Legislature(2013 - 2014)ANCH LIO Rm 210

10/16/2013 09:00 AM LEGISLATIVE BUDGET & AUDIT

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Audio Topic
09:04:27 AM Start
09:05:09 AM Approval of Minutes
09:05:40 AM Revised Program - Legislative (rpls)
09:14:28 AM Executive Session
11:22:58 AM Other Committee Business
11:37:24 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Approval of Minutes TELECONFERENCED
RPLs
DEC - Contaminated Sites Program
DHSS - Alaska Parntership Project
Executive Session
Audits
Other Committee Business
Consideration of Performance Review Contract
Revised Committee Handbook Procedures
Juneau Teleconference Site - Beltz Rm 105 (TSLOB)
This meeting will be streamed on akl.tv
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                       Anchorage, Alaska                                                                                        
                        October 16, 2013                                                                                        
                           9:04 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Anna Fairclough, Chair                                                                                                  
Representative Mike Hawker, Vice Chair                                                                                          
Senator Kevin Meyer (via teleconference)                                                                                        
Senator Click Bishop                                                                                                            
Senator Cathy Giessel                                                                                                           
Senator Donald Olson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Alan Austerman                                                                                                   
Representative Bob Herron                                                                                                       
Representative Kurt Olson                                                                                                       
Representative Andy Josephson                                                                                                   
Senator Mike Dunleavy                                                                                                           
Representative Scott Kawasaki                                                                                                   
Representative Bill Stoltze                                                                                                     
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Mike Chenault                                                                                                    
Representative Eric Feige                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
APPROVAL OF MINUTES                                                                                                             
REVISED PROGRAM - LEGISLATIVE (RPLS)                                                                                            
EXECUTIVE SESSION                                                                                                               
OTHER COMMITTEE BUSINESS                                                                                                        
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
LACEY SANDERS, Fiscal Analyst                                                                                                   
Legislative Finance Division                                                                                                    
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Reviewed  RPL  18-4-0380,  Department  of                                                             
Environmental  Conservation, Contaminated  Sites Program  and RPL                                                               
06-4-0241,  Department  of  Health and  Social  Services,  Alaska                                                               
Partnership Project.                                                                                                            
                                                                                                                                
KRISTIN RYAN, Director                                                                                                          
Division of Spill Prevention and Response                                                                                       
Department of Environmental Conservation                                                                                        
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Answered  questions related  to RPL  18-4-                                                             
0380.                                                                                                                           
                                                                                                                                
KRISTIN CURTIS                                                                                                                  
Legislative Auditor                                                                                                             
Division of Legislative Audit                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Provided  information  on the  performance                                                             
review audit request.                                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:04:27 AM                                                                                                                    
                                                                                                                                
CHAIR  ANNA FAIRCLOUGH  called the  Legislative Budget  and Audit                                                             
Committee  meeting  to order  at  9:04  a.m.   Senators  Giessel,                                                               
Bishop,  Olson, Meyer  (via teleconference),  and Fairclough  and                                                               
Representative Hawker were present at the call to order.                                                                        
                                                                                                                                
^Approval of Minutes                                                                                                            
                      Approval of Minutes                                                                                   
                                                                                                                                
9:05:09 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER  made a  motion to  approve the  minutes of                                                               
August 22, 2013.  There being  no objection, the minutes from the                                                               
meeting of August 22, 2013, were approved.                                                                                      
                                                                                                                                
^Revised Program - Legislative (RPLs)                                                                                           
              Revised Program - Legislative (RPLs)                                                                          
                                                                                                                                
9:05:40 AM                                                                                                                    
                                                                                                                                
CHAIR FAIRCLOUGH  announced that the committee  would now discuss                                                               
the two RPLs before it.                                                                                                         
                                                                                                                                
9:05:59 AM                                                                                                                    
                                                                                                                                
LACEY  SANDERS,  Fiscal  Analyst, Legislative  Finance  Division,                                                               
Legislative  Affairs   Agency,  began  with  the   Department  of                                                               
Environmental  Conservation  (DEC)  RPL  18-4-0380,  which  is  a                                                               
request  for  $959,500  in federal  receipt  authority  to  issue                                                               
contracts  for  cleanup  and oversight  of  cleanup  activity  of                                                               
military  facilities,  formerly  used defense  sites,  and  other                                                               
federally   contaminated  sites.     The   state  must   exercise                                                               
regulatory oversight  over cleanup activities in  order to ensure                                                               
compliance with state  standards.  The funds  will come primarily                                                               
from the  U.S. Department of  Defense, U.S. Coast  Guard, Federal                                                               
Aviation  Administration,  and  the  Bureau  of  Land  Management                                                               
(BLM).  She informed the  committee that the military has cleanup                                                               
plans for  Galena, Eielson Air  Force Base, Fort  Wainwright, and                                                               
the  Joint  Base Elmendorf-Richardson.    This  work requires  no                                                               
general  funds  or  response  funds,  but  corresponding  federal                                                               
receipt  authority   may  be  requested   in  the   2015  budget.                                                               
Furthermore, no  new positions  are required at  this time.   Ms.                                                               
Sanders reported  that there  are no  technical issues  with this                                                               
RPL, federal  funds have already  been awarded,  and availability                                                               
of federal funds is not  impacted by sequestration or the federal                                                               
shutdown.                                                                                                                       
                                                                                                                                
