He            
 said he doesn't think those people should be discriminated against            
 either.  Senator Donley said, "I think (c) is not wise, I think (b)           
 doesn't conflict with the existing bill."  If that makes the                  
 insurance industry happy, he doesn't think it is necessary.  It               
 doesn't do violence to the bill.                                              
 Number 651                                                                    
 REPRESENTATIVE ROKEBERG said he didn't understand the point about             
 the third party beneficiary.  He asked how it relates to the first            
 SENATOR DONLEY said, "I think in the world of insurance, that could           
 be read to mean that just if your name is on the insurance policy,            
 do you have the protection against discrimination?  If you're a               
 third party beneficiary of the benefits of a policy, rather than              
 being insured you would still be -- you could still legally                   
 discriminate and I don't think that is what the committee really              
 wants.  I mean I don't think that's good public policy.  That's the           
 only reason I can see for having that language in there is to allow           
 discrimination against other beneficiaries of the insurance and I             
 don't think that's appropriate based only the fact that if they're            
 a victim of domestic violence.                                                
 Number 743                                                                    
 CHAIRMAN KOTT asked if it would be satisfactory to delete                     
 subsection (c).  He then made a motion to amend the amendment to              
 delete subsection (c) and number the sections accordingly.                    
 CHAIRMAN KOTT asked if there was an objection to amend the                    
 amendment.  Hearing none, the amendment was before the committee.             
 Chairman Kott asked if there was an objection to the amendment.               
 Number 775                                                                    
 REPRESENTATIVE ROKEBERG objected.  He said he wanted know if the              
 sponsor had a problem with the amendment.                                     
 SENATOR DONLEY said he doesn't think it harms the purpose of the              
 bill.  He said he thinks it is consistent with what has been said             
 all along.  Unless the specific reason was that they were a victim            
 of domestic violence rather than some other appropriate                       
 underwriting criteria.  He stated he doesn't think it is necessary,           
 but it doesn't harm the ultimate purpose of the bill.                         
 CHAIRMAN KOTT asked if there was an objection to the amendment.               
 Hearing none, the amendment was adopted.                                      
 CHAIRMAN KOTT said the bill is an Act relating to insurance                   
 covering an insured.  He said through the committee process, we               
 have covered procedures within the bill dealing with an applicant             
 which is not an insured.  Chairman Kott said in his opinion, the              
 title of the bill needs to be changed to reflect the contents.                
 SENATOR DONLEY said in working with the drafters in developing the            
 committee substitute currently before the committee, the drafters             
 are usually pretty good in pointing something like that out.  He              
 said since the version that came over from the Senate also use the            
 word "applicants" at some point, he thinks it is O.K. because the             
 insured is also frequently an applicant.                                      
 Number 915                                                                    
 REPRESENTATIVE ROKEBERG said, "The whole provision about the reason           
 an applicant got turned down -- we're talking about applicants                
 here, it may not even be covered as an insured so..."                         
 CHAIRMAN KOTT said that is something that could be checked on with            
 the drafters.  If there is a problem, it can be adjusted.                     
 Number 956                                                                    
 REPRESENTATIVE ROKEBERG made a motion to move HCSCSSB 197, as                 
 amended, Version R, with the accompanying fiscal notes and                    
 individual recommendations.                                                   
 CHAIRMAN KOTT asked if there was an objection.  Hearing none,                 
 HCSCSSB 197(L&C), as amended, was moved out of the House Labor and            
 Commerce Committee                                                            
 HB 436 - MOBILE HOME DEALERS & TITLES                                       
 Number 1000                                                                   
 CHAIRMAN KOTT announced the next order of business would be CSHB
 436(TRA), "An Act relating to purchase and sale of mobile homes by            
 mobile home dealers; to mobile home titles; and providing for an              
 effective date," sponsored by Representative Martin                           
 TOM ANDERSON, Legislative Assistant to Representative Terry Martin            
 Alaska State Legislature, came before the committee to address HB
 436.  He informed the committee the bill was introduced in response           
 to the Alaska Manufactured Housing Association to place into                  
 statute licensing and regulation procedures for mobile home                   
 MR. ANDERSON said, "Currently, statutory provisions regulate, and             
 license and bond have a surety provision and offer Alaska Real                
 Estate Commissioner, for realtors, but mobile home dealers have no            
 regulation and are unbonded and unlicensed.  So this would place              
 them under a new heading under Occupational Licensing.  In                    
 addition, the state does not require, it allows but does not                  
 require the Division of Motor Vehicles (DMV) to title a mobile                
 home.  And this bill would also require and authorize DMV to title            
 mobile homes."                                                                
 MR. ANDERSON said this is in the best interest of the consumer.  He           
 indicated there is a zero fiscal note.  Mr. Anderson said there are           
 people connected via teleconference to speak on the measure.                  
 Number 1116                                                                   
 REPRESENTATIVE ROKEBERG asked if there is a prohibition in the                
 legislation on the fact that a real estate broker couldn't also               
 sell a mobile home.                                                           
 MR. ANDERSON said he didn't believe so.                                       
 REPRESENTATIVE ROKEBERG asked if this would be a new licensure set            
 up to provide for that.                                                       
 MR. ANDERSON indicated it was.                                                
 Number 1154                                                                   
 REPRESENTATIVE ELTON said it is another rampant example of                    
 Republicans wanting to add more regulations to statutes.                      
 Number 1171                                                                   
 CHAIRMAN KOTT referred to page 2, line 8, "(6) a statement that the           
 applicant is a bona fide dealer or agent in mobile home sales with            
 a business at the location given;".  He asked if there will be a              
 requirement to update with the department as the representatives in           
 sales change.                                                                 
 MR. ANDERSON said, "To be honest, Mr. Chairman, this was drafted              
 from Legal Services and we had them `wing it' and put in what they            
 thought would be good information."  Mr. Anderson said in speaking            
 with the director of Occupational Licensing who has stated that               
 Section (b), line 1, page 2, to line 10, probably doesn't have to             
 be in the bill.  Mr. Anderson said the committee is welcome to                
 amend the bill in regard to informational purposes as much of this            
 is already on record.  He said they would have to notify the                  
 CHAIRMAN KOTT informed Mr. Anderson that subsection (b) is lines 1            
 through 16.  He said subsection (b)(4) calls for the name and                 
 address of sales representatives.  Chairman Kott pointed out that             
 are some dealerships where there are a lot of people in sales.  He            
 said you can go to Cal Worthington's one week and there are 50                
 sales representatives and you go down there two weeks later there             
 is almost a 50 percent turnover.  He said he was wondering if the             
 intent to update that or if it is not too onerous.                            
 MR. ANDERSON said he meant in terms of the occupational licensing             
 application, much of this information is already on the application           
 packet.  He said we don't believe that it is necessary to maintain            
 this information.  He referred to Chairman Kott's question and said           
 he doesn't think there is a need to continually update that.  He              
 said he meant that if the committee members were looking at                   
 subsection (b), further subsections (1), (2), (3) and (4), they do            
 not necessarily have to be in the bill.  It was included for a                
 reaffirmation of who and what the business was and where the                  
 address was.  He said he doesn't know how to change that other than           
 to delete it.                                                                 
 Number 1347                                                                   
 CHAIRMAN KOTT said on page 4, language was added on line 8, "shall            
 issue a certificate of title to the owner of a mobile home upon               
 application," and then the new language is "display of evidence of            
 ownership."  He asked if there was any testimony in the previous              
 committee from the department as to what kinds of evidence would be           
 MR. ANDERSON indicated there wasn't testimony in the previous                 
 committee.  He said he believes they simply meant a certification             
 or a title, an actual piece of paper.  He indicated he doesn't know           
 the answer.                                                                   
 CHAIRMAN KOTT said as in the case of registering or titling motor             
 vehicles, would the certificate of title also show lienholders.               
 MR. ANDERSON indicated that is the intent.                                    
 Number 1405                                                                   
 REPRESENTATIVE ELTON referred to page 4, line 8, and said DMV would           
 issue the title.  He said they would issue that title, for example,           
 if somebody buys a mobile home outright that would go to the owner,           
 but it could also go to the bank and the bank would be required to            
 pay a fee of $100.                                                            
 MR. ANDERSON said he isn't sure how that procedure works.  He said            
 assumes it would be similar to a vehicle.                                     
 Number 1453                                                                   
 REPRESENTATIVE GENE KUBINA asked what has happened in the state               
 where it has become necessary to regulate another group of people.            
 MR. ANDERSON said in the committee packet, there is a letter from             
 the Alaska Housing Manufacture Association.  They would be better             
 to respond with specific situations that have occurred that                   
 infringed on their sales.                                                     
 Number 1539                                                                   
 REPRESENTATIVE ELTON referred to page 2, lines 1 through 17 and               
 said the way he reads it the department prescribes and furnishes a            
 form of application and the application then must have this                   
 information.  He said he believes it would be discretionary on the            
 adoption of regulations which is talked about on the bottom of page           
 1, whether or not they would have to update that.  Representative             
 Elton said he is assuming the license the license application would           
 be the same as for other occupational licensing - once every two              
 MR. ANDERSON indicated that is correct.                                       
 Number 1589                                                                   
 LEONARD GROSS, President, Alaska Manufactured Home Owners                     
 Association said he is also a dealer.  Mr. Gross referred to HB 436           
 and said it is a consumer bill.  He said it would be a little more            
 costly to him.  He said manufactured homes with the former name               
 `mobile homes,' - the least expensive manufactured new homes coming           
 into Anchorage costs about $50,000.  This represents probably the             
 largest investment of a home owner who lives in a manufactured home           
 or a mobile home, yet there is no central agency of mandatory                 
 registration.  Formally they were issued titles, all mobile homes             
 or manufactured homes had to be titled.  Now it is arbitrary which            
 is kind of ridiculous to have two sets of registration.  What has             
 happened over the last year when the DMV stopped handling titles              
 and wouldn't retitle for a year, from July of 1994 to August of               
 1995, there were instances of fraud where renters were selling                
 homes with a false bill of sale.  Showing their ownership didn't              
 mean a thing.  Mr. Gross said there are some manufactured home for            
 $100,000.  It is evident that somebody needs protection.  As a DMV            
 dealer, where it is mandatory to have a license, they have to be              
 bonded.  The present bond is $10,000.  He said currently, there               
 isn't no way to have the central regulation to see if the unit is             
 free and clear.  Mr. Gross said an increase in the bonding would              
 cost him money, but it would still be for the protection of the               
 MR. GROSS referred to the titling and said the consumer pays for              
 the title transfer in the (indisc.) application, one way or the               
 other.  He said the only thing they can show is a clear title.                
