Legislature(1997 - 1998)
12/11/1998 01:50 PM House BUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
ALASKA STATE LEGISLATURE
BUDGET AND AUDIT COMMITTEE
December 11, 1998
1:50 p.m.
TAPES
LB&A 12/11/98, Tape 1, Side A and B;
Tape 2, Side A
CALL TO ORDER
The December 11, 1998 meeting of the Legislative Budget and Audit Committee was
called to order by Chairman Randy Phillips at approximately 1:50 p.m.
PRESENT
The following members were present:
Senators Representatives
Sen. Randy Phillips, Chair Rep. Terry Martin, Vice Chair (Teleconference)
Sen. Rick Halford (Teleconference) Rep. Con Bunde
Sen. John Torgerson (Teleconference) Rep. Eric Croft
Sen. Al Adams (Teleconference) Rep. Gene Therriault
ALSO PRESENT: Pat Davidson, Legislative Auditor, Legislative Finance; Janet
Clarke, Director, Admin. Services, Department of Health and Social Services; Da
Hardengurgh, Director of Community Development Division, RurAL CAP; David Teal,
Director, Legislative Finance; Dan Spencer, Chief Budget Analyst, Office of Bud
Management; Pat Ladner, Exec. Director, Alaska Aerospace Development Corporatio
(AADC); Laura Gould, Director of Business Operations, AADC; Joe Reeves, Deputy
Director/ASM, Department of Corrections; Tom Williams, Senate Finance Committee
Staff; Kathy Porterfield, Managing Partner, KPMG Peat Marwick; Annalee McConnel
Director, Office of Management and Budget; Bob Poe, Y2K Project Director.
APPROVAL OF MINUTES
Rep. Terry Martin MOVED to approve minutes from the following meetings: August
1997; December 12, 1997; January 21, 1998; February 11, 1998; February 20, 1998
March 4, 1998; March 9, 1998; April 1, 1998; April 30, 1998; May 11, 1998; July
1998; October 2, 1998. There being no objection, the motion was PASSED by
unanimous consent.
EXECUTIVE SESSION
Rep. Martin MOVED to enter into Executive Session in order to discuss legal iss
pertaining to RPL's and preliminary audit reports. There being no objection, t
Committee went into Executive Session at approximately 1:53 p.m.
Sen. Adams joined the meeting during Executive Session.
OPEN SESSION
The Committee resumed open session at approximately 2:37 p.m.
CONSIDERATION OF REQUESTS FOR AUDITS
PAT DAVIDSON, Legislative Auditor, brought five (5) requests for audits to the
attention of the Committee. The first was a request from Sen. Phillips to exam
Division of Workers Compensation; this audit was to examine various policies an
operational issues related to workers compensation. The second audit was reque
Sen. Taylor, asking the Committee to examine special education programs in the
Department of Education (DOE). She clarified that, since the issue had been re
public, her staff had contacted the Department of Education to determine their
to the issues. She noted that DOE had hired a team of specialists at the Schoo
expense to bring the District into compliance. Ms. Davidson stated that the au
would review the actions taken by DOE, as well as the remedial efforts put fort
School District, and identify any outstanding issues.
The third request for audit brought before the Committee had been put forth by
Moses, asking for a ten-year analysis on the Board of Fisheries, including the
the Board to complete work within its schedule.
The fourth request had been brought by Sen. Phillips, asking for a follow-up au
Child Protective Services, Custody and Determination. Ms. Davidson clarified t
Philips had requested that the audit be delayed long enough to allow time for t
to implement earlier recommendations, and that the report be made to the Legisl
January 2000.
The fifth audit was requested by Rep. Hudson for the Department of Administrati
Rep. Hudson had asked for examination of the new hiring system now used by the
of Alaska to determine whether it was in compliance with AS 39.25.150, which pr
a hiring preference for veterans. Ms. Davidson noted that her staff had been i
with Rep. Hudson's staff on the issue, and had come to the agreement to delay a
until her staff had the opportunity to work with the Dept. of Administration on
Rep. Martin then MOVED that the Committee approve four of the five requests --
from Sen. Phillips, Sen. Taylor, Rep. Moses and Sen. Phillips. There being no
that motion was PASSED by unanimous consent.
