HB 126 - REMOVAL OF MEMBERS OF THE PF BOARD Number 0941 CHAIR ROKEBERG announced that the next order of business would be HOUSE BILL NO. 126, "An Act relating to removal of members of the board of trustees of the Alaska Permanent Fund Corporation; and providing for an effective date." Number 0967 ROBERT D. STORER, Executive Director, Alaska Permanent Fund Corporation (APFC), Department of Revenue (DOR), explained that HB 126 inserts into statute the provision that public members of the board of trustees of the APFC may only be removed for cause. The board of trustees consists of six members: Two members are commissioners and the other four are public members appointed by the governor to serve for four-year staggered terms. What the APFC is asking for is language consistent with that of 19 other boards and commissions, including the State Pension Investment Board, which oversees the management of the assets of the retirement system. MR. STORER noted that it takes some time for a board member to be educated and understand the role of managing large institutional assets. He explained that although HB 126 does not give tenure and replacement of board members is still allowed, HB 126 would ensure that there is continuity of board members and that institutional memory would be passed on for the benefit of all board members. Investment management of large funds is becoming more and more sophisticated, he said, and the APFC, for example, can take over a year to study an issue before acting upon it. CHAIR ROKEBERG requested that a list of the aforementioned 19 other boards be added to members' packets. He asked why the primary tenet is for corporate boards of directors to have staggered terms. MR. STORER reiterated that it is to provide continuity of management, be it a public fund or "Corporate America", so that the institutional memory of how decisions are made is perpetuated. REPRESENTATIVE JAMES said she is pleased to see HB 126 before the committee; she noted that it is similar to legislation she had sponsored in the past but which was vetoed by the governor. She said she agrees wholeheartedly that the APFC board of trustees needs continuity and that members should not be removed on a political whim. She opined that because it handles huge sums of money on behalf of the state, the APFC board of trustees is the most important board that Alaska has. Number 1010 MR. STORER, in response to questions, explained that there had never been a board member replaced at the APFC until the Hickel Administration took office; either a board member resigned or his/her term expired. The Hickel Administration replaced five of the six board members, leaving the chair in place. This person remained in place until Governor Knowles was elected, at which time, again, five of the six board members were replaced, keeping the same chair. When this person's term expired, the current chair filled the vacancy. Mr. Storer noted that each time these replacements took place, the incoming board members had to be educated "from scratch." He added that in neither instance had there been a problem with the performance of the board. REPRESENTATIVE JAMES observed that during the entire history of the APFC, there has not been one single appointment to the board that she has objected to; all of the candidates have been excellent choices. In conclusion, she said that she did not see any need for appointees to the APFC board of trustees to list what political party they belong to; the duties of the board have nothing to do with politics. CHAIR ROKEBERG recognized the presence of members from the APFC and board of trustee member, Clark Gruening, whom the chair thanked for his service. Chair Rokeberg closed the public hearing on HB 126. Number 1429 REPRESENTATIVE JAMES moved to report HB 126 out of committee with individual recommendations and the accompanying zero fiscal notes. There being no objection, HB 126 was reported from the House Judiciary Standing Committee.