CS FOR HOUSE BILL NO. 166(FIN) "An Act relating to contributions from permanent fund dividends to community foundations, to certain educational organizations, and to certain other charitable organizations; and providing for an effective date." Co-Chair Hoffman MOVED to ADOPT Senate Committee Substitute for CSHB 166, work draft 25-LS0678\V as the working document. There being NO OBJECTION, the Senate Committee Substitute Version V was adopted. KACI SCHROEDER, STAFF, REPRESENTATIVE THOMAS, provided an overview of the committee substitute. The first change in the new committee substitute Version V was in Section 1 which allows Alaskans to check off and contribute $25 to the full dividend amount as a donation to charity. On page 2, it states that the contribution can not be changed after the application is filed and no money contributed by the individual shall be used for administrative costs. Ms. Schroeder continued that on page 2, Section (c) it further clarifies the types of organizations that are eligible for this program and on page 3 it lists the criteria that an organization must meet before they are allowed to be put on the permanent fund application. Page 4 clarifies that the department may not use any contributions for administrative costs but also states that the department can collect a $50 application fee. Ms. Schroeder noted that on page 4, (g) it allows the department to circumvent the procurement code. She signified that by January of each year the Legislature would receive a report on how the program is working. She cited that Section 2, page 5 deals with language requested by the Department of Revenue. She noted the last change on page 6 states that this will not apply to the 2008 dividend. The program will begin in 2010 to give the department time to implement the program. 10:39:09 AM Senator Olson asked for the reasoning behind circumventing the procurement quota. Ms. Schroeder replied that it had been requested in the House by Representative Coghill. The United Way was the only known program ready to do this program now. 10:39:46 AM DEBBIE RICHTER, DIRECTOR, DIVIDEND DIVISION noted she was available for questions. JERRY BURNETT, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF REVENUE remarked that the department neither supports nor opposes this bill. There is other language in the bill that would eliminate paper and work load for the department to allow staff to respond to questions. Co-Chair Stedman inquired if the department feels this is administratively controllable. 10:42:14 AM Ms. Richter remarked that the division has been working with the United Way as the potential contractor for handling the qualification of the agencies and they have expressed a concern. They have offered an 800 number that would be posted on their website for people call and ask questions. Co-Chair Stedman requested the fiscal impact in the future. 10:43:01 AM Mr. Burnett reported that the bill is written prohibiting the division from using any Alaskan's dividend money to pay for this program. Any money spent would be money that was contractual from the Rasmussen Foundation or other private sources. The fiscal note just gives spending authorization for designated program receipts that are donated to the state for this purpose. Co-Chair Stedman inquired if it was expected that financial support would still be there in three years or is this funding just to start the program. 10:44:28 AM Senator Elton questioned if the division is anticipating that future costs will be funded by an application fee. Mr. Burnett replied that the $50 application fee would not be significant in terms of funding for this program. The number of organizations would not be large enough. He indicated that there would be, after successful two to three years, some arrangement with the organizations receiving this based on the costs. If the sunset is removed, then a funding formula would need to be put into place at that time. 10:45:50 AM Senator Elton asked why the application fee was necessary. Mr. Burnett replied that the department did not write the bill or add the application fee as a funding source. The application fee money would just offset some of the costs of qualifying organizations rather than the ongoing costs. Under this bill the Rasmussen foundation would pay the administration costs for the first three years. 10:46:51 AM Co-Chair Hoffman inquired why it was necessary to have four thousand man hours to implement this legislation. Ms. Richter replied that the eligibility technician requested is to answer public response because the department expects a significant increase in public contact questioning the new information on the application. The division is not able to handle the public response at this time. Co-Chair Hoffman signified that he does not see the division receiving two thousand hours of inquiry for this program. He noted that the Governor was looking for more efficiency in government and this request did not reflect that philosophy. Mr. Burnett agreed that the division may need less time and effort but the fiscal note is an authorization to use money given by the Rasmussen Foundation for this purpose. There may not be a significant increase over time but only a short term bump of inquiries. Any employees hired for this program will be project specific employees not a permanent full time part of the department until after this bill becomes a permanent law. 10:49:23 AM Senator Elton asked what kind of public contact the department anticipates. Ms. Richter replied that the department anticipates the public will have many questions about the program in general, such as whether their contributions are tax deductable or if they can change their selection. The division anticipates that if only one percent of the applicants that apply for a dividend actually call the division, this would be approximately six thousand phone calls. 10:50:39 AM Senator Thomas remarked that the division does anticipate that the number of calls could be less than projected and the three years of Rasmussen contributions in the first three years will take care of that in the beginning stages. He inquired if there are one thousand who regularly file 990s regularly. Ms. Richter believed it to be two thousand. 10:52:00 AM JEFF PARK, VICE PRESIDENT, RASMUSSEN FOUNDATION, responded that the foundation would engage in working with the third party provider, the United Way, and an outreach program to inform the public about the purpose of the dividend check- off. The fiscal note assumes that the department will be taking on many of these new activities. 10:54:33 AM Co-Chair Stedman requested an overview of the bill. Mr. Parks remarked that this bill provides Alaskans with a mechanism for making charitable donations to their favorite non-profits. He addressed that the three year provision of the program would be underwritten by the Rasmussen Foundation. If the program were to continue beyond year three it would require action by the Legislature. 10:55:49 AM MIKE WALSH, VICE PRESIDENT, 4 ACRE GROUP testified via teleconference and remarked he was available for questions. 10:56:38 AM Co-Chair Hoffman MOVED to REPORT SCS CSHB 166 (FIN) out of Committee with individual recommendations and an accompanying fiscal. There being NO OBJECTION, it was so ordered. SCS CSHB 166 (FIN) was REPORTED out of Committee with no recommendations and an accompanying new fiscal note from the Department of Revenue. AT EASE: 10:57:24 AM RECONVENED: 10:59:14 AM