Legislature(1997 - 1998)
01/21/1998 03:30 PM House BUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
Legislative Budget and Audit
January 21, 1998
3:30 p.m.
State Capitol
Juneau, Alaska
Tape: LBA-982101
Tape 1 Side 1
CALL TO ORDER
Chairman Phillips convened the meeting of the Legislative Budget
and Audit Committee on January 21, 1998, at approximately 3:40
p.m. in the State Capitol, Juneau, Alaska. Representative Hanley
was excused to meet with the Speaker.
PRESENT
The following members were present:
Senators Representatives
Chairman Phillips Representative Martin
Senator Adams Representative Bunde
Senator Donley Representative Croft
Senator Halford Representative James
Senator Pearce Representative Therriault
Representative Hanley
(alternate)
ALSO PRESENT
Pat Davidson, Acting Chief Legislative Auditor; Dane Larson,
Legislative Auditor, Anchorage Manager; Mike Greany, Legislative
Fiscal Analyst; Jerome Komisar, President of the University of
Alaska.
APPROVAL OF MINUTES
Representative Martin MOVED to approve the 1997 minutes for the
following dates:
January 13
January 16
February 26
March 24
July 30
October 8
(Representative Therriault was now present; Representative Bunde
left the meeting)
Representative Martin WITHDREW his motion until a quorum of
members was present.
CONSIDERATION OF AUDITS, RELEASE OF AUDITS AND PRELIMINARY AUDIT
REQUESTS
Chairman Phillips - We have the University of Alaska's response
to the request of an audit.
Pat Davidson - I would recommend to the Committee that they move
to go into Executive Session.
Representative Martin MOVED to go into Executive Session to
discuss the University of Alaska's selective Russian programs.
Chairman Phillips reconvened the meeting.
APPROVAL OF MINUTES
Representative Martin MOVED to approve the minutes of January 13,
January 16, February 26, March 24, July 30, and October 8, 1997.
Chairman Phillips - Hearing no objection, the motion was
APPROVED.
The minutes of August 22 and December 12 will be brought before
the Committee at the next meeting.
CONSIDERATION OF AUDITS, RELEASE OF AUDITS AND PRELIMINARY AUDIT
REQUESTS
Representative Martin MOVED since there is now a quorum present
to go into Executive Session for the response on the University
of Alaska's selective Russian program with the possibility of
talking about personalities and other financial considerations.
Chairman Phillips - Hearing no objection, the motion was
APPROVED.
EXECUTIVE SESSION
Chairman Phillips reconvened the meeting to the public at 4:40
p.m.
Representative Martin MOVED a thirty-day automatic release for
the special audit requested on the Department of Education, Pupil
Transportation Program, approximate release date February 22.
Senator Donley - When we preliminarily release these they go to
the Department Are they then completely public so people can
comment on them?
Pat Davidson - The process we have gone through during the
interim is we send the preliminary audit to the agency, give them
20 days to respond to us. What we then do is incorporate their
response with the report and send it to the Committee members for
their consideration for seven days. If we don't hear any
objection from the Committee members, it will be released.
Senator Donley - Since the Pupil Transportation Program directly
impacts a certain school district also and a lot of the
information came from the school district and not the Department
of Education, is there a way the school district could look at it
also?
Pat Davidson - Yes. The Municipality of Anchorage?
Senator Donley - I think at least the Municipality should have an
opportunity to look at it and comment.
Representative Martin - Ms. Davidson, you will show that it is
confidential?
Pat Davidson - Yes
Senator Donley - Could that be part of the motion?
Representative Martin AMENDED the motion to include releasing the
special audit also to the agencies that need to respond.
Chairman Phillips - Hearing no motion, the amended motion was
APPROVED.
Representative Martin MOVED that the sunset audit on the
Department of Public Safety, Council for Domestic Violence and
Sexual Assault be approved for the public; the regular audit on
the Department of Fish & Game, Estimated FY97 Board Attendance
Costs be released to the public and the other general audit done
on Travel Compensation Survey be released to the public.