Rep. Martin also MOVED to release five (5) preliminary audits to their respecti
Agencies and Departments, with provision for a 30-day automatic release, unless
was requested by a legislator. He noted that the preliminary audits were as fo
Alaska Science Technology Report for the Department of Commerce and Economic
Development; (2) Community and Regional Affairs Report on computer data base; (
Fish and Game Sports Receipts Usage; (4) Organization Employment Center
reorganization of employment security operations and charges; (5) Marine Pilot
Mention also was made of the Rural Sanitation Report for the Department of
Environmental Conservation.
Ms. Davidson suggested that the Committee, in view of the upcoming holiday and
of the Committee to Juneau, consider merely releasing the preliminary audits to
respective Agencies for response and then bring the reports before the next Com
meeting.
Rep. Martin then so AMENDED his motion. There being no objection, the motion
PASSED.
CONSIDERATION OF RPLs
01-9-8033 Office of the Governor $78.8 Federal Receipts
Alaska Coastal Management Program Grant
Sen. Adams MOVED to adopt RPL 01-9-8033. There being no objection, the motion
PASSED.
04-9-0013 Revenue $50.0 Federal Receipts
Federal Access & Visitation Grant
Rep. Martin MOVED to adopt RPL 04-9-0013. There being no objection, the motion
PASSED.
06-9-0017 Health and Social Services $1,605.8 Federal Receipts
Juvenile Accountability Incentive Block Grant
Rep. Croft MOVED to adopt RPL 06-9-0017. Rep. Martin questioned whether, since
this was a new program, there would be General Funds accountability in terms of
matching funds.
Janet Clarke, Director, Admin. Services, Dept. of Health and Social Services,
responded by stating that the General Funds match had already been identified f
existing funds to match the $1.6 million for the program.
There being no further discussion or objection to the original motion, the moti
PASSED.
06-9-0126 Health and Social Services $3,100.0 Federal Receipts
PASS Child Care Program
Sen. Adams MOVED to adopt RPL 06-9-0126.
Responding to a question from Rep. Martin, Ms. Clarke clarified that no General
Match was necessary for the Federal Receipts. She stated that there was mainte
effort requirement pertaining to the entire welfare reform program for which he
department was in current compliance.
Without further discussion or objection, the motion PASSED.
06-9-130 Health and Social Services $ 211.5 Statutory Designated
Children's Health Outreach
Rep. Martin questioned whether, since the funds were designated from General Fu
there was a limit on all such funds, formerly Program Receipts.
Ms. Clarke responded by clarifying that the funds were actually from a private
foundation, The Robert Woods Johnson Foundation, and could not be accepted unle
used for the specific grant purposes. Therefore, she stated that the funds wou
into the General Funds unless they were appropriated for the specific program.
pointed out that her department had received verbal and written confirmation th
had been approved.
Responding to a question from Sen. Phillips, it was confirmed that the program
included in the Governor's budget.
Sen. Adams MOVED to approve RPL 06-9-0130. Sen. Phillips OBJECTED in
consideration of possible future impact on the General Fund.
Rep. Croft questioned whether this program was to function as a means of locati
children who were not being covered under the Medicaid Health Insurance Program
Clarke affirmed that the Robert Wood Johnson Foundation intended to help States
complete outreach work for the Congressionally authorized Children's Health Ext
Program.
Rep. Croft asked whether the process of locating children who were not being pr
health care service was a temporary function. Ms. Clarke explained that curren
approximately 11,000 children in the State would be eligible for the program, a
outreach to encourage children to be enrolled in the program had not been compl
a number of years. She noted that the grant provided $1 million over three yea
would help in identifying unserved children. She stated that after that time,
that the number of unserved children would decrease significantly as eligible c
would become more routinely enrolled. She also noted the benefit of being able
outside, private foundation dollars to complete the work at hand, rather than h
utilize General Funds.
Responding to another question from Rep. Croft, Ms. Clarke clarified that Medic
provided using a 59.8% Federal participate rate, with a State matching of funds
to maintain the program.
