Legislature(2013 - 2014)Anch Temporary LIO
08/06/2014 01:30 PM Senate LEGISLATIVE BUDGET & AUDIT
| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Executive Session | |
| Other Committee Business | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
August 6, 2014
1:34 p.m.
MEMBERS PRESENT
Senator Anna Fairclough, Chair
Senator Kevin Meyer
Senator Cathy Giessel
Representative Alan Austerman (via teleconference)
Representative Bob Herron (via teleconference)
Representative Kurt Olson
Representative Andy Josephson
MEMBERS ABSENT
Representative Mike Hawker, Vice Chair
Senator Click Bishop
Senator Mike Dunleavy (alternate)
Representative Scott Kawasaki (alternate)
Representative Bill Stoltze (alternate)
OTHER LEGISLATORS PRESENT
Senator Hollis French
COMMITTEE CALENDAR
APPROVAL OF MINUTES
EXECUTIVE SESSION
OTHER COMMITTEE BUSINESS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
REPRESENTATIVE PAUL SEATON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented a request for an audit of the
Commercial Fisheries Entry Commission.
KRIS CURTIS, Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the special audit
request of the Commercial Fisheries Entry Commission.
ACTION NARRATIVE
1:34:00 PM
CHAIR ANNA FAIRCLOUGH called the Legislative Budget and Audit
Committee meeting to order at 1:34 p.m. Senators Meyer,
Giessel, and Fairclough and Representatives Herron (via
teleconference), Austerman (via teleconference), and Josephson
were present at the call to order.
^Approval of Minutes
Approval of Minutes
1:34:44 PM
CHAIR FAIRCLOUGH announced that the first order of business
would be the approval of the minutes.
SENATOR GIESSEL made a motion to approve the minutes of July 17,
2014. There being no objection, the minutes from the meeting of
July 17, 2014 were approved.
^Executive Session
Executive Session
1:35:07 PM
CHAIR FAIRCLOUGH announced that the committee would move into
executive session to discuss confidential committee contracts
and confidential audit reports.
SENATOR GIESSEL made a motion to move to executive session for
the purpose of discussing confidential committee contracts under
Uniform Rule 22(b)(1) and 22(b)(3), and for the purpose of
discussing confidential audit reports under AS 24.20.301. There
being no objection, the committee went into executive session at
1:35 p.m.
3:17:01 PM
CHAIR FAIRCLOUGH brought the committee back to order at 3:17
p.m. Senators Meyer, Giessel, and Fairclough, and
Representatives Austerman (via teleconference), Herron (via
teleconference), and Josephson were present at the call back to
order. Senator French joined the committee during a portion of
the executive session. Representative Olson arrived as the
meeting was in progress.
3:18:00 PM
SENATOR GIESSEL made a motion for the following preliminary
audits to be released to the appropriate agency for response:
Department of Revenue, Oil and Gas Tax Audit Process;
Department of Revenue, Alaska Film Production
Incentive Program;
Department of Commerce, Community & Economic
Development, Alcoholic Beverage Control Board (ABC)
Sunset Review;
Department of Commerce, Community & Economic
Development, Certified Direct-Entry Midwives Sunset
Review; and
Department of Commerce, Community & Economic
Development, Regulatory Commission of Alaska, FY 13
Annual Report.
There being no objection, it was so ordered.
^Other Committee Business
Other Committee Business
3:18:40 PM
CHAIR FAIRCLOUGH directed attention to a request for contract
funding by the Division of Legislative Audit.
SENATOR GIESSEL moved that the Legislative Budget and Audit
Committee approve the scope of work for Janak Mayer and Nikos
Tsafos.
REPRESENTATIVE JOSEPHSON remarked that as previously stated he
does not object to any legislator obtaining additional expertise
on a topic.
There being no objection, the scope of work was approved.
3:19:22 PM
SENATOR GIESSEL moved to approve the proposal and monthly
retainer for Janak Mayer in the amount not to exceed $10,000 per
month, excluding expenses through the term of the contract.
There being no objection, it was so ordered.
3:19:42 PM
SENATOR GIESSEL moved to approve the proposal and monthly
retainer for Nikos Tsafos in the amount not to exceed $10,000
per month, excluding expenses through the term of the contract.
There being no objection, it was so ordered.
3:20:01 PM
CHAIR FAIRCLOUGH related the Legislative Budget and Audit
Committee had previously discussed performance review audits for
the Department of Health and Social Services as required by
legislation [HB 30 - 28th Legislature] that passed the
legislature two years ago. She reported that Legislative Budget
and Audit Committee has been in the midst of the first review
for the Department of Corrections and this action, [to solicit
and award contracts to conduct the Department of Health and
Social Services' performance review] will keep the legislature
on track to meet the requirements under the bill.
