Legislature(2003 - 2004)
12/06/2004 02:06 PM House BUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT
December 6, 2004
2:06 p.m.
MEMBERS PRESENT
Representative Ralph Samuels, Chair
Representative Mike Hawker
Representative Vic Kohring
Representative Reggie Joule, alternate
Senator Gene Therriault, Vice Chair
Senator Ben Stevens
MEMBERS ABSENT
Representative Mike Chenault
Representative Beth Kerttula
Senator Con Bunde
Senator Gary Wilken
Senator Lyman Hoffman
COMMITTEE CALENDAR
^APPROVAL OF MINUTES
^REVISED PROGRAM - LEGISLATIVE (RPLs)
^EXECUTIVE SESSION
^CONSIDERATION OF AUDITS
^OTHER COMMITTEE BUSINESS
^AUDIT REQUESTS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DUANE BANNOCK, Director
Division of Motor Vehicles
Department of Administration
Fairbanks, Alaska
POSITION STATEMENT: Explained RPL 2-5-0164.
MARK LEWIS, Budget Analyst
Education Support Services
Department of Education and Early Development
Juneau, Alaska
POSITION STATEMENT: Explained RPL 5-5-0750.
JANET CLARKE, Director
Division of Administrative Services
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Explained RPLs 6-5-0169 and 6-6-0179.
JOELLEN HANRAHAN, Director
Division of Administrative Services
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Explained RPL 8-5-0019.
AL CLOUGH, Deputy Commissioner
Office of the Commissioner
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding RPL 8-5-0019.
JOHN CRAMER, Director
Administrative Services Division
Department of Military & Veterans' Affairs
Juneau, Alaska
POSITION STATEMENT: Explained RPLs 9-5-0061 and 9-5-0062.
ROBERTA CARNEY, Staff Officer
Division of Homeland Security/Emergency Management
Department of Military & Veterans' Affairs
Fort Richardson, Alaska
POSITION STATEMENT: Answered questions regarding RPL 9-5-0062.
DAVID TEAL
Legislative Fiscal Analyst
Legislative Finance Division
Juneau, Alaska
POSITION STATEMENT: Provided information on RPL8-5-0019.
BONNIE ROBSON, Consultant
for Joint Committee on Legislative Budget and Audit
POSITION STATEMENT: Provided information regarding the
committee's contract with FERC attorney Mr. Shepler.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Suggested that the committee consider
changing its policy regarding receipt of audit requests.
ACTION NARRATIVE
TAPE 04-36, SIDE A
Number 0001
CHAIR RALPH SAMUELS called the Joint Committee on Legislative
Budget and Audit meeting to order at 2:06 p.m. Representatives
Samuels, Hawker, Kohring, and Joule and Senators Therriault and
Stevens were present at the call to order.
APPROVAL OF MINUTES
REPRESENTATIVE HAWKER made a motion to approve the minutes of
July 8, September 1, September 2, September 28, October 13, and
October 14. There being no objection, those minutes were
approved.
REVISED PROGRAM - LEGISLATIVE (RPLs)
REPRESENTATIVE HAWKER made a motion for the approval of the
following RPLs: 2-5-0164; 5-5-0750; 6-5-0169; 6-5-0179; 8-5-
0019; 9-5-0061; and 9-5-0062.
CHAIR SAMUELS objected for discussion purposes.
Number 019
DUANE BANNOCK, Director, Division of Motor Vehicles (DMV),
Department of Administration, explained that with RPL 2-5-0164
the $1,075,300 grant will accomplish two different projects for
DMV. The unified network interface (UNI) will allow DMV to
electronically communicate with other states and law enforcement
agencies. The UNI program is federally mandated and there are
no state obligations or matches to the federal funds. The other
project funded by this grant is the electronic transmission of
citation data, which will move away from triplicate written
citations and data entry. This grant will move DMV further into
the electronic age.
