03/20/2008 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB198 | |
| SB199 | |
| SCR12|| SB203 | |
| SB213 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 198 | TELECONFERENCED | |
| *+ | SB 203 | TELECONFERENCED | |
| *+ | SCR 12 | TELECONFERENCED | |
| *+ | SB 199 | TELECONFERENCED | |
| *+ | SB 213 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
March 20, 2008
9:07 a.m.
MEMBERS PRESENT
Senator Lesil McGuire, Chair
Senator Gary Stevens, Vice Chair
Senator Hollis French
Senator Lyda Green
Senator Con Bunde
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 198
"An Act extending the statute of limitations for the filing of
complaints with the Alaska Public Offices Commission involving
state election campaigns, reducing the period in which an
elected candidate may continue to accept contributions; limiting
the quantity of unused campaign contributions a candidate may
transfer to a political party; increasing the penalty for a
lobbyist or employer of a lobbyist who fails to properly
register or file a report; and extending the statute of
limitations for prosecutions of violations of the Alaska
Election Code."
FAILED TO MOVE OUT OF COMMITTEE
SENATE BILL NO. 199
"An Act extending the statute of limitations for the filing of
complaints with the Alaska Public Offices Commission involving
state election campaigns."
MOVED SB 199 OUT OF COMMITTEE
SENATE CONCURRENT RESOLUTION NO. 12
Proposing an amendment to the Uniform Rules of the Alaska State
Legislature relating to voting.
HEARD AND HELD
SENATE BILL NO. 203
"An Act requiring a legislator to abstain from voting on
questions affecting an enterprise if the legislator or member of
the legislator's immediate family has a financial interest in
the enterprise that is substantial, and requiring a legislator
to abstain from taking or withholding official action or
exerting official influence in certain matters in which the
legislator's action or influence could benefit another person;
making the Act conditionally effective; and providing for an
effective date."
HEARD AND HELD
SENATE BILL NO. 213
"An Act relating to the audit authority of the legislative audit
division."
MOVED CSSB 213(STA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 198
SHORT TITLE: CAMPAIGN FINANCE/ELECTION CODE VIOLATIONS
SPONSOR(S): SENATOR(S) WIELECHOWSKI, THOMAS
01/16/08 (S) PREFILE RELEASED 1/4/08
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) STA, JUD, FIN
03/20/08 (S) STA AT 9:00 AM BELTZ 211
BILL: SB 199
SHORT TITLE: CAMPAIGN FINANCE COMPLAINTS
SPONSOR(S): SENATOR(S) THERRIAULT
01/16/08 (S) PREFILE RELEASED 1/4/08
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) STA, FIN
03/20/08 (S) STA AT 9:00 AM BELTZ 211
BILL: SCR 12
SHORT TITLE: AMEND UNIFORM RULES: ABSTAIN FROM VOTING
SPONSOR(S): SENATOR(S) WIELECHOWSKI
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) STA, JUD
03/20/08 (S) STA AT 9:00 AM BELTZ 211
BILL: SB 203
SHORT TITLE: LEGISLATIVE ETHICS: VOTING & CONFLICTS
SPONSOR(S): SENATOR(S) WIELECHOWSKI
01/16/08 (S) PREFILE RELEASED 1/4/08
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) STA, JUD
03/20/08 (S) STA AT 9:00 AM BELTZ 211
BILL: SB 213
SHORT TITLE: LEGISLATIVE AUDIT DIVISION POWERS
SPONSOR(S): SENATOR(S) DYSON
01/16/08 (S) PREFILE RELEASED 1/4/08
01/16/08 (S) READ THE FIRST TIME - REFERRALS
01/16/08 (S) STA, FIN
03/20/08 (S) STA AT 9:00 AM BELTZ 211
WITNESS REGISTER
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau AK
POSITION STATEMENT: Presented SB 198.
CHRIS ELLINGSON, Acting Executive Director
Alaska Public Offices Commission
Anchorage AK
POSITION STATEMENT: Answered questions about SB 198 and 199.
SENATOR GENE THERRIAULT
Alaska State Legislature
Juneau AK
POSITION STATEMENT: Presented SB 199.
MICHELLE SYDEMAN, Staff
to Senator Bill Wielechowski
Alaska State Legislature
POSITION STATEMENT: Presented SCR 12.
DAN WAYNE, Attorney
Legal and Research Services Division
Alaska Legislative Affairs
Juneau AK
POSITION STATEMENT: Answered questions about SCR 12.
SENATOR FRED DYSON
Alaska State Legislature
Juneau AK
POSITION STATEMENT: Presented SB 21.
