Legislature(2021 - 2022)

01/18/2021 09:00 AM Senate BUD

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09:09:56 AM Start
09:10:55 AM Approval of Minutes
09:11:22 AM Executive Session
09:39:46 AM Status Update
09:41:50 AM Contracts
09:57:46 AM Special Audit Request
10:26:29 AM Revised Programs - Legislative
11:00:52 AM Legislative Finance Division 2021 Session Protocol
11:18:25 AM Special Audit Request
11:31:56 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                 
              LEGISLATIVE BUDGET AND AUDIT COMMITTEE                                                                          
                         January 18, 2021                                                                                       
                            9:09 a.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Chris Tuck, Chair                                                                                                
Senator Click Bishop, Vice Chair                                                                                                
Representative Neal Foster                                                                                                      
Representative Andy Josephson                                                                                                   
Representative Ivy Spohnholz                                                                                                    
Senator Bert Stedman                                                                                                            
Senator Natasha von Imhof                                                                                                       
Senator Cathy Giessel                                                                                                           
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mark Neuman                                                                                                      
Representative Jennifer Johnston (alternate)                                                                                    
Senator Bill Wielechowski (alternate)                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
APPROVAL OF MINUTES                                                                                                             
EXECUTIVE SESSION                                                                                                               
STATUS UPDATE                                                                                                                   
CONTRACTS                                                                                                                       
SPECIAL AUDIT REQUEST                                                                                                           
REVISED PROGRAMS - LEGISLATIVE                                                                                                  
LEGISLATIVE FINANCE DIVISION 2021 SESSION PROTOCOL                                                                              
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KRIS CURTIS, Legislative Auditor                                                                                                
Legislative Audit Division                                                                                                      
Legislative Agencies and Offices                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Gave an update on audits and answered                                                                    
questions.                                                                                                                      
                                                                                                                                
KEN ALPER, Staff                                                                                                                
Representative Chris Tuck                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Explained the special audit request.                                                                     
                                                                                                                                
ALEXEI PAINTER, Director                                                                                                        
Legislative Finance Division                                                                                                    
Legislative Agencies and Offices                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented the RPLs and answered questions                                                                
pertaining to them.                                                                                                             
                                                                                                                                
BRYAN D. BUTCHER, CEO/Executive Director                                                                                        
Alaska Housing Finance Corporation                                                                                              
Department of Revenue                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during discussion of the                                                              
RPLs.                                                                                                                           
                                                                                                                                
LACEY SANDERS, Director                                                                                                         
Administrative Services Section                                                                                                 
Department of Education and Early Development                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during discussion of the                                                              
RPLs.                                                                                                                           
                                                                                                                                
DOM PANNONE, Director                                                                                                           
Division of Administrative Services                                                                                             
Department of Transportation & Public Facilities                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during discussion of the                                                              
RPLs.                                                                                                                           
                                                                                                                                
ROB CARPENTER, Deputy Commissioner                                                                                              
Office of the Commissioner                                                                                                      
Department of Transportation & Public Facilities                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during discussion of the                                                              
RPLs.                                                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:09:56 AM                                                                                                                    
                                                                                                                                
CHAIR  CHRIS  TUCK  called  the   Legislative  Budget  and  Audit                                                             
Committee  meeting  to  order  at   9:09  a.m.    Representatives                                                               
Josephson, Spohnholz,  Foster (via teleconference), and  Tuck and                                                               
Senators Stedman,  Giessel, von  Imhof (via  teleconference), and                                                               
Bishop were  present at  the call  to order.   Also  present were                                                               
Representatives  Edgmon, Stutes,  and  LeBon and  Representative-                                                               
elect Kaufman.                                                                                                                  
                                                                                                                                
^APPROVAL OF MINUTES                                                                                                            
                       APPROVAL OF MINUTES                                                                                  
                                                                                                                              
9:10:55 AM                                                                                                                    
                                                                                                                                
CHAIR TUCK  announced the  first order of  business would  be the                                                               
approval of minutes.                                                                                                            
                                                                                                                                
9:11:02 AM                                                                                                                    
                                                                                                                                
SENATOR  BISHOP  moved  that the  Legislative  Budget  and  Audit                                                               
Committee approve the  minutes of the December  10, 2020, meeting                                                               
as  presented.   There being  no  objection, the  minutes of  the                                                               
December 10, 2020, meeting were approved.                                                                                       
                                                                                                                                
^EXECUTIVE SESSION                                                                                                              
                        EXECUTIVE SESSION                                                                                   
                                                                                                                              
9:11:22 AM                                                                                                                    
                                                                                                                                
CHAIR TUCK  announced the next order  of business would be  to go                                                               
into  executive session  to  consider the  final  release of  the                                                               
Office of Children's Services Compliance  with Foster Care Reform                                                               
Laws, Part 1, audit.                                                                                                            
                                                                                                                                
9:11:34 AM                                                                                                                    
                                                                                                                                
SENATOR  BISHOP  moved  that the  Legislative  Budget  and  Audit                                                               
Committee go  into Executive  Session under  Uniform Rule  22 (b)                                                               
(3), discussion  of matters that may,  by law, be required  to be                                                               
confidential.  He asked that  the following persons remain in the                                                               
room or on the phone lines:                                                                                                     
                                                                                                                                
   • The Legislative Auditor and necessary staff for the                                                                        
     auditor;                                                                                                                   
   • Any legislators not on the committee; and                                                                                  
   • Staff for legislators who are members of the                                                                               
     committee.                                                                                                                 
                                                                                                                                
9:12:09 AM                                                                                                                    
                                                                                                                                
The committee  took an at-ease  from 9:12  a.m. to 9:38  a.m. for                                                               
the purpose of executive session.                                                                                               
                                                                                                                                
9:38:14 AM                                                                                                                    
                                                                                                                                
CHAIR  TUCK called  the Legislative  Budget  and Audit  Committee                                                               
back to  order at 9:38  a.m.  Present at  the call back  to order                                                               
were   Representatives   Josephson,    Spohnholz,   Foster   (via                                                               
teleconference),  and Tuck  and  Senators  Stedman, Giessel,  von                                                               
Imhof (via  teleconference), Hoffman,  and Bishop.   Also present                                                               
were Representatives  Edgmon, Stutes,  LeBon, Hannan,  Ortiz, and                                                               
Claman.                                                                                                                         
                                                                                                                                
CHAIR  TUCK  noted that  Representatives  Thompson  and Prax  and                                                               
Senators  Reinbold   and  Revak  had  been   present  during  the                                                               
executive session.                                                                                                              
                                                                                                                                
9:39:12 AM                                                                                                                    
                                                                                                                                
SENATOR BISHOP  moved that the  following audit be released  as a                                                               
final public report:                                                                                                            
                                                                                                                                
   • Department of Health and Social Services, Office of                                                                        
     Children's Services Compliance with Foster Care Reform                                                                     
     Laws, Part 1.                                                                                                              
                                                                                                                                
There being no objection, the audit was released.                                                                               
                                                                                                                                
^STATUS UPDATE                                                                                                                  
                           STATUS UPDATE                                                                                    
                                                                                                                                
9:39:46 AM                                                                                                                    
                                                                                                                                
CHAIR TUCK announced that the next  order of business would be an                                                               
update on Part 2 of  the Office of Children's Services Compliance                                                               
audit.                                                                                                                          
                                                                                                                                