Number 041
MARK LEWIS, Budget Analyst, Education Support Services,
Department of Education and Early Development, explained that
RPL 5-5-0750 is for federal funds for the grants programs at the
Alaska State Library. Normally, a portion of this grant
would've been recorded in fiscal year 2004, but that didn't
occur. Therefore, the department is requesting the authority to
record two federal grants in fiscal year 2005. This money is
used for the inter-library cooperation grants, which are
competitive grants. In response to Senator Ben Stevens, Mr.
Lewis confirmed that all of the grant is available for the
inter-library cooperation grants. However, he noted that there
is a small portion that falls in the contractual line, but that
goes directly for training in the library.
SENATOR BEN STEVENS asked if there is a listing of the libraries
that have received this type of grant program prior to this
year.
MR. LEWIS answered that he didn't believe so, but offered to do
so. In further response to Senator Ben Stevens, Mr. Lewis
confirmed that the $966,000 new balance available for pending
2005 grants is carryover money. He clarified that the
$232[,000] would be the remaining balance, unallocated federal
authority. The new grant is anticipated to be approximately
$733,000, with which this RPL would provide enough authority to
record the new federal grant.
SENATOR THERRIAULT inquired as to why the federal grant wasn't
recorded in time for fiscal year 2004.
MR. LEWIS explained that every year one federal grant is
received and then there is a balance [remaining] for the
unobligated portion of it in order to handle any carry forward
funds for that year. He further explained:
What really has occurred is that we would've recorded
the '03 grant when we received it in '03, a portion of
that grant would've been spent in '03 and then we come
into ... the state fiscal year of '04 we would have a
remaining balance of that '03 grant to spend in '04
and that money did get spent. And so what happened is
at the end of the fiscal year they went through a
reconciliation process and they were looking at what
federal money they would have available to spend. So,
what we have is a program that would know how much
money they had in the federal program to spend and
they would try to put those grants on line. During
the reconciliation, they saw that we didn't have
enough authority because we haven't received the
federal grant dollars. And so, what would've taken
place is they would've said, "Well, all this money is
restricted and they wanted to find out why." And the
reason for that was because the ... documentation that
the fiscal section would need to record that grant
didn't make it to our office in time. So, we had
passed completely through the reappropriation period,
the grant documentation showed up, and that's when we
realized that we had a serious problem. And so, this
is really the only timely and efficient and
appropriate way to fix this problem is to come before
you with this request to allow us to go ahead and
record both grant awards in fiscal year (FY) '05.
MR. LEWIS, in further response to Senator Therriault, specified
that the documentation ended up in a file in a field office and
didn't arrive at the central fiscal section until after the
fact. He mentioned that the individuals involved with handling
the information were fairly new to handling federal grant
documentation. Since this, it has been made very clear that
when the original federal grant documentation arrives, it must
be forwarded to the fiscal section to be properly recorded.
SENATOR THERRIAULT pointed out the notation from the
legislature's fiscal analyst that says "No additional federal
authority is available for transfer within this appropriation."
Therefore, there was no free federal authorization that could be
used for this purpose, which is why there is this request for an
increase in the authorization.
MR. LEWIS agreed.
Number 117
JANET CLARKE, Director, Division of Administrative Services,
Department of Health and Social Services (DHSS), turned to RPL
6-5-0169. She explained that DHSS is requesting the authority
to receive and expend $200,000 in federal receipts for the
Payment Error Rate Measurement (PERM) grant. The aforementioned
grant is a grant from the Centers for Medicaid and Medicare
services. The department was awarded the grant to participate
in the pilot program that the federal government will initiate
in FY 05. "This is in anticipation of a nationwide mandate for
all states to begin a Payment Error Rate Measurement ... program
for their Medicaid programs next October 1, 2005," she informed
the committee. Alaska will be one of several states
participating in the pilot program, the purpose of which is to
measure the payment error rate of the Medicaid program in an in-
depth manner. "This is going to be fairly complicated for all
states," she remarked. The department applied for the federal
funds July 16, 2004, and were awarded the funds in September 29,
2005. She mentioned that states are a bit concerned with this
federal mandate, which isn't going to be 100 percent funded next
year when it's mandated for all states. However, this [pilot]
program will allow DHSS to get started and ramp up with some of
the tools and processes in order to meet the federal
requirements next fiscal year.
