Legislature(2009 - 2010)HOUSE FINANCE 519

04/05/2010 09:00 AM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 190(FIN) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
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                                                                    
9:05:51 AM                                                                                                                    
Representative  Fairclough MOVED  to ADOPT  Work Draft  CSHB
190 (FIN),  (26-LS0502\N, Mischel, 4/2/10, copy  on file) as                                                                    
a working document before the committee.                                                                                        
Co-Chair Stoltze OBJECTED for DISCUSSION.                                                                                       
Representative   Fairclough   provided    history   of   the                                                                    
legislation.  The  Alaska  Children's Trust  (ACT)  and  the                                                                    
Friends  of the  Alaska Children's  Trust (FACT)  boards had                                                                    
come to her office 18  months prior with challenges they had                                                                    
been  having,  including  the  inability  to  track  private                                                                    
donations  and  difficulty  drawing matching  money  to  the                                                                    
trust.  The  boards  resolved to  privatize  the  trust  and                                                                    
brought the  idea to the  legislature. In the middle  of the                                                                    
2009 legislative session, the  Alaska Supreme Court ruled in                                                                    
the  University Land  Grant case  that the  state had  given                                                                    
appropriation   powers   away   to   the   university.   The                                                                    
administration  decided to  oppose the  bill because  of the                                                                    
ruling.  Attorneys  hired by  FACT  as  well as  Legislative                                                                    
Legal Services had been asked to interpret the ruling.                                                                          
9:09:17 AM                                                                                                                    
Representative  Fairclough   continued  that   in  mid-March                                                                    
[2010], the  administration finalized its  interpretation of                                                                    
the  ruling and  drafted  HB 190.  She  emphasized that  the                                                                    
legislation would not privatize  the trust, but would create                                                                    
a grant  account within  the general  fund. She  stated that                                                                    
the proposal  would accomplish  approximately 70  percent of                                                                    
the  original   request  by  the   trust,  but   leaves  the                                                                    
legislature's power of appropriation.  It would also require                                                                    
the state to account for private donations.                                                                                     
Representative  Fairclough concluded  that  the trust  board                                                                    
believed HB  190 would help  them do the work  of preventing                                                                    
child abuse. She  stated that she had  relied extensively on                                                                    
legal counsel and was confident  that the provision could be                                                                    
legally defended.                                                                                                               
KIM   SKIPPER,   STAFF,  REPRESENTATIVE   ANNA   FAIRCLOUGH,                                                                    
SPONSOR, reviewed the sectional analysis (copy on file):                                                                        
   · Section 1, 2, 3. Amends AS 18.50.225(d); 18.50.272(e);                                                                     
     28.10.421(d)(14).    Allows    the    legislature    to                                                                    
     appropriate  funds  generated from  birth  certificates                                                                    
     and   heirloom  marriage   certificates  suitable   for                                                                    
     display; and Alaska children's  trust license plates to                                                                    
     the Alaska children's trust grant account.                                                                                 
   · Section 4. Amends AS 36.30.990(1). Exempts the Alaska                                                                      
     children's trust and the Alaska Children's Trust Board                                                                     
     from the State Procurement Code.                                                                                           
   · Section 5. Amends AS 37.14.200(b). Defines the assets                                                                      
     of the trust to include appropriations, donations to                                                                       
     the trust,  and income  earned on investments  of trust                                                                    
   · Section 6. Repeals and reenacted AS 37.14.200(c).                                                                          
     Provides for the commissioner of  revenue to manage the                                                                    
     trust as an endowment.                                                                                                     
   · Section 7. Amends AS 37.14.200 by adding new                                                                               
     subsections AS  37.14.200(d)(e)(f)(g). The commissioner                                                                    
     of  revenue  shall  provide reports  to  the  board  on                                                                    
     condition  and  investment  of the  trust.  Allows  the                                                                    
     legislature to  annually appropriate  5% of  the market                                                                    
     value, as  calculated on a  three year average,  of the                                                                    
     Alaska Children's  Trust to  the grant  account. Allows                                                                    
     the legislature  to appropriate  from the  principal of                                                                    
     the trust  up to  $150,000 for  administrative expenses                                                                    
     of the  board; and appropriate expenses  related to the                                                                    
     commissioner of  revenue's management of  trust assets.                                                                    
     Explains that this section does  not create a dedicated                                                                    
   · Section 8. Amends AS 37.14 by adding new section AS                                                                        
     37.14.205.  Creates an  Alaska  children's trust  grant                                                                    
     account as  an account in  the general fund  and allows                                                                    
     the legislature to appropriate funds  from the trust to                                                                    