Rep. Bunde stated his understanding that ultimately the program would have an i
on State funding, since those children enrolled in the Medicaid program would b
partially supported by State matching dollars. He also noted the importance of
unserved children and having an impact on their health concerns.
Rep. Therriault pointed out a document from Legislative Finance stating that th
one-time appropriation, and that outreach efforts would be reduced after FY 200
relation to the reduction of grant funding. Ms. Clarke reiterated that the fun
one-time grant from a private foundation, intended to underwrite the work of br
large group of children into the existing program.
Ms. Clarke responded to other questions by stating that in the Mat-Su Valley a
percentage of eligible children were unserved, as well as in other areas statew
A roll call vote was held:
YEA: Sen. Adams, Sen. Torgerson, Rep. Martin, Rep. Bunde, Rep. Croft, Rep.
Therriault
NAY: Sen. Phillips
RPL 06-9-0130 was therefore PASSED by a vote of 6 to 1.
06-9-0139 Health and Social Services $1,328.7 Federal Receipts
Energy Conservation Initiative
Sen. Adams MOVED to adopt RPL 06-9-0139.
Rep. Bunde questioned in which areas the funds would be expended.
Janet Clarke stated that her Department would contract with RuAL CAP, the grant
the program, who works in a number of villages. She explained that the company
provided a list of villages which they serviced last year, which was included i
background materials. She stated that this year, the villages served would be
serviced by RurAL CAP who have AmeriCorps volunteers.
Sen. Adams added that those served would be predominantly low income households
elders. He also stated that 70% of the funding would go out to rural communiti
30%, or $316,999 going to Anchorage and a portion to Fairbanks, where supplies
be purchased.
Responding a question from Rep. Bunde, Ms. Clarke affirmed that the work would
completed largely by volunteers, with the majority of the funding going toward
Sen. Adams also stated that the matching funds were provided by RurAL CAP and t
the RPL was not approved, the Federal funding would go to another state.
Responding to a question from Rep. Martin, Ms. Clarke pointed out that other
weatherization programs, such as those provided by AHFC, reported being able to
five to six villages per year. She also stated that the work done by these oth
was more extensive and not geared toward lower income households. She explaine
the work in the proposed program would reach a greater number of villages.
David Hardenburgh, Director of Community Development Division, RurAL CAP
stated that the matching funding for the program came from the Corporation for
Service to provide funding for the AmeriCorps program, and came through the Ala
State Community Services Commission under the auspices of DCRA. He explained t
this funding provided over 25 AmeriCorps members per year. He stated that the
Conservation Initiative would entail 25% of the time for AmeriCorps, while the
80% of their time was funded by another Federally supported program.
Rep. Therriault added his understanding that the volunteers would be Alaska Nat
from the villages and stated his belief that in future discussions about power
equalization for rural Alaska, it would be important to have residents in the c
become knowledgeable about how to consume less energy. He expressed his suppor
the RPL.
There being no further questions or comments, and no objections, RPL 06-9-0139
PASSED.
Rep. Bunde added his hope that a press release would be issued communicating th
million being spent on rural Alaska to reflect the attention given to this area
06-9-0184 Health and Social Services $ 705.9 Federal Receipts
Alcohol/Drug Abuse Services
Rep. Croft MOVED that RPL 06-9-0184 be approved. There being no objection or
discussion, the motion was PASSED.
06-9-0187 Health and Social Services $ 50.0 Statutory Designated
AK Public Health Improvement
Sen. Adams MOVED that RPL 06-9-0187 be approved. There being no objection, the
motion PASSED.
Sen. Phillips elected to delay action on RPL 08-9-0062 until the end of the mee
schedule, as a good deal of discussion was anticipated.
It was noted that RPL's 08-9-0063 and 08-9-0064 had been withdrawn from the sch
10-9-4026 Natural Resources $ 73.0 Federal Receipts
Volcano Monitoring Network
Sen. Adams MOVED that RPL 10-9-4026 be approved. There being no objection, the
motion PASSED.
10-9-4027 Natural Resources $ 50.0 Federal Receipts
Minerals/Related Data Conversion
Sen. Adams MOVED that RPL 10-9-4027 be approved. There being no objection, the
motion PASSED.
