Legislature(2019 - 2020)SENATE FINANCE 532
03/30/2020 09:00 AM Senate LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Executive Session | |
| Special Audit Requests | |
| 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
March 30, 2020
9:05 a.m.
MEMBERS PRESENT
Representative Chris Tuck, Chair
Representative Neal Foster
Representative Andy Josephson
Representative Ivy Spohnholz
Representative Jennifer Johnston (alternate)(via teleconference)
Senator Click Bishop, Vice Chair (via teleconference)
Senator Bert Stedman
Senator Cathy Giessel
Senator Natasha von Imhof (via teleconference)
Senator Bill Wielechowski (alternate)
MEMBERS ABSENT
Representative Mark Neuman
Senator Lyman Hoffman
OTHER LEGISLATORS PRESENT
Representative Bryce Edgmon
COMMITTEE CALENDAR
APPROVAL OF MINUTES
EXECUTIVE SESSION
SPECIAL AUDIT REQUESTS
OTHER COMMITTEE BUSINESS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
AURORA HAUKE, Staff
Representative Chris Tuck
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced the audit request for a follow
up to the 2018 Alaska Mental Health Trust Authority on behalf of
Representative Tuck.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Answered questions during discussion of the
audit requests.
TOM WRIGHT, Staff
Senator Mia Costello
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the audit request of the Alaska
State Commission for Human Rights on behalf of Senator Costello.
ACTION NARRATIVE
9:05:22 AM
CHAIR CHRIS TUCK called the Legislative Budget and Audit
Committee meeting to order at [9:05] a.m. Representatives Tuck,
Spohnholz, Foster, and Josephson and Senators Stedman, Giessel,
Wielechowski (alternate), Bishop (via teleconference), and von
Imhof (via teleconference) were present at the call to order.
Representative Johnston (alternate)(via teleconference) arrived
as the meeting was in progress.
^Approval of Minutes
Approval of Minutes
9:06:13 AM
CHAIR TUCK announced that the first order of business would be
approval of the minutes.
9:06:18 AM
SENATOR BISHOP made a motion to approve the minutes of the
Legislative Budget and Audit Committee of February 28, 2020.
There being no objection, the minutes from the meeting of
February 28, 2020 were approved.
^Executive Session
Executive Session
9:07:20 AM
CHAIR TUCK announced that the next order of business would be
executive session.
9:08:44 AM
SENATOR BISHOP made a motion to move to executive session under
Uniform Rule 22(b)(3), discussion of matters that may, by law,
be required to be confidential, for the purpose of discussing
confidential audit reports under AS 24.20.301. There being no
objection, the committee went into executive session at 9:09
a.m.
9:09:21 AM
The committee took an at-ease from 9:09 a.m. to 10:07 a.m. for
the purpose of executive session.
10:07:20 AM
CHAIR TUCK brought the committee back to order at 10:07 a.m.
Representatives Tuck, Spohnholz, Foster, Josephson, and Johnston
(alternate)(via teleconference) and Senators Stedman, Giessel,
Wielechowski (alternate), Bishop (via teleconference), and von
Imhof (via teleconference) were present at the call to order.
Also in attendance was Representative Edgmon (via
teleconference).
10:08:23 AM
SENATOR BISHOP made a motion that the State of Alaska Single
Audit for the Fiscal Year ended June 30, 2019, be released as a
final public report. There being no objection, the State of
Alaska Single Audit for the Fiscal Year ended June 30, 2019, was
released to the agencies for response.
^Special Audit Requests
Special Audit Requests
10:08:57 AM
CHAIR TUCK announced that the next order of business would be
requests for special audits. He pointed out that the executive
summary from the 2018 audit and the final report from the Alaska
Mental Health Trust Authority were also included in members'
packets.