PAT DAVIDSON, Auditor
Division of Legislative Audit
Juneau AK
POSITION STATEMENT: Answered questions about SB 21.
ACTION NARRATIVE
CHAIR LESIL MCGUIRE called the Senate State Affairs Standing
Committee meeting to order at 9:07:41 AM. Senators French,
Stevens, Bunde, and McGuire were present at the call to order.
Senator Green arrived later.
SB 198-CAMPAIGN FINANCE/ELECTION CODE VIOLATIONS
9:07:52 AM
CHAIR MCGUIRE announced the consideration of SB 198.
SENATOR BILL WIELECHOWSKI, Alaska State Legislature, said SB 198
is based on recommendations by the Alaska Public Offices
Commission (APOC) to restore the statute of limitations to four
years for investigating and prosecuting violations of state
campaign finance reforms. Alaska has only a single year now.
Most states allow for more time for violations to come to light
and be investigated. Georgia allows three to five years.
Washington and California allow complaints to be filed within
four years. Connecticut, Massachusetts, Hawaii, and New Jersey,
have no time limits. Several states extend their statutes for
fraud and misrepresentation for one year from the date of
discovery. At the unanimous urging from APOC, SB 198 would
reinstate the four-year statute of limitations that existed
until 2003, providing sufficient time for a violation to be
discovered and investigated. The bill will restrict post-
election fundraising to ten days after an election. It also
limits surplus campaign funds that can be given to a political
party to $5,000, in conformity with AS15.030.70, which limits
individual donations to political parties. At the recommendation
of the APOC commissioners, SB 198 will also increase the civil
penalty for lobbyists who don't file required reports with the
commission from $10 to $50 per day. It has not been increased
since 1976, and APOC is concerned that it is not substantial
enough to encourage timely filing.
9:10:31 AM
CHAIR MCGUIRE asked why 10 days instead of 45 for fundraising.
SENATOR WIELECHOWSKI said it was a recommendation by APOC, and
the fundamental idea is that once someone wins an election he or
she shouldn't fundraise.
SENATOR STEVENS asked if this has been a problem.
SENATOR WIELECHOWSKI said he is willing to take that provision
out.
CHAIR MCGUIRE suggested that an underdog may win and then wants
an opportunity to recover costs.
SENATOR BUNDE said it seems that some losers of federal
campaigns have fundraisers to recoup personal funds. He
understands that ten days may include money in the mail. But a
winner may be able to lean on people and there may be more
pressure than from a loser's fundraising activities.
9:13:00 AM
CHRIS ELLINGSON, Acting Executive Director, Alaska Public
Offices Commission, said the rationale for the ten days is based
on what has been happening since campaign finance reform. The
winners usually get most of the money before and after the
election. There seems to be a run of post-election fundraising
to recoup some personal money and to pay off debts, but much of
it is used to give away to others. APOC has looked at where this
money is going. Some goes to charities that had a close
relationship with the winner and some goes to the political
party. APOC is considering reinstating the ten-day post-election
report and changing the year-end report due date to December 31,
which makes more sense. "That's why they were looking at the
ten-day time frame. They were not wedded to it and if it is a
problem, I'm sure that they would understand if it came out."
9:15:19 AM
SENATOR BUNDE said he supports limiting "the notion of
harvesting money and then turning it around and passing it on to
parties and charities and that sort of thing." The bill also
contains a $5,000 maximum contribution, and he asked if that
would address those concerns. "The other thing is if it was
limited to only people who lost the election, would that help?
Because … someone that has won the election and then has a
fundraiser … people may feel pressured to attend that."
MS. ELLINGSON said the $5,000 would make a big difference. If
that stays in, APOC would have no problem with the time period
th
being up to the 45 day. Of importance is that the people who
run and win are the ones who can have a fundraiser. A fundraiser
for a loser doesn't really happen.
9:17:18 AM
SENATOR STEVENS asked if the money is really a problem. He would
be lucky to have money left over after an election. How often
has over $5,000 been given to a political party?
MS. ELLINGSON said quite often because of the limits of rolling
money forward to a new campaign. She has seen anywhere from
$10,000 to $20,000, and it doesn't necessarily go to the central
committee, it may go to different arms of the committees.
SENATOR STEVENS said he wants some facts before he would agree.
MS. ELLINGSON said she can get it to him, but there are between
five and six candidates that distribute that much to parties
after every election campaign. It is part of the disbursement
process after the election is over.
9:19:02 AM
SENATOR FRENCH asked if a person could donate $5,000 to the
Republican Party and then give more to a subdivision of the
party, like a candidate's fund. Will it all count toward the
limit?
