Legislature(2015 - 2016)BARNES 124

02/26/2015 03:30 PM LEGISLATIVE BUDGET & AUDIT

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Audio Topic
03:34:56 PM Start
03:35:56 PM Approval of Minutes
03:37:06 PM Audit: Alaska State Legislature Financial Statement and Audit Report
03:38:55 PM Executive Session
04:35:04 PM Release of Confidential Preliminary Statewide Single Audit Fy 14
04:35:40 PM Other Committee Business
04:47:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
- Audits
Alaska State Legislature Financial Statements &
Audit Report
- EXECUTIVE SESSION
Statewide Single Audit FY14 Preliminary
- Other Committee Business
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                       February 26, 2015                                                                                        
                           3:34 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Chair                                                                                               
Representative Kurt Olson                                                                                                       
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Sam Kito                                                                                                         
Representative Mark Neuman (alternate)                                                                                          
                                                                                                                                
Senator Anna MacKinnon, Vice Chair                                                                                              
Senator Cathy Giessel                                                                                                           
Senator Bert Stedman                                                                                                            
Senator Pete Kelly (alternate)                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Click Bishop                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
APPROVAL OF MINUTES                                                                                                             
AUDIT:  ALASKA STATE LEGISLATURE FINANCIAL STATEMENT AND AUDIT                                                                  
REPORT                                                                                                                          
EXECUTIVE SESSION                                                                                                               
RELEASE OF CONFIDENTIAL PRELIMINARY STATEWIDE SINGLE AUDIT FY 14                                                                
OTHER COMMITTEE BUSINESS                                                                                                        
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KRISTIN CURTIS                                                                                                                  
Legislative Auditor                                                                                                             
Division of Legislative Audit                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided information on the Alaska State                                                                 
Legislature Financial Statement and Audit Report.                                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:34:56 PM                                                                                                                    
                                                                                                                                
CHAIR  MIKE  HAWKER  called  the   Legislative  Budget  and  Audit                                                            
Committee meeting  to order at 3:34 p.m.   Representatives Hawker,                                                              
Pruitt, Thompson,  and Kito and  Senators MacKinnon,  Giessel, and                                                              
Stedman  were  present at  the  call  to order.    Representatives                                                              
Olson  and  Neuman  (alternate)   and  Senator  Kelly  (alternate)                                                              
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
^Approval of Minutes                                                                                                          
                      Approval of Minutes                                                                                   
                                                                                                                              
3:35:56 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER announced  that the first order of  business would be                                                              
the  approval  of the  minutes  from  the Legislative  Budget  and                                                              
Audit  Committee meetings  of January  21, 2015  and February  12,                                                              
2015.                                                                                                                           
                                                                                                                                
SENATOR  MACKINNON  made  a  motion  to  approve  the  minutes  of                                                              
January  21, 2015.   There being  no objection,  the minutes  from                                                              
the meeting of January 21, 2015 were approved.                                                                                  
                                                                                                                                
SENATOR  MACKINNON  made  a  motion  to  approve  the  minutes  of                                                              
February 12,  2015.   There being no  objection, the  minutes from                                                              
the meeting of February 12, 2015 were approved.                                                                                 
                                                                                                                                
^Audit:  Alaska State  Legislature Financial  Statement and  Audit                                                            
Report                                                                                                                        
 Audit: Alaska State Legislature Financial Statement and Audit                                                              
                             Report                                                                                         
                                                                                                                              
3:37:06 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  announced that the  next order of business  would be                                                              
the preliminary  review of the Alaska State  Legislature Financial                                                              
Statement and Audit Report.                                                                                                     
                                                                                                                                
3:37:24 PM                                                                                                                    
                                                                                                                                
KRISTIN  CURTIS,  Legislative  Auditor,  Division  of  Legislative                                                              
Audit, Alaska  State Legislature,  explained that each  member had                                                              
a   copy  of   the   Alaska   State  Legislature's   schedule   of                                                              
appropriations, expenditures,  and encumbrances, and  the schedule                                                              
of  revenues  for the  fiscal  year  ended  June  30, 2014.    She                                                              
relayed  that this  audit  was conducted  annually,  and that  the                                                              
independent auditor  had provided  an unmodified opinion  that the                                                              
schedules were free from material misstatement.                                                                                 
                                                                                                                                
3:38:10 PM                                                                                                                    
                                                                                                                                
MS. CURTIS,  in response  to Chair  Hawker, directed attention  to                                                              
the letter attached  to the audit report, as  required by auditing                                                              
standards,  which listed  several things  required by auditors  to                                                              
report.                                                                                                                         
                                                                                                                                
CHAIR HAWKER asked  if the letter referenced any  items of concern                                                              
to the committee.                                                                                                               
                                                                                                                                
MS. CURTIS replied that there were no items of concern.                                                                         
                                                                                                                                
CHAIR HAWKER  declared that acceptance  of the report  required no                                                              
further action on behalf of the committee.                                                                                      
                                                                                                                                
^Executive Session                                                                                                            
                       Executive Session                                                                                    
                                                                                                                              
