Legislature(2015 - 2016)ANCH LIO AUDITORIUM


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01:32:59 PM Start
01:34:15 PM Revised Program - Legislative (rpls)
01:50:55 PM Executive Session
04:06:18 PM Final Audit Reports
04:06:45 PM Performance Review Reports
04:17:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Rescheduled from 12/4/15 --
+ Legislative Revised Programs (RPLs): TELECONFERENCED
- Dept. of Education & Early Development
- Child Nutrition Programs - RPL 05-6-0111
- IRIS Audit Authorization
Final Audit Reports:
- Alaska Pioneer Homes
- Big Game Commercial Services Board
Final Performance Review Reports:
- Behavioral Health
- Long Term Care
- Overall Department Organization
-- Testimony <Invitation Only> --
**Streaming available in JNU in TS Bldg Rm 105**
                    ALASKA STATE LEGISLATURE                                                                                  
             LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                           
                       ANCHORAGE, ALASKA                                                                                      
                        December 7, 2015                                                                                        
                           1:32 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Mike Hawker, Chair                                                                                               
Senator Anna MacKinnon, Vice Chair (via teleconference)                                                                         
Representative Kurt Olson                                                                                                       
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson (via teleconference)                                                                              
Representative Sam Kito                                                                                                         
Senator Lyman Hoffman (via teleconference)                                                                                      
Senator Click Bishop (via teleconference)                                                                                       
MEMBERS ABSENT                                                                                                                
Senator Cathy Giessel                                                                                                           
Senator Bert Stedman                                                                                                            
Representative Mark Neuman (alternate)                                                                                          
Senator Pete Kelly (alternate)                                                                                                  
COMMITTEE CALENDAR                                                                                                            
REVISED PROGRAM - LEGISLATIVE (RPLs)                                                                                            
EXECUTIVE SESSION                                                                                                               
IRIS AUDIT PROCUREMENT                                                                                                          
RELEASE OF FINAL AUDIT REPORTS                                                                                                  
RELEASE OF PERFORMANCE REVIEWS                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
HEIDI TESHNER, Director                                                                                                         
Administrative Services                                                                                                         
Department of Education and Early Development                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented RPL 05-6-0111, Child Nutrition                                                                 
LACEY SANDERS, Fiscal Analyst                                                                                                   
Legislative Finance Division                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified regarding RPL 05-6-0111.                                                                       
KRIS CURTIS, Legislative Auditor                                                                                                
Legislative Finance Division                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Explained  the process after  releasing the                                                             
final performance review reports from the committee.                                                                            
ROSS ALEXANDER                                                                                                                  
Legislative Audit Division                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Answered  a question  regarding the  final                                                             
performance review reports.                                                                                                     
ACTION NARRATIVE                                                                                                              
1:32:59 PM                                                                                                                    
CHAIR  MIKE  HAWKER  called  the  Legislative  Budget  and  Audit                                                             
Committee meeting  to order  at 1:32  p.m.   Representatives Kito                                                               
Olson, Thompson,  and Hawker, and  Senators Bishop,  Hoffman, and                                                               
MacKinnon  were present  at the  call to  order.   Representative                                                               
Pruitt arrived as the meeting was in progress.                                                                                  
^REVISED PROGRAM - LEGISLATIVE (RPLs)                                                                                           
              REVISED PROGRAM - LEGISLATIVE (RPLs)                                                                          
1:34:15 PM                                                                                                                    
CHAIR HAWKER announced that the  first order of business would be                                                               
RPL  05-6-0111, Department  of Education  and Early  Development,                                                               
Child Nutrition Programs.                                                                                                       
1:34:54 PM                                                                                                                    
HEIDI TESHNER,  Director, Administrative Services,  Department of                                                               
Education  and Early  Development, advised  that the  Division of                                                               
Teaching and Learning Support, Child  Nutrition Programs (CNP) is                                                               
requesting  an  increase  of  $8.7  million  in  federal  receipt                                                               
authority  in  order to  receive  additional  U.S. Department  of                                                               