MS. ELLINGSON said yes. Everyone else in the state who wants to
contribute to the party can only give $5,000, so why shouldn't a
candidate have the same limit?
SENATOR FRENCH asked if this bill will make $5,000 the total
limit and not allow giving $5,000 to different subdivisions.
9:20:37 AM
MS. ELLINGSON said it will bring it in line with every other
person that contributes. That is the total maximum.
SENATOR STEVENS asked if this is abused by both parties.
MS. ELLINGSON said, absolutely.
SENATOR BUNDE asked how often the lobbyist fine is imposed now,
and how many days are they usually in arrears.
MS. ELLINGSON said at every APOC meeting there are five to
fifteen lobbyists up for civil penalty review because they want
to appeal them. Lobbyists have paid up to $7,000 at $10 per day.
SENATOR BUNDE asked if they are accessed the penalty when they
are under appeal.
MS. ELLINGSON said lobbyists have to file a report and then they
are assessed a penalty. The clock stops the day the report is
filed. They can appeal it once they get the penalty letter.
SENATOR STEVENS said a $7,000 fine could go up to $35,000.
MS. ELLINGSON agreed.
9:23:20 AM
SENATOR STEVENS said he is not a great friend of lobbyists but
the fine sounds high, but they do earn lots of money. He has a
problem with the ten days and the $5,000. He wants to know why
it is so bad that the parties receive funds and disburse them to
the candidates. What is so bad about the current system?
SENATOR WIELECHOWSKI said Ms. Ellingson had compelling
testimony. APOC is unanimous on it. If a lobbyist is getting
fined $7,000 it means reports haven't been filed for over two
years, and Ms. Ellingson said there were five to fifteen
lobbyists per APOC meeting. It is a problem, and if the fine is
increased it might solve it. The fine is so small lobbyists
decide to pay the fine instead of disclosing information.
9:26:09 AM
SENATOR BUNDE said he understands the logic of not letting a
candidate donate more than anyone else. He supports the $5,000
limit. The ten-day timeframe wasn't as important to APOC. He
heard Ms. Ellingson say there were ten to fifteen lobbyists
appealing, not in arrears. A person files, meets the deadline,
and then argues about it afterwards. He doesn't understand why a
lobbyist wouldn't file on a timely basis, so he is not concerned
about the $50 a day. He doesn't understand why a winner "should
be able to do the 45 days. I don't know if we want to be
creative and say losers get 45 days and winners get 10." Maybe
it isn't worth the effort because not many people go to a
loser's fundraiser. There may be people who run with the idea of
recouping some of their losses after the election. He asked Ms.
Ellingson about differentiating between winners and losers.
9:28:22 AM
MS. ELLINGSON said it would be doable but prefers keeping it
equal across the board. APOC is not wedded to the ten-day limit.
CHAIR MCGUIRE said if candidates are doing what they should be
doing, they are out knocking on doors and campaigning.
Fundraising is a burden, but the money helps get the message
out. She raises money after the deadline because she has no time
during the election. She doesn't raise money to give to a party.
SENATOR FRENCH said the heart of this proposal is extending the
statute of limitations. This is what the public wants. The bill
has a long way to go, and he wants the committee to agree to let
that provision go forward today. A one-year statute of
limitation on campaign violations is insufficient given the
meager resources of APOC. He wants to rally around that part of
the bill. He doesn't know how much of a problem post-election
fundraising is, but APOC thinks it is a problem. There should be
some time limit on fundraising. He has seen some losers hold
fundraisers, and maybe they are being encouraged to run again.
"I've had to come deeply out of pocket to get through an
election cycle, and so you try to get some of that back." He
suggested changing the limit to 30 days, keeping the statute of
limitations, and moving the bill.
9:32:05 AM
SENATOR BUNDE said there is another bill that addresses only the
four-year statute of limitations. This bill could be set aside.
CHAIR MCGUIRE said she would like to let both bills move through
the process. Thirty days seems like a compromise.
SENATOR FRENCH moved conceptual Amendment 1, as follows:
On page 2, line 8:
Delete "ten"
Insert "thirty"
Hearing no objection, conceptual Amendment 1 passed.
CHAIR MCGUIRE said she would like to hear how that plays out,
and maybe with the limitation on the party donation, it will
take care of the problem.
SENATOR STEVENS said he wants to know the reason for the $5,000.
He gets money from the Republican Party. He has never returned
any to it, but it may be a good idea to return money to those
coffers. What is wrong with it?
9:34:11 AM
SENATOR WIELECHOWSKI said APOC unanimously supported these
changes, and it puts everyone in line with what any other
individual in the state can donate. The meat of the bill is the
statute of limitation. If the committee is concerned, perhaps it
can be taken up at another time.