3:20:34 PM
SENATOR GIESSEL moved to approve the performance review scope of
work for the Department of Health and Social Services as
presented to the committee. There being no objection, it was so
ordered.
3:20:52 PM
SENATOR GIESSEL moved to authorize the legislative auditor to
solicit an award of contract for an amount not to exceed
$325,000 for a performance review of Department of Health and
Social Services' delivery and administration of behavioral
health services. There being no objection, it was so ordered.
3:21:20 PM
SENATOR GIESSEL moved to authorize the legislative auditor to
solicit an award of contract for an amount not to exceed
$375,000 for a performance review of Department of Health and
Social Services' delivery and administration of long-term care
services. There being no objection, it was so ordered.
3:21:41 PM
SENATOR GIESSEL moved to authorize the legislative auditor to
solicit an award of contract for an amount not to exceed to
$250,000 for a performance review of Department of Health and
Social Services' organizational structure. There being no
objection, it was so ordered.
CHAIR FAIRCLOUGH, in response to a question, agreed that the
committee had approved Janak Mayer's supplemental contract.
3:22:39 PM
CHAIR FAIRCLOUGH announced that the next item before the
committee would be a special audit request from Representative
Seaton.
3:22:48 PM
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, (via
teleconference) directed attention to his request for an audit
of the Commercial Fisheries Entry Commission (CFEC) with a focus
on opportunities for consolidation [letter dated July 30, 2014].
He also referred to last year's sponsor statement for HB 386,
which was introduced to consider transferring the CFEC to a
division within the Alaska Department of Fish & Game (ADF&G)
[items included in members' packets]. He explained the primary
reason to transfer the CFEC's function to ADF&G is to address
the budgetary constraints and achieve efficiencies.
REPRESENTATIVE SEATON provided a brief history of the Commercial
Fisheries Entry Commission, stating the commission has performed
well since it was established in 1973 to develop a commercial
fisheries limited entry permit system and adjudicate permit
fisheries matters in Alaska. In 2005, the CFEC's commissioners
heard 86 cases and had 95 pending cases, but by 2013 the
caseload had declined and the commission held hearings on only 6
cases with 22 cases pending. The state already had established
its limited entry fisheries and no new limited entry fisheries
were created in the past ten years. Further, he indicated that
the Commercial Fisheries Entry Commission is an expensive
agency, noting that in FY 15 the staffing level is 31 employees.
REPRESENTATIVE SEATON acknowledged the Commercial Fisheries
Entry Commission (CFEC) has performed well, but due to declining
cases the question arises as to whether the duties of the
commission can better be performed by the Alaska Department of
Fish & Game (ADF&G). The Office of Administrative Hearings
(OAH), Department of Administration, has since been established
more recently and the OAH's hearing officers would be available
to hear commercial fisheries' cases.
REPRESENTATIVE SEATON summarized his request, which is for
legislative auditors to review and determine whether the
Commercial Fisheries Entry Commission's services could be
combined with the Alaska Department of Fish & Game to achieve
cost savings. He indicated some overlap exists, noting the
ADF&G currently issues commercial fishing crewmember licenses
and the CFEC issues limited entry permits. However, these
functions are primarily administrative ones that can be
performed electronically. He concluded that the proposed
special audit will determine if it makes sense to transfer the
CFEC to the ADF&G. He emphasized that his audit request is not
intended to any way degrade the job the CFEC has done, but to
determine whether it has outgrown its independent usefulness.
3:27:01 PM
CHAIR FAIRCLOUGH asked whether Representative Seaton has worked
with the legislative auditor.
REPRESENTATIVE SEATON answered yes.
CHAIR FAIRCLOUGH asked whether Ms. Curtis, Legislative Auditor,
could verify that a measureable opportunity exists to seek
consolidation or at least oversight and review.
3:27:23 PM
KRIS CURTIS, Legislative Auditor, Division of Legislative Audit,
Alaska State Legislature, explained that the legislative audit's
staff has already conducted some inquiries and interviews of the
CFEC and the ADF&G and she helped draft the audit request. She
offered her belief that the points outlined in Representative
Seaton's request are auditable points and the division can
provide a report that accurately summarizes the results.
3:27:46 PM
REPRESENTATIVE JOSEPHSON asked whether the audit will include
dissenting views from CFEC's advocates to outline what would be
given up with the proposed transfer. He acknowledged that he
didn't have expertise in this area, but he assumed the audit
would include this information.