10:09:41 AM
AURORA HAUKE, Staff, Representative Chris Tuck, Alaska State
Legislature, explained that this special audit request was a
follow-up request for the 2018 Alaska Mental Health Trust
Authority special audit which found that the Trust Authority was
not transferring funds meant to be transferred to the Mental
Health Trust fund managed by the Alaska Permanent Fund
Corporation. She reported that the money had, instead, been
used to purchase real estate, which was in violation of statute
and the Weiss v. State settlement. She added that there were
four recommendations on the 2018 audit, and there was intent
language in the fiscal year 2020 (FY 20) Operating Budget which
requested a final report in November. She directed attention to
this report [included in members' packets] in which the Alaska
Mental Health Trust Authority claimed to have dealt with all the
recommendations. She explained that this current request for a
special audit was a follow up to ensure that these actions were
taken in a manner that complied with law. She added that the
special audit would also review whether any of the policies and
procedures in place allowing these actions had been updated.
10:11:19 AM
SENATOR STEDMAN offered his agreement with this follow up. He
paraphrased line item 4 as addressing other issues concerning or
identified by the Legislative Audit Division during the audit.
He asked for [a new line item] to include an update on the real
estate holdings that were in question. He offered his belief
that it should be made clear for the expressed interest of
bringing this to a final resolution.
CHAIR TUCK expressed his agreement for a list of the assets and
purchases.
10:12:58 AM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, referencing the proposed
addendum to the special audit request, asked whether "provide a
current status of the real estate holdings" was sufficient.
[CHAIR TUCK indicated his agreement.]
SENATOR STEDMAN asked whether this could also include a request
for the intent of the assets still held by the Alaska Mental
Health Trust Authority.
CHAIR TUCK clarified that [the proposed line item] would include
an update to the current status of the real estate holdings and
for the Alaska Mental Health Trust Authority Board to report the
intent for the use of these holdings.
10:14:18 AM
SENATOR BISHOP made a motion that the Legislative Budget and
Audit Committee approve the request for an audit of the Alaska
Mental Health Trust Authority. There being no objection, it was
so ordered.
10:14:42 AM
CHAIR TUCK announced that the next special audit request for
consideration was an audit of the Alaska State Commission for
Human Rights.
10:14:53 AM
TOM WRIGHT, Staff, Senator Mia Costello, Alaska State
Legislature, reported that this audit request asked to determine
whether the Alaska State Commission for Human Rights was
investigating complaints in a timely manner, to determine how
many and what type of complaints were investigated, to determine
how many days it takes to resolve complaints, and to determine
the reason for delayed resolutions. This audit would determine
whether the commission was investigating complaints in
accordance with the internal policy for promptness, as outlined
in state law, which required informal investigation of a filed
complaint promptly and impartially; this audit would gain an
understanding and report on the work sharing agreement by the
Commission with the federal Equal Employment Opportunity
Commission; this audit would identify and report the steps
taken by the Commission to seek and eradicate discrimination;
and, finally, this audit would determine the current status of
prior audit recommendations.
MS. CURTIS, in response to Senator Giessel, explained that there
had been two previous, fairly comprehensive audits of the Alaska
State Commission for Human Rights with similar objectives. One
had been completed in 2000 and the other completed in 2011.
CHAIR TUCK asked whether these audits were for the same scope or
whether this was a special audit request asking for additional
information.
MS. CURTIS replied that this was a similar request.
REPRESENTATIVE SPOHNHOLZ asked about the findings in those two
audit reports.
MS. CURTIS replied that there were findings, which had to do
with certain actions to help with the timeliness of the cases.
She added that, as the commission had been too busy trying to
get cases caught up, they were not doing many actions.
CHAIR TUCK asked for the length of time to close complaints.
MS. CURTIS said that she did not remember, although there were
sometimes years of delay.
REPRESENTATIVE JOSEPHSON shared that his office had a proposed
bill to expand the jurisdiction of the Alaska State Commission
for Human Rights to include non-profit organizations. He
reported that currently there were about 40,000 Alaskans who
would have to take any claims for discrimination to the federal
Equal Employment Opportunity Commission.