SENATOR STEVENS said APOC has not presented a compelling
argument. There is nothing wrong with returning funds to the
party that supported him. He also questioned the 30-day limit.
SENATOR FRENCH said there should be some limit, and 30 days is
enough time to wrap up a campaign and settle the debts. He is
not sure any abuses have been centered on settling campaign
accounts. He wouldn't oppose an amendment to strike Section 3.
SENATOR BUNDE objected. This is a package of recommendations
from APOC and the committee is dissecting and picking among
them. "If you want a clean bill, we've got one."
CHAIR MCGUIRE said she will oppose the amendment because she can
see where a party is using candidates - who are propped up by
the party -- to regenerate funds. It is outside the regular
method for raising money for the party.
9:37:09 AM
SENATOR FRENCH he said he wouldn't oppose a motion, but did not
move an amendment.
CHAIR MCGUIRE said Senator Stevens has made good points, and
perhaps between now and the next committee, he can get more
information.
SENATOR FRENCH moved to report SB 198, as amended, from
committee with individual recommendations and attached fiscal
note(s).
SENATOR BUNDE objected. There are two bills with the core
provision, and this is more complicated. SB 198 shouldn't move
out of committee when there are a lot of questions. "We should
work on this bill, and I think these $5,000 questions are
important ones. Let the clean bill move forward, and we can let
this one catch up after we get our questions answered."
9:39:14 AM
CHAIR MCGUIRE said she doesn't want politics to get in the way
of what seems to be a good idea. "Good enough that you have two
members out of 20 that have put it forward." She wants to put
them both forward and see which one moves ahead.
A roll call vote was taken. Senators French and McGuire voted in
favor of moving SB 198 from committee, and Senators Bunde and
Stevens voted against. The bill failed to move out of committee
on a vote of 2 to 2.
SB 199-CAMPAIGN FINANCE COMPLAINTS
9:40:50 AM
CHAIR MCGUIRE announced the consideration of SB 199, which is
similar to SB 198 but only addresses the statute of limitations.
SENATOR GENE THERRIAULT, Alaska State Legislature, said SB 199
increases the statute of limitations from one year to four
years. Section 2 just clarifies that it will apply to any matter
that has taken place within the past year and forward. It will
not be retroactive to four years. The change to one year was in
a bill that was introduced by the administration and intended to
abolish APOC. There wasn't a lot of debate on the statute of
limitations. He doesn't recall an objection from APOC, but it
may have been focused on other aspects of the bill, like
abolishing APOC. The fiscal note is not insignificant.
The committee took a brief at-ease at 9:43:15 AM.
9:43:31 AM
SENATOR THERRIAULT said APOC was struggling with its budget back
then, and shortening the statute of limitations freed up some
financial pressures. With the dynamics of the legislature in the
last year and a half, it is prudent to revisit the issue. SB 199
is wholly contained in SB 198, and he would support moving SB
198 instead. There is an unwritten rule that the lower-numbered
bill moves. That rule should be followed but was violated this
week and he was disappointed. Parts of SB 198 are problematic to
some members. His view on the $5,000 limit is that the money
would not be an individual personal donation. If there is a
surplus after a campaign, it has to be given away. To say that
it should be treated the same as a personal donation is not
logical.
9:46:17 AM
SENATOR BUNDE asked if SB 199 addresses APOC's main concern.
CHRIS ELLINGSON, Acting Executive Director, Alaska Public
Offices Commission, said the commission was open to four or five
years, and would be delighted with four years. It puts it back
to what it was before 2003.
SENATOR STEVENS asked how it compares with federal law.
MS. ELLINGSON said she doesn't know exactly, but she has seen
investigations go back ten years.
9:48:27 AM
SENATOR BUNDE said it is obviously longer than four years.
SENATOR GREEN asked about the difficulty in building a case in
that time frame and if there is lost information. She asked if
things couldn't be substantiated after four years.
SENATOR THERRIAULT said following a paper trail will be more
problematic, and that is what drives part of the fiscal note.
SENATOR BUNDE said the rule of thumb is keeping canceled checks
for seven years. This may mean that people shouldn't clean out
their files until after four years.
SENATOR THERRIAULT said he keeps his paperwork forever.
CHAIR MCGUIRE said it is difficult to retrace. It is a burden
with expectations. There are many things to keep records of,
including her son's dividend and college fund.
9:51:21 AM
SENATOR BUNDE said the four-year limitation is part of a concern
on the lack of ethical behavior. He asked if APOC was not able
to address some violations because of the short time limit.