 Most of the banks will not finance a home without a title.  He                
 thanked the committee for listening.                                          
 Number 1706                                                                   
 BEN MARSH, Executive Secretary, Alaska Manufactured Housing                   
 Association, testified via teleconference from Anchorage.  He                 
 explained he operates and manages the association.  Mr. Marsh said            
 he hears about anecdotal stories about people who have been                   
 handling sales of mobile homes without adequate titling and proof             
 of ownership.  He said his association would like to see something            
 to protect the rights of people who buy mobile homes under those              
 conditions - used ones.  Obviously, if a mobile home sold with a              
 lean from a bank or a loan from a lender, a problem won't arise               
 because there will be proof of title before a loan is issued.  The            
 problem arises when you're conveying used models between                      
 individuals and the seller is financing.                                      
 Number 1772                                                                   
 DAVE CAREY, Vice President Carey Homes; Past President, Alaska                
 Manufactured Housing Association, said he concurs with everything             
 Mr. Gross and Mr. Marsh stated.  He referred to Wasilla and said a            
 few years ago, one gentleman sold the same mobile home four or five           
 times because he played on the fact that a bill of sale was the               
 only thing that was necessary.  Had there been the requirement of             
 a title to be processed through the DMV, that would have been                 
 detained.  He said he hopes we can recover from the years that we             
 haven't had titling.  He said he concurs with Mr. Gross on the                
 dealerships.  Mr. Carey said their homes are built under federal              
 standards, yet there is nobody in Alaska who is actually inspecting           
 those homes to make sure they have the proper seals on them.  He              
 said we just want to protect ourselves and our people.                        
 CHAIRMAN KOTT noted Representatives Porter and Kubina had joined              
 the meeting.                                                                  
 Number 1867                                                                   
 CHAIRMAN KOTT referred to the application requirements that the               
 department will require and asked Mr. Carey if those conditions               
 were satisfactory.                                                            
 MR. CAREY said they use the same forms for mobile homes and have in           
 the past.  That form is completely acceptable.                                
 CHAIRMAN KOTT asked what the wish of the committee was.                       
 Number 1935                                                                   
 REPRESENTATIVE JERRY SANDERS moved and asked unanimous consent that           
 HB 436 be moved out of committee with accompanying fiscal notes and           
 individual recommendations.                                                   
 CHAIRMAN KOTT asked if there was an objection.  Hearing none, CSHB
 436(TRA) was moved out of the House Labor and Commerce Committee.             
 HB 524 - INSURANCE POOLING BY EMPLOYER ASS'N.                               
 Number 1983                                                                   
 CHAIRMAN KOTT announced the committee would hear HB 524, "An Act              
 relating to insurance pooling."                                               
 TERRY DUSZYNSKI, President , Alaska State Homebuilders'                       
 Association, was first to come before the committee to testify in             
 support of HB 524.  He pointed out that currently, they are                   
 supporting the concept of the bill.  After hearing testimony at the           
 last hearing on the bill by the Division of Insurance and the                 
 Division of Workers' Compensation, he has met with Marianne Burke             
 and Paul Grossi.  He said they spent time going over some of the              
 problems they have had with the current language in HB 524.  He               
 said they decided to bring some amendments forward to make it                 
 compatible or palatable between both of those people and groups.              
 He said he read a letter into the record:                                     
 Dear Representative Kott:  The Alaska State Homebuilders'                     
 Association met with the principal state regulators yesterday to              
 discuss House Bill 524.  The meeting produced an agreement between            
 the homebuilders and the regulators that House Bill 524 should be             
 amended to include the following principles:  Group self insurance            
 will be for workers' compensation purposes only; groups that self             
 insure must be shown to be solvent; groups that self insure must be           
 able to pay any potential claims; a plan for liquidation must be              
 included in the legislation; the guarantee fund must be included in           
 the legislation; all parties who may participate in the group must            
 be treated equally; and group self insurance plans will be                    
 regulated by the state.                                                       
 "If these principles are included in the bill, we believe the                 
 regulators will support the bill.  Such a bill will protect Alaska            
 workers while allowing groups to manage their own workers                     
 compensation destinies and reduce their costs of doing business in            
 the state of Alaska."                                                         
 MR. DUSZYNSKI informed the committee that Mr. Ken Mitchell was in             
 attendance with him.  He is the executive officer of the North                
 Carolina Homebuilders' Association.  Mr. Duszynski said they are              
 modeling everything they are bringing forward based on what they              
 have had in their success.                                                    
 Number 2114                                                                   
 KEN MITCHELL, Executive Vice President, North Carolina                        
 Homebuilders' Association, was next to address the committee.  He             
 noted he also serves as the administrator for the North Carolina              
 Homebuilders' Set Insurers Fund.  He explained this is a situation            
 they got into twelve years ago.  Mr. Mitchell said they were in a             
 posture where insurance rates were going extremely high.  Many of             
 their small builders weren't able to buy workers' compensation                
 insurance and many of the traditional markets had left the                    
 marketplace.  There is a provision in the North Carolina law that             
 groups that are homogeneous can form together and prove their risk            
 as far workers' compensation is concerned.  There are requirements.           
 He said they are regulated by the North Carolina Department of                
 Insurance.  They started their fund in May, 1984.  The first year,            
 they had 400 member firms who participated in the plan.  They had             
 about $840,000 of annual premium.  During 1995, they have over                
 8,500 employers generating $65 million of annual premiums.  Mr.               
 Mitchell said they have been able to reduce the cost of workers'              
 compensation by two or three different ways.  Number one is they              
 make sure they have a good underwriting program so that they bring            
 desired firms into the plan.  Secondly, they don't just pay claims,           
 they manage claims.  He said he thinks this is where the real cost            
 savings are involved in workers' comp.  If you, as an employer, can           
 become very involved in the claims and accidents that you have on             
 your workplace, then you can save dollars through lowering your               
 expense (indisc.), getting your people back to work as quickly as             
 MR. MITCHELL said they are no different than the builders in Alaska           
 in that they want to make sure that their employees that are                  
 injured in the workplace receive every benefit that they're                   
 entitled to.  He said they want to make sure that happens anywhere            
 that does group self-insurance across the country.  He said they              
 want to be able to control their destiny and costs so that they can           
 be in a situation where they can reduce the cost of workers' comp.            
 Every house that is built, a large portion of the expense of                  
 building that house goes into the area of workers' compensation.              
 If they can reduce those costs, then they can make housing more               
 affordable to the citizens of North Carolina and Alaska.  He said             
 he doesn't think it is the builders in Alaska or their intent to              
 circumvent any of the rules or regulations that are involved in               
 workers' compensation in the state of Alaska.  They want to have              
 the opportunity to move forward and to do the things that currently           
 36 other states allow which is to allow individual firms to join a            
 group self-insurance program so that they can have some control as            
 far as their destiny is concerned.                                            
 MR. MITCHELL informed the committee that currently there are 14               
 homebuilders associations throughout the country and soon to be 15            
 that will offer to its employers and members the ability to join a            
 group self-insurance fund.  He said he hopes that in the future               
 Alaska will be in that posture.  Mr. Mitchell noted he is not a               
 paid consultant and that he isn't in attendance for a profit                  
 motive.  The only reason he is here is to work with the legislature           
 and the members of the Alaska Homebuilders to hopefully provide               
 them with a vehicle so that they can deliver their workers' comp to           
 their workers in a manner that will be cost effective and, in the             
 long run, that will save them money and it will help to reduce the            
 accidents and the cost of those accidents on the job site.                    
 Number 2287                                                                   
 REPRESENTATIVE ELTON referred to Mr. Mitchell stating that they               
 started with 400 and have expanded to 8,500 and asked if there is             
 a minimum of the number of employees necessary to keep the risk               
 from being too concentrated.                                                  
 MR. MITCHELL said he isn't sure that there is a certain number of             
 employers that Alaska should be interested in; it is the dollar               
 premium that is generated.  He said that in North Carolina 12 years           
 ago, they had to have $750,000 in annual premiums to start their              
 program.  Some states have $500,000, and it varies across the                 
 board.  He stated he doesn't think it is the number of firms you              
 have, but the premiums that they generate.                                    
 Number 2320                                                                   
 REPRESENTATIVE BRIAN PORTER asked Mr. Mitchell if his association             
 has joint and several liability.                                              
 MR. MITCHELL said, "Yes Sir.  There are really a number of                    
 safeguards we feel very strongly about and we want to make sure               
 there is protection for the worker.  The main thing that we want to           
 make sure the end result is is that if anybody is hurt on that job            
 site, that there is money there to pay for those people.  First of            
 all, there is premium collected that is exactly the same as the               
 premium that is prescribed they rate bureau.  We don't try to get             
 around that.  Secondly, the state of North Carolina requires us to            
 put up $600,000 in cash in a guarantee fund made payable to the               
 Department of Insurance in the event that we can't pay our claims.            
 We can either do that in the form of cash or in the form of a a               
 surety bond.  Thirdly, we have joint and several liability in the             
 event that the process gets to the point where we can't pay our               
 claims, then we can go back and assess our people.  But prior to              
 that, we're also required to buy reinsurance where we will take a             
 certain portion of the risk up front and then we will have                    
 reinsurance that will cover that risk for catastrophic type losses.           
