Legislature(2019 - 2020)ADAMS 519
03/03/2020 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB121 | |
| HB209 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 121 | TELECONFERENCED | |
| *+ | HB 209 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 209
"An Act relating to public finance; creating the
Department of Management and Budget; transferring the
duties of the office of management and budget to the
Department of Management and Budget; and providing for
an effective date."
9:27:45 AM
REPRESENTATIVE STEVE THOMPSON, SPONSOR, thanked the
committee for hearing the bill and reviewed its purpose
with a prepared statement:
• House Bill 209 transfers the Office of Management and
Budget to a freestanding budget agency.
• Currently OMB is located within the Governor's office
• As an agency within the executive branch, the
commissioner of the Department of Management and
Budget will be subject to legislative confirmation and
their salary determined by the State Officer
Compensation Commission.
• This will also allow for additional legislative
oversight during the budgetary process
• There are 11 other states that require legislative
confirmation for the state's chief budget official
• 12 other states that have a freestanding budget agency
• Since FY11 the annual salary of the Director has
increased from $136.4 to $194.7
• Total UGF spend is from $192.5 to $277.2 with benefits
Representative Thompson explained that the bill was lengthy
because it had to hit so many agencies on the books. He
detailed that the bill basically just changed the words
Office of Management and Budget (OMB) to Department of
Management and Budget. He shared that his staff was
available for any questions.
9:29:51 AM
Representative LeBon referenced Representative Thompson's
mention of significant history and background information.
He asked if the idea had been churning in the background
for a while.
Representative Thompson replied in the negative. He
explained that the idea had arisen from the situation in
the previous year. The bill originated from the idea that
the legislature should have more oversight and knowledge of
who was coming into the OMB [director] position.
Representative Wool asked if there were hurdles or costs
associated with establishing a new department aside from
the salary considerations and confirmation [of a director].
CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE STEVE THOMPSON,
replied that there were about eight fiscal notes in
committee members' bill packets (copy on file). She
confirmed there were additional minimal costs associated
with setting up an independent agency including shared
services, procurement, and information technology. She
would provide additional information when fiscal notes were
reviewed.
Representative Knopp was interested in the fiscal notes. He
remarked that there were numerous notes that were all
substantial. He hoped to hear an in depth review of each of
the fiscal notes.
Co-Chair Johnston shared her intention to hear a sectional
analysis followed by a review of the fiscal notes.
9:32:37 AM
Vice-Chair Ortiz asked if the costs would be ongoing or one
time only.
Ms. Koeneman replied that the hope was once things were
underway the change would be budget neutral, meaning the
current costs associated with OMB under the Office of the
Governor would be those costs moving forward as a
standalone agency. She noted that the legislature would
have that power through the budgetary process.
Representative Tilton asked whether the bill would result
in any diminishment of the separation of powers between the
executive and legislative branches.
Ms. Koeneman answered that the bill did not change any of
OMB's powers and duties. The statutes currently in place
were contained in the legislation, the only difference was
the change from the word "office" to "department" and from
"director" to "commissioner." The services OMB currently
provided would remain the same.
9:34:17 AM
Co-Chair Johnston requested to hear the sectional analysis.
Ms. Koeneman complied. Sections 1 through 30 included
conforming language changing the Office of Management and
Budget to the Department of Management and Budget.
Additionally, the sections updated the words "office" to
"department" and "director" to "commissioner." She read
from the sectional (copy on file):
Section 31: AS 44.17.005. Offices and departments
Adding the "Department of Management and Budget" to
the list of principal offices and departments.
Section 32: Proposed new Chapter AS 44.22.010.
Chapter 22. Department of Management and Budget (p.
33)
Sec. 44.22.010. Commissioner of management and budget
Establishes the principal executive officer of the
Department of Management and Budget is the
commissioner of management and budget.
Sec. 44.22.020. Powers and duties of the commissioner.
Outlines the duties of the commissioner of management
and budget. (Identical language to current powers and
duties of the director under AS 44.19.144)
Ms. Koeneman noted that Section 44.22.020 was included in
the sections being repealed at the end of the bill. She
remarked the language was conforming. She continued to
review the sectional analysis:
Sec. 44.22.030. Powers and duties of the department.
Outlines the duties of the department of management
and budget. (Identical language to current powers and
duties of the department under AS 44.19.145)
Sec. 44.22.040. Internal audit records. Requires the
department to keep a complete file of audit reports.
(Identical language to current internal audit records
under AS 44.19.147)
Sec. 44.22.050. Definitions. Provides a definition for
the commissioner and department of management and
budget.