MS. ELLINGSON said yes, and some may have been minor.
SENATOR BUNDE said, "Then it isn't just a PR thing." SB 199 is
the guts of the matter and not just a feel-good thing. It is
necessary, and he moved SB 199 from committee with individual
recommendations and attached fiscal note(s). There being no
objection, SB 199 passed out of committee.
SCR 12-AMEND UNIFORM RULES: ABSTAIN FROM VOTING
SB 203-LEGISLATIVE ETHICS: VOTING & CONFLICTS
9:53:28 AM
CHAIR MCGUIRE announced the consideration of SCR 12 and SB 203.
MICHELLE SYDEMAN, Staff to Senator Bill Wielechowski, said SCR
12 will bring Alaska in line with most other states prohibiting
legislators who have a substantial financial stake from voting
on a bill. She said 65 percent of states do this, including
Colorado, Florida, Maine, Texas and Washington. An additional 35
percent allow legislators with substantial conflicts to request
permission to abstain. Most of these states permit abstention if
a majority of legislators vote to grant it. Alaska is the only
state that requires unanimous consent before a legislator with a
conflict can abstain from a vote. The Center for Ethics in
Government knows of no other states. The House Clerk and the
Senate Secretary do not recall a single time when permission to
abstain was granted. Alaska is at the far end of the spectrum,
even among states with small citizen legislatures. Existing
statutes go to lengths to insure that conflicts are substantial
before a legislator would be required to abstain. Any benefit a
legislator might receive from supporting a particular piece of
legislation would have to be greater than the benefit a large
group of Alaskans would receive in order to require abstention.
A legislator who teaches during the interim could vote on the
salary of teachers, because the gain is shared among many.
9:56:47 AM
MS. SYDEMAN said SCR 12 would require legislators to declare
their conflict, identify the provision of the ethics act that
would be violated, and abstain from voting. A request to abstain
due to anything other than ethical concerns would still require
unanimous consent. There will be few instances that a member
will be able to demonstrate direct and substantial economic
benefit that is greater than that received by the substantial
class of persons to which that legislator belongs as a member of
a profession, industry or region. This is the existing language
of AS24.60.030. In those rare instances, this change in the
uniform rules would provide assurance that decisions are made in
the public interest. It would also protect legislators from
allegations that a vote was influenced by personal concerns.
SENATOR BUNDE said "a large or substantial number" is squishy.
He would like a better definition.
MS. SYDEMAN said it is terminology used across the country. She
couldn't find a state with a good definition. She believes it is
left to the discretion of the ethics committees. It is also the
existing language in Alaska's statutes right now.
9:58:38 AM
SENATOR BUNDE said that Ms. Sydeman mentioned that teachers
would be a substantial group, and he asked about fishers, crab
fishers, hair crab fisher, and how to determine substantial.
MS. SYDEMAN said she has this discussion with many people across
the country and she hasn't gotten a clear answer. The decision
must be made on a case-by-case basis.
SENATOR BUNDE said he applauds the goal but questions the
mechanism for getting there.
9:59:36 AM
SENATOR STEVENS said there are conflicts of interest when voting
on the floor. There are also conflicts elsewhere. For example,
he retired from the university and was asked him to come back to
teach a class. Legislative attorneys said he can't work at the
university because he votes on the university budget. What is
the connection with that conflict and a voting one?
10:00:38 AM
MS. SYDEMAN said those are separate parts of state statutes.
DAN WAYNE, Legal and Research Services Division, said there is a
specific statute keeping legislators from taking certain jobs.
The concern, he believes, was about exerting influence to get a
job -- being hired because of legislative status.
SENATOR BUNDE said he had the same experience. The constitution
says a person cannot have two positions of profit with the
state. A public school teacher can be a legislator because
schools are "not directly a facet of the state" as the
university is. There was a legislator from Juneau who taught at
the university, and no one challenged it.
10:03:00 AM
SENATOR FRENCH said he couldn't work as a prosecutor in the off
season for the state but he could for a municipality.
CHAIR MCGUIRE said many lawmakers have been talking about this
and it has been awkward. It would be helpful to see how other
states handle it. For this small community everyone knows
everyone, and a large number of people may get conflicted out.
SENATOR STEVENS said legislators don't want to take a position
on an issue where their constituents are split, and it might be
convenient not to vote. Now, a person has to vote. He questioned
how the legislature operates when people can weasel out on a
vote. It might be difficult to get anything done if there were a
narrow majority.
SENATOR FRENCH asked if this would change the tally of votes
required to pass a bill.
MS. SYDEMAN said those requirements are in the constitution.
