Legislature(2011 - 2012)ANCH LIO Rm 220
06/27/2012 10:30 AM House LEGISLATIVE BUDGET & AUDIT
| Audio | Topic |
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| Start | |
| Approval of Minutes | |
| Revised Program - Legislative (rpls) | |
| Executive Session | |
| Other Committee Business | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
June 27, 2012
10:34 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Chair
Representative Bill Thomas (via teleconference)
Representative Mike Doogan
Representative Scott Kawasaki (alternate) (via teleconference)
Senator Lyman Hoffman (via teleconference)
Senator Hollis French
Senator Linda Menard
Senator Kevin Meyer (alternate) (via teleconference)
MEMBERS ABSENT
Senator Bert Stedman, Vice Chair
Senator Thomas Wagoner
Representative Mark Neuman
Representative Kurt Olson
Representative Bill Stoltze (alternate)
COMMITTEE CALENDAR
APPROVAL OF MINUTES
REVISED PROGRAM - LEGISLATIVE (RPLs)
EXECUTIVE SESSION
OTHER COMMITTEE BUSINESS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DAVID TEAL, Legislative Fiscal Analyst
Legislative Finance Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the four RPLs
(Revised Program - Legislative) to the Joint Committee on
Legislative Budget and Audit.
JEFF JESSEE, Chief Executive Officer
Alaska Mental Health Trust Authority
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions during discussion of RPL
06-3-0099.
SARAH WOODS, Deputy Director
Finance and Management Services
Department of Health and Social Services
Juneau, Alaska
POSITION STATEMENT: Testified during discussion of RPL 06-3-
0099.
GREG JONES, Executive Director
Alaska Mental Health Lands Trust Office (TLO)
Anchorage, Alaska
POSITION STATEMENT: Testified during discussion of RPL 10-3-
5000.
KRISTIN CURTIS
Legislative Auditor
Legislative Audit Division
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on the audit request.
PAULYN SWANSON, Staff
Representative Mike Hawker
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified during discussion of the office
space for Legislative Audit Division.
ACTION NARRATIVE
10:34:56 AM
CHAIR MIKE HAWKER called the Legislative Budget and Audit
Committee meeting to order at 10:34 a.m. Representatives
Hawker, Doogan, Kawasaki (via teleconference), and Thomas (via
teleconference) and Senators Meyer (via teleconference), Menard,
Hoffman (via teleconference), and French were present at the
call to order.
^Approval of Minutes
Approval of Minutes
10:36:24 AM
CHAIR HAWKER announced that the first order of business would be
the approval of the minutes.
10:36:44 AM
REPRESENTATIVE DOOGAN made a motion to approve the minutes of
April 25, 2012. There being no objection, the minutes from the
meeting of April 25, 2012 were approved.
^Revised Program - Legislative (RPLs)
Revised Program - Legislative (RPLs)
10:37:11 AM
CHAIR HAWKER announced that the next order of business would be
the consideration of four RPLs.
10:37:47 AM
DAVID TEAL, Legislative Fiscal Analyst, Legislative Finance
Division, Alaska State Legislature, introduced RPL 05-3-0002
from the Department of Education and Early Development (EED).
This was a request for $80,000 of Statutory Designated Program
Receipt (SDPR) from the Rasmussen Foundation for the Harper Arts
Touring grant program. He relayed that at the October 14, 2011
meeting, the committee approved RPL 05-2-0070 for $65,000 in
SDPR for this grant program in FY 2012. He explained that the
Rasmussen Foundation had notified EED in early April 2012 of an
interest in renewing the contract for this program. He noted
that the current RPL request was for FY 2013.
