Legislature(2003 - 2004)

03/02/2004 11:06 AM EDU

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 333-PUBLIC SCHOOL ENDOWMENT                                                                                              
                                                                                                                                
Number 1590                                                                                                                     
                                                                                                                                
CHAIR GATTO  announced that the  next order of business  would be                                                               
HOUSE BILL NO.  333, "An Act relating to an  endowment for public                                                               
education; and providing for an effective date."                                                                                
                                                                                                                                
Number 1583                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG moved  to adopt CS HB 333,  23-LS0991\U as the                                                               
working document.                                                                                                               
                                                                                                                                
CHAIR  GATTO noted  that Representatives  Wilson and  Coghill are                                                               
co-sponsors of the bill.                                                                                                        
                                                                                                                                
REPRESENTATIVE DAN  OGG, Alaska  State Legislature,  testified as                                                               
sponsor of  CS HB 333.   He told  the members that  he represents                                                               
the  Kodiak  Island and  north  end  of  the Lake  and  Peninsula                                                               
Borough and  is a former regent  of the University of  Alaska for                                                               
eight and one-half years.                                                                                                       
                                                                                                                                
REPRESENTATIVE  OGG explained  that this  bill really  has to  do                                                               
with  how  education  is  funded  and  provided  some  historical                                                               
perspective.    In  1634 the  Massachusetts  colony  granted  the                                                               
community  of Dorchester,  Thompson's Island.   Four  years later                                                               
the rents,  fees, and royalties  from that island  were dedicated                                                               
to a  free school.   In 1670,  the Plymouth colony  followed suit                                                               
and  enacted  the first  ordinance  in  America which  said  that                                                               
profits should  annually accrue  to the  colony for  fishing with                                                               
nets in Cape Cod for mackerel,  bass, or herring, and those funds                                                               
would  be dedicated  for a  free school.   The  following year  a                                                               
teacher came to the colony by  the name of Thomas Hinkley and the                                                               
colony provided  those fishing profits [for  education purposes].                                                               
At the same  time, the colony dedicated the  profits and benefits                                                               
from two former-Indian tribal lands to run the school.                                                                          
                                                                                                                                
Number 1384                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG went on to say  that in 1861 the Moral Act was                                                               
passed  which said  that  America felt  higher  education was  so                                                               
important  that  it authorized  the  giving  of land  in  western                                                               
states to setup land-grant colleges.                                                                                            
                                                                                                                                
REPRESENTATIVE OGG  said when Alaska  became a territory  it came                                                               
under  this act,  he  said.   In 1917  the  University of  Alaska                                                               
Fairbanks  became Alaska's  land  grant college.    As such,  the                                                               
lands in Alaska  were available to them.  The  one catch with the                                                               
federal government  was that the  land had to be  surveyed before                                                               
the land could  be obtained.  During the territorial  days and up                                                               
until statehood  the amount of  lands that were surveyed  and the                                                               
sections  in them  that  were dedicated  to  schools or  colleges                                                               
ended  up being  a  total  of 115,000  acres.   During  statehood                                                               
discussions there  was always the intent  to get the land  to the                                                               
University of  Alaska to fulfill  the land  grant.  In  1959 when                                                               
the statehood  compact was signed,  the land grant was  left out.                                                               
There  was some  discussion  because Alaska  was  unique and  the                                                               
federal  government gave  the state  103 million  acres with  the                                                               
thought that perhaps the [university  land grant] should come out                                                               
of this 103 million acres.                                                                                                      
                                                                                                                                
REPRESENTATIVE OGG  told the members that  during Governor Egan's                                                               
administration there  was a bill  that passed the  legislature to                                                               
give the  University of Alaska a  land grant, and it  was vetoed.                                                               
The land  grant issue remained  dormant for some time,  until the                                                               
1990s  when  two  regents  for  the  University  of  Alaska,  Lew                                                               
Williams, Jr.  and Joseph  Henry, worked hard  for a  land grant.                                                               
Representative Ogg commented  that he worked with them.   He told                                                               
the  members that  three land  grant  bills made  it through  the                                                               
legislature during that time, and each one was vetoed.                                                                          
                                                                                                                                
