MINUTES SENATE FINANCE COMMITTEE February 25, 1997 9:07 A.M. TAPES SFC-97, # 44, Side 1 (000-489) CALL TO ORDER Senator Bert Sharp, Cochair, Senate Finance Committee, convened the meeting at approximately 9:07 A.M. PRESENT In addition to COCHAIR SHARP, COCHAIR PEARCE, SENATORS DONLEY and ADAMS were present when the meeting was convened. SENATORS PHILLIPS, TORGERSON and PARNELL arrived as the meeting was in progress. Also Attending: SENATOR ROBIN TAYLOR, Sponsor of SB 38; SENATOR GARY WILKEN, Sponsor of SB 84; MARK JOHNSON, Chief, Community Health and Emergency Medical Services, Department of Health and Social Services; WENDY REDMAN, Vice President for University Relations, University of Alaska; BETTY MARTIN, Comptroller, Treasury Division, Department of Revenue; and aides to committee members. Also Attending Via Teleconference: JIM LYNCH, University of Alaska; MERRITT MITCHELL, Chair, UA Alumni Legislative Committee; JOEL HARD, LT., Division of Fish and Wildlife Protection, Department of Public Safety. SUMMARY INFORMATION SB 38 ANATOMICAL GIFTS, LIVING WILLS & DNR ORDER SENATOR TAYLOR, Sponsor, testified on behalf of the bill. MARK JOHNSON, testified in support of SB 38 and answered questions regarding the fiscal note. SENATOR ADAMS MOVED for passage with individual recommendations. Without objection, CSSSSB 38 (JUD) was REPORTED OUT of committee with individual recommendations, a previous fiscal note from the Department of Health and Social Services (2.0) and a previous zero fiscal note from Department of Public Safety. SB 84 ASSETS OF THE UNIVERSITY OF ALASKA SENATOR WILKEN, Sponsor, testified on behalf of the bill. WENDY REDMAN answered questions of committee members. JIM LYNCH was available for questions. MERRITT MITCHELL spoke in support of the bill. BETTY MARTIN addressed questions posed by committee members. COCHAIR PEARCE MOVED for passage of SB 84 with individual recommendations. Without objection, SB 84 was REPORTED OUT of committee with individual recommendations and previous fiscal notes from the University of Alaska (1,000.0) and the Department of Revenue (9.0). SB 7 HUNTING SPORT FISH TRAPPING FEES/LICENSES SENATOR DONLEY noted a new draft CS before the committee and recapped amendments from the previous hearing. He also noted new fiscal notes that applied. JOEL HARD was available for questions. SENATOR ADAMS MOVED for ADOPTION of the draft CS. Without objection, CSSB 7(FIN) was ADOPTED. SENATOR PARNELL MOVED for passage with individual recommendations and accompanying fiscal notes. There being no objection, CSSB 7(FIN) was REPORTED OUT of committee with individual recommendations, two zero fiscal notes from the Department of Public Safety, and two new fiscal notes from the Department of Fish and Game (<31.5> Wildlife Conservation, <790.5> Sport Fish Division). SENATE BILL NO. 38 "An Act relating to anatomical gifts, living wills, and do not resuscitate orders." SENATOR ROBIN TAYLOR, Sponsor, referred to the Sponsor Statement in committee files (copy on file). The legislation is simple and attempts to clean up and readily provide for communication and notification of care givers and care responders such as ambulance personnel regarding whether the person being treated is an organ donor or has a living will. He considered it a first step to providing better notification. The second step being worked on, but not yet developed was a future system to provide prompt response via information carried on drivers' licenses so that the care giver knows the person is an organ donor or has a living will. The legislation attempts to improve the communication link. SENATOR PHILLIPS called attention to the fiscal note (2.0) to design a symbol for bracelets and asked if the design couldn't be taken from some other state. SENATOR TAYLOR couldn't speak fully to that, but indicated that although they wanted to come up with some universal symbol, it seemed that each state had their own unique design. MARK JOHNSON, Chief, Community Health and Emergency Medical Services, Department of Health and Social Services; supported the intent of the legislation. In response to a question from SENATOR PHILLIPS regarding the fiscal note, he believed it was very modest in that it does not provide funds to educate providers or the public regarding the legislation. The money would be for design, printing, and some public notices in the newspaper. Regarding the design symbol, he recalled previous legislation which required similar action for a 'Do Not Resuscitate' identification and protocol system. It passed without implementation funding, so they did adopt a standard logo developed in Montana. Unfortunately, no such logo exists for organ and tissue donation in the U. S. Additionally, they would have to print cards and provide some public notice, so there would be a cost to the division. He believed the $2000 fiscal note was extremely modest compared to the magnitude of effort entailed to inform 4,000 EMS providers, plus hospital workers and others. The division has received criticism regarding lack of education and training on this issue, which they continue to address. For example, they sent a letter to every physician in the state. SENATOR PHILLIPS felt MR. JOHNSON'S response didn't answer his question, and he assumed it was impossible to come up with logos from other states. MR. JOHNSON responded that based on their research, there was no existing logo. He reiterated that the $2000 included more than just designing a logo. COCHAIR SHARP inquired