Legislature(2013 - 2014)SENATE FINANCE 532
04/02/2013 06:00 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB47 | |
| SB57 | |
| HB30 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 18 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 30 | TELECONFERENCED | |
| += | SB 47 | TELECONFERENCED | |
| += | SB 57 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 30(FIN)
"An Act relating to performance reviews, audits, and
termination of executive and legislative branch
agencies, the University of Alaska, and the Alaska
Court System; and providing for an effective date."
6:19:31 PM
REPRESENTATIVE MIKE CHENAULT, SPONSOR, stated that HB 30
was an investment in Alaska's future; it would implement a
review of departments and agencies over a 10-year period to
determine efficiencies and effectiveness through missions,
measures, and core services. He referred to legislation
from prior years that would have provided the Department of
Corrections (DOC) budget subcommittee with an audit to
reference during the current session. He believed it was
impossible for the House and Senate Finance Committees to
sufficiently review and approve a $10 billion budget during
a 90-day session. He noted that while budget hearings
during the interim allowed legislators to become more
familiar with departments, HB 30 represented an action plan
to make changes in the process. He stated that the
legislature's job was not to micromanage departments, but
to ensure that funding was the right amount for the right
service or project, at the right time, and within the
state's financial means.
Representative Chenault communicated that the bill would
implement a review of department operations and would
compare them to best practices from other states and
organizations (e.g. the National Council of State
Legislatures) in order for the state to efficiently and
effectively meet its constitutional mandates. He believed
the process would significantly enhance the legislature's
ability to responsibly handle the state's finances. He
thanked the committee for its time.
6:22:19 PM
SHARON KELLY, STAFF, REPRESENTATIVE MIKE CHENAULT, directed
attention to back up documents contained in members files
(copy on file). She relayed that department staff was
available to answer questions pertaining to the
legislation. She shared that the authority for sunset
audits existed in current law under AS 44.66; the authority
for the sunset of boards and commissions existed under the
statute. She stated that unfortunately the audits related
to state agencies included dates and the last date was
1983. No cycle date had been included; therefore, there had
been no authority to continue the audits. She referred to
the sponsor's preparation of prior legislation (HB 166) and
cited advice from Legislative Legal Services related to the
legislative intent of the bill:
...that there was a need for an effective and regular
system of scrutiny of the programs and activities of
agencies and the establishment of periodic reviews
would help the governor and the legislature determine
the need for the continued existence of each of the
agencies.
Ms. Kelly relayed that HB 30 revised the process of
performance reviews. The sponsor and staff had referenced
the Texas Sunset Commission during the bill preparation (a
fact sheet was included in members' packets). She detailed
that the commission had been implemented 30 years earlier
and had staff of 32 including senior and regular analysts;
the commission had a budget of slightly above $2 million
per year plus reappropriations. She elaborated that the
commission had eliminated 58 agencies and had consolidated
12 agencies. The commission recommendations had saved Texas
approximately $800 million since its establishment.
Ms. Kelly detailed that a 15 percent cut to the current
budget would be approximately $600 million. The sponsor
believed HB 30 would significantly help the legislature as
it began examining necessary reductions. The bill would
establish a performance review process of Alaska's state
departments, which would measure a department's work,
efficiency, and effectiveness using objective criteria
including missions, measures, and core services; it laid
out a systematic 10-year continuing review of each
department, beginning with DOC.
Ms. Kelly addressed the sectional analysis (copy on file).
Section 1 required the Legislative Finance Division to
identify reductions as a result of the performance reviews.
Sections 2 through 4 reenacted the performance reviews
under the Division of Legislative Audit. Section 5
established the review order of departments. Section 6
outlined how the reviews would be conducted including the
establishment of the review team, working with the
departments, holding public hearings, completing the review
process, presenting a report confidentially to the
Legislative Budget and Audit Committee (LB&A), and lastly a
public report to the finance committees. Sections 7 through
12 set an effective date of July 1, 2013 and made technical
amendments including definitions and appropriate repeals.
6:26:08 PM
Senator Dunleavy asked for detail on what would occur in
the upcoming two years if the bill became law. Ms. Kelly
replied that the effective date of the bill was July 1,
2013. The Division of Legislative Audit would begin
preparing and beginning in January DOC would start
supplying information to the review team. A 10 percent cut
would be included in the process and a public review would
occur. Subsequently, the information would move through
LB&A in December and would be presented to the legislature
during the following session.
Senator Dunleavy asked if DOC would be the only department
to undergo the process in the first year. Ms. Kelly replied
in the affirmative. She elaborated that the Division of
Legislative Audit had requested that the process begin with
a smaller audit; the following year the Departments of
Education and Early Development and Health and Social
Services would undergo the process. Beginning with a
smaller department would provide a year to work out any
issues.
Senator Dunleavy surmised that the bill would implement an
ongoing process where departments were not all audited
simultaneously. He observed that decisions would be made
related to several departments per year. Ms. Kelly answered
in the affirmative. The bill included a 10-year period for
all departments to undergo reviews. She noted that the
departments were listed in Section 6 of the legislation.
Vice-Chair Fairclough pointed to page 4 related to the
review order. One department had indicated that a change in
the review order should be considered. She wondered how the
order had been determined. Ms. Kelly responded that a House
subcommittee had reordered the list in order to look at the
large departments near the beginning. The subcommittee
believed the most significant savings would occur in the
large departments.
Vice-Chair Fairclough asked whether departments would be
grouped together for efficiency in the event that
individuals were hired to assist with specific expertise.
Ms. Kelly replied in the affirmative. The Department of
Fish and Game, the Department of Environmental
Conservation, and the Department of Natural Resources had
been grouped together. Additionally, the Departments of
Revenue, Public Safety, and Law had all been grouped
together for review in 2022.
