Legislature(1993 - 1994)

04/13/1994 09:09 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                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.                                                                 
                                                                               

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