ALASKA STATE LEGISLATURE
HOUSE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE
March 31, 2009
3:04 p.m.
MEMBERS PRESENT
Representative Bob Herron, Co-Chair
Representative Wes Keller, Co-Chair
Representative John Coghill
Representative Bob Lynn
Representative Paul Seaton
Representative Lindsey Holmes
MEMBERS ABSENT
Representative Sharon Cissna
COMMITTEE CALENDAR
HOUSE BILL NO. 192
"An Act relating to nonpayment of child support; relating to
certain judicial and administrative orders for medical support
of a child; relating to periodic review and adjustment of child
support orders; relating to relief from administrative child
support orders; relating to child support arrearages; relating
to medical support of a child and the Alaska Native family
assistance program; amending Rule 90.3, Alaska Rules of Civil
Procedure; and providing for an effective date."
- MOVED CSHB 192 (HSS) OUT OF COMMITTEE
HOUSE BILL NO. 71
"An Act relating to a registry for advance health care
directives."
- HEARD AND HELD
HOUSE BILL NO. 190
"An Act privatizing the Alaska children's trust as a separate
endowment fund; providing for an administrator for the assets of
the former trust; establishing conditions for a grant of the
balance of the former Alaska children's trust; designating
certain receipts as available for grants to the trust's
successor; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 192
SHORT TITLE: CHILD SUPPORT/CASH MEDICAL SUPPORT
SPONSOR(s): REPRESENTATIVE(s) COGHILL
03/18/09 (H) READ THE FIRST TIME - REFERRALS
03/18/09 (H) HSS, JUD
03/31/09 (H) HSS AT 3:00 PM CAPITOL 106
BILL: HB 71
SHORT TITLE: ADVANCE HEALTH CARE DIRECTIVES REGISTRY
SPONSOR(s): REPRESENTATIVE(s) HOLMES, DAHLSTROM, MILLETT,
KAWASAKI
01/20/09 (H) PREFILE RELEASED 1/16/09
01/20/09 (H) READ THE FIRST TIME - REFERRALS
01/20/09 (H) HSS, JUD
03/31/09 (H) HSS AT 3:00 PM CAPITOL 106
BILL: HB 190
SHORT TITLE: CHILDREN'S TRUST GRANT FOR ENDOWMENT
SPONSOR(s): REPRESENTATIVE(s) FAIRCLOUGH
03/16/09 (H) READ THE FIRST TIME - REFERRALS
03/16/09 (H) HSS, FIN
03/31/09 (H) HSS AT 3:00 PM CAPITOL 106
WITNESS REGISTER
RYNIEVA MOSS, Staff
to Representative John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 192 on behalf of the prime
sponsor, Representative Coghill.
JOHN MALLONEE, Director
Anchorage Central Office
Child Support Services Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Presented a sectional analysis and answered
questions about HB 192.
STACY STEINBERG, Chief Assistant Attorney General;
Statewide Section Supervisor
Commercial/Fair Business Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on HB 192.
PETER PUTZIER, Senior Assistant Attorney General
Opinions, Appeals, & Ethics
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on HB 192.
GINGER BLAISDELL, Director
Administrative Services Division
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Testified about HB 192.
BOB LOESCHER
Judiciary Committee
Sub Committee of State and Tribal Affairs
Central Council Tlingit & Haida Indian Tribes of Alaska
Juneau, Alaska
POSITION STATEMENT: Testified about HB 192.
JESSIE ARCHIBALD, Attorney
Tribal Child Support Program
Central Council Tlingit & Haida Indian Tribes of Alaska
Juneau, Alaska
POSITION STATEMENT: Testified about HB 192.
MIKE FORD, Assistant Attorney General & Legislative Liaison
Legislation & Regulations Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: Answered questions about HB 192.
PAT LUBY, Advocacy Director
AARP
Anchorage, Alaska
POSITION STATEMENT: Spoke in support of HB 71.
