Legislature(1993 - 1994)
04/13/1994 09:09 AM Senate STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE STATE AFFAIRS COMMITTEE April 13, 1994 9:09 a.m. MEMBERS PRESENT Senator Loren Leman, Chair Senator Mike Miller, Vice Chair Senator Robin Taylor MEMBERS ABSENT Senator Jim Duncan Senator Johnny Ellis COMMITTEE CALENDAR SENATE BILL NO. 199 "An Act relating to employees of the division of elections." CS FOR HOUSE BILL NO. 277(JUD) "An Act relating to public employers defending and indemnifying public employees and former public employees with respect to claims arising out of conduct that is within the scope of employment." CS FOR HOUSE BILL NO. 347(FIN) "An Act relating to long-term plans of certain state agencies and recommendations regarding elimination of duplication in state agency functions." SENATE BILL NO. 244 "An Act relating to investments of the permanent fund in certain limited partnerships each of whose principal purpose is investment in securities of public or private companies; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 199 - See State Affairs minutes dated 4/23/93. HB 277 - No previous senate committee action. HB 347 - No previous senate committee action. SB 244 - See State Affairs minutes dated 1/28/94. WITNESS REGISTER Bruce Aronson Office of the Ombudsman P.O. Box 113000, Juneau, AK 99811-3000¶465-4970 POSITION STATEMENT: in favor of SB 199 Mike McMullen, Manager System Services Division of Personnel/EEO Department of Administration P.O. Box 110201, Juneau, AK 99811-0201¶465-4430 POSITION STATEMENT: testified on SB 199 Joe Swanson, Director Division of Elections P.O. Box 110017, Juneau, AK 99811-0017¶465-4611 POSITION STATEMENT: in favor of SB 199 Eric Musser, Aide Representative Porter State Capitol, Juneau, AK 99801-1182¶465-4930 POSITION STATEMENT: prime sponsor of HB 277 Susan Cox, Assistant Attorney General Civil Division Department of Law P.O. Box 110300, Juneau, AK 99811-0300¶465-3603 POSITION STATEMENT: testified on HB 277 Representative Sean Parnell State Capitol, Juneau, AK 99801-1182¶465-2995 POSITION STATEMENT: prime sponsor of HB 347 Jack Fargnoli Office of Management & Budget P.O. Box 110020, Juneau, AK 99811-0020¶465-3568 POSITION STATEMENT: in favor of HB 347 Carl F. Brady, Jr., Trustee Alaska Permanent Fund Corporation 2100 Atwood Drive, Anchorage, AK 99517¶ POSITION STATEMENT: in favor of SB 244 William H. Scott, Executive Director Alaska Permanent Fund Corporation P.O. Box 25500, Juneau, AK 99802-5500¶465-2047 POSITION STATEMENT: in favor of SB 244 Ralph C. Seekins, Trustee and Chairman of the Board Alaska Permanent Fund Corporation 1625 Old Steese Hwy., Fairbanks, AK 99701¶452-1991 POSITION STATEMENT: in favor of SB 244 Jim Kelly, Research & Liaison Officer Alaska Permanent Fund Corporation P.O. Box 25500, Juneau, AK 99802-5500¶465-2047 POSITION STATEMENT: in favor of SB 244 ACTION NARRATIVE TAPE 94-26, SIDE A Number 001 CHAIRMAN LEMAN calls the Senate State Affairs Committee to order at 9:09 a.m. Number 009 CHAIRMAN LEMAN brings up SB 199 (ELECTIONS EMPLOYEES IN CLASSIFIED SERVICE) as the first order of business before the Senate State Affairs Committee. The chairman calls the first witness. Number 032 BRUCE ARONSON, Office of the Ombudsman, states the Ombudsman continues to support SB 199. Mr. Aronson adds the only other comment Mr. Fowler wants communicated to the committee is that the Ombudsman thinks section 3 is not necessary, given the existing rules for moving folks into classified service. Number 049 CHAIRMAN LEMAN states the committee has an amendment in the bill file which was drafted by the ombudsman and would address section 3. Number 057 SENATOR TAYLOR expresses concern over classifying employees, and asks how one would get rid of someone like Charlotte Thickstun. Number 082 MR. ARONSON responds that, under SB 199, the Director of the Division of Elections would still be an exempt position. SENATOR TAYLOR asks how one would get rid of forty-some incompetent employees at DEC (Department of Environmental Conservation). Number 097 MIKE MCMULLEN, Division of Personnel & EEO, Department of Administration states the department does not have a position on sections 1 and 2 of SB 199, but is opposed to section 3. The Department of Administration supports the amendment to delete section 3. The legislature has already passed provisions for employees whose positions are moved from exempt or partially exempt to classified service. Those provisions are under AS 39.25.150. Mr. McMullen states that the process has worked well in the twelve years since the provisions were passed; those provisions have been used several times. Difficulties and confusion occurs when the legislature writes exceptions to those provisions. Number 147 CHAIRMAN LEMAN asks if there are any questions for Mr. McMullen. Hearing none, the chairman calls Mr. Swanson to testify and notes that the committee has two amendments on SB 199. Number 151 JOE SWANSON, Director, Division of Elections states