Number 1128                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG  went on to  say that  in 2000, the  last land                                                               
grant bill,  SB 7, was  vetoed.  It  was a historic  time because                                                               
the  legislature over-rode  the  governor's veto.   However,  the                                                               
governor declared  that the over-ride  of his veto was  not valid                                                               
because the  legislature did not  have enough votes as  he deemed                                                               
the legislation  to be an  appropriation which requires  a three-                                                               
quarter vote  to over-ride his  veto.   In January of  this year,                                                               
the Alaska Supreme  Court ruled that was not the  case.  The bill                                                               
was not  an appropriation and  the legislature was  only required                                                               
to  have the  two-thirds vote  so the  vote [in  over riding  the                                                               
governor's veto]  was upheld.   However, what the judge  said was                                                               
that because  there was a  conservation group who had  joined the                                                               
law suit at the lower court and  had put forth the question as to                                                               
whether  this bill  was an  unconstitutional dedication  of state                                                               
funds, the  Alaska Supreme  Court said it  would not  decide that                                                               
issue because  it had not been  brought up to them;  so that case                                                               
went back  to the superior  court where  it sits today  to decide                                                               
that issue.   SB 7 gave an  actual physical grant of  land to the                                                               
university  of 250,000  acres.   The  bill lays  out a  schematic                                                               
about  how  the university  would  work  with the  Department  of                                                               
Natural  Resources to  pick  these  lands.   When  the lands  are                                                               
selected it must then come back to the legislature for approval.                                                                
                                                                                                                                
REPRESENTATIVE OGG pointed  out that the reason for  this is that                                                               
when a  specific grant  of land  is selected  then it  will "gore                                                               
someone's  ox", he  said.   When the  bills came  through in  the                                                               
1990s  the miners  were very  upset that  potential mining  lands                                                               
might end up in  the hands of the university.   At other times it                                                               
would  be the  timber  industry  that would  be  upset, he  said.                                                               
Representative Ogg  added that sometimes  it would  be supporters                                                               
of the university  that did not believe the  university should be                                                               
involved  in developing  land and  it was  their desire  the land                                                               
stay in a pristine state.                                                                                                       
                                                                                                                                
Number 1046                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG  reiterated that the university  does not have                                                               
its  full  land  grant because  it  is  tied  up  in court.    He                                                               
explained  that  HB   333  is  a  little   different  from  other                                                               
legislation that  has been  brought forward.   He  explained that                                                               
this bill creates  a tenancy in common with the  State of Alaska.                                                               
He posed the following hypothetical  example to demonstrate how a                                                               
tenancy  in common  works.   He said  imagine that  a grandfather                                                               
decided that  he wanted his  grandchildren to have some  land and                                                               
willed it to  all of his grandchildren equally.   For example, if                                                               
there were eight grandchildren,  each grandchild owned one-eighth                                                               
of that land, but  there is no way for that  grandchild to go out                                                               
on the  land and  say, this  piece of land  is mine,  because the                                                               
land is owned in  common.  If the grandfather knew  that he had a                                                               
couple of  grandchildren who were  spendthrifts and did  not want                                                               
them to manage  the land, he then arranged for  one grandchild to                                                               
manage  the  land  and  the  other  grandchildren  would  benefit                                                               
equally from  the land.   Representative Ogg stated that  is what                                                               
this bill does.                                                                                                                 
                                                                                                                                