3:38:55 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  announced that the  next order of business  would be                                                              
an executive session.                                                                                                           
                                                                                                                                
3:39:00 PM                                                                                                                    
                                                                                                                                
SENATOR  MACKINNON made  a  motion to  move  to executive  session                                                              
under Uniform Rule  22 for the purpose of  discussing confidential                                                              
audit reports under  AS 24.20.301.  There being  no objection, the                                                              
committee went into executive session at 3:39 p.m.                                                                              
                                                                                                                                
3:39:24 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:39 p.m. to 4:34 p.m.                                                                       
                                                                                                                                
4:34:34 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER brought  the committee  back to  order at 4:34  p.m.                                                              
Representatives  Hawker,  Pruitt, Thompson,  Olson,  and Kito  and                                                              
Senators  MacKinnon,  Giessel,  Stedman,  and  Kelly  (alternate),                                                              
were present at the call to order.                                                                                              
                                                                                                                                
^Release  of Confidential  Preliminary Statewide  Single Audit  FY                                                            
14                                                                                                                            
 Release of Confidential Preliminary Statewide Single Audit FY 14                                                           
                                                                                                                              
4:35:04 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  announced that the  next order of business  would be                                                              
a release  of the confidential  preliminary audit to  the agencies                                                              
for response.                                                                                                                   
                                                                                                                                
SENATOR  MACKINNON made  a motion  for the  preliminary audit  for                                                              
the Statewide  Single  Audit for  the Fiscal  Year ended June  30,                                                              
2014  to be  released to  the appropriate  agencies for  response.                                                              
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
^Other Committee Business                                                                                                     
                    Other Committee Business                                                                                
                                                                                                                              
4:35:40 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  announced that the  next order of business  would be                                                              
a general  audit services contract  approval request  [Included in                                                              
members' packets].                                                                                                              
                                                                                                                                
MS. CURTIS asked  that the Legislative Budget and  Audit Committee                                                              
consider and  approve a  request for  the Division of  Legislative                                                              
Audit to solicit  and award a contract for general  audit services                                                              
in  support of  the statewide  audit  for Fiscal  Year (FY)  2015.                                                              
She  explained  that the  division  would  like to  hire  contract                                                              
auditors to  work under its supervision  in order to  help address                                                              
vacancies and control  of the workload.  She  reiterated that this                                                              
request had been  granted over the past few years  to help control                                                              
the workload.                                                                                                                   
                                                                                                                                
CHAIR HAWKER  asked if  the amount  requested was consistent  with                                                              
the amounts previously needed.                                                                                                  
                                                                                                                                
MS. CURTIS replied  that the amount requested had  fluctuated from                                                              
$50,000 up to $250,000.   She offered her belief  that the current                                                              
request  for $150,000  would meet  the needs  of the division  for                                                              
this year.                                                                                                                      
                                                                                                                                
CHAIR HAWKER  asked if  the legislature  had eliminated  this item                                                              
from  its upcoming  budget.    He asked  if  Ms. Curtis  had  been                                                              
directed to seek  a change in the audit relationship  for the fees                                                              
charged to the  administration for the services  performed, and to                                                              
increase those fees by $450,000.                                                                                                
                                                                                                                                
MS.  CURTIS replied  that this  particular contract  had not  been                                                              
referenced  in the  budget, as it  was reviewed  annually  for its                                                              
need and available authorization.                                                                                               
                                                                                                                                
CHAIR HAWKER asked what had been removed from the budget.                                                                       
                                                                                                                                
MS. CURTIS  replied that her division  had asked for  an increment                                                              
for  the Integrated  Resource  Information  System (IRIS)  system,                                                              
which was coming  on-line on July  1, 2015.  She stated  that this                                                              
would require  procurement of IT  expertise in order to  audit the                                                              
system,  as  there  was  no  one  currently  on  staff  with  this                                                              
expertise.   She  reported  that  part of  this  request had  been                                                              
allowed, and  part had been  denied.  She  shared that  a one-time                                                              
IT  increment  for  the  Medicaid  Management  Information  System                                                              
(MMIS)  audit  from   the  previous  year,  which   had  not  been                                                              
performed due to  defects in the system, had been  allowed to roll                                                              
forward.    She said  that  this  $100,000  had been  allowed  for                                                              
application to the IRIS audit.                                                                                                  
                                                                                                                                
CHAIR HAWKER  summarized that the  requested $150,000 was  for the                                                              
FY 15 audit, and had not been removed from future budgets.                                                                      
                                                                                                                                
MS.   CURTIS  explained   that  this   request  was   for  FY   15                                                              
authorization that  was still available.  She said  that the audit                                                              
services would be mostly completed by the end of June.                                                                          
                                                                                                                                
CHAIR HAWKER stated  that the FY 16 request could  be addressed at                                                              
a later date.                                                                                                                   
                                                                                                                                