10:18:43 AM
SENATOR BISHOP made a motion to approve the special audit
request for an audit of the Alaska State Commission for Human
Rights. There being no objection, it was so ordered.
^Other Committee Business
Other Committee Business
10:19:12 AM
SENATOR GIESSEL directed attention to a letter, dated March 26,
2020, related to a contract entered into by the Legislative
Budget and Audit Committee on March 19, 2020. She explained
that the purpose of the contract as stated was to evaluate the
sale of British Petroleum [BP plc] assets to Hilcorp [Energy
Company]. She acknowledged that, although the chair of the
Legislative Budget and Audit Committee had signature authority
to enter into contracts without notification to the committee
members, she had concern with the contract based on the
individual chosen and the jurisdiction of the Alaska State
Legislature over private sector financial exchanges.
CHAIR TUCK relayed that there had been discussion for
determining the role of the Alaska State Legislature during a
House Resources Standing Committee meeting. He opined that the
contract referenced the role of the legislature for making any
decisions on behalf of the State of Alaska. He questioned the
function of the dismantlement, removal, and restoration book
entry, its relationship to tariffs through the Trans-Alaska
Pipeline System, and whether this was deductible. He added that
not only did he have questions, but the House Resources Standing
Committee also had questions.
10:21:49 AM
SENATOR STEDMAN acknowledged that "this was a new issue to me,
too." He asked why someone from the outside had been
contracted, and why the Legislative Budget and Audit Committee
and the Legislative Legal Services staff were not asked to
figure this out. He questioned whether the Alaska State
Legislature had any role in the review of private party
commercial transactions. He offered his belief that this
question was "rudimentary and, quite frankly, not very complex
as far as our role."
CHAIR TUCK shared that he had thought to ask an existing
consultant; however, the rates being paid to those consultants
were higher and he had preferred to have a consultant here in
Juneau. He reported that the consultant had worked with the
Department of Law and was "very knowledgeable on oil and tax
issues."
10:23:47 AM
SENATOR VON IMHOF directed attention to Clause 1, Section 3, of
the contract, which stated identification of the state statutes
that may be amended or added to help protect the state's
interest in future transfers of Alaska oil and gas assets. She
offered her belief that this was "a little bit more granular
than what's the state's role." She opined that this allowed for
manipulation or change to the statutes to increase or decrease
the cash coming to the state. She offered her belief that this
was beyond the originally described scope. She declared that
she had concern for that statement.
CHAIR TUCK opined that these were recommendations for any
possible legislation to protect the best interests of Alaska.
He offered his belief that this was not the intent, and he
reported that his intent was to ensure that Alaska's interests
were protected.
10:25:13 AM
SENATOR VON IMHOF directed attention to the passage that state
statutes may be amended or added to help protect the states
interests in future transfers and declared that this seemed "a
little pointed." She asked whether the state's interests were
monetary, and how that was defined. She asked why statutes
would be changed and expressed her concern that this was being
reactive to a specific sale. She said, "this just seems a
little odd to me."
CHAIR TUCK agreed that the contract was "pretty general, it's
pretty open" and it was not very specific. He reiterated that
his desire was to protect the best interests of Alaska.
10:26:31 AM
REPRESENTATIVE SPOHNHOLZ acknowledged that the contract had been
awarded to a person with a unique background which allowed for a
quick, substantive analysis. She expressed her understanding
for the concerns of Senator von Imhof for the contract being
reactive to a specific field and company. However, given the
importance of the North Slope to the "state's balance book, it's
important that we have a very clear understanding of what sort
of the risks are to the State of Alaska." She noted that any
additional information and analysis for the Alaska State
Legislature could be useful.
10:27:35 AM
SENATOR BISHOP explained that this contract was prospective and
did not concern the immediate sale.
CHAIR TUCK added that this was a learning opportunity.
