SB 36-OPT-OUT CHARITABLE GIVING PROGRAM    9:24:07 AM CHAIR WIELECHOWSKI announced the next order of business would be SB 36. GRIER HOPKINS, staff to Senator Joe Thomas, sponsor of SB 36, said this bill was brought to their attention by Golden Valley Electric Association (GVEA). Opt-out charitable giving programs have been around for many years, and more than 250 utility cooperatives across the U.S. have adopted similar programs. These allow individuals to contribute small amounts that add up quickly and help build a stronger community. Opt-out charitable giving programs must be approved by co-op members. This program rounds up a monthly bill to the nearest dollar, so the maximum amount withheld per month would be anywhere between .01 cent and .99 cents. These small amounts add up quickly, and the average payment for a GVEA member would be approximately six dollars a year. Collected funds are dispersed to qualified organizations and individuals within the service district. Each co-op crafts its own by-laws on this. Most distribute the funds to the board of a separately created 501(c)(3) organization that they have established. Among the more than 250 cooperatives with charitable giving programs, most have adopted opt-out rather than opt-in programs. These programs have 90 percent member participation. Members may choose to opt out of the program at any time. Donations may be refunded up to a full three years. SB 36 will remove any possible conflict with AS 45.45.930, dealing with opt-out marketing plans. Opt-out charitable giving programs in Alaska would require membership approval; disclosure of the amount added would be identified on the member's bill; extended refunds, if requested, could stretch back as far as three years. Donations are tax deductible and must benefit the service area of the cooperative. 9:28:05 AM BRIAN NEWTON, CEO, Golden Valley Electric Association (GVEA), Fairbanks, testified in support of SB 36. He said their members have already approved initiating the program. GVEA became aware of a possible conflict with AS 45.45.930, so this bill is intended to remove any possible conflict. GVEA is proud of being able to give back to the community. Collecting small amounts and then returning them to the community is a way of giving to the community. GVEA will rotate the money as quickly as possible. 9:30:37 AM CHAIR WIELECHOWSKI asked how GVEA decides what charities to give to. MR. NEWTON said the board of directors of their 501(c)(3) will review the applications. They will look at the need and purpose. The board has specifically prohibited religious campaigns and political donations. So the board will choose who receives the funds, based upon criteria they have established. SENATOR GIESSEL asked if GVEA had already started the program. MR. NEWTON responded that GVEA has started the program, and legal counsel advises they are not prohibited from doing this. SB 36 is a clean-up bill to make sure there is no conflict with existing statutes. 9:32:35 AM ED SNIFFEN, Assistant Attorney General, Consumer Protection Unit, Civil Division, Department of Law, Anchorage, said that AS 45.45.930 creates a potential conflict with the program as outlined. There is some question about whether this program would be prohibited under current statute. This bill would make a specific exemption from AS 45.45.930 for electric and telephone cooperatives. This bill provides good protection for consumers. 9:33:33 AM SENATOR PASKVAN joined the meeting. 9:34:55 AM SENATOR GIESSEL asked about information in the committees' packets referring to an amendment discussing the definition of charitable purpose. MR. SNIFFEN said in HB 114, the companion bill, there was discussion in the House Labor & Commerce Committee about restricting the ability of cooperatives to provide donations to religious organizations. After doing research on how to define charitable purpose, the committee came up with an amendment. 9:36:47 AM MR. SNIFFEN noted that language in statutes and cases helps define "charitable purpose." Alaska Statutes require charitable solicitors to register and operate within certain guidelines. Combining these resources led to a definition of charitable purpose. GVEA is a model program, but the bill doesn't require other electric associations to do the same thing. The definition of charitable donations in the original bill is too broad. SENATOR GIESSEL asked how the amendment narrowed the definition of charitable donations. MR. SNIFFEN said the definition was dealing with language that does not exist in the bill, and would not apply to this bill. The proposed amendment to the companion bill did not use that language, but rather mirrored existing language which says that they can make donations for the public welfare, charitable, and educational purposes. They have narrowed the definition to charitable purposes only. Entities other than 501(c) (3)s also do charitable work. SENATOR GIESSEL asked about the constitutional equal protection issue. She mentioned the Salvation Army and Brother Francis Shelter, and asked if organizations like these are included or excluded. MR. SNIFFEN said they would be included under this definition. Religious based organizations can do charitable work. If there is not a religious purpose, to promote a particular religion, then they are eligible to receive donations. 9:42:18 AM CHAIR WIELECHOWSKI suggested the bill sponsor's suggested amendment could be included in a CS for the next meeting. MR. HOPKINS explained the purpose of the amendment. This is an amendment that Mr. Sniffen wrote to limit or more closely define charitable purposes. The intent is to assure there is no pecuniary profit, but it does not exclude specific types of organizations or donations. This could also be addressed in the by-laws of the utility co-op. SENATOR PASKVAN asked about refunds going back three years. 9:45:25 AM MR. HOPKINS said it was to give members the benefit of the doubt in case they did not read their bill. SENATOR PASKVAN asked if there was discussion about that length of time. MR. HOPKINS said GVEA took the recommendation from its members. MR. NEWTON said that the board of GVEA was emphatic about the 3 years, because people vote with their dollars. GVEA will publish the list of organizations donated to, and consumers get a three year look at how money is given to the community. If they don't like the board's choices, they can request a refund. SENATOR MEYER noted that opt-out programs on credit card bills required 60 days written notice for opting out. He stated he is not concerned with this program, but he is concerned about the length of three years, and asked where GVEA would get the refund money. 9:48:22 AM CHAIR WIELECHOWSKI noted the committee is setting policy for the whole state. Other organizations might be affected. MR. NEWTON said the committee could change the refund length to one or two years. He stated the fund would have to maintain a reserve for possible refunds. Other states have not had a problem with this. If the committee wants to shorten the time, that would be fine. SENATOR MEYER said if there is an adequate reserve then three years is probably okay. He does support the bill. In general he favors opt in vs. opt out, but this program seems okay. He had a bad experience with a credit card company and an opt-out program, but is not concerned with this bill. CHAIR WIELECHOWSKI asked if Mr. Sniffen could address opt in vs. opt out programs. MR. SNIFFEN said generally the DOL doesn't like opt out programs. But for this particular program the statute has good features to help protect consumers. The cooperative membership has to vote on the program. The three year refund is a feature that DOL likes, and would encourage keeping in the bill. If the program is run correctly they will have a reserve. DOL also likes the mandatory disclosures on monthly utility bills. He stated SB 36 contains many protections to resolve potential problems, it does benefit the community, and he supports the bill. MR. NEWTON stated that GVEA would support an amendment or CS as proposed, with the changes proposed in the House version. 9:54:13 AM CHAIR WIELECHOWSKI closed public testimony and announced he would hold SB 36 in committee.