9:40:05 AM                                                                                                                    
                                                                                                                                
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Legislative  Agencies and  Offices,  referred to  House Bill  151                                                               
[passed  in the  Thirtieth  Alaska State  Legislature] as  having                                                               
several  different  effective  dates,  spanning  multiple  years,                                                               
resulting in the  audit request being split into  three parts, of                                                               
which Part 1  was recently completed and released  publicly.  She                                                               
added  that  Part  1 contained  provisions  that  were  effective                                                               
September or  December 2018.   She added  that, due  to Covid-19,                                                               
the  Office   of  Children's  Services  procedures   had  changed                                                               
dramatically, and it had been determined  not to be a good use of                                                               
audit resources to  continue with Parts 2 and 3.   She added that                                                               
required  documentation for  review is  being stored  at regional                                                               
offices  which   are  closed  while  staff   telework.    Another                                                               
objective of  the audit  requires the hiring  of a  contractor to                                                               
review  Office of  Children's Services  management structure  and                                                               
would necessitate  on site  interviews and  travel, which  is not                                                               
advised at this time.   She indicated that Parts 2  and 3 will be                                                               
postponed  for  at least  one  year  and  they may  be  conducted                                                               
simultaneously.  She  stated that she was not  seeking action for                                                               
the committee and  had provided the status update as  a matter of                                                               
record.                                                                                                                         
                                                                                                                                
^CONTRACTS                                                                                                                      
                            CONTRACTS                                                                                       
                                                                                                                              
9:41:50 AM                                                                                                                    
                                                                                                                                
CHAIR TUCK  announced that  the next order  of business  would be                                                               
Contracts.                                                                                                                      
                                                                                                                                
9:41:58 AM                                                                                                                    
                                                                                                                                
MS. CURTIS  referred to  a memorandum  ("memo") in  the committee                                                               
packet  entitled "LBAC  memo RE  IT  audit procurement  approval"                                                               
which requested the committee's  approval of a contract extension                                                               
with Barry,  Dunn, McNeil, &  Parker, LLC for IT  audit services.                                                               
She explained  that the  current contract  was approved  in March                                                               
2018 and covered  the review of general  and application controls                                                               
of the  state's accounting  system for fiscal  year 2018  (FY 18)                                                               
and  FY  19.    She  added that  in  January  2020  the  contract                                                               
extension was approved  to cover system controls for FY  20.  She                                                               
stated that  the contract extension request  before the committee                                                               
would  cover  services  for  a  system  general  and  application                                                               
controls audit  for FY 21.   She  explained that IT  controls are                                                               
needed to  meet auditing  standards for  state and  federal audit                                                               
compliance.    She  referred  to a  recent  memo  requesting  the                                                               
extension and  noted that it  contained an error and  should read                                                               
FY  21 and  not FY  20.   She noted  that the  contract extension                                                               
would be  for an amount not  to exceed $173,000, the  same amount                                                               
for FY 18, FY 19, and FY 20.                                                                                                    
                                                                                                                                
9:43:33 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:43 a.m. to 9:44 a.m.                                                                       
                                                                                                                                
9:44:15 AM                                                                                                                    
                                                                                                                                
SENATOR  BISHOP  moved  and  asked  unanimous  consent  that  the                                                               
Legislative Budget and Audit  Committee authorize the legislative                                                               
auditor  to  amend the  March  2018  contract with  Berry,  Dunn,                                                               
McNeil,  & Parker,  LLC for  information technology  expertise to                                                               
extend  the  contract  for  the  review  of  FY  21  general  and                                                               
application  controls of  the  state's  accounting and  reporting                                                               
systems  for an  increase in  the contract  amount not  to exceed                                                               
$173,000.  There being no objection, it was so ordered.                                                                         
                                                                                                                                
9:45:06 AM                                                                                                                    
                                                                                                                                
CHAIR   TUCK  said   the  next   contract  for   the  committee's                                                               
consideration  was for  public opinion  polling  services in  the                                                               
amount  of  $50,000.    He  explained that  the  purpose  of  the                                                               
contract  is   for  polling  services  to   ascertain  trends  of                                                               
citizens' view  of the Alaska  State Legislature,  and especially                                                               
considering the pandemic.  He  added his knowledge that polls had                                                               
been similarly conducted between 2009 and 2015.                                                                                 
He  told  the committee  that  Dittman  Research  is one  of  the                                                               
nation's highest  ranked pollsters.   He referred to part  of the                                                               
committee  packet item  entitled  "Public  Opinion Poll  Contract                                                               
Memo and Proposal," which read [original punctuation provided]:                                                                 
                                                                                                                                
     Dittman boasts a 100% accuracy rating on Nate Silver's                                                                     
     FiveThirtyEight pollster                                                                                                   
     ranking with nine polls analyzed. Dittman ranks 1st in                                                                     
     Alaska among Alaskan pollsters and Outside                                                                                 
     firms that poll in Alaska.                                                                                                 
                                                                                                                                
9:46:54 AM                                                                                                                    
                                                                                                                                
SENATOR STEDMAN stated  that he is not  comfortable with spending                                                               
$50,000  to ascertain  public opinion  considering the  extensive                                                               
interaction  that legislators  have  had with  the  public on  an                                                               
ongoing  basis that  should inform  legislators regarding  public                                                               
opinion.   He  suggested  a  poll later  in  the session  seeking                                                               
different information may be considered  by either body; however,                                                               
in light  of the existing budget  deficit he was not  in favor of                                                               
the contract as proposed.                                                                                                       
                                                                                                                                
9:47:59 AM                                                                                                                    
                                                                                                                                
SENATOR VON  IMHOF said she does  not support the expense  of the                                                               
proposed  contract.   She  said  legislators  have and  use  many                                                               
different  methods  such  as town  hall  meetings  and  published                                                               
letters to  ascertain constituents'  opinions and  to disseminate                                                               
information on a wide variety of important topics.                                                                              
                                                                                                                                
9:49:14 AM                                                                                                                    
                                                                                                                                
CHAIR TUCK referred  to the committee packet  and highlighted the                                                               
questions  that would  be  used  in the  survey.    He noted  one                                                               
example is  that the pandemic  has resulted  in a broad  range of                                                               
opinions  in the  public  and  that the  poll  is  not solely  to                                                               
determine popularity  of legislators.  He  contended that several                                                               
elections had  very close  results despite  candidates' disparate                                                               
views.   He added that  other questions would elicit  opinions on                                                               
Alaska's education  system and other  important functions  of the                                                               
legislature and  administration, and he encouraged  the committee                                                               
to review the materials provided.                                                                                               
                                                                                                                                
9:51:10 AM                                                                                                                    
                                                                                                                                
SENATOR  BISHOP  moved  that the  Legislative  Budget  and  Audit                                                               
Committee enter into a contract  with Dittman Research for public                                                               
opinion polling  for $50,000 and  that the committee  approve the                                                               
exemption  as required  by  Sec. 040  of  the Alaska  Legislative                                                               
Procurement Policy.                                                                                                             
                                                                                                                                
9:51:31 AM                                                                                                                    
                                                                                                                                
SENATOR STEDMAN objected.                                                                                                       
                                                                                                                                