that when he became Director of the Division of Elections, he reviewed the personnel files of the employees and found there was not one employee who met the minimum qualifications for the job they held. As long as the division is subject to the possibility of employees being replaced for other than work related criteria, he thinks that problem will always exist. Mr. Swanson says that it is his opinion from a division director's standpoint, and he has been the director of three different divisions for a total of thirteen years, that if the entire core and all the experience of an organization is removed, it will be almost impossible for that division to function. The State of Alaska could come very close to having a "very bad" election if this kind of thing continues to happen. MR. SWANSON states he does not disagree with Senator Taylor that it is difficult to remove incompetent employees. There are means within the system to remove incompetent personnel, however, the manager has to have the guts to do it. It removing incompetent employees is possible, Mr. Swanson states he has done so several times before. It is painful, and takes a lot of work, but it is better than hiring people with zero qualifications. Number 184 CHAIRMAN LEMAN asks Mr. Swanson if he thinks it should be easier to remove employees who hold classified positions. Number 190 MR. SWANSON responds there has be a balance between protecting classified personnel and being able to remove incompetent persons in classified positions. We would not want a manager to be able to just walk in and fire an employee. Then we would end up with all arbitration being handled through the Court System, which would be much more expensive than handling problems through a personnel-type system. Number 198 CHAIRMAN LEMAN asks if there are further questions for Mr. Swanson. Hearing none, the chairman asks if anyone else wishes to testify. Number 200 There being no further witnesses, the chairman offers amendment #1. Amendment #1 is to page 4, lines 12 through 15, and would delete section 3. CHAIRMAN LEMAN asks if there is any objection or discussion relating to amendment #1. Hearing none, the chairman states amendment #1 has been adopted. Number 211 SENATOR MILLER offers amendment #2 as a conceptual amendment, the amendment being to leave the four regional supervisors positions exempt, and not classify those positions. Number 223 SENATOR RANDY PHILLIPS states he would support that amendment. He thinks the Director of the Division of Elections should have the ability to supervise the field offices. Number 227 MR. MCMULLEN adds he does not think the amendment should stipulate the number of regional supervisors, because it could create a problem if the number of supervisors was to change. SENATOR MILLER agrees with Mr. McMullen's point. Number 235 CHAIRMAN LEMAN states the amendment will just specify "regional supervisors" and not list the number of supervisors. CHAIRMAN LEMAN asks if there is any discussion regarding the amendment. The chairman asks if there is objection to the adoption of the amendment. Hearing none, amendment #2 is adopted. CHAIRMAN LEMAN asks the pleasure of the committee regarding SB 199. SENATOR MILLER makes a motion to discharge SB 199 from the Senate State Affairs Committee with individual recommendations. Number 238 CHAIRMAN LEMAN, hearing no objection, orders SB 199 released from committee with individual recommendations. Number 262 CHAIRMAN LEMAN brings up HB 277 (INDEMNIFICATION OF PUBLIC EMPLOYEES) as the next order of business before the Senate State Affairs Committee. The chairman calls Mr. Musser to testify. Number 265 ERIC MUSSER, Aide to Representative Porter, states HB 277 would codify current state policy, which indemnifies employees for actions that occur during the normal scope of their employment. HB 277 also provides for exceptions to the indemnification of employees. An exception would occur when a collective bargaining agreement addresses indemnification. The collective bargaining agreement would supersede the provisions in HB 277. Also, if the acts or omissions of the employee were the result of gross negligence or misconduct, the employee would not be indemnified. MR. MUSSER states there is also a provision in the bill establishing the employees rights. MR. MUSSER states there is a provision allowing the employer to settle claims or actions without the consent of the employee, so long as it settles all claims or actions on behalf of the employee. Number 308 CHAIRMAN LEMAN asks Mr. Musser if there have been cases of employees who have had suits brought against them and who have not been defended by their employer. Number 312 MR. MUSSER responds the impetus behind the legislation is that there have been several cases where employees who were in the process of either buying or selling a home, were stopped from doing so because they were a party to an action. CHAIRMAN LEMAN asks if there are further questions of Mr. Musser. Hearing none, he