SENATOR FRENCH asked about a difficult issue, like a phone war,
where members would skip out on the vote by declaring a false
conflict of interest. He asked what happens in that instance.
10:06:42 AM
MS. SYDEMAN said that is an important question. The ethics
committee could make a determination. There could be a mechanism
for the body to determine if a conflict is real. It could be
rulings by a presiding officer or a vote by the body. The
uniform rules once called for a majority vote to determine
whether a member did have a substantial conflict, and then it
went to a two-thirds vote, and now it is unanimous consent.
SENATOR BUNDE said if SCR 12 becomes law, "and I declare a
conflict, then whether I had one or not and was prohibited from
voting would be a matter of a majority vote in the body."
MS. SYDEMAN said that is not the intent of this bill. It relies
on the judgment of the individual legislator, so that no other
members have to judge. "This bill leaves that completely up to
the determination of individual legislators." People thought
there could be political maneuvering if one member were to be
judged by a majority. A member with a conflict must go on record
and make the determination. If there is abuse, the ethics
committee is there.
10:09:17 AM
SENATOR BUNDE said the bill creates a huge opportunity for a
member not to vote on tough issues. He has a friend who lost an
election because he stood up and took the tough vote, "and he
could've ducked it." He asked how the ethics committee can
consider someone unethical who thinks there is some personal
financial impact. They may have to do a polygraph.
SENATOR STEVENS said one option is having the rules committee or
legislative council decide. But that would throw sand in the
wheels, and some may take advantage of that. The legislature,
now, is not as bad as some options being considered.
SENATOR BUNDE asked about another member deciding someone else
shouldn't vote.
MS. SYDEMAN said that is why the bill leaves it up to the member
- we didn't want other members pointing fingers.
10:12:27 AM
SENATOR GREEN asked, "How many other instances has the
legislature amended the uniform rules in statute?"
MS. SYDEMAN said this would not amend the uniform rules through
statute; it is a concurrent resolution. This particular rule has
been amended twice.
SENATOR GREEN asked if it was amended by the adoption of new
uniform rules or by direction in statute.
10:13:10 AM
MS. SYDEMAN said she believes it was done in a joint session of
the legislature, but she is not sure.
SENATOR GREEN said the uniform rules and the adoption of Mason's
current manual were really big issues when she was newly
elected. She hasn't heard that conversation as much recently,
but the uniform rules are considered powerful in order to keep
the legislature in charge of its business. The court has
recognized that. It makes her nervous to amend them without the
adoption of a whole new set of uniform rules.
CHAIR MCGUIRE said she will set the bill aside, but it is good
for bringing up this discussion. Members have been struggling
with how to handle conflicts. The body may want to consider
looking at the uniform rules. The Anchorage assembly deals with
conflicts of interest through its own internal rules, which
seems to work well. The discussion needs to continue.
SENATOR GREEN asked if for an example of someone being
conflicted from a vote.
SENATOR BUNDE asked if a three-quarters vote would be better
than the unanimous consent as a middle ground.
CHAIR MCGUIRE said members get cut off when they discuss why
they have a conflict. Maybe they should be in the public record.
SENATOR FRENCH said this is a difficult and fascinating issue -
ethically, politically, and philosophically. "We all know that
something has to happen." He suggested looking at examples in
other states where it works. Perhaps it only happens every four
or five years. Apparently the other states can get their work
done with some rule that prevents voting in some circumstances.
It seems like the Alaska legislature works, but it also seems
like a dinosaur. "We need to be open to the idea that there are
methods out there for dealing with what may be a circumstance
which is far more rare than most of us perceive."
10:18:50 AM
SENATOR STEVENS said the public knows where a politician stands
when elected. Citizens know what they are getting and want their
elected representatives to vote.
MS. SYDEMAN said there are many facets to the debate. The
committee could establish a small task force.
SENATOR BUNDE noted the disenfranchisement of the citizens who
elected someone who won't vote.
CHAIR MCGUIRE set aside SCR 12 as well as SB 203.
10:21:37 AM
MS. SYDEMAN said she has a separate presentation for SB 203. It
makes changes to the statute governing conflicts of interest.
CHAIR MCGUIRE set SCR 12 and SB 203 aside.
The committee took a brief at-ease at 10:22:21 AM.
SB 213-LEGISLATIVE AUDIT DIVISION POWERS
10:23:42 AM
CHAIR MCGUIRE announced the consideration of SB 213.
10:23:56 AM
SENATOR FRED DYSON, Alaska State Legislature, said he has had
interesting discussions on the scope of auditors' authority.
