03/11/2010 09:00 AM House FINANCE

HOUSE BILL NO. 342                                                                                                            
                                                                                                                                
     "An Act extending the termination date of the Board of                                                                     
     Certified Real Estate Appraisers; and providing for an                                                                     
     effective date."                                                                                                           
                                                                                                                                
REPRESENTATIVE TAMMIE  WILSON presented  an overview  of her                                                                    
bill  to   extend  the  Board   of  Certified   Real  Estate                                                                    
Appraisers to June 30, 2014. She reported that the Board of                                                                     
Certified Real  Estate Appraisers (BCREA) is  comprised of a                                                                    
five   member   board    to   establish:   (1)   examination                                                                    
specifications   for   certification   as  a   real   estate                                                                    
appraiser; (2)  rules of  professional conduct  to establish                                                                    
and  maintain  a high  standard  of  integrity in  the  real                                                                    
estate appraisal  profession; and (3)  regulations necessary                                                                    
to carry  out the purposes  of the statutes.  The conclusion                                                                    
of the Legislative  Audit is a recommendation  to extend the                                                                    
BCREA's  termination date  by four  years rather  than eight                                                                    
due  to   the  deficiencies  identified  by   the  appraisal                                                                    
subcommittee. The  deficiencies have or are  being addressed                                                                    
by the  board. The board is  funded by the RSS  fund through                                                                    
receipts  from  licensing fees.  She  stressed  that no  new                                                                    
funds will be required to implement the bill.                                                                                   
                                                                                                                                
9:10:32 AM                                                                                                                    
                                                                                                                                
PAT   DAVIDSON,  LEGISLATIVE   AUDITOR,  LEGISLATIVE   AUDIT                                                                    
DIVISION,  LEGISLATIVE AFFAIRS  AGENCY,  recommended a  four                                                                    
year extension for  the board instead of  eight years. There                                                                    
was  concern the  board failed  to  act in  following up  on                                                                    
issues  identified during  their federal  review. She  added                                                                    
that   there  were   also  administrative   deficiencies  in                                                                    
financial accounting  and reporting by the  board. She noted                                                                    
that there  have been extended  vacancies on the  board this                                                                    
year  as  the  governor's   office  failed  to  make  timely                                                                    
appointments.  There are  recommendations to  the governor's                                                                    
office to address more timely  appointments of board members                                                                    
and  a  recommendation  to the  department  to  improve  its                                                                    
administrative support  to the board. Ms.  Davidson stressed                                                                    
that these boards are self  supporting and maintaining a fee                                                                    
level  appropriate  for  their  expenses.  In  FY2009,  they                                                                    
substantially dropped their fees.                                                                                               
                                                                                                                                
9:12:32 AM                                                                                                                    
                                                                                                                                
Representative Doogan  inquired about  the fiscal  note. Ms.                                                                    
Davidson  replied that  she could  not speak  to the  fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Representative Austerman asked for  the reason to extend the                                                                    
board  for  four  years  rather  than  eight.  Ms.  Davidson                                                                    
replied  that it  was primarily  due  to the  lack of  board                                                                    
responsiveness  and follow  up  to the  federal review.  The                                                                    
board  is required  to certify  real estate  appraisers, and                                                                    
then  state  residents  could participate  in  federal  loan                                                                    
programs.  There  is a  federal  agency  that does  periodic                                                                    
reviews  of the  activities  of the  board  and that  agency                                                                    
found  that   the  board  and  department   were  not  being                                                                    
sufficiently   responsive   to    address   the   identified                                                                    
shortcomings.                                                                                                                   
                                                                                                                                
Representative  Austerman   asked  if  the  board   will  be                                                                    
reviewed  again   within  the   four  years.   Ms.  Davidson                                                                    
responded that there is currently  a federal review in draft                                                                    
form that  should be finalized  soon, but  legislative audit                                                                    
will not  be going back  to look at  the board for  the next                                                                    
four years. Representative Austerman  maintained it does not                                                                    
make sense to wait four years  if they are having a problem,                                                                    
but  should be  reviewed  again in  one  year. Ms.  Davidson                                                                    
reminded  the  committee  that  at any  point  in  time  the                                                                    
legislature can  ask Legislative Audit to  conduct an audit.                                                                    
There can  also be  a request  to see  if the  problems have                                                                    
been  resolved.  Representative  Austerman  asked  if  there                                                                    
would be  an automatic  follow up due  to the  problems. Ms.                                                                    
Davidson  indicated  that  if the  legislature  extends  the                                                                    
board for four years, then  Legislative Audit will follow up                                                                    
in four years.                                                                                                                  
                                                                                                                                
9:16:04 AM                                                                                                                    
                                                                                                                                
Representative Fairclough referred to  page 11 of the report                                                                    
under  "Findings  and   Recommendations"  where  the  second                                                                    
bullet  point states  that the  board does  not have  enough                                                                    
authority  to  carry  out  its  functions  under  TITLE  XI.                                                                    
Representative  Fairclough asked  Ms. Davidson  to speak  to                                                                    
this finding  (Alaska State Legislature,  Legislative Budget                                                                    
and   Audit  Committee,   Division  of   Legislative  Audit,                                                                    
December 7,  2009, Pat  Davidson, Legislative  Auditor, copy                                                                    
on file).                                                                                                                       
                                                                                                                                
Ms. Davidson responded that the  bullet points state that if                                                                    
the federal agency came in and  found that the board did not                                                                    
meet these  criteria, but it does  not specifically indicate                                                                    
that they  do not have  enough authority. These are  set out                                                                    
as criteria, not as findings.                                                                                                   
                                                                                                                                