9:51:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ expressed that  she had initial concerns                                                               
with the use  of funds for this contract;  however, after reading                                                               
the questions in the proposal  and those in previous surveys, she                                                               
considers the  survey worthwhile.   She added that  a nonpartisan                                                               
survey aligns with the bipartisan  and bicameral structure of the                                                               
committee and  no bipartisan  surveys exist.   She  conceded that                                                               
careful  use of  funds in  any  amount under  the current  budget                                                               
crisis  is   very  important;  however,  considering   the  large                                                               
injections of federal COVID relief  coupled with the "sea change"                                                               
decisions that lie  ahead, the survey of  Alaskan's priorities as                                                               
proposed would be helpful in guiding decisions going forward.                                                                   
                                                                                                                                
9:53:21 AM                                                                                                                    
                                                                                                                                
SENATOR  GIESSEL  lauded the  quality  of  work done  by  Dittman                                                               
Research and  expressed that survey  results are  interesting and                                                               
informative  but  are  limited  to participants  that  choose  to                                                               
respond.   She contended that  the Alaska State Legislature  is a                                                               
republic  form  of  government   and,  as  such,  citizens  elect                                                               
representatives who  bring knowledge of  the issues and  who have                                                               
massive amounts  of information  on which  to base  decisions and                                                               
exercise judgment.  She opined  that elected officials should not                                                               
be swayed  by shifting  opinions or sentiments  in passing.   She                                                               
acknowledged  the $50,000  amount, in  the context  of a  billion                                                               
dollars  may seem  insignificant.   She added,  "But, if  you pay                                                               
attention  to the  nickels and  dimes, the  dollars take  care of                                                               
themselves."  She  stated that for those reasons  she will oppose                                                               
this contract.                                                                                                                  
                                                                                                                                
9:55:39 AM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.   Representatives Josephson, Foster,                                                               
Spohnholz,  and  Tuck voted  in  favor  of  the motion  that  the                                                               
Legislative  Budget and  Audit Committee  enter  into a  contract                                                               
with Dittman Research for public  opinion polling for $50,000 and                                                               
that the committee approve the  exemption as required by Sec. 040                                                               
of  the  Alaska Legislative  Procurement  Policy.   Senators  von                                                               
Imhof, Stedman,  Giessel, Hoffman,  and Bishop voted  against it.                                                               
Therefore, the motion failed by a vote of 4-5.                                                                                  
                                                                                                                                
^SPECIAL AUDIT REQUEST                                                                                                          
                      SPECIAL AUDIT REQUEST                                                                                 
                                                                                                                              
9:57:46 AM                                                                                                                  
                                                                                                                                
CHAIR TUCK announced next order  of business would be the Special                                                               
Audit Request.                                                                                                                  
                                                                                                                                
CHAIR TUCK  said this  pertained to  a request  for audit  of the                                                               
Alaska CARES  Act grants.   He invited  Ken Alper to  present the                                                               
audit request to the committee.                                                                                                 
                                                                                                                                
9:58:18 AM                                                                                                                    
                                                                                                                                
KEN  ALPER,  Staff,  Representative   Chris  Tuck,  Alaska  State                                                               
Legislature, offered background information  on the special audit                                                               
request of  the Alaska CARES  Act.   He added, "That's  the small                                                               
business grant  program component  of the broader  state response                                                               
to the use of the federal CARES Act money."  He said this is a                                                                  
$290  million program  originally authorized  by the  Legislative                                                               
Budget  and Audit  Committee  in May  2020  and was  subsequently                                                               
ratified  through HB  313.   He added  that in  August 2020,  the                                                               
administration  brought  forward  changes to  the  administrative                                                               
rules of  the program, specifically  opening it up  to applicants                                                               
who had  previously received other  federal funding sources.   He                                                               
stated  that   the  Alaska  Industrial  Development   and  Export                                                               
Authority  (AIDEA)  is  the  administrative  entity  running  the                                                               
program  and has  been forthcoming  with high-level  summary data                                                               
such  as the  number of  applicants per  community and  aggregate                                                               
amounts  distributed but  not forthcoming  with individual  names                                                               
and amounts  received.  He stated  that the purpose of  the audit                                                               
is  twofold:   to  learn  who  has  received  the funds  and  the                                                               
application  and  review   process,  including  determination  of                                                               
eligibility  for the  limited funds  available; and  to determine                                                               
whether the  funds went  to those  with the most  need.   He drew                                                               
attention to the committee packet  item entitled "20-201boo Cares                                                               
Act grants should be public (002)" and, in summary, stated that                                                                 
there  is no  reason  that  the information  should  not be  made                                                               
available  [to the  committee], and  that  it had  not been  made                                                               
available.                                                                                                                      
                                                                                                                                
10:00:57 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON recalled  that some  category of  CARES                                                               
Act  funding  recipients had  been  made  publicly available  and                                                               
asked  Mr.  Alper   to  confirm  and  provide   details  on  what                                                               
information was made public.                                                                                                    
                                                                                                                                
MR. ALPER stated that   [recipient] lists had been made available                                                               
for  several  large  federal   programs  including  the  Paycheck                                                               
Protection  Act,  which consists  of  forgivable  loans, and  the                                                               
Economic  Injury Disaster  loans,  long term  loans, through  the                                                               
Small Business Administration (SBA).   He welcomed Representative                                                               
Josephson's question  as it showed precedent  and underscored the                                                               
need  for  state-level information  to  be  shared in  line  with                                                               
federal-level information.                                                                                                      
                                                                                                                                
10:02:03 AM                                                                                                                   
                                                                                                                                
SENATOR GIESSEL asked Mr. Alper  to explain why the legal opinion                                                               
provided in  the committee packet  appears to be specific  to the                                                               
Pacific  States  Marine  Fisheries   Commission  and  the  Alaska                                                               
Department  of  Fish  &  Game;  however,  the  special  audit  as                                                               
described is much broader [in scope].                                                                                           
                                                                                                                                
MR. ALPER  answered that the  original request for  legal opinion                                                               
solicited by Chair  Tuck's office was on  two different programs-                                                               
the Alaska CARES Small Business Grant  as well as the $50 million                                                               
Fisheries Assistance  Program- and that the  opinion provided was                                                               
bifurcated along  the lines of the  two programs.  He  noted that                                                               
fisheries may have different protections  of individual data.  He                                                               
emphasized that  the special audit  request before  the committee                                                               
is limited  to the Small  Business Administration grant  and does                                                               
not  include  a request  to  audit  of the  Fisheries  Assistance                                                               
Program.                                                                                                                        
                                                                                                                                
10:03:57 AM                                                                                                                   
                                                                                                                                
SENATOR   STEDMAN  expressed   his   shared   concern  that   the                                                               
administration  should  provide   requested  information  to  the                                                               
committee   in  a   timely  manner   and  in   the  interest   of                                                               
transparency.   He asked  that Legislative  Audit staff  speak to                                                               
inform the committee on the amount  of time that the audit should                                                               
take.  He  emphasized that additional federal  aid is anticipated                                                               
over the  next several  months and  that he does  not see  how it                                                               
would benefit the administration to  not be overly transparent in                                                               
the  sharing  of  this  information with  the  legislature.    He                                                               
suggested that  legislators have  been congenial in  working with                                                               
the  administration to  allow leeway  in  its appropriations  and                                                               
authority.    He  added  that the  legislature  is  scheduled  to                                                               
convene,  and,  between  the  two  bodies,  extensive  review  is                                                               
anticipated to  occur.  He said  he had a question  regarding the                                                               
timing of ordering  an audit as compared to  allowing the finance                                                               
subcommittees to conduct their business.   He maintained that the                                                               
information is needed sooner rather than later.                                                                                 
                                                                                                                                
