00 HOUSE BILL NO. 30 01 "An Act relating to performance reviews, audits, and termination of executive and 02 legislative branch agencies, the University of Alaska, and the Alaska Court System; and 03 providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05  * Section 1. AS 24.20.231 is amended to read: 06 Sec. 24.20.231. Duties. The legislative finance division shall 07 (1) analyze the budget and appropriation requests of each department, 08 institution, bureau, board, commission, or other agency of state government; 09 (2) analyze the revenue requirements of the state; 10 (3) provide the finance committees of the legislature with 11 comprehensive budget review and fiscal analysis services; 12 (4) cooperate with the office of management and budget in establishing 13 a comprehensive system for state budgeting and financial management as set out in 14 AS 37.07 (Executive Budget Act); 01 (5) complete studies and prepare reports, memoranda, or other 02 materials as directed by the Legislative Budget and Audit Committee; 03 (6) with the governor's permission, designate the legislative fiscal 04 analyst to serve ex officio on the governor's budget review committee; and  05 (7) identify the actual reduction in state expenditures in the first  06 fiscal year following a review under AS 44.66.040 resulting from that review, and  07 inform the Legislative Budget and Audit Committee of the amount of the  08 reduction. 09  * Sec. 2. AS 24.20.271 is amended to read: 10 Sec. 24.20.271. Powers and duties. The legislative audit division shall 11 (1) conduct a performance post-audit of boards and commissions 12 designated in AS 44.66.010 [AND OF THOSE PROGRAMS AND ACTIVITIES OF 13 AGENCIES SUBJECT TO TERMINATION AS DETERMINED IN THE MANNER 14 SET OUT IN AS 44.66.020 AND 44.66.030,] and make the audit, together with a 15 written report, available to the legislature not later than the first day of the regular 16 session of the legislature convening in each year set out with reference to boards and 17 [,] commissions [, OR AGENCY PROGRAMS] whose activities are subject to 18 termination as prescribed in AS 44.66; the division shall notify the legislature that the 19 audit and report are available; 20 (2) conduct a performance review of the agencies listed in  21 AS 44.66.020(a) and make the final review report available to the legislature not  22 later than the first day of the regular session convening in the year after the year  23 designated for each agency performance review in AS 44.66.020(a); 24 (3) audit at least once every three years the books and accounts of all 25 custodians of public funds and all disbursing officers of the state; 26 (4) [(3)] at the direction of the Legislative Budget and Audit 27 Committee, conduct performance post-audits on any agency of state government; 28 (5) [(4)] cooperate with state agencies by offering advice and 29 assistance as requested in establishing or improving the accounting systems used by 30 state agencies; 31 (6) [(5)] require the assistance and cooperation of all state officials and 01 other state employees in the inspection, examination, and audit of state agency books 02 and accounts; 03 (7) [(6)] have access at all times to the books, accounts, reports, or 04 other records, whether confidential or not, of every state agency; 05 (8) [(7)] ascertain, as necessary for audit verification, the amount of 06 agency funds on deposit in any bank as shown on the books of the bank; no bank may 07 be held liable for making information required under this paragraph available to the 08 legislative audit division; 09 (9) [(8)] complete studies and prepare reports, memoranda, or other 10 materials as directed by the Legislative Budget and Audit Committee; 11 (10) [(9)] have direct access to any information related to the 12 management of the University of Alaska and have the same right of access as exists 13 with respect to every other state agency; 14 (11) [(10)] conduct an audit every two years of information found in 15 the annual reports required under AS 42.05.211 and AS 42.06.220 regarding 16 compliance by the Regulatory Commission of Alaska with the requirements of 17 AS 42.05.175(a) - (e) and of the timeline extensions made by the commission under 18 AS 42.05.175(f), and of other performance measures adopted by the commission; 19 (12) [(11)] conduct audits of the Alaska film production incentive 20 program (AS 44.25.100 - 44.25.190) and make the audits available to the legislature 21 on the first day of the regular session of the legislature in 2015, 2017, and 2021. 