10-9-4028 Natural Resources $ 53.0 Federal Receipts
Sagavanirktok Mapping
Sen. Adams MOVED that RPL 10-9-4028 be approved. There being no objection, the
motion PASSED.
10-9-4032 Natural Resources $ 13.2 Statutory Designated
Aleknagik Building Lease
Sen. Adams MOVED that RPL 10-9-4032 be approved. There being no objection, the
motion PASSED.
10-9-4033 Natural Resources $ 7.5 Statutory Designated
Project Learning Tree Cirriculum
Sen. Adams MOVED that RPL 10-9-4033 be approved. There being no objection, the
motion PASSED.
Rep. Martin requested that RPL 20-9-0007 be held until the end of the schedule
anticipation of more lengthy discussion.
08-9-0062 Comm. & Economic Dev. $7,000.0 Federal Receipts
Alaska Aerospace Development Corp.
Kodiak Launch Complex Construction
David Teal, Director, Legislative Finance Division stated that his original
recommendation no longer applied, since the RPL had been revised to request $7
in Federal Receipts, changed from the original $5 million in Federal Receipts a
million in Corporate Receipts.
In response to a question from Rep. Croft, Mr. Teal clarified that his departme
technical and legal concerns pertaining to the statutory authority.
Sen. Adams asked for clarification of the breakdown between Federal and Corpora
receipts in the request.
Mr. Teal explained that, in addition to the $5 million in Federal Receipts, the
$2 million in interest on those Federal funds. He further clarified that, alth
originally classified as Corporate Receipts, they should technically be classif
Federal Receipts.
Mr. Teal noted that certain questions could be raised by the Committee. For in
pointed out that although the Department was requesting authority to expend $2
in interest on Federal Receipts, they were likely to earn only $1.5 million.
Rep. Therriault stated, as a member of the Board of Directors of the Alaska Aer
Development Corporation, that the Board had instructed Pat Ladner, from the Aer
Corporation, to come forward with the RPL request. He expressed his support of
examining technical questions pertaining to the interest earnings on the Federa
and stated his belief that authorizing the Department to collect the highest po
amount of interest earnings seemed the most appropriate choice. He added that
interest earnings represented not only interest on the $5.0 million in Federal
interest on the total package of Federal allocations received by the Alaska Aer
program, which he understood to be substantial. He recommended that the Commit
approve the RPL in its modified form.
Rep. Martin expressed his concern that, even though the terminology of the RPL
been modified, the fact remained that a state agency would be utilizing program
which were state funds that required authorization from the State. He also exp
concern about the Corporation bonding for the greater earnings, since that crea
possible cost risk to the State if the earnings were not realized.
Rep. Austerman from Kodiak was introduced by Rep. Therriault as being present v
telephone line. Rep. Therriault stated that Rep. Austerman was another legisla
member of the Aerospace Corporation Board of Directors.
Rep. Therriault pointed out that the revised RPL eliminated the bonding issue.
clarified that the current RPL only requested the receipt of Federal Funds, in
what was appropriated in the year's Federal budget, and a request for authority
interest earnings from the Federal dollars. Rep. Therriault noted that AADC ha
instructed to create the Kodiak launch complex and to seek contracts to operate
complex. He explained that the time had come to do more substantial work with
private sector, which required the launch tower construction.
Rep. Martin MOVED that the question be divided, in order that the Committee mig
approve the expenditure of $5 million in Federal Receipts and reserve the autho
the next legislative body to expend the $2 million in interest earnings, which
maintained became technically State funds after the Federal monies had been rec
Dan Spencer, Chief Budget Analyst, OMB expressed his understanding that interes
earnings could not be used for general purposes and were restricted by the term
Federal appropriation.
Rep. Therriault also stated that interest earned from a Federal appropriation a
particular project could not be allocated to the General Fund to be used for an
purpose.
The proposed motion therefore could not be acted upon.
Sen. Adams MOVED that RPL 08-9-0062 be approved.
Sen. Phillips stated that he had received a complaint from a constituent regard
project and was seeking more information.
Mr. Teal noted that, although the Department may receive authority to expend $5
dollars, they may in fact only receive $4.8 million. He asked whether in that
Department would reduce their appropriation by $200,000.