10:06:26 AM                                                                                                                   
                                                                                                                                
MS. CURTIS  explained that,  in the  absence of  further guidance                                                               
from the committee, this performance  audit would be scheduled to                                                               
commence  approximately   one  year   from  now,  based   on  the                                                               
prioritization of requests as "first  in, first out".  She stated                                                               
that the  division has seven  statutorily mandated  sunset audits                                                               
with  deadlines and  two or  three performance  audits that  have                                                               
been staffed, although work on those  has not started.  She added                                                               
that the  requested audit seems  straightforward.   She indicated                                                               
that the  committee may direct  the division to  reprioritize any                                                               
audit except for those with statutory deadlines.                                                                                
                                                                                                                                
MS. CURTIS  added that  the division  is reviewing  federal money                                                               
coming into the state to determine  whether it is a major federal                                                               
program as defined  by a threshold of  approximately $14 million.                                                               
She added  that these funds have  been reviewed during the  FY 20                                                               
Statewide Single Audit that included  review of the Department of                                                               
Commerce, Community & Economic  Development (DCCED); however, the                                                               
review  criteria are  defined  by the  federal  government.   She                                                               
noted that AIDEA is a sub  recipient of the funds.  She explained                                                               
that the audit,  as requested, would determine  how DCCED awarded                                                               
funds  to  AIDEA, and  AIDEA's  staff  auditors would  audit  the                                                               
specific  money going  out from  AIDEA.   She clarified  that the                                                               
criteria  in the  special  audit request  would  not be  examined                                                               
under the single audit format.                                                                                                  
                                                                                                                                
SENATOR STEDMAN asked, should the  committee direct the agency to                                                               
prioritize  this  audit above  others,  when  conclusions may  be                                                               
brought to  the committee  and whether the  timing of  that would                                                               
allow the finance subcommittees to  use the information in making                                                               
decisions  with   additional  funds  going  forward   during  the                                                               
upcoming legislative session.                                                                                                   
                                                                                                                                
MS. CURTIS stated  that if the audit were  started this February,                                                               
then, at  a minimum, preliminary  results should be  available in                                                               
late April or May 2021.                                                                                                         
                                                                                                                                
SENATOR  STEDMAN contended  that the  information that  is sought                                                               
needs  to be  obtained much  sooner than  May 2021  and that  the                                                               
matters  and the  additional funds  expected to  come before  the                                                               
legislature will  become increasingly complex.   He expressed his                                                               
hope that the administration would  cooperate and offer increased                                                               
transparency  quickly.    He  urged   aggressive  action  by  the                                                               
incoming bodies to clarify these matters.                                                                                       
                                                                                                                                
10:10:33 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON stated  that the  administration should                                                               
already have a list of grantees.   He asked whether the committee                                                               
could have this list by February 15, 2021.                                                                                      
                                                                                                                                
MS.  CURTIS affirmed  that they  could get  a list;  however, she                                                               
explained  that the  audit process  consists of  process reviews,                                                               
interviews,  and testing  of databases  to ensure  reliability of                                                               
data in compliance with auditing  standards.  She suggested that,                                                               
in lieu  of an audit,  a request  could be made  with agreed-upon                                                               
procedures to answer  specific questions.  She  advised that such                                                               
an approach  is possible and  could yield faster results  than an                                                               
audit  but  would  require  cooperation from  the  entity.    She                                                               
clarified that  Legislative Audit Division staff  are directed to                                                               
perform audits.   She  noted that inquiries  that are  not audits                                                               
have been  performed by the agency  but are not considered  to be                                                               
an audit.                                                                                                                       
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  stated   that   the  incoming   Biden                                                               
Administration wants another  CARES Act and that  the state might                                                               
get a  lot of  money with  fewer restrictions.   He  stated that,                                                               
should the  funds come to  the state during  legislative session,                                                               
they  would not  be appropriated  through  the RPL  process.   He                                                               
claimed that  the legislature  would not be  able to  spend those                                                               
funds  without  knowing  how previous  money  received  had  been                                                               
spent.                                                                                                                          
                                                                                                                                
10:12:53 AM                                                                                                                   
                                                                                                                                
SENATOR HOFFMAN  asked Ms. Curtis  to restate what the  timing of                                                               
the proposed  audit of AIDEA  would be.   He stated  that several                                                               
constituents have expressed  to him their concern  of AIDEA board                                                               
members having received thousands of  dollars [of CARES Act grant                                                               
funds].   He asked  whether those funds  were made  accessible to                                                               
board members  who may  have inside  information to  access those                                                               
funds.   He expressed interest  in this information not  only for                                                               
AIDEA board  members, but also  for members of the  Alaska Energy                                                               
Authority  and any  other board  members that  may have  received                                                               
thousands of dollars.                                                                                                           
                                                                                                                                
MS. CURTIS  recommended that if  the committee wished  to include                                                               
that  information  in  the  requested   review,  then  it  should                                                               
formally amend the request to include that specific information.                                                                
                                                                                                                                
SENATOR   HOFFMAN   asserted   that    the   integrity   of   the                                                               
administration and [its] boards demand  the question be asked and                                                               
answered.                                                                                                                       
                                                                                                                                
10:14:30 AM                                                                                                                   
                                                                                                                                
SENATOR  BISHOP  asked  Ms.  Curtis to  confirm  that  the  audit                                                               
request before the  committee, if approved as  written, would not                                                               
commence for a year.                                                                                                            
                                                                                                                                
MS. CURTIS confirmed  that unless the committee tells  her not to                                                               
do  an audit,  but instead  to do  "an agreed-upon  procedure" to                                                               
specifically  provide  answers  to  the questions  posed  by  the                                                               
committee as soon  as possible, and to prioritize  it above other                                                               
non-statutory  timelines, she  would not  start this  audit until                                                               
next year.                                                                                                                      
                                                                                                                                
10:15:06 AM                                                                                                                   
                                                                                                                                
SENATOR  STEDMAN echoed  the sentiment  shared by  Representative                                                               
Josephson regarding  the importance of receiving  the information                                                               
as soon as  possible.  He advocated to start  an informal inquiry                                                               
process and  to follow that with  a more formal audit,  as deemed                                                               
necessary.    He  also  agreed  that  Senator  Hoffman's  concern                                                               
regarding  board members  potentially  receiving  funds based  on                                                               
inside information or  front running is a  legitimate concern and                                                               
should  be added  to  the request  in the  best  interest of  the                                                               
public.                                                                                                                         
                                                                                                                                
10:16:24 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 10:16 a.m. to 10:26 a.m.                                                                     
                                                                                                                                
10:25:56 AM                                                                                                                   
                                                                                                                                
CHAIR TUCK announced  he would move the special  audit request to                                                               
the bottom of the agenda in order to revise the request.                                                                        
                                                                                                                                
^REVISED PROGRAMS - LEGISLATIVE                                                                                                 
                  REVISED PROGRAMS - LEGISLATIVE                                                                            
                                                                                                                              
10:26:29 AM                                                                                                                   
                                                                                                                                
CHAIR  TUCK announced  the next  order of  business would  be the                                                               
Revised Programs - Legislative.                                                                                                 
                                                                                                                                