22  * Sec. 3. AS 24.20.301(a) is amended to read: 23 (a) The legislative audit division shall keep a complete file of all audit reports 24 and other reports or releases issued by the division, and a complete file of audit work 25 papers and other related supportive material. The division shall also keep a complete 26 and accurate record of all fiscal transactions involving the division. Audit records are 27 confidential and audit reports and performance review reports are confidential 28 unless the report has been approved for release under AS 24.20.311. 29  * Sec. 4. AS 24.20.311 is amended by adding a new subsection to read: 30 (b) The annual report must include the actual and projected reductions in state 31 expenditures resulting from reviews conducted under AS 44.66.040. 01  * Sec. 5. AS 44.66.020 is repealed and reenacted to read:  02 Sec. 44.66.020. Agency programs. (a) Every year, the legislative audit 03 division shall ensure that the review team conducts a performance review of the 04 appropriate programs of the agencies listed in this subsection. Programs that are 05 administered by more than one agency shall be reviewed with the agency that the 06 Legislative Budget and Audit Committee designates. Reviews may be conducted 07 before the dates set out in this subsection at the discretion of the Legislative Budget 08 and Audit Committee. The first review shall occur in the calendar year set out after 09 each agency's name, as follows, and subsequent reviews of each agency, or part of an 10 agency, shall occur every 10 years: 11 (1) Department of Corrections, 2014; 12 (2) Office of the Governor, 2015; 13 (3) agencies of the legislative branch, 2015; 14 (4) Alaska Court System, 2015; 15 (5) the Department of Health and Social Services, 2016; 16 (6) Department of Education and Early Development, including the 17 foundation formula, 2017; 18 (7) University of Alaska, 2018; 19 (8) Department of Transportation and Public Facilities, 2019; 20 (9) Department of Administration, 2020; 21 (10) Department of Commerce, Community, and Economic 22 Development, 2020; 23 (11) Department of Fish and Game, 2021; 24 (12) Department of Environmental Conservation, 2021; 25 (13) Department of Natural Resources, 2021; 26 (14) Department of Revenue, 2022; 27 (15) Department of Law, 2022; 28 (16) Department of Public Safety, 2022; 29 (17) Department of Military and Veterans' Affairs, 2023; 30 (18) Department of Labor and Workforce Development, 2023. 31 (b) Subject to appropriation, the legislative audit division shall hire individuals 01 and contract with individuals or firms to form a review team or teams to complete the 02 reviews under this section. 03 (c) In the year before the year designated as the year for review in (a) of this 04 section, the agency shall provide to the review team, before November 1, 05 (1) citations to the agency's authority under the Constitution of the 06 State of Alaska or the Alaska Statutes to administer its programs; 07 (2) a list of programs or elements of programs that compose at least 10 08 percent of the general funds in the agency's budget appropriated from the general fund 09 that could be reduced or eliminated; the agency shall consider first those programs or 10 elements of programs that 11 (A) do not serve a current need; 12 (B) are not authorized by the Constitution of the State of 13 Alaska or the Alaska Statutes; or 14 (C) are not essential; 15 (3) a list of active encumbrances and an explanation of the continuing 16 need for any encumbrance unsatisfied more than one year after it was incurred; 17 (4) all information submitted to the legislature in the agency's most 18 recent submission under AS 37.07.050, including agency proposed programs and 19 financial plans and agency priorities from the most important to the least important. 20  * Sec. 6. AS 44.66 is amended by adding a new section to read: 21 Sec. 44.66.040. Duties of the review team. (a) During a review year set out in 22 AS 44.66.020(a), the legislative audit division shall determine the scope of the 23 performance review subject to approval by the Legislative Budget and Audit 24 Committee, and the review team shall 25 (1) collaborate with the legislative audit division and the legislative 26 finance division to identify any earlier audit findings or budgetary issues for the 27 agency; 28 (2) through the Legislative Budget and Audit committee or the senate 29 or house finance committees of the state legislature, schedule public hearings in 30 Juneau, Anchorage, Fairbanks, and other locations as determined by the committees to 31 review agency activities and identify problems or concerns; 01 (3) consult with other states and appropriate public policy 02 organizations to establish best practices for the agency; 03 (4) analyze the agency priorities reported to the legislature under 04 AS 37.07.050(a)(13); and 05 (5) evaluate the agency process for development of capital projects. 