Section 33-35: Conforming language changing the office
of management and budget to the Department of
Management and Budget; and updating "office" to
"department".
Section 36: Repeals statutes related to the "office"
of management and budget.
Section 37: Transitional language that allows for the
transfer of information and documents from the "office
to the "department".
Ms. Koeneman explained that if there were any current suits
against OMB, they would continue until they were worked out
through the transition. She concluded the sectional
analysis:
Section 38: Provides a July 1, 2020 effective date.
9:37:16 AM
Representative Merrick asked if OMB had taken a position on
the legislation.
Ms. Koeneman replied that she did not believe so.
Representative Knopp looked at Section 32 and asked if it
was the intent that the commissioner would also be the OMB
director. Alternatively, he wondered if there would be a
commissioner and director.
Ms. Koeneman answered that the intention was the positions
currently with OMB - the director and staff currently
listed in OMB's personal service expenditure - would be the
staff for the office. She remarked that the fiscal notes
had additional positions listed, but the bill sponsor's
intention was to transfer the office as it currently stood
to a standalone department. She relayed it had been her
hope to only modify the language in statute; however, with
the constitution, it had not been so easy.
Representative Wool asked if the sponsor foresaw there
being a deputy commissioner. He pointed out that typically
there was at least one deputy commissioner position
alongside a commissioner position. He asked if the parallel
position existed, such as assistant director. He wondered
if there would be a straight transfer over.
Ms. Koeneman responded not necessarily. She detailed that
in name the position would probably be a deputy
commissioner but depending on how a governor set up their
OMB there was sometimes a deputy director. She clarified it
was the sponsor's intention that the comparable level
position would be the deputy.
9:39:49 AM
Co-Chair Johnston asked to hear a review of the fiscal
notes.
SYLVAN ROBB, POLICY ANALYST, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, began by noting that the
State of Alaska had not created a new department from whole
cloth since prior to 1975. She noted that OMB had run out
of time to continue the historical research. She reviewed
the eight fiscal notes. There were not OMB component
numbers to use as reference because the component numbers
did not exist. She detailed that the proposed new
Department of Management and Budget would be comprised of
four appropriations with seven allocations. The first
fiscal note [Identifier HB209-GOV-DIA-03-01-20] created a
division of internal audit. She noted the item had been
defunded for many years; however, because it was contained
in the statute of the bill, OMB had operated under the
assumption there would be interest in restarting the
function. She shared that the last time a position had been
filled was in 2012 when there had been one position. She
relayed that the position had been taken off the books a
number of years ago as part of a cleanup as it had been
unfilled for many years.
9:42:03 AM
Vice-Chair Ortiz wanted to ensure he was looking at the
right fiscal note. He asked Ms. Robb to provide the
identifier at the top [left] of the fiscal note.
Ms. Robb replied that the identifier was HB209-GOV-DIA-03-
02-20.
Representative Knopp believed Ms. Curtis and Ms. Robb had
both stated that the internal audit program had been
discontinued. He asked for verification that Ms. Robb had
stated that OMB had included the program in the fiscal
notes because it was specified in statute and OMB assumed
the legislature wanted to go back to the program.
Ms. Robb replied that the statute was contained in HB 209
and it was the assumption that the bill sponsor intended
the functions to resume.
Representative Knopp asked for verification there were
currently no other internal auditors in any of the state
departments.
Ms. Robb answered that within the Department of
Administration the Division of Finance performed single
audit work. She added that OMB no longer performed audit
work.
9:43:38 AM
Representative LeBon asked if any bargaining units touched
OMB staffing wise. Alternatively, he asked if OMB was
completely outside the bargaining unit influence.
Ms. Robb answered that under the current structure where
OMB was under the governor's office, all staff positions
were fully exempt. If the office was changed to a
department some of the positions may change to classified.
9:44:27 AM
Ms. Robb moved to the next fiscal note, Identifier HB209-
GOV-DBA-03-02-20. She noted the note pertained to the
Department of Management and Budget, budget analysis. She
detailed that the division represented the majority of OMB
as it currently existed. The note included current budget
analysts, a chief budget analyst, and the addition of an
assistant (a position OMB had until recently).
9:45:12 AM
Ms. Robb looked at the third fiscal note for Administrative
Services, Identifier GOV-DAS-03-02-20. Currently OMB was
part of the governor's office and the administrative
services covered by the fiscal note were services provided
to OMB as part of the governor's office. For example, OMB
was able to take advantage of governor's office procurement
staff, human resources staff, and the finance officer and
administrative services directors. She explained that if
OMB was turned into a department, the positions would need
to be created in order to provide the services to the
department.