if there were any graphic artists on staff at DHSS. MR. JOHNSON did not have any in his division and was not aware of resources available on this. SENATOR ADAMS MOVED for passage with individual recommendations and accompanying fiscal notes. Without objection, CSSSSB 38 (JUD) was REPORTED OUT of committee with individual recommendations, a previous fiscal note from the Department of Health and Social Services (2.0) and a previous zero fiscal note from the Department of Public Safety. SENATE BILL NO. 84 "An Act relating to fiscal management of endowment assets of the University of Alaska; amending the definition of `university receipts' to include distribution from university endowments and the total return from the University of Alaska's endowment trust fund for land obtained under the Act of Congress of January 21, 1929, as amended, and transferring responsibility for management and investment of those assets; and making technical amendments to provisions relating to federal grants and appropriations from federal land grant college fund sources that must be paid to the state." SENATOR WILKEN, Sponsor, testified on behalf of SB 84. It was not the same as SB 250 which the legislature had wrestled with the past few years, but it was a component of that bill and has to do with the management of the University of Alaska Trust. It consolidates the management of some of the University's funds under the oversight and direction of the regents. The Department of Revenue has managed the fund for many years, but it is time for the University to take another step toward development of self- sufficiency. Statutory restrictions on management and use of the fund insure that the interest of the public, fiduciary responsibilities and accountability of the regents are covered appropriately. Some paperwork will be saved by moving the fund reporting to the University budget reports rather than maintaining a separate reporting mechanism. Some administrative costs will be saved in the Department of Revenue. Consolidation with other University fund management duties means that the costs will not be replicated in their budget. Other University investments have shown a higher rate of return than this fund under the Department of Revenue's management, the differences being the philosophy of investment. Since all parts of government are being urged to run a tighter ship, SB 84 is consistent because fund management is further consolidated, costs are cut, efficiencies are realized and effectiveness enhanced. SENATOR ADAMS noted the $1 million investment income and inquired how much was in that particular pool at this time. WENDY REDMAN, Vice President for University Relations, University of Alaska; responded that there was $36.6 million in cash and investments in the fund. SENATOR ADAMS referred to page 3, lines 3-6, and asked for an explanation of "net income" as it relates to administration costs. MS. REDMAN replied that net income is all of the money generated from the sale/lease/use of the land minus the cost for the sale/lease or development of the land. SENATOR ADAMS asked where the investment income would be covered in the University budget. MS. REDMAN replied that it would show up as Program Receipts. Currently, it is reported separately in the annual report. SENATOR ADAMS suggested that what is basically being done is allowing program receipts to come into the University and reduce the state money needed for the University. MS. REDMAN hoped that was not exactly the case. It does take away the incentive to make investments and raise private money if the intention is a dollar-for-dollar decrease in general funds. Although, it was the purpose of the original land bill that the investments gained from lands would help support the University and they would rely less on general funds. The presence of Senators Torgerson and Parnell was noted. SENATOR PHILLIPS inquired if the statement "lease funds are adequately protected by law" referred to state law rather than federal law. MS. REDMAN informed him that the land was transferred with the direction that it be held in trust, the Board of Regents statutes AS 14.40 directs that they will handle all investments with prudent trust management, and SB 84 reiterates that the trust will be held in perpetuity on page 3, line 10. SENATOR PHILLIPS next asked about the land grant investment performance under the Department of Revenue. He noted the University had a greater investment return. MS. REDMAN responded that the Department of Revenue had been held on the precipice for the last four years regarding this provision in the land bill, so they have been more conservative than normal with these funds. SENATOR PHILLIPS' impression was that the department wanted to get on with the transfer. MS. REDMAN confirmed that the department didn't want to be held responsible for lower returns and never opposed the University taking the fund management back. COCHAIR SHARP informed the committee that there were two people on teleconference to testify. JIM LYNCH, University of Alaska; did not have prepared testimony and stated he was available for questions. MERRITT MITCHELL, Chair, UA Alumni Legislative Committee; briefly stated support for passage of SB 84 and pointed out that the University had an excellent investment record. COCHAIR SHARP called for questions. There being none, he invited comments from others present at the meeting. BETTY MARTIN, Comptroller, Treasury Division, Department of Revenue; appeared before the committee