 And there are two types of reinsurance that we deal with.  One is             
 for the specific claims that we have and the second is called an              
 `aggregate reinsurance' which is kind of like an umbrella coverage            
 in your general liability policy, it takes an overall look at where           
 we are.  And then -- then the next area, which would be the                   
 (indisc.) of protection is that we also have a guarantee fund in              
 the state of North Carolina where every individual self insurer and           
 every group self insurer contributes money into a guarantee fund.             
 And if we have one of those groups or individual firms that become            
 insolvent, after everything else is exhausted then the guarantee              
 fund will go in and pay the worker's claims that they have and then           
 we will go back and reassess everybody who is individually or group           
 self-insured in the state to recoup those losses and build the                
 guarantee fund back up.  Fortunately or unfortunately, I've been on           
 the guarantee fund since the very start.  The commissioner of                 
 Insurance appointed the first guarantee fund and I was a part of              
 that and have served as the chairman of the guarantee fund for the            
 last two years.  I probably told you more than you wanted to know             
 about it.                                                                     
 Number 2417                                                                   
 CHAIRMAN KOTT referred to the three areas underpinning the North              
 Carolina program - underwriting, pay and manage claims and                    
 questioned what the third one was.                                            
 MR. MITCHELL responded, "Safety - loss control."                              
 CHAIRMAN KOTT asked him to expand on the loss control aspect.                 
 MR. MITCHELL explained they have safety engineers that are employed           
 by the third party administrator who oversees their program.                  
 Safety engineers are professional people who go out to the job                
 sites and inspect.  He noted some of the safety engineers on staff            
 and then they use some on a contract basis.  Mr. Mitchell said,               
 "Lets say that you have a construction job and your experience mod            
 continues to rise and you have a frequency of accidents.  Then our            
 safety engineers will go to your job site and say, `You must do the           
 following things because these are not right on your job site.'               
 Then we will write a letter to that individual employer saying,               
 `Here is the problems that you have on the job site, you've got 30            
 days to correct these,' and if they don't correct those then we               
 don't allow them to stay in the fund anymore.  We have tried to               
 sell the concept to our people that this is your fund, you can do             
 with it whatever you see fit.  If you work together and you prevent           
 accidents on the job site, then you're going to save money.  And I            
 have people that builders that will call me and say, `Ken, you need           
 to go over and look at Terry Duszynski's job site, he's got some              
 people over there doing things that he's not supposed to do and               
 he's going to have an accident and when he does, it's going to cost           
 me money.'  And that's the kind of concept that we've tried to                
 foster in North Carolina - that this is our member's fund and any             
 monies that they have that we can produce as a savings on the claim           
 side, then we give that money back to our participants."  [END OF             
 TAPE 96-32, SIDE B                                                            
 Number 001                                                                    
 MR. MITCHELL continued, "Our safety dividends work in the following           
 manner:  If you don't have a 70 percent loss ratio, then you don't            
 participate in the safety dividend because you didn't help create             
 the monies that are there that are leftover.  For 1995 -- We have             
 to get this approved by the Department of Insurance to be able to             
 give this money back.  For 1995, we have asked for and have been              
 approved to give back $5 million to our people.  Those are the                
 kinds of things that we're able to do with the concepts that we               
 have.  We want to get involved, and I hope I don't offend anybody             
 that's in the traditional insurance business, if I do I'm sorry but           
 that's the way it is.  Most of the time what we've found in North             
 Carolina, it may be different in Alaska, is that they just pay the            
 claims that come in and what we want to do is manage those claims.            
 We want to make sure that we cut out fraud in the workplace.  Our             
 statistics tell us that probably 25 percent of the claims that are            
 filed for workers' comp are fraudulent and we passed legislation in           
 North Carolina that makes that a felony and we send those people to           
 jail because it's steeling, and if it's not a real claim where                
 people are actually being hurt then we don't want to pay that and             
 we don't want our employers to have to pay that."                             
 Number 058                                                                    
 CHAIRMAN KOTT questioned if a safety engineer's visit isn't                   
 necessarily triggered by an event.                                            
 MR. MITCHELL said it could be for any reason.  A safety engineer              
 could be driving by a job site and stop.  He pointed out that if              
 there are people who are questionable as far as underwriting is               
 concerned, they will send a safety engineer out before they are               
 actually accepted into the plan.                                              
 CHAIRMAN KOTT asked how the safety engineers are funded.                      
 MR. MITCHELL explained that it comes from the premium that is                 
 generated through the group self insurance.  Presently, they have             
 what is called a third party administrator who does all their                 
 billing, collections, claims and safety engineering.  He said all             
 of that will be in-house by July 1.  Mr. Mitchell noted they are              
 going to have $2 million plus dollars, annually, in savings by                
 bringing this in-house.                                                       
 CHAIRMAN KOTT thanked Mr. Mitchell for his testimony and introduced           
 Mr. George.                                                                   
 Number 221                                                                    
 JOHN GEORGE, National Association of Independent Insurers, was next           
 to address HB 524.  He informed the committee his background is in            
 risk management and he has worked on forming (indisc.) insurance              
 companies for corporations.  He said he thinks there are some                 
 benefits in any group looking at themselves internally to find out            
 why they have losses, how they can improve that, whether they end             
 up in an insurance program, a self-insurance program or a pool.  He           
 said he would like to reserve his comments until he can see what              
 the new proposal is.                                                          
 CHAIRMAN KOTT invited Paul Grossi and Marianne Burke to come before           
 the committee.  He explained Mr. Duszynski had indicated there had            
 been a meeting between Mr. Grossi, Ms. Burke and members of the               
 industry.  Chairman Kott asked them to comment on what direction              
 we're taking.                                                                 
 Number 300                                                                    
 MARIANNE BURKE, Director, Division of Insurance, Department of                
 Commerce and Economic Development, was next to come before the                
 committee.  She said she thinks we were all tremendously relieved             
 to realize that we're not talking about joint insurance                       
 arrangements (JIAs).  Once that issue was put aside, they then                
 discussed the considerations that they felt were essential to                 
 protect the workers in the state of Alaska.  She said, "Outlined              
 under Title 21, the insurance title, some options that are already            
 there in that we already have in statute provisions for reciprocal            
 arrangements.  I'd suggested that they look to this -- the statute            
 to see if this met their needs.  And we also discussed, under Title           
 23, the option of self-insurance was there but that in statute                
 there are very strict solvency requirements and very strict                   
 requirements as the net worth of the company, et cetera, (indisc.)            
 that is already in statute.  Our meeting I think was extremely                
 productive in that we had a opportunity to outline our concerns and           
 what we felt were necessary to protect the individuals in the state           
 of Alaska.  As we pointed out to them, our concern is that someone            
 is there to pay the bills for the injured worker.  The concept of             
 loss control, of course, is the key to keeping workers' comp costs            
 down.  It is not that the premiums just go up, the claims go up,              
 and as the claims go up they cause more to get the insurance.  So             
 we applaud their interesting concern in having a active safety                
 program.  Loss control and managing of the claims is the secrete              
 and we have told them we would work with them and to make sure that           
 the concerns that we have are addressed.  And again, I have                   
 suggested that they look to statutes that are already on the books            
 that provide for similar type arranges.  The timber exchange is a             
 perfect example.  It has worked very well, very successful.  It is            
 regulated.  I have talked to the -- I have information from North             
 Carolina.  From inception, all of their employer associations were            
 regulated and there were solvency requirements required from the              
 very beginning.  And effective 1/1/96, basically their (indisc.)              
 they were an insurance company and that they're filing the required           
 statements, they have solvency requirements, reporting and they               
 also have the guarantee fund which has been set up.  And again, I             
 think this is a wonderful concept that we would need if, in fact,             
 this sort of arrangement came into being in Alaska.  Right now,               
 (indisc.--coughing) certain companies participate in the guarantee            
 fund.  So we have the added assurance that the policy holders or              
 the beneficiaries of the policy will have a source to pave the                
 corners through the guarantee (indisc.--coughing) insurance                   
 companies.  If an association, such as this, had problems - if they           
 also have a guarantee association there is that extra safety.                 
 Number 473                                                                    
 PAUL GROSSI, Director, Division of Workers' Compensation,                     
 Department of Labor, said he didn't have much to add to Ms. Burke's           
 testimony.  He said their main concern is to make sure that                   
 workers' compensation liability is covered under anything that they           
 do relating to legislation that is passed.  Mr. Grossi pointed out            
 one thing they did discover is that they wanted some sort of                  
 workers' compensation coverage.  He said he didn't know whether               
 they wanted to address this in Title 21 or Title 23, but it will              
 require a lot of work to change what they have.                               
 CHAIRMAN KOTT said he has received a list of suggestions for                  
 inclusion into some kind of statutory scheme.  He said based on the           
 time left for the legislative session, he isn't sure we will be               
 able to pursue this to finality.  He said he will take the ideas              
 that were a result of the meeting and have the drafters try and               
 incorporate those into some type of legislative scheme.  Chairman             
 Kott said he will work with the departments as well as the industry           
 in ensuring that all the requirements have been met that need to be           
 met in keeping Alaska's work force safe.  He said the bill would be           
 HB 544 - HEALTH INSURANCE NOMENCLATURE                                      
 Number 590                                                                    
 CHAIRMAN KOTT announced the committee would hear HB 544, "An Act              
 relating to the use of the terms `health' and `disability' in the             
 context of insurance coverage," sponsored by the committee by                 
 request.  He said it makes some changes from a housekeeping                   
 perspective where we have used disability and have confused that              
 with health insurance.  It seems like we're conforming to make                
 disability an integral part of health insurance.  We're basically             
 changing some various parts of the insurance statutes.                        
 MARIANNE BURKE, Director, Division of Insurance, Department of                
 Commerce and Economic Development, came forward to testify on HB
 544.  She said this is a housekeeping bill where they are changing            
 the word "disability," which is an archaic term that went on the              
 books many years ago.  Since that time, disability, income                    
 protection insurance and other types of disability coverage have              
 come into being and it creates a great deal of confusion.  Ms.                