06 (b) The review team shall analyze materials relevant to the performance of the 07 agency, including 08 (1) a 10-year growth history and a 10-year projection of agency 09 expenses by funding source, prepared by the office of management and budget; 10 (2) organizational charts, personnel charts by location that show the 11 number of positions and the functions of each position, and a list of transfers of 12 personal services funding to or from other line items within the agency during the 13 preceding 10 years, prepared by the office of management and budget; 14 (3) audit information, including a list of agency audit 15 recommendations, prepared by the legislative audit division; 16 (4) a list of any financial issues relating to the agency's operating or 17 capital expenditures, prepared by the legislative finance division; 18 (5) an explanation of the function and procedure for dedicated funds or 19 any other special funds in the agency, prepared by the legislative finance division; 20 (6) a 10-year history of any budget ratifications or supplemental 21 budget requests, prepared by the legislative finance division; and 22 (7) analysis and summary of confidential information that the review 23 team may request, through the Legislative Budget and Audit Committee, from the 24 legislative audit division, if necessary to complete the team's review. 25 (c) Before December 16 of the review year set out in AS 44.66.020(a), the 26 review team shall provide a confidential preliminary report to the Legislative Budget 27 and Audit Committee. 28 (d) One week before the first day of the regular session of the legislature in the 29 year following the review year set out in AS 44.66.020(a), the review team shall 30 provide to the chairs or cochairs of the senate and house finance committees a final 31 report. In the report, the review team may 01 (1) evaluate the efficiency and effectiveness of the agency's programs; 02 (2) evaluate the appropriateness of the budget reductions proposed 03 under AS 44.66.020(c); 04 (3) determine if the agency acted in good faith to correct problems 05 identified in any previous audit or review; 06 (4) evaluate the success of the agency in achieving its mission, goals, 07 and objectives and recommends appropriate changes to the agency's missions and 08 measures; 09 (5) list agency programs or actions not authorized by statute and 10 identifies other authority for those actions; 11 (6) identify agency authority to collect fees, conduct inspections, 12 enforce state law, or impose penalties; 13 (7) recommend improvements to agency practices and procedures, 14 including means to decrease regulatory burdens or restrictions without decreasing 15 public service and safety; 16 (8) identify areas in which programs and jurisdiction of agencies 17 overlap and assesses the quality of interagency cooperation in those areas; 18 (9) evaluate whether the agency promptly and effectively addresses 19 complaints; 20 (10) evaluate to what extent the agency encourages and uses public 21 participation in rulemaking and other decision making; 22 (11) evaluate the agency's process for implementing technology and 23 recommends new types or uses of technology to improve agency efficiency and 24 effectiveness; 25 (12) identify programs and functions duplicated by another 26 government agency or private entity and recommends a single entity to perform those 27 programs and functions; 28 (13) evaluate whether the agency priorities reported to the legislature 29 under AS 37.07.050(a)(13), and the list of programs or elements of programs provided 30 under AS 44.66.020(c)(2) are consistent with the results of the performance review; 31 (14) identify agencies that could be terminated or consolidated, 01 reductions in costs, and potential program or cost reductions based on policy changes; 02 (15) identify reductions recommended as a result of a review 03 conducted under this section; 04 (16) identify the extent to which statutory, regulatory, budgetary, or 05 other changes are necessary to enable the agency to better serve the interests of the 06 public and to correct problems identified during the review; 07 (17) analyze how the review team's recommendation to terminate the 08 agency or to terminate any program within the agency would affect federal funding or 09 instigate federal intervention; 10 (18) include draft legislation to correct problems identified in the 11 report that shall be introduced by the senate and house finance committees of the state 12 legislature during the current legislative session; 13 (19) identify areas that need in-depth review in order to provide 14 complete information to the Legislative Budget and Audit Committee for 15 consideration in the audit process; and 16 (20) identify any other elements appropriate to a performance 17 management review. 