MS. CURTIS answered that the audit would review information at
each agency. The process would involve interviewing staff,
although she noted there isn't a public hearing component.
Certainly, if auditors became aware of dissenting views, the
division would consider them as the audit procedures were
structured. Thus far, nothing blatant came up during the
initial inquiries with staff. She said the division's approach
will be to assess current the CFEC's staff duties and determine
if those functions could be absorbed by the ADF&G. She
indicated that she was initially concerned about legislative
intent so the division researched the CFEC's enabling
legislation and committee minutes to gain an understanding of
why the commission was independent, prior to changing that
status.
3:29:30 PM
REPRESENTATIVE JOSEPHSON said he wasn't questioning the
motivation for transferring the CFEC's function, especially
since Representative Seaton has applauded the commission's work.
Although he does not object to the audit, he would like to
ensure that all sides were heard.
REPRESENTATIVE SEATON clarified that HB 386 was introduced in
the last week of session to start the conversation. He related
that the CFEC's commissioners attended the initial hearing and
he didn't recall any objections, but questions were raised on
most effective timing to consolidate the commission. In
addition, the commission understands its caseload is winding
down and only two of three commissioners have been appointed.
He reiterated the purpose of the special audit is to have an
effective review of the commission.
3:30:46 PM
REPRESENTATIVE AUSTERMAN questioned the fee structure. He
related that in prior years the CFEC's revenue was generated
from fee assessments on the fishing industry, based on the type
of fishery and size of the fishing vessels. He specifically
asked whether the audit will consider the fee structure. He
related his understanding that several million in excess fees
reverted back to the state.
MS. CURTIS replied that the division asked the Legislative
Finance Division about the excess revenues. She reported that
the excess revenues were directed to the FY 16 Capital Budget.
REPRESENTATIVE AUSTERMAN interjected that except for recent
years, the CFEC's excess revenues were directed to the ADF&G's
budget.
MS. CURTIS responded that the use of the funds is not currently
included as an object of the audit; however, the audit could
include a report on excess fees and the use of those fees if the
Legislative Budget and Audit Committee would like to add it.
REPRESENTATIVE AUSTERMAN answered that it seemed appropriate as
part of the legislature's review, noting the fees are set by
regulation.
REPRESENTATIVE SEATON said he is not opposed. He clarified that
the fees in question are designated general fund (DGF) revenue
and not unrestricted general fund (UGF) revenue. He emphasized
that at a time when the legislature is making big cuts to the
ADF&G's budget, that fees being generated from commercial fish
should be used for management of fish and game.
3:33:51 PM
CHAIR FAIRCLOUGH asked whether there is any objection to adding
the [fee structure] as a criterion for the audit.
SENATOR MEYER asked for further clarification on the amount.
REPRESENTATIVE AUSTERMAN recalled the contribution to the
general fund has ranged from $1.5 to $2 million. Most of these
funds have benefited the fishing industry in the form of
supporting improvements to fish hatcheries.
3:34:42 PM
CHAIR FAIRCLOUGH confirmed that Representative Herron did not
have any questions or comments.
3:35:01 PM
MS. CURTIS related her understanding that the audit would report
on the excess fees generated by the Commercial Fisheries Entry
Commission and the use of the fees. She asked for further
clarification on the timeline for how far to go back and if five
years is sufficient.
CHAIR FAIRCLOUGH asked whether Representative Austerman had a
specified period in mind for the timeline.
REPRESENTATIVE AUSTERMAN answered that a five year review would
be fine.
3:35:57 PM
SENATOR GIESSEL moved to approve Representative Seaton's
request, as amended, for a special audit of the Commercial
Fisheries Entry Commission. There being no objection, it was so
ordered.
3:36:21 PM
CHAIR FAIRCLOUGH announced that the last item under other
committee business would be an Education Study Subcommittee
outlined in the education bill [HB 278] that passed the
legislature this year. She appointed the following members to
serve on a subcommittee to develop the scope of work for the
request for proposal (RFP) for two education studies: Senator
Fairclough, Chair; Senators Giessel and Dunleavy; and
Representatives Hawker, Josephson, and Herron.
CHAIR FAIRCLOUGH confirmed that Senators Giessel and Dunleavy,
and Representatives Hawker, Herron, and Josephson have agreed to
serve.
3:38:11 PM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
3:38 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| LB&A Minutes 7.17.pdf |
JBUD 8/6/2014 1:30:00 PM |
|
| CFECAuditRequest.pdf |
JBUD 8/6/2014 1:30:00 PM |