Legislature(2017 - 2018)Anch LIO Lg Conf Rm

06/05/2018 10:00 AM LEGISLATIVE BUDGET & AUDIT

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Audio Topic
10:01:47 AM Start
10:03:23 AM Approval of Agenda
10:03:53 AM Approval of Minutes
10:04:14 AM Executive Session
03:08:17 PM Other Committee Business - Special Audit Request
03:14:46 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Executive Session: TELECONFERENCED
a. Final Audit-Alaska Mental Health Trust
Authority
b. Preliminary Audit-Statewide Single FY17
c. Preliminary Audit-Regulatory Commission of
Alaska FY17 Annual Report
d. Contract Amendments
e. Sexual Harassment Policy
Other Committee Business
a. Special Audit Request
                     ALASKA STATE LEGISLATURE                                                                                 
              LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                          
                           June 5, 2018                                                                                         
                            10:01 a.m.                                                                                          
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Bert Stedman, Chair                                                                                                     
Senator Anna MacKinnon                                                                                                          
Senator Cathy Giessel                                                                                                           
Senator Natasha von Imhof (alternate)                                                                                           
                                                                                                                                
Representative Andy Josephson, Vice Chair                                                                                       
Representative Scott Kawasaki (via teleconference)                                                                              
Representative Paul Seaton                                                                                                      
Representative Ivy Spohnholz                                                                                                    
Representative Dan Ortiz (alternate) (via teleconference)                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Click Bishop                                                                                                            
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
Representative Jennifer Johnston                                                                                                
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Tammy Wilson                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
APPROVAL OF AGENDA                                                                                                              
APPROVAL OF MINUTES                                                                                                             
EXECUTIVE SESSION                                                                                                               
OTHER COMMITTEE BUSINESS - SPECIAL AUDIT REQUEST                                                                                
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
RANDY RUARO, Staff                                                                                                              
Senator Bert Stedman                                                                                                            
Alaska State Legislature                                                                                                        
POSITION STATEMENT:  Offered information regarding a committee                                                                
memorandum.                                                                                                                     
                                                                                                                                
KRISTIN CURTIS, Legislative Auditor                                                                                             
Legislative Audit Division                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Provided information  regarding a  special                                                             
audit request.                                                                                                                  
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:01:47 AM                                                                                                                   
                                                                                                                                
CHAIR  BERT  STEDMAN  called the  Legislative  Budget  and  Audit                                                             
Committee  meeting  to  order  at  10:01  a.m.    Representatives                                                               
Kawasaki (via teleconference),  Seaton, Spohnholz, Josephson, and                                                               
Ortiz  (alternate) (via  teleconference),  and Senators  Stedman,                                                               
MacKinnon,  Giessel, and  von Imhof  (alternate) were  present at                                                               
the call to order.  Also present was Representative Wilson.                                                                     
                                                                                                                                
CHAIR STEDMAN  announced that there  was a quorum, as  there were                                                               
nine members of the committee present.                                                                                          
                                                                                                                                
^APPROVAL OF AGENDA                                                                                                             
                       APPROVAL OF AGENDA                                                                                   
                                                                                                                                
10:03:23 AM                                                                                                                   
                                                                                                                                
CHAIR STEDMAN announced the first  order of business would be the                                                               
approval of the agenda.                                                                                                         
                                                                                                                                
10:03:31 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a motion  that  the  Legislative                                                               
Budget and  Audit Committee approve  the agenda.  There  being no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
^APPROVAL OF MINUTES                                                                                                            
                      APPROVAL OF MINUTES                                                                                   
                                                                                                                                
10:03:53 AM                                                                                                                   
                                                                                                                                
CHAIR STEDMAN announced  the next order of business  would be the                                                               
approval of the minutes.                                                                                                        
                                                                                                                                
10:04:01 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE JOSEPHSON made a motion  to approve the minutes of                                                               
the  April  11, 2018,  meeting  as  presented.   There  being  no                                                               
objection, the minutes  from the meeting of April  11, 2018, were                                                               
approved.                                                                                                                       
                                                                                                                                
^EXECUTIVE SESSION                                                                                                              
                        EXECUTIVE SESSION                                                                                   
                                                                                                                              
10:04:14 AM                                                                                                                   
                                                                                                                                
CHAIR STEDMAN announced that the  next order of business would be                                                               
executive session.                                                                                                              
                                                                                                                                