Number 0995                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG told the members  that this bill would provide                                                               
for the land to stay under  the management of the State of Alaska                                                               
and the university  would end up owning one percent  of all state                                                               
land as a  tenancy in common.   There is a caveat  that when land                                                               
is given  in the  example provided,  that the  non-managing party                                                               
acquires the right over the  managing tenant, the managing tenant                                                               
has a fiduciary  duty to be a  good steward of the  property.  He                                                               
explained  that  in this  bill  that  fiduciary duties  does  not                                                               
apply.  The  reason that language was inserted is  to ensure that                                                               
the University of Alaska is not  looking over the shoulder of the                                                               
Department of Natural  Resources and trying to  make decisions on                                                               
the management of the  land.  The idea is to get  the land to the                                                               
university as  a tenancy in  common and  have the monies  flow to                                                               
the university, he said.                                                                                                        
                                                                                                                                
Number 0884                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG  pointed out  that parts of  the bill  set out                                                               
what funds  would actually flow  to the university,  because some                                                               
might think the  university would get one percent of  the oil and                                                               
gas, mining, or land sales  revenues.  This language ensures that                                                               
the university does  not get revenues from the  existing flow; it                                                               
would only receive  revenues from new leases or new  sales.  This                                                               
would not impact the state from its current revenue sources.                                                                    
                                                                                                                                
Number 0846                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG said  the language in Section 1 and  2 is just                                                               
enabling language.  Section 3  is a new section which establishes                                                               
the  fund.     Section   4  sets  out   powers  and   duties  for                                                               
commissioners and how the fund will function.                                                                                   
                                                                                                                                
REPRESENTATIVE OGG told the members  that Sec. 14.40.499, on page                                                               
4, says  how the fund  would be administered and  establishes the                                                               
board.                                                                                                                          
                                                                                                                                
REPRESENTATIVE OGG said  that Sec. 14.40.501 sets  out the duties                                                               
and powers of the  fund.  He pointed out that on  page 5 there is                                                               
a new section  [Sec. 14.40.505] that says how  funding flows from                                                               
state lands.                                                                                                                    
                                                                                                                                
REPRESENTATIVE OGG told the members  that in Sec. 14.40.507 there                                                               
is  language  which conveys  the  land  to  the university  as  a                                                               
tenancy in common.                                                                                                              
                                                                                                                                
Number 0704                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG  pointed  to  a  change  in  wording  between                                                               
version U and the original bill which  is on page 4, line 10.  He                                                               
explained  that for  many years  there was  a "President"  of the                                                               
board of  regents and has  since been  changed to "Chair"  of the                                                               
board of regents.   Version U changes that wording  to "chair" of                                                               
the board, he reiterated.                                                                                                       
                                                                                                                                
REPRESENTATIVE OGG told  the members that there  was a suggestion                                                               
from the  University of Alaska  to "use the percentage  of market                                                               
value" so that  the money that comes  out of the fund  flows at a                                                               
rate of 5 percent on an  annual basis which is delineated in Sec.                                                               
14.40.503.                                                                                                                      
                                                                                                                                
REPRESENTATIVE OGG said Sec. 14.40.507,  page 5, lines 16 through                                                               
19, provides  language that removes the  fiduciary responsibility                                                               
so the state can manage the land unimpeded.                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG  summarized that  there  may  be some  slight                                                               
changes in  language to  ensure the bill  reflects the  intent he                                                               
has described to the members.                                                                                                   
                                                                                                                                
Number 0550                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  asked to  be directed  to the  language that                                                               
provides  for one  percent of  state  land to  be transferred  as                                                               
tenants in common.                                                                                                              
                                                                                                                                
REPRESENTATIVE OGG  directed Representative Gara to  page 5, line                                                               
13.   He  commented that  the language  is inarticulate  and will                                                               
have to be redrafted.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GARA asked  how  the one  percent  of state  land                                                               
compares to the 250,000 acres in the last land grant.                                                                           
                                                                                                                                
Number 0462                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG  responded that  one  percent  of state  land                                                               
would be  about 1,004,000  acres.  He  reminded the  members that                                                               
the land cannot be divided because it is a tenancy in common.                                                                   
                                                                                                                                
REPRESENTATIVE  GARA asked  how Representative  Ogg came  up with                                                               
one million acres.                                                                                                              
                                                                                                                                