Page 1 of SB 213 notes that: "Audit has authority to look at the
books and accounts of all custodians of public funds and all
disbursing officers of the state." Senator Dyson wants the
division to have authority, if directed by Legislative Budget
and Audit Committee (LBA), to audit any organization that has
public funds. Pat [Davidson] said she only has authority to
audit state organizations. The bill makes it clear that she has
authority to audit any organization that gets money from or
through the state, including federal money.
10:26:17 AM
SENATOR BUNDE said line 13, page 1, is current law, and he asked
if the difference of opinion is what constitutes a custodian.
SENATOR DYSON said yes. "Paragraph 2 doesn't quite go where we
would want, because it seems to mandate that that be done every
three years, and I wouldn't want Pat and her organization to
have to audit every group that receives money every three
years." So the new paragraph is necessary.
10:27:12 AM
SENATOR STEVENS said senior citizen organizations are funded by
the state, including the one in Kodiak, which pays for and
performs its own audit. That duty will now go to the state. Is
that what would happen?
SENATOR DYSON said he would hope not. His goal is giving LBA the
authority to order an audit, "at their discretion and for their
reasons," on any organization that gets money through the state.
"It wouldn't be anything that they would be required to do, only
that they would have the authority to do."
SENATOR FRENCH said the bill says "shall … perform an audit of
an organization that receives money from or through the state."
He asked how many organizations that entails.
SENATOR DYSON said he missed that.
10:28:38 AM
CHAIR MCGUIRE moved conceptual Amendment 1 to replace "shall"
with "may" on line 4 of page 1.
SENATOR FRENCH objected and said, "Don't we want them to keep
doing what they have been doing?"
CHAIR MCGUIRE apologized.
SENATOR FRENCH suggested adding "as necessary" after "shall".
SENATOR GREEN suggested putting "may" at the end of line 22.
CHAIR MCGUIRE said conceptual Amendment 1 will change page 2,
line 22 or 23, adding "and may" or "or may".
SENATOR GREEN said the drafter might want to rewrite the
paragraph.
CHAIR MCGUIRE said that is conceptual Amendment 1. Hearing no
objections, conceptual Amendment 1 was adopted.
SENATOR GREEN said the legislature can't audit or require an
audit of a school district. It is up to the school board or the
borough assembly to order the audit. "I think we are making a
mighty reach here to think that we can go to nonprofits and
funders that happen to receive state money that they can come
under our authority." She doesn't object to it, but there needs
to be legal consideration. There are audits in the department
that are required for school districts, but they aren't
necessarily legislative audits.
10:31:31 AM
SENATOR DYSON said some states have this wording so they can be
a watch dog for public funds. Several states are allowed to
audit schools. He asked what can be done if there is a rogue
school district that the state pours money into. The legislature
has the responsibility to watch public funds. He said there was
some scandal with money that was distributed to nonprofits out
of health and human services. There was a cozy relationship
between the department and the grantees. Currently the audit
division can only audit health and human services and its
process, not how the money was used. He wants the division to
see how the public money was used.
SENATOR BUNDE noted that the Adak School District had no
students for a year or more, and the superintendent kept getting
money and the school board kept hiring him because he kept
hiring them. He thinks the education department finally shut
them down. He asked if the bill refers to federal money passed
through the state and funded directly.
SENATOR DYSON said, "From or through the state, that's line 23
and 24 on page 2." The federal government trusts the legislature
to be stewards of the money it gives.
10:34:12 AM
SENATOR GREEN said the federal government sometimes does an
audit, taking a cue from the state. She noted an audit on sewer
wastewater.
SENATOR DYSON said he has seen some past federal audits, and if
the state is not conforming in several areas there will be some
draconian things that happen. He wants to catch them before the
federal government does.
10:35:14 AM
PAT DAVIDSON, Auditor, Division of Legislative Audit, said her
ability to go beyond state agencies is limited. "Legislative
audit has very broad but very vague authority." Legislative
auditors have been around prior to statehood. Auditing other
than a state agency depends upon the grant agreement, and some
allow audits and some don't. If, for example, the Department of
Health and Social Services gave money to an entity to build a
health facility and LBA required Davis-Bacon wages, unless it is
in the grant agreement that they will comply with that, she
doesn't have a basis for an audit. The intent of the bill is to
open up the scope of inquires that could follow state money or
federal money flowing through the state. It would broaden her
ability to look at financially and, possibly, performance-based
issues. If the legislature wanted legislative audit to evaluate
a school district's policies, procedures, and how well it is
achieving goals, the bill will allow it.
10:38:39 AM
SENATOR BUNDE asked if Ms. Davidson wants this authority.
