Legislature(2005 - 2006)HOUSE FINANCE 519
03/02/2005 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB81 | |
| SB60 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| HB 81 | |||
| SB 60 | |||
HOUSE FINANCE COMMITTEE
March 2, 2005
1:44 P.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 1:44:45 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Jim Holm
Representative Reggie Joule
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
Representative Mike Kelly
ALSO PRESENT
Representative Tom Anderson, Sponsor; Jon Bittner, Staff,
Representative Tom Anderson; Grey Mitchell, Director,
Division of Labor Standards and Safety, Department of Labor
and Workforce Development; Jeff DeSmet, President, Southeast
Home Builders Association, Juneau; John Bitney, Lobbyist,
Alaska State Home Building Association (ASHBA); Shannon
Straube, Staff, Senator Ben Stevens; Diane Casto, Manager,
Division of Behavior Health, Department of Health and Social
Services; Pat Davidson, Legislative Auditor, Legislative
Audit Division; Alan Wilson, Southeast Alaska Building
Association, Juneau
PRESENT VIA TELECONFERENCE
Tom Larkin, Unregistered Contractor, Fairbanks; Dave
Dillard, Alaska Home Builders, Fairbanks; Richard Tilly,
Alaska Home Builders, Fairbanks; Jack Hebert, Alaska Home
Builders, Fairbanks; Mike Musick, Fairbanks; Roger Nash,
Real Estate Appraiser, Fairbanks; William Bruu, Matsu;
Rockwell Smith, Preferred Plumbing and Heating, Kenai;
Jeremy Riddle, General Contractor, Fairbanks; Wally Smith,
General Contractor, Fairbanks
SUMMARY
HB 81 An Act establishing an administrative fine and
procedure for construction contractors in certain
circumstances; increasing the amount of a civil
penalty for persons acting in the capacity of
contractors or home inspectors; modifying the
elements of a crime involving contractor
registration and residential contractors; and
exempting the administrative hearings for imposing
an administrative fine on construction contractors
from the hearings conducted by the office of
administrative hearings in the Department of
Administration.
HB 81 was HEARD and HELD in Committee for further
consideration.
SB 60 An Act extending the termination date of the
Statewide Suicide Prevention Council; and
providing for an effective date.
SB 60 was HEARD and HELD in Committee for further
consideration.
1:45:01 PM
HOUSE BILL NO. 81
An Act establishing an administrative fine and
procedure for construction contractors in certain
circumstances; increasing the amount of a civil penalty
for persons acting in the capacity of contractors or
home inspectors; modifying the elements of a crime
involving contractor registration and residential
contractors; and exempting the administrative hearings
for imposing an administrative fine on construction
contractors from the hearings conducted by the office
of administrative hearings in the Department of
Administration.
1:45:43 PM
REPRESENTATIVE TOM ANDERSON, SPONSOR, explained that under
current law, the State of Alaska investigates and enforces
violations of construction contractor laws. Both the
Department of Labor and Commerce and the Department of
Community & Economic Development have authority to pursue
violations of work performed by unregistered construction
contractors. For the most part, they rely upon the public
complaints and follow up with investigations. Under current
laws, these agencies enforce violation by issuing citations.
After a citation is issued, the impetus falls to the
Department of Law as to whether or not to prosecute the
matter in Court.
Representative Anderson noted that with over 1,600
unregistered contractors operating under the exemption,
numerous reports have been made about the unregistered
businesses offering construction services in violation of
the laws. Enforcement efforts have proven to be difficult
and many consumers are unaware their contractor may not be
qualified to provide construction services and have little
or no insurance and warranty protections.
HB 81 would amend the law to allow the Department of Labor
and the Department of Commerce, Community & Economic
Development to issue civil penalties for violations.
Instead of going through the Department of Law, a violator
would either pay a fine (proposed at $1,000 for the first
violation and $1,500 for subsequent violations) or appeal to
an administrative hearing officer. The system would be much
more effective toward penalizing first-time violations
quickly and effectively. The departments would retain the
option of going through the current criminal violation
process if the fines do not deter a violator.