REPRESENTATIVE HAWKER recalled that the Legislative Audit
Division completed its own analysis of Alaska's Medicaid
programs. That report indicated that there may be some problems
with proper payment authorizations. Will some of this money be
used to help address some of the issues raised in that report,
he asked.
MS. CLARKE replied yes. She explained that the program is based
on a random sample and will allow feedback into the system if
processing problems or other errors are seen. In further
response to Representative Hawker, Ms. Clarke related her belief
that [the department] is required to report any suspected
fraudulent activity to the Medicaid fraud unit.
Number 167
SENATOR STEVENS pointed out that the project manager position
will become permanent October 1, 2005, which is the beginning of
FY 06. However, the information provided specifies that all
funds received will be expended by FY 05. He asked if the state
would have to incur the cost of that full-time position going
into FY 05.
MS. CLARKE specified that the $200,000 grant is a one-time
federal grant, which will be used for federal fiscal year 2005.
In federal fiscal year 2006, which begins October 1, 2005, the
federal government has already created a legal requirement for
this program to continue. She pointed out that the efforts put
forth the pilot program will have to be ramped up 100 percent.
Therefore, the one-time federal money is being used to start the
program, which requires a program manager. That program will
continue in state fiscal year 2006 when the federal government
will pay for 50 percent of that position and the state will pay
50 percent of that position. States are concerned that this is
a federal mandate, but the federal government is only paying 50
percent of the share when this is an ongoing federal mandate.
However, they are providing 100 percent to get the program
started.
SENATOR STEVENS asked if it would be correct to anticipate
additional full-time positions in the future. He also asked if
this co-mingles responsibility with the Medicaid fraud unit.
MS. CLARKE clarified that it wouldn't be co-mingled with the
Medicaid fraud unit. She confirmed that once the program is at
the [fully mandated level] there will be other positions
required because this is very expensive and intensive to do.
The department's FY 06 budget will include additional positions
[for DHSS].
Number 222
REPRESENTATIVE JOULE inquired as to the cost of this through the
next budget cycle.
MS. CLARKE said that she could answer that after the governor
announces the budget.
REPRESENTATIVE JOULE asked if the $200,000 will be enough to
take the program through the year.
MS. CLARKE replied yes and reiterated that it will be expensive
next year. The department has proposed an incremental request
to the governor for the FY 06 budget.
SENATOR STEVENS asked if anything in the federal regulations
specify that there have to be results.
MS. CLARKE related that typically the federal programs she has
seen, such as the food stamp error rate, compare every state and
if a state doesn't meet the national average, there might be
financial penalties or technical assistance to get the state
into compliance. While all the federal rules aren't totally
determined, this program will probably follow the aforementioned
model. Therefore, the federal government will encourage states
to calculate the rate, although there will probably be some help
from the federal government in the first few years.
CHAIR SAMUELS, following the food stamp model, surmised then
that half the states would fall below the average and be
penalized.
MS. CLARKE specified that a state is penalized in a proportional
amount to the amount that state is away from the national
average. She reiterated that she isn't sure what the federal
government will do with this program since the regulations
haven't been finalized.
Number 273
MS. CLARKE turned to RPL 6-5-0179, which requests approval to
receive and expend $500,000 in additional federal authority for
the Women, Infant, and Children (WIC) component. This would be
additional federal authority from the U.S. Department of
Agriculture for the WIC portion of the program. These funds are
necessary to cover an increase in the cost and the number of
clients using the WIC program, a food nutrition program for
pregnant women and children. This request is before the
committee because in the later part of the last fiscal year
there was an increase in the food costs associated with this
program and the department can't cover the cost projections with
the existing federal authority. Although there is some excess
federal authority for some time, before the end of this fiscal
year the department will need an additional $500,000 to pay for
the WIC costs.