REPRESENTATIVE OGG thanked Representative  Gara for bringing that                                                               
question before  the committee because  when providing  a history                                                               
of  land grants,  he  did not  mention an  important  point.   He                                                               
explained  that this  legislation  is different  from other  land                                                               
grant acts in  that it is his desire to  fund both the university                                                               
and kindergarten through 12th grades.   He said both of those two                                                               
educational  entities would  benefit from  the university's  land                                                               
grant.   He explained that is  the reason the number  of acres is                                                               
higher.   One  other reason  the number  is higher  is that  when                                                               
starting  with nothing  this endowment  is really  a pass  to the                                                               
next generation.  Representative Ogg  said probably by 2013 there                                                               
will be  about $3  to $4 million  a year.   He commented  that he                                                               
does not  have the exact  figure, but said  it takes a  while for                                                               
the funds  to build up.   Representative Ogg used a  past example                                                               
of state  oil revenues  that began  in the  1960s through  to the                                                               
present where the state has received  about $52 billion.  That is                                                               
the total  amount of revenue,  he said.   If one percent  of that                                                               
$52 billion  had gone into  this fund  there would be  about $520                                                               
million in  the fund.   That figure  covers a 35-year  period, he                                                               
added.   If it  had been  managed as the  permanent fund  has, it                                                               
would be a billion dollar account.   Five percent of that billion                                                               
dollars would provide $50 million  for education.  If using those                                                               
figures  into the  future,  25 or  30 years  down  the road,  $25                                                               
million  would go  to  kindergarten through  12th  grade and  $25                                                               
million   for  the   university  system   on  an   annual  basis.                                                               
Representative Ogg said it is not a lot, but it helps.                                                                          
                                                                                                                                
Number 0196                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  commented that there  is land that  he would                                                               
not want to see conveyed away  from public ownership.  He said he                                                               
believes  it is  amazing that  a person  can walk  up and  down a                                                               
stream and fish or  raft it.  He said he  believes that among the                                                               
lands  that are  most precious  to Alaskans  are the  stream bank                                                               
lands and  other recreational lands.   The Department  of Natural                                                               
Resources  has done  a  good  job over  the  years in  protecting                                                               
stream bank lands, he commented.   He asked if Representative Ogg                                                               
would be willing  to include language that would  ensure that the                                                               
state would  not give away  public access  to the Kenai  River or                                                               
other cherished public lands.                                                                                                   
                                                                                                                                
REPRESENTATIVE OGG commented that this  kind of language could be                                                               
included in  the bill; however, in  doing so it would  change the                                                               
legislation from  a tenancy  in common to  that of  an individual                                                               
land grant to the university.   He pointed out that SB 7 actually                                                               
provided  for specific  land  to be  granted  to the  university.                                                               
Representative Ogg reminded  the members that there  will be land                                                               
that will  gore your ox;  a miner will  have land that  will gore                                                               
his ox, and that is why this  bill does not go in that direction.                                                               
This  bill leaves  the authority  to  manage the  lands with  the                                                               
State of  Alaska in the  Department of Natural  Resources through                                                               
the public  hearing and public  notice process to dispose  of and                                                               
develop land.   He  added that  the point  of the  language which                                                               
relieves the department of  fiduciary responsibility would ensure                                                               
that the  university would not come  to the state and  argue that                                                               
the  department  is   not  managing  the  land   to  benefit  the                                                               
university in the way it wishes.                                                                                                
                                                                                                                                
TAPE 04-13, SIDE A                                                                                                            
                                                                                                                              
Number 0095                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON asked  about  the language  in Section  2,                                                               
page 2, lines 26 through 28, where it says:                                                                                     
                                                                                                                                
      and any other land owned by the University of Alaska                                                                      
      is not and may not be treated as state public domain                                                                      
     land.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  SEATON asked  Representative Ogg  to explain  the                                                               
meaning of the designation "state  public domain land."  He asked                                                               
if  the lands  cannot be  treated  as public  domain lands,  what                                                               
restrictions are put upon them by that clause.                                                                                  
                                                                                                                                