     the grant  account. Defines uses  of the  grant account                                                                    
     to  include   making  grants;  obtaining   private  and                                                                    
     federal  donations;  solicit contributions,  gifts  and                                                                    
     bequests for  the trust and grant  accounts; and expend                                                                    
     private   restricted-use  donations   from  the   grant                                                                    
     account without further appropriation.                                                                                     
   · Section 9. Amends AS 37.14.225. Defines the membership                                                                     
     of the ACT board, and their qualifications.                                                                                
   · Section 10. Amends AS 37.14.230. Describes the powers                                                                      
     and  duties  of  the  ACT board,  to  include  awarding                                                                    
     grants,  maintaining records  of all  donations to  the                                                                    
     trust and grant  account; apply for and  use funds from                                                                    
     grant account to obtain private  and federal grants for                                                                    
     child  abuse  &  neglect prevention  programs;  solicit                                                                    
     donations to  the grant  account; account  for interest                                                                    
     earned  on  private   restricted  donations  not  fully                                                                    
   · Section 11. Amends AS 37.14.230 by adding new                                                                              
     subsection   AS   37.14.230(b).   Allows   the   Alaska                                                                    
     Children's Trust Board to  enter into joint arrangement                                                                    
     with  a  private  non-profit  entity  or  entities  for                                                                    
     grant-making  and  fundraising without  delegating  its                                                                    
     duties or authority.                                                                                                       
   · Section 12. Amends AS 37.14 by adding new section AS                                                                       
     37.14.235. Provides  support staff from  the Department                                                                    
     of Health & Social Services.                                                                                               
   · Section 13. Amends AS 37.14 by adding new section AS                                                                       
     37.14.245. Allows the Alaska  Children's Trust Board to                                                                    
     adopt regulations  not subject  to the  requirements of                                                                    
     the Administrative Procedures Act.                                                                                         
   · Section 14. Amends AS 37.14.270 is repealed and                                                                            
     reenacted.  Defines   board,  grant   account,  private                                                                    
     restricted-use donation, and trust.                                                                                        
   · Section 15. Amends AS 37.14.210, 37.14.240, 37.14.250,                                                                     
     and 37.14.260 are repealed.                                                                                                
9:14:48 AM                                                                                                                    
Representative Doogan  referenced Sections  1, 2, and  3 and                                                                    
asked how  much money  the legislature would  appropriate in                                                                    
an  average year.  Representative Fairclough  replied around                                                                    
Representative  Doogan referenced  Section 4  and asked  why                                                                    
the  state  would be  exempted  from  the State  Procurement                                                                    
Code. Representative  Fairclough answered  that part  of the                                                                    
problem has  been limited grants;  the procurement  code has                                                                    
caused money donated for child  abuse prevention to be spent                                                                    
to   meet   federal   requirements.  The   provision   would                                                                    
streamline an  accountability process consistent  with state                                                                    
law but not necessarily matching federal requirements.                                                                          
Representative Doogan turned to  Section 9 and asked whether                                                                    
in the  past the board  had more private citizens  and fewer                                                                    
commissioners. Ms.  Skipper responded  that the  board would                                                                    
stay the same at  seven members. Representative Doogan asked                                                                    
whether  the  ratio  of private  members  and  commissioners                                                                    
would  be the  same as  before. Ms.  Skipper replied  in the                                                                    
Representative  Doogan queried  changes related  to adopting                                                                    
regulations  not subject  to  the Administrative  Procedures                                                                    
Act (APA) proposed in  Section 13. Representative Fairclough                                                                    
replied  that  federal  requirements  had  set  a  high  bar                                                                    
through  the  APA,  which  was  not  necessary  for  smaller                                                                    
Representative Doogan  asked for  details about what  HB 160                                                                    
would repeal [Section 15].                                                                                                      
9:18:59 AM                                                                                                                    
MIKE   BARNHILL,   SENIOR    ASSISTANT   ATTORNEY   GENERAL,                                                                    
DEPARTMENT OF  LAW, responded to  the question  of exempting                                                                    
the trust  from the APA.  He explained that the  context was                                                                    
that  the people  from ACT  and Representative  Fairclough's                                                                    
office   had   requested   legal  opinion   about   possible                                                                    
solutions.  He stated  that short  of fully  privatizing the                                                                    
trust,  the  Department of  Law  (DOL)  had offered  various                                                                    
solutions already  existing in  statute for  other entities,                                                                    