10:04:27 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a motion  that  the  Legislative                                                               
Budget  and  Audit  Committee go  into  executive  session  under                                                               
Uniform Rule 22 of the  Alaska State Legislature and AS 24.20.301                                                               
for the  purpose of considering release  of a final audit  of the                                                               
Alaska  Mental Health  Trust Authority,  a preliminary  Statewide                                                               
Single  Audit for  fiscal  year 2017  (FY 17),  an  audit of  the                                                               
Regulatory  Commission  of  Alaska  (RCA) FY  17  Annual  Report,                                                               
contract amendments  for consultants Gaffney Cline  and In3nergy,                                                               
and a new contract with the law firm Wiley Rein.                                                                                
                                                                                                                                
CHAIR  STEDMAN objected  to  lay out  the  schedule of  executive                                                               
session.  He then removed his objection.                                                                                        
                                                                                                                                
10:05:50 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON added  to the  motion to  ask that  the                                                               
following   individuals   remain   in   the   room   or   online:                                                               
legislative   auditor,   Kris   Kurtis;   necessary   staff   and                                                               
contractors of  the Legislative Audit Division;  attorney Michael                                                               
Caulfield; attorney  Eric Wohlforth;  any legislators not  on the                                                               
committee; and  any legislative staff for  Legislative Budget and                                                               
Audit Committee  members.   There being no  objection, it  was so                                                               
ordered.                                                                                                                        
                                                                                                                                
10:06:22 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease at 10:06 a.m.                                                                                
                                                                                                                                
[Due to  technical difficulties, the following  information up to                                                               
the at-ease  going into  executive session  was derived  from the                                                               
secretary's log notes and is not on the recording.]                                                                             
                                                                                                                                
CHAIR  STEDMAN brought  the  committee back  to  order and  asked                                                               
Representative Josephson to modify the  motion to add a topic for                                                               
discussion.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a  motion to  add  to  executive                                                               
session  a discussion  of the  Sexual Harassment  Policy.   There                                                               
being no objection, it was so ordered.                                                                                          
                                                                                                                                
The committee  took an at-ease from  10:07 a.m. to 3:03  p.m. for                                                               
the purpose of executive session.                                                                                               
                                                                                                                                
3:03:31 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN brought the Legislative  Budget and Audit Committee                                                               
back  to  order.    Present  at  the  call  back  to  order  were                                                               
Representatives    Kawasaki    (via   teleconference),    Seaton,                                                               
Spohnholz, Ortiz  (alternate, via teleconference),  and Josephson                                                               
and Senators MacKinnon, Giessel, and Stedman.                                                                                   
                                                                                                                                
CHAIR STEDMAN announced  there was a quorum, as  there were eight                                                               
members of the committee present.                                                                                               
                                                                                                                                
3:04:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON stated  that  the  committee had  heard                                                               
from  Michael Caulfield,  an attorney  from  Jermain, Dunnagan  &                                                               
Owens, P.C.,  who is  under contract  with the  Legislative Audit                                                               
Division but  whom he  had not met  until today.   Representative                                                               
Josephson  disclosed that  his sister  is a  partner at  Jermain,                                                               
Dunnagan & Owens, P.C.                                                                                                          
                                                                                                                                
CHAIR STEDMAN said, "Duly noted."                                                                                               
                                                                                                                                
3:05:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a motion  that  the  Legislative                                                               
Budget  and Audit  Committee  approve the  release  of the  Final                                                               
Alaska Mental Health  Trust Audit to the public.   There being no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
3:05:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON made a motion  to approve the release of                                                               
the Preliminary  Statewide FY 17  Single Audit to  the applicable                                                               
state agencies for formal comment.   There being no objection, it                                                               
was so ordered.                                                                                                                 
                                                                                                                                
3:06:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON made a motion  to approve the release of                                                               
the  preliminary audit  of the  RCA FY  17 Annual  Report to  the                                                               
applicable state  agencies for  formal comment.   There  being no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
3:06:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a motion  that  the  Legislative                                                               
Budget  and  Audit  Committee  approve   the  amendments  to  the                                                               
contract  with  Gaffney  Cline as  presented  to  the  committee.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
3:07:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a motion  that  the  Legislative                                                               
Budget  and  Audit  Committee  approve   the  amendments  to  the                                                               
contract  with In3nergy  as presented  to the  committee.   There                                                               
being no objection, it was so ordered.                                                                                          
                                                                                                                                