REPRESENTATIVE ANNA FAIRCLOUGH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 190 as the prime sponsor.
CRYSTAL KOENEMAN, Staff
to Representative Anna Fairclough
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 190 on behalf of the prime
sponsor, Representative Fairclough, and answered questions.
CARLEY LAWRENCE, Chair
Friends of the Alaska Children's Trust (FACT) Board
Anchorage, Alaska
POSITION STATEMENT: Spoke in support of HB 190.
SAMMYE POKRYFKI, Vice Chair
Friends of the Alaska Children's Trust (FACT)
Anchorage, Alaska
POSITION STATEMENT: Spoke in support of HB 190.
ARLISS STURGULEWSKI
POSITION STATEMENT: Spoke in support of HB 190.
DIANE KAPLAN, Board Member
Alaska Children's Trust (ACT)
Anchorage, Alaska
POSITION STATEMENT: Spoke in support of HB 190.
GINGER BAIM, Executive Director
Safe and Fear Free Environment (SAFE)
Dillingham, Alaska
POSITION STATEMENT: Spoke in support of HB 190.
CAROL SIMONETTI, President & CEO
Alaska Community Foundation
Anchorage, Alaska
POSITION STATEMENT: Spoke in support of HB 190.
PANU LUCIER, Executive Director
Alaska Children's Trust (ACT) and Friends of the Alaska
Children's Trust (FACT)
Anchorage, Alaska
POSITION STATEMENT: Spoke in support of HB 190.
MARGARET VOLZ, Vice Chair
Alaska Children's Trust (ACT) Board
Anchorage, Alaska
POSITION STATEMENT: Spoke in support of HB 190.
JERRY BURNETT, Deputy Commissioner
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions about HB
190.
ACTION NARRATIVE
3:04:30 PM
CO-CHAIR BOB HERRON called the House Health and Social Services
Standing Committee meeting to order at 3:04 p.m.
Representatives Herron, Keller, Seaton, Coghill, and Holmes were
present at the call to order. Representative Lynn arrived as
the meeting was in progress.
HB 192-CHILD SUPPORT/CASH MEDICAL SUPPORT
3:04:54 PM
CO-CHAIR HERRON announced that the first order of business would
be HOUSE BILL NO. 192, "An Act relating to nonpayment of child
support; relating to certain judicial and administrative orders
for medical support of a child; relating to periodic review and
adjustment of child support orders; relating to relief from
administrative child support orders; relating to child support
arrearages; relating to medical support of a child and the
Alaska Native family assistance program; amending Rule 90.3,
Alaska Rules of Civil Procedure; and providing for an effective
date."
3:05:29 PM
REPRESENTATIVE COGHILL moved to adopt CSHB 192, Version 26-
LS0483\P, Mischel, 3/30/09, as the working document. There
being no objection, CSHB 192, Version P, was adopted as the
working document.
3:06:00 PM
REPRESENTATIVE COGHILL, prime sponsor of HB 192, said that HB
192 was introduced at the request of the administration. He
presented a high level review of the bill, and explained that it
emanated from a federal requirement. He noted that HB 192
included conforming language, a definition of the Uniform
Interstate Family Support Act (UIFSA), and the administration of
the order of support for the Child Support Services Division.
He referred to Section 3 of the bill, and ascertained that this
was a federal mandate in order for Alaska to receive federal
money. He directed attention to the definition for "state"
contained in Section 3 (19) which was amended to include "an
Indian tribe." He pointed out that Alaskan tribal issues were
based in enrollment, bloodline, and corporation whereas in the
Lower 48, the tribal issues were based on geography. He
explained the intent language in Section 1(b) which read:
In Alaska, the scope of tribal authority to enter,
modify, or enforce a child support order is an
unsettled legal question, due in part to the lack of
Indian country in most of the state. In adopting
UIFSA conforming amendments, the legislature does not
intend to grant or restrict tribal jurisdiction to
enter, modify, or enforce child support orders, and
the amendments are not intended, either directly or
impliedly, to acknowledge, expand, or restrict tribal
jurisdiction.