such as full exemption from  the Alaska Procurement Code and                                                                    
the APA.  He opined that  it was  purely a policy  call. The                                                                    
proposal was an attempt to  free the trust from bureaucratic                                                                    
obstacles  to  fulfilling its  mission.  He  added that  the                                                                    
language came from statute related to the Permanent Fund.                                                                       
Mr. Barnhill provided  an overview of the  the sections that                                                                    
would be repealed by HB 190:                                                                                                    
   · AS 37.14.210 - Sets out the powers and duties of the                                                                       
     Commissioner of Revenue. The  section would be replaced                                                                    
     with language  in Sections 6 and  7. The commissioner's                                                                    
     investment duties would be  aligned with the investment                                                                    
     duties spelled out in AS  37.10.071, the fall provision                                                                    
     for management of state funds.                                                                                             
   · AS 37.14.240 - A provision governing fund utilization.                                                                     
     The section  would be replaced  with language  about an                                                                    
     annual appropriation of 5 percent  to the grant account                                                                    
     to  be  expended  by  the board  for  child  abuse  and                                                                    
     neglect prevention programs.                                                                                               
   · AS 37.14.250 - Existing grant statute. The section was                                                                     
     viewed  as particularly  burdensome  by  the board;  it                                                                    
     would  be replaced  by board  authority to  expend from                                                                    
     the grant  account for purposes of  grant-making in the                                                                    
     area of child abuse and neglect prevention, as well as                                                                     
     for additional fund-raising.                                                                                               
   · AS 37.14.260 - Eligibility section. There would be no                                                                      
     corresponding section in the CS; eligibility would be                                                                      
     determined by the board.                                                                                                   
9:23:05 AM                                                                                                                    
Representative Doogan  questioned whether  the privatization                                                                    
route  did  not  work  because  state  funds  could  not  be                                                                    
privatized. Mr.  Barnhill responded  in the  affirmative; in                                                                    
the  wake  of  the  university  land  case,  the  department                                                                    
believed that  the Alaska Supreme Court  would disapprove of                                                                    
any attempt to privatize state funds.                                                                                           
Co-Chair  Hawker thought  "privatize" was  a vague  word; he                                                                    
asked whether there would be  a problem with the legislature                                                                    
deciding to  appropriate the money currently  in the account                                                                    
to  another organization  as a  named  recipient grant.  Mr.                                                                    
Barnhill  replied that  the last  versions of  the bill  had                                                                    
done that by  appropriating the entire balance  of the trust                                                                    
account to  a private  entity. He  stressed that  a critical                                                                    
distinction  made  by  DOL  was  between  appropriating  for                                                                    
expenditure and  appropriating for  management as  a private                                                                    
endowment.  He  detailed  that   the  Alaska  Supreme  Court                                                                    
identified two objectives as the  purpose of the prohibition                                                                    
against dedicated  funds. One objective  is to  preserve the                                                                    
flexibility  of the  legislature to  appropriate funds.  The                                                                    
second  objective   is  to  prevent  the   legislature  from                                                                    
abdicating its  responsibility for appropriating  funds. The                                                                    
department thought  that both  objectives would  be defeated                                                                    
by taking a pot of money  and putting it into private hands.                                                                    
For  that  reason,  even though  the  legislature  would  be                                                                    
appropriating   to   a   named  recipient   and   exercising                                                                    
appropriation  power,   DOL  thought  that   ultimately  the                                                                    
legislature's  flexibility to  further  designate where  the                                                                    
funds should  go would be defeated,  and recommended against                                                                    
Co-Chair Hawker asked whether the  legislature would be able                                                                    
to appropriate  all or part  of the  state funds to  a named                                                                    
recipient   grant   for   whatever   purpose   without   the                                                                    
constraints.  Mr. Barnhill  responded  that the  legislature                                                                    
would  be able  to do  that as  long as  the funds  would be                                                                    
expended  for  the  purpose  of   child  abuse  and  neglect                                                                    
prevention.  However, they  did not  recommend doing  so for                                                                    
the purpose of managing an endowment.                                                                                           
9:26:48 AM                                                                                                                    
DIANE  KAPLAN, MEMBER,  ALASKA  CHILDREN'S  TRUST BOARD  and                                                                    
PRESIDENT,     RASMUSON    FOUNDATION,     ANCHORAGE    (via                                                                    
teleconference) testified  in support  of HB 190.  She noted                                                                    
that she  was also a  former member  of the FACT  board. She                                                                    