Agriculture  (USDA) grant  funds.   She noted  that this  request                                                               
would bring  the FY2016 Child  Nutrition Program's  total federal                                                               
receipt authority  to a little  over $61 million.   She explained                                                               
that these programs  are fully federally funded  and the spending                                                               
will  provide  support  for  the  significant  growth  they  have                                                               
experienced,  within its  USDA Federal  Nutrition Services  Block                                                               
Grant.  The grant includes  programs such as, the National School                                                               
Lunch Program, Child and Adult  Care Food Program (CACFP), Summer                                                               
Food Service  Program, and others.   Without full  authority, she                                                               
further explained, the  USDA Meals Program will  be terminated or                                                               
reduced which  will impact school districts,  child care centers,                                                               
Head Start agencies,  and the summer meal program.   She said the                                                               
major  growth within  school meals  is directly  attributed to  a                                                               
community eligibility  program which provides free  breakfast and                                                               
lunch  to all  students of  low-income schools.   The  schools in                                                               
Alaska,  as well  as other  states, have  experienced an  overall                                                               
increased  participation in  meal programs  when meals  are free,                                                               
and [find]  that students  are better  prepared to  receive their                                                               
education "with food in their  bellies."  She expressed that this                                                               
RPL requires  no state funding  as it is fully  federally funded,                                                               
and  is   requested  because  more   students  are   eligible  to                                                               
participate.     She  noted   that  students   do  not   have  to                                                               
1:37:30 PM                                                                                                                    
CHAIR  HAWKER  requested  confirmation that  this  is  additional                                                               
federal money available to the  State of Alaska without requiring                                                               
any    additional   general    fund   investments    or   in-kind                                                               
MS. TESHNER answered, "That is correct."                                                                                        
1:38:09 PM                                                                                                                    
SENATOR  BISHOP  referred  to  page [3]  of  the  RPL  "Budgetary                                                               
Issues," and  asked for clarification that  this is authorization                                                               
for $8.7 million for billable claims.                                                                                           
MS.  TESHNER responded  that the  [amount] is  based upon  actual                                                               
claims of actual meals served.                                                                                                  
CHAIR  HAWKER noted  this is  the second  time the  RPL has  been                                                               
before the  committee because during  the last meeting  there was                                                               
not sufficient votes to pass it.   He said there was concern that                                                               
this program  would create a  deepening of consideration  of what                                                               
would  be  a welfare  class  and  would  bring more  people  onto                                                               
federally  subsidized   programs,  thereby,   creating  increased                                                               
reliance on them.  He  also noted constituents' concern that they                                                               
do not  want their  children placed  in increasing  reliance upon                                                               
federal  government  handouts.     He  asked  for  Ms.  Teshner's                                                               
response and  why the committee should  create additional further                                                               
reliance upon the federal government  to run this program knowing                                                               
that federal money is "always going  to be challenged" and it may                                                               
not be  available in  the future  after creating  the expectation                                                               
that these programs provide.                                                                                                    
MS. TESHNER  replied that  parents can  determine whether  or not                                                               
their children participate in the program,  and do not have to be                                                               
singled  into the  low income  category.   She  pointed out  that                                                               
students  learn better  when they've  had a  decent meal  and not                                                               
everyone has access  to a decent meal.  This  allows all of those                                                               
students  to take  advantage [of  the program]  that will  assist                                                               
them in learning, she pointed out.                                                                                              
1:41:13 PM                                                                                                                    
CHAIR HAWKER  said he  appreciates the  clarity that  parents are                                                               
not  required to  participate, but  from the  state's perspective                                                               
questioned  whether it  is  a  good thing  for  the committee  to                                                               
create  increased reliance  upon a  federally subsidized  program                                                               
that likely will  not be sustainable in the future.   Thereby, he                                                               
remarked, causing  expectations by the families  that these funds                                                               