He summarized that this tribal definition declared that Alaska
was different than the 48 contiguous states.
3:09:42 PM
CO-CHAIR HERRON asked if the Tanana chiefs were involved with
this definition.
3:10:04 PM
REPRESENTATIVE COGHILL replied that he had worked on the
definition with the Office of the Attorney General. He stressed
that this definition was an unsettled question in Alaska, and
that acceptance of the federal definition could create serious
issues in Alaska. He expressed his desire that it not become a
big issue in Alaska.
3:10:52 PM
RYNIEVA MOSS, Staff to Representative John Coghill, Alaska State
Legislature, said that she would divide the sections of the bill
into four categories: Sections 2, 4, 5, 9, 10, 11, and 12 add
cash medical support for sections of the law that apply to child
support and health insurance under existing law; Section 1
redefines the word "state" to include "the United States Virgin
Islands" and "an Indian tribe"; Section 4 required child support
to review cases on a three year cycle; Sections 7 and 8 allow
the child support agency to correct a clerical error in an
administrative order without a motion from the obligor. She
noted that the first three categories were required to comply
with federal law, or lose $18 million annually in federal
funding.
3:13:39 PM
REPRESENTATIVE SEATON referred to cash medical support orders,
and asked if this bill was seeking conforming language, or were
these support orders currently issued.
MS. MOSS replied that Alaska had medical support orders, but not
cash medical support orders. She reported that the bill would
include both. She explained that this would extend to both
custodial and non-custodial parents.
REPRESENTATIVE COGHILL reported that it was currently assumed
the obligor had insurance, but that this proposed bill broadened
that both parents would be assumed to have insurance or cash
medical support, in lieu of insurance.
3:15:43 PM
REPRESENTATIVE SEATON asked whether there was a necessity for
cash medical support if there was medical insurance.
3:16:36 PM
REPRESENTATIVE COGHILL, in response to Representative Seaton,
said that the cash was for medical coverage.
3:17:40 PM
JOHN MALLONEE, Director, Anchorage Central Office, Child Support
Services Division, Department of Revenue (DOR), said that child
support was a federally mandated, but state operated program.
He explained the federal requirements and the federal funding
for the program. He described the three areas that HB 192
addressed for changes of the state statute in order to meet
federal requirements for funding: the first area was within the
Uniform Interstate Family Support Act (UIFSA), an act which
provided efficient procedures for the collection of child
support in interstate cases and eliminated multiple support
orders, and he pointed out that the Alaska definition of "state"
would need to conform to that in UIFSA; the second area was in
regard to child medical support, and he pointed out that HB 192
added to existing law "the authority to order either or both
parents to pay cash medical support if warranted;" the third
area addressed support orders, and he noted that under HB 192
clients could now request a review at any time, that child
support orders must now be reviewed at least every three years,
and that language was removed which limited who could request a
correction of (1) a clerical mistake in an administrative order
or, (2) a decision based on default income, and not the ability
to pay.
3:23:21 PM
CO-CHAIR KELLER asked if the state had been out of compliance
since 1996.
MR. MALLONEE agreed, with regard for the definition of "state."
CO-CHAIR KELLER asked what had occurred to make this now more
important than in 1996.
MR. MALLONEE said that this had been brought to the attention of
the federal Office of Child Support Enforcement, which sent a
pre-notice letter of consequences for non-compliance to (Alaska)
Child Support Services Division.
MR. MALLONEE, in response to Co-Chair Herron, offered his belief
that it had been previously overlooked.
3:25:11 PM
REPRESENTATIVE SEATON referred to page 3, line 20 of the bill,
which read, "agency shall issue a support order," and he asked
to define a cash medical support order.
