Legislature(2011 - 2012)BUTROVICH 205
03/28/2012 08:00 AM House LEGISLATIVE BUDGET & AUDIT
| Audio | Topic |
|---|---|
| Start | |
| Executive Session | |
| Other Committee Business | |
| Approval of Minutes | |
| Audit Request | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
March 28, 2012
8:04 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Chair
Representative Mark Neuman
Representative Kurt Olson
Senator Bert Stedman, Vice Chair
Senator Hollis French
Senator Lyman Hoffman
Senator Linda Menard
Senator Thomas Wagoner
MEMBERS ABSENT
Representative Bill Thomas
Representative Mike Doogan
Representative Scott Kawasaki (alternate)
Representative Bill Stoltze (alternate)
Senator Kevin Meyer (alternate)
COMMITTEE CALENDAR
EXECUTIVE SESSION
OTHER COMMITTEE BUSINESS
APPROVAL OF MINUTES
AUDIT REQUEST
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
REPRESENTATIVE ERIC FEIGE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Requested an audit of the Agricultural
Revolving Loan Fund (ARLF) program under the Department of
Natural Resources (DNR).
KRISTIN CURTIS
Legislative Auditor
Legislative Audit Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the audit request.
ACTION NARRATIVE
8:04:03 AM
CHAIR MIKE HAWKER called the Legislative Budget and Audit
Committee meeting to order at 8:04 a.m. Representatives Hawker,
Olson, and Neuman and Senators Hoffman, Menard, Wagoner, and
Stedman were present at the call to order. Senator French
arrived as the meeting was in progress.
^Executive Session
Executive Session
8:04:32 AM
CHAIR HAWKER announced that the first order of business would be
to move into executive session.
8:04:46 AM
SENATOR STEDMAN made a motion under Uniform Rule 22 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 8:05 a.m.
8:29:18 AM
CHAIR HAWKER brought the committee back to order at 8:29 a.m.
Representatives Hawker, Olson, and Neuman and Senators Hoffman,
Menard, Wagoner, and Stedman were present at the call to order.
^Other Committee Business
Other Committee Business
8:29:27 AM
SENATOR STEDMAN made a motion for the preliminary audits for the
Virus Free Seed Potatoes Project and the Film Production
Incentive Program - Financial Compliance to be released to the
appropriate agencies for response. There being no objection, it
was so ordered.
8:29:48 AM
SENATOR STEDMAN made a motion for the final audit for the FY 11
Statewide Single Audit to be released to the public for
response. There being no objection, it was so ordered.
8:30:02 AM
The committee took an at-ease from 8:30 a.m. to 8:37 a.m.
8:37:32 AM
CHAIR HAWKER brought the committee back to order at 8:37 a.m.
Representatives Hawker, Olson, and Neuman and Senators French,
Menard, and Wagoner were present at the call to order.
^Approval of Minutes
Approval of Minutes
8:37:38 AM
REPRESENTATIVE OLSON made a motion to approve the minutes of
February 27, 2012. There being no objection, the minutes from
the meeting of February 27, 2012 were approved.
^Audit Request
Audit Request
8:38:03 AM
CHAIR HAWKER announced that the next order of business would be
an audit request from Representative Feige.
REPRESENTATIVE ERIC FEIGE, Alaska State Legislature, requested
that an audit be performed on the Agricultural Revolving Loan
Fund (ARLF). He paraphrased from a prepared statement:
[Included in members' packets]
The ARLF was set up by the Territorial Legislature in
1953 to promote the more rapid development of
agriculture by means of long-term, low-interest loans.
The fund is administered by the Division of
Agriculture and the Division of Support Services in
the Department of Natural Resources. Lending
decisions are made by the seven-member Board of
Agriculture & Conservation (BAC).
Given the extensive changes to both the agricultural
industry and state government since ARLF was created,
the time has come to examine the administration of the
fund and to look for efficiencies. It is my
understanding that five previous audits of ARLF were
done in an eleven year period with the last one being
in 1998. Specifically, I request the audit include
the following objectives:
Evaluate the performance of ARLF's loan
portfolio. Identify types of ARLF loans and the
degree to which each loan is performing.
Identify the duties performed by DNR employees in
the administration of ARLF and identify areas where
efficiencies could be gained to improve the
administration of the program.
Determine whether DNR should continue to
administer ARLF or should all or part of ARLF's
administration be carried out by a different state
department, agency or private entity to improve
performance and/or reduce costs.
Compare ARLF's program structure, including the
Board's involvement in lending decisions, to other
Alaska and non-Alaska governmental lending programs.
Identify potential changes that could improve the
program. Are there any inherent conflicts with
respect to Board members approving these loans?
I have had several conversations with the Department
of Natural Resources and they would welcome this
audit.
8:40:22 AM
REPRESENTATIVE NEUMAN asked which department would best
administer ARLF.
REPRESENTATIVE FEIGE, in response, said that either the
Department of Commerce, Community & Economic Development (DCCED)
or the Alaska Commercial Fishing and Agricultural Bank (CFAB)
could manage the loan packages.
REPRESENTATIVE NEUMAN relayed that he had extensive discussions
with the agriculture industry regarding CFAB. He expressed
concern with DCCED and its Division of Banking & Securities and
he opined that it was "important that agricultural industry
minded people look at these [agriculture] loans," as the prices
were different than in the Lower 48. He cited other issues that
arose for farmers. He suggested that another bank from
territorial time, which had loaned the original ARLF funds and
was expert in managing agricultural loans, should be included in
the review for new management. He opined that, although the
current management was adequate, this was an opportunity to
search for other supervision.
8:43:44 AM
SENATOR FRENCH asked how much was in the ARLF fund.
8:44:00 AM
REPRESENTATIVE FEIGE replied that he would report back on that
figure.
SENATOR FRENCH asked if anyone knew the amount.
REPRESENTATIVE NEUMAN surmised that it was about $16-$18
million.
SENATOR FRENCH asked about the average loan amount and how many
loans were granted annually.
REPRESENTATIVE NEUMAN offered his belief that there were 12 - 28
loans each year and, reflecting on loan amounts, declared that
"it's all over the board on what they do."
SENATOR FRENCH commented, "you're making me more supportive of
this request all the time."
8:45:27 AM
KRISTIN CURTIS, Legislative Auditor, Legislative Audit Division,
Alaska State Legislature, offered that her office had a long
relationship with the ARLF, with extensive historical documents,
and she welcomed the opportunity for a review.
8:46:01 AM
REPRESENTATIVE OLSON made a motion to approve the request for an
audit of the Agricultural Revolving Loan Fund (ARLF) program
under the Department of Natural Resources (DNR). There being no
objection, it was so ordered.
8:46:25 AM
CHAIR HAWKER asked if there was any other committee business.
8:46:33 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
8:46 a.m.
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