04/19/2017 01:30 PM House FINANCE

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."                                                                                                             
                                                                                                                                
2:53:15 PM                                                                                                                    
                                                                                                                                
Representative  Wilson noted  that 31  House members  and 14                                                                    
Senators  had  cosponsored  the  original  legislation.  She                                                                    
requested further  discussion before  the bill  reported out                                                                    
of committee  and thought the  performance reviews  had some                                                                    
merit.  She  wanted  clarification that  the  Department  of                                                                    
Health  and  Social   Services  (DHSS)  performance  reviews                                                                    
identified $2 million savings.                                                                                                  
                                                                                                                                
COURTNEY  ENRIGHT, STAFF,  REPRESENTATIVE GABRIELLE  LEDOUX,                                                                    
deferred  to   Kris  Curtis,  Legislative   Auditor,  Alaska                                                                    
Division  of Legislative  Audit to  respond to  the question                                                                    
and   noted  that   she  was   not  available   to  testify.                                                                    
Representative  Wilson requested  a subcommittee  to examine                                                                    
the  issue  further.  She  suggested  that  Ms.  Curtis  had                                                                    
suggested ways to fix the  problem, decrease the cost of the                                                                    
reviews,  and  still  result in  the  desired  outcome.  She                                                                    
reminded the committee that  the original legislation passed                                                                    
with bipartisan support.                                                                                                        
                                                                                                                                
Co-Chair  Foster asked  for more  input  from other  members                                                                    
whether to report  the bill out of committee or  place it in                                                                    
a subcommittee for further discussions.                                                                                         
                                                                                                                                
2:56:59 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  noted that  the  sponsor  of the  original                                                                    
legislation,  HB   30  (State  Agency   Performance  Audits)                                                                    
[CHAPTER  19  SLA  13   -  05/28/2013]  Representative  Mike                                                                    
Chenault was  on a  subcommittee that  recommended repealing                                                                    
the legislation.  At present, he  felt that  proceeding with                                                                    
the program that was unfunded  for the previous two sessions                                                                    
and that the  legislature had already decided  was not worth                                                                    
continuing was  the correct course  of action.  He recounted                                                                    
that  the previous  legislature  left  the program  unfunded                                                                    
predicated on  the results  that were not  worth the  half a                                                                    
million dollar cost  each year. He preferred to  vote on the                                                                    
bill.   He  suggested   addressing  a   particular  agency's                                                                    
performance in question via specific legislation.                                                                               
                                                                                                                                
2:59:28 PM                                                                                                                    
                                                                                                                                
Representative   Tilton   remembered    that   Kris   Curtis                                                                    
identified one  challenge with the  legislature implementing                                                                    
the recommendations from the reviews.  She recalled that Ms.                                                                    
Curtis  reported  on  one  recommendation  that  would  save                                                                    
approximately  $1 million  in the  DHSS budget.  She relayed                                                                    
her  previous  experience  as   a  House  Finance  Committee                                                                    
staffer  handling  the DHSS  budget  when  she undertook  an                                                                    
internal review. She emphasized  how helpful the performance                                                                    
audit  review would  had been  if available  at the  time in                                                                    
enhanced  understanding  resulting  in better  outcomes  and                                                                    
better  decisions. She  mentioned  the overwhelming  support                                                                    
for  the   original  bill.   She  suggested   examining  the                                                                    
completed  reviews  further  over the  interim  to  discover                                                                    
further savings.                                                                                                                
                                                                                                                                
Representative  Kawasaki reported  having been  a co-sponsor                                                                    
of the original  legislation. He commented that  the way the                                                                    
bill was  presented and "envisioned" was  different than the                                                                    
actual outcome of the reviews  that were completed. He noted                                                                    
the necessity for  the 3 full-time positions  and $1 million                                                                    
dollar  cost  to move  forward  with  program. He  supported                                                                    
moving HB 167 out of committee.                                                                                                 
                                                                                                                                
Vice-Chair Gara  reported that a  provision in  the original                                                                    
bill tasked  the audit  with finding 10  percent or  more of                                                                    
efficiencies  in an  agencies  budget. Next  year, the  bill                                                                    
listed  the  University Of  Alaska  as  the recipient  of  a                                                                    
performance audit.  He communicated that the  University had                                                                    
$50 million to  $72 million in proposed cuts  in the current                                                                    
fiscal year  alone. The legislature had  already cut roughly                                                                    
$600 million  from agencies. He  acknowledged that  the DHSS                                                                    
audit identified  a $1  million cut to  the DHSS  budget but                                                                    
was not  scheduled to receive  another review for  ten years                                                                    
and the  DHSS budget was  cut $200 million since  passage of                                                                    
the  bill.  The goal  of  the  original  bill was  to  begin                                                                    
finding cuts.  The legislature  had already  identified cuts                                                                    
that totaled  $3.4 billion  in all  departments. He  did not                                                                    
see the  logic in  continuing the reviews  on the  drawn out                                                                    
schedule by  each individual agency  to identify  10 percent                                                                    
in cuts. He  concluded that the legislature  was cutting all                                                                    
department's budgets and the bill was unnecessary.                                                                              
                                                                                                                                