4:38:55 PM                                                                                                                    
                                                                                                                                
SENATOR MACKINNON  moved to authorize  the Legislative  Auditor to                                                              
solicit  and  award a  contract  for  the statewide  single  audit                                                              
assistance not to  exceed $150,000.  There being  no objection, it                                                              
was so ordered.                                                                                                                 
                                                                                                                                
4:39:31 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER announced  that the  last  few items  on the  agenda                                                              
were updates on  consulting services driven by  the education bill                                                              
[House  Bill 278]  during  the previous  year.   The  first was  a                                                              
review of  the education foundation  formula and the second  was a                                                              
more macro approach  to the overall approach of  statewide funding                                                              
to education,  which included  requirements  and needs, and  would                                                              
offer counsel for  a methodology to adapt or  incorporate into the                                                              
current school funding  approach.  He shared  that the procurement                                                              
committee had  selected a  recipient to  the request for  proposal                                                              
(RFP).  He explained  that the contract required  a public hearing                                                              
to provide  the consultants a scoping  venue and offer  the public                                                              
the opportunity  to weigh  in with the  consultants.   He reported                                                              
that this  education consultant  public hearing  would be  held on                                                              
Tuesday, March 10, at 7:30 a.m.                                                                                                 
                                                                                                                                
CHAIR HAWKER directed  attention to the RFP for a  micro review of                                                              
the  factors  within  the  current school  funding  formula.    He                                                              
stated that  there had not been  any responses to  this consultant                                                              
RFP  request.     He  mentioned  the  Ketchikan   lawsuit  brought                                                              
questions  to  the foundation  formula,  noting  that  it was  not                                                              
clear  what  would  need  to  be  reviewed  until  that  suit  was                                                              
stabilized.     He  allowed   that  the   RFP  contract   for  the                                                              
aforementioned  macro view  of the  education  funding included  a                                                              
"pretty sophisticated review of the foundation formula."                                                                        
                                                                                                                                
CHAIR HAWKER pointed  out that the next House  Bill 30 performance                                                              
review  would  be  for  the  Department  of  Education  and  Early                                                              
Development and school [foundation formula] funding.                                                                            
                                                                                                                                
4:42:56 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  stated that, after  consultation, the  committee had                                                              
decided  not to  go  forward  with the  RFP  request  for a  micro                                                              
review of  the school  funding formula at  this time,  although he                                                              
allowed  that  it  was  a  future  possibility  dependent  on  the                                                              
outcome  of the  Ketchikan  lawsuit.   He  pointed  out that  this                                                              
would  be  dependent  on  funding  from  the FY  16  budget.    He                                                              
expressed  his   enthusiasm  for  the  aforementioned   consultant                                                              
group, stating "they're really an impressive group."                                                                            
                                                                                                                                
SENATOR  MACKINNON  asked  if  it  was  necessary  to  notify  the                                                              
Speaker of  the House and the  President of the Senate  that there                                                              
had  not been  a response  to an  RFP, and  that, subsequently,  a                                                              
contract would not be let in accordance with the deadline.                                                                      
                                                                                                                                
CHAIR HAWKER  offered to send a  letter to the  presiding officers                                                              
to  inform  them  of  the situation,  as  a  matter  of  courtesy;                                                              
although, he  opined that  there was not  a formal requirement  to                                                              
do so.                                                                                                                          
                                                                                                                                
4:45:02 PM                                                                                                                    
                                                                                                                                
CHAIR  HAWKER addressed  the  current  House Bill  30  performance                                                              
review for  Department of  Health and  Social Services,  and noted                                                              
that  this   process  required   public  hearings  in   Anchorage,                                                              
Fairbanks,  Juneau,   and  other   locations  designated   by  the                                                              
committee.   He stated  that the  Juneau public  meeting for  this                                                              
performance  review was  planned for  March 17,  at 7:30 a.m.  and                                                              
that  there would  be public  noticing.   He  reiterated that  the                                                              
public meeting for  statewide education funding would  be on March                                                              
10.                                                                                                                             
                                                                                                                                
4:46:03 PM                                                                                                                    
                                                                                                                                
CHAIR HAWKER  reported that the  next performance review  would be                                                              
for  the  Department  of  Education and  Early  Development.    He                                                              
lauded  a  methodology  developed  by Senator  MacKinnon  for  the                                                              
previous  scoping, and suggested  that this  process be  repeated.                                                              
He   asked   that  Senator   MacKinnon,   Senator   Giessel,   and                                                              
Representative Kito  join him, as the chair, on  a subcommittee to                                                              
work with the auditor  on the audit scoping for the  House Bill 30                                                              
performance  review  on  the Department  of  Education  and  Early                                                              
Development.                                                                                                                    
                                                                                                                                
4:47:06 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There  being  no  further  business   before  the  committee,  the                                                              
Legislative Budget  and Audit Committee  meeting was  adjourned at                                                              
4:47 p.m.                                                                                                                       

Document Name Date/Time Subjects
Agenda_LBA_26Feb15.pdf JBUD 2/26/2015 3:30:00 PM
leg audit contract memo 19Feb15.pdf JBUD 2/26/2015 3:30:00 PM