Pat Ladner, Executive Director, Alaska Aerospace Development Corporation
(AADC), responded that as the $5 million was routed through the Federal Governm
the Federal Government may retain a portion of the funds; he pointed out that S
Department agencies would not be retaining funds. He explained that his agency
requesting the entire amount in the hope that they would, as they had in the pa
the entire amount.
Rep. Therriault stated that, at the most recent Board of Directors' meeting, th
discussed the routing of Federal funds. He noted that Mr. Ladner would be work
closely with the congressional delegation to ensure that the funds would not be
which would increase the chances of funds being "skimmed".
Sen. Torgerson asked whether the total budget for the launch tower project was
million, or whether this only represented a phase of the project.
Mr. Ladner replied that the launch tower itself was budgeted at slightly over $
Laura Gould, Director of Business Operations, AADC, clarified that the modified
request in the revised RPL was $7 million, which represented the final funding
components for the project. She stated that the RPL would complete funding the
in its entirety, including the launch pad and service structure.
She also clarified that at this time, there was no proposal to complete a bond
on discussions in coordination with OMB.
Dan Spencer also addressed Sen. Torgerson's question by stating his understandi
between $5 and $7 million dollars were needed above the $7 million dollars curr
requested in order to complete the project. He pointed out that, if the $5 mil
obtained through bonding, that the agency would once again have to approach the
legislature, due the requirement that the legislature approve bonding in excess
million. He noted that there had been some discussion about approaching Alaska
Industrial Development Export Authority (AIDEA) for the bonding.
Sen. Torgerson again questioned why the project in its entirety was not being r
this time. He expressed that he would prefer to consider the total cost of the
one time. He suggested that, since the agency was still awaiting 40% of its fu
request could be brought before the next legislature in regular session.
Annalee McConnell, Director, Office of Management and Budget, supported Ms.
Gould's comment that, at this time, there was no proposal outstanding for addit
bonding authority. She noted that, as part of the FY 2000 budget, to be releas
following week, the remaining funds for the project would be requested. She ex
that the currently requested portion of the funding was part of a process of re
funding method that the AADC had originally planned, one that would have involv
number of smaller bond issues. She explained that her department had advised A
coordinate with AIDEA and Dept. of Revenue to find a more cost-effective way of
obtaining funding. She stated that, while the entire package of revised fundin
something which the Committee could currently approve, her Department did feel
prudent to keep construction on schedule. She stated that approving this reque
take the project to the next stage and give the next legislature the opportunit
a bond package for the project.
Laura Gould then detailed the funding history of the project. She explained th
funding received for the project was through an RPL in 1996, which approved a g
from NASA to fund one of the buildings in the facility. The total amount of th
was $5.6 million, including $5 million in Federal receipts and up to $600,000 i
corporate receipts. She explained that anticipated interest earnings which the
not been allowed to retain represented the difference between the amount author
received.
Rep. Martin expressed his concern that, by coordinating various requests throug
on a step by step basis, the full legislature and the general public was not gi
opportunity to consider the scope of the entire, long term project being funded
expressed concern over the competition that this project could create with the
launch pad in Fairbanks. He stated that he would prefer to wait for the agency
and approach the full Legislature, and to have the Governor place the request i
or the Supplemental Budget, in order that it may be considered by the legislatu
Annalee McConnell stated that if the agency waited to undergo the full legislat
process, there would not be adequate time to put funds in place before May of 1
noted that this would not support the construction schedule for AADC. She clar
no other state revenues would be requested for the project, and that no interes
on federal funds for the project could not be used for any other purpose.
Rep. Therriault stated that there was no competition existing between the propo
facility and the existing one in Fairbanks.