Representative Anderson pointed out a loophole in the
contractor exemption statutes that allows small contracting
companies to operate without a license. That has also been
closed. Previously, an individual could file for an
exemption and build a residential or commercial property
every year. Under HB 81, the time limit between buildings
would be raised to 2 years of occupancy. Individuals, who
need to, could file for a hardship waiver to build another
property before the two-year minimum.
1:48:19 PM
Representative Anderson pointed out that HB 81 had been
changed at the request of Representative Rokeberg that the
builder occupy the house they built for no less than two
consecutive years. In the original bill, the contractor
would have to live in the house for three consecutive years.
The intent of the legislation is to curb situations in which
offsprings of contractors construct houses and then sell
them quickly. He interjected that they are building a home
every year and then claiming it as their residence. They
are abusing their privileges. HB 81 requires that if you
are not a registered general contractor, the builder must
live in the structure for at least two years.
Representative Anderson urged the Committee's support of the
legislation, pointing out that the community homebuilder
associations are in support of it.
1:51:13 PM
Representative Croft inquired what are the requirements for
a contractor outside of bonding and licensing. He asked the
price of a bond. Representative Anderson did not know.
Representative Croft questioned if the contractors license
could be pulled if they were not operating ethically.
Representative Anderson replied it could. If the builder
did not have the license and bonding and they built a
defective home, the buyer would have no recourse.
Representative Croft asked if the money gathered from fines
could be used for enforcement. Representative Anderson
replied that language had not been included. Co-Chair Meyer
agreed it was a good idea.
1:53:10 PM
Representative Holm observed that not everyone gets a
residential endorsement on a contractors bond.
Co-Chair Chenault inquired how many fines per year are
levied and what the newly proposed increase would be.
Representative Anderson recommended that someone from the
Department address that question.
1:55:16 PM
GREY MITCHELL, DIRECTOR, DIVISION OF LABOR STANDARDS AND
SAFETY, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT,
advised that essentially there are 250 assist orders issued
per year and relatively few fines issued. Over the past
five years, perhaps only a dozen have proceeded through the
criminal system, resulting in a fine. He stressed that it
is difficult to reach the level of proof required in
criminal prosecution, which is the reason for HB 81.
Representative Holm interjected that it should not be
considered criminal status for a person attempting to "feed
their family". He questioned how far the bar could be
raised.
Mr. Mitchell advised that is the reason that the bill makes
sense. Currently, the only enforcement action is to pursue
a criminal prosecution. The legislation establishes another
mechanism to address violations. The builder would have a
new consideration in regards to the administrative fine.
Essentially, there would be a quicker result for those that
are following the rules. Additionally, it protects the
public. HB 81 attempts to make it easier, making a penalty
that fits the violation.
1:58:46 PM
Representative Croft asked how onerous are the requirements
for a contractor to get licensed and bonding. Mr. Mitchell
did not know bonding costs.
Representative Croft asked how involved of a process was it
to get a license. Mr. Mitchell explained it is an
application process through the Division of Occupational
Licensing. After the application is filled out, proof must
be submitted for bonding and insurance requirements. Mr.
Mitchell did not know the turn around time for that. Also,
there is a residential endorsement test for the general
contractors building single-family residences.
Representative Croft inquired if the main cost would be the
insurance requirement. Mr. Mitchell stated that was not his
area of expertise.
Representative Weyhrauch asked about Section 3, the
injunction civil penalty. He asked why the Department of
Commerce, Community & Economic Development and Department of
Labor & Workforce Development had been singled out rather
than just saying the State of Alaska. He pointed out that
the Department of Law is the agency that would institute the
action. Mr. Mitchell did not know, recommending that the
sponsor address that. He pointed out that he had not been
involved in drafting the legislation; however, assumed that
the reason those two departments had been listed was because
they are the ones that have authority over contractor
licensing.
JON BITTNER, STAFF, REPRESENTATIVE TOM ANDERSON, pointed out
that language is in current statute.
2:02:49 PM
In response to further questioning by Representative
Weyhrauch, Mr. Mitchell explained that the separation
results from the two different licenses being discussed.