10:27:05 AM                                                                                                                   
                                                                                                                                
ALEXEI   PAINTER,   Director,   Legislative   Finance   Division,                                                               
Legislative Agencies and Offices,  addressed the revised programs                                                               
- legislative (RPLs).  He  directed attention to RPL 04-2021-1066                                                               
for Department  of Revenue Covid-19 Federal  Housing and Homeless                                                               
stimulus   for   Alaska   Housing  Finance   Corporation   (AHFC)                                                               
operations in  the amount  of $200  million in  federal receipts.                                                               
He  added   that  the  amount   includes  funds  for   which  the                                                               
Municipality   of  Anchorage   applied  directly;   however,  the                                                               
municipality did  not respond to  questions regarding  the amount                                                               
for which  it applied, so  the amount  will be the  $200 million,                                                               
less the amount for Anchorage.   He reminded the committee that a                                                               
similar RPL  on May 11, 2020,  for $10 million was  approved, and                                                               
the RPL  before the committee will  be in the same  budget and be                                                               
for the  same purpose.   He stated  that the  Legislative Finance                                                               
Division would recommend that carry-forward  language be added to                                                               
AHFC's operating budget  to allow for the funds to  be spent into                                                               
the next fiscal  year.  He said the  Legislative Finance Division                                                               
sees no technical issues with this  RPL.  He noted that fund code                                                               
1265 will be used to track COVID-19 federal funds.                                                                              
                                                                                                                                
10:29:24 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  if the  recommendation  to  add                                                               
carry-forward language should be stated  as part of the motion to                                                               
approve the RPL.                                                                                                                
                                                                                                                                
MR. PAINTER  indicated that, no,  the language would be  added to                                                               
the operating budget for AHFC.                                                                                                  
                                                                                                                                
10:29:51 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ asked Bryan  Butcher to explain the plan                                                               
for distributing  these funds, and  she observed that  the amount                                                               
under consideration is 20 times higher than last year.                                                                          
                                                                                                                                
10:30:24 AM                                                                                                                   
                                                                                                                                
BRYAN D. BUTCHER, CEO/Executive  Director, Alaska Housing Finance                                                               
Corporation,  Department  of  Revenue,  allowed  that  there  are                                                               
similarities  between   the  previous  RPL  and   the  one  under                                                               
consideration.  He  noted that there were  also some differences,                                                               
such  as the  previous program  allowed for  rental and  mortgage                                                               
assistance  and the  federal requirements  have  limited this  to                                                               
rental assistance only.   He noted that,  previously, the program                                                               
allowed  for up  to two  months of  relief, whereas  this program                                                               
allows   for  twelve   to  fifteen   months,  depending   on  the                                                               
circumstances  of the  renter.   He added  that priority  will be                                                               
given  to those  [with rent]  in  arrears, and  that every  three                                                               
months going forward  the renter would be required  to file again                                                               
to re-establish the need for assistance.                                                                                        
                                                                                                                                
10:31:33 AM                                                                                                                   
                                                                                                                                
CHAIR  TUCK asked  for  an  explanation between  this  RPL and  a                                                               
subsequent  $6.5   million  RPL   coming  up  later   before  the                                                               
committee.                                                                                                                      
                                                                                                                                
MR.  BUTCHER  answered  that  the  RPL  under  consideration  was                                                               
confined  to rental  assistance, and  the other  RPL pertains  to                                                               
emergency   solutions  grants   for   homelessness  and   housing                                                               
opportunities for individuals living with HIV/AIDS.                                                                             
                                                                                                                                
10:32:13 AM                                                                                                                   
                                                                                                                                
MR.   PAINTER  directed   attention  to   RPL  04-2021-1067   for                                                               
Department  of  Revenue  COVID-19 Federal  Housing  and  Homeless                                                               
stimulus  partnerships  for  Alaska Housing  Finance  Corporation                                                               
(AHFC)  operations  in the  amount  of  $6.5 million  in  federal                                                               
receipts under  the capital budget  appropriation.  He  said that                                                               
there  exists a  $6 million  in federal  receipt authority  under                                                               
federal and other competitive grants for  FY 21.  He reminded the                                                               
committee   that   this   is   for   homelessness   and   housing                                                               
opportunities for individuals living with  HIV/AIDS.  He said the                                                               
Legislative Finance  Division sees no technical  issues with this                                                               
RPL.  He noted  that fund code 1265 will be  used to track COVID-                                                               
19 federal funds.                                                                                                               
                                                                                                                                
10:33:14 AM                                                                                                                   
                                                                                                                                
SENATOR  BISHOP asked  if rescue  missions  throughout the  state                                                               
would  be eligible  to  apply  for and  receive  funds under  the                                                               
program.                                                                                                                        
                                                                                                                                
MR. BUTCHER answered yes.                                                                                                       
                                                                                                                                
10:33:56 AM                                                                                                                   
                                                                                                                                
CHAIR TUCK  recalled the  $10 million RPL  that was  approved May                                                               
11, 2020, and  the one under consideration appear  to be similar.                                                               
He  asked   for  an  explanation   on  how  this  RPL   would  be                                                               
administered.                                                                                                                   
                                                                                                                                
MR.  BUTCHER explained  that the  previous $10  million was  used                                                               
strictly  for rent  and  mortgage  relief.   He  added that  this                                                               
program is  a long-established federal program  that provides aid                                                               
to  emergency  shelters,  including  improvements  and  emergency                                                               
services,  but the  biggest difference  is that  the program  had                                                               
been funded at only approximately $250,000 per year.                                                                            
                                                                                                                                
CHAIR TUCK referred to RPL  04-2020-1059 approved on May 11, 2020                                                               
and  asked if  that  should be  included in  the  RPL before  the                                                               
committee.                                                                                                                      
                                                                                                                                
MR.  PAINTER indicated  that it  was  included for  informational                                                               
purposes  only  to demonstrate  that  AHFC  had received  similar                                                               
funds previously.                                                                                                               
                                                                                                                                
10:35:41 AM                                                                                                                   
                                                                                                                                
SENATOR HOFFMAN  asked how information regarding  funds available                                                               
would  be disseminated  to the  public, and  whether Mr.  Butcher                                                               
felt that the system was adequate to inform those in need.                                                                      
                                                                                                                                
MR. BUTCHER answered  that AHFC would use its  existing Notice of                                                               
Funding  Availability system  and anticipates  receiving requests                                                               
from both urban and rural areas, statewide.                                                                                     
                                                                                                                                
SENATOR HOFFMAN asked how individuals obtain rental assistance.                                                                 
                                                                                                                                
MR. BUTCHER  stated that there  would be a  massive informational                                                               
campaign using  social media,  television, and  radio.   He added                                                               
that individual  communities will also conduct  outreach, as will                                                               
tribes who  have received separate  funding.  He  emphasized that                                                               
the goal is to inform all Alaskans in need.                                                                                     
                                                                                                                                