3:07:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a motion  that  the  Legislative                                                               
Budget  and Audit  Committee approve  a new  contract with  Wiley                                                               
Rein,  as presented  to the  committee, and  to approve  entering                                                               
into an engagement letter with the  law firm that conforms to the                                                               
contract  approved   by  Legislative  Legal.     There  being  no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
^OTHER COMMITTEE BUSINESS - SPECIAL AUDIT REQUEST                                                                               
         OTHER COMMITTEE BUSINESS - SPECIAL AUDIT REQUEST                                                                   
                                                                                                                              
3:08:17 PM                                                                                                                    
                                                                                                                                
CHAIR  STEDMAN announced  the final  order of  business would  be                                                               
other committee business concerning a special audit request.                                                                    
                                                                                                                                
3:09:12 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease at 3:09 p.m.                                                                                 
                                                                                                                                
3:09:25 PM                                                                                                                    
                                                                                                                                
RANDY   RUARO,  Staff,   Senator  Bert   Stedman,  Alaska   State                                                               
Legislature, drew attention to  a committee memorandum requesting                                                               
its  own  approval for  a  special  audit  of the  Department  of                                                               
Revenue (DOR)  related to  a tax  credit loan  program.   He said                                                               
some concerns  were brought  to the attention  of staff  and were                                                               
discussed with the auditor and the  agency.  The finding was that                                                               
there was enough information to  warrant a special audit request.                                                               
Mr. Ruaro  related that the  memorandum describes  the background                                                               
and some  of the timeline  of the  program and lays  out specific                                                               
areas of investigation for the auditor on page two.                                                                             
                                                                                                                                
3:10:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  made  a motion  that  the  Legislative                                                               
Budget and Audit  Committee approve the special  audit request as                                                               
presented to  the committee and  set forth  in the May  28, 2018,                                                               
memorandum to committee members.                                                                                                
                                                                                                                                
CHAIR STEDMAN objected for the purpose of discussion.                                                                           
                                                                                                                                
3:11:02 PM                                                                                                                    
                                                                                                                                
SENATOR  MACKINNON  requested  the committee  hear  from  Kristin                                                               
Curtis regarding the timing for completion of the audit.                                                                        
                                                                                                                                
3:11:16 PM                                                                                                                    
                                                                                                                                
KRISTIN CURTIS, Legislative  Auditor, Legislative Audit Division,                                                               
Alaska  State Legislature,  said she  thinks the  audit could  be                                                               
started in spring of 2019 and could be done in time.                                                                            
                                                                                                                                
SENATOR MACKINNON asked if there  was anything else being held by                                                               
the  Legislative Budget  and Audit  Committee that  needed to  be                                                               
released.   For  example, she  asked whether  the Matanuska  Maid                                                               
Dairy audit had been released already.                                                                                          
                                                                                                                                
MS. CURTIS answered that the  Matanuska Maid Dairy audit has been                                                               
drafted, is  in her  possession, and may  be a  preliminary audit                                                               
topic  for  a meeting  in  September  when  there would  be  five                                                               
sunsets to  address.  She  added that she also  anticipates there                                                               
will  be  a  special  audit of  the  Alaska  Gasline  Development                                                               
Corporation (AGDC) organization ready by September or October.                                                                  
                                                                                                                                
CHAIR  STEDMAN  removed his  objection  to  the motion  that  the                                                               
Legislative Budget and Audit Committee  approve the special audit                                                               
request as  presented to the committee  and set forth in  the May                                                               
28,  2018,  memorandum to  committee  members.   There  being  no                                                               
further objection, it was so ordered.                                                                                           
                                                                                                                                
3:12:32 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN announced the next meeting would be some time in                                                                  
July.  He asked Ms. Curtis to share the projected dates.                                                                        
                                                                                                                                
3:13:46 PM                                                                                                                    
                                                                                                                                
MS. CURTIS said  there is a need  to get out the  single audit as                                                               
soon as  possible, perhaps on  July 12 or  14.  The  next meeting                                                               
for  audit purposes  may be  the first  week of  October, with  a                                                               
follow-up meeting the first week of November.                                                                                   
                                                                                                                                
3:14:46 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the                                                                       
Legislative Budget and Audit Committee meeting was adjourned at                                                                 
3:15 p.m.                                                                                                                       

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