MS. DAVIDSON said anything that will help the legislature make
decisions is something that her group should do.
SENATOR BUNDE said he served on LBA and has seen some audits
with personal and political agendas, and audits aren't cheap.
How much does it cost to conduct an audit?
MS. DAVIDSON said from $10,000 to over $100,000. "We do bill out
under federal at a complete billing rate at about $50 an hour
for the division." Professionals do the work. "Whether or not
you want that section to be able to be done at my direction as
legislative auditor or you want to invest that authority only in
the budget and audit committee to authorize that … is an
important distinction." Now the legislative auditor is required
to do certain things, and the way it is written is permissive
for the division to start a financial-related audit. But a
performance audit needs to be approved by LBA. The LBA is a
gatekeeper of her work load.
10:41:23 AM
SENATOR BUNDE suggested that the cost of an audit should be put
forward so the LBA knows what it will cost, particularly if an
audit is not motivated by altruist reasons.
MS. DAVIDSON said financial audits can be estimated, but
performance audits can't. "You don't know what you're going to
get into. You don't know what sort of records are available."
The LBA asks if an audit will be big or small or go smoothly.
10:43:01 AM
SENATOR BUNDE said the number of audits will blossom if the
committee isn't extremely thoughtful.
SENATOR STEVENS said the custodians perform their own audits,
and asked if the division has access to those. It would be
duplication unless the organization's audit was respected.
MS. DAVIDSON said she would not duplicate any audits, and she
would not assume the responsibility for audits of any entity.
That model already exists. The division is required, by law, to
audit the state's financial statements; however, organizations
such as the Alaska Housing Finance Corporation and the permanent
fund contract with CPA firms to do their audits. There is a way
the division can rely on the work of others.
10:45:38 AM
SENATOR STEVENS asked if the division can use the school
districts' audits.
MS. DAVIDSON said she believes that is true. She has been asked
to audit school busses. There are a number of statutes governing
how school districts deal with bussing. The statutes are
referred to when the money is given to the districts, so she has
done those audits. The division doesn't repeat financial audits.
The bill authorizes something beyond that, like performance
audits or something very specific.
CHAIR MCGUIRE asked if anything needs to be added to the bill
regarding duplication.
MS. DAVIDSON said conceptual Amendment 1 may do that. The other
policy is to let the legislative auditor initiate the audit or
require direction from LBA. It is the practice of the profession
to work with other auditors instead of duplicating work.
CHAIR MCGUIRE said SB 213 is a good idea and will keep everyone
on their toes, but she wants legal advice.
10:48:18 AM
SENATOR BUNDE asked Ms. Davidson's opinion if the additional
audits allowed by the bill should be originated by the LBA.
MS. DAVIDSON said that is a policy call. She has seen issues
come up where she approached the chair of LBA. Not being able to
initiate audits wouldn't create any substantial barriers. The
legislature needs to decide who to give the authority to.
SENATOR BUNDE said he agrees with the goal of the bill. But he
is concerned about political motives from the people on LBA to
intimidate people or cause trouble.
SENATOR FRENCH asked how many extra audits can actually be done.
There are 2,000 groups that receive grants through the state.
10:50:52 AM
MS. DAVIDSON said audits with statutory deadlines are a
priority. Everything else just gets done as it comes up. The
delay can be several months. There have been informal
discussions about creating a priority process. She doesn't know
how many audits will be generated by SB 213. As legislators
understand that these organizations can be audited, there will
be more requests coming to LBA.
10:52:22 AM
SENATOR DYSON said there may be some additional costs at the
discretion of LBA, but fraud and wasting money has a cost. The
legislature has an innate responsibility to be stewards of
public money. There is no downside to SB 213. It may be misused,
but he trusts those on the LBA. On page 2, line 23, he has
thought about adding "when approved by LBA" after "perform".
10:54:31 AM
SENATOR BUNDE moved conceptual Amendments 1 and 2.
CHAIR MCGUIRE said conceptual Amendment 1 has been addressed.
The committee can offer conceptual Amendment 2, as follows:
Page 2, line 23, following "perform"
Insert: "when approved by the Legislative Budget
and Audit Committee"
SENATOR BUNDE said there may be some problems, but there is more
good to this bill than negatives. A positive unintended
consequence will be more forethought.
Hearing no objection, conceptual Amendment 2 was adopted.
SENATOR BUNDE moved to report SB 213 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, CSSB 213(STA) passed out of committee.
SENATOR DYSON said he will get legal advice to ensure that the
statutes do not preclude this, "and if there is, we'll deal with
it."
There being no further business to come before the committee,
Chair McGuire adjourned the meeting at 10:57:29 AM.
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