10:40:32 AM
MR. TEAL directed attention to RPL 06-3-0099 from the Department
of Health and Social Services (DHSS). This was a request for
$33,600 of Mental Health Trust Authority Authorized Receipts
(MHTAAR). He noted that, at the December 5, 2011 committee
meeting, the committee approved RPL 06-2-0348 for $100,000 from
MHTAAR for this same purpose, the Patient Centered Medical Home
Model project. He pointed out that this prior approval had been
included in an approved $500,000 for FY 2012. The current
requested RPL for $33,600 was for funds not used in the prior
approval, as it was not possible to know in advance how much of
the original FY 2012 authority would be available for carryover
into FY 2013. Hence, this would appear as a new request for FY
2013. He stated that this RPL was for development of a model
for a care delivery system, and the cost for the actual service
was not part of this RPL. He offered his belief that the cost
using the new model was "presumed to be lower than under the
existing model."
10:41:42 AM
CHAIR HAWKER stated that this would require a presentation to
both the Senate Finance Committee and the House Finance
Committee to justify the additional investment to implement the
new model.
MR. TEAL expressed his agreement. He clarified that this RPL
request was simply for a contract to develop a model of a care
delivery system.
10:42:12 AM
REPRESENTATIVE DOOGAN asked if the total spent for the proposed
study was in addition to the previous appropriation.
MR. TEAL explained that $100,000 was authorized in FY 2012, and
then an additional $500,000 was authorized for FY 2013. He
reported that this proposed RPL requested use of the remaining
$33,600 of the $100,000 authorized in FY 2012, as there had not
been a request to carry it forward, in addition to the already
approved $500,000 for FY 2013.
10:43:43 AM
JEFF JESSEE, Chief Executive Officer, Alaska Mental Health Trust
Authority, Department of Revenue, stated that it was a necessity
to control Medicaid costs over the long term, as the current
system was unsustainable. He reported that the Alaska Mental
Health Trust Authority was working with DHSS to develop a model
of care to control these costs. He reported that, as care for
complex medical conditions was not coordinated, the costs kept
escalating. He explained the Medical Home concept as a central
place for patients to have a primary care relationship, with
referrals and other care management decisions made at this
location. He noted that this has been an effective cost
containment mechanism in other areas, particularly for patients
with high end costs and complex medical needs. He established
the need to develop a model for Alaska, and to engage the tribal
partners for developing these systems. He pointed out that the
tribal health system generated a 100 percent federal match. He
clarified that $500,000 of MHTAAR funding had been authorized
for FY13 and that DHSS would match an additional $200,000 with
federal funds. He explained that the proposed RPL was for an
unspent $33,600 from the previous FY 2012 funding, and would be
added to the FY 2013 funding. He agreed with Chair Hawker that
the model of care would then be explained to the House Health
and Social Services Standing Committee, the Senate Finance
Committee, and the House Finance Committee.
10:46:24 AM
SENATOR MENARD asked to clarify that $750,000 was necessary to
develop this health care model. She asked what other states had
successfully implemented this model.
MR. JESSEE explained that this model development was not using
any state general funds, as all the funding was federal or
MHTAAR funds. He observed that this was evidence-based
practice, and the model was searching for other states which had
successfully implemented this model.
10:48:04 AM
SARAH WOODS, Deputy Director, Finance and Management Services,
Department of Health and Social Services, expressed agreement
with Mr. Jesse.
10:48:21 AM
REPRESENTATIVE DOOGAN asked to clarify that $700,000 would be
spent on a study to determine how to spend more money on a
program that was currently enacted in several other states.
10:49:02 AM
CHAIR HAWKER established that the current RPL request was for
$33,600 which had been previously appropriated for FY 2012 and
FY 2013. He confirmed that the larger decision to conduct the
activity had already been agreed upon by the legislature, and
approved for in the FY 2013 budget. He clarified that the
Legislative Budget and Audit Committee was not determining
whether or not to fund the program.
10:49:47 AM
MR. JESSEE stated that this is not just a study, but it was the
development for a model that would adapt to work in Alaska for
the reduction of expenditures. He reported that the system of
medical care was different in every state, whether it was
different partners or different funding mechanisms, and that the
difference with Alaska was the tribal health system. He pointed
out that Medicaid dollars were often spent in an uncoordinated,
fragmented way to the various providers. He declared that a
coordination of care would result in better care, better
management of chronic conditions, and lower costs.
