Legislature(2017 - 2018)HOUSE FINANCE 519
04/14/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Spring Revenue Forecast: Powerpoint | |
| HB103 | |
| HB76 | |
| HB128 | |
| SB3 | |
| HB167 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 76 | TELECONFERENCED | |
| + | HB 128 | TELECONFERENCED | |
| *+ | HB 167 | TELECONFERENCED | |
| + | SB 3 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 103 | TELECONFERENCED | |
HOUSE BILL NO. 167
"An Act relating to performance reviews, audits, and
termination of executive and legislative branch
agencies, the University of Alaska, and the Alaska
Court System."
5:27:23 PM
REPRESENTATIVE GABRIELLE LEDOUX, SPONSOR, explained that
the bill would repeal the requirement for performance
audits. She reported that performance audits had not been
funded for the previous couple of years. She thought their
costs ran over $1 million. The audits were typically 800 to
1000 pages in length. She doubted anyone had ever read any.
Someone had requested that she introduce the bill to
eliminate the requirement.
Representative Wilson did not agree with the reason for the
proposed elimination. She wondered if the legislature was
taking the wrong approach to finding efficiencies and
measuring programs. She wondered if there was a better
approach to take rather than requiring performance audits.
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, replied that she believed there was an
expectation gap in terms of the definition of a performance
audit. Performance audits were not in place to cut the
budget. She continued that a very small piece of the audits
had to do with the budget. Departments were asked to submit
10 percent reductions in their general funds and the
consultant was asked to evaluate whether the reductions
were in line with their findings of the reviews. She
explained that a performance review included looking at the
agency's mission and evaluating how it conducted its
business. The performance reviews were not intended to help
solve the state's budget crisis. The inherent problem with
the audit reviews was that they had not been read. If the
expectation was the performance reviews were going to help
solve the budget, it was not valid. If the legislature
chose to fund audits in the future, many changes should be
made to make them effective. She had been asked to provide
a summary of suggested changes. However, she did not have
the resources to do so at present. She suggested it might
be possible in the off-season. She added that if
performance audits were to continue at the request of the
legislature, some tweaks would need to be made to the
process.
5:31:53 PM
Vice-Chair Gara commented that the largest department had
already been reviewed - the Department of Health and Social
Services. He wondered if was correct. Ms. Curtis confirmed
that DHSS had been audited.
Vice-Chair Gara imagined that the DHSS audit would have
been the most expensive audit process. He recalled that the
department made the changes that seemed rational on the
audit report. He could not say there was no value to the
reports. However, the goal of the original bill was to
review internal practices in the hopes of achieving 10
percent reductions wherever possible. He did not see the
need for future audit reports.
Representative Wilson thought only a portion of the
Department of Health and Social Services had been audited.
She asked if she was accurate. Ms.
Curtis replied that the process called for Legislative
Audit to help draft a scope of work. The scope was then
provided to the committee, they approved it, and
contractors were hired. The audit had been focused on the
overall organization of the department, long-term care, and
another piece that she did not recall in the moment.
Representative Wilson thought that the entire department
was going to be audited and noted her disappointment. She
stated that if there was a possibility to tweak the program
to achieve the original intent of the legislation at a
lower price.
5:35:07 PM
Ms. Curtis responded that she would have to receive
guidance from policy makers on what they wanted to see from
the bill. She clarified they were not audits, but reviews.
The budget request was so high because the University was
included in the list of departments to be reviewed. The
cost was contingent on the size of the department.
Representative Pruitt asked when the legislature's review
had been scheduled. Ms. Curtis answered that it was
scheduled the year it was defunded. The legislature, the
Office of the Governor, and the Alaska Court System were
scheduled in the same cycle.
Representative Pruitt asked if there was harm to revising
the program. He referred to a memorandum in members'
packets. He wondered if there was a problem with leaving
the law on the books. Ms. Curtis responded that the only
problem had to do with the uncertainty of staffing. She
detailed it was difficult to determine whether staff would
be available. It had taken a lot to get the program
running. If it was the will of policy makers, she could
provide feedback on some of the obstacles in getting the
reports to lawmakers to make a difference. She had feedback
if individuals were interested in continuing the program.
If it were left on the books, she would have to come before
the legislature each year to request the funding.
5:38:34 PM
Representative Pruitt thought the reviews were
misunderstood. He believed there was an understanding by
legislators and the public that the audits were to assist
in finding efficiencies. He referenced suggestions made by
Mr. Alexander and asked if the items he highlighted would
assist in addressing inefficiencies in government. Ms.
Curtis responded that she did not believe the problem with
the program was how it had been structured. She offered
that the current statutes provided direction for looking
for efficiencies within departments and essentially
providing a grade to an agency for accomplishing its
mission. She believed it [the review process] had been well
set up; however, using it as a tool to cut the budget
appeared to be the expectation. She indicated that she was
not in agreement with some of Mr. Alexander's suggestions.