3:26:07 PM
MR. MALLONEE explained that the Child Support Services Division
first determined whether either party had health insurance, and
if not, then a set amount of money was required as cash medical
support.
3:27:33 PM
REPRESENTATIVE SEATON asked if this was limited to co-pay or
deductibles in addition to the insurance.
3:28:15 PM
MR. MALLONEE, in response to Representative Seaton, said that
the cash medical support was in lieu of insurance. He noted
that non covered medical payments, such as co-pay and
deductibles, were already addressed in statute. He pointed out
that this applied to people who had no medical insurance
available to them, so that some money was available for medical
expenses.
3:29:09 PM
REPRESENTATIVE SEATON asked to clarify the need for "or both"
language in the bill with reference to "a medical support order"
and "a cash medical support order."
3:29:44 PM
MR. MALLONEE replied that it was required language, and he
theorized on the possibilities for the need of both.
3:30:58 PM
STACY STEINBERG, Chief Assistant Attorney General;, Statewide
Section Supervisor, Commercial/Fair Business Section, Civil
Division (Anchorage), Department of Law (DOL), said that she was
available to answer questions.
3:31:30 PM
CO-CHAIR KELLER asked what legal effect the proposed intent
language for the definition of "state" in HB 192 would have for
a legal determination to tribal jurisdiction.
3:32:32 PM
PETER PUTZIER, Senior Assistant Attorney General, Opinions,
Appeals, & Ethics, Civil Division (Anchorage), Department of Law
(DOL), replied that the legal question was whether the state was
changing any procedures under the UIFSA. He relayed that the
tribal argument might be the implication that jurisdiction was
intended. He said that the intent language of HB 192 was clear,
and that this was not a position, merely a conforming amendment.
He said that the unresolved issues were whether the inherent
jurisdiction of the tribes was extended for child support
orders, specifically in Alaska. He opined that HB 192 would not
be a central argument for resolution.
3:36:47 PM
REPRESENTATIVE SEATON referred to "other insurance coverage" on
page 3, line 24, and asked if that was Denali Kid Care.
3:37:33 PM
MS. STEINBERG explained that Denali Kid Care was not private
insurance, but a form of public assistance; therefore, it would
not cover this. She said that Indian Health Service care would
suffice, as would military health care.
3:38:24 PM
GINGER BLAISDELL, Director, Administrative Services Division,
Department of Revenue (DOR), reiterated that the first pre-
notice letter for non-compliance was received on March 27, 2009,
and it stated that block grant funds for Temporary Assistance to
Needy Families (TANF) would be at risk if the state did not
enact conforming child support legislation. She stated that HB
192 would enact all the necessary conforming laws. She said
that the amount of money at risk for the state was about $85
million. She emphasized that it was critical to conform to
UIFSA.
3:40:40 PM
CO-CHAIR HERRON asked if Alaska had been aware of not being in
conformity, even though the federal government was not.
3:41:01 PM
MS. BLAISDELL said that Alaska had been aware for a short time.
She said that Alaska had requested a waiver on January 29, 2009,
which was denied.
3:41:53 PM
MS. BLAISDELL, in response to Co-Chair Herron, said that she did
not know when a warning letter would arrive.
3:42:18 PM
REPRESENTATIVE COGHILL said that, unless Alaska was willing to
do something else for its citizens, it was necessary to pass
this bill.