REPRESENTATIVE OGG  responded that  the University of  Alaska has                                                               
some  lands   already.     The  university   is  not   under  the                                                               
jurisdiction of the  State of Alaska as to how  those lands which                                                               
it possesses are  developed.  He pointed out that  is the purpose                                                               
of  land  grants.    It   allows  that  the  university  have  an                                                               
independent source  of income by  managing the land to  make some                                                               
extra  money,  he  said.    Representative  Ogg  pointed  to  the                                                               
following language in bold [on page 2, line 25 and 26]:                                                                         
                                                                                                                                
        land conveyed to the state and the University of                                                                      
     Alaska under AS 14.40.507,                                                                                               
                                                                                                                                
REPRESENTATIVE OGG told the members  that that language will most                                                               
likely be deleted.                                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON referred to page  5 where there is language                                                               
about a conveyance  and selection process.  He said  he knows the                                                               
members are aware  of the difficulty that  was experienced during                                                               
the  Native and  state land  selections process.   Representative                                                               
Seaton asked  if it  would be  acceptable to  change the  tack to                                                               
take one  percent of revenues  generated from state lands  and in                                                               
that way  avoid the  selection process  which would  be difficult                                                               
and expensive.                                                                                                                  
                                                                                                                                
Number 0331                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG replied  that what  Representative Seaton  is                                                               
suggesting  is exactly  what this  bill would  do.   There is  no                                                               
selection  process   with  this   legislation,  he  said.     The                                                               
university ends up owning one percent  of all the land, but it is                                                               
an undivided  one percent portion of  the land.  In  other words,                                                               
there is no  actual physical land transferred, only  a right that                                                               
is transferred.                                                                                                                 
                                                                                                                                
REPRESENTATIVE SEATON  referred to page  5, lines 11  through 12,                                                               
which reads:                                                                                                                    
                                                                                                                                
     The commissioner of natural resources shall convey to                                                                      
     the University of Alaska...                                                                                                
                                                                                                                                
Number 0426                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGG  added  that  it  also  says  "the  State  of                                                               
Alaska."  He commented that  this language needs to be clarified.                                                               
Representative Ogg  explained that  the language should  say that                                                               
the land  is conveyed, the  university owns one percent,  and the                                                               
State of Alaska owns 99 percent.   The land is owned together, he                                                               
stated.   The tenancy is common.   He commented that  he has been                                                               
talking with Bob Loeffler about clarifying the language.                                                                        
                                                                                                                                
Number 0542                                                                                                                     
                                                                                                                                
JOSEPH BEEDLE,  Vice President for Finance,  University of Alaska                                                               
Systems, testified  in HB  333.   He told the  members that  as a                                                               
land grant  university they are  familiar with the  mechanism and                                                               
support  this endowment  to help  fund education.   Federal  land                                                               
grant  efforts  date back  to  1915  and  1929 when  the  federal                                                               
government   attempted  to   transfer   360,000   acres  to   the                                                               
university.   Unfortunately, less than one-third  was transferred                                                               
because of survey  delays and the fact that  the Alaska Statehood                                                               
Act did not complete the commitment.                                                                                            
                                                                                                                                
MR. BEEDLE said  these facts place Alaska last in  all land grant                                                               
universities  or  college  states.     For  example,  New  Mexico                                                               
received 1.3  million acres, Oklahoma  received 1  million acres,                                                               
New  York  received 1  million  acres,  Arizona received  850,000                                                               
acres, Pennsylvania  received 780,000  acres, and  the University                                                               
of Alaska  received in the range  of 115,000 acres.   He told the                                                               
members  that Alaska  is  ranked  48th in  amount  of land  grant                                                               
volume  received and  has not  received parity  of other  states.                                                               
Mr. Beedle told the members that  the one percent land grant is a                                                               
minimal approach  because of the shrinkage  of revenues available                                                               
to the university because much  of the revenue is dedicated, such                                                               
as the 25 percent mineral  resources revenues going to the Alaska                                                               
Permanent Fund.                                                                                                                 
                                                                                                                                