10:51:25 AM
REPRESENTATIVE DOOGAN, drawing from his 6 years in the Alaska
State Legislature, recalled although he had been told
innumerable times that more spending would save money in the
long term, he had never seen that happen.
MR. JESSEE, in response, directed attention to the Bring the
Kids Home program. He relayed that the legislature had invested
additional dollars into community-based care, which resulted in
a 50 percent savings to out-of-state Medicaid costs for
residential psychiatric treatment. He said that the overall
expenditures for a better level of care had gone down. He
directed attention to the Alaska Psychiatric Institute as
another example to cost savings. He relayed that the original
plan for replacement had been to build a 165-bed hospital at a
cost over $45 million, with additional tens of millions of
dollars for operation of the facility. However, work with the
community and DHSS developed a single point of entry at
Providence Hospital with additional evaluation and treatment
beds, and then a 72-bed hospital was built with considerably
lower operational costs than if there were not the investment in
those other services. He agreed that costs had not been reduced
in every case, but that these and other examples had lowered
costs. He pointed out that "with greater need does come greater
cost." He highlighted that there was a focus on data outcomes,
and he stated that The Trust had delivered on its "promise to
use public resources in a smarter, more effective, and in some
cases, a less costly way."
10:54:13 AM
REPRESENTATIVE DOOGAN expressed his appreciation for the zeal.
10:56:14 AM
MR. TEAL directed attention to RPL 10-3-5000 from the Department
of Natural Resources (DNR). This was a request for $360,300 of
MHTAAR operating funds, which included $160,300 for a long-term
non-permanent Trust Resource Manager position and $200,000 for
term contracts. He explained that this request was in addition
to a FY 2013 increment of $261,300 to expand the capabilities of
The Trust Land Office, in its search for the acquisition of
properties that benefit trust beneficiaries.
10:57:22 AM
MR. JESSEE explained that this long-term non-permanent position
had not been requested from the legislature earlier, as there
was not yet Office of Management & Budget (OMB) approval for
that position. He said that the position became necessary
because of serious illness to a senior resource manager made it
necessary to hire someone to work with this manager and
eventually take over. He stated that the $200,000 in contracts
was for funding that had been approved during the previous
legislative session. He offered an overview of The Trust Land
Office (TLO) and said that the TLO had already converted the
"low hanging fruit", such as timber and resource extraction,
into revenue for the Mental Health Trust. Therefore, the TLO
income generation has now decreased over the last few years,
which is of concern and resulted in the TLO analyzing and
determining what can be done to enhance the ability of The Trust
Land Office to generate more income for The Trust and develop
more of its land. In the past, TLO work was "reactive" whereas
now TLO recognizes the need to be creative and "proactive" with
the development of its land. He noted that the increment which
had been funded during the legislative session was for core
operating costs of the TLO to deal with the existing portfolio
and its issues. The additional request for $200,000 for term
contracts was for legal assistance and project management. He
characterized it as a business opportunity with a limited window
of opportunity in terms of timing. He said that state agencies
are not usually well equipped to "respond with great alacrity
when those types of business opportunities arise or are
created." In fact, prior TLO work through the attorney
general's office was not acted upon quickly enough to generate
an effective business opportunity; therefore, [it resulted in]
this request for a term contract for legal services. A similar
situation exists with the contract for project management
services.
11:03:16 AM
SENATOR FRENCH projected that the request for $160,300 would "go
away" in a few years when the resource manager position was
filled by the incoming manager. He asked if the $200,000 for
term contracts was going to be an annual request.
MR. JESSEE agreed that there would be some level of an ongoing
request. He reported that the trustees did not want to request
an upfront multi-year allocation; instead, preferring to
evaluate the need each year.
SENATOR FRENCH asked why this was not requested during the
regular session budget process.
MR. JESSEE replied that, although the process to analyze the
income generation of the TLO had been ongoing, it had not fit
into the legislative timing process. He explained that the
committee process, which the trustees had undertaken, was not
concluded until April. He stated that future requests would be
made through the regular legislative budget process.