9:07:35 AM                                                                                                                    
                                                                                                                                
SENATOR  GIESSEL  requested  confirmation  that  the  funds  were                                                               
appropriated prior to sequestration.                                                                                            
                                                                                                                                
MS. SANDERS  confirmed that  is the  understanding and  noted the                                                               
DEC representative  in attendance agrees with  that understanding                                                               
as well.                                                                                                                        
                                                                                                                                
9:07:59 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER inquired  as to why funds  that are largely                                                               
coming from U.S.  Department of Defense agencies  to cleanup U.S.                                                               
Department  of  Defense sites  is  passing  through Alaska's  DEC                                                               
rather  than the  U.S.  Department of  Defense  dealing with  the                                                               
[cleanup] directly.                                                                                                             
                                                                                                                                
9:08:34 AM                                                                                                                    
                                                                                                                                
KRISTIN  RYAN,   Director,  Division  of  Spill   Prevention  and                                                               
Response,  Department  of Environmental  Conservation,  explained                                                               
the  funds are  primarily  used to  hire  contractors to  perform                                                               
oversight of  the cleanup.   The federal agencies  are performing                                                               
the cleanup.                                                                                                                    
                                                                                                                                
9:09:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER  asked whether  the state  has jurisdiction                                                               
and oversight over federal property.                                                                                            
                                                                                                                                
MS. RYAN replied  yes, and added that the  federal government has                                                               
to comply  with the state's  cleanup rules and regulations.   She                                                               
emphasized the importance of working  with the federal government                                                               
in  these   cleanup  projects   because  sometimes   the  state's                                                               
standards differ from those of the federal government.                                                                          
                                                                                                                                
9:09:48 AM                                                                                                                    
                                                                                                                                
SENATOR BISHOP  remarked that  the state's  402 primacy  might be                                                               
part of the equation in this situation.                                                                                         
                                                                                                                                
9:10:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER  inquired  as  to whether  the  BLM  funds                                                               
involved in  this cleanup are part  of the funds the  state hopes                                                               
will address the legacy fields on the North Slope.                                                                              
                                                                                                                                
MS. RYAN clarified that the funds  are not those that the federal                                                               
government will use to clean up  the sites on the North Slope but                                                               
rather are  funds that provide  the state the ability  to oversee                                                               
that cleanup  and pay contractors  to review the plans  to ensure                                                               
they are adequate.                                                                                                              
                                                                                                                                
9:10:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER  moved to  report  RPL  18-4-0380 for  the                                                               
Department of  Environmental Conservation to receive  $959,500 of                                                               
federal receipt authority.   There being no  objection, RPL 18-4-                                                               
0380 was approved.                                                                                                              
                                                                                                                                
9:11:07 AM                                                                                                                    
                                                                                                                                
MS. SANDERS  then turned to  the Department of Health  and Social                                                               
Services (DHSS),  Division of  Behavioral Health,  RPL 06-4-0241,                                                               
Alaska   Partnership,   which   requests  $949,912   in   federal                                                               
authorization  for a  multi-year grant  with the  Substance Abuse                                                               
and Mental  Health Services  Administration Center  for Substance                                                               
Abuse Treatment  (SAMHSA).   These funds will  be used  to expand                                                               
the Parenting  with Love and  Limits (PLL) and the  Transition to                                                               
Independence Process (TIP).  The  project will deliver treatment,                                                               
family  therapy, and  in-home services  to adolescents  and their                                                               
families.   The  target  population is  rural  and Alaska  Native                                                               
youth as well  as youth at-risk of moving into  treatment that is                                                               
more  restrictive or  out of  their homes  and communities.   Ms.                                                               
Sanders  informed  the  committee  that  about  $950,000  of  the                                                               
federal  funds  per year,  with  no  match requirement,  will  be                                                               
available for four  fiscal years, fiscal year  (FY) 2014-FY 2017.                                                               
Behavioral Health  Administration's component FY14 budget  of $11                                                               
million  includes $2.9  million  in federal  authorization.   The                                                               
services  for  severely  emotionally  disturbed  youth  component                                                               
budget   of  $15.8   million   has   no  federal   authorization.                                                               
Therefore, this  new multi-year federal  award can't  be absorbed                                                               
with an  existing authorization.   Ms.  Sanders pointed  out that                                                               
the RPL does have a minor  technical issue since it addresses two                                                               
allocations  rather  than one.    However,  the issue  should  be                                                               
resolved  because   the  language  clearly  specifies   that  the                                                               
Legislative  Finance  Division  will  create  the  following  two                                                               
transactions:     $904,000  in   the  Severely   and  Emotionally                                                               
Disturbed  Youth allocation,  $45,900  in  the Behavioral  Health                                                               
Administration allocation.                                                                                                      
                                                                                                                                