REPRESENTATIVE HAWKER turned to a comment from the Legislative
Finance Division regarding that with the transfer of the
$700,000, DHSS could delay the need for this RPL until the
legislature considers the supplemental budget request. He asked
if Ms. Clarke had any recommendations.
MS. CLARKE said that if this RPL is approved then DHSS won't
request supplemental federal authority for the supplemental
budget for this. Either way, the $500,000 is necessary and the
department felt it was prudent to approach the committee once
the problem was identified.
Number 320
JOELLEN HANRAHAN, Director, Division of Administrative Services,
Department of Commerce, Community & Economic Development,
addressed RPL 8-5-0019. The department is requesting authority
to receive and expend $300,000 in federal funds to assist the
Alaska Rural Visitor industry in its product development. This
money is from the Capacity Building program with the U.S.
Department of Commerce & Economic Development. The purpose of
the program is to stimulate business and jobs in the visitor
industry in rural areas. She noted that the department is
coordinating with the Alaska Department of Fish & Game to assist
communities with wildlife viewing areas and other partnerships
with agencies and development organizations will be formed as
well. The plan is to do this in four to six regions or a
community cluster in order to demonstrate successful product
development and job expansion initiatives that can be applied in
other locations while maximizing local opportunity. Ms.
Hanrahan highlighted that this is a matching grant for which the
matching funds will come from within the Office of Economic
Development.
REPRESENTATIVE HAWKER related his understanding that the
matching funds [from the Office of Economic Development] are
existing appropriated, encumbered funds, and won't require any
additional general fund expenditure.
MS. HANRAHAN confirmed that Representative Hawker is correct
that no additional general funds will be required. In response
to Representative Joule, Ms. Hanrahan explained that ADF&G will
be a partner that will be funded through an RSA to help promote
wildlife-viewing areas.
Number 359
SENATOR STEVENS turned attention to Attachments A & B regarding
the scope of work. He asked if the two ADF&G personnel would be
existing personnel.
MS. HANRAHAN confirmed that the two personnel are existing
personnel.
SENATOR STEVENS questioned whether, after 8 months, the
legislature would anticipate ADF&G designating wildlife viewing
areas that excluded other uses of that area.
AL CLOUGH, Deputy Commissioner, Office of the Commissioner,
Department of Commerce, Community & Economic Development, said
that the language [in the grant] should've referred to wildlife
viewing opportunities in order to imply that there is some land-
use designation. There is no intent to become involved in land
[or resource] management through this program. The hope is to
provide a few more jobs in rural Alaska.
Number 396
JOHN CRAMER, Director, Administrative Services Division,
Department of Military & Veterans' Affairs, explained that RPL -
9-5-0061 is a $100,000 request for statutory designated program
receipts for operating. Mr. Cramer reminded the committee that
Alaska is involved in an Emergency Management Assistance Compact
(EMAC) with other states such that individuals in Alaska respond
to emergencies when requested. In fact, this past August Alaska
sent personnel to aide Florida after the hurricanes. The State
of Florida will reimburse the State of Alaska for the monies
expended for the assistance. The State of Florida reimburses
Alaska with Federal Emergency Management Agency (FEMA) monies it
receives.
SENATOR THERRIAULT related his understanding that the department
used some of its general fund authority to cover the
aforementioned expense and this RPL is requesting federal
receipt authority to repay itself.
MR. CRAMER replied yes. In further response to Senator
Therriault, Mr. Cramer confirmed that without this RPL, the
money would be paid to the general fund and wouldn't flow to the
department.
SENATOR THERRIAULT related that the fiscal analyst recommends
that in the FY 06 budget that adequate SBPR authority be built
in. He asked if the aforementioned has been done.
MR. CRAMER said that will be in the DMVA budget for FY 06.
REPRESENTATIVE HAWKER inquired as to the impact on DMVA if the
$100,000 spent for services to Florida went into the general
fund. "Do you have the capacity to absorb these costs this
year," he asked.