SENATOR FRENCH, noting that the request was for legal services
and reflecting that there were more attorneys than work, asked
if they were "driving a hard bargain for your hourly rates."
MR. JESSEE declared that the costs would be closely monitored,
although it was still unclear as to the actual need. He opined
that the contracts might never be used. He further declared a
need to fill these positions with people skilled in
developmental opportunities, with the knowledge creating deals
in the private sector. He noted that it was a challenge for a
state agency to operate similar to an aggressive, private sector
developer.
11:07:03 AM
CHAIR HAWKER clarified that the request had been previously
vetted by the Mental Health Trust Board of Directors and the
request was for Mental Health Trust Authority funds not for any
general or federal funds.
MR. JESSEE offered his belief that the decision making for this
request had been difficult as the money would not be available,
in the short term, to directly support the beneficiaries through
the mental health program. He charged that the trustees were
holding TLO accountable for results to justify this investment.
11:08:15 AM
REPRESENTATIVE DOOGAN asked to clarify that there was a decline
in revenue from the land trust.
MR. JESSEE clarified that there was a decline to income, as well
as to the principal.
11:08:53 AM
GREG JONES, Executive Director, Alaska Mental Health Lands Trust
Office (TLO), in response, said that earlier timber sales were
now completed, and that the remaining land was sensitive for
logging. He declared that the revenue from the initial land
sales and land leases had decreased significantly, with no
commercial land leases in the last eight years. He reported
that the TLO was now more aggressive for marketing natural
resources, specifically oil and gas, coal, and hard rock
minerals. Furthermore, TLO is now analyzing the development of
real estate for income as well as investment into income
properties. He pointed out that TLO revenue from both principal
and income had increased in the last year. He declared that the
current types of transactions were now much more complex than
previous types, and that the request for contracts would enable
more expertise for these transactions.
11:11:33 AM
REPRESENTATIVE DOOGAN asked for the cost breakdown to the
funding for the long term non-permanent position.
MR. JONES explained that the current employee was ill, and the
position would be filled with a permanent position. The request
for the long-term non-permanent position was for the current
employee to work part-time and to transition the new employee
into that role. He explained that about two-thirds of the
request was for salary, with the remaining one-third for the
"load to carry the salary." He further explained that, should
the current employee return, the position would be funded into a
permanent position through the Office of Budget and Management
(OMB).
11:14:03 AM
MR. TEAL directed attention to RPL 10-3-5001 from the Department
of Natural Resources (DNR). This is a request for $85,000 of
Statutory Designated Program Receipt (SDPR) to implement a
Canada thistle management program in the Anchorage area. He
clarified that DNR needed authorization to receive this money
from the National Fish and Wildlife Foundation to implement this
Canada thistle management program. Originally, this had been
submitted as an FY 2012 RPL, but had been modified to FY 2013
with the cooperation of DNR and OMB.
11:15:52 AM
CHAIR HAWKER clarified that this would be approved as RPL 10-3-
5001.
11:16:33 AM
REPRESENTATIVE DOOGAN made a motion to approve the following
RPLs: RPL 05-3-0002 for $80,000 of Statutory Designated Program
Receipts to the Department of Education and Early Development;
RPL 06-3-0099 for $33,600 of Mental Health Trust Authority
Authorized Receipts to the Department of Health and Social
Services; RPL 10-3-5000 for $360,3000 of Mental Health Trust
Authority Authorized Receipts to the Department of Natural
Resources; and RPL 10-3-5001 for $85,000 of Statutory
Designated Program Receipts to the Department of Natural
Resources.
11:18:31 AM
There being no objection, the RPLs were all approved.
^Executive Session
Executive Session
11:18:47 AM
REPRESENTATIVE DOOGAN made a motion under Uniform Rule 22 to
move to executive session for the purpose of discussing
confidential audit reports under AS 24.20.301. There being no
objection, the committee went into executive session at 11:19
a.m.
11:40:15 AM
CHAIR HAWKER brought the committee back to order at 11:40 a.m.
CHAIR HAWKER announced that there was not a quorum, but that the
committee would continue with the next request until a quorum
could be established.