9:13:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER  moved to  report  RPL  06-4-0241 for  the                                                               
Department  of  Health  and  Social Services  in  the  amount  of                                                               
$959,912  in   federal  receipt   authority.    There   being  no                                                               
objection, RPL 06-4-0241 was approved.                                                                                          
                                                                                                                                
^Executive Session                                                                                                              
                       Executive Session                                                                                    
                                                                                                                                
9:14:28 AM                                                                                                                    
                                                                                                                                
CHAIR  FAIRCLOUGH announced  the committee  would now  proceed to                                                               
executive  session   in  order  to  discuss   confidential  audit                                                               
reports.                                                                                                                        
                                                                                                                                
9:14:31 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER made  a motion  that  the committee  under                                                               
Uniform  Rule 22  go into  executive session  for the  purpose of                                                               
discussing confidential audit reports  under AS 24.20.301 and for                                                               
discussion of a confidential request for proposal.                                                                              
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
9:15:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER withdrew his  prior motion.  Representative                                                               
Hawker then  made a motion  for the committee under  Uniform Rule                                                               
22 to move  into executive session for the  purpose of discussing                                                               
confidential  audit reports  under AS  24.20.301, a  confidential                                                               
request  for proposal,  and the  HB 30  performance review  audit                                                               
scope  of work.   There  being no  objection, the  committee went                                                               
into executive session at 9:16 a.m.                                                                                             
                                                                                                                                
11:20:32 AM                                                                                                                   
                                                                                                                                
CHAIR  FAIRCLOUGH   called  the  Legislative  Budget   and  Audit                                                               
Committee  back  to   order  at  11:20  a.m.     She  noted  that                                                               
Representatives Feige  and Chenault  joined the  committee during                                                               
the  executive session.   She  also noted  that Senators  Bishop,                                                               
Olson, Giessel,  Meyer (via  teleconference), and  Fairclough and                                                               
Representative Hawker were in attendance.                                                                                       
                                                                                                                                
11:21:05 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HAWKER  made a  motion  for  the following  final                                                               
audits to be released to the public for response:                                                                               
                                                                                                                                
     a)  Department   of  Commerce,  Community   &  Economic                                                                    
     Development,  Regulatory Commission  of Alaska,  Sunset                                                                    
     Review;                                                                                                                    
     b)  Department   of  Commerce,  Community   &  Economic                                                                    
     Development,  Board of  Chiropractic Examiners,  Sunset                                                                    
     Review;                                                                                                                    
     c)  Department   of  Commerce,  Community   &  Economic                                                                    
     Development,  Board  of  Marital  and  Family  Therapy,                                                                    
     Sunset Review;                                                                                                             
     d)  Department   of  Commerce,  Community   &  Economic                                                                    
     Development, Board of Optometry, Sunset Review;                                                                            
     e)  Department   of  Commerce,  Community   &  Economic                                                                    
     Development,  State Physical  Therapy and  Occupational                                                                    
     Therapy Board, Sunset Review;                                                                                              
     f)  Department   of  Commerce,  Community   &  Economic                                                                    
     Development,   Board    of   Certified    Real   Estate                                                                    
     Appraisers, Sunset Review;                                                                                                 
     g)  Department of  Public Safety,  Council on  Domestic                                                                    
     Violence and Sexual Assault, Sunset Review;                                                                                
     h)  Department of  Health and  Social Services,  Alaska                                                                    
     Health Care Commission, Sunset Review;                                                                                     
     i)   Department  of   Natural  Resources,   Agriculture                                                                    
     Revolving Loan Fund, Select Issues.                                                                                        
                                                                                                                                