MR. CRAMER answered that such a situation would result in DMVA
requesting a supplemental budget because it doesn't have the
funds to absorb these impacts to its budget.
Number 451
MR. CRAMER turned to RPL 9-5-0062, which requests $13,349,469 in
federal receipts. The $15 million in the original request was
what was anticipated and it wasn't until December 3, 2004, that
the final numbers were received.
Number 481
REPRESENTATIVE HAWKER made a motion requesting that the amount
requested in RPL 9-5-0062 be reduced from $15 million to
$13,349,469. There being no objection, RPL 9-5-0062 was
amended.
MR. CRAMER explained that this additional funding authority is
requested for the Homeland Security federal grant appropriation.
This additional authority will be used to accept the federal FY
05 Homeland Security Counter-Terrorism Grant Award by the Office
of Domestic Preparedness, U.S. Department of Homeland Security.
He clarified that the split will be $10,770,612 and the pass
through to communities will be $2,578,857.
CHAIR SAMUELS inquired as to how much of the $37.8 [million] has
been distributed.
ROBERTA CARNEY, Staff Officer, Division of Homeland
Security/Emergency Management, Department of Military &
Veterans' Affairs, specified that the total distribution of all
the federal funds from '02-'04 is $31,057,827.44, which is the
total of several grants. There is another approximately $10
million that has also been distributed. Therefore, total awards
passed through DMVA amounts to $41,147,936, of which $2 million
is due to be allocated to state agencies along with "two lines"
for critical infrastructure in the amounts of $712,100,430.83
and $426,497.10. The latter two pots of funds were from the
federal government for response to terrorism incidents at the
national level when the national threat level was orange. Those
funds remain unallocated and require special approval from the
federal government to use those funds for anything else.
CHAIR SAMUELS asked if the split for the $13.4 million is an
administrative decision or does it have strings attached.
MS. CARNEY specified that there is a requirement that the funds
pass through the federal pass through grants. She pointed out
that this large grant contains several minor grants. She noted
that the State Homeland Security program in the amount of
$9,368,591 requires an 80 percent pass through. The Law
Enforcement Terrorism Prevention program in the amount of
$3,406,760 also requires an 80 percent pass through. The
Citizen Core Grant in the amount of $118,934 has no pass through
requirement this year, but "we" will pass through 80 percent.
She turned to the Emergency Management Performance Grant
$1,529,911 and explained that the federal government has passed
the FEMA operational grant that DMVA receives every year to
Homeland Security, and it has been bundled. Therefore, that
authority resides in DMVA's operating budget and isn't included.
The Metropolitan Medical Response System program of $455,184 is
100 percent pass through to Anchorage and Southeast Alaska for
original grants that have been received through DHSS.
Number 628
REPRESENTATIVE JOULE asked if the state has priorities for its
share.
MR. CRAMER likened it to what the local jurisdictions have to go
through. There's guidance that will be sent to agencies who
will submit their priorities.
TAPE 04-36, SIDE B
MS. CARNEY, in response to Representative Hawker, said the
amount of the Emergency Management Performance Grant $1,529,911,
is in the operating budget, not the capital budget. She
confirmed that the aforementioned is already in this year's
receipt authority budget.
DAVID TEAL, Legislative Fiscal Analyst, Legislative Finance
Division, informed the committee that RPL 8-5-0019 had an
incorrect allocation. He explained that the reference to
Community Advocacy should be to the Office of Economic
Development. Although the aforementioned change was made, the
motion should refer to the RPL 8-5-0019 as corrected.
CHAIR SAMUELS removed his objection. There being no further
objections, the RPLs were passed.
EXECUTIVE SESSION
REPRESENTATIVE HAWKER made a motion to move to executive session
for the purpose of discussing confidential audit reports under
AS 24.20.301. There being no objection, the committee went into
executive session at 2:55 p.m.
CHAIR SAMUELS brought the committee back to order at 3:25 p.m.