 Burke explained she has been approached by legislators saying, "Why           
 is this bill addressing disability."  She was also questioned why             
 the word "disability" was used in the domestic violence bill.  It             
 is because it conforms with the Alaska statute's usage of that                
 term.  She said "disability" is being changed to "health."  This              
 will bring us into agreement with the usage of the term throughout            
 the industry throughout the United States.   We would be catching             
 up with the rest of the country.  Ms. Burke said it is user                   
 Number 692                                                                    
 REPRESENTATIVE ROKEBERG indicated he applauds the bill.                       
 REPRESENTATIVE KUBINA noted it looks like the title is so tight               
 that you can't do anything else but deal with those two words.                
 Number 742                                                                    
 REPRESENTATIVE ROKEBERG made a motion to move HB 544 out of                   
 committee with individual recommendations and the attached zero               
 fiscal note.                                                                  
 CHAIRMAN KOTT asked if there was an objection.  Hearing none HB 544           
 was moved out of the House Labor and Commerce Committee.                      
 SB 300 - UNIFORM COMMERCIAL CODE:ART 8(SECURITIES)                          
 Number 866                                                                    
 CHAIRMAN KOTT announced the committee would address SB 300,                   
 "An Act relating to the Uniform Commercial Code, primarily to                 
 investment securities; amending Rule 8(d), Alaska Rules of Civil              
 Procedure; and providing for an effective date."                              
 SHERMAN ERNOUF, Legislative Assistant to the Senate Labor and                 
 Commerce Committee, informed the members that the bill is a                   
 housekeeping bill.  He said the committee introduced SB 300 by                
 request of the Uniform Law Commission.  He said, "If I had to boil            
 this down to one main topic, which really is the full substance of            
 the bill, its one main theme is the recognition of current                    
 practices in the handling of investment securities by electronic              
 means instead of paper and by the use of a lot clearinghouse                  
 corporations and securities intermediaries have popped up.  This              
 bill just updates the UCC code to recognize electronic handling of            
 securities.  It passed the Senate 20 to 0.  Really, there is no               
 opposition stated.  Its been endorsed by quite a few people."                 
 MR. ERNOUF indicated many states have adopted it and there are                
 currently a quite a few states that are going through this process            
 to get this on the books as fast as possible.                                 
 Number 965                                                                    
 REPRESENTATIVE PORTER asked if this is basically what was done to             
 the banking code as far as wire transfers.                                    
 ART PETERSON, Uniform Law Commissioner, National Conference of                
 Commissioners on Uniform State Laws, explained the bill is related            
 in that it uses modern technology, but it deals with a whole                  
 different set of issues and circumstances.  It is to address the              
 modern world.  The current code was written several decades ago.              
 Number 1006                                                                   
 L. S. (JERRY) KURTZ, JR., Member, Code Revision Commission, said              
 the bill is an attempt to get the law to catch up with the                    
 computers.  He said he would point out that this is a 1994 proposal           
 by the Uniform Law Commission.  As of last September 30, 13 states            
 had already adopted it, including several important commercial                
 states, namely Illinois and Texas.  He noted Washington and Oregon            
 have recently adopted this and other states are currently in the              
 same process.                                                                 
 Number 1608                                                                   
 WILLIS KIRKPATRICK, Director, Division of Banking Securities and              
 Corporations, Department of Commerce and Economic Development, was            
 next to address SB 300.  He informed the committee that SB 300 is             
 really not that much different if it is compared with AS 45.08.               
 There are some significant changes in it and those changes are                
 basically in the area of control and the action of intermediaries.            
 The action of the intermediaries takes place in the electronic                
 transfer of funds and in the electronic transfer of shares of                 
 ownership.  Those go to a clearinghouse or to an intermediary or a            
 third party who handles those types of transactions.  Mr.                     
 Kirkpatrick explained in the mid 1970s, this was handled by the               
 exchanges through a depository trust corporation that held in the             
 depository certificates and everybody would do a bookkeeping entry            
 as a debit of credit against those certificates.  Today, with the             
 electronic age, electronic transfers and the activity that is                 
 occurring, we are getting more and more into a "certificateless"              
 world.  The law needs to be updated to protect those who have                 
 certificates with the intermediaries and those who have liens and             
 actions against those certificates.  He said it protects all                  
 parties in relationship to those types of transactions.  Mr.                  
 Kirkpatrick said the bill is a good bill and he urged passage.                
 Number 1175                                                                   
 REPRESENTATIVE ROKEBERG referred to page 31, line 28, and said it             
 speaks to lost stock certificates.  The words "bona fide purchaser"           
 were changed to "protected."  He said he isn't sure he understands            
 MR. KIRKPATRICK said he believes that protected is covered under              
 the definition of a protected certificate holder.  He said it may             
 be explained in Section 113.                                                  
 REPRESENTATIVE ROKEBERG said the reason he asked this question is             
 because about 25 years ago he bought his father one stock in Exxon            
 and a few other shares in other companies.  He said he is looking             
 for one of the certificates because he wants to sell the stock.               
 MR. KIRKPATRICK said he may be able to get a replacement for the              
 certificate through the transfer or registered bank.  He said he              
 doesn't believe that is the protected definition in this instance.            
 Number 1282                                                                   
 REPRESENTATIVE ROKEBERG referred to the state of New York not                 
 adopting this.  He said the security exchanges are in the state of            
 New York.                                                                     
 MR. PETERSON said he has called the Chicago office of the Uniform             
 Laws Conference and the reason it hasn't been enacted in New York             
 was that the New York Bar was studying it in great detail.  He said           
 there was some segment of the bar that was causing some delay.                
 They have since come out with a report, which was favorable.  It              
 was supposed to go to the New York legislature in March.  It may be           
 currently pending in the New York.  The plan was that it would be             
 introduced this spring and it is expected to pass in New York very            
 MR. PETERSON explained that in the 1960s, there was a major                   
 paperwork crises hitting the New York Stock Exchange and all the              
 security exchanges.  Two things stemmed in response to that.  One             
 was the developing concept of the uncertificated security.  So if             
 General Motors wanted to issue Representative Elton a share of                
 stock, they don't send him a piece of paper saying, "Dear Kim, here           
 is your piece of paper."  They would deal through a depository, an            
 intermediary that in fact is between the issuer, General Motors,              
 the stock broker and the ultimate purchaser, Kim Elton.  Mr.                  
 Peterson explained that because of that development to the point              
 where this clearing corporation system so dominates the scene now,            
 something like 80 percent of all shares are held through that                 
 clearing corporation in New York which is called a depository trust           
 corporation, there are very few instances of pieces of paper flying           
 around through the mail back and forth, but there are still some.             
 So this bill retains some of the provisions of the old UCC to take            
 care of that situation, but it also adds a new group of sections              
 recognizing what is called the "Indirect Securities Holding                   
 System."  Representative Elton would have his account with his                
 broker, Merrill Lynch.  Merrill Lynch, in turn, would have its                
 account with a depository clearing corporation in New York, and               
 that corporation would then be in touch with General Motors.  He              
 said there are several intermediaries between the ultimate                    
 purchaser, the ultimate holder who has the right to receive the               
 benefits of that share of stock, and the issuer of that stock, the            
 corporation that is doing the manufacturing, etc.  Mr. Peterson               
 said because the law has failed to keep up with that, we need to              
 have this modernized version of the Uniform Commercial Code                   
 MR. PETERSON explained the second thing that developed was the use            
 of computers.  This electronic technology that has mushroomed over            
 the last two decades.  It is such a different scene now from the              
 way it was in the 1960s, and the law has not kept up with that.               
 This bill is supposed to try to do so.  He said in a few years                
 there will be another bill that does whatever the advances are                
 then.  Mr. Peterson said SB 300 is overwhelmingly supported by all            
 of the folks in the securities industry.  He said he isn't sure               
 whether the committee members' files includes a series of letters             
 from people of the New York Stock Exchange, the American Stock                
 Exchange and the Depository Trust Company.  The American Bar                  
 Association supports the changes.  He noted it was developed by the           
 National Conference of Commissioners in Uniform State Laws.  Mr.              
 Peterson explained the National Conference of Commissioners put out           
 a section by section commentary if the committee wished to have a             
 copy.  He urged the committee to pass the bill.                               
 Number 1618                                                                   
 CHAIRMAN KOTT asked Mr. Peterson to make the section by section               
 analysis available.                                                           
 Number 1655                                                                   
 REPRESENTATIVE PORTER made a motion to move SB 300 out of committee           
 with individual recommendations and a zero fiscal note.                       
 CHAIRMAN KOTT asked if there was an objection,  Hearing none, SB
 300 was moved out of the House Labor and Commerce Committee.                  
 SB 261 - UNEMPLOYMENT COMPENSATION                                          
 Number 1742                                                                   
 CHAIRMAN KOTT announced the next order of business would be SB 261            
 "An Act relating to the release of employment security records;               
 relating to an injunction or an employer's security for delinquent            
 unemployment insurance contributions; extending time periods for              
 redeterminations and appeals for unemployment insurance; relating             
 to the overpayment or the redetermination of unemployment insurance           
 benefits; relating to availability for work, seeking work, and the            
 calculation of wages for unemployment insurance purposes; relating            
 to voluntary federal tax withholding from unemployment insurance              
 benefits; relating to the binding effect of unemployment                      
 compensation decisions; relating to the definition of `waiting                
 week' for employment security purposes; and providing for an                  
 effective date," sponsored by the Senate Labor and Commerce                   
 SHERMAN ERNOUF, Legislative Assistant to the Senate Labor and                 
 Commerce Committee, Alaska State Legislature, explained the SB 261            
 was introduced by request of the Department of Labor.  He explained           
 it is a cleanup bill of the unemployment Security Code.  Mr. Ernouf           
 then referred the committee to Dwight Perkins.                                
