Legislature(2021 - 2022)
01/18/2021 09:00 AM Senate BUD
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Executive Session | |
| Status Update | |
| Contracts | |
| Special Audit Request | |
| Revised Programs - Legislative | |
| Legislative Finance Division 2021 Session Protocol | |
| Special Audit Request | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
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 |