HOUSE BILL NO. 553  An Act relating to investments of the Alaska permanent fund and to the income of and appropriations from the Alaska permanent fund and making conforming amendments; relating to the determination of net income of the mental health trust fund; and providing for an effective date. PETE ECKLUND, STAFF TO REPRESENTATIVE WILLIAMS, observed that the legislation is similar to HB 298, which was previously moved from Committee. He discussed differences between HB 298 and HB 553. He observed that Section 3 of HB 553 directs the Alaska Permanent Fund Corporation to use the prudent-investor rule while investing that value of the Fund in excess of principal. BOB BARTHOLOMEW, CHIEF OPERATING OFFICER, ALASKA PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE, further explained that statutory directions regarding how money in excess of principal is invested would be repealed. The statutory list of allowed investments would apply. The authority of how to invest the balance in excess of principal is currently in AS 37.13.145, which is being repealed. A portion of AS 37.13.145 would be brought into HB 553: (a) This section applies to investment of fund principal and all other amounts in the fund Mr. Ecklund noted that the Committee might want to change "general fund" to "public education" on line 20, page 3. He further explained that the cost of operating the Corporation would before the split occurred. Then not more than 50 percent could be to the General Fund [subsequently amended by the Committee to read: "public education"] and not more than 50 percent could be appropriated for dividends. Section 5 is the same as HB 298. Mr. Ecklund discussed page 4, lines 1 and 2. He noted that the section is basically the same as language contained in HB 298, with the exception of the: The revenue generated by the fund's investments must be identified as the source of the operating budget of the corporation and shall be included in the state's operating budget under AS 37.07. The only other difference from HB 298 was on page 5: disclose the amount of each dividend attributable to [INCOME EARNED BY THE PERMANENT FUND FROM] appropriations to the permanent fund. Representative Hawker MOVED to delete "general fund" and insert "public education" on line 20, page 3, in order to conform to HB 298. There being NO OBJECTION, it was so ordered. Mr. Ecklund noted that the effective date might need to be changed to June 30, 2005. Co-Chair Williams noted that it could be changed on the House Floor if necessary. Co-Chair Harris MOVED to report HB 553 out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 553(FIN) was REPORTED out of Committee with individual recommendations and no fiscal impact notes.