There  being no  objection,  the above-listed  final audits  were                                                               
released to the public for response.                                                                                            
                                                                                                                                
REPRESENTATIVE   HAWKER  made   a   motion   for  the   following                                                               
preliminary audits to  be released to the  appropriate agency for                                                               
response:    Department  of Administration,  Alaska  Land  Mobile                                                               
Radio  System;  Department  of  Commerce,  Community  &  Economic                                                               
Development,  Alaska Seismic  Hazards  Safety Commission,  Sunset                                                               
Review.     There   being   no   objection,  the   aforementioned                                                               
preliminary audits  were released  to the appropriate  agency for                                                               
response.                                                                                                                       
                                                                                                                                
^Other Committee Business                                                                                                       
                    Other Committee Business                                                                                
                                                                                                                                
11:22:58 AM                                                                                                                   
                                                                                                                                
[Contains discussion of HB 30.]                                                                                                 
                                                                                                                                
CHAIR FAIRCLOUGH  announced that the committee  would now discuss                                                               
the  consideration  of  the Performance  Review  Contract.    She                                                               
reminded  the  committee  that she  had  previously  appointed  a                                                               
subcommittee   consisting   of   herself,  Senator   Bishop   and                                                               
Representatives  Hawker,  Herron, and  Kawasaki  to  work on  the                                                               
scope of work for the contract.   The subcommittee held a lengthy                                                               
meeting on October 1, 2013, to  discuss the scope of work for the                                                               
contract;  Representatives  Olson  and  Josephson  were  also  in                                                               
attendance at the subcommittee meeting.   Chair Fairclough opined                                                               
that the  subcommittee settled  on a  thorough and  balanced work                                                               
product, which Ms. Curtis will explain.                                                                                         
                                                                                                                                
11:23:35 AM                                                                                                                   
                                                                                                                                
KRISTIN  CURTIS,  Legislative  Auditor, Division  of  Legislative                                                               
Audit, Alaska  State Legislature, explained the  division intends                                                               
to  request approval  to  solicit  and award  a  contract not  to                                                               
exceed  $300,000   to  conduct  the  Department   of  Corrections                                                               
performance  review.   The contractor  will lead  the performance                                                               
review  team,  which  will  also   be  made  up  of  Division  of                                                               
Legislative  Audit employees.   She  reminded the  committee that                                                               
performance  reviews of  state departments  were authorized  this                                                               
past session and  will begin with the  Department of Corrections.                                                               
During the course of the  review, the department will be required                                                               
to provide a  list of programs or elements  of programs supported                                                               
by general  funds that can  be cut without impacting  the ability                                                               
of  the department  to  fulfill its  mission  or reduce  required                                                               
services to the public.  A  review team lead by a contractor will                                                               
conduct   a  systematic   assessment   of  the   appropriateness,                                                               
effectiveness,  and   efficiency  of   the  department   and  its                                                               
programs.    The  review,  she   related,  is  meant  to  provide                                                               
information that can improve the  entity's performance and assist                                                               
legislators in evaluating the department  and its budget.  One of                                                               
the  first  steps  in  the  performance  review  process  is  the                                                               
Legislative  Budget  and   Audit  Committee's  consideration  and                                                               
approval of the  performance review scope.  She  explained that a                                                               
scope describes the nature and expense  of the work that needs to                                                               
be  done  in order  to  complete  the  review.   The  scope  this                                                               
committee approves  will serve as  the basis for the  request for                                                               
proposal for the  contractor.  Once the  contractor completes the                                                               
review  a report  is prepared  and submitted  to the  Division of                                                               
Legislative  Audit  and then  the  Legislative  Budget and  Audit                                                               
Committee.   The  Department of  Corrections' performance  review                                                               
report must be  sent to this committee by December  16, 2014, and                                                               
is required  to be confidential  until finalized and  released by                                                               
the committee.   Statutes  require that copies  of the  report be                                                               
sent to the chairs and co-chairs  of the House and Senate Finance                                                               
Committees one week prior to the legislative session beginning.                                                                 
                                                                                                                                
11:25:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HAWKER  moved  that  the  committee  approve  the                                                               
performance review  scope of work  as presented.  There  being no                                                               
objection, it was approved.                                                                                                     
                                                                                                                                
11:26:11 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HAWKER moved  that  the  committee authorize  the                                                               
legislative  auditor   to  solicit  and  award   a  contract  for                                                               
performance review services in an  amount not to exceed $300,000.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
11:26:31 AM                                                                                                                   
                                                                                                                                
CHAIR FAIRCLOUGH announced that  the committee would now consider                                                               
the revised committee handbook procedure.                                                                                       
                                                                                                                                