2:03:44 PM
JEFF DESMET, PRESIDENT, SOUTHEAST HOME BUILDERS ASSOCIATION,
JUNEAU, voiced strong support for HB 81. He addressed
questions and concerns of the Committee, referencing a
situation in Juneau, where a confrontation was made over a
loophole regarding whether the contractor was a registered
licensed contractor and then selling his own owner built
home within sixty days. That contractor violated the law's
intent. He did not have a general contractors license,
violated the residentual endorsement and the intent of the
law. He plumbed and wired the house himself, violating the
mechanical code. Mr. DeSmet added that the builder had
hired illegal subcontractors that he did not have proper
insurance.
Mr. DeSmet stressed that contracting is expensive and that
being in business is expensive but not impossible.
Mr. DeSmet noted that the law stipulates that a handyman can
operate within a $5,000 dollar limit. The builders
associations welcome people that do those jobs and stays
within that limit. He mentioned that over the years, he has
formed relationships with all the various law enforcers and
that during that time, only one of his requests had been
impacted.
Mr. DeSmet reiterated his support for the legislation.
2:08:17 PM
Vice-Chair Stoltze noted that he supported the requirements
and asked if the banking industry provided any safeguards
around the concern. Mr. DeSmet explained that bankers are
eager to make loans. The building associations prefer not
to spend time mediating problems when the bank is left
holding the bag. In some of situations, the banks do not
deal with the owner/builder. The market is competitive and
the bank has to weigh the options.
Vice-Chair Stoltze questioned if houses in Juneau were
moving so quickly that the banks just "blink and nod". Mr.
DeSmet responded that bankers do not want to deal with
owner/builders but if they have a financial package, the
bank will usually take the risk.
2:10:18 PM
Representative Foster inquired where the examples mentioned
by Mr. DeSmet had occurred. Mr. DeSmet replied in Juneau.
Representative Foster asked which populations of the State,
the bill would be affecting. He indicated his confusion
with the language indicating less than 1,000 residents. Mr.
DeSmet understood that the exemptions apply to what is
indicated in the language and that there would be no
exemptions in Juneau or Anchorage. Co-Chair Meyer
recommended the sponsor answer that query.
Representative Croft summarized that a problem exists
because if there is a problem with the built house, the
builder might not have the bonding or insurance to insure
repairs. The buyer would then have no recourse. Mr. DeSmet
acknowledged that was correct. The buyer could possibly go
after the builder's personal assets.
Representative Croft inquired how much insurance costs per
year. Mr. DeSmet replied for a small volume builder, the
contractors is required to buy a general contractors
license, exclusive for residential, renewable every two
years at $250 dollars. A residential endorsement
requirement is $100 dollars for a two year period; however,
along with that comes the requirement for 16-hours of
continuing education units for every license period. For a
new comer, the handyman stepping into the next realm, there
is an arctic engineering class required. It is not
impossible to take that test and the test is not as
difficult as the administered in California.
Mr. DeSmet noted that it costs about $600 per year for the
bonding of $10,000. Liability insurance has become
problematic and costs $5,000 to $8,000 per year, based on
the gross income sales. A policy limit would be at least
$100,000 dollars. He added that it is getting more
difficult to find liability insurance.
Representative Croft assumed that insurance is the largest
cost. He asked why the "handymen" are not becoming
contractors. Mr. DeSmet responded that through a loophole,
they end up "putting more money in their pocket". Their
selling rates are often the same as the general contractors
but they end up making more money by doing a "cash"
business.
2:16:29 PM
Mr. DeSmet pointed out that it makes the professionals look
bad given the faulty workmanship.
Mr. Bittner revisited Representative Foster's concern noting
that both provisions would have to be met:
· A community would have to be less than a 1,000 and
· Not connected by a road to Fairbanks or Anchorage.
Representative Foster pointed out that Nome would not be
exempt as there are over 1,000 residents. Mr. Bittner
claimed that was correct. He reiterated that if there are
over 1,000 residents, the community does not get an
exemption.