Representative  Fairclough inquired  if the  state needs  to                                                                    
act to  provide additional  authority to  the board  so they                                                                    
can  carry out  their mission  under TITLE  XI. Ms.  Davison                                                                    
reported  that  they did  a  review  of the  federal  report                                                                    
before  it became  final. The  recommendations in  the audit                                                                    
are minor  housekeeping and statutory cleanups,  but nothing                                                                    
substantial.                                                                                                                    
                                                                                                                                
9:18:23 AM                                                                                                                    
                                                                                                                                
Representative Austerman asked if  the statement that it was                                                                    
only minor problems was why  the department was recommending                                                                    
the  four  years. Ms.  Davidson  responded  that there  were                                                                    
operational  and statutory  issues.  The operational  issues                                                                    
had  to  do  with  how  well  the  applications  were  being                                                                    
reviewed and  the follow up  when the board really  needs to                                                                    
take immediate  action. In the  draft report,  federal level                                                                    
changes  were made  in some  laws, statutes  and regulations                                                                    
changes  sometime get  behind. They  do not  have the  final                                                                    
report  yet,  but  when reviewing  the  draft  the  problems                                                                    
appeared to be minor clean up that needed to be addressed.                                                                      
                                                                                                                                
9:20:06 AM                                                                                                                    
                                                                                                                                
JENNIFER   STRICKLER,   OPERATIONS  MANAGER,   DIVISION   OF                                                                    
OCCUPATIONAL  LICENSING, DEPARTMENT  OF COMMERCE,  COMMUNITY                                                                    
AND ECONOMIC  DEVELOPMENT, answered  some of  the questions.                                                                    
The  division  went  through difficulties  with  unqualified                                                                    
staff, but  these individuals have  moved on and  new people                                                                    
hired. The  issues in the  audit regarding the board  as not                                                                    
being   in  compliance   with  the   appraisal  subcommittee                                                                    
findings were  related to three licensed  individuals. These                                                                    
individuals lacked  some submissions  of work logs  in their                                                                    
licensing  files.  The  department took  action  to  contact                                                                    
these individuals to  have them submit their  work logs; one                                                                    
complied,  two did  not. The  department fell  short on  not                                                                    
being  more assertive  with the  board to  take disciplinary                                                                    
action against the two licensees  who continue to hold their                                                                    
license. It has  been brought to the attention  of the board                                                                    
and  the boar  referred those  two individuals  over to  the                                                                    
investigative until to start disciplinary proceedings.////                                                                      
                                                                                                                                
9:22:37 AM                                                                                                                    
                                                                                                                                
Representative Doogan inquired again about the fiscal note.                                                                     
                                                                                                                                
Ms. Strickler related that personal  services are made up of                                                                    
licensing staff, management  staff, and investigative staff.                                                                    
Licensing  staff operates  on a  positive timekeeping  basis                                                                    
because  of the  receipt supported  services funding  so the                                                                    
only time attributed to this  board is recorded and charged.                                                                    
She continued that travel,  consisting of transportation and                                                                    
per dieum  is for the board  and staff to meet  at least two                                                                    
times  a year.  The contractual  costs are  high because  in                                                                    
2008 there were litigations and  hearing costs which tend to                                                                    
drive  expenses up.  Representative  Doogan  asked what  the                                                                    
contractual  are being  paid for.  Ms. Strickler  noted that                                                                    
the division  has an investigation unit  comprised of twenty                                                                    
investigators. They  are assigned  to this program  so their                                                                    
salary  is  paid  by  the   department  as  they  are  state                                                                    
employees.                                                                                                                      
                                                                                                                                
Representative Doogan  asked if  this was charged  back from                                                                    
other agencies. Ms. Strickler replied yes.                                                                                      
                                                                                                                                
9:25:04 AM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked about a  consistent failure  to fill                                                                    
the board seats. He inquired  if this problem had been fixed                                                                    
over  the past  several months.  Ms. Strickler  stated there                                                                    
have been a  lot of appointments to various  boards, but she                                                                    
was unable to say if it has been a problem.                                                                                     
                                                                                                                                
Co-Chair Stoltze  questioned if  there was  any improvement.                                                                    
Ms. Strickler contended that she could not say.                                                                                 
                                                                                                                                
9:26:27 AM                                                                                                                    
                                                                                                                                
BUTCH OLMSTEAD,  VICE CHAIRMAN, ALASKA APPRAISAL  BOARD (via                                                                    
teleconference), talked  about the  two recent  vacancies on                                                                    
the board and  believed there were two  new appointees ready                                                                    
to fill  those vacancies.  In the past  it was  noticed that                                                                    
open  seats on  the board  were  vacant for  a long  period,                                                                    
therefore in that  regard there has been  an improvement. He                                                                    
referred to  some of the  housekeeping matters  and problems                                                                    
from  the  audit  and  acknowledged   that  they  have  been                                                                    
addressed.                                                                                                                      
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
9:28:26 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  commented that he has  noticed consistently                                                                    
that every  single sunset audit  has involved  criticisms of                                                                    
the support  services provided to the  department or agency.                                                                    
He  has asked  for all  the past  reports on  audit problems                                                                    
with  plans to  insist on  a  more consistent  follow up  by                                                                    
them.                                                                                                                           
                                                                                                                                
Co-Chair  Stoltze   responded  that  he   preferred  shorter                                                                    
sunsets when there are concerns.                                                                                                
                                                                                                                                
Vice-Chair Thomas  MOVED to report  HB 342 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being No Objection, it was so ordered.                                                                              
                                                                                                                                
HB  342  was  REPORTED  out  of  Committee  with  "do  pass"                                                                    
recommendation and with a  previously published fiscal note:                                                                    
FN1                                                                                                                             
                                                                                                                                
9:31:05 AM