She reported that if the expectation were to use the review
process to help an agency cut its budget, some tweaks
should be made. She suggested that the Office of Management
and Budget, because they have oversight of the agencies,
might be a better source for suggested reductions. It was
left to the departments to recommend cuts; however, some
did not provide any feedback. She mentioned some other
problems with the structure of the reports that limited
their effectiveness. For instance, the reports came out in
December, a time of the year when the Legislative Finance
Division was busy with reviewing the budget. There was not
much time to get the information to legislators, and the
legislature lacked a working group to vet the report. There
was also a lack of feedback as to what to include in the
reports or any kind of follow-up mechanism.
Ms. Curtis indicated that she struggled with how to get the
legislature's attention. She posed the question as to who
was responsible for implementing items. In the Legislative
Budget and Audit Annual Report, the Legislative Finance
Division was required to report on the savings. She shared
that DHSS had reported over $1 million in savings from one
of the recommendations in the report. She opined that there
had been gems in the report. She noted that there was
information in the Department of Corrections report about
booking fees, parole fees that were on the books but not
being collect. However, there was no one to gather the
information. She claimed there were real problems with the
way things were set up. She speculated that it was not a
good use of funds to generate a report if the information
was not used. She had a neutral position, but it was
disappointing, based on the effort that went into
generating the reports, not to see the material utilized.
5:43:00 PM
Representative Guttenberg discussed that in the past the
legislature had spent significant time defining missions
and measures for the departments that he believed had been
forgotten. The administration was required to produce a
tool that would help the legislature in determining where
to make reductions. He reported people did not like that
the tool revealed certain places where additional monies
should be spent. He cited an example of a mission and
measure in the Recorder's Office. He thought the
legislature had not had a vested interest in the report. He
expressed concerns about eliminating the report in its
entirety. He was glad Ms. Curtis pointed out some of the
recommendations. He asked how often the recommendations had
been taken up by the departments.
5:46:01 PM
Ms. Curtis did not know of a mechanism in place to track
implementation. She urged members to look at the Department
of Education and Early Development's performance review.
She characterized the report as a phenomenal report and
encouraged all members to review it. She highlighted that
the reports depended on a contractor, an expert in the
field, being hired. In managing the reports, contractors
had a vested interest in having additional studies done.
She suggested contractors would always recommend conducting
additional studies. She thought it was one obstacle. She
added that it was important that the relationship between
the department and the contractor remained professional.
She shared that her staff had attended every meeting with
the contractor. There were many lessons that had been
learned that she believed could be applied in the future.
Co-Chair Seaton reported that the House Finance
Subcommittee for the Legislature's budget met on February
23rd and decided to ask the House Rules Committee to
introduce a bill that would eliminate the provision of
reviewing all of the departments in a 10-year cycle. The
cost included $1 million and 3 full-time positions. The
legislature did not fund the amount. He thought that
routine performance reviews were not being used enough to
justify the expense. He would rather that the legislature
request a specific audit for a department when needed. He
believed the committee should move the bill and get
something off the books that required full-time positions
to be hired.
5:49:53 PM
Representative Wilson disagreed. She believed the
legislature was partially at fault. She thought finance
should have had a subcommittee review the reports. She also
recommended reviewing a lesser number of departments each
year. She had read the reviews and believed they contained
good information. She found that some of the departments
had done better than other ones. If the legislature were
more involved, agencies would be more cooperative knowing
they would be held accountable. She believed that
accountability was a missing link. She thought that based
on the times, the legislature should be taking a deeper
look beyond a 90-day or 120-day session. She spoke to the
importance of finding efficiencies. She thought follow-
through was important to put into place without any
additional costs. Members of the legislature could be
appointed to review the reports. She believed the situation
was a disservice to Legislative Budget and Audit. She did
not support rushing the bill through when she thought the
review process could be saved.
Co-Chair Seaton surmised that Representative Wilson wanted
to fund the reviews and to fund the three positions.
Representative Wilson believed the legislature could not
afford three positions. She thought that spending money on
the University to conduct the review did not make sense.
She suggested that maybe the issue could be addressed over
the interim and that the state could pay for one review.
5:53:00 PM
Representative Guttenberg was concerned that if the
required audits were eliminated in statute, institutional
memory could potentially be lost. In reference to the
university, he thought one of its problems was in looking
at its self.
Co-Chair Foster asked committee members if they wanted to
take action on the bill. He would provide more time for
members to think about the bill. He indicated that the
deadline for amendments was on Tuesday, April 17, 2017 at
5:00 p.m.
Co-Chair Foster OPENED Public Testimony on HB 167.
Co-Chair Foster CLOSED Public Testimony on HB 167.
HB 167 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the agenda for the following day
and recessed the meeting to a call of the chair [Note: the
meeting never reconvened].