HB 137-ST. COUNCIL ON THE ARTS: PUBLIC CORP.  9:03:35 AM CHAIR DRUMMOND announced that the final order of business would be HOUSE BILL NO. 137, "An Act re-designating the Alaska State Council on the Arts as a public corporation and governmental instrumentality of the state; defining the powers and duties of the Alaska State Council on the Arts; providing exemptions from certain statutes for the Alaska State Council on the Arts; making conforming amendments; and providing for an effective date." 9:03:54 AM KRISTIN KRANENDONK, Staff, Representative Harriet Drummond, Alaska State Legislature, introduced HB 137 on behalf of the House Education Standing Committee, sponsor by request. She informed the committee the bill would [quasi] privatize the Alaska State Council on the Arts (ASCA) by restructuring the council as a public corporation, thereby allowing ASCA to continue its work with Alaskan artists and art businesses. The bill would improve the ability of the council to leverage nonstate funding and remain within the Department of Education and Early Development. Also, HB 137 would exempt ASCA from state procurement code, but would provide formal and appropriate procurement protocols. Restructuring would keep ASCA's operating budget under the Executive Budget Act for openness and transparency, and transition language would allow its advisory committee public processes and public participation to remain in place as ASCA administers grants programs and services. Further, the bill would allow ASCA to grow and develop a funding base and reduce its reliance on state funds. Ms. Kranendonk presented a sectional review, paraphrasing from a prepared statement, which read as follows [original punctuation provided]: Section 1 (Pages 1-4): Amends AS 39.25.110 concerning exempt state employees to add all employees of the Alaska State Council on the Arts (ASCA), thus making employees of ASCA exempt from the State Personnel Act. Section 2 (Pages 5-7): Adds artists' submissions made in response to an inquiry or solicitation initiated by the Alaska State Council on the Arts, to the list of records that are exempt from public inspection under AS 40.25.120. Section 3 (Page 7): Repeals and re-enacts AS 44.27.040 regarding the creation of ASCA, to establish the Council as a separate and independent public corporation of the state of Alaska within the Department of Education and Early Development (DEED). Section 4 (Page 7): Amends AS 44.27.041 to charge ASCA to be governed by an 11 member board of trustees, adds literary arts as a field represented within the board, and a member's expertise, rather than interest, as a factor for consideration for board membership. Section 5 (Page 7): Amends AS 44.27.042 to replace the term "members" with the term "trustees" and "council" with "board of trustees". Section 6 (Page 8): Amends AS 44.27.043 to replace the term "member" with "trustee". Section 7 (Page 8): Replaces the term "members" with the term "trustees" in AS 44.27.044 and replaces language that entitles trustees to be reimbursed for travel expenses at the same rate of members of state boards under AS 39.20.180. Section 8 (Page 8): Amends AS 44.27.045 to use gender- neutral terms for board members. Section 9 (Page 8-9): Amends AS 44.27.050 to require the council to encourage literary arts as well as other disciplines, invest in arts throughout the state, and conduct research into artistic and cultural activities throughout the state. Section 10 (Page 9): Amends AS 44.27.052(a) to replace "educational" objectives with "strategic" objectives as it relates to the council's ability enter into contracts and accept gifts, contributions, and bequests. Section 11 (Page 9-10): Amends AS 44.27.054 to replace language with the proper terms "chair" and "trustees" previously established and makes a conforming amendment to Section 1. Section 12 (Page 10): Adds a new section to AS 44.27 detailing the administration of affairs of the board of trustees. The board of trustees shall manage the assets of the council, establish and amend bylaws governing the business of the corporation, and employ an executive director to supervise the administration of ASCA. This section also exempts ASCA from the State Procurement Code (AS 36.30), instructs the board of trustees to establish procedures for procurement, and requires consistency with the Alaska Veterans preference established in AS 36.30.32(f). The operating budget of ASCA is subject to the provisions established in the Executive Budget Act (AS 37.07). Section 13 (Page 10): Amends AS 44.27.058 to require that ASCA comply with the 20 U.S.C 951 960 (National Foundation on the Arts and the Humanities Act of 1965) as it relates to the receipt and disbursement of funds from the National Endowment for the Arts. Section 14 (Page 10-11): Amends AS 44.27.060 to add new subsections (e) and (f) regarding confidentiality of artist submissions and adds a provision for public disclosure to submissions when the artist is awarded a commission for said submission. However, under subsection (g), subsections (e) and (f) do not apply if the submission was created as a work for hire under 17 U.S.C. 101 or if the artist's copyright has been transferred under 17 U.S.C. 204. Section 15 (Page 11): Amends AS 44.27 to add definitions for "board of trustees" and "council". Section 16 (Page 11-12): Creates transition language for ASCA to allow council members to remain on the board of trustees until their term is over, allows current employees to remain with ASCA, allows regulations, contracts, rights, liabilities, and obligations created under current law to remain in effect, and allows ASCA to retain all records, equipment, appropriations, and other property. Section 17 (Page 12): Creates an effective date for this legislation as July 1, 2017. 