and was available for questions. SENATOR ADAMS referred to a 1-23-97 letter from Ross Kinney, Deputy Commissioner, (in committee files) that expressed concern over prolonging resolution of this issue and its relation to the earning power of the trust. MS. MARTIN explained that for the last four years the issue had been open regarding whether the money would move to the University. Accordingly, the Department of Revenue felt they had to be more conservative because it didn't make sense to expand the equity position of the fund and have to turn around and sell it because of transaction costs and the possibility of losses. So, the concern was not with the University having the trust, but a decision needed to be made in order to properly invest this as a long-term trust. SENATOR ADAMS asked if there would be a reduction in the Department of Revenue due to the transfer of the investment power to the University. Ms. Martin replied in the negative. COCHAIR SHARP pointed out the Department of Revenue's fiscal note, particularly the $26,000 fixed cost. MS. MARTIN responded that the department manages many funds and they allocate a certain percentage of personal services and their custody contract to those funds. In addition, they pay their direct cost of investment management fees. The University's fund is not large enough that it would allow for reduction of a full position or affect the custody contracts, so the cost would have to be reallocated back to the general fund. COCHAIR SHARP clarified that it would result in a cost shift of $26,000 to those that do use the services. MS. MARTIN confirmed. COCHAIR SHARP was curious what the fiscal note was when they took over the services and whether they added $26,000 then to cover the costs of management at the time. He commented that, as Revenue Budget Subcommittee chair, he would look at it. SENATOR ADAMS inquired of the sponsor whether money had been designated for use in the University system and suggested it could be used to help solve the collective bargaining problem existing with community teachers. SENATOR WILKEN did not know the use of the money, but indicated there were people in the room that did. COCHAIR SHARP asked the pleasure of the committee. COCHAIR PEARCE MOVED for passage of SB 84 with individual recommendations and two accompanying fiscal notes. Without objection, SB 84 was REPORTED OUT of committee with individual recommendations and previous fiscal notes from the University of Alaska (1,000.0) and the Department of Revenue (9.0). SENATE BILL NO. 7 "An Act reducing certain resident sport fishing, hunting, and trapping license fees, increasing certain nonresident sport fishing license and tag fees, and relating to nonresident sport fishing, hunting, and trapping licenses; and providing for an effective date." SENATOR DONLEY, Sponsor, called attention to a draft CS before the committee which reflects three changes: 1) The fee for combination resident, hunting and trapping or resident hunting and sport fishing changed from $38 to $39, reflecting the actual savings to the state. 2) The nonresident annual sport fish license was reduced from $200 to $150 in Section 5, page 2. 3) Another change made in Section 5 responded to an earlier concern expressed by Senator Adams over narrowing licensure provisions for commercial activity to those in Alaska for the annual license. One of the reasons for doing that was because of a proposal in the other body that would require an annual sport fish license before getting a guiding license, so it worked in conjunction with other possible legislation. SENATOR ADAMS asked for an explanation of the new fiscal notes accompanying the proposed CS. SENATOR DONLEY said that because the cost for the fourteen day license was adjusted down, as was the annual nonresident license fee, the revenue estimate declined to just above $3 million per year instead of the earlier estimate of $6 million. The reduction in fees were supported by the Department of Fish and Game. The models used to predict the revenues were uncertain business but there was strong indication that the legislation would be a revenue generator. COCHAIR SHARP clarifed that the proposed license schedule for nonresidents left no option for an annual license except for the one in Section 5. SENATOR DONLEY confirmed that was correct. One of the main reasons for eliminating the annual license for nonresidents was to get at the problem of over- harvesting and using the sport fish license for commercial harvesting purposes. JOEL HARD, LT., Division of Fish and Wildlife Protection, Department of Public Safety, was on teleconference. He had no prepared testimony but was available for questions. SENATOR ADAMS MOVED for ADOPTION of the draft CS, version 0- LS131\K. Without objection, CSSB 7(FIN) was ADOPTED. He asked about the repealer in Section 9. SENATOR DONLEY confirmed that it was the annual nonresident sport fish license that was repealed. SENATOR PARNELL MOVED for passage with individual recommendations and accompanying fiscal notes. There being no objection, CSSB 7(FIN) was REPORTED OUT of committee with individual recommendations, two zero fiscal notes from the Department of Public Safety, and two new fiscal notes from the Department of Fish and Game (<31.5> Wildlife Conservation, <790.5> Sport Fish Division). COCHAIR SHARP and other committee members made brief announcements regarding upcoming budget subcommittee meetings. ADJOURNMENT The meeting was adjourned at approximately 9:47 A.M.