Legislature(1997 - 1998)
05/12/1997 09:00 AM House BUD
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Legislative Budget and Audit
May 12, 1997
9:00 a.m.
Senate Finance Committee Room
Juneau, Alaska
Tapes LBA97#5 Side 1 003-423
CALL TO ORDER
Chairman Phillips convened the meeting of the Legislative Budget
and Audit Committee on May 12, 1997 at approximately 9:00 a.m. in
the Senate Finance Committee Room in Juneau, Alaska.
PRESENT
Representatives Senators
Rep. Bunde Chrm. Phillips
Rep. Croft Sen. Pearce
Rep. Martin Sen. Halford
Rep. James
ALSO PRESENT
Mike Greany, Director, Legislative Finance Division; Randy
Welker, Legislative Auditor.
REVISED PROGRAMS
RPL 20-07-0026 Corrections
Chrm. Phillips requested a motion to enable the first RPL to be
discussed. Sen. Halford MOVED for approval of RPL 20-07-0026.
Mr. Greany recommended approval by the committee, noting it is a
relatively straightforward expenditure increase for the
correctional industries. These industries anticipate doing this
much more business prior to the end of the fiscal year. This
expenditure would allow them to fulfill the industry orders. Mr.
Greany acknowledged that the correct authorization numbers for
the Department of Corrections has been an issue recently. He
confirmed that this RPL request amount is accurate regarding the
cost of their commodities and supplies.
Chrm. Phillips asked if there were any questions. The MOTION
passed unanimously, APPROVING RPL 20-07-0026.
Chrm. Phillips noted for the record that Sen. Pearce had entered
the meeting.
RPL 41-7-0049 Court System
Mike Greany MOVED for approval of a request that is a
continuation of an existing fully Federally funded effort to
address the issue of fairness and access for minorities to the
Justice system. He noted that this was a one-time expenditure
cost that would not generate any future obligations or require
any additional general funds for the Court system. No objections
being raised; the MOTION was APPROVED unanimously.
Mr. Welker addressed a memo dated May 12, 1997. At Chrm.
Phillips's request, last year's analysis of the consolidation of
the Anchorage and Juneau data centers has been reviewed and
updated. A year ago, the Department was indicating a savings of
approximately $450,000 to $500,000, resulting from the proposed
realignment. Concerns regarding capacity of the Juneau data
center to handle the consolidation were raised at that time.
Review a year later confirm that the concerns were legitimate.
The data center did have to upgrade and buy a new computer,
primarily due to capacity concerns. While savings did result
from the consolidation, the extent of the savings was not as much
as discussed a year ago.
Mr. Welker then addressed a memo that was a follow-up on year-end
operating encumbrances. Fiscal Year 95 year-end encumbrance
practices of virtually all departments were examined. Some
improvement has been seen. Mr. Welker noted that the Department
of Law 96 was addressed by the Legislature through a
supplemental. With the Department of Law's concurrence to cease
the practice of carrying forward some of their litigation moneys,
a sizable piece of amounts that are taken exception to will be
removed from concern. He stated that significant concerns remain
with the Department of Health and Social Services for the manner
in which it encumbers funds at year-end. Many of the moneys
encumbered at the end of the fiscal year are clearly for services
to be provided in Fiscal Year 97. The moneys are being used
primarily to contract with Senior Services in many instances.
Mr. Welker stated that they take exception to those encumbrances.
Chrm. Phillips stated for the record that Rep. Bunde and Rep.
Croft were present.
Mr. Welker then introduced the third memo regarding an analysis
of expenditure trends. Previously Rep. Bunde brought to the
committee's attention assorted State warrants. It was determined
that this was information generated primarily from the Moznik
Computer Services. Preliminary conclusions by the Committee were
that there was not anything extremely critical in nature in the
information summary, so it was moved to the back burner. Mr.
Welker said the memo was a final result, discussing the alleged
improprieties implied by expenditure trends, i.e. certain
increases and decreases, in State warrant information. The
reasons for those changes have been explained in dollar amounts
in this memo. It does appear that there is adequate
justification and that the expenditures were reasonable with
explanations for why the changes took place from year to year.
Finally, Mr. Welker addressed the memo listing seven special
audit requests for consideration by the Committee during this
session. A few on the list could possibly be satisfied with
something short of an audit. Every effort will be made to see
that this happens. All results will be shared in full with the
full Committee.
Chrm. Phillips requested that the special audit request be
addressed first, to be followed by the MOTION for Executive
session. Rep. Martin MOVED for Approval of the Special Audit
Requests as listed in the memo dated May 11, 1997. No objections
being raised; all seven audit requests were APPROVED.
EXECUTIVE SESSION
Rep. Martin MOVED that the Committee enter into EXECUTIVE SESSION
for the purpose of discussing the preliminary reports on the
audits. No objections being raised; the Committee then met in
EXECUTIVE SESSION from ?? a.m. to ?? a.m.
REGULAR SESSION
The Committee resumed REGULAR SESSION.
FINAL AUDIT
Rep. Martin MOVED that the Blue Audits be released to the public,
particularly the ones pertaining to the Department of
Transportation and Public Facilities - The Alaska Marine Highway
System as well as the one pertaining to the Department of Labor -
the Division of Labor Standards and Safety. No objection being
raised; the MOTION was APPROVED, making those reports available
to the public.
PRELIMINARY AUDITS
Rep. Martin MOVED that the other four confidential audits, which
are Preliminary Reports right now, be released for response from
the indivivual agencies with an automatic release in 30 days or
with response to Mr. Wilson??. No objection being raised; the
MOTION was APPROVED.
REQUEST FOR COMPUTERS
Mr. Greany MOVED for an equipment purchase exceeding $10,000 for
seven replacement PC's. These would replace PC's originally
purchased in 1992 for development of the network based system.
