HOUSE BILL NO. 75 "An Act repealing certain audit requirements for entities receiving contributions from permanent fund dividends; requiring each campus of the University of Alaska to apply to be included on the contribution list for contributions from permanent fund dividends; and requiring a university to pay an application fee for each campus separately listed on the contribution list for contributions from permanent fund dividends." 9:54:46 AM Representative Costello MOVED to ADOPT the proposed committee substitute for HB 75 (FIN), 28-LS0323\O, Work Draft (Martin 3/17/14). Co-Chair Stoltze OBJECTED for discussion. DANIEL GEORGE, STAFF, REPRESENTATIVE BILL STOLTZE, explained the changes in the legislation. He stated that on page 1, line 2 the title was changed to "requiring the three main campuses of the university" instead of the previous language, "requiring each campus of the university to apply for contribution lists." He cited page 1, line 4 that previously read, "and requiring a university to pay an application fee" that was changed to "and requiring the university to pay an application fee." He stated that page 1, section 1 was new. He cited Section one language, "each university campus that applied under (m) of this section…" and explained that each university campus may apply for the Pick, Click, and Give program rather than requiring each campus to do so. He noted that page 2, Section 2 was new. Previously the bill repealed the provision on page 2, line 29. The current bill amended the audit requirements in Section 2, item (8) to read: …this paragraph applies only to an organization that is required by the federal government to complete a financial audit by an independent certified public accountant… Mr. George indicated that the audit requirements only applied to organizations that were required to have financial audits by federal law. He offered that Section 3 was formerly Section 1 and was amended to require that each campus that applied for the Pick, Click, and Give program was charged the $250 fee. He added that Section 4 was formerly Section 2 and specified that each campus of the University of Alaska "shall" apply instead of "must." He read the new additional language on page 3, lines 22 through 24, …The University of Alaska may apply for each campus other than the three main campuses to be listed on the contribution list for the current dividend year in the manner prescribed by the department. Mr. George turned to page 3, subsection (n), lines 25 through page 4, line 5. He stated that the language was new and read: In addition to the application fee in (f) of this section, the department shall withhold a coordination fee from each organization, foundation, or university campus that receives contributions under this section in the immediately preceding dividend year. The coordination fee for an organization, foundation, or university campus that receives contributions under this section shall be seven percent of the amount of contributions reported by the department under (j) of this section for the organization, foundation, or university campus for the immediately preceding dividend year. The coordination fee shall be separately accounted for under AS 37.05.142 and shall be accounted for separately from the application fee collected under (f) of this section. The annual estimated balance in the account maintained under AS 37.05.142 for coordination fees collected under this subsection may be appropriated for costs of administering this section. DAN DEBARTOLO, DIRECTOR, PERMANENT FUND DIVIDEND, DEPARTMENT OF REVENUE, explained that the operational cost for the division's work was handled by the $250 fee. The work carried out under the 7 percent coordination fee would be contracted out to an eligible entity. The division could not provide the services for 7 percent. Co-Chair Austerman wondered why the repealer in Section 3 was unnecessary. He asked whether the reason was because the provision was amended. Mr. George answered in the affirmative. He explained that rather than repealing the audit requirement altogether the new provision in Section 2, item (8) required that if the organization was required to provide an audit under federal law the same audit could be submitted as part of its Pick, Click, and Give program application. Co-Chair Stoltze WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. The committee substitute (CS) was adopted. JORDAN MARSHALL, RASMUSON FOUNDATION, ANCHORAGE (via teleconference), testified in favor of the changes in the CS. He believed the CS made the program stronger and more sustainable. He relayed that the program was in its 6th year and funneled approximately $8 million to charitable organizations. The program began as a three year pilot program. He reported that the program had no fiscal impact to the state. He felt that the CS would propel the charitable program "toward long-term self-sufficiency." He noted that the coordination fee ensured that participating organizations sustained the program well into the future. Co-Chair Stoltze noted the intent of the audit requirement change was designed to "catch the large ones and not overregulate the small ones." Mr. DeBartolo replied that the previous requirements were burdensome to the small organizations and demonstrated a positive change. Representative Costello reported that the bill had one new zero fiscal note from the University of Alaska and one new indeterminate fiscal note from the Department of Revenue. 10:05:19 AM Representative Munoz MOVED to REPORT CSHB 75 (FIN) out of committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 75 (FIN) was REPORTED out of committee with a "do pass" recommendation and with one new indeterminate fiscal note from the Department of Revenue and one new fiscal note from the University. Co-Chair Stoltze