9:11:13 AM BENJAMIN BROWN, Chair, Board of Trustees, Alaska State Council on the Arts (ASCA), Department of Education and Early Development (DEED), stated the ASCA Board of Trustees ("council") has spent the last year searching for ways to address challenges facing the state's art agency, which are similar to those facing all parts of state government. The bill would allow ASCA to perform well for the next 50 years, and he related HB 137 is the result of a lengthy and considered process involving all of the volunteer council members, staff, and stakeholders, such as the Rasmuson Foundation. REPRESENTATIVE KOPP asked how HB 137 would enable the arts council to more effectively partner with nonprofits that wish to make donations to ASCA. MR. BROWN said ASCA has a long-standing working relationship with the Rasmuson Foundation, which provides the majority of funds supporting arts education programs. Recently, ASCA has embarked on a multi-year partnership with the Margaret A. Cargill Foundation, and its funds are supporting meaningful and transformative work with the Copper River and Kodiak school districts through the new visions initiative partnerships. Mr. Brown pointed out the bill does not exempt ASCA from oversight by the governor or the legislature in the receipt and expenditure of private foundation funds; however, the state procurement code brought out the need for the bill because when ASCA receives funds from a private foundation, spending the funds as it would undesignated general funds by a state agency is unnecessarily cumbersome, and he provided an example. In fact, the procurement code creates time-consuming hoops to be negotiated, while affording few benefits. Being a state agency impedes ASCA's desire to be nimble in its actions, to seek out private foundation partner funding, and to best serve its constituency of arts educators, individual artists, or arts organizations. He offered further examples of how state procedures and bureaucratic red tape impede the council's mission. 9:16:39 AM REPRESENTATIVE SPOHNHOLZ recalled other state programs that have gone private to obtain additional flexibility, such as the Alaska Children's Trust, and asked whether the arts council considered all of its options before selecting the model defined by the bill. MR. BROWN pointed out ASCA could not become fully private without losing matching funds from the National Endowment for the Arts (NEA); the National Foundation on the Arts and the Humanities Act provides that state arts agencies must be part of state government with one exception, and the funds to match NEA money must be a state appropriation: money from the Rasmuson Foundation or the Cargill Foundation could not supplant the appropriation received from the state legislature. Therefore, the bill directs for quasi-privatization. He cautioned in Kansas, the state arts organization lost all its NEA funding by privatizing, so ASCA sought a compromise, and will remain housed within DEED and retain its enabling statute. Mr. Brown explained the current council is comprised of eleven active members, and the bill would allow the council to be nimble but still accountable to the public. He restated ASCA, in a similar situation as The Children's Trust, faced difficulties granting funds in the best manner, and encountered obstacles created by the procurement code when sponsoring events. Further, regarding staffing, ASCA is down from six to four fulltime positions and having employees in the exempt service, rather than the classified service, and using contractors when necessary, are ways ASCA can meet the realities of its new budget environment. The council seeks to continue to meet its mission to encourage all Alaskans to create and enjoy art for all of its benefits; however, the current system will not serve the council into the future. 9:20:50 AM REPRESENTATIVE JOHNSTON asked whether the council would still be subject to the personnel rules of the state. MR. BROWN clarified ASCA employees would be reclassified from classified into exempt service; the rules would be less constraining. He related ASCA staff is aware of the proposed changes to their status. REPRESENTATIVE JOHNSTON asked if the council is assigned a vacancy factor from the Department of Administration (DOA). MR. BROWN responded six employees and one part-time position are currently on the books, and only four positions are currently filled. One of the positions is the Visual and Literary Arts Program Director and is a maintained vacancy. The other position was moved to shared services. Mr. Brown noted ASCA staff members accept duties outside their job descriptions to ensure all the work is done in a collaborative environment. He was unsure whether ASCA has an assigned vacancy factor. CHAIR DRUMMOND asked whether ASCA receives services from shared services. MR. BROWN deferred comment to the executive director and noted ASCA is in need of accounting services. 