2:18:16 PM
TODD LARKIN, (TESTIFIED VIA TELECONFERENCE), UNREGISTERED
CONTRACTOR, FAIRBANKS, testified against the proposed
legislation, noting that he was a handyman in the Fairbanks
area. He added that he does "punch lists" for registered
general contractors working on projects far in excess of
$5,000 dollars. In current law, it is questionable if
working for those contractors is legal. If the law passes,
he believed that he would be legal one day and a criminal
the next.
Mr. Larkin encouraged the Committee to take an alternative
route that would protect consumers. He commented that the
bill contradicts its own premise. If a citizen is qualified
to act as their own contractor, then that same person should
be qualified to build a house every month. Mr. Larkin
claimed that if occupancy is the standard but which the
problems of poor building appear, at the very least, the
occupancy requirement should be replaced with an
alternative, possibly two years occupancy or three years
rental history with the owner/operator acting as landlord.
He believed that within three years, every consumer problem
would come to light.
Mr. Larkin pointed out that there are strong disclosure laws
in the State of Alaska and that the banks are a self-
policing agent. He believed that could be a powerful force
in the market.
Mr. Larken voiced concern that passage of the legislation
would put him in danger of citation, making his business
practices illegal. He urged that the Committee consider
that the bill would raise rates to consumers. If the goal
is consumer protection, there are other avenues. The
occupancy permit could be augmented by a possible rental
policy or making builders directly liable for the homes that
they build, by making standards statutorily constructed with
a three-year warranty for every house built. He mentioned
costs associated with civil litigation. Mr. Larken believed
that if proof were set in law, the bad builders would go
bankrupt.
2:26:09 PM
DAVE DILLARD, (TESTIFIED VIA TELECONFERENCE), PRESIDENT,
ALASKA HOME BUILDERS, FAIRBANKS, spoke to market
competition. He acknowledged that the industry needs to
have handymen. They need to be included in the market place
for those jobs under $5,000 dollars. However, for projects
over $5,000, it could be possible to work for the general
contractor and then the builder would be covered by
workman's comp. He reiterated that good, qualified handymen
are important.
Mr. Dillard continued, if everyone takes responsibility for
the work that they do, the legislation would not be needed.
The largest problem is the home/owner builder, who sells the
built house quickly. He warned that costs associated with
insurance are high, continuing to "sky rocket" and that
workmen's compensation insurance costs are incredible. This
year, those costs are anticipated to be 26% of the gross
sales. Mr. Dillard urged that the Legislature help to
address these problems.
2:32:52 PM
RICHARD TILLY, (TESTIFIED VIA TELECONFERENCE), ALASKA HOME
BUILDERS, FAIRBANKS, commented on the section of the bill
addressing whether the home was occupied by the builder and
the length of time for occupancy. He emphasized that there
are numerous builders statewide following the rules. The
other ones that are building the homes are not doing the
work legitimately. They are committing a crime.
Mr. Tilly spoke to high insurance costs. He pointed out
that if there were an accident on the premise, it then
becomes the homeowner's responsibility if the builder is not
insured.
Mr. Tilly echoed his support for the bill. He acknowledged
that there is a place for the handyman in the market,
handling jobs under $5,000 dollars. He requested that the
Legislature deal with the builders that are circumventing
rules and laws.
2:34:59 PM
JACK HEBERT, (TESTIFIED VIA TELECONFERENCE), ALASKA HOME
BUILDERS, FAIRBANKS, noted that he has been designing and
building in Interior Alaska since 1973. He urged passage of
the legislation. He agreed that the tradition of building
ones own homes is ingrained and clearly what the
owner/builder is all about. However, Alaska has grown in
complexity and the costs of being in business are
complicated and expensive. The issue needs to be addressed
and must be regulated. He stressed that the liabilities are
"killers" for the industry.
Representative Holm asked if the legislation would have
ramifications on "closed shop" in the industry or required
union participation versus non-union work. Mr. Hebert
responded that he is personally is an "open" union shop.
The option is given on the residential side. He noted that
his agreement with the union is that he can hire either
union or non-union workers. He noted that working with the
Fairbanks unions has been flexible. He pointed out that
workers sometimes prefer the union option so that they can
get affordable health insurance. He commented that union
involvement was not the issue.