MR. BEEDLE went on to say:                                                                                                      
                                                                                                                                
     Referring briefly to  the legislative research document                                                                    
     projections  for new  resource  revenue, we  appreciate                                                                    
     over a  25-year estimated time period  that there could                                                                    
     be  $34  billion accumulated  in  nominal  terms.   One                                                                    
     percent  for education,  $342  million  over that  life                                                                    
     time  for an  average of  $13.7 million  or a  split of                                                                    
     $6.8  [million] with  K-12.   I would  agree that  that                                                                    
     could average,  in terms of  the POMV approach,  $15 to                                                                    
     $20 million in the year 2030.   So looking out 25 years                                                                    
     from  now, we  could,  in fact,  have  earnings off  of                                                                    
     those  endowed proceeds  of  approximately between  $15                                                                    
     and $20 million.                                                                                                           
                                                                                                                                
     I  would note  that  the backup  schedules provided  by                                                                    
     legislative   research  [Legislative   Research  Report                                                                    
     Number   04.176,  dated   March  1,   2004]  from   the                                                                    
     Department of  Revenue shows that  it is 2012  when you                                                                    
     assume  all four:   ANWR,  Beaufort Sea,  Central North                                                                    
     Slope, NPRA  ... all four have  to work.  Then  the gas                                                                    
     line  has to  come  on  for us  to  reach $100  million                                                                    
     (indisc.) if all those things work.                                                                                        
                                                                                                                                
     Under the  concept of $100  million, if I was  asked to                                                                    
     do  a  fiscal  note  for the  university,  I  would  be                                                                    
     assuming then  $100 million to  the state.   And again,                                                                    
     that does not  start to occur under  this Department of                                                                    
     Revenue forecast  until 2012,  $100 million,  K-12 gets                                                                    
     $500,000  and  the university  gets  $500,000.   So  we                                                                    
     assume the stream  is static, a stream  of $500,000 per                                                                    
     year.   Because of  prudent investments  and percentage                                                                    
     of market draws, we only have  $5,000 at the end of the                                                                    
     second  year  to  spend because  you  would  assume  20                                                                    
     percent,  so one-fifth,  five  years  averaging of  the                                                                    
     $500,000 of the five percent  earnings.  So in year six                                                                    
     we  would have  that first  contribution where  all the                                                                    
     money was  invested, $500,000 per year  for five years,                                                                    
     equals $2.5  million.   At year  six then  that average                                                                    
     for  the five  years  would be  $1.5  [million], so  we                                                                    
     would  receive  $75,000 in  year  six.   In  year  ten,                                                                    
     assuming  again,  the  minimalistic, $100  million  per                                                                    
     year  at one  percent to  K-12 and  the university,  we                                                                    
     would  enjoy $200,000  per  year  in year  11.   So  it                                                                    
     certainly pales  in comparison to  our total  needs for                                                                    
     state general funds and it  would beg the question:  is                                                                    
     one percent, in  fact, enough.  Should it  be raised to                                                                    
     say maybe four percent or  so to roughly the equivalent                                                                    
     of something meaningful.                                                                                                   
                                                                                                                                
Number 1018                                                                                                                     
                                                                                                                                
MR.  BEEDLE  told  the  members  that  the  university  currently                                                               
administers  its  own  land   grant  development  and  conversion                                                               
process,  but  has  no  objection to  having  the  Department  of                                                               
Natural Resources  administer the universities tenancy  in common                                                               
ownership  proposed under  this bill.   Currently  the university                                                               
has a land  grant trust endowment which is in  statute and it has                                                               
used the  percent of market  value (POMV) process since  1996, so                                                               
five percent  of the average  five year  balance is paid  out, he                                                               
said.    Mr.  Beedle  summarized   his  comments  by  saying  the                                                               
university supports HB  333 and offered to work  with the sponsor                                                               
to address some of the technical aspects of the bill.                                                                           
                                                                                                                                