calls Ms. Cox to testify. Number 336 SUSAN COX, Assistant Attorney General, Department of Law reiterates Mr. Musser's statements, and says it will not change any existing practices, but simply codify them. Number 349 CHAIRMAN LEMAN asks Mr. Musser if the Alaska Municipal League has taken a position on HB 277. Number 350 MR. MUSSER responds the Alaska Municipal League supports HB 277, and there should be a letter of support in committee members bill file packets. CHAIRMAN LEMAN asks if any opposition has been voiced to HB 277. MR. MUSSER replies there has been no negative testimony on the bill. SENATOR TAYLOR asks if HB 277 would merely codify common law. Number 359 MS. COX responds she does not know that there is necessarily a common law obligation for employers to indemnify their employees. But it is certainly ongoing practice to do so. Number 363 SENATOR TAYLOR says he has been told, regarding other legislation, that a letter of indemnification has been sent to volunteers working in behalf of the state on emergency response planning teams. When it was researched, there was nothing found to indicate an emergency response planning team or a member of a team had ever been sued in the United States. Senator Taylor continues to describe a problem in indemnifying emergency response planning teams. He comments that situation is directly related to this bill. Number 387 MS. COX replies she is not familiar with the situation to which Senator Taylor is referring. However, there may be a difference between indemnification of public employees and indemnification of volunteers. SENATOR TAYLOR comments the state ought to stand behind volunteers who perform a public service for the state. Number 408 CHAIRMAN LEMAN asks if there are any further questions of the witnesses or if anyone else wishes to testify. Hearing none, the chairman calls a brief at ease. Number 409 CHAIRMAN LEMAN calls the Senate State Affairs Committee back to order. Number 413 SENATOR TAYLOR makes a motion to discharge HB 277 from the Senate State Affairs Committee with individual recommendations. Number 415 CHAIRMAN LEMAN, hearing no objection, orders HB 277 released from committee with individual recommendations. Number 422 CHAIRMAN LEMAN brings up HB 347 (STATE LONG-TERM PLANNING) as the next order of business before the Senate State Affairs Committee. The chairman calls on the sponsor to testify. Number 424 REPRESENTATIVE SEAN PARNELL, prime sponsor of HB 347, states HB 347 requires departments to establish six-year, long range plans. Representative Parnell describes provisions of HB 347 as outlined in the sponsor statement on the bill. Number 451 CHAIRMAN LEMAN asks Representative Parnell if he is trying to encourage a budget based not on historical record, but on needs. Number 459 REPRESENTATIVE PARNELL states that is definitely the direction he is going with HB 347, and that the bill is based on Texas legislation. Number 466 SENATOR MILLER asks Representative Parnell how he intends to compel the governor to adhere to the provisions in HB 347 if the bill is passed. Number 470 REPRESENTATIVE PARNELL replies that compelling administrations to adhere to performance-based budgeting systems has proven to be the prime problem with this type of budgeting system. Number 484 REPRESENTATIVE PARNELL states the Court System has proposed two amendments that they would like to see adopted. The first would be to change to term "court system", which appears throughout the bill, to "judicial branch". The second amendment would amend section 1 on page 3, line 7, which would insert after "government", "the compilation shall include the plan for the judicial branch as submitted". Representative Parnell states he is not opposed to either of these amendments and asks that a member of the Senate State Affairs Committee offer them. SENATOR TAYLOR makes a motion to offer amendment #1. Number 495 CHAIRMAN LEMAN asks if there is any objection to amendment #1. Hearing none, the chairman states amendment #1 has been adopted. Number 507 REPRESENTATIVE PARNELL clarifies that amendment #1 includes both changes suggested by the Court System. CHAIRMAN LEMAN asks if anyone else wishes to testify on HB 347. Number 511 JACK FARGNOLI, Director's Office, Office of Management & Budget (OMB), states OMB supports HB 347 for two reasons: first, it is a good approach, and secondly, it is the direction in which OMB has itself been moving, and in which it intends to keep moving. When OMB discovered that Representative Parnell was interested in this legislation, OMB contacted him to express their support. It is true that for this type of system to work, is entirely predicated on the good will of the governor and the legislative branch. Number 528 SENATOR MILLER asks when HB 347 became a priority of the administration. MR. FARGNOLI replies that the administration has had an inter-agency working group on the subject for about a year. Number 533 SENATOR MILLER comments, if this was such a priority of the