emphasized the  importance of the  issue of child  abuse and                                                                    
neglect  in Alaska;  ACT and  FACT wanted  Alaska to  be the                                                                    
safest place  for children  to grow up,  not the  least safe                                                                    
place. She believed that the  current structure of the trust                                                                    
made it difficult  for ACT or FACT to be  effective in their                                                                    
work. In particular, there were  issues around raising money                                                                    
when the  fundraisers could  not ensure  that the  intent of                                                                    
donors  would  be met,  the  inability  to raise  money  for                                                                    
current initiatives  and projects  because of  the structure                                                                    
of  the  legislation,  and the  considerable  administrative                                                                    
burden related to being subject  to Department of Health and                                                                    
Social   Services   regulations.    She   noted   that   the                                                                    
commissioners  of the  Departments  of  Education and  Early                                                                    
Development and  Health and  Social Services  sit as  two of                                                                    
the  seven members  of the  [ACT]  board; the  commissioners                                                                    
have  consistently  been  in   favor  of  moving  towards  a                                                                    
public/private partnership to operate the program.                                                                              
Ms. Kaplan referred to varied  legal opinions, including the                                                                    
possibility of  lawsuits regarding the  constitutionality of                                                                    
moving  the  assets. She  believed  HB  190 took  a  mid-way                                                                    
approach  of  dealing with  the  most  pressing issues.  She                                                                    
listed  examples  of  fund-raising  efforts  that  had  been                                                                    
thwarted because donors could  not be assured that donations                                                                    
were going  where they intended  them to go. She  noted that                                                                    
when   the  Attorney   General's  Office   investigated  (in                                                                    
reviewing the  legislation), they  found that no  records of                                                                    
any  previous  donations  to  the  trust  could  be  located                                                                    
anywhere in state government. She  pointed out that the five                                                                    
fund-raisers on  the FACT board  take an oath to  not engage                                                                    
in unethical  fund-raising; she noted that  the fund-raisers                                                                    
supported the legislation.                                                                                                      
Ms. Kaplan testified that the  trustees have been successful                                                                    
in receiving  federal grant money  in certain  years because                                                                    
of  the way  the fund  was  structured; those  are the  only                                                                    
monies that have  been available to give out in  the form of                                                                    
grants.  The  grant-making  process  as  it  exists  in  the                                                                    
department   makes  it   impossible  to   fund  the   small,                                                                    
neighborhood  grass-roots organizations  that are  doing the                                                                    
day-to-day  work of  addressing  the issues  on a  community                                                                    
level. She noted  that currently, the chance  of obtaining a                                                                    
grant  is  almost  nothing,  which is  not  what  the  trust                                                                    
intended. She  emphasized that the legislation  would set up                                                                    
a  private partnership  with assets  managed by  a governor-                                                                    
appointed  private  board  that   would  deal  with  current                                                                    
challenges around fundraising and grant-making.                                                                                 
9:33:03 AM                                                                                                                    
Co-Chair Hawker referred  to earlier conversations regarding                                                                    
the  trust's  inability  to  raise  money  from  the  public                                                                    
because the  money would  go to the  state. He  talked about                                                                    
earlier versions of the legislation  that were structured so                                                                    
that receipt of public funds  would be outside the state. He                                                                    
stated concerns about creating a  grant account within state                                                                    
funds  and asking  the public  to contribute  into a  state-                                                                    
managed  account.  He  questioned   her  feeling  about  the                                                                    
situation.  Ms. Kaplan  responded that  ACT had  been hoping                                                                    
for more;  she called the  proposal "half a loaf,"  but felt                                                                    
the legislation would be better  than the current situation.                                                                    
She stated  that the trustees  were very frustrated.  At the                                                                    
February 2010 meeting, the trustees  had no idea of how much                                                                    
money was  available for  2010 grants.  She opined  that the                                                                    
state has not been a diligent steward of the funds.                                                                             
Ms. Kaplan admitted that trust  would rather move the assets                                                                    
out of  the state. She  opined that  she would do  it anyway                                                                    
and let  it be  challenged. However, given  the threat  of a                                                                    
constitutional  challenge, the  trust  felt the  legislation                                                                    
would improve the  situation greatly in terms  of being able                                                                    
to segregate the funds in a  grant account, moving more to a                                                                    
percent of  market value  structure, and  allowing donations                                                                    