11:26:36 AM                                                                                                                   
                                                                                                                                
MS.  CURTIS  informed  the  committee that  the  changes  in  the                                                               
committee handbook  were necessitated by the  performance reviews                                                               
of HB  30.  The  new statutes created by  HB 30 were  inserted in                                                               
the  committee handbook.   The  revised  committee handbook  also                                                               
includes revised  procedures, which were modeled  after the audit                                                               
procedures.  The  bulk of the new procedures begin  on page 41 of                                                               
the committee handbook.                                                                                                         
                                                                                                                                
11:29:22 AM                                                                                                                   
                                                                                                                                
CHAIR  FAIRCLOUGH mentioned  her  appreciation  of the  proactive                                                               
approach  the  division  has  taken  in  terms  of  revising  the                                                               
committee handbook.                                                                                                             
                                                                                                                                
11:29:44 AM                                                                                                                   
                                                                                                                                
SENATOR OLSON asked from where the bulk of these changes come.                                                                  
                                                                                                                                
MS.  CURTIS  explained  that she  contracted  with  the  previous                                                               
legislative auditor  to draft the  changes, which  originate from                                                               
HB 30.     The new procedures  were modeled in  terms of  how the                                                               
audits  work,  which  she  recalled  was the  intent  of  HB  30.                                                               
Therefore, there  are specifications  relating to the  release of                                                               
the audit,  the number of days  in which the agency  can respond,                                                               
the  number of  times  it  comes before  the  committee, and  the                                                               
confidentiality of the work papers.                                                                                             
                                                                                                                                
11:30:36 AM                                                                                                                   
                                                                                                                                
SENATOR  MEYER  said   he  had  no  concerns   with  Ms.  Curtis'                                                               
recommendations.    However,  he mentioned  the  backlog  of  the                                                               
Division  of Legislative  Audit and  inquired as  to the  current                                                               
size of it.                                                                                                                     
                                                                                                                                
MS. CURTIS answered that the  division's current backlog consists                                                               
of three special audits and four sunset audits coming next year.                                                                
                                                                                                                                
SENATOR MEYER then inquired as to  how long it would take a newly                                                               
requested audit to be completed.                                                                                                
                                                                                                                                
MS. CURTIS  opined that  no new audits  would be  considered next                                                               
year but rather they would be considered the year after.                                                                        
                                                                                                                                
CHAIR FAIRCLOUGH related her  understanding that completion dates                                                               
would be a full year out.                                                                                                       
                                                                                                                                
11:33:02 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HAWKER   moved  that  the  updated   and  revised                                                               
Legislative Budget  and Audit Committee  handbook as  provided to                                                               
the  committee  today  be  adopted  as  the  currently  effective                                                               
committee  handbook. There  being no  objection, the  updated and                                                               
revised  Legislative  Budget  and Audit  Committee  handbook  was                                                               
adopted.                                                                                                                        
                                                                                                                                
11:33:34 AM                                                                                                                   
                                                                                                                                
CHAIR FAIRCLOUGH  announced the appointment of  a subcommittee on                                                               
occupational licensing and boards, which  would hold a meeting in                                                               
January for the  full committee to attend.  She  appointed to the                                                               
subcommittee the following members:   Senators Fairclough, chair,                                                               
Giessel  and Representatives  Hawker,  Austerman, and  Josephson.                                                               
There being no objection, the subcommittee was formed.                                                                          
                                                                                                                                
11:35:18 AM                                                                                                                   
                                                                                                                                
CHAIR FAIRCLOUGH thanked Laura  Pierre, Staff, Legislative Budget                                                               
and  Audit Committee,  for  her work  in  bringing the  committee                                                               
together and  keeping the  meeting organized.   She  also thanked                                                               
Ms. Curtis  and her staff  for their work  as auditing is  not an                                                               
easy  job,   particularly  when   working  in  less   than  ideal                                                               
surroundings during their office renovation.                                                                                    
                                                                                                                                
MS. CURTIS highlighted  the dedication of her  staff, noting that                                                               
performing nine  sunsets in one  year is an incredible  amount of                                                               
work along with two special audits.                                                                                             
                                                                                                                                
11:37:24 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There  being  no  further  business  before  the  committee,  the                                                               
Legislative Budget  and Audit Committee meeting  was adjourned at                                                               
11:37 a.m.                                                                                                                      

Document Name Date/Time Subjects
LB&A Agenda 10.16.13.pdf JBUD 10/16/2013 9:00:00 AM
2013-10-16_RPLCompletedPacket.pdf JBUD 10/16/2013 9:00:00 AM