would be  made up  by the  State of Alaska.   He  queried whether                                                               
this is a good route to go.                                                                                                     
MS. TESHNER answered  "personally, yes," in that this  is a fully                                                               
federally  funded  program and  if  it  is not  approved,  school                                                               
districts would have  to use state money to  fulfill the backfill                                                               
of not  having the  federal money  to pay  for the  meals already                                                               
1:42:12 PM                                                                                                                    
CHAIR HAWKER surmised that the  state is already obligated to pay                                                               
general fund money for this  program should the state not receive                                                               
this money from the federal government.                                                                                         
MS. TESHNER responded,  no.  She offered that  the programs would                                                               
have  to  be  seriously  reduced  or  terminated  because  school                                                               
districts could  not afford to  pay.   In the event  anything had                                                               
already occurred,  beyond the federal  money they  could receive,                                                               
[school districts] would have to backfill with state funding.                                                                   
CHAIR  HAWKER  surmised  that  this  [funding]  would  curtail  a                                                               
proposed increase,  which is a net  zero, and noted that  it does                                                               
not make sense.                                                                                                                 
MS.  TESHNER  advised  that  if   there  is  no  federal  funding                                                               
authority to  pay school  districts for  meals they  have already                                                               
disbursed to students,  there is a chance they  would either have                                                               
to terminate  the program during  the school year, or  would have                                                               
to  substantially  reduce  it  to   the  federal  authority  they                                                               
received, and "they  would not have to subsidize  that with state                                                               
dollars."  She related that  it would affect the programs without                                                               
the funding, but  "we" will not come back for  more state funding                                                               
for the Child Nutrition Program itself.                                                                                         
1:43:43 PM                                                                                                                    
CHAIR  HAWKER referred  to Ms.  Teshner's statement  that "it  is                                                               
your  opinion," and  asked whether  that  is her  opinion or  the                                                               
opinion of the agency and Governor Bill Walker's administration.                                                                
MS. TESHNER replied that it is  the opinion of the agency and the                                                               
1:44:10 PM                                                                                                                    
REPRESENTATIVE KITO commented that  the state has federal funding                                                               
opportunities  available   to  help  the   state's  disadvantaged                                                               
students.   He  cautioned  that the  legislature should  consider                                                               
that the  state is  receiving $300-$400 million  a year  from the                                                               
federal    government   for    the   state's    federal   highway                                                               
transportation  program,  and  is  receiving  approximately  $100                                                               
million  from the  Federal  Aviation  Administration for  capital                                                               
construction on  the state's aviation  program.  He  reminded the                                                               
committee  that  the  state  receives  a  significant  amount  of                                                               
federal  money every  year on  the capital  side as  well as  the                                                               
operating side.   The  legislature, he pointed  out, needs  to be                                                               
certain  it  has the  ability  to  capitalize  on the  amount  of                                                               
federal  funding   the  state  can   receive  to   help  Alaska's                                                               
residents.  When  discussing the possible loss  of federal funds,                                                               
it should not be forgotten  that the state receives a significant                                                               
amount of  capital funds it could  lose as well.   He opined that                                                               
legislators  would not  consider decreasing  the state's  federal                                                               
fund receipts for  aviation or highways and to keep  that in mind                                                               
when considering these other programs.                                                                                          
1:45:28 PM                                                                                                                    
REPRESENTATIVE OLSON  asked whether  they are giving  the federal                                                               
government artificially inflated numbers  with regard to families                                                               
that do  not participate,  and questioned  whether the  state has                                                               
any liability for over-reporting.                                                                                               
MS. TESHNER advised that the  state is not providing artificially                                                               
inflated numbers  to the  USDA, as  it bases  its numbers  on the                                                               
average of the last two school  years.  While they will receive a                                                               
set  authorization from  the federal  government,  they are  only                                                               