to be  received for  current activities  and no  go directly                                                                    
into the corpus where they  cannot be tracked. She suggested                                                                    
trying out  the proposal. She  believed the intent  of those                                                                    
involved was good.                                                                                                              
9:37:11 AM                                                                                                                    
Co-Chair Hawker  agreed with acting and  allowing settlement                                                                    
through  litigation.   He  was  not  comfortable   that  the                                                                    
provision would accomplish as much  as he wanted. Ms. Kaplan                                                                    
responded  that FACT  had exhausted  resources on  lobbyists                                                                    
for the  past three  years to get  previous versions  of the                                                                    
legislation    passed.    She    commended    Representative                                                                    
Fairclough's efforts to get some positive change through.                                                                       
Representative  Doogan asked  whether  there  would be  more                                                                    
flexibility  and ability  to fund-raise  if  the trust  were                                                                    
privatized. Ms.  Kaplan answered  that the  situation varies                                                                    
from year to year; the trustees  have no idea how much money                                                                    
will be available  because only the income  [interest on the                                                                    
principal] is  available to  be spent.  There is  no current                                                                    
percent of  market value.  She emphasized  that year-by-year                                                                    
grants  were not  a dependable  way to  address the  serious                                                                    
problems  of   child  abuse  in  the   state.  However,  the                                                                    
legislation would provide some  level of regular funding for                                                                    
multi-year sustained  initiatives that were  working. Having                                                                    
a grants  account would free the  trustees to be a  lot more                                                                    
pro-active and sensible in administration  of the funds. She                                                                    
pointed  out that  most children's  trusts get  funding from                                                                    
the state,  but that is not  the case in Alaska.  Most other                                                                    
children's  trusts get  federal funding  available to  every                                                                    
state for  child abuse prevention;  in Alaska,  every dollar                                                                    
going   into   the   trust  annually   is   contributed   by                                                                    
individuals.  The legislation  would  at least  free up  the                                                                    
grants account to be managed more flexibly.                                                                                     
9:42:20 AM                                                                                                                    
Representative Doogan  was concerned  that there might  be a                                                                    
small annual stream of funding,  but that the trust would be                                                                    
locked into the state system.  He wondered whether the trust                                                                    
could  be set  up on  its own  with the  currently available                                                                    
assets  so that  it could  raise its  own money.  Ms. Kaplan                                                                    
responded  that  the  trustees   had  requested  just  that.                                                                    
However,  possible constitutional  issues have  continued to                                                                    
kill legislation  [attempting to do  so]. The trust  did not                                                                    
want to go through that yet  another year and hoped the bill                                                                    
would  provide some  partial relief.  She stated  that there                                                                    
would  be  strong  support  from the  trustees  to  do  what                                                                    
Representative Doogan described.                                                                                                
Representative  Fairclough noted  that  there was  currently                                                                    
$10 million in  the Alaska Children's Trust;  Ms. Kaplan had                                                                    
been  referring to  any  interest off  that  account as  the                                                                    
amount available  to be spent.  The amount  fluctuates based                                                                    
on  earnings and  costs. As  an example,  she referred  to a                                                                    
document from the trust showing  that in FY 08, the trustees                                                                    
had awarded  $550,000 in grants.  In FY 2009, the  trust was                                                                    
only able to  award $186,799. She emphasized  that the large                                                                    
variance in available funds made it difficult to plan.                                                                          
Representative Fairclough referred  to a $170,000 Department                                                                    
of  Health  and  Social  Services  (DHSS)  fiscal  note  for                                                                    
management  of the  trust.  She noted  that  Ms. Kaplan  had                                                                    
testified that  the state  contributes nothing.  She queried                                                                    
current administrative support levels  for ACT and FACT. Ms.                                                                    
Kaplan responded  that at one  time, the department  had one                                                                    
full-time  employee  (that  later turned  into  a  half-time                                                                    
employee)  to administer  the trust;  for a  period of  time                                                                    
there  was no  staff. She  referred  to a  meeting at  which                                                                    
there  was no  staff to  provide the  information the  trust                                                                    
needed to  make decisions. The  trust had attempted  to hire                                                                    
someone through state  government, but was unable  to do so;                                                                    
they then requested  hiring a staff member  outside of state                                                                    
government, which  was finally allowed. An  annual operating                                                                    
grant is made  out of principal of the  trust (allowed under                                                                    