Responding to another question, Ms. Gould stated that the initial project budge
$28 million, including $5 AFTF funding, $18 million in Federal Funding, and a $
million grant from NASA. She went on to clarify the total project budget, incl
requested authority, was $40 million dollars. She explained that three indepen
estimates were completed on the project: one by an architectural and engineeri
one by a project management team, and one by a cost estimating firm in Anchorag
noted that each of those estimates undervalued the cost of the project. She at
to the fact that AADC did not receive their federal monies in a timely fashion,
the time they were able to contract for work, there had been an escalation in t
market which increased the cost of the project. She explained that their Board
Directors had charged their management to locate other funding sources, which r
in the current request for funding to complete the project. She stated AADC's
create a facility which would meet the governmental and commercial markets. Sh
that in November, the facility completed its first launch for governmental cust
explained that to meet the needs of the commercial market, which she noted had
stated as the goal of the new facility, the launch tower needed to be completed
Mr. Ladner confirmed that AADC had signed an agreement with Lockheed Martin for
two commercial launches, one in May of 2,000 and one in August of 2,000. He ex
that, in order to meet the needs of this first commercial customer, AADC had to
for the building of a launch tower, since a pathfinder launch was necessary to
facility by October/November of 1999. He noted that the contract was based on
order basis, in order to complete the project in stages during which funding wo
place. He stressed that it was critical for the project to receive approval fo
in Federal funds and $2 million in interest earnings at this time in order to m
schedule of the new, critical commercial customer.
Sen. Adams restated his MOTION to approve RPL 08-9-0062. Sen. Torgerson
OBJECTED. A roll call vote was taken.
YEA: Sen. Adams; Rep. Bunde; Rep. Croft; Rep. Therriault
NAY: Sen. Phillips; Sen. Halford; Sen. Torgerson; Rep. Martin
The motion FAILED by a vote of 4 to 4.
20-9-0007 Corrections $573.9 Federal Receipts
Information System
Rep. Croft MOVED that RPL 20-9-0007 be approved.
Sen. Phillips noted that in Mr. Teal's report, he indicated that the project mi
additional General Funds. He asked for clarification on this point.
Mr. Teal stated his understanding that some modules of the information would re
additional programming in the future.
Joe Reeves, Deputy Director/ASM, Dept. of Corrections stated that in FY1995 his
agency began a replacement of offender-based corrections information system. H
explained that a contractor had been hired to develop a strategic plan, which w
estimated at a cost of $1 million. He further stated that, to date, the depart
expended $3.1 million dollars and a commitment to expend an additional $2.5 mil
dollars, for a total of $5.6 million in expenditures, including the currently p
He further stated that the department was currently in Phase IV of the process,
entailed two steps, the first being to purchase the system from the state of Ut
to hire the programmers to convert the existing system over the new one. He st
for the additional $1 million needed, the department would seek a capital appro
FY 2000.
He also noted that additional resources would be needed to finalize the automat
management systems which the new information system must accommodate, such as
medical records, legislative demographics, etc. He stated that they were not y
to how they would approach the legislature for these additional resources. He
that their goal was to complete Phase IV so as to have a compliant system by th
2000. He explained that they were currently seeking additional Federal grants
the project.
Mr. Reeves stated that the total cost of the project in the long term was estim
million dollars, not accounting for rising costs over time.
Rep. Croft asked whether funding all steps of the process was necessary, or if
some benefit involved in each phase as it was completed. He went on to clarify
Committee had concerns over future expenditures of General Funds and pointed ou
if the Committee merely approved the current RPL, then the new system could be
updated and completed, even if not brought to the optimum level by future expen
Rep. Croft restated his MOTION to approve RPL 20-9-007 for $573,938 of Federal
Funds.
Rep. Martin OBJECTED for sake of discussion. He expressed concern that the amou
of future General Funds necessary was still unknown. He then suggested that th
could be placed in the Supplement or the FY 2000 Budget.
Sen. Halford suggested that if the appropriation was critical, it could be appr
Session.
A roll call vote was held.
YEA: Sen. Phillips; Sen. Adams; Rep. Croft
NAY: Sen. Halford; Sen. Torgerson; Rep. Martin; Rep. Bunde; Rep Therriault
The motion therefore FAILED on a vote of 3 to 5.
This concluded the discussion of RPL's for the Committee Meeting.
Rep. Martin left the meeting. He was thanked for his years of service to the L
STATE SALARIES AND BENEFITS
Tom Williams, Senate Finance Committee Staff referred to the draft report prepa
for the Committee by KPMG Peat Marwick, LLP. He noted that staff had assisted
reviewing the contract to determine the draft report's compliance, as well as w
KPMG to focus elements of the study on those outlined in the contract. He drew
attention of the Committee to the Executive Summary, found on pages 1-2 of the
draft report, as well as to additional information to be found in the section o
which contained exhibits and appendices.