billed for what the state paid for actual claims, she explained.                                                                
1:46:34 PM                                                                                                                    
SENATOR  BISHOP  surmised  that  the   increase  is  due  to  the                                                               
population  growth  of school  aged  children  in Anchorage,  and                                                               
noted it is reimbursable up to  $8.7, but there is nothing to say                                                               
that the state will bill $8.7 million.                                                                                          
MS. TESHNER  responded that  Senator Bishop  is correct,  in that                                                               
they are asking up to $8.7  million, but all of the authority may                                                               
not be used as it is based upon actuals.                                                                                        
1:48:07 PM                                                                                                                    
LACEY  SANDERS,  Fiscal  Analyst, Legislative  Finance  Division,                                                               
Alaska State Legislature, stated that  there are no general funds                                                               
required and  no additional staff  is needed regarding  RPL 05-6-                                                               
0111.    The  Legislative  Finance Division  finds  no  technical                                                               
issues, she advised.                                                                                                            
1:49:07 PM                                                                                                                    
REPRESENTATIVE OLSON  made a motion  and asked  unanimous consent                                                               
that  the   committee  approve   RPL  05-6-0111,   Department  of                                                               
Education  and Early  Development, Child  Nutrition Programs  for                                                               
$8,700,000  Federal Receipts,  Fund  Code 1002,  as an  operating                                                               
budget item.                                                                                                                    
A  roll  call  vote  was taken.    Representatives  Kito,  Olson,                                                               
Thompson, Pruitt  and Hawker, and  Senators Bishop,  Hoffman, and                                                               
MacKinnon voted in favor of  RPL 05-6-0111.  Therefore, RPL 05-6-                                                               
0111 was approved by the  Legislative Budget & Audit Committee by                                                               
a vote of 8 to 0.                                                                                                               
^EXECUTIVE SESSION                                                                                                              
                       EXECUTIVE SESSION                                                                                    
1:50:55 PM                                                                                                                    
CHAIR HAWKER  announced the  next order of  business would  be an                                                               
executive session.                                                                                                              
1:51:09 PM                                                                                                                    
REPRESENTATIVE OLSON moved and asked  unanimous consent, that the                                                               
Legislative Budget  and Audit  Committee enter  executive session                                                               
under  Uniform Rule  22(b)(1)  and (b)(3),  as  the meeting  will                                                               
involve  a discussion  of matters,  that the  immediate knowledge                                                               
of, would adversely affect the  finances of a government unit and                                                               
under AS 24.20.301  for the discussion of  confidential audit and                                                               
performance review reports.                                                                                                     
CHAIR  HAWKER  announced that  seeing  no  objection, it  was  so                                                               
1:51:54 PM                                                                                                                    
The committee took an at-ease from 1:51 p.m. to 4:03 p.m.                                                                       
4:03:28 PM                                                                                                                    
CHAIR HAWKER  brought the  committee back to  order at  4:03 p.m.                                                               
Representatives Kito,  Olson, Thompson, and Hawker,  and Senators                                                               
Bishop, Hoffman and MacKinnon were present at the call to order.                                                                
                     IRIS AUDIT PROCUREMENT                                                                                 
4:05:32 PM                                                                                                                    
REPRESENTATIVE OLSON  made a motion  that the  Legislative Budget                                                               
and Audit  Committee authorize the  Legislative Auditor  to award                                                               
and enter into a contract  for specialized information technology                                                               
expertise to  review the State's Integrated  Resource Information                                                               
System (IRIS) in  an amount not to exceed $400,000.   There being                                                               
no objection, it was so ordered.                                                                                                
^FINAL AUDIT REPORTS                                                                                                            
                      FINAL AUDIT REPORTS                                                                                   
4:06:18 PM                                                                                                                    
REPRESENTATIVE  OLSON  made a  motion  that  the following  final                                                               
audits be  released to  the public:   Division of  Alaska Pioneer                                                               
Homes, and  Big Game  Commercial Services  Board, Sunset.   There                                                               