 Number 1784                                                                   
 DWIGHT PERKINS, Special Assistant, Office of the Commissioner,                
 Department of Labor, read his statement into the record:                      
 "The bill before the committee makes several changes to the                   
 Employment Security Act in six major areas:  Federal income tax               
 withholding; confidentiality of records; contributions and                    
 collection; benefit overpayments; finality of determinations; and             
 appeals.  In addition, the bill contains a few minor and technical            
 "Regarding income tax withholding, one important change brings the            
 Employment Security Act into conformity with a new federal                    
 provision that requires states to allow claimants to have income              
 withheld from their benefits to cover their federal income tax                
 "In the confidentiality of records section, proposed changes to AS            
 23.20.110 would allow the department to provide additional specific           
 unemployment insurance information to other entities under strict             
 disclosure guidelines.  This information exchange will support and            
 enhance the department's own programs, as well as assisting other             
 state programs.  The information would be used only to protect the            
 unemployment compensation fund; enhance employment, training, and             
 labor market information programs; and assist state eligibility               
 verification and collection functions.  These changes do not                  
 rescind the public disclosure prohibitions already in As 23.20.110.           
 They are intended only to increase efficiency of state government             
 while retaining current privacy safeguards.                                   
 "In the contributions and collection section, Mr. Chairman, two               
 provisions would provide important tools for collecting delinquent            
 contributions.  First, the department would be authorized to                  
 require a deposit or bond from an employer who is at least two                
 quarters delinquent in making contributions to the unemployment               
 compensation fund.  The bill also allows the department to enjoin             
 a delinquent employer, who refuses to post a bond or pay                      
 contributions, from operating as an employer.  The department would           
 use these provisions only in situations where existing remedies in            
 the Employment Security Act are not effective, as for example,                
 where an employer operates without significant assets subject to              
 lien or seizure.  These uncollectible accounts are currently being            
 subsidized by the rest of Alaska's employers who pay contributions            
 on a timely manner.  An additional change allows the department to            
 notify employing units of their contractor's or subcontractor's               
 liability for contributions to the unemployment compensation fund.            
 This information will help employers to meet their obligation to              
 require contribution bonds of their subcontractors before making              
 contract payments.                                                            
 "In the benefit overpayments section, the standard for waiving                
 unemployment insurance overpayments would be changed from `great              
 hardship' to `equity and good conscience.'  The new standard would            
 allow the department to consider other factors, such as the degree            
 of good faith in claiming benefits and the claimant's detrimental             
 reliance on these benefits.  The bill would also permit the                   
 department to write off uncollectible overpayments after two years.           
 Practice has shown that most recoverable overpayments are collected           
 within two years.                                                             
 "In the finality of determinations, the department would be given             
 clear authority to correct any determination during the benefit               
 year of an unemployment claim.  This change will increase the                 
 accuracy of claim adjudication.                                               
 "In our appeals section, a proposed amendment would provide a                 
 uniform 30 day time period for filing appeals from any                        
 determination made by the department.  The current 15 day period              
 probably impacts rural parties unfairly and may not allow enough              
 time to review and consider an appeal.  A longer period would still           
 allow for prompt disposition of claims and assessments.                       
 "The bill would also clarify the legal effect of appealed                     
 decisions.  It would make it clear that findings of fact and                  
 conclusions of law in unemployment hearings are not binding in                
 another proceeding.  The purpose of this amendment is to prevent              
 parties from excessively litigating issues based on the effect the            
 department's rulings may have on later civil litigation.  This                
 change will help keep unemployment hearings speedy, informal and              
 "Both the 30 day appeal period and the provision restricting the              
 scope of department decisions address concerns of a recent                    
 legislative audit of the unemployment insurance appeals process.              
 "Finally, Mr. Chairman and committee members, the minor and                   
 technical changes that I spoke about earlier are additional                   
 amendments would allow an insured worker to continue receiving                
 unemployment benefits while attending the funeral of an immediate             
 family member; require a worker to file a compensable claim for the           
 week immediately before jury duty or attendance at a funeral in               
 order to receive an eligibility exemption for those reasons; exempt           
 extended benefit claimants from the work search required while                
 attending an approved training course; correct the definition of              
 the `waiting week' in the Employment Security Act; and finally,               
 clarify the treatment of `cafeteria plan' payments under the wage             
 definition in the Act."                                                       
 MR. PERKINS said that concludes his testimony.                                
 Number 2222                                                                   
 REPRESENTATIVE ROKEBERG referred to page 8, line 14, Section 14,              
 where the bill lowers from six years to two years the period in               
 which the commissioner shall seek to make recovery for overpaid               
 benefits and said his first impression is it seems like we're not             
 being diligent enough to collect these overpayments.                          
 MR. PERKINS said he would defer that question to Mr. Torgerson.  He           
 said regarding the recoverable payments, he believes the department           
 is at 90 percent of payments that are overpaid.                               
 Number 2332                                                                   
 RON TORGERSON, Chief Hearing Officer, Division of Employment                  
 Security, Department of Labor, explained he worked on the drafting            
 of the bill.  He said most of their overpayments are recovered.  He           
 said their non-front recovery rate is better than 90 percent.  Most           
 of them are recovered or offset from benefits within about two                
 years.  Mr. Torgerson explained this won't cause the department to            
 walk away from the overpayments at all.  It is not prescriptive and           
 doesn't require the department to write off the overpayment, it               
 just allows it.  He explained there have been instances where                 
 they've written off an overpayment and then determined somebody has           
 returned to Alaska and have reinstituted it and collected it.  This           
 wouldn't significantly impact collection.                                     
 REPRESENTATIVE ROKEBERG asked why we are doing this.                          
 MR. TORGERSON said he believes the department's point is just to              
 not carry uncollectible overpayments on the books.  It does drag              
 down the recovery rate (indisc.).  If they're uncollectible, it               
 seems expedient to write them off.  He noted some stats don't ever            
 write them off, some states write them off after six months, two              
 years is sort of medium period to keep the overpayment on the books           
 [END OF TAPE....]                                                             
 TAPE 96-33, SIDE A                                                            
 Number 001                                                                    
 MR. TORGERSON continued, "It isn't a vital position, I don't                  
 believe, it is simply that there is no reason for showing                     
 overpayments on the books that are uncollectible."                            
 REPRESENTATIVE ROKEBERG noted his concern that they aren't being              
 carried on the record.  It says in the provision that a record                
 could also be thrown out.  He pointed out that a six year holding             
 period for records is similar to the Internal Revenue Service's               
 standards for record keeping.  Representative Rokeberg referred to            
 throwing the record out and questioned how would you collect on a             
 Number 081                                                                    
 MR. PERKINS said he believes that even after six years, if a person           
 returns to the state they would be able to collect those funds.  He           
 stated it is not a complete deletion of the case file.  It is a               
 measure of time in a window period that they can look back and see            
 what is outstanding or what is not outstanding after two years.               
 Mr. Perkins stated that in no way do they intend to delete the                
 file.  If the person comes back to the state, the department plans            
 on diligently collecting those funds.  He again pointed out that              
 they have had a 90 percent recovery rate.                                     
 CHAIRMAN KOTT asked if the 90 percent recovery rate fell within the           
 two year time period or over six years.                                       
 MR. TORGERSON explained most of the overpayments are collected                
 fairly quickly and usually by offsetting against benefits that the            
 person may be eligible for down the line.  He said he can't                   
 confirm, without more research, exactly how many overpayments are             
 recovered within two years.  He noted they are working on a new               
 system which is called a "Bart System" which is being instituted              
 under a federal grant.  It would allow the department to monitor              
 and discover overpayments much more quickly.  It should increase              
 the department's collection rate even more.                                   
 REPRESENTATIVE ROKEBERG asked what a typical circumstance is that             
 creates an overpayment.                                                       
 MR. TORGERSON said a majority of the overpayments are because of              
 misreported wages on claims.  Wages and other income are deductible           
 from benefits and, in most instances, it is not fraudulent                    
 misreporting, it is just incorrect answers on claim forms.  He                
 informed the committee the average overpayment is about $216 which            
 is slightly over the maximum benefit amount for one week.  The vast           
 majority of the overpayments are recollected very quickly by offset           
 from any future benefits.                                                     
 REPRESENTATIVE ROKEBERG pointed out that in Alaska there is                   
 seasonal work.  He asked if the department carries the outstanding            
 balances to the following calendar year.                                      
 MR. TORGERSON said they do.  The current system the department is             
 operating under, basically cross matches, every quarter, the claims           
 filed against the wage reports of every employer in the state.  If            
 the program sees that an individual files a benefit claim in a                
 quarter in which the employer has reported wages for him, the                 
 probability of a waited match is assigned to that and the case is             
 investigated.  He noted the new system will do this more                      
 Number 371                                                                    
 REPRESENTATIVE SANDERS said the file isn't being thrown away, it is           
 just being put into a file drawer somewhere.  If something comes              
 up, they can go and get it back out of the drawer.                            
 MR. TORGERSON said it gets cases out of the system that has a much            
 lower probability of collecting so that they can focus on the cases           
 that are collectable.                                                         
 Number 412                                                                    
 REPRESENTATIVE PORTER asked what would trigger the ability to go              
 back to a case.                                                               
 MR. TORGERSON said he wasn't sure exactly how long the computer               
 system keeps claims archived, but it is a good many years.  He said           
 the department has had cases where the head of the benefit payment            
 control unit has reinstituted the overpayment and collected it                
 after it becomes obvious that, through a tip or any other                     
 information, that the overpayment is collectable.                             
 Number 458                                                                    
 MR. PERKINS said once there is a qualifying event by a claimant,              
 then that would raise a red flag, or possibly through employment              
 security taxes that the employer pays on an individual.                       