SENATOR BISHOP shared that during a meeting in October, it was
apparent that the Department of Natural Resources "would scrub
this from a to z," and he offered his belief that the Department
of Revenue would also have as much say regarding this proposed
sale.
10:28:40 AM
SENATOR STEDMAN reflected on the demolition and restoration of
the oil fields area, not including the Trans-Alaska Pipeline
System, and how that would be structured and viewed in the
future. He pointed out that, as the infrastructure would need
to be removed and the gravel pads and the roads would need to be
picked up, it would be good to have an understanding. He
recommended that the Chairs of Legislative Budget and Audit
Committee and Legislative Council exercise their authority for
entering into contractual arrangements for studies and work and
share that action with their vice chairs to ensure good
communication between the bodies as these were joint committees.
He shared an anecdote of issues created by a prior chairman of
Legislative Budget and Audit Committee.
10:31:36 AM
SENATOR GIESSEL moved attention back to the contract. She
reflected on a long joint House Resources Standing Committee and
Senate Resources Standing Committee meeting on this subject in
February. She reported that the Department of Natural Resources
and the Department of Environmental Conservation had testified.
She pointed out that the contract did not "call out"
dismantlement, removal, and restoration even as it was
extensively discussed in that hearing. She declared that the
contract was very vague and was not specific to dismantlement,
removal, and restoration. She expressed her concern for
impartiality, noting that the individual selected for the
contract had published many opinion pieces, printed documents,
and testified publicly with a negative perspective toward the
oil companies and oil resource extraction policies. She
reiterated her support for impartial research but expressed her
concern for this contract. She declared that she "would have
liked to have known" about the contract prior to its
finalization.
CHAIR TUCK offered to share any future contracts but pointed out
that this contract did not require a vote of the committee. He
mused that the problem was with the individual selected for the
contract, and not so much with finding information.
SENATOR GIESSEL declared, "That is incorrect, Mr. Chairman, that
is incorrect." She emphasized that, although she had no problem
with an impartial audit, this subject had been extensively
reviewed by a joint committee of the Alaska State Legislature.
She said that, although Chair Tuck had identified specifically
what he was looking for, this was not stated in the contract.
CHAIR TUCK acknowledged that, although there had been the joint
meeting of the House Resources Standing Committee and the Senate
Resources Standing Committee, there had not been any information
compiled in one report, which was his goal. He stated that many
open-ended questions were unanswered in the joint meeting.
10:35:36 AM
SENATOR WIELECHOWSKI asked for more background for the expertise
in this area of the consultant, Lisa Weissler.
CHAIR TUCK shared that Ms. Weissler had been an oil and gas
attorney during the [Governor] Palin administration. He added
that Ms. Weissler had also worked for a number of legislators.
He did not have any knowledge to share regarding her reports or
testimony.
SENATOR WIELECHOWSKI reported that he had not heard any negative
comments regarding the oil industry from Ms. Weissler and added
that she was an excellent attorney who had worked for the State
of Alaska for "a number of years." He noted that she had
presented comprehensive, well researched testimony, and he
reiterated that he had not perceived any of these presentations
to be negative toward the oil industry.
CHAIR TUCK declared, "I just want to look at the facts. I just
want to see what the state's role is and what the legislature's
role is." He opined that it may have been better to work
through the Division of Legislative Audit.
10:37:11 AM
SENATOR GIESSEL reported that, as the contract was for $10,000,
this was within the established policy governing the signature
authority of the Chair of Legislative Budget and Audit
Committee.
10:37:40 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
10:38 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 20-03-30 LBA Agenda AMENDED.pdf |
JBUD 3/30/2020 9:00:00 AM |
|
| Special Audit Request - Alaska State Commission for Human Rights.pdf |
JBUD 3/30/2020 9:00:00 AM |
|
| Special Audit Request - Alaska Mental Health Trust Authority - Tuck.pdf |
JBUD 3/30/2020 9:00:00 AM |