18 (e) The Legislative Budget and Audit Committee shall, based on the amount 19 of the actual reduction in state expenditures reported by the legislative finance division 20 under AS 24.20.231(7) increased by an appropriate inflationary factor to be 21 determined by the Legislative Budget and Audit Committee, estimate the anticipated 22 savings for the second through fifth fiscal years following the review. The Legislative 23 Budget and Audit Committee shall include the amount of the actual reduction and the 24 anticipated future savings in its annual report under AS 24.20.311 for the second fiscal 25 year following the review and each of the subsequent four reports. 26 (f) The senate and house finance committee chairs, cochairs, and 27 subcommittees may incorporate the recommendations of a report submitted under (d) 28 of this section into the budget for the fiscal year following the report. 29  * Sec. 7. AS 44.66.050 is amended to read: 30 Sec. 44.66.050. Legislative oversight. (a) Before the termination, dissolution, 31 continuation, or reestablishment of a board or commission under AS 08.03.010 or 01 AS 44.66.010, [OR OF AN AGENCY PROGRAM UNDER AS 44.66.020 AND 02 44.66.030,] a committee of reference of each house, which shall be the standing 03 committee of legislative jurisdiction as provided in the Uniform Rules of the 04 Legislature, shall hold one or more hearings to receive testimony from the public, the 05 commissioner of the department having administrative responsibility for each named 06 board or [,] commission, [OR AGENCY PROGRAM,] and the members of the board 07 or commission involved. The hearings may be joint hearings. The committee shall also 08 consider the proposed budget of the board or [,] commission [, OR AGENCY 09 PROGRAM,] prepared in accordance with AS 37.07.050(f) [,] and the performance 10 audit of the activities of the board or [,] commission [, OR AGENCY PROGRAM,] 11 prepared by the legislative audit division as prescribed in AS 24.20.271(1). The 12 committee may consider any other report of the activities of the board or [,] 13 commission [OR PROGRAM], including [BUT NOT LIMITED TO] annual reports, 14 summaries prepared by the Legislative Affairs Agency, and any evaluation or general 15 report of the manner of conduct of activities of the board or [,] commission [, OR 16 AGENCY PROGRAM] prepared by the office of the ombudsman. 17 (b) During a public hearing, the board or [,] commission [OR AGENCY] shall 18 have the burden of demonstrating a public need for its continued existence or the 19 continuation of the program, and the extent to which any change in the manner of 20 exercise of its functions or activities may increase efficiency of administration or 21 operation consistent with the public interest. 22 (c) A determination as to whether a board or commission [OR AGENCY 23 PROGRAM] has demonstrated a public need for its continued existence must take into 24 consideration the following factors: 25 (1) the extent to which the board or [,] commission [, OR PROGRAM] 26 has operated in the public interest; 27 (2) the extent to which the operation of the board or [,] commission [, 28 OR AGENCY PROGRAM] has been impeded or enhanced by existing statutes, 29 procedures, and practices that it has adopted, and any other matter, including 30 budgetary, resource, and personnel matters; 31 (3) the extent to which the board or [,] commission [, OR AGENCY] 01 has recommended statutory changes that are generally of benefit to the public interest; 02 (4) the extent to which the board or [,] commission [, OR AGENCY] 03 has encouraged interested persons to report to it concerning the effect of its regulations 04 and decisions on the effectiveness of service, economy of service, and availability of 05 service that it has provided; 06 (5) the extent to which the board or [,] commission [, OR AGENCY] 07 has encouraged public participation in the making of its regulations and decisions; 08 (6) the efficiency with which public inquiries