 REPRESENTATIVE PORTER said if the file is purged, how would the red           
 flag get raised.                                                              
 MR. TORGERSON said he can't say for sure.  He said he wants to                
 emphasize that this particular section doesn't require the                    
 department to write off anything.  The department isn't required to           
 write off after six years.                                                    
 Number 516                                                                    
 CHAIRMAN KOTT said in the provision, it indicates that the                    
 commissioner may declare the sums uncollectible and cancel both the           
 resulting shortage and related records.  It doesn't mean that the             
 commissioner will.  Chairman Kott said he would suspect that in               
 some circumstances he won't.                                                  
 MR. TORGERSON said that is correct.  He said the commissioner would           
 like the discretion to be able to write off what appears to be                
 uncollectible overpayments quickly.  The commissioner isn't                   
 necessarily going to write those overpayments off.                            
 REPRESENTATIVE ROKEBERG asked if this wouldn't have the net affect            
 of making the commissioner's record of collection look better.                
 MR. TORGERSON indicated it would.  He pointed out Oklahoma has one            
 of the worst overpayment recovery records simply because they write           
 off nothing.  They're still collecting on overpayments made after             
 World War II.  He said the department is subject to a variety of              
 federal oversight and one of the components is overpayment recovery           
 rate.  Mr. Torgerson said the commissioner is not extremely                   
 interested in having the records burdened with uncollectible                  
 accountants.  He stated Alaska has been first in the nation in                
 overpayment recovery.  In past years we were fourth or sixth.                 
 Number 769                                                                    
 CHRIS CHRISTENSEN, Staff Counsel, Office of the Administrative                
 Director, Alaska Court System, was next to come before the                    
 committee.  He explained when a bill is labeled "housekeeping and             
 cleanup" sometimes it is easy for it to fall through the cracks.              
 He said there is one very substantial change to current law in                
 Section 3 which was added at the Court System's request by the                
 Department of Labor prior to introduction.  Mr. Christensen said              
 both the state and federal constitutions provide that if a person             
 is charged with a crime and can't afford a lawyer, the state has to           
 provide one for free.  The Court System has the prime                         
 responsibility for determining indigency and does the best job they           
 can, but they are funded by the legislature with only four people             
 statewide, two in Anchorage and two in Fairbanks.  Section 3                  
 provides the Court System with a very important new tool to                   
 determine indigency.  It says the court system will have access to            
 the Department of Labor's employment security tax records for                 
 purposes of determining indigency.  Mr. Christensen said this will            
 make it much easier for the Court System to determine if a person             
 is truly eligible.  He said they also requested that an additional            
 section be put into Section 3 which would give the Department of              
 Law's Finance Collection Unit access to the same data.  He noted              
 the Finance Collection Unit is funded by program receipts.  It has            
 responsibility for collecting criminal fines that are unpaid as               
 well as collecting the monies which the Court System orders                   
 indigent defendants to pay for their public defender services once            
 they acquire money in the future.  Mr. Christensen explained that             
 currently, the Finance Collection Unit primarily goes after                   
 permanent fund dividends because there is no easy and inexpensive             
 way to do anything else.  Once they have got access to these                  
 records, they'll be able to garnish paychecks because they'll know            
 when somebody has gone back to work and is making money.                      
 Number 800                                                                    
 There being no further witnesses, REPRESENTATIVE ROKEBERG made a              
 motion to move SB 261 out of committee with individual                        
 recommendations and a zero fiscal note.                                       
 CHAIRMAN KOTT asked if there was an objection.  Hearing none, SB
 261 was moved out of the House Labor and Commerce Committee.                  
 HB 345 - PENSION INVESTMENT BOARD PROCUREMENTS                              
 Number 960                                                                    
 CHAIRMAN KOTT announced the committee would hear HB 345, "An Act              
 relating to the procurement of investment and brokerage services by           
 the Alaska State Pension Investment Board," sponsored by                      
 Representative Foster.                                                        
 JOHN WALSH, Legislative Assistant to Representative Richard Foster,           
 said HB 345 would require that the Alaska Pension Investment Trust            
 Board increase the utilization of brokerage and investment services           
 provided by persons located in the state to at least 7 percent.               
 Additionally, there is a provision to provide an option to take a             
 look in Alaska.  If these services are not available or the quality           
 of service is not available, the board wouldn't be required to make           
 that local procurement.  In support of the bill, he would reiterate           
 on behalf of the sponsor, that the findings section of the bill               
 where the case is made for a healthy competitive private sector is            
 of paramount importance to Representative Foster.  He said he is              
 aware of the impending fiscal gap that is motivating much of the              
 fiscal restrictions in the House and Senate operating budget.  The            
 opportunities before us are not limited to general fund only.  We             
 think that use of the assets that the state has access to                     
 including, the pension investment fund, could be used to circulate            
 somewhat through the state and thereby, enhance the economy in                
 support of the local firms that operate here.  Mr. Walsh said they,           
 in no way, have any intentions to jeopardize the investments or the           
 integrity of the fund.  That is not the objective of the sponsor.             
 He said there are attractive investments in the state and quality             
 firms that can handle some of the brokerage transactions and                  
 investment counseling.  He said it is incentive to take a look in             
 Alaska before going out of state.  Currently, the board uses 100              
 percent out-of-state investment counseling.                                   
 CHAIRMAN KOTT noted there is a new committee substitute which                 
 couldn't be adopted because of a lack of a quorum.  He asked Mr.              
 Walsh to review the changes.                                                  
 Number 1119                                                                   
 MR. WALSH said, "In the State Affairs hearings, there was some                
 confusion as to whether we were talking about actual investments or           
 investment services and we thought about that and took a look at              
 the statute for the permanent fund investment.  This committee                
 substitute would incorporate Section 11, page 3, lines 7 through              
 13, -- would incorporate the same language that's currently in                
 statute for the permanent fund.  And that would be to take a look             
 at investments for which the board is responsible in-house, to the            
 extent that state investments are available and if the in-state               
 investments have a risk level and expect to yield comparable to the           
 alternative investment that the board would be looking otherwise --           
 and are certainly consistent with the investment policies                     
 established by the board.  So the point here is an expansion to the           
 original intent.  It goes from beyond the investment counseling and           
 brokerage services to actually requiring the board to take a look             
 at investments in the state that meet or exceed those which the               
 board would be looking for outside of the state.  And we think if             
 it's suitable for the permanent fund, it certainly is worthy of               
 consideration in this legislation.  And, again, the intent is to              
 not in any diminish or disrupt the critical analysis or integrity             
 that the board places on their current investments.                           
 REPRESENTATIVE ROKEBERG questioned what the number is in terms of             
 the gross amount of pensions related to this area in terms of the             
 Pension Investment Board.  He referred to it being multiplied by 7            
 percent and questioned the meaning.                                           
 MR. WALSH said, "I think I see members of the Department of Revenue           
 here - staff to the Department of Revenue.  If I understand, I                
 think the actual transaction fees or investment fees by the Pension           
 Investment Board are in the neighborhood of $7.4 million for the              
 PERS (public employees retirement system).  Well here, I have a               
 schedule investment management fees, year ended June 30, 95, that's           
 $7.4.  I don't expect that those -- I guess -- I'm not sure how               
 often the contract is turned, but that appears to be - just for the           
 PERS - the amount of management fees for the fiscal year 94."                 
 REPRESENTATIVE ROKEBERG asked if the 7 percent would be based on              
 the gross of the corpus of those funds.                                       
 MR. WALSH explained the corpus of the funds is approximately $7               
 billion combined.                                                             
 Number 1338                                                                   
 MICHAEL KIRK came before the committee to testify against HB 345.             
 He said  he is addressing the committee not merely as a pension               
 retiree, but as a fellow pension retiree as the committee members             
 will be.  Mr. Kirk said, "The reason I'm here to testify against HB
 345 is because I consider the need that you will be given as an arm           
 twister and maybe a little bit of a red herring, I've submitted               
 incidently testimony to you which is in your file.  It is                     
 unbelievable that presumably competent entrepreneurs, presumably              
 competent investment brokers, presumably competent investment                 
 counselors would have to attempt to twist your arm to say that they           
 should have special privileges for being in this state at this                
 moment, they could have moved in any time as far as I'm concerned,            
 and trying to persuade you or stampede you into believing, first of           
 all, that the American free market economy has singled them out and           
 is unfair to them, that the U.S. pension funds, contrary to court             
 decisions, are the employer's property when the courts have ruled             
 constantly otherwise.  They are the earned property of the retiree.           
 Number three, to have you believe that the epidemic in U.S. pension           
 trust looting, as reported in the New York Times repeatedly and as            
 reported in Business We repeatedly never happened."  Mr. Kirk                 
 continued to give testimony against HB 345 and noted he submitted             
 testimony which was included in the committee member's committee              
 Number 1667                                                                   
 TIM VOLWILER was next to come before the committee to testify on HB
 345.  He informed the committee he has 16 years in the teacher's              
 retirement system, he hopes to retire in the next century and he              
 hopes there is money there for it.  Mr. Volwiler said he believes             
 the pension investment board is a trust fund for the teachers and             
 the public employees.  He said he thinks the pension investment               
 board is working well in its present format and he doesn't see any            
 reason to change the freedom of the board as it is.  Mr. Volwiler             
 said he was distressed to see the work draft, Section 11, page 3,             
 lines 7 through 13.  He noted he has sent letters to the committee            
 members against the original bill.                                            
 MR. VOLWILER said, "Number one, there doesn't seem to be any                  
 percentages in the bill; and number two, to me this kind of puts a            
 burden of proof for consideration on to things which are not                  
 provable.  I mean you're looking at risk level and expected yield             
 and that is guess work.  I mean you can have good analysis, but you           
 can have a difference of opinion and I don't believe that you                 
 should tell the pension investment board that they are required to            
 look at someone in-state or look at, you know, a municipal bond in-           
 state that's AA rated is equivalent to a municipal bond AA rated              
 anywhere else.  So there is different analysis and I don't think              
 you should put a burden of proof on the pension investment board to           
 justify why they're not using local people.  I think there are                
 people in the state that have good ideas, but I don't think we                
 should make any recommendations towards the board as to who they              
 should hire.                                                                  
 MR. VOLWILER said, "The second comment I would have is there is a             
 difference between making your first investment in this state and             
 then making other investments.  If you have a wide diversification            
 in your portfolio, all those risks balance out.  If you concentrate           
 a lot of investments in the state, such as Alaska with relatively             
 few people, that concentrates your risk more.  So each additional             
 investment unbalances your portfolio.  My main point, though, is I            
 believe that `why fix what's not broken to start out with?'  I                
 think the pension investment board is working well.  I think if               
 they so choose to invest in-state, that's fine but the benefits               
 should be the retirees and, as I consider myself, an expected                 
 retiree.  When there is not a conflict here, I don't believe, I               
 mean the recipients want their money to be there, when it comes               
 they can spend it and that's how we can get economic development in           
 this state.  I don't think we should mandate a certain percentage             
 or a certain broker that they have to go through.  I think that the           
 retirees have earned their money and when they get it in the terms            
 of their retirement pay, they'll spend it in-state and that's the             
 way we see the economic benefit in the state.  If they choose to do           
 so, I don't oppose that, but I don't think the legislature should             
 be tying their hands and saying, `You must invest in-state.'"                 