2:39:52 PM
MIKE MUSICK, (TESTIFIED VIA TELECONFERENCE), PRESIDENT,
INTERIOR BUILDING ASSOCIATION, FAIRBANKS, voiced support for
the legislation. He pointed out that the difference between
himself and the handyman is that the general contractor has
to go through 16 hours continuing education every year two
years in order to be able to better understand the physics
of how buildings operate. That differs from someone coming
in from out of state. He informed members that those
trainings relate to Alaskan concerns. He urged that the bar
be raised so that all builders are trained properly.
Representative Holm mentioned vapor barrier concerns. Mr.
Musick explained that when vapor barriers are improperly
installed, the relative humidity and temperature can rot the
structure to the extent that it could break the framing
within five years.
2:43:03 PM
JEREMY RIDDLE, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS,
commented on his personal business practices. He pointed
out that those that are operating illegally had undercut
him. He emphasized that a handyman license allows a builder
to be in business with zero overhead. When someone does not
have to carry the expense of insurance and bonding undercuts
the contractor, it puts all employees at risk. Builders
cannot compete with someone that is not carrying the burden.
Mr. Riddle stressed that the legislation would protect the
consumer and eliminates unfair advantages for the "owner-
builder" contracts.
ROGER NASH, (TESTIFIED VIA TELECONFERENCE), REALTY
APPRAISER, FAIRBANKS, spoke in support of HB 81. He noted
that responsibility for quality falls back to the appraiser.
WALLY SMITH, (TESTIFIED VIA TELECONFERENCE), GENERAL
CONTRACTOR, FAIRBANKS, voiced support for the legislation.
He noted that he does small remodel projects and deals with
handymen that do not have education, insurance or consumer
protection. He urged that the regulations be enforced.
WILLIAM BRUU, (TESTIFIED VIA TELECONFERENCE), INSPECTOR,
MATSU, addressed the exemption of applying the bill in rural
Alaska. He recounted numerous homes he had inspected in
rural Alaska. He felt that the rules should be enforced.
That part of Alaska should no longer be exempted as the
legislation is designed to protect the consumer. Rural
Alaska is being "victimized" by contractors that are not
licensed or bonded.
Vice-Chair Stoltze pointed out that there are fewer rural
exemptions than in the past. Mr. Bruu asked that any
exemption in rural Alaska be eliminated, as it is unfair to
those people living in such severe conditions.
ROCKWELL SMITH, (TESTIFIED VIA TELECONFERENCE), PREFERRED
PLUMBING AND HEATING, KENAI, testified in support of HB 81.
He noted that he has held an Alaskan plumbing license and
has been a mechanical contractor for 25 years, with over 15
full-time employees. He provided an overview of the
building process on the Kenai Peninsula. Inside the city
limits of Kenai, Soldotna & Seward, general contractors must
apply for a building permit and post bond permits at the job
site before beginning.
Mr. Smith overviewed a list of licensing infractions that he
had seen in the recent past. He sited specific examples.
The problem is not with competition but with unfair
competition, poor workmanship and improper training, which
can result in hazardous situations and code violations. The
concerns can be remedied. Laws need to be enforced as well
as the penalties.
Mr. Smith pointed out at present, the impetus to take the
mechanical, electrical, or general contractors exam, obtain
insurance and bonding, and complete the continuing education
required in order to retain the license is non-existent. He
stressed that enforcement is lax, penalties are weak, and
the building community has a "blind eye" to the violations,
which costs honest, legitimate businesses money,
shortchanges consumers, and undermines public safety
standards and building codes.
3:03:08 PM
Vice-Chair Stoltze asked if it is difficult to get a
building permit in Juneau.
ALAN WILSON, SOUTHEAST ALASKA BUILDING ASSOCIATION, JUNEAU,
replied that it is difficult. He echoed sentiments of
previous testimony regarding the urgent need for the
legislation.
3:04:15 PM
Co-Chair Meyer noted that the bill would be held in
Committee to address some of the issues raised.
HB 81 was HELD in Committee for further consideration.