10:38:01 AM                                                                                                                   
                                                                                                                                
MR.  PAINTER  directed  attention  to RPL  05-2021-1089  for  the                                                               
Department  of Education  and Early  Development  (DEED) for  the                                                               
U.S.  Department  of  Education Consolidated  Appropriations  Act                                                               
COVID  Relief  Funds  in  the  Students  and  School  Achievement                                                               
section of  the budget in  the amount of $168,111,142  in federal                                                               
receipts.   He explained that  the RPL consists of  several grant                                                               
programs, the  largest of which  is the Elementary  and Secondary                                                               
School  Emergency Relief  Fund in  the amount  of $159,719,422.00                                                               
for school districts that will  be distributed based on the Title                                                               
1-A formula and  may be used for any  prevention, preparation, or                                                               
response to  COVID-19.  He  categorized the remainder of  the RPL                                                               
as Governor's  Emergency Education  Relief Fund that  consists of                                                               
two spending categories.   He specified that $2.8  million is for                                                               
emergency  grants to  support education-related  entities in  the                                                               
state "deemed  essential for  carrying out  emergency educational                                                               
services, or  to Local Education Agencies  that are significantly                                                               
impacted  by   coronavirus",  and  $5.6  million   for  emergency                                                               
assistance to non-public schools.   He pointed out that the funds                                                               
would  be  available  to  the state  until  September  30,  2023;                                                               
however,  DEED has  existing  carry-forward  language that  would                                                               
allow use of  the funds in subsequent fiscal years.   He said the                                                               
Legislative Finance  Division sees no technical  issues with this                                                               
RPL.  He noted  that fund code 1265 will be  used to track COVID-                                                               
19 federal funds.                                                                                                               
                                                                                                                                
10:40:38 AM                                                                                                                   
                                                                                                                                
SENATOR HOFFMAN  asked to  be provided with  a list  of nonpublic                                                               
schools that would be eligible to receive these funds.                                                                          
                                                                                                                                
MR.  PAINTER  deferred  to  DEED  to  fulfill  Senator  Hoffman's                                                               
request.                                                                                                                        
                                                                                                                                
10:41:08 AM                                                                                                                   
                                                                                                                                
LACEY   SANDERS,  Director,   Administrative  Services   Section,                                                               
Department of  Education and Early Development,  stated that DEED                                                               
would be  able to  produce a  list of  private schools  and added                                                               
that funds  would be distributed  through an  application process                                                               
that is in development.                                                                                                         
                                                                                                                                
10:41:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   JOSEPHSON   asked,   in   reference   to   funds                                                               
availability to  address "learning loss," whether  funds could be                                                               
used for summer school.                                                                                                         
                                                                                                                                
MS. SANDERS answered yes.                                                                                                       
                                                                                                                                
10:42:44 AM                                                                                                                   
                                                                                                                                
SENATOR VON  IMHOF asked  if some  funds may  be used  to install                                                               
connections to satellites and broadband in rural areas.                                                                         
                                                                                                                                
MS. SANDERS answered that the  funding allows for the purchase of                                                               
educational   technology   including  hardware,   software,   and                                                               
connectivity  for  students.     She  advised  consultation  with                                                               
federal   partners   to   ensure  compliance   for   capital-type                                                               
expenditures.                                                                                                                   
                                                                                                                                
SENATOR VON IMHOF noted that  technology equipment issued without                                                               
connectivity  is ill-conceived  and suggested  that communication                                                               
between  federal partners  and stakeholders  needs to  occur, and                                                               
that investment  in Internet access  and expansion is  money well                                                               
spent.                                                                                                                          
                                                                                                                                
10:45:40 AM                                                                                                                   
                                                                                                                                
SENATOR BISHOP echoed the sentiments  of Senator von Imhof adding                                                               
that  internet connectivity  is unstable  even in  outlying urban                                                               
areas.                                                                                                                          
                                                                                                                                
10:46:04 AM                                                                                                                   
                                                                                                                                
SENATOR  GIESSEL  added that  there  are  areas within  Anchorage                                                               
School District that have no internet.                                                                                          
                                                                                                                                
10:46:20 AM                                                                                                                   
                                                                                                                                
SENATOR  HOFFMAN stated  that there  exists  a major  maintenance                                                               
list  for Alaska  schools including  those related  to inadequate                                                               
drinking water.   He  encouraged DEED  to revisit  with districts                                                               
and prioritize water and sewer projects for improved hygiene.                                                                   
                                                                                                                                
10:48:29 AM                                                                                                                   
                                                                                                                                
MR.  PAINTER  directed  attention  to RPL  25-2021-4038  for  the                                                               
Department  of Transportation  & Public  Facilities for  COVID-19                                                               
Federal  Highway  grants  for the  reopening  of  the  Silvertip,                                                               
Chitina, and Birch  Lake Maintenance Stations in  the Central and                                                               
Northern Region Highways  section of the budget in  the amount of                                                               
$2,130,200  in  federal receipts.    He  explained that  Alaska's                                                               
future  potential total  share of  highway infrastructure  may be                                                               
between $120  million and  $150 million.   He recited  an excerpt                                                               
from  the RPL  included in  the committee  packet, which  read as                                                               
follows [original punctuation included]:                                                                                        
                                                                                                                                
     Funds  are  available  to replace  amounts  lost  as  a                                                                    
     result    of   the    coronavirus   for    preventative                                                                    
     maintenance,   routine  maintenance,   operations,  and                                                                    
     personnel costs.  These funds may also  support typical                                                                    
     Title  23 eligible  activities (surface  transportation                                                                    
     capital  projects)  as  well as  tolling  agencies  and                                                                    
     ferry systems.                                                                                                             
                                                                                                                                
MR. PAINTER  pointed out  that DOT&PF  will have  until September                                                               
2024 to  spend these funds.   He noted that the  $2.1 million RPL                                                               
is split between  $950,000 for the Central  Region and $1,180,200                                                               
for  the  Northern  Region.   He  said  the  Legislative  Finance                                                               
Division sees no  technical issues with this RPL.   He noted that                                                               
fund code 1265 will be used to track COVID-19 federal funds.                                                                    
                                                                                                                                
10:50:45 AM                                                                                                                   
                                                                                                                                
SENATOR  STEDMAN recalled  that reopening  of these  stations had                                                               
been   included  several   times  in   the  budget   in  previous                                                               
legislation but  had not  been passed.   He  asked what  level of                                                               
flexibility would exist to implement  the projects if this should                                                               
pass.                                                                                                                           
                                                                                                                                
MR. PAINTER deferred to the department to answer.                                                                               
                                                                                                                                
10:51:29 AM                                                                                                                   
                                                                                                                                
DOM  PANNONE,  Director,  Division  of  Administrative  Services,                                                               
Department  of Transportation  & Public  Facilities, stated  that                                                               
the  funds   were  likely  to   be  [in  the  form   of]  surface                                                               
transportation  block grants,  and,  as such,  are available  for                                                               
projects that preserve or improve  the conditions and performance                                                               
on any  federal aid  highway.   He said  that in  the Coronavirus                                                               
Response  and Relief  Supplemental Appropriations  Act the  funds                                                               
are  anticipated to  be  extremely flexible  for  use on  surface                                                               
transportation and within the operating budget.                                                                                 
                                                                                                                                
SENATOR  STEDMAN clarified  that  the  legislature has  supported                                                               
these projects through appropriation,  but they have been subject                                                               
to veto.  He emphasized that  the projects are a matter of public                                                               
safety and  asked what  position DOT&PF  held on  advancing these                                                               
projects in the budget process.                                                                                                 
                                                                                                                                
10:53:41 AM                                                                                                                   
                                                                                                                                
ROB CARPENTER,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department  of Transportation  & Public  Facilities, stated  that                                                               
the   RPL  process   has  brought   these  projects   before  the                                                               
legislature and the department is  in support of cooperating with                                                               
the  legislature  to  ensure  they are  included  in  the  budget                                                               
process.  He  stated that the funds available are  a windfall and                                                               
he expressed his hope in executing the projects.                                                                                
                                                                                                                                