 Number 1858                                                                   
 MILT BARKER came before the committee to testify on HB 345.  He               
 informed the committee he is a PERS beneficiary, served the state             
 for eight years as deputy commissioner of Treasury.  He said his              
 concern is both for the state and the beneficiaries and that mean             
 upholding the high standards we currently have in legislation the             
 legislature has passed.  Mr. Barker said the defining principle of            
 the trust fund, as quoted in standard legal text, is the most                 
 fundamental duty owed by the trustee to the beneficiaries of the              
 trust, which is the duty of loyalty and that duty is defined as, "A           
 trustee owes a duty to the beneficiaries to administer the affairs            
 of the trust in the interest of the beneficiaries alone and to                
 exclude from consideration the welfare of third persons."  Mr.                
 Barker said HB 345 would be a retreat from these standards and                
 would be a costly one.  The cost would come from higher trading               
 costs, poor investment performance, greater administrative costs              
 and potentially litigation.  The board is currently obligated to              
 obtain the best performance and the lowest transaction costs that             
 it can.  Even if Alaskan firms provided equal service, mandating              
 their use can increase costs by increasing the number of firms that           
 the board deals with.  Mr. Barker said this could be increases in             
 administrative costs and managerial distractions from it pursuing             
 investment performance.  It also can increase costs because typical           
 investment management contracts have graduated fee scales - the               
 more money under management, the lower the rate.  You divide the              
 money between more firms and you'll raise your total fees.                    
 MR. BARKER said when the permanent fund's adviser, Michael O'Leary            
 of Callen, Associates, was asked how many domestic fixed income               
 managers should be heard, he stated, "Any more than two and fees              
 would affect the return, if the board hired three to make room for            
 an Alaska based emerging manager."  The trust fund standards that             
 we have are really global standards of excellence and this has paid           
 off.  These funds are among the best funded pension funds in the              
 country.  Their performance is better than the permanent fund even            
 though the permanent fund, as an endowment, has a longer investment           
 MR. BARKER explained the cost of HB 345 would be born, not only by            
 employees, but by employers.  Contribution rates can only go up.              
 He said for public employer higher costs, it means higher taxes or            
 fewer services.  He questioned whether this is the time to be                 
 subsidizing in-state business when the state faces a half a billion           
 deficit and is cutting education and other essential services.                
 MR. BARKER said by ignoring standards of fiduciary conduct, HB 345            
 could expose the state to risks of litigation.  Plaintiffs might be           
 beneficiaries to PERS, TRS, SBS, deferred comp, etc.  He said you             
 could also find that municipal or other employees besides the state           
 would possibly take the state to court.  Mr. Barker said he thinks            
 the ordeal of the mental health trust law suit ought to give us               
 pause.  In short, HB 345 can only exacerbate the state's budget               
 crises and cheapen the promises public employers have made to their           
 retirees.  Mr. Barker pointed out there is no bar to in-state                 
 businesses performing services to the state's trust funds, but it             
 should not be handed to them on a plate or given as a political               
 favor.  He said like the commercial says, "Let them get the                   
 business the old fashion way, earn it."                                       
 MR. BARKER said he would like to make a comment regarding the                 
 additional language in the proposed committee substitute.  He said            
 the goal, he believes, is to increase in-state investment and a lot           
 of that would be targeted through commercial mortgages, both multi-           
 family and business.  The state already has major effort in that              
 regard, both AIDEA and now AHFC.  He said just recently AHFC                  
 announced a new financing program for market rent multi-family                
 housing and that should address a lot of the concern that is behind           
 some of this legislation.                                                     
 Number 2112                                                                   
 WILLIE ANDERSON, NEA-Alaska, was next to address the committee.  He           
 stated NEA-Alaska opposes HB 345, primarily for the reasons stated            
 previously by earlier speakers.  He said their concern is that the            
 bill mandates that there is a percentage of the pension fund that             
 is required to be invested in-state.  The pension board was elected           
 about four years ago, has been operating as an independent pension            
 investment board and has done a good job.  The returns have                   
 continued to increase since the board has been in place; the fund             
 is healthy; the unfunded liability has decreased over time; and               
 with the potential of this requirement, the unfunded liability                
 could very well increase and could cost the state additional funds            
 instead of increasing the revenue to the state.  He said it could             
 impinge upon the state's liability to bail out yet another                    
 investment system.  Mr. Anderson referred to when the SBS situation           
 went sour in the late 1980s - early 1990s, there was a requirement            
 for the state to bail that fund out.  They later sued and recovered           
 some of that money.  The same potential exists for this situation.            
 He urged that the bill not move out of committee.                             
 MR. ANDERSON referred to the new language in Section 11 and said it           
 causes additional concern to NEA-Alaska because it doesn't appear             
 to have a limit as to how much can be and should be invested.  He             
 said there is a risk level and an expected yield.  Currently, the             
 yield for the pension investment for Alaska is above average and is           
 well respected in the arena of state employee pension funds                   
 throughout the nation.  If this bill is passed, we cannot tell what           
 that performance will be.  He urged the bill be held in committee.            
 Number 2211                                                                   
 REPRESENTATIVE SANDERS asked if the Alaska teacher's retirement               
 fund buy or carry mortgages in Alaska.                                        
 MR. ANDERSON said he doesn't think that is part of their portfolio            
 at this time.  He said someone from the Department of Revenue could           
 better answer that question.  Mr. Anderson noted there is nothing             
 to preclude them from doing so.  If it is a worthy investment, they           
 can pursue it.                                                                
 Number 2242                                                                   
 BOB STORER, Chief Investment Officer, Treasury Division, Department           
 of Revenue, was next to come before the committee.  He pointed out            
 that the Department of Revenue provides staff to the Alaska State             
 Pension Investment Board.  He said the intent and the benefits of             
 the legislation are fairly obvious, but he would like to speak to             
 a number of things for the committee's consideration as they                  
 evaluate the merits of the legislation.  Mr. Storer said AS                   
 14.25.180 does name the Alaska State Pension Investment Board as              
 the fiduciary of the trust funds.  In that context, they must                 
 consider the funds investments and the liabilities.  They must                
 determine the appropriate investment objectives and act only in               
 regard to the best interests of the system's plan and                         
 MR. STORER explained that one of the things this legislation does             
 is, by statute, it creates policy and in the modern investment                
 world, it is changing and is very dynamic.  These issues need to be           
 addressed on an ongoing basis throughout the world.  Some of the              
 unintended consequences of the legislation is it could have the               
 effect of actually dictating the asset allocation of the retirement           
 system.  If you have a limited universe in Alaska to choose from,             
 you select managers in Alaska that provide a certain investment               
 vehicle.  Then by default, you have other asset allocation                    
 questions to deal with externally.  Mr. Storer referred to                    
 testimony relating to fees and those statements are reasonably                
 accurate.  He said they are always very aggressively trying to cut            
 management fees as much as possible.  Over the last couple of                 
 years, they have successfully cut about $2 million in management              
 fees.  He said he believes PERS and TRS in the aggregate, are about           
 $13 million.  The fees are published annually in the Retirement and           
 Benefit Annual Report.                                                        
 MR. STORER said, "There is one thing, if I was an Alaskan manager             
 and I knew you had to come to me for investment services, basically           
 you've taken all my leverage - my negotiation leverage away from              
 me.  Why would I acquiesce to lower fees, and again, we do this on            
 an ongoing basis if I know you must come to me.  So I think there             
 are some implications there, not only in the number of managers,              
 but the ability to negotiate lower fees on an ongoing basis."                 
 MR. STORER said, "In terms of brokerage, I'd like to come back to             
 that.  I did so well at describing at the last committee, I decided           
 to draw pictures this time and so hopefully, it will be helpful for           
 the committee members.  The new piece, in terms of investing in               
 Alaska -- this is sort of classic language, if you will, for                  
 economically targeted investments.  `Is that done out there                   
 elsewhere?' -- And the answer is `Yes.'  A study done in 1995, by             
 a firm named Grenich (ph) Associates indicated that public funds in           
 excess of $1 billion, about 17 percent of those public funds do               
 economically target investments.  So if you want to look at it --             
 glass half full or half empty, 83 don't - 17 do, or however you               
 want to perceive that.  I would revisit the question of risk and              
 yield and what I've known is that the farther away you get from               
 markets where (indisc.) reported trading, the greater the                     
 difference on the perception between what is appropriate risk and             
 yield and it depends on whether you're the buyer or the seller.               
 And there can be distinct differences on that opinion as you move             
 MR. STORER said a distinction that one should consider versus the             
 permanent fund and the retirement system is that the retirement               
 system has a distinct liability stream - the beneficiaries.  The              
 permanent fund doesn't have a liability stream and they do not have           
 to deal with that issue when they're evaluating investments.                  