3:04:58 PM
SENATE BILL NO. 60
An Act extending the termination date of the Statewide
Suicide Prevention Council; and providing for an
effective date.
SHANNON STRAUBE, STAFF, SENATOR BEN STEVENS, stated that
suicide is an Alaskan tragedy. On average, suicide takes
130 Alaskans every year, which is nearly twice the national
average. With Alaska's large geography, multiple cultures,
and many communities, addressing suicide is a complicated
matter.
nd
Ms. Straube continued, in 2001, the 22 Alaska State
Legislature enacted legislation that created the Statewide
Suicide Prevention Council (SSPC) and tasked it with the
mission to reduce suicide through coordination with public
and private entities as well as its own initiatives, and
broaden suicide awareness. Under A.S. 44.29.350, the
Council is charged with advising the Legislature and the
Governor on "actions that can and should be taken to improve
health and wellness throughout the State by reducing suicide
and its effect on individuals, families and communities."
The Council is made up of 15 members. In addition to
legislative and executive branch members, there are nine
public members. The public appointments represent a broad
spectrum of individuals from rural and urban communities,
clergy, youth, and behavioral health community. There is
one part-time staff person to coordinate council activities.
Ms. Straube noted that among the Council's accomplishments
is a statewide suicide prevention plan. The plan sets up
goals and strategies for suicide prevention. Currently, the
Council is also in the process of implementing a Follow Back
Study and a public awareness campaign. The media campaign
fulfils the Council's mission to educate Alaskans on suicide
and its devastating effects.
Ms. Straube continued that the findings from a recently
conducted sunset audit recommend the SSPC continue the work
of research, broadening public awareness, collaborating
prevention and intervention efforts around the State and in
making recommendations to the Governor and Legislature.
Ms. Straube concluded that SB 60 extends the termination
date of the Council to 2009, which will allow the statewide
Suicide Prevention Council to continue in the work.
3:07:43 PM
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, noted that the Division conducted an audit to
determine if the termination date for the Suicide Prevention
Council should be extended.
She pointed out that the Council advises the Legislature and
the Governor on suicide and suicide prevention in Alaska.
Recently, the Council completed a statewide suicide
prevention plan, which establishes goals and strategies for
suicide prevention. The Council has been providing suicide
prevention training, coordinating statewide suicide
prevention efforts and provides technical assistance to
communities as they develop their own plans. The Council
has been operating in public interest in a manner consistent
with its statutory responsibilities.
Ms. Davidson noted that the termination date for the Council
is June 30, 2005; the Division recommends that the
termination date be extended until June 30, 2009.
She continued, during the review, the Division identified
that Council funds were misspent by the Department of Health
and Social Services. Additionally, unclear communications
between the Department and the Council about available funds
resulted in the Council curtailing some activities and
ultimately, lapsing over 60% of the original funding.
Ms. Davidson advised that in the report, the Division has
made recommendations for improvements including:
· 1. That the community based suicide prevention
grants issued by the Department of Health and Social
Services, conform to the recently developed
statewide suicide prevention plan. The Division is
not recommending that the Council become involved in
the grant making process; rather the Department of
Health & Social Services staff modify the grant
application process so that communities read the
statewide suicide prevention plan and certify that
the grant for their local plan is consistent with
the State plan.
· 2. That the Department of Health and Social Services
establish a more formalized and helpful system of
reporting financial information to the Council. It
is not clear where the flow of financial information
between the Department and the Council went awry.
However, given the Department's resources and
sophistication in obtaining financial information,
the Division believes it is incumbent on them to
ensure the Council clearly understands their
financial situation.
· 3. Besides the lack of effective access to FY04
funds, the Council was hampered by delays in
appointment of members. The Legislative Audit
Division recommends that the Office of the Governor
make appointments to the Council in a timely manner.
3:11:21 PM
Co-Chair Chenault voiced his appreciation that the Division
had provided important information. He noted his concern
with the impact of the fiscal note.
Representative Hawker requested further information
regarding the fiscal note.
Ms. Davidson referenced Page 6 of the Audit Report. (Copy
on File). Page 6 provides a summary of the FY04 spending.