being no objection, it was so ordered.                                                                                          
^PERFORMANCE REVIEW REPORTS                                                                                                     
                   PERFORMANCE REVIEW REPORTS                                                                               
4:06:45 PM                                                                                                                    
REPRESENTATIVE  OLSON made  a motion  that the  committee release                                                               
the  following final  Department  of Health  and Social  Services                                                               
performance  review reports  to the  public:   Behavioral Health,                                                               
Long-Term Care, and Administrative Structure.                                                                                   
CHAIR  HAWKER  emphasized,  for clarity,  that  there  are  three                                                               
separate physical reports.                                                                                                      
CHAIR HAWKER  objected and commented  that these  are significant                                                               
performance reviews of  a significant agency that are  of a great                                                               
deal  of interest  to  many  people.   He  noted  there are  some                                                               
controversial  findings in  the report,  and  "a lot  of meat  to                                                               
digest."  He  asked Kris Curtis, Legislative  Auditor, to explain                                                               
the  process  as the  reports  are  released  to be  certain  the                                                               
information  is available  to legislators,  the House  and Senate                                                               
Finance Committees, and the public at-large.                                                                                    
4:07:59 PM                                                                                                                    
KRIS CURTIS,  Legislative Auditor, Legislative  Finance Division,                                                               
Alaska  State   Legislature,  stated   that  subsequent   to  the                                                               
committee's  release,  the full  reports  and  summaries will  be                                                               
posted on  the web  site.   However, she  noted, the  reports are                                                               
full of findings and recommendations  in that each report is over                                                               
200 pages.   She encouraged all legislators to  have their budget                                                               
knowledgeable  staff  review  these  reports  because  there  can                                                               
certainly be other information in  them of particular interest to                                                               
specific  legislators  that  may   not  be  included  within  the                                                               
summaries.   She explained that  the summaries will be  posted on                                                               
the web site  to help guide people in reviewing  the reports, and                                                               
[the division]  will prepare a  summary of  potential legislation                                                               
that  legislators  may  be  interested  in  sponsoring  that  are                                                               
suggested  within the  reports.   These reports,  she emphasized,                                                               
are the opinion and product of  the contractors hired by "us" and                                                               
are independent, objective reviews by  experts in the field.  She                                                               
said her expectation  is that within the next day  or two, emails                                                               
with the above  information will be directed  to every legislator                                                               
and co-chairs of the House and Senate Finance Committees.                                                                       
MS. CURTIS, in response to  Chair Hawker, advised that her office                                                               
will send out  a public press release  regarding the availability                                                               
of the audit.   She offered that hard copies will  be sent to the                                                               
chairs of the House and  Senate Finance Committees, chairs of the                                                               
House  and  Senate Health  and  Social  Services Committees,  and                                                               
chairs of the House and  Senate Finance Committees' subcommittees                                                               
for health and social services.                                                                                                 
4:10:37 PM                                                                                                                    
CHAIR HAWKER asked that the  very voluminous reports be posted on                                                               
the web site with a reduced .pdf size.                                                                                          
MS.  CURTIS advised  they  would also  attempt  to include  links                                                               
within  the summaries  allowing  people to  drill  down into  the                                                               
voluminous reports more efficiently.                                                                                            
4:11:09 PM                                                                                                                    
SENATOR  MACKINNON asked  Ms. Curtis  how in  depth documentation                                                               
was performed  with regard  to Medicaid  waivers for  1915(i) and                                                               
(k), and  whether the  reports highlight  the state's  options or                                                               
potential risks on the waivers.                                                                                                 
CHAIR HAWKER  advised Senator  MacKinnon that  Ms. Curtis  is not                                                               
qualified to respond.                                                                                                           
4:11:50 PM                                                                                                                    
MS. CURTIS advised that the reports  are not public at this point                                                               
and  she must  wait  until they  are  released before  addressing                                                               