3:43:45 PM
BOB LOESCHER, Judiciary Committee, Sub Committee of State and
Tribal Affairs, Central Council Tlingit & Haida Indian Tribes of
Alaska, reported that he had been working on the federal
compliance issue for several months, and he stressed the impact
this would have on Alaskan families and children. He discussed
the Central Council of Tlingit & Haida tribal child support
program, which did not use state funds, but was funded directly
from the federal government. He shared that the tribe
cooperated with the state children services and the DOR. He
confirmed that Alaskan tribes were recognized under the United
States constitution, by the U.S. Congress, and by the Secretary
of the Interior. He pointed out that the Statehood Act
recognized Alaskan native peoples, which was based on tribal
enrollment. He asked that the legislature recognize that tribes
did exist, as there was a mutual benefit for cooperation with
the tribes on programs of common interest. He noted that this
kept people working, kept children safe, and kept families fed
and taken care of. He pointed out that Alaska was the only
state which did not include "Indian tribe" in adoption of the
federal act. He said that the Central Council supported HB 192,
but he opined that Section 1(b) of the intent language did not
comply with federal law. He suggested that the jurisdiction
should be decided by the courts, and not be written into
legislation. He offered his opinion that it was not helpful to
the relationships.
3:52:41 PM
JESSIE ARCHIBALD, Attorney, Tribal Child Support Program,
Central Council Tlingit & Haida Indian Tribes of Alaska,
explained that the purpose of UIFSA was for conforming
procedures among states and tribal jurisdictions for child
support orders. She stated that Section 1(b) was contradictory,
and did not support the purpose of UIFSA. She shared that
tribes in Alaska now had their own federally funded child
support programs. She offered her belief that the purpose of
the program was to provide child support, not to argue about
jurisdiction. She agreed that this was a procedural statute.
3:55:54 PM
CO-CHAIR HERRON asked to clarify that Mr. Loescher supported the
proposed CS for HB 192, except for Section 1(b).
MR. LOESCHER asked to clarify that "uncodified" meant that it
was proposed and that "codified" meant that it was already in
statute.
3:57:10 PM
MIKE FORD, Assistant Attorney General & Legislative Liaison,
Legislation & Regulations Section, Civil Division (Juneau),
Department of Law (DOL), said that the reference to uncodified
law meant that there was not an AS section assigned, and that it
was in a different section of the statutes, but he clarified
that it was still law.
3:58:53 PM
REPRESENTATIVE COGHILL, in response to Mr. Loescher and Ms.
Archibald, said that there were other tests of authority to be
worked out. He affirmed that this needed to work for all
Alaskans. He explained that Alaska had different tribal issues
than the lower 48 states, and he noted that Alaska had
enrollment based programs which were not geographically based,
as in most other states. He welcomed the Tlingit & Haida
involvement with child support programs and the TANF program.
He explained that the language in HB 192, Section 1(b) was not
intended to grant or restrict tribal jurisdiction. He endorsed
support for Alaskan families and children.
4:03:38 PM
CO-CHAIR KELLER reiterated that the bill language in Section
1(b) stated "does not grant or restrict," which was not a
statement on tribal jurisdiction. He considered the rest of the
bill to be procedural for conformation to federal regulations.
4:04:33 PM
MR. LOESCHER asked about the guidance memo from the governor and
the commissioner of the DOR. He reflected that the language in
that memo was clearer than the language in Section 1(b).
4:05:19 PM
CO-CHAIR HERRON asked that the guidance memo be placed in the
bill file. He noted that Mr. Loescher and Ms. Archibald had
concerns with Section 1(b), and that they suggested for it to be
deleted.
4:06:13 PM
The committee took an at-ease from 4:06 p.m. to 4:07 p.m.
4:07:06 PM
CO-CHAIR KELLER moved to report CSHB 192, Version 26-LS0483\P,
out of committee with individual recommendations and the
accompanying zero fiscal note. There being no objection, CSHB
192 (HSS) was reported from the House Health and Social Services
Standing Committee.
HB 71-ADVANCE HEALTH CARE DIRECTIVES REGISTRY
4:07:29 PM
CO-CHAIR HERRON announced that the next order of business would
be HOUSE BILL NO. 71, "An Act relating to a registry for advance
health care directives."