· $35,000 dollars was spent on Council related
activities, which represents 20% of the budget.
· $32,000 was spent for office furnishings for the
information technology systems within the
Department. The Division has identified that as a
concern. Statute addresses reimbursable service
agreements and requires that services be billed on
actual and specific costs or a cost allocation
methodology. Those costs were not specified costs.
The Division looked at the reasonableness of that
amount coming out of the budget. The cost did not
have an allocation plan.
· The Council lapsed $95,000 dollars into various
working reserves accounts in the general fund.
Representative Hawker voiced concern that the Administration
had placed the Council in that situation. The Reimbursable
Service Agreement (RSA) makes the legislative budget
difficult. He questioned the furniture costs for the
Council. Ms. Davidson stated that those funds were used to
purchase furnishings for the information technology group.
Representative Hawker emphasized that problem, and that the
Committee should address it. He questioned if there was a
mechanism in place to help keep spending in line.
Ms. Davidson advised that spending was a violation of
statute. A small cost associated with the Council could be
used in support of department-wide information technology,
but clearly not that amount of their budget. There are
statutes in place to prevent that. She did not know of
anything that could be done on a budgetary basis.
3:17:06 PM
Representative Hawker stated that would be an appropriate
question for the Department.
DIANE CASTO, MANAGER, PREVENTION AND EARLY INTERVENTION
SERVICES FOR THE DIVISION OF BEHAVIOR HEALTH, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES, advised that she had been a part
of the conversations regarding the audit and the concerns of
the Department. The Department is aware of these concerns
and is committed to "not falling down that road again".
They have made a commitment to monitor the actions more
carefully. The Department was in the midst of a major
reorganization and new people were coming in and out of the
newly formed Division of Behavioral Health. The Council was
one of the entities that got "lost" as their coordinator had
quit. Ms. Casto pointed out that there are many oversights
that lead to the confusion. She reiterated that the
Department is committed to doing better monitoring.
Vice-Chair Stoltze stated that the Suicide Prevention
Council is so important and that he felt outraged at that
type of abuse.
3:20:14 PM
Representative Joule inquired if the bill would be held in
Committee. Co-Chair Meyer replied that it would and
requested that the Department be present with the Director
of Administrative Services.
Representative Joule noted that the Council has been tasked
with very heavy responsibilities and that the Legislature
cannot sit by idly with that type of interference.
Co-Chair Chenault expressed how "upsetting" it is to see
that amount of money being spent on such projects. The
Council is tasked with an important job and if they do not
have the ability to run the Council in an appropriate way,
then they are impaired.
Co-Chair Chenault questioned what has happened on the
Council since inception. He requested that a Council member
be present at the next meeting to discuss these concerns.
He wanted to know their goals in the future and how that
money related to what has been spent.
3:23:50 PM
Representative Weyhrauch pointed out that the Director of
the Division of Administrative Services also the Finance
Manager of Services, should be present to discuss these
concerns. He reiterated the importance of the questions.
He pointed out the fact that the auditor assessed the
situation and the Department's response was defensive. He
th
referenced a letter dated December 27, 2004.
Representative Weyrauch urged more accountability.
3:25:13 PM
Representative Joule asked if the Council was closer to
hiring a coordinator. Ms. Casto noted that Kathy Kraft is
the current coordinator for the Council, as part time work.
Originally, it was a full time position and Mary Carlson was
then the coordinator. The current plan is to look for a
more permanent fulltime coordinator. Ms. Casto did not know
the timeline.
Representative Hawker recommended that the Committee "expand
the thought process" regarding the issue. He stated that
there are a number of councils that are not consolidated
within the Department of Health & Social Services budget
such as:
· Mental Health Board
· Alcohol and Drug Abuse Advisory Board
· Commission on Aging
· Suicide Prevention Council
Representative Hawker recommended a more consolidated
approach, which might provide a better management structure.
He asked consideration of the discussion whether or not
there could be a more effective manner in dealing with the
concerns and bring them together in a more consolidated
approach.
3:28:21 PM
Co-Chair Meyer noted that SB 60 would be held for further
deliberation.
SB 60 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 3:29 P.M.
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