10:54:23 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ asked  if the  funds available  through                                                               
the  Fixing America's  Surface Transportation  Act could  be used                                                               
for  the Alaska  Marine  Highway System  (AMHS),  in addition  to                                                               
highway maintenance.                                                                                                            
                                                                                                                                
MR. CARPENTER affirmed the funds could be used for AMHS.                                                                        
                                                                                                                                
REPRESENTATIVE SPOHNHOLZ held that AMHS  is in tremendous need of                                                               
funding and  asked whether there were  additional funds available                                                               
for which  the state could  apply to  aid in adequate  funding of                                                               
AMHS.                                                                                                                           
                                                                                                                                
MR. CARPENTER  stated that the Federal  Highway Administration is                                                               
anticipated to make an additional  $120 - $150 million available.                                                               
He  also presumed  that additional  funding  through the  Federal                                                               
Transportation Administration grants, all  of which could be used                                                               
for AMHS  and DOT&PF  would work with  the legislature  to assign                                                               
priorities in funding.                                                                                                          
                                                                                                                                
REPRESENTATIVE  SPOHNHOLZ  expressed  her hope  that  AMHS  would                                                               
maintain  a priority  in funding.   She  asked whether  the funds                                                               
could be used for updating ports.                                                                                               
                                                                                                                                
MR. CARPENTER confirmed  yes with the caveat that it  should be a                                                               
state-owned port.                                                                                                               
                                                                                                                                
10:57:03 AM                                                                                                                   
                                                                                                                                
CHAIR  TUCK asked  if anyone  could recall  the amounts  that had                                                               
been previously vetoed for the two projects.                                                                                    
                                                                                                                                
10:57:27 AM                                                                                                                   
                                                                                                                                
SENATOR  BISHOP  offered  his   understanding  that  the  Chitina                                                               
Station was $157,000.                                                                                                           
                                                                                                                                
10:57:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   SPOHNHOLZ  asked   for   clarification  on   the                                                               
definition of "state-owned port."                                                                                               
                                                                                                                                
MR.  CARPENTER  offered  that different  funding  mechanisms  are                                                               
available  through  Federal  Highway Administration  funding  and                                                               
added that  the funds  could be  used for  any Title  23 eligible                                                               
asset.   He offered to  provide additional  follow-up information                                                               
to further clarify.                                                                                                             
                                                                                                                                
10:58:35 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease at 10:58 a.m.                                                                                
                                                                                                                                
10:59:20 AM                                                                                                                   
                                                                                                                                
SENATOR  BISHOP  moved  that the  Legislative  Budget  and  Audit                                                               
Committee approve the following RPLs:                                                                                           
                                                                                                                                
   • RPL  04-2021-1066, DOR, COVID-19 Federal Housing and                                                                       
     Homeless Stimulus / AHFC Ops;                                                                                              
   • RPL  04-2021-1067, DOR, COVID-19 Housing and Homeless                                                                      
     Stimulus Partnerships / AHFC Ops;                                                                                          
   • RPL  05-2021-0189, DEED, U.S. Department of Education                                                                      
     Consolidated Appropriations Act, COVID Relief /                                                                            
     Student and Student Achievement; and                                                                                       
   • RPL  25-2021-4038, DOT, COVID-19 FHWA Grants  Re-                                                                          
     opening of Silvertip, Chitina and Birch Lake                                                                               
     Maintenance Stations / Central and Northern Region                                                                         
     Highways / Maintenance Stations.                                                                                           
                                                                                                                                
There being no objection, the RPLs were approved.                                                                               
                                                                                                                                
^LEGISLATIVE FINANCE DIVISION 2021 SESSION PROTOCOL                                                                             
        LEGISLATIVE FINANCE DIVISION 2021 SESSION PROTOCOL                                                                  
                                                                                                                              
11:00:52 AM                                                                                                                   
                                                                                                                                
CHAIR  TUCK announced  the next  order of  business would  be the                                                               
Legislative Finance Division 2021 Session Protocol.                                                                             
                                                                                                                                
11:01:01 AM                                                                                                                   
                                                                                                                                
MR. PAINTER stated that the  Legislative Council has directed the                                                               
Legislative  Affairs   Agency  to  establish   session  protocols                                                               
related to the  COVID-19 pandemic for staff  and that Legislative                                                               
Finance  Division receives  its  direction  from the  Legislative                                                               
Budget and Audit Committee.   He referred to the committee packet                                                               
item  entitled  "Legislative   Finance  Division's  2021  Session                                                               
Protocol."    He  expressed  that  the  preferred  communications                                                               
methods  would be  via telephone  or videoconference  and, should                                                               
legislators  or  staff  wish to  meet  with  Legislative  Finance                                                               
Division staff in person, he  asked that individuals direct their                                                               
requests to  him as a  single point  of contact for  the division                                                               
rather  than  make  the  request  of  individual  analysts.    He                                                               
explained  this   would  help  in  making   staff  available  and                                                               
mitigating risk  to staff.   He asked that all  in-person contact                                                               
be restricted  to by appointment  only.   He added that  the same                                                               
protocol should  apply to committee meetings  in cooperation with                                                               
the chairs.                                                                                                                     
                                                                                                                                
11:03:23 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE JOSEPHSON  said he had  observed that there  was a                                                               
monitor  in the  finance subcommittee  room for  the purposes  of                                                               
videoconferencing witnesses, and he  asked if additional monitors                                                               
would be purchased and deployed  throughout other committee rooms                                                               
for the same purpose.                                                                                                           
                                                                                                                                
MR. PAINTER stated that, while  he did not have details regarding                                                               
the  intent of  the subcommittees  for general  meetings such  as                                                               
overview   presentations,  he   considered  that   closeouts  and                                                               
amendments  warranted  Legislative   Finance  Division  in-person                                                               
attendance whereas  general meetings in which  division staff are                                                               
not presenting would not.                                                                                                       
                                                                                                                                
11:04:17 AM                                                                                                                   
                                                                                                                                
The committee took an at-ease from 11:04 a.m. to 11:18 a.m.                                                                     
                                                                                                                                
^SPECIAL AUDIT REQUEST                                                                                                          
                      SPECIAL AUDIT REQUEST                                                                                 
                                                                                                                              
11:18:25 AM                                                                                                                   
                                                                                                                                
CHAIR  TUCK announced  the final  order  of business  would be  a                                                               
return to the discussion of the Special Audit Request.                                                                          
                                                                                                                                
CHAIR TUCK  directed attention  to a  revised memo  pertaining to                                                               
the special  audit request of  the CARES  Act.  He  recalled many                                                               
reported  frustrations  surrounding  the  small  business  relief                                                               
program.   He recounted that  initially there were  issued loans,                                                               
and then grants, with limitations  on businesses who had received                                                               
other federal  funds.  He  shared anecdotes of  businesses having                                                               
returned previously  received federal  funds in order  to qualify                                                               
for  subsequent larger  block grants  made available  through the                                                               
state.    He cited  an  example  of  a business  having  returned                                                               
federal funds and  re-queuing to apply for block  grants, but the                                                               
timing  of  the  federal  refund  processing  made  the  business                                                               
ineligible for receiving the grants.   He recalled the opinion of                                                               
Legislative Legal  Services Director  Megan Wallace in  which she                                                               
categorized it as "a tortured process."   He pointed out that the                                                               
committee had  met on three  occasions to aid  the administration                                                               
to "get it right."  He  stated that additional relief funds would                                                               
be coming to the state, and  he expressed his desire to affirm to                                                               
the  business  community  that  it   should  be  able  to  expect                                                               
certainty  and  clarity.    He  recounted  that  his  office  had                                                               
assisted  several individuals  throughout the  state in  applying                                                               
for the  funds.  He emphasized  that the purpose of  the audit is                                                               
to aid improvement  to the processes and should  augment, and not                                                               
interfere with the upcoming Finance Committee process.                                                                          
                                                                                                                                