or complaints regarding 09 the activities of the board or [,] commission [, OR AGENCY] filed with it, with the 10 department to which a board or commission is administratively assigned, or with the 11 office of victims' rights or the office of the ombudsman have been processed and 12 resolved; 13 (7) the extent to which a board or commission that regulates entry into 14 an occupation or profession has presented qualified applicants to serve the public; 15 (8) the extent to which state personnel practices, including affirmative 16 action requirements, have been complied with by the board or [,] commission in [, OR 17 AGENCY TO] its own activities and in the area of activity or interest; 18 (9) the extent to which statutory, regulatory, budgetary 19 [BUDGETING], or other changes are necessary to enable the [AGENCY,] board [,] or 20 commission to better serve the interests of the public and to comply with the factors 21 enumerated in this subsection; 22 (10) the extent to which the board or [,] commission [, OR AGENCY] 23 has effectively attained its objectives and purposes and the efficiency with which the 24 board or [,] commission [, OR AGENCY] has operated; and 25 (11) the extent to which the board or [,] commission [, OR AGENCY] 26 duplicates the activities of another governmental agency or the private sector. 27 (d) As to each board or [,] commission [, OR AGENCY PROGRAM] 28 assigned to it for purposes of review, the committee of reference shall, not later than 29 the 60th day of the legislative session, submit a report to the presiding officer of the 30 house. The report must contain a summary of the findings of the committee as to the 31 compliance of the board or [,] commission [, OR PROGRAM] with the factors 01 enumerated in (c) of this section, together with a summary or recommendations of the 02 committee as to each of the following: 03 (1) an identification of the problems or the needs that the programs and 04 activities of the board or [,] commission [, OR AGENCY] are intended to address; 05 (2) a statement, to the extent practicable, of the objectives of the 06 program of the board or [,] commission [, OR AGENCY PROGRAM,] and its 07 anticipated accomplishments; 08 (3) an identification of any other programs having similar, conflicting, 09 or duplicate objectives; 10 (4) an assessment of alternative methods of achieving the purposes of 11 the program; 12 (5) an assessment of the consequences of eliminating the board or [,] 13 commission [, OR PROGRAM] and consolidating its activities with another program, 14 or of funding it at a lower level; 15 (6) a justification for the recommended continuation or extension of 16 the board or [,] commission [, OR PROGRAM,] and an explanation of the manner in 17 which it avoids duplication of or conflict with other efforts; and 18 (7) any other information that, in the opinion of the committee, would 19 improve the performance of the board or [,] commission [, OR AGENCY] with 20 respect to its representation of and responsiveness to the public interest. 21 (e) The committee of reference may introduce a bill providing for the 22 reorganization or continuation of the board or [,] commission. Not [, OR AGENCY 23 PROGRAM. NO] more than one board or [,] commission [, OR AGENCY 24 PROGRAM] may be continued or reestablished in any legislative bill, and the board 25 or [,] commission [, OR AGENCY PROGRAM] must be mentioned in the title of the 26 bill. 27  * Sec. 8. AS 44.66.060 is amended to read: 28 Sec. 44.66.060. Existing claims. This chapter does not cause the termination 29 or dismissal of a claim or right of a citizen against a board, commission, or program of 30 an agency terminated by legislative action or under this chapter that is subject to 31 litigation. Claims and rights shall be assumed by the department to which the board or 01 commission terminated under this chapter was attached for administrative purposes. 02  * Sec. 9. AS 44.66 is amended by adding a new section to read: 03 Sec. 44.66.070. Definitions. In this chapter, 04 (1) "agency" means a state department or agency, whether in the 05 legislative, judicial, or executive branch, and includes the University of Alaska; 06 (2) "review team" means appropriate professionals hired by or under 07 contract with the legislative audit division to complete a performance review under 08 AS 44.66.020 - 44.66.040. 09  * Sec. 10. AS 44.66.030 is repealed. 10  * Sec. 11. AS 24.20.231(7), 24.20.271(2), 24.20.311(b); AS 44.66.020, and 44.66.040 are 11 repealed July 1, 2023. 12  * Sec. 12. This Act takes effect July 1, 2013.