administration, they should have come forward with a bill in January. MR. FARGNOLI responds he appreciates Senator Miller's comments; the administration did not consider it to be a trivial project to undertake, and frankly did not feel ready for it before that time. CHAIRMAN LEMAN adds the concept is good, but he just hopes HB 347 is not an exercise in futility. Number 543 MR. FARGNOLI states he certainly hopes so too. Number 545 CHAIRMAN LEMAN asks if there are further questions or if anyone else wishes to testify on HB 347. Hearing none, the chairman asks the pleasure of the committee. SENATOR MILLER makes a motion to discharge HB 347 from the Senate State Affairs Committee with individual recommendations. Number 547 CHAIRMAN LEMAN, hearing no objection, orders HB 347 released from committee with individual recommendations. Number 549 CHAIRMAN LEMAN brings up SB 244 (PERMANENT FUND INVESTMENTS - LTD PARTNERS) as the next order of business before the Senate State Affairs Committee and calls the first witness. Number 555 CARL BRADY, Jr., Trustee, Alaska Permanent Fund Corporation, introduces Mr. Scott and Mr. Seekins. Mr. Brady describes the impetus behind SB 244. The corporation's and Mr. Brady's reasoning is contained in a memorandum and six attachments which were submitted to the Senate State Affairs Committee. TAPE 94-26, SIDE B Number 594 MR. BRADY continues his dissertation on SB 244. Number 581 CHAIRMAN LEMAN asks if there are any questions of Mr. Brady. Hearing none, the chairman calls Mr. Scott to testify. Number 580 BILL SCOTT, Executive Director, Alaska Permanent Fund Corporation, adds that SB 244 would provide for greater security and analysis of an investment. It is not a liberalization of how the corporation invests, but rather a greater concentration of analysis. Number 555 RALPH SEEKINS, Trustee and Current Chairman of the Board, Alaska Permanent Fund Corporation, states he takes his responsibility as a member of the board very seriously. He says the corporation is constantly grading itself on how well it is doing against other institutional investors. Mr. Seekins tells of a conference on alternative investments he recently attended in Colorado. Number 498 CHAIRMAN LEMAN comments he remains cautious about investments due to the Executive Life situation. Number 490 MR. SCOTT states that the Executive Life investments were made with virtually no supervision and outside control. The permanent fund has excellent and very restrictive internal controls in making investments. So Mr. Scott does not believe that one could compare the Executive Life investments with those made by the Permanent Fund Corporation in any way, shape, or form. Number 476 MR. BRADY adds that Washington and Oregon have over three billion dollars between them invested in this type of investment. Number 464 CHAIRMAN LEMAN notes the committee has an amendment to SB 244, and asks Mr. Scott to describe what the amendment would do. Number 461 MR. SCOTT states the amendment would substitute an entire new version for the original bill that was introduced. The first version was hastily drafted, and the corporation came up with what it believes would be a better definition of the limitations of the sort of investment that might be done under SB 244. It more clearly addresses the investment, as opposed to the vehicle for the he investment. Mr. Scott believes that "limited partnership" has negative connotations. MR. SCOTT states the original bill principally addressed limited partnerships. The corporation asks that the committee amend SB 244 by substituting the amendment for the original version. Number 444 CHAIRMAN LEMAN states there would be several complications involved in doing what Mr. Scott is asking the committee to do. The first is that the original title is not valid in relation to the new version being proposed by the corporation; the new version does not have an effective date. Secondly, the connotation of "limited partnership" will still carry through, because the short title of the bill will not be changed. MR. SCOTT asks the chairman if there is a solution to this minor impasse. Number 429 CHAIRMAN LEMAN responds that Legislative Legal Services could handle the problem. JIM KELLY, Research & Liaison Officer, Alaska Permanent Fund Corporation, suggests a simple title of "An Act relating to equity investments of the Permanent Fund." Number 418 SENATOR MILLER makes a motion to adopt amendment #1. Number 407 CHAIRMAN LEMAN asks if there is any objection to amendment #1. Hearing none, he states the amendment has been adopted. The chairman asks if there is anyone else who wishes to testify on SB 244. Number 400 SENATOR TAYLOR makes a motion to discharge SB 244 from the Senate State Affairs Committee with individual recommendations. Number 398 CHAIRMAN LEMAN, hearing no objection, orders SB 244 released from committee with individual recommendations. Number 393 CHAIRMAN LEMAN adjourns the Senate State Affairs Committee Meeting at 10:16 a.m.