Senator Dunleavy pointed to page 4 and inquired about the
inclusion of the foundation formula under the Department of
Education and Early Development review. He surmised it
would not include a study of the state's 53 school
districts. He asked how the foundation formula would be
included. Ms. Kelly responded that the foundation formula
was put in statute approximately 10 to 12 years earlier.
She furthered that the formula would be reviewed to ensure
that it was working as intended.
6:30:43 PM
Senator Dunleavy believed that in order to include the
foundation formula discussions with all 53 school districts
would be necessary. Ms. Kelly responded in the affirmative.
Co-Chair Meyer believed that 1998 was the last time the
foundation formula had been reviewed.
Representative Chenault confirmed that the foundation
formula had been rewritten in 1998 under Senators Gary
Wilken and John Torgerson.
Senator Hoffman augmented that special committees of the
House and Senate had been appointed to examine the
foundation formula and substantial changes had been made.
There had been a look at cost differential, intensive
needs, and the Base Student Allocation.
Senator Dunleavy asked for verification that the
department, but not the school districts, would be audited.
Ms. Kelly replied that the school districts would not be
audited. She clarified that the process would be a review,
not an audit.
Co-Chair Meyer remarked on the bill's 30 cosponsors. He
CLOSED public testimony.
6:33:14 PM
Co-Chair Meyer asked the Division of Legislative Audit to
explain the fiscal note and the division's involvement in
the process.
KRIS CURTIS, LEGISLATIVE AUDITOR, DIVISION OF LEGISLATIVE
AUDIT, communicated that the division saw its role in the
process as a facilitator; the work group that compiled the
bill had assigned the review responsibility to a team that
would be facilitated by the division. She pointed to
language on page 4 of the legislation designating that the
division would annually ensure that the review team would
conduct a performance review of the appropriate programs.
Page 4, line 31 stated that the division "shall" hire
individuals and contract with individuals to form a review
team. The review team would be responsible for conducting
and reporting on the review and its results. The team would
be led by an expert in the field procured by the division
using the rules adopted by Legislative Council.
Ms. Curtis continued that the review team would be led by
an expert and would also be composed of division employees
to serve as support. The division would monitor the
contract to ensure that deliverables were met. The division
would also facilitate the reporting process by providing
support to the expert in the preparation and delivery of
the report to LB&A. She clarified that the reviews under HB
30 were not audits and would not be conducted in accordance
with auditing standards. The bill provided for
consultant/expert reviews, which was vastly different than
audits produced by the division. She communicated that the
scope of the review would be approved by LB&A; she relayed
that the committee would have a strong role in the process.
6:36:04 PM
Co-Chair Meyer observed that the reviews would be different
than audits conducted by the division. He asked whether the
reviews would conflict the division's current work. Ms.
Curtis answered that the difference between an audit and
the review was a different level of assurance (a higher
level of assurance would require more hours and resources).
The review under the bill was designed to be a leaner and
quicker, which she believed to be important. She stated
that the primary challenge for the division would be hiring
experts.
Co-Chair Meyer asked how the process would work if a
problem was located during the review. Ms. Curtis replied
that the bill specified that the scope of the review would
be approved and outlined by LB&A. She furthered that the
bill outlined what the department would be required to
produce and provide to the review team. She noted the
information required by the departments was extensive. She
detailed that the information built on what the departments
were currently required to provide legislative budget
subcommittees during session. Departments would provide
information detailing whether their programs were
authorized in statute and/or in the constitution;
departments would also prioritize their services and
recommend budget cuts to the review team. The review team
would analyze the data for best practices and would look
for areas where savings had been made in other states. The
report would include various aspects dictated by the bill
and would be seen first by LB&A; it would then become a
public document and would be provided to the legislature at
the beginning of session.
6:38:55 PM
Senator Hoffman asked whether the provision related to the
foundation formula had been included in the Texas model. He
observed that any changes to the formula would require
legislation. He was unsure how the formula fit in with the
review process unless school district input was included.
Ms. Curtis replied that during discussions on the
legislation there had been concern that the foundation
formula would be excluded in the review process. She
surmised that the formula had been included in response to
the concern.
Ms. Kelly supplemented that the foundation formula was one
of the largest budgets in the state; it had been included
by the House in response to concern that it should be
reviewed. The review team would determine how in depth the
formula would be examined. She believed the review team
would contact school districts. She furthered that the team
may look to other states as examples and would make
recommendations, which could be extensive or minimal.
Senator Hoffman asked whether states other than Texas had
been reviewed during the development of the bill. Ms. Kelly
responded that some other states had less extensive sunset
reviews; however, only Texas had been looked to as a model.
6:41:28 PM
Vice-Chair Fairclough spoke from her position as the LB&A
chair. The committee had recently reviewed agency
performances under the prior year's audit and had located
multiple places where departments had not addressed audit
findings. She stated that the bill would be another vehicle
to highlight information located by auditors. She wondered
whether the sponsor or auditor had questions about how the
items would be highlighted.
Ms. Curtis replied that the bill would require the review
team to consider the department's progress in addressing
findings. She stated that the bill could be considered as a
follow up to findings.
Ms. Kelly communicated that the provision had been included
in the bill in response to frustration by the prior
legislative auditor that the departments did not respond to
some findings.
Co-Chair Meyer discussed the schedule for the following
day.
HB 30 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 47 work draft version G.pdf |
SFIN 4/2/2013 6:00:00 PM |
SB 47 |
| SB 57 work draft version P.pdf |
SFIN 4/2/2013 6:00:00 PM |
SB 57 |
| CSSSSB047(FIN)-EED-K12-4-3-13 (2).pdf |
SFIN 4/2/2013 6:00:00 PM |
SB 47 |