CONSIDERATION OF AUDITS
REPRESENTATIVE HAWKER made a motion for the final sunset audit
for the Board of Dental Examiners and the Board of Pharmacy to
be released to the public for response. There being no
objection, it was so ordered.
REPRESENTATIVE HAWKER made a motion for the preliminary audits
for the special audits on employment opportunities for women
engineers, the Alaska sunset process, and selected investigative
as well as the preliminary sunset audits on the Board of Public
Accountancy; the Board of Registration for Architects,
Engineers, and Land Surveyors; the Board of Barbers and
Hairdressers; the Board of Social Work Examiners; the Board of
Professional Counselors; the Board of Marital & Family Therapy;
the Board of Psychologists and Psychological Associate
Examiners; the Board of Veterinary Examiners; the Suicide
Prevention Council; and the Alaska Seismic Hazard Safety
Commission to be released to the appropriate agency for
response. There being no objection, it was so ordered.
OTHER COMMITTEE BUSINESS
CHAIR SAMUELS informed the committee that he, Senator
Therriault, Mr. Shepler, and Ms. Robson filed a brief with the
Federal Energy Regulatory Commission (FERC) before it's rule
making. He related that work would continue to be done in the
name of the committee. He requested the support of the
committee to submit the same comments [provided to FERC] to the
Department of Natural Resources to consider during its
deliberations over the right-of-way lease for TransCanada.
Chair Samuels further informed the committee that the committee
has contracted with a FERC attorney, Don Shepler. As the
process moves forward the funding necessary for Mr. Shepler's
services will go over $25,000.
Number 708
REPRESENTATIVE HAWKER made a motion that the committee authorize
Chair Samuels to amend the committee's existing contract with
Don Shepler to an amount not to exceed $75,000 in aggregate,
with no other changes to the contract.
REPRESENTATIVE JOULE inquired as to the duration of the
contract.
BONNIE ROBSON, Consultant for Joint Committee on Legislative
Budget and Audit, answered that the contract would last to mid-
February. She informed the committee that the deadline for FERC
to promulgate regulations on open seasons governing the Alaska
Natural Gas Pipeline is February 10, 2005.
SENATOR THERRIAULT objected in order to relate that in his
private conversations with FERC officials that the report, which
was largely the product of Mr. Shepler and Ms. Robson, provided
to it was well reasoned. Senator Therriault withdrew his
objection.
CHAIR SAMUELS noted that he heard similar comments from various
levels of FERC and others. Hearing no further objection, the
committee's existing contract with Don Shepler was amended as
stated in the motion. Although the original report was created
when things were happening fast and wasn't presented as from the
committee, he provided the committee members with signature
sheets in order to have the report come from the committee.
AUDIT REQUESTS
Number 741
PAT DAVIDSON, Legislative Auditor, Division of Legislative
Audit, Alaska State Legislature, informed the committee that
after there were a number of questions regarding an audit
request at the last hearing, she reviewed the formal procedures
for dealing with audit requests. She explained that the
committee's formal policies and procedures only require that the
audit request be to the chairman's office 24 hours in advance of
the meeting. However, after the many questions at the last
meeting, she suggested that the committee may want to have audit
requests submitted a week in advance in order to distribute the
information and obtain answers to questions.
SENATOR THERRIAULT asked if the audit request under discussion
at the last meeting was done by the Division of Legislative
Audit. He related his understanding that generally people get
in touch with the division and if the matter can be addressed
without a full-blown audit, the division does it. He also
related his understanding that the division works with the audit
requestor in order to narrow the scope of the audit. He asked
if the last audit went through such a process.
MS. DAVIDSON replied yes.
SENATOR THERRIAULT asked if this matter could be carried forward
to the next meeting.
CHAIR SAMUELS agreed.
SENATOR THERRIAULT asked if this suggestion can merely be
adopted or would a change in statute be required.
MS. DAVIDSON answered that it would merely be a committee
policy.
ADJOURNMENT
There being no further business before the committee, the Joint
Committee on Legislative Budget and Audit meeting was adjourned
at 3:36 p.m.
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