9:24:25 AM CHAIR DRUMMOND opened public testimony on HB 137. 9:24:36 AM ANDREA NOBLE-PELANT, Executive Director, Alaska State Council on the Arts (ASCA), stated support for HB 137, and offered an example of a current project - involving several partners - that has a planning timeframe of three months. [ASCA] turned over the administration of the logistics of the project to Americans for the Arts because ASCA could not complete its tasks quickly due to its present structure. Further, she paraphrased from a prepared statement, which read as follows [original punctuation provided]: The Alaska State Council on the Arts, now in its 51st year, is ready for organizational change. The timing of HB137 is opportune as Alaska's creative industry is currently growing and expanding due to a decade of targeted public and private investment and focus on the arts and culture sector as an economic player. As a result, the Alaska State Council on the Arts has experienced rapid growth in grants, programs and public/private partnerships. We wish to continue this effort, and with the provisions in HB137, the Alaska State Council on the Arts is poised to continue grant-making as a public corporation that will also allow new and existing programs to reach more Alaskans with increased impact and efficiency. As staff of four, we work on local, national and international levels to oversee projects and initiatives that build capacity for arts organizations, provide practical professional development for individual artists and boost students' chances for success through arts in education. Through mutually beneficial alliances with public/private sector partners, our reach extends to military service members and their families who experience PTSD, incarcerated individuals, pre-service teachers from rural communities, Alaskan children and youth who want opportunities to learn through arts and culture, and parents who want to raise their families in safe, sustainable communities. Keeping with our mission, revenue from funders and services goes back to Alaskan residents and communities as grants, programs and resources. Longstanding partnerships are in place with The Rasmuson Foundation, The Alaska Arts and Culture Foundation, and The Atwood Foundation. New partners include Margaret A. Cargill Philanthropies, The CIRI Foundation, and Sealaska Heritage Institute. Other partners include the Alaska Humanities Forum and The Western States Arts Federation who contribute in-kind support, resources and funding. HB137 provides flexibility for staff to manage fast flow projects in a timely manner and to work statewide across sectors such as health, economic development, tourism, and transportation. HB137 allows for responsive project execution that is necessary for desired collaborative outcomes which affect performance evaluations and our ability to secure future funding. 9:29:40 AM ALICE BIOFF, Business Planning Specialist, Kawerak, Inc.; Member, [Board of Trustees], Alaska State Council on the Arts, Department of Education and Early Development, stated support for HB 137, paraphrasing from a prepared statement, which read as follows [original punctuation provided]: I am testifying today in my capacity as an ASCA council member. I am a tribal member of the Native Village of Koyuk and grew up there and in Nome. My family and I have lived in Nome for the last 17 years. For much of that time, I have been employed by Kawerak, Inc., the regional Native non-profit consortium of tribes for the Bering Strait region, as a business planning Specialist. Through our work here at Kawerak, I am honored and privileged to work with artist entrepreneurs within our communities. We provide direct technical assistance offering tools and resources to assist artists continue their work so that they can sustain themselves, their families and their communities. It is through this work that I have seen firsthand how important it is for these artists who live in communities with very few resources and infrastructure, to grow their businesses through opportunities such as those that become available through ASCA and others. Artist Entrepreneurs are economic development drivers in their communities and the Alaska State Council on the Arts supports these communities through their work and advocacy. With their partnerships, resources and programs, we see a bright future and growth opportunity to support all artists across the State. Through the restructuring initiative, we see ASCA services continued and strengthened to support the artists through improved ability to react to funding opportunities and better represent, support and advance the artists by offering the tools and services needed to strengthen an already existing and important economy. This is critical to strengthening and sustaining our rural communities in this fiscally challenging time. HB 137 streamlines the process ASCA will use to present opportunities to artists all over Alaska, including those artists we have worked with for years here in the Bering Strait region. From my perspective, this will be a great benefit for all artists including those in rural Alaska. CHAIR DRUMMOND, after ascertaining no one else wished to testify, closed public testimony on HB 137. 9:33:02 AM REPRESENTATIVE PARISH moved to report HB 137 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 137 was reported from the House Education Standing Committee.