HOUSE BILL NO. 525 An Act designating certain permissible investments by the Alaska Permanent Fund Corporation in taxable municipal or state debt securities and corporate debt securities; changing the allocation limits on domestic and nondomestic government and corporate securities, nondomestic corporate promissory notes, domestic and nondomestic corporate stocks, and taxable government debt securities; and providing for an effective date. Co-chairman Halford directed that HB 525 be brought on for discussion. REPRESENTATIVE TERRY MARTIN came before committee. He explained that the bill was introduced by House Finance on behalf of the Legislative Budget and Audit Committee. The Representative noted that the flexibility sought by the board of trustees of the permanent fund stems from an evaluation of the five fiduciary programs in Alaska. Senator Rieger advised that he spoke with representatives of the permanent fund and asked if they would object to increasing the percentage set forth at Page 2, Line 18, from 50 to 60 percent. They indicated they would not. That would make asset allocation a bit more permissive. Co- chairman Halford voiced his understanding it would allow for 60 percent to be placed in stocks. In response to a question from the Co-chairman concerning need for the increase, Senator Rieger explained that investments "are up against the limit." The reason bracketed language is being removed is because the board is having difficulty achieving the asset allocations recommended by specialists. Representative Martin noted that the permanent fund corporation has no objection to the change but wishes to remain neutral. He requested that, for the sake of expediency, the percentage remain at 50 percent. Co- chairman Halford voiced reluctance to make the change without additional background information. Senator Rieger said that failure to effect the increase would merely "hold down overall returns." Senator Sharp asked if language within Section 4 would lower the present grade of investment that could be purchased. LINDA SNOW, aide to Representative Martin, responded affirmatively. She said that the lowest grade of investment that can currently be made is A. Investment grade (BBB) is one grade lower. The proposed bill allows for investment in BBB. Senator Rieger MOVED for passage of HB 525 with individual recommendations. No objection having been raised, HB 525 was REPORTED OUT of committee with a zero fiscal note from the Dept. of Revenue. Co-chairman Frank and Senators Phillips, Rieger, and Zharoff signed the committee report with a "do pass" recommendation. Co-chairman Halford and Senators Donley and Sharp signed "no recommendation."