Representative Wool asked for verification the note
included all new positions.
Ms. Robb agreed. She explained that currently OMB received
the services from the governor's office.
Vice-Chair Ortiz asked for a breakdown of the types of
services she was referring to. He asked for further detail
on the five positions.
Ms. Robb answered that the positions would provide services
currently received from the governor's office. She
elaborated that the positions included an administrative
services director (as in other departments), a finance
officer (it was always necessary to have two people in the
financial positions because people cannot certify each
other's work), a budget manager, a procurement specialist,
and a human resources consultant. She noted OMB's
anticipation that in the outyears one of the positions
would no longer be needed as the current consolidation
efforts for procurement and human resources came to
fruition.
9:47:45 AM
Co-Chair Johnston asked members to hold their questions
until the end of the fiscal note review. She reminded
members that floor session began at 10:00 a.m.
Ms. Robb continued with the fourth fiscal note, Identifier
HB209-GOV-CO for administrative services and the
commissioner's office. She explained that the creation of a
new department would require a commissioner's office. She
detailed that three of the staff shown on the fiscal note
were existing staff. She referenced an earlier question and
relayed that there was a deputy director at OMB and it was
the assumption that person would become the deputy
commissioner for the new department. She detailed that
current Director Neil Steininger had an assistant who would
continue and there would be a special assistant to act as
the legislative liaison and perform duties normally filled
by that role.
Ms. Robb moved to the fifth fiscal note, Identifier HB209-
GOV-PP for policy and planning. The note included three
existing OMB policy positions that would continue under the
new department.
9:49:19 AM
Ms. Robb reviewed the sixth fiscal note, Identifier HB209-
GOV-SDC for policy and planning, statewide data
clearinghouse. The note reflected the current OMB
programmer who maintained the Alaska Budget System where
all budgeting for the state occurred. The note also
included the addition of a research analyst in anticipation
of the internal audit and the collection of additional data
(in order to make the best use of the data).
9:50:09 AM
Ms. Robb turned to the seventh fiscal note, Identifier
HB209-GOV-ASD for policy and planning and centralized
administrative services directors. The note did not reflect
a change. She highlighted that the administrative services
directors had been moved into OMB by Executive Order 307
[in 2019 under the Dunleavy administration]. The fiscal
note reflected the administrative services directors would
continue to be a part of the new department.
Ms. Robb turned to the eighth fiscal note, OMB Component
Number 1244. The note represented the removal of funding
for OMB.
Co-Chair Johnston OPENED and CLOSED public testimony.
9:51:45 AM
Representative Wool referenced the salaries of the
commissioner determined by the salary compensation
commission. He noted the policy planner position was listed
as a salary range 27 at $229,000. He asked for verification
the salary was considerably more than the commissioner's
salary. He asked if the numbers were standard.
Ms. Koeneman replied that it was not uncommon in other
departments to have the commissioner's topped out at
$135,000 set by the Salary Compensation Commission and to
have a director level position at a range 27 with
additional pay steps to outrank the commissioner in terms
of pay.
Representative Knopp asked for verification that Ms. Robb
had reported that a new state department had not been
created since 1974.
Ms. Robb replied that OMB had struggled to locate the last
time a department had been created. They had researched
back to 1975 before running out of time.
Representative Knopp thought it was an interesting
conversation. He believed it clearly showed how the state
managed and staffed its departments. He thought it was a
great review and opportunity to talk about the internal
audits that were not done and the research analysis for
internal auditors. He opined it was a good conversation to
consider how business was being conducted in the state's
departments.
HB 209 was HEARD and HELD in committee for further
consideration.
Co-Chair Johnston reviewed the schedule for the afternoon.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 121 Repealer List 2.4.2020.pdf |
HFIN 3/3/2020 9:00:00 AM |
HB 121 |
| HB 121 Sponsor Statement 2.4.2020.pdf |
HFIN 3/3/2020 9:00:00 AM |
HB 121 |
| HB 209 Budget Processes in the States - Spring 2015 Tables 2-5-20.pdf |
HFIN 3/3/2020 9:00:00 AM |
HB 209 |
| HB 209 FY11-20 OMB PS ED 2-5-20.pdf |
HFIN 3/3/2020 9:00:00 AM |
HB 209 |
| HB 209 Sectional Analysis v. M 1.28.2020.pdf |
HFIN 3/3/2020 9:00:00 AM |
HB 209 |
| HB 209 Sponsor Statement 1.28.2020.pdf |
HFIN 3/3/2020 9:00:00 AM |
HB 209 |