Number 1112                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA asked if the  state kindergarten through 12th                                                               
grade and university budgets are approximately $1 billion.                                                                      
                                                                                                                                
REPRESENTATIVE OGG responded that it is close to that.                                                                          
                                                                                                                                
REPRESENTATIVE GARA asked what the  benefit is in obtaining funds                                                               
through revenue of state lands,  as opposed to just requesting it                                                               
from the general fund.                                                                                                          
                                                                                                                                
REPRESENTATIVE OGG replied that  the bill recognizes a historical                                                               
trend in  this country that  supports land grant  universities to                                                               
provide an independent revenue source.   This independent revenue                                                               
provides some  independence from  the political  process.   Not a                                                               
lot, he said, but  a little bit.  He said  that another reason to                                                               
pursue  this  is  that  this   is  a  federal  program  that  was                                                               
established and it is fulfilling a  promise made to the state, as                                                               
the  university lands  were  included in  the  104 million  acres                                                               
[given to the state by the federal government].                                                                                 
                                                                                                                                
Number 1269                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGG told the members  that when the governor was a                                                               
U.S. Senator  he put in  matching land  grant bills, that  if the                                                               
state  gave  a   grant  to  the  university,   then  the  federal                                                               
government  would "pony  up."   What happened  then was  that the                                                               
same  "oxen were  being  gored."   If  the  state  does this  and                                                               
fulfills the state land grant,  then the U.S. Senators could look                                                               
at this and say here is a  way to fulfill the federal promise for                                                               
the land  grant.  He  added that the  amount of money  that would                                                               
flow  from the  federal side  far exceeds  what the  state monies                                                               
would be.                                                                                                                       
                                                                                                                                
Number 1314                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GARA  asked  Mr.  Loeffler  if  the  state  lands                                                               
managed by the  Department of Natural Resources  would be managed                                                               
any  differently than  it is  today if  this legislation  were to                                                               
pass.                                                                                                                           
                                                                                                                                
Number 1325                                                                                                                     
                                                                                                                                
BOB  LOEFFLER, Director,  Division  of Mining,  Land, and  Water,                                                               
Department  of  Natural  Resources,   testified  on  HB  333  and                                                               
answered  questions from  the members.    Mr. Loeffler  responded                                                               
that it  would be fair  to say that  there would not  be changes.                                                               
He added  that there have been  some errors in drafting  the bill                                                               
which are  being addressed.  He  explained that as long  as those                                                               
errors are corrected,  it is transparent to the  department as to                                                               
where the  revenue goes.   The intention of  the bill is  for the                                                               
department  to maintain  all of  the management  authority.   Mr.                                                               
Loeffler commented that this is  really a policy decision for the                                                               
committee.                                                                                                                      
                                                                                                                                
Number 1424                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON  asked Mr.  Loeffler  if  this land  grant                                                               
includes subsurface  rights, because that  is where the  money is                                                               
generated.    He  said  his  understanding  is  that  the  Alaska                                                               
Statehood  Bill   provides  that  if  the   state  transfers  the                                                               
subsurface rights  [of state lands], then  the federal government                                                               
takes them back.                                                                                                                
                                                                                                                                
MR.  LOEFFLER  pointed  out  that this  bill  would  provide  one                                                               
percent  of  the revenue  for  everything.    The land  is  still                                                               
managed  by the  department and  the  revenue still  goes to  the                                                               
state.  He  told Representative Seaton that he  could contact the                                                               
Attorney General's Office for verification,  but said he does not                                                               
believe that is a problem.                                                                                                      
                                                                                                                                
REPRESENTATIVE SEATON  replied that  he would  appreciate hearing                                                               
back on this point.                                                                                                             
                                                                                                                                
CHAIR GATTO announced that HB 333 would be held in committee.                                                                   
                                                                                                                                

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