The machines' useful lives have been exceeded and the money
requested from the FY 97 budget is a one-time savings in the
Personal Services area, arising from personnel turnover.
Sen. Pearce stated she understood that Mr. Greany had a concern
regarding the Legislature's ability to interface with OMB's
massive rebuilding of its system. She asked whether the
requested computers will be comparable and able to interface well
with the new OMB automated system.
Mr. Greany affirmed his confidence that the system would be able
to bring in the information delivered from OMB with data being
interfaced easily. He stated interest in OMB's intention to
create a "budget bread machine". He pointed out that testimony
in the Governor's Office Budget before the joint sub-Committee
stated that $1.2 million would be spent developing this system,
noting that the Legislature's system rebuild was much more modest
and that cost was recovered in savings within a year.
Sen. ?? stated her opinion that the lifetime of computers is
becoming increasingly shorter. Now after five years, a system is
outdated and the new system would undoubtedly be able to
communicate to other systems easily.
Sen. Pearce felt the new system would present enormous challenges
to Mr. Greany and Mr. Welker. She was concerned that if the
system is too complicated, it will not be easily usable by other
members. She states that she thought that the proposed system is
more complicated than needed.
Sen. Pearce MOVED to approve the Legislative Finance computer
purchase for $17,500. No objections being raised; the MOTION was
APPROVED.
OTHER BUSINESS
Chrm. Phillips requested clarification on the agenda item
regarding whether a motion was necessary for the Anchorage/Juneau
Data Center. He was assured that those were public memos.
Sen. Pearce stated that the Legislature has been unfairly
criticized by the press and public due to the information
gathered and disseminated every January on the annual payments to
Legislators due to their allowance, moving costs, travel and
other associated costs. She thinks it is fair that the
information is available to the public, but would like to
formally MOVE to ask Mr. ?? to work with Mr. Greany to develop a
system that compares costs/payments to State-elected officials
with the Commissioner and appropriate Executive-level employees
in the Governor's office. She feels the public would be well
served to be able to compare the costs associated with all of
these officials. She would like to see this report produced in
January or February, but would like a recommendation in the next
LBA meeting for the best manner in which to accomplish this goal.
Mr. ?? agreed that this is an excellent idea. In addition, he
would like the public to see the tax consequences of what the
Legislature members receive since much of it is tax free.
Rep. ?? wished it clarified that the reason it is tax free is
because it is expenses that result directly from work. This
amount should be compared as well. It should be clarified that
this is not necessarily more in salary, but is a cost of doing
the job.
?? asked if a Commissioner-level employee's W-2 would show all
their travel expenses as income like that of Legislative members.
She agreed with Rep. Croft that it should be an "apples to
apples" comparison across the board, both tax-free and taxable
income.
Mr. ?? clarified that compensations are handled through the State
payroll system, enabling easy access to this type of data.
Travel costs, on the other hand, are bundled under vendor
accounts and must be extracted manually from a hard copy file.
While this can be done, the number of people for whom this is
done is directly linked to the level of resources required to
accomplish the goal.
Sen. Pearce replied that on July 1st, each department be directed
to supply the necessary data. If a department did not appear to
be showing accurate data, there could be a spot check next month.
Mr. Greany responded that this type of request is received almost
always received at the beginning of every session. Generally the
agencies are willing to respond, particularly if they know in the
beginning which people to collect data on. He anticipated
difficulty with OMB since she likes all information funneled
through her before being disseminated. He suggested that it be
made clear that this is a Legislative request directly of the
agency.
Sen. Pearce stated she would like to have the report published in
January, dependent upon the recommendation presented in the next
meeting.
Rep. James stated that she felt that the record keeping on a
State level was inaccurate. She felt that it is the
Legislature's responsibility to require an accurate record of
this type of information.
Mr. Greany responded that most agencies do maintain a file by the
person who is doing the traveling. However, within the automated
accounting system, the information cannot be extracted in that
manner.
?? suggested that with the new equipment being acquired, that
this type of data should be made more readily accessible.
Rep. Croft asked if any Commissioners or administrative personnel
receive per diem at home.
Rep. Martin recommended that an audit would take be very time
consuming and suggested a conceptual report.
Sen. Pearce responded that this was not to be considered an audit
per se.
Sen. Torgerson stated that he is paid on an hourly basis.
Therefore, if he works extra hours, he can put in for per diem as
a wage - not to defray any costs. He finds it troubling that Mr.
Greany has difficulty acquiring data from the different agencies.
He recognized that the Governor's PR office can be a "choke
point" since everything must be cleared through that office.
Chrm. Phillips asked Mr. Greany and Mr. ?? to bring
recommendations back to the next meeting. He recommended they
contact all ten members of the Committee for input, pool the
information and outline the big picture.
Sen. Pearce responded that the experience Mr. Greany and Mr. ??
have with the various department would
Rep. Martin MOVED to allow Mr. ?? and his staff to continue on
the Railroad report and include the taxation or toll to be
charged on the Alaska Railroad across the lines. No objections
being raised, the MOTION was APPROVED.
Mr. ?? responded that while the toll is not charged up front, it
is mixed in with the ticket price and then they make a rebate.
Sen. Pearce MOVED to enter into a contract not to exceed $50,000
with an architectural firm for co-compliance and renovations to
the Juneau Capital School Building, subject to the conditions set
out in the May 12th memo. This amount is allotted in the budget.
No objections being raised, the MOTION was APPROVED.
ADJOURNMENT
Rep. Martin MOVED to ADJOURN. No objections being raised, the
meeting was adjourned at approximately 10:30 a.m.
LBA 5/12/97 Page 6
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