11:21:49 AM                                                                                                                   
                                                                                                                                
SENATOR VON IMHOF  said in December 2020 she  had estimated that,                                                               
since  April  2020, the  state  had  received approximately  $5.6                                                               
billion  of federal  funds for  unemployment insurance  benefits,                                                               
small  business economic  industry  disasters, business  paycheck                                                               
protection  programs,  the  $1.2  billion in  CARES  Act  funding                                                               
associated with the RPLs, and  hundreds of millions in additional                                                               
funds  through other  programs.   She agreed  with the  sentiment                                                               
that information should be sought,  and sooner rather than later.                                                               
She suggested that,  rather than a list  of individual recipients                                                               
and  specific   amounts,  categories  of  expenditures   such  as                                                               
homeless  programs,  housing  assistance,  food  assistance,  and                                                               
childcare  assistance should  be sought  and understood,  and the                                                               
question should  be asked as to  whether all the funds  have been                                                               
dispersed  to  date.    She cautioned  against  scrutiny  of  the                                                               
minutia of the  data and fairness among  recipients and advocated                                                               
to  identify areas  of  expenditure that  will  benefit from  the                                                               
anticipated  additional funding  that  all  states will  receive.                                                               
She expressed concern that comparing  who had received what could                                                               
result in  arguments and opined  that there  was a better  use of                                                               
the committee's time  when considering the data.   She stated her                                                               
agreement  that the  process to  date  had been  a tortured  one;                                                               
however, she  expressed her  hope that  AIDEA and  other entities                                                               
have  received  constructive  feedback   and  would  apply  their                                                               
expertise within  the public's  trust and  with oversight  by the                                                               
administration to make continual improvements to the processes.                                                                 
                                                                                                                                
SENATOR  VON  IMHOF  summarized   her  comments  to  suggest  the                                                               
approach should  be to  determine:  where  the money  has already                                                               
been spent;  where gaps in  spending are most apparent;  what the                                                               
federal parameters  for the anticipated  additional funds  yet to                                                               
be  received are;  and  in  what areas  of  need the  legislature                                                               
should endorse spending going forward.                                                                                          
                                                                                                                                
11:25:45 AM                                                                                                                   
                                                                                                                                
CHAIR TUCK added that it was  proposed to audit all the CARES Act                                                               
funds received to date; however,  the request had been pared down                                                               
to  examine  instead  the  small business  relief  that  had  the                                                               
"torturous process".   He described  it as the program  which has                                                               
the most significant  impact on the economy  and getting Alaskans                                                               
back to work.  He expressed  agreement that an examination of all                                                               
CARES Act  funds would  be worthwhile  in the  future.   He added                                                               
that  one  important  factor  is the  state  is  responsible  for                                                               
reimbursing the federal government should the funds be misspent.                                                                
                                                                                                                                
SENATOR  VON  IMHOF reiterated  her  desire  that a  higher-level                                                               
review is  in order  and her  opinion that  exposure of  lists of                                                               
thousands of businesses and entities  and the amounts received is                                                               
not a good use of the  committee's time.  She added that attempts                                                               
had  been made  at micromanaging  the AIDEA  and DCCED  processes                                                               
without success.                                                                                                                
                                                                                                                                
CHAIR TUCK stated that the  information being sought in the audit                                                               
request  has   already  been  made   available  to   the  federal                                                               
government,   and  he   expressed  his   concern  regarding   the                                                               
difficulty encountered  in seeking the same  information from the                                                               
administration.  He argued that  the transparency being sought is                                                               
important,  and the  consequences  of information  revealed as  a                                                               
result of the review is deserving of scrutiny.                                                                                  
                                                                                                                                
11:28:39 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE JOSEPHSON recalled  that during committee meetings                                                               
in  late  August or  September  2020,  the committee  approved  a                                                               
change in  the definition  of eligibility at  the request  of the                                                               
administration.    He explained  that  the  change in  definition                                                               
resulted in  funds being made  available to  larger corporations.                                                               
He  emphasized  that transparency  into  who  has received  funds                                                               
would inform as to who needs  the next tranche.  He demurred with                                                               
respect to a  previous speaker that micromanagement  is cried out                                                               
for when mismanagement is observed.   He recalled that discussion                                                               
had taken place in June and  throughout the summer, and not until                                                               
around Labor Day  was there an expressed interest on  the part of                                                               
the administration to fix the problems.                                                                                         
                                                                                                                                
11:29:54 AM                                                                                                                   
                                                                                                                                
SENATOR  BISHOP  moved  that the  Legislative  Budget  and  Audit                                                               
Committee direct  the legislative auditor to  provide information                                                               
and conduct an  audit of the Alaska CARES Act  grants as provided                                                               
in  Chair  Tuck's amended  memo.    He  further moved  that  this                                                               
request  be  accelerated  and prioritized  before  other  special                                                               
audits.  There being no objection, it was so ordered.                                                                           
                                                                                                                                
11:30:35 AM                                                                                                                   
                                                                                                                                
CHAIR  TUCK  expressed  his  gratitude  to  the  members  of  the                                                               
committee and  their staff, the  Legislative Audit  Division, and                                                               
Legislative  Finance  Division  for   their  help  in  conducting                                                               
committee business.  He thanked  the committee for their apparent                                                               
commitment  and flexibility  in  handling  the complexities  that                                                               
accompany the large influx of funds.                                                                                            
                                                                                                                                
11:31:33 AM                                                                                                                   
                                                                                                                                
SENATOR BISHOP echoed the sentiments  of Chair Tuck and added his                                                               
gratitude to Senator  Giessel [who was ending her  term in office                                                               
as   Senate  President]   for  her   attention   to  detail   and                                                               
organization to  further the committee's efforts,  to which other                                                               
members applauded.                                                                                                              
                                                                                                                                
11:31:56 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the                                                                       
Legislative Budget and Audit Committee meeting was adjourned at                                                                 
11:32 a.m.                                                                                                                      

Document Name Date/Time Subjects
CARES Act Special Audit Request.pdf JBUD 1/18/2021 9:00:00 AM
20-201boo Cares Act grants should be public (002).pdf JBUD 1/18/2021 9:00:00 AM
LBAC memo RE IT audit procurement approval.pdf JBUD 1/18/2021 9:00:00 AM
RPL Complete Packet.pdf JBUD 1/18/2021 9:00:00 AM
LFD Session Protocol.pdf JBUD 1/18/2021 9:00:00 AM
Public Opinion Poll Contract Memo and Proposal.pdf JBUD 1/18/2021 9:00:00 AM
LBA Agenda 21-01-18 third amendment.pdf JBUD 1/18/2021 9:00:00 AM
CARES Act Special Audit Request Amendment.pdf JBUD 1/18/2021 9:00:00 AM