Rep. Therriault commended the Senate Finance Staff on excellent work, but
recommended that the report not be released. He noted that the report gave som
information to the legislature regarding the level of state employee compensati
also expressed his concern, however, about the fact that no adjustment had been
reflect a 40 hour work week. He recalled a specific request he had made for an
adjustment to allow for adequate comparisons and was concerned that this had no
done. He pointed out, for instance, that had adjustments from 37.5 hours vs. 4
been made, perhaps no jobs would have fallen below the market range. He sugges
the adjustments be made before the report be released.
Mr. Williams expressed that the staff shared this concern and therefore had req
KPMG disclose in the Executive Summary that the numbers were not adjusted.
Sen. Halford then left the meeting.
Mr. Williams stated that the adjustment was not made since KPMG believed that,
37.5 was a full time job with the State of Alaska which was being compared to o
time jobs, the comparison was reasonable. He noted that this was discussed on
Project Approach, in the Draft Report.
Sen. Phillips suggested that KPMG could be asked to complete an addendum based
40 hour week, or Legislative Finance could complete such a study, in order to p
information. He noted that, in a similar case when he had released a draft cop
study, ultimately the final report prevailed.
Rep. Therriault suggested that this adjustment should be included in the origin
eliminate confusion or the need to refer to an addendum.
Mr. Teal noted that KPMG was reluctant to change their approach to the study si
believed it would not change the overall outcome of the study, that being that
State Employees were above market median by 18% He also noted that by adjustin
the 40 hour work week, the numbers would increase by roughly 6%, which would pl
Alaska State workers at 124% of the competitive market.
Rep. Therriault requested that such information be placed in the report, to cre
inasmuch as possible, an "apples to apples" comparison.
Sen. Phillips asked whether the report needed to be immediately released. He r
that Mr. Teal's division prepare an addendum to the report.
Mr. Teal pointed out that the report would need to be approved in its present d
that the addendum would occur after the fact.
Mr. Williams stated that there was no one from the accounting firm currently pr
the meeting, but a representative could be called.
Rep. Bunde suggested that the Legislature should not adjust the figures in the
since this might compromise the objectivity of the report. He also objected to
definition of a full time job. He noted that for workers in the private sector
of hours committed to a full time job varied widely. He supported Rep. Therria
desiring an even comparison of 40 hours per week of work.
Rep. Croft raised a question regarding stratification of jobs, as illustrated o
the report. He noted that, if an adjustment was made, it should also be reflec
stratified tables. He expressed his desire to have the final survey identify d
the hiring ranges.
Mr. Teal pointed out that cost of living adjustments affected the percentages a
median reflected for those salaries in Range 23 and above.
Mr. Williams also clarified that not all State jobs fell within the typical Ran
therefore were not considered in that particular analysis.
Sen. Phillips pointed out that the report could not be released at this time du
quorum on the Committee.
Sen. Phillips also suggested that the Committee would request that KPMG prepare
addendum which adjusted figures based on a 40 hour work week for discussion at
next Committee meeting.
Rep. Therriault requested that the information be recompiled and a new report c
with that information, rather than simply issuing an addendum.
In response to a question by Rep. Croft, Mr. Williams pointed out that the meth
determining benchmark salaries was outlined on page 11 of the report.
Kathy Porterfield, Managing Partner, KPMG, Anchorage arrived at the meeting and
explained the reason that the numbers were not adjusted for a 40 hour work week
stated that the numbers were compared from job to job; the specific responsibil
Alaska State employees were used to determine job value. This data was compare
other workers in the United States who have the same responsibilities. Ms. Por
also pointed out that many employees were exempt, which meant they may work mor
than 40 hours per week and would not be paid for overtime. She noted that if o
the data to 40 hours per week, the general conclusion of the report, the fact t
significant number of jobs were over the market median, would not change. She
conceded that more jobs would reflect as being above median, and that the perce
the median would be higher.