law  for amounts  under $150,000)  to the  Foraker Group  to                                                                    
employ a person  (Panu Lucier) as the  executive director of                                                                    
both  ACT and  FACT. There  are grant  administrators within                                                                    
the  departments  who  issue grant  agreements  and  receive                                                                    
reports.  She  was   not  aware  of  any   employee  of  the                                                                    
department that was connected with  the trust other than the                                                                    
9:48:27 AM                                                                                                                    
Ms. Kaplan referenced  the $550,000 awarded [in  FY 08]; she                                                                    
believed  the  vast  majority  of  the  funds  were  federal                                                                    
earmarks from Senator Stevens. The  funds would end in June,                                                                    
so  there was  no expectation  of  having them  in the  next                                                                    
Representative  Fairclough noted  that DHSS  was asking  for                                                                    
two staff for  grant support for the trust.  She queried the                                                                    
support  needed from  the state.  Ms. Kaplan  responded that                                                                    
administration  would  take  up   40  percent  of  available                                                                    
funding.  She pointed  out that  a  typical expectation  for                                                                    
administration would be 8 or 10 percent.                                                                                        
Representative Kelly  had concerns about the  two additional                                                                    
state employees.                                                                                                                
GEORGE W.  BROWN, PEDIATRICIAN, JUNEAU, spoke  in support of                                                                    
HB  190  as  going  in   the  direction  of  providing  more                                                                    
protection for  children. He  did not  think child  abuse in                                                                    
Alaska was as bad as it  had been 40 years ago. For example,                                                                    
deaths due  to neglect and abuse  have been reduced 9  or 10                                                                    
times. He felt there was still  a long way to go. He thought                                                                    
the situation  was complicated by  talk about money  and who                                                                    
controls  it. He  stressed  that prevention  is  also is  at                                                                    
least that  complicated, and requires  a change  in attitude                                                                    
on the part of society.  He believed there should be respect                                                                    
for all  children. He thought  the bill was good  because it                                                                    
placed  responsibility on  both the  public and  the private                                                                    
Dr. Brown spoke  of a conversation with the  director of the                                                                    
children's trust fund  in Wisconsin, which has  had a public                                                                    
and private partnership that has  worked well for some time.                                                                    
He commended work done and encouraged staying the course.                                                                       
PANU   LUCIER,   EXECUTIVE   DIRECTOR,   ALASKA   CHILDREN'S                                                                    
TRUST/FRIENDS OF  ALASKA CHILDREN'S TRUST, spoke  in support                                                                    
of  HB  190.  She   reported  professional  experience.  She                                                                    
believed the  legislation was a  good compromise  that would                                                                    
allow  the  trust  to  get  out  of  the  state  procurement                                                                    
process. She described challenges  due to caps and irregular                                                                    
grant funding.                                                                                                                  
9:56:48 AM                                                                                                                    
Ms. Lucier  emphasized that  for the second  year in  a row,                                                                    
the  trust  had  only  $75,000 available  for  requests  for                                                                    
proposals (RFPs). She reported  the difficultly of operating                                                                    
with such a small amount,  especially since ACT had the goal                                                                    
of making Alaska the safest  state for children by 2030. She                                                                    
emphasized  that  the  goal  could not  be  reached  at  the                                                                    
current  rate  of  funding. She  referred  to  programs  for                                                                    
families and stressed  that changes needed to  take place at                                                                    
the family  and community  level. She stated  concerns about                                                                    
state  agencies and  about using  general  funds. She  hoped                                                                    
that  the funds  would not  be used  by the  legislature for                                                                    
other purposes.                                                                                                                 
Co-Chair Stoltze  noted that the  greater fear would  be the                                                                    
administration spending the funds.                                                                                              
Representative  Austerman asked  how the  executive director                                                                    
position was funded.  Ms. Lucier responded that  she was not                                                                    
a  state  employee;  the  position was  funded  by  the  the                                                                    
Foraker Group, but she reports to the ACT and FACT boards.                                                                      
Vice-Chair Thomas queried the ultimate  goal of the bill and                                                                    
what would make  it work fully. He wanted  to understand the                                                                    
compromises made.                                                                                                               
10:01:15 AM                                                                                                                   
Ms. Lucier responded that the goal  of HB 190 was to address                                                                    
constitutionality concerns. The  compromise bill would allow                                                                    
the trust to  accomplish many of the things it  hoped to do.                                                                    