3:04:39 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt voiced  that Representative  Wilson's                                                                    
request was appropriate. He had  found some very interesting                                                                    
information in some  of the audits from the  past. He agreed                                                                    
that in the current year  it was appropriate to abstain from                                                                    
an  audit due  to costs  and with  the exercise  of removing                                                                    
programs  "from the  books" if  warranted. He  believed that                                                                    
the  performance  review  program  should  be  reformed.  He                                                                    
advocated  for  further  consideration  of  the  performance                                                                    
audit program  over the  interim and  felt that  the program                                                                    
was a useful  tool that could bring value in  the future. He                                                                    
promoted modernizing the program instead of eliminating it.                                                                     
                                                                                                                                
3:08:12 PM                                                                                                                    
                                                                                                                                
Representative Thompson  believed that  "it was  always good                                                                    
to  review   performance."  However,  the   legislature  had                                                                    
reduced  budgets and  identified  efficiencies. He  wondered                                                                    
about  the  workload  and burden  the  program  created  for                                                                    
legislative  audit  and  the departments  under  review.  He                                                                    
favored the  concept of a  performance review but  had mixed                                                                    
feelings  about  whether or  not  to  support the  bill.  He                                                                    
suggested  reviewing   the  program  over  the   interim  to                                                                    
determine how to proceed.                                                                                                       
                                                                                                                                
Representative Guttenberg  liked the performance audit  as a                                                                    
tool  but  surmised that  the  reviews  worked only  if  the                                                                    
department was "static." He did  not see the value currently                                                                    
because  there   had  already  been  cuts   resulting  in  a                                                                    
significant amount of transition  and reorganization in each                                                                    
agency.  He  mentioned that  missions  and  measures was  an                                                                    
established tool that offered  agency analysis. He suggested                                                                    
that additional  audits could be  funded in the  future. Due                                                                    
to  the  state's  current fiscal  condition,  he  wanted  to                                                                    
cancel the  program. He mentioned  that keeping  the program                                                                    
in  statute  but  not  funding  it  caused  instability  and                                                                    
uncertainty for  legislative audit. He supported  moving the                                                                    
bill out of committee.                                                                                                          
                                                                                                                                
3:12:27 PM                                                                                                                    
                                                                                                                                
Representative  Wilson wanted  to understand  the difference                                                                    
in rescinding  the program today  versus waiting  until next                                                                    
year. She  noted that Ms.  Curtis provided a review  with 12                                                                    
suggestions. She  thought that  requiring board  audits held                                                                    
boards  at  higher  standards than  the  agencies.  She  was                                                                    
asking whether it  was worth "taking the program  off of the                                                                    
books at present  or waiting until next  January and further                                                                    
examine  the  issue.  She thought  the  audits  provided  an                                                                    
opportunity for  agencies to  determine whether  its mission                                                                    
was  met. She  reiterated her  request to  reexamine whether                                                                    
the program, in total or in part, was beneficial.                                                                               
                                                                                                                                
Co-Chair  Seaton  reminded  the committee  that  Ms.  Curtis                                                                    
testified her  need to  hire 3  manager positions  to manage                                                                    
contracts to  continue with the reviews.  The disruptions to                                                                    
the   department  the   audits  caused   were  "significant"                                                                    
especially due  to budget cutting measures.  He deduced that                                                                    
altering  the program  required  additional legislation.  He                                                                    
remarked that the legislature could  require an agency audit                                                                    
if  a  problem was  identified  and  noted that  audits  and                                                                    
performance  reviews  were  different. He  stressed  that  a                                                                    
better way to proceed was  to address a targeted problem and                                                                    
not reform an unproductive  system. He reiterated his desire                                                                    
to report the bill out of committee.                                                                                            
                                                                                                                                
Co-Chair Foster indicated that  members had "good arguments"                                                                    
on both sides of the issue.  He believed that a vote was the                                                                    
best course of action.                                                                                                          
                                                                                                                                
Vice-Chair Gara reported  on the fiscal note  FN 1(LEG) with                                                                    
zero fiscal impact.                                                                                                             
                                                                                                                                
3:17:53 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton MOVED  to report  HB 167  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Gara, Grenn, Guttenberg,  Kawasaki, Ortiz, Foster,                                                                    
Seaton                                                                                                                          
OPPOSED: Thompson, Tilton, Wilson, Pruitt                                                                                       
                                                                                                                                
The MOTION PASSED (7/4).                                                                                                        
                                                                                                                                
HB  167  was  REPORTED  OUT of  Committee  with  an  "amend"                                                                    
recommendation  and with  one new  zero fiscal  note by  the                                                                    
Legislature.