She noted that there was adequate time before January 20 to adjust the figures
prepare a new report.
Rep. Croft suggested that to make the analysis meaningful, it would have to det
actual hours worked, unless another measurement of job value was utilized.
Rep. Therriault suggested the alternative to encompassing the variety of hours
different jobs was to choose 40 hour weeks as a common measurement.
Discussion ensued as to the best method with which to compare data on the repor
David Teal suggested that any adjustments should only be made to those job clas
which are overtime eligible.
It was requested by the Chairman that, if time were available and management wa
amenable, KPMG produce a new report with adjustments made to those jobs which w
overtime eligible.
Mr. Teal also pointed out that State employees were part of a three-tiered syst
benefits, which was omitted from the study. He stated that the study was conse
since it only examined Tier III employees, the level at which new employees are
hired.
Rep. Croft suggested that such an approach was practical for a hiring analysis.
Sen. Phillips suggested that the analysis should reflect two sets of numbers, o
calculated at 37.5 hours and one at 40.0 hours, so that both sets of numbers co
during the next legislative session.
Discussion continued as to the best way to measure hours worked and salary paid
Ms. Porterfield clarified the Committee's intent for KPMG to prepare a report w
increased the gross wages of non-exempt employees by 2.5 hours per week and
recalculated the analysis of the medians and market weighted averages based on
new figures.
Sen. Phillips confirmed that this was the sentiment of the four Committee membe
present, although a formal vote could not be taken without quorum.
Rep. Therriault and Rep. Bunde left the meeting at 4:30 p.m.
WESTERN ALASKA FISHERIES DISASTER
Since no quorum remained, Sen. Phillips suggested that the agency prepare a one
brief on the discussion and send it to all members of the Committee.
Annalee McConnell, Director, Office of Management and Budget referred to her
summary which she committed to send to current LB&A Committee members.
She noted that her department had answered the questions raised by a memo from
Therriault as well as possible. She pointed out that there were still issues t
with the Federal Government regarding Federal funds appropriated, as outlined i
summary. She stated that expenditures to date were within the $12 million auth
part of the statute declaration.
Ms. McConnell stated that the average amount of aid for each eligible applicant
$1,485.00. In response to a question posed at the previous LB&A Committee mee
she explained that a comparison of this amount of relief to that given in other
still under determination pending confirmation of the final amount of Federal f
which would be received.
Ms. McConnell referenced her summary of the current status of Federal aid. She
explained that in discussions with Economic Development Administration, they ha
suggested that the most efficient way to distribute funds was not to have it pa
by the State of Alaska, but rather granted by EDA to particular projects. Ms.
also noted that the plans for a grant to Fish and Game were still under develop
that she expected to have a clearer update in time for the new legislature.
Ms. McConnell also noted that all fish had been delivered at this point, after
during the summer months. She also stated that program effectiveness was curre
under examination.
Sen. Phillips asked whether State and Federal relief for an economic disaster,
viewed the current dilemma for the fishing industry, would be offered for a rea
decline in South-Central Alaska due to decreasing oil prices.
Ms. McConnell pointed out that the Federal relief was possible due to the natur
which caused the decline in fish harvest.
Sen. Phillips emphasized that he desired to have policies of this nature consis
throughout the State.
Ms. McConnell further clarified that the criterion for receiving Federal aid de
whether the fish harvest for a particular area was biologically affected, and n
whether the market for the harvest was affected. She stated that the situation
natural disaster, and not merely an economic one.
Y2K STATUS REPORT
Bob Poe, Y2K Project Director reported that the data listed on the December 4,
report represented the current status -- agency readiness reports were being co
internally; 60% of all systems had been remediated and were awaiting testing on
mainframe on January 1, 1999; 85% of systems had been assessed; all contingency
would be submitted by the end of December, 1998; 30% of systems had been tested
15% had been implemented.
It was noted that the Risk Management Fund was being utilized to fund the proce
An agency readiness report would be released to the public in mid-January.
Sen. Phillips suggested that the status report be added to the agenda for the n
Committee meeting.
There being no further business, the meeting was adjourned at 4:44 p.m.
LB & A 12/11/98 Page 16
JPM
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