4:08:06 PM
REPRESENTATIVE HOLMES explained that the current personal
advance health care directive documents were not easily
accessible should someone become incapacitated. She established
that HB 71 allowed for a voluntary online cataloging for a
personal advance health care directive. She described that the
document would be submitted to the Department of Health and
Social Services (DHSS) and put into an electronic format, which
would allow health care facilities to access it at a patient's
request. She noted that an amendment to the bill was
forthcoming, as the original bill had placed unintended
financial burdens on DHSS.
4:11:29 PM
PAT LUBY, Advocacy Director, AARP, said that AARP was in strong
support of HB 71. He explained that AARP had long encouraged
its members to complete advanced health care directives, and he
pointed out the problem of emergency hospitalization without the
health care directive accompanying the person. He stated that
HB 71 would alleviate that problem. He emphasized that this
would establish a means for health care providers to "follow the
wishes of their patients."
4:12:39 PM
[HB 71 was held over.]
HB 190-CHILDREN'S TRUST GRANT FOR ENDOWMENT
4:13:01 PM
CO-CHAIR HERRON announced that the final order of business would
be HOUSE BILL NO. 190, "An Act privatizing the Alaska children's
trust as a separate endowment fund; providing for an
administrator for the assets of the former trust; establishing
conditions for a grant of the balance of the former Alaska
children's trust; designating certain receipts as available for
grants to the trust's successor; and providing for an effective
date."
4:13:25 PM
REPRESENTATIVE ANNA FAIRCLOUGH, Alaska State Legislature, read
that "the mission of the Trust [Alaska Children's Trust (ACT)]
was to improve the status of children in Alaska by generating
funds and committing resources to eliminate child abuse and
neglect." She reported that the Alaska Children's Trust was
established in 1988, and in 1996, it was given an appropriation
of $6 million by the state of Alaska. She discussed the current
value of the trust, and stated that the Alaska Community
Foundation had lost less investment value than the Permanent
Fund. She identified FACT as the Friends of the Alaska
Children's Trust, a private group which raised additional funds
to address child abuse and neglect in Alaska. She explained
that donors to FACT could not specifically dedicate funds as all
the donations went into the state of Alaska general fund. She
described that ACT grants could only fund to a specific
percentage each year, which she opined was not good for
addressing the long term issues of child abuse and neglect. She
presented that the Alaska Community Foundation would be better
suited to manage the ACT funds, and would give greater
flexibility for generating and distributing dollars. She noted
that it was currently implied in state statute that funding
could only be used for programs of prevention for child abuse
and neglect, and not for research. She summarized that HB 190
would allow: a public-private partnership, a consistent funding
stream, a change in fund management, and for continued
administrative cost to be provided by marriage licenses, birth
certificates, and special request children's fund license
plates.
4:19:51 PM
CRYSTAL KOENEMAN, Staff to Representative Anna Fairclough,
Alaska State Legislature, presented the sectional analysis on HB
190. [Included in the members' packets.] She explained that
Sections 1-5 allowed the legislature to appropriate funds
generated from birth certificates, heirloom marriage
certificates, and children's fund special license plates,
account for them separately, and to give these funds to the
endowment fund held by the charitable named recipient grantee.
She noted that Section 6 discussed management of the endowment
fund, which allowed the legislature to transfer the balance of
the ACT to a charitable named recipient grantee, and to be held
as a permanent endowment fund for child abuse and neglect
prevention activities. She discussed Section 7, which created a
grant administrator and determined the duties. She affirmed
that Section 8 was clean up language to repeal current ACT
statutes. She said that Section 9 amended the Uncodified law,
and explained that it was contingent on the appropriation of the
ACT funds to a named recipient grantee. She summarized that
Section 10 explained the effective date of the act.
4:25:26 PM
CO-CHAIR HERRON asked for clarification of the March 30, 2009
memorandum from Legislative Legal and Research Services,
discussing the ACT reference after repeal of the trust.
[Included in the members' packets.]
4:25:50 PM
MS. KOENEMAN asked if he was referring to the memo that
accompanied the amendment.