their content.                                                                                                                  
CHAIR  HAWKER asked  Senator MacKinnon  to withdraw  her question                                                               
until the vote was concluded.                                                                                                   
SENATOR MACKINNON agreed.                                                                                                       
4:12:11 PM                                                                                                                    
CHAIR HAWKER  advised that the  question before committee  is the                                                               
release  of   the  Department  of  Health   and  Social  Services                                                               
performance  review   reports  selectively  identified   for  the                                                               
Behavioral  Health  Division,   Long-Term  Care  Activities,  and                                                               
Administrative  Structure   of  the  agency.     There  being  no                                                               
objection, it was so ordered.                                                                                                   
4:12:38 PM                                                                                                                    
SENATOR MACKINNON  pointed to  Ross Alexander,  Legislative Audit                                                               
Division, and the  Medicaid waivers 1915(i) and  (k), and advised                                                               
she has knowledge as to what  1915(i) and (k) obligates the state                                                               
to  do.   She asked  Mr. Alexander  whether the  report currently                                                               
released contains any of the  negative consequences or accurately                                                               
reflects a  comparison of the  state's potential risks  for those                                                               
two waiver programs.                                                                                                            
4:13:36 PM                                                                                                                    
ROSS   ALEXANDER,  Legislative   Audit  Division,   Alaska  State                                                               
Legislature, advised  that the  reports themselves  do not  go in                                                               
depth into  risk.   They do include  a disclaimer;  however, that                                                               
the reports themselves are providing  a recommendation on how the                                                               
state can shift  costs to the federal  government and collaborate                                                               
with the federal government on  ways to lower state expenditures.                                                               
He  offered that  the reports  recognize  that in  order to  move                                                               
forward on  any of  the recommendations, the  state will  need to                                                               
seriously consider  the risks.   Although,  he remarked,  they do                                                               
not go  in depth into  the risks themselves,  they do not  make a                                                               
blanket "this  is a good  idea" on moving  forward on any  of the                                                               
options or waivers without further study.                                                                                       
4:14:23 PM                                                                                                                    
SENATOR MACKINNON inquired  whether it is true  the Department of                                                               
Health and  Social Services  did not comply  with the  request to                                                               
show the committee a ten percent reduction anywhere.                                                                            
MR.  ALEXANDER  responded  that  she  is  correct,  in  that  the                                                               
proposed  list of  reductions put  forth by  the department  is a                                                               
list  of totally  and approximately  4.5 percent  of its  general                                                               
fund  budget.   He explained  that it  is part  of Governor  Bill                                                               
Walker's  amended  budget  put  out last  year.    Therefore,  he                                                               
responded, it is not in  full compliance with the requirements of                                                               
the statute.                                                                                                                    
SENATOR MACKINNON  commented to the committee  that the committee                                                               
has   gone  through   two  audit   cycles,  with   two  different                                                               
departments, and  it has not  received the results  the committee                                                               
had hoped for  under passage of the bill.   She said she wondered                                                               
whether the  committee should have  a discussion on  the efforts,                                                               
as  it  moves  forward,  and   investing  "this  much  money"  to                                                               
understand what  the department is doing,  and having departments                                                               
refuse to comply with Alaska State Statute.                                                                                     
4:16:12 PM                                                                                                                    
CHAIR HAWKER  noted that Senator MacKinnon  echoed his sentiments                                                               
exactly.    He  asked  whether there  were  any  other  committee                                                               
concerns for the  good of the order.  Hearing  and seeing none he                                                               
thanked the committee members for their attendance.                                                                             
4:17:08 PM                                                                                                                    
There being no further business before the committee, the                                                                       
Legislative Budget and Audit Committee meeting was adjourned at                                                                 
4:17 p.m.                                                                                                                       

Document Name Date/Time Subjects
Agenda .pdf JBUD 12/7/2015 1:30:00 PM
RPL Packet.pdf JBUD 12/7/2015 1:30:00 PM