She added that privatization was the ultimate goal.                                                                             
ALISON   ELGEE,   ASSISTANT    COMMISSIONER,   FINANCE   AND                                                                    
MANAGEMENT  SERVICES,   DEPARTMENT  OF  HEALTH   AND  SOCIAL                                                                    
SERVICES, reviewed the thinking  behind the fiscal note. She                                                                    
explained that  the fiscal note developed  by the department                                                                    
anticipated that  the full management  of the  activities of                                                                    
ACT  would revert  to DHSS.  Therefore,  the $150,000  grant                                                                    
currently made from  the principal to the  Foraker Group for                                                                    
support of the trust would  be replaced with in-house staff.                                                                    
She  stated  that the  department  did  not pre-suppose  the                                                                    
legislature's desire in terms  of funding the personnel with                                                                    
the  principal  grant  (although  that  is  allowed  in  the                                                                    
legislation);  it has  been  represented  as general  funds,                                                                    
recognizing  the limitations  of the  trust and  the options                                                                    
available to the committee as to how it should be funded.                                                                       
Representative  Kelly queried  the  role  of the  department                                                                    
related  to  the  executive  director  position.  Ms.  Elgee                                                                    
responded that the fiscal note would [fund the position].                                                                       
Co-Chair Hawker noted that the  fiscal note was sponsored by                                                                    
the Rules  Committee at the  request of the  governor, which                                                                    
needed to be corrected. Ms. Elgee agreed.                                                                                       
Co-Chair Hawker  asked whether the  other money was  soon to                                                                    
be appropriated  in the  FY 11  operating budget.  Ms. Elgee                                                                    
answered  that the  department would  appropriate the  trust                                                                    
revenue available  for grant funding;  she did not  know the                                                                    
status of the principal funding  of the grant to the Foraker                                                                    
Group. She offered to check.                                                                                                    
Co-Chair  Hawker referred  to  a previous  fiscal note  that                                                                    
zeroed  out the  allocation within  Children's Services  and                                                                    
Children's Trust  Programs ($13,000  in travel,  $100,000 in                                                                    
services and commodities, and $435,000  in grants). He asked                                                                    
where  the $150,000  to  the Foraker  Group  came from.  Ms.                                                                    
Elgee offered to get more information.                                                                                          
Co-Chair  Hawker  believed  there  needed to  be  an  offset                                                                    
somewhere.  He  thought there  should  be  a  way to  do  it                                                                    
without adding  the two employees.  Ms. Elgee  reported that                                                                    
DHSS misunderstood  the intent  in Section 12,  which stated                                                                    
that the department would provide staff to the board.                                                                           
10:06:58 AM         AT EASE                                                                                                   
10:07:15 AM         RECONVENED                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION  to adopting  the                                                                    
work  draft.  There being  NO  further  OBJECTION, CSHB  190                                                                    
(FIN),  (26-LS0502\N, Mischel,  4/2/10,  copy  on file)  was                                                                    
Representative Fairclough asked  whether eliminating Section                                                                    
12  would  create  any technical  difficulty.  Mr.  Barnhill                                                                    
responded that it would not.                                                                                                    
Representative  Fairclough informed  the committee  that the                                                                    
intent was not to name DHSS  as the source of staff support;                                                                    
the intent was  to allow the executive  director to maintain                                                                    
the  relationship with  the Foraker  Group. She  recommended                                                                    
eliminating the section.                                                                                                        
Representative Fairclough addressed  questions regarding the                                                                    
bill being  only half an  answer to the challenges  faced by                                                                    
the trust.  She stated that  HB 190 was the  best compromise                                                                    
given battling legal opinions and  would enable the state of                                                                    
Alaska to  defend its position  should an action  be brought                                                                    
against  it. She  acknowledged that  the bill  was not  full                                                                    
privatization,  but   she  intended  to  propose   that  the                                                                    
committee  move  a portion  of  the  fund  (as much  as  $10                                                                    
million or as  little as zero). The money  could be attached                                                                    
to  the bill;  it could  be brought  up through  the capital                                                                    
budget.  She wanted  the  full amount  to  be privatized  in                                                                    
order to help  children. She emphasized that HB  190 was the                                                                    
best way to take a first step and encouraged support.                                                                           
Representative Fairclough summarized the challenges:                                                                            
   · The trust and people who have tried to provide                                                                             
     additional funding for the trust have received                                                                             
     unpredictable funding from the grant line.                                                                                 
   · The Department of Revenue has sometimes placed the                                                                         