 MR. STORER said, "If I may, in talking about activity for a minute            
 I'd like to hand out these diagrams.  And the answer on public                
 employees, in terms of in terms of asset management fees and                  
 investment advisory counsel is $7.5 million and for TRS it's $4.3             
 million is what's paid for asset management - a substantial sum.              
 Trades are really divided into two groups.  The brokerage firms,              
 when they deal with it, you have institutional level trading and              
 that's what the retirement system, the permanent fund, any public             
 fund - private entities use.  And then you have retail which we at            
 this table probably use."                                                     
 MR. STORER continued to explain the diagram he had given the                  
 committee members.  He said the manager makes the trade decision              
 and they make the decision to buy or sell the securities.  Mr.                
 Storer said they are not just trading just on behalf of the Alaska            
 State Pension Investment Board.  They have many other funds that              
 they deal with. [END OF TAPE....]                                             
 TAPE 96-33, SIDE B                                                            
 Number 001                                                                    
 MR. STORER continued, "...They're trained to be execution.  There             
 is quality execution.  They're used to what we call `large blocks -           
  large trading.'  And that's how you obtain the best execution.               
 And it goes through the institutional sales office and then on to             
 the institution trade desk, and we've heard about electronic                  
 trading a bit earlier.  It's done very quickly and that's important           
 because you want to get maximum execution.  I should also note that           
 by contract, managers accept fiduciary responsibility and they have           
 held to a standard of best execution possible.  Now what happens,             
 in terms of if we were trade through offices in Alaska, these would           
 go through a retail entity.  What happens is the manager must                 
 complete all trades (indisc.--coughing) and there is some level of            
 our market impact when that execution occurs.  So if you can see,             
 if we were to be held back by the diagram, we would go after all              
 the other trades would be completed and then you would have to                
 execute the trades through the Alaskan desks, and typically but               
 this is not an absolute statement, major brokerage firms have an              
 intermediary between the retail and the institutional desk to get             
 the trading.  So you must wait and complete the order before we can           
 do our trade.  There are other delays, there is clearly market                
 impact.  Under additional costs, what will be the market impact?              
 You cannot determine it until after the fact.  So you could only              
 determine the (indisc.) costs by hiring an independent consulting             
 firm to evaluate the trading costs after the fact.  And, of course,           
 hiring has some cost implications also.  With that in mind, if I              
 may, I'd like to be available to answer any questions the members             
 of this committee might ask.                                                  
 Number 079                                                                    
 REPRESENTATIVE ROKEBERG referred to when the department goes out              
 for management services contracts and asked if they go through the            
 procurement code.  He also asked how contacts are worded.                     
 MR. STORER said, "This process is unique.  It's actually recognized           
 that it is exempt from the procurement process.  Nevertheless, you            
 do have a process.  You're obligated as a fiduciary.  The board               
 will evaluate an array of asset classes, make the decision.  And we           
 do have a consulting firm that assists the board in:  (A) Those               
 decisions; and then (B) When we're looking for a specific type of             
 manager.  The consulting firm essentially runs the RFP process in             
 concert with the board and members of an investment council also              
 assists the board.  And I would suggest that to some degree it is             
 far more rigorous than the RFP process.  These firms are constantly           
 appraising the investment community at large.  I think the one we             
 use evaluates something like 1,200 management firms that provide              
 due diligence and they look at a lot of issues as you suggest - the           
 depth of an organization, the abilities.  Yes, fees are some                  
 distinction but they're not an absolute distinction.  It is a                 
 rather vigorous process and then the final component is bring some            
 element -- some group of finalists before the board for the final             
 selection process."                                                           
 MR. STORER continued, "In answer to your question about Alaskan               
 money management firms, I think one of the things that is very                
 important is communication.  I think that the investment board must           
 understand what investment options are available in Alaska.  And I            
 think that the management firms must convey how they manage their             
 assets so that the board would be well educated when those                    
 investments are appropriate.  In fact, the board has invited, on              
 two occasions, money management firms in Alaska to make educational           
 presentations before the board.  One was a fixed income manager and           
 another was one that proposed managing mortgages.  From the                   
 investment board side, this is important because the more we know             
 it'll assist us in evaluating these firms.  And then as we evolve             
 our way through the asset allocation decisions, that could be                 
 embedded in the process.  So I do think it is important that the              
 communication be in place and that there be ongoing education in              
 terms where managers are in Alaska.                                           
 Number 211                                                                    
 REPRESENTATIVE PORTER asked Mr. Storer if he has had any experience           
 with in-state providers.                                                      
 MR. STORER informed the committee that to date, the board has not             
 hired an investment manager to provide services in Alaska.                    
 REPRESENTATIVE ROKEBERG asked if anybody in the state has made a              
 proposal to the board.                                                        
 MR. STORER said they have always asked the consulting firm to take            
 a very long look at the management firms in Alaska.  He said that             
 has always been his instructions as the chief investment officer to           
 the consulting firm.                                                          
 REPRESENTATIVE ROKEBERG referred to when the permanent fund was               
 started there was a percentage of quota provision for investments             
 within financial institutions, specifically banks within the state.           
 MR. STORER said he helped develop that policy as he worked nine               
 years for the permanent fund.  There was the Alaska Certificate               
 Deposit Program.  He said they made up to $300 million available to           
 the institutions in Alaska.  These were fully collateralized                  
 certificates of deposit.  Mr. Storer said, "We worked with the                
 banks, not always to their satisfaction because they like to pay a            
 little bit less and we'd like to get a little bit more.  But we               
 developed a program that did make funds available in what we felt             
 was a market rate - a favorable market rate to both entities.  The            
 most that I can remember that the banks availed themselves of was             
 about $200 of the $300 million and, while I have not been over in             
 the last four years, I think the average balance has been about $80           
 or $100 million the last four years.  What that suggests is that              
 banks don't need capital because that was designed as a source of             
 capital for them.                                                             
 CHAIRMAN KOTT thanked Mr. Storer for his testimony and said it is             
 not his intent to move HB 345.   He asked the committee to review             
 the proposed committee substitute as it would be brought up at the            
 next meeting on the measure.                                                  
 SB 305 - REGULATION OF ACCOUNTANTS                                        
 Number 379                                                                    
 CHAIRMAN KOTT announced the last order of business would be CS FOR            
 SB 305(L&C), "An Act relating to the regulation of accountants; and           
 amending the effective date for sec. 6, ch. 62, SLA 1991,"                    
 sponsored by the Senate Labor and Commerce Committee                          
 SHERMAN ERNOUF, Legislative Assistant to Senator Tim Kelly,                   
 explained SB 305 was introduced at the request of several people.             
 It is the product of work between the Alaska State Board of Public            
 Accountancy, represented by Charles Griffin, the Alaska Society of            
 Certified Public Accountants and faculty from University of Alaska            
 - Anchorage (UAA) and University of Alaska - Fairbanks (UAF).  Mr.            
 Ernouf explained the bill changes the educational requirement for             
 licensure as a certified public accountant (CPA).  In 1991, the               
 accountancy statutes were amended to require completion of 150                
 semester credit hours for licensure as a CPA.  Those changes had an           
 effective date of September 1, 1997.  The proposed changes in the             
 bill would extend the effective date of that act to January 1,                
 2001.  This change would alleviate a number of concerns.  It                  
 conforms Alaska's statute with the AICPA change that is going to              
 occur at that time and would allow UAA and UAF to gear up their               
 programs for the 150 hour requirement.  Currently, there has been             
 friction with students and faculty over that change.                          
 MR. ERNOUF informed the committee that in 1992, Alaska started                
 recognizing limited liability companies.  Currently, without an               
 amendment to the statute, public accounting practice units can't              
 organize as limited liability companies.  This bill would amend the           
 statute so that they could organize as limited liability companies.           
 MR. ERNOUF explained the third change the bill makes to the code is           
 it allows for reciprocity for CPAs moving to Alaska.  Reciprocity             
 would be granted for an established CPA who has worked in public              
 accounting for five out of the last ten years.  The CPA would be              
 granted a reciprocal certificate.                                             
 MR. ERNOUF noted the bill was worked on in the Senate Labor and               
 Commerce Committee and a couple of small changes were made.  He               
 said all parties involved have worked together with each other and            
 it is pretty much a consensus piece of legislation.                           
 Number 499                                                                    
 TOM BARTLETT, President, Alaska Society of Certified Public                   
 Accountants, was next to address the committee via teleconference             
 from Fairbanks.  He said he would reiterate that his organization             
 worked closely with the Alaska State Board of Accountancy and that            
 they support CSSB 305(L&C).  He urged passage of the legislation.             
 Number 527                                                                    
 CHARLES "CHUCK" GRIFFIN, Certified Public Accountant, was next to             
 testify via teleconference from Mat-Su.  He informed the committee            
 he served on the Board of Accountancy for six years and has chaired           
 it for the last five years.  He said Mr. Ernouf has given the                 
 proper background on the bill.  Mr. Griffin informed the committee            
 that the board unanimously supported and endorsed the bill to meet            
 the transition and grandfather requirements of the current                    
 university graduates and to comply with the counsel of their AAG              
 who indicates that they may not issue firm permits without the                
 statutory authority to recognize the LLC form of business and to              
 have a permissive provision to issue on the basis of reciprocity              
 licenses to CPAs from other states who moved to Alaska to practice,           
 primarily with the larger national firms.  He thanked the committee           
 and urged support.                                                            
 Number 590                                                                    
 REPRESENTATIVE ROKEBERG made a motion to move CSSB 305(L&C) out of            
 committee with individual recommendations and the accompanying zero           
 fiscal note.                                                                  
 CHAIRMAN KOTT asked if there was an objection.  Hearing none, CSSB
 305(L&C) was moved out of the House Labor and Commerce Committee.             
 CHAIRMAN KOTT adjourned the House Labor and Commerce Committee                
 meeting at 6:06 p.m.                                                          

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