4:26:41 PM
CO-CHAIR HERRON agreed.
REPRESENTATIVE FAIRCLOUGH said that there were conflicting legal
opinions to the ability of the legislature to appropriate an
asset and allow another party to manage those funds.
4:28:07 PM
MS. KOENEMAN confirmed that the Legislative Legal and Research
Services memorandum [Included in the members' packets.] stated
that making this an endowment fund which referenced a repealed
trust that no longer existed in statute, for the purpose of fee
collection, created an unenforceable provision in codified law.
She reasoned that the public recognized the license plates as
Alaska Children's Trust plates, so that maintaining the same
name would avoid unnecessary confusion for donations.
4:29:45 PM
CARLEY LAWRENCE, Chair, Friends of the Alaska Children's Trust
(FACT) Board, pointed out that the code of ethics for fund
raising stated that contributions should be used in accordance
with donors' intentions. She ascertained that FACT could not
guarantee that the donors' intent would be met, as the
legislature had control of the funds. She explained that this
limited the FACT trust from generating additional funds. She
offered her support for HB 190.
4:31:44 PM
SAMMYE POKRYFKI, Vice Chair, Friends of the Alaska Children's
Trust (FACT), said that she supported HB 190. She confirmed
that the primary purpose of FACT was to raise funds for the ACT.
She reiterated the ethical dilemma of honoring the donor's
intent when they solicited contributions. She stated that only
the dividends and interest generated by the trust were available
for grants, and that this was an unpredictable amount each year.
She explained that establishing this trust as an endowment would
allow donations to be spent as intended, and it would ensure a
predictable distribution each year. She said that FACT board
members voted unanimously for privatization of the ACT.
4:33:53 PM
ARLISS STURGULEWSKI said that she was a supporter of ACT. She
mentioned that she was a legislator when ACT was introduced and
funded. She offered her support for the privatization of the
trust, as she believed that meeting the donors' intent was very
important.
4:36:46 PM
DIANE KAPLAN, Board Member, Alaska Children's Trust (ACT), said
that she had been involved with the trust for more than 12
years. She said that the restrictions of current funding
structure made it difficult to have an impact on the goal of ACT
to eliminate child abuse and neglect.
4:40:09 PM
CO-CHAIR KELLER asked what the criteria were for funding.
4:41:18 PM
MS. KAPLAN said that the focus was on new, young first time
parents in rural communities. She shared that research had
indicated that young people were not prepared to become parents.
4:43:02 PM
GINGER BAIM, Executive Director, Safe and Fear Free Environment
(SAFE), stated that SAFE had been a recipient of ACT grants.
She explained some of its prevention work, which included
substance abuse and fetal alcohol syndrome. She said that SAFE
supported privatization of ACT, as it would assure steady and
dependable grant management. She agreed that privatization
would increase and enhance donors, as the donor would be
guaranteed the funds were used as intended. She expressed her
support of HB 190.
4:46:49 PM
CAROL SIMONETTI, President & CEO, Alaska Community Foundation,
explained the background of the Alaska Community Foundation,
which was proposed as the fiscal sponsor of the endowment fund
for the ACT. She shared that it had been in existence since
1996, and that it was one of more than 700 community foundations
across the country. She reported that it had $35 million in
assets in more than 210 funds, and that in 2008, it had paid out
more than $10 million in grants. She explained that it was an
endowment with a mission to build charitable resources to meet
current needs. She explained the reasons it would be the
appropriate choice to manage an endowment fund to prevent child
abuse and neglect, which included an assurance that funds would
be used for the intended purpose, and that the foundation had
expertise in the management of endowed funds.