     assets in more risky investments (from the Alaska                                                                          
     Children's Trust perspective) inside the the Permanent                                                                     
     Fund allocation; the trust gets lost in the mix.                                                                           
   · There are multi-faceted accounting problems, including                                                                     
     being unable  to account for  donations in  the private                                                                    
     sector; the  bill would  fix that.  The bill  would not                                                                    
     fix  unworkable  and  antiquated records;  the  Foraker                                                                    
     Group, DHSS, and the ACT  and FACT boards also continue                                                                    
     to have problems with the issue.                                                                                           
  · Local communities cannot compete for smaller grants.                                                                        
   · ACT and FACT boards want multi-year initiative                                                                             
     strategies in local communities to reduce child abuse;                                                                     
     state bureaucracy is holding this up.                                                                                      
Representative  Fairclough argued  that  HB 190  would be  a                                                                    
"gigantic" step  towards relieving the problems  with access                                                                    
to funds.                                                                                                                       
10:13:11 AM                                                                                                                   
Representative   Fairclough   MOVED  to   ADOPT   conceptual                                                                    
Amendment 1:                                                                                                                    
     Page 6, lines 19-21:                                                                                                       
     Section 12: Delete whole section                                                                                           
Co-Chair  Stoltze OBJECTED  for  discussion.  He noted  that                                                                    
eliminating the  section would not eliminate  the department                                                                    
from assisting the effort.                                                                                                      
Representative Doogan summarized  his understanding that the                                                                    
proposal would  eliminate the two state  employee positions;                                                                    
there would  then be  one employee  working through  a grant                                                                    
that  would  go through  the  Foraker  Group. He  asked  how                                                                    
accounting  problems  described  would   be  solved  by  the                                                                    
amendment.  Representative Fairclough  replied that  a grant                                                                    
fund  would be  created that  would move  money directly  to                                                                    
FACT;  in  the  end  the  ACT  board  could  establish  what                                                                    
previous  versions have  had:  a  singular appropriation  so                                                                    
they know  where the money goes  to. All the money  would be                                                                    
spent out and gone from the state.                                                                                              
Representative  Doogan stated  concerns  because  as it  was                                                                    
currently  set  up, the  money  was  still state  money.  He                                                                    
thought that  there should be  a way for accounting  for the                                                                    
money if it was going to go through the described process.                                                                      
10:16:28 AM                                                                                                                   
Representative  Kelly  pointed  to  page  3,  lines  13  and                                                                    
continuing, related  to the Commissioner of  Revenue solving                                                                    
the discussion  about poor investment  practices and  so on.                                                                    
He asked whether that would  stay in and whether there would                                                                    
a  zero  fiscal note  for  the  management of  the  program.                                                                    
Representative Fairclough responded yes.                                                                                        
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, conceptual Amendment 1 was ADOPTED.                                                                          
Co-Chair  Hawker directed  the committee  aide to  prepare a                                                                    
zero fiscal  note for the  bill in  lieu of the  DHSS fiscal                                                                    
Representative Austerman queried the  status of the negative                                                                    
fiscal note by DHSS. Co-Chair  Stoltze replied that the note                                                                    
was  for  a  previous  version  of the  bill  that  was  not                                                                    
Representative Fairclough MOVED to  report CSHB 190(FIN) out                                                                    
of  Committee   with  individual  recommendations   and  the                                                                    
accompanying fiscal notes.                                                                                                      
CSHB  190(FIN) was  REPORTED  out of  Committee  with a  "do                                                                    
pass"  recommendation   and  with  new  zero   note  by  the                                                                    
Department of Commerce,  Community and Economic Development,                                                                    
new zero  note by Department  of Revenue, and new  zero note                                                                    
by the House Finance Committee  for the Department of Health                                                                    
and Social Services.                                                                                                            

Document Name Date/Time Subjects
HB 190 CS Work Draft N Version 040210 HB190.pdf HFIN 4/5/2010 9:00:00 AM
HB 190
House Bill 190 SS - 4-2-10.doc HFIN 4/5/2010 9:00:00 AM
HB 190
HB190 Sectional Analysis - FIN - 4-2-10.doc HFIN 4/5/2010 9:00:00 AM
HB 190
HB 361 Sponsor Statement - Electronic.doc HFIN 4/5/2010 9:00:00 AM
HB 361
HB 361 Article.pdf HFIN 4/5/2010 9:00:00 AM
HB 361
HB 361 - Kenai Pen. Borough LTR[1].pdf HFIN 4/5/2010 9:00:00 AM
HB 361
CPRToday_Certification[1].pdf HFIN 4/5/2010 9:00:00 AM
HB 361
Carson City dispatcher helps save a life.pdf HFIN 4/5/2010 9:00:00 AM
HB 361
Brookline 911 dispatcher helps save a life.pdf HFIN 4/5/2010 9:00:00 AM
HB 361
AdultCPRCourse[1].pdf HFIN 4/5/2010 9:00:00 AM
HB 361
Visitor Industry Impacts 3_30.pdf HFIN 4/5/2010 9:00:00 AM
HB 361
HB 361 CS WORK DRAFT 26 LS 1478 R.pdf HFIN 4/5/2010 9:00:00 AM
HB 361
HB 190 Letter Rasmuson Foundation.pdf HFIN 4/5/2010 9:00:00 AM
HB 190
HB 190 NEW FISCAL NOTE HSS.pdf HFIN 4/5/2010 9:00:00 AM
HB 190