^Other Committee Business
Other Committee Business
11:40:38 AM
KRISTIN CURTIS, Legislative Auditor, Legislative Audit Division,
Alaska State Legislature, explained that legislative procurement
procedures required that any contract entered into by the
Division of Legislative Audit that exceeded $25,000 must be
approved the Legislative Budget and Audit Committee. She
requested approval to solicit and award a contract for technical
assistance for (1) the evaluation of KABATA's public-private
partnership draft agreement and (2) for the reasonableness of
KABATA's economic assumptions that support their financial
projections and usage assumptions. She explained that there was
the potential to have one contractor with the expertise to
perform both of these tasks, which would necessitate the
approval for a contract greater than $25,000.
11:42:43 AM
SENATOR MENARD, noting her great interest in this project, asked
for a list of steps to ensure that the audit was completed as
quickly as possible.
MS. CURTIS said that the division approaches "all audits to
complete it as timely as possible." She reported that the field
work had been completed and the project would be put down until
technical assistance could be completed, at which point it would
be finalized. She offered her belief that the preliminary audit
would be completed by December 2012.
11:43:42 AM
SENATOR MENARD urged that the audit be completed before the
beginning of the next legislative session. She stated, "KABATA
provides regular reports and information relating to products,
is readily available from the authority, in fact it's all on-
line." She opined that all the information requested by the
Legislative Audit Division from KABATA had been fulfilled.
MS. CURTIS replied that the Legislative Audit Division was still
waiting for certain information.
SENATOR MENARD repeated her desire to have the audit completed
prior to the next legislative session.
11:44:47 AM
CHAIR HAWKER announced that the Legislative Budget and Audit
Committee had re-established a quorum.
11:45:20 AM
REPRESENTATIVE DOOGAN made a motion for the preliminary audit
reports for the RCA - Annual Report Review and the Statewide
Suicide Prevention Council Sunset Review to be released to the
appropriate agencies for response. There being no objection, it
was so ordered.
11:45:59 AM
REPRESENTATIVE DOOGAN moved to authorize the Legislative Auditor
to solicit and award a contract for technical assistance on the
KABATA Audit in an amount not to exceed $50,000. There being no
objection, it was so ordered.
11:46:36 AM
CHAIR HAWKER announced that the final order of business would be
a status update on the development of the office space for the
Legislative Audit Division.
11:47:04 AM
PAULYN SWANSON, Staff, Representative Mike Hawker, Alaska State
Legislature, reported that, as she was the aide to the
Legislative Budget and Audit Committee and as the committee had
oversight responsibility for the Legislative Audit Division, she
had been working with Legislative Council, which was in charge
of facilities management and maintenance, on the remodel
project. She offered her belief that the church remodel for the
Legislative Finance Division was moving along, which would allow
the Legislative Audit Division to expand into the much needed
space.
11:48:02 AM
MS. CURTIS allowed that it was an unusual position to promote
funding to expand the services of the division. She noted that
her division had not invested in the facility in 20 years, and
had suffered from turnovers to personnel. She opined that
expansion and improvement of the working environment would
benefit the turnover rate.
11:49:40 AM
CHAIR HAWKER relayed that it was a long process and a
significant commitment to move forward for permanent levels of
improvement.
11:50:40 AM
SENATOR MENARD reported that there had been a slight "hiccup" on
construction of the sprinkler system in the church building
remodel for Legislative Finance Division.
11:51:15 AM
MS. SWANSON relayed that she was awaiting the next meeting of
Legislative Council, and would be prepared to move forward for
an RSA (reimbursable services agreement) with the Division of
General Services, Department of Administration, to manage the
project for a 2 percent fee, based on the project cost. She
shared that the initial RSA for design and architectural
engineering would be brought forward at the next Legislative
Council meeting.
11:52:18 AM
SENATOR MENARD shared that September 1 was the tentative date to
coordinate this meeting.
MS. SWANSON reported that the following the design work another
RSA with a construction bid would be brought to Legislative
Council for approval.
11:54:46 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
11:54 a.m.
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