4:52:03 PM
PANU LUCIER, Executive Director, Alaska Children's Trust (ACT)
and Friends of the Alaska Children's Trust (FACT), explained
that the groups believed that there was a better way to increase
grant funds and reach underserved communities. She opined that
privatizing ACT would enhance the ability to focus grants in the
highest need areas. She said it would allow ACT and FACT to
merge and take on ethical fundraising to ensure the long term
stability of the funds, with a more efficient process. She
opined that this would still protect the original legislative
intent to create a children's trust in perpetuity.
4:59:57 PM
MARGARET VOLZ, Vice Chair, Alaska Children's Trust (ACT) Board,
agreed that privatization would allow flexibility in the choice
of programs for prevention of child abuse and in the pursuit of
funding.
5:03:28 PM
JERRY BURNETT, Deputy Commissioner, Department of Revenue (DOR),
said that both the commissioners of Department of Health and
Social Services and Department of Education and Early
Development voted to privatize ACT. He acknowledged that there
were problems with the current management of the ACT. He
reported that the trust had about $7.2 million, which was part
of the $15 billion that DOR managed, and he detailed the asset
allocations for the trust. He explained that the trust was
divided into two accounts, the income account and the main
account. He stated that currently only the income account was
spendable. He said that legislation could make the trust an
endowment, which could allow access to more of the account. He
expressed concern with the concept of taking state money and
granting it to a private organization for management toward a
specific outcome.
5:07:48 PM
CO-CHAIR HERRON suggested that DOR had not done "a very good
job" with management of the trust.
5:08:37 PM
MR. BURNETT, in response to Co-Chair Herron, said that the asset
allocation for the trust was based on investments with a long
time horizon. He patiently explained that the stock market had
its third worst performance in the last 218 years. He pointed
out that the trust performance was similar to the Constitutional
Budget Reserve account and the Permanent Fund account, all of
which had been professionally managed with the appropriate time
horizon.
5:09:59 PM
CO-CHAIR HERRON expressed concern with the longer financial
history, and he opined that, as the trust was a small part of
the much larger investment portfolio, it was not a big concern
for DOR.
5:11:08 PM
REPRESENTATIVE SEATON asked if this issue was parallel to the
Supreme Court decision which rendered as unconstitutional the
University of Alaska land endowment.
5:12:02 PM
MR. BURNETT agreed that this was an issue that the
administration was still reviewing. He detailed that the
account income was appropriated each year by the legislature and
transferred to a private account which dedicated the money for a
specific purpose. He asked if this was a way around the
constitutional provision against dedicated funds.
5:12:55 PM
REPRESENTATIVE SEATON, in response to Co-Chair Herron, asked if
the objection was for the legislature not appropriating
sufficient money out of the income fund, or that the fund
management had not generated sufficient money.
5:13:26 PM
MR. BURNETT, in response to Representative Seaton, said that the
fund could only spend dividends and gains, which were part of
the income account. He explained that the income was not
consistent from year to year; therefore the grants would not be
consistent. He expressed that this would be different with an
endowment account, whereby a percentage could be appropriated to
provide more consistent available income.
5:14:41 PM
REPRESENTATIVE SEATON asked if it was possible for a statutory
change to a percent of market value (POMV) for the ACT.
5:14:51 PM
MR. BURNETT replied that he was not aware of anything to prevent
this.
5:14:59 PM
MS. KAPLAN said that an endowment fund was managed for
consistency. She said that ACT had been requesting a
legislative change for many years, but that it had not happened.
She noted the hesitancy of donors to write a check to the state
of Alaska, when their intent was to donate to ACT.
5:17:10 PM
REPRESENTATIVE FAIRCLOUGH said that she had met with the
attorney general, and was wanting for a ruling. She emphasized
that this was a life changing issue that affected children every
day. She explained that putting the ACT into an endowment would
still allow the governor to appoint the board, and the
legislature to maintain the fund in perpetuity.
[HB 190 was held over.]
5:20:17 PM
ADJOURNMENT
There being no further business before the committee, the House
Health and Social Services Standing Committee meeting was
adjourned at 5:20 p.m.