Chairman Phillips - Hearing no objection, the motions were
APPROVED.
Representative Martin - For consideration is the agreement by
Senator Pearce and Representative Hudson to withdraw the
recommendation on the audit on the Department of Transportation,
Public Employees right termination settlement. I'd like to MOVE
that this audit request be withdrawn.
Chairman Phillips - Was that something we approved or is this
old?
Pat Davidson - The Committee needs to approve the withdrawal of
this request.
Chairman Phillips - Hearing no objection, the motion was
APPROVED.
Pat Davidson - There was one memo that covered both of the audits
to be withdrawn.
Representative Martin - Both were Representative Hudson and
Senator Pearce.
Representative Martin MOVED to approve the audit request by
Representative Foster of the Department of Community and Regional
Affairs, Division of Energy, Bulk Fuel Grant funds to the City of
Teller.
Chairman Phillips - Hearing no objection, the motion was
APPROVED.
Representative Martin MOVED to approve the audit request by
Representative Martin and Senator Phillips of the Alaska Energy
Authority and AIDEA on the Four Dam Pool management for the last
three years overviewing their costs of operation.
Senator Pearce objected. I feel what you are asking the auditors
to do is too broad. What are we specifically looking for? Is
there any way to narrow it down?
Representative Martin - In consideration of Senator Pearce's
request, we've had no knowledge in the last few years nor have
there been any audits done on the management costs of the Four
Dam Pool. We know that they have the authority and it is pretty
much that the Board rubber stamps its own expenditures. We do
not know because of the cost to the state and consumer what their
average annual cost has been over the years. There has been
concern by consumers that because we don't know what impact it
has on the state or consumer we should have some idea how much
they are spending and why.
Senator Pearce - That's not information available in the budget
process?
Representative Martin - No. I haven't seen it. We know what
AIDEA approved but we haven't specifically looked at the Four Dam
Pool management unit.
Chairman Phillips - What we could do is go ahead and give it a
conditional approval and let the auditors come back at the next
meeting and tell us what they can and cannot do with the time and
manpower we have available to us. That's my suggestion at this
time. We do have a lot of audits. Ms Davidson, have your
Division look at it and narrow it down and tell us what you can
really do.
Pat Davidson - What we could do is write a letter to the people
and ask them for information and then advise the Committee here
is the numbers and what else do you want us to do?
Chairman Phillips - Why don't you move it with that
understanding, Representative Martin.
Representative Martin AMENDED the motion to include the
understanding Senator Pearce addressed.
Chairman Phillips - Hearing no objection, the amended motion was
APPROVED.
STATUS OF OUTSTANDING AUDITS
Pat Davidson - What I tried to do in this memorandum of January
19 to the Committee was give a perspective in terms of workload
of the audit agency and then detail out where we are. What the
chart shows is in 1993 and 1994 is we had a significant workload
between the sunsets and special audits. What happened in 1995
and 1995 is the requests coming in slowed down and we were able
to catch up. We probably were pretty good at the end of 1996 and
then the audit requests started again in 1997.
Generally what we do is we take them as they come. Sometimes
there are going to be differences. Sometimes an auditor has a
particular expertise in an area and we're going to wait for that
auditor or if that auditor frees up we might bump one ahead.
Generally we try to do them in order. There are Committee
requests; there are the sunset audits which are required by
Statute as well as the state licensing audit which is a
combination of a state Statute with regard to the financial
statements and Federal compliance in terms of the single audit
portion.
In this listing, we talk about the statewide single audit (one
audit). What I tried to do was identify what are we doing, where
are we at when it comes to that audit and that's what the list of
all those departments are. In terms of the Committee requests, I
believe we are going to get for the next meeting the Public
Defender, Agricultural Revolving Loan Fund and Department of
Education, Special Education. We have a high priority audit in
terms of the Child Custody and Child Protection. Our auditors
have a travel request into me and they're heading out.
In terms of the pending audit requests as you look at them they
can fall into a couple of categories. One is performance audits,
looking at the operations of the divisions; the other one how is
the program running. I would say the Pt. McKenzie Correctional
Facility is that one. There is concern about the financial
operations as well as is Pt. McKenzie running the way it should
be running. The Division of Alcohol and Drug Abuse is basically
an outcome audit. We put a lot of money into that program, what
are the outcomes; what do we get for that money and that is what
that type of audit is.
Then sometime audit requests come in which are frustration with
the agency in not providing information to the Committee
requested by individual legislators. They will ask the Audit
Division to come in. I don't think there are any slack audits in
here. They are all very good questions, very important
questions. That is the workload we have right now.
Representative Therriault - I think we probably have to do what
we just did. When we get one and it has to be narrowed then we
do it. Maybe we might determine some aren't justified; perhaps
staff can attempt to get the answer and come back to us if
they're unsuccessful. Clearly the backlog is building. We need
to take some steps.
Chairman Phillips - I'll be sitting down with the auditors; see
where they are. I'll bring back to the Committee a
recommendation on how they are going to proceed with this
backlog. We've had a lot of requests this summer, more than I've
ever see. This is the second time for me as Chairman and there
are a lot. I think we need to slow down so people can do their
job. By next meeting, I'll have an update and recommendation for
the Committee.
Representative Bunde - It might be that the Committee's job is to
not only screen the audits but to prioritize the backlog.
Senator Pearce - Have you every looked at the workloads and
divided them out between the agencies and corporations that we've
set up for special programs? Are there a lot of audits that come
in for special things we've set up that aren't internal to the
daily management of the department?
Pat Davidson - We do get a lot of requests for the quasi
corporations we set up. I think it is because their operations
are not as visible. Their financial operations don't run through
the same mechanisms. The programs they are trying to operate are
different than the norm of government entities. Maybe the
budgetary scrutiny may not be the same as you give to a general
funded program.
Representative Martin - We might also discuss what particular
audits that the Division has handled year in and year out that
can be contracted out and be done initially that way.
Chairman Phillips - That is part of the process I plan to do over
the next few weeks.
APPOINTMENT OF LEGISLATIVE AUDITOR
Chairman Phillips - As of last December we appointed a
subcommittee to first advertise the position and also go through
a selection process. We selected three candidates which the
subcommittee yesterday interviewed and the subcommittee is
recommending to this Committee that Dane Larson be our chief
auditor. I'd like to have a motion and then answer questions.
The process is the subcommittee recommends to this Committee; the
Committee as a whole recommends the name which is submitted to
the President of the Senate and Speaker of the House. Those
respective bodies will vote on the name. In the past, the Senate
just had a vote. The House sent it to the Finance Committee and
the Finance Committee made a recommendation back to the body as a
whole for the House of Representatives approval. That was the
process.
Representative Martin MOVED that the full Committee accept the
recommendation from the subcommittee to appoint Dane Larson as
the new Chief Legislative Auditor.
Senator Adams objected.
Representative Bunde MOVED to go into Executive Session for the
discussion of personnel issues.
Chairman Phillips - Hearing no objection, the motion to go into
Executive Session was APPROVED.
EXECUTIVE SESSION
Chairman Phillips reconvened the meeting to the public at 5:20
p.m.
Representative Martin renewed his motion that the full Committee
accept the subcommittee recommendation of the appointment of Dane
Larson as Chief Legislative Auditor.
Senator Adams objected.
Chairman Phillips hearing an objection called for a roll call
vote.
Yea Representative Bunde, Representative Croft, Senator
Halford, Representative Therriault, Senator Phillips,
Representative Martin, Representative James
Nay Senator Adams, Senator Pearce
(Senator Donley was not present for the vote)
Chairman Phillips - The motion was APPROVED by a vote of 7-2.
Mr. Dane Larson's name will go before the both the House and
Senate for approval.
OTHER BUSINESS
Representative Bunde - The final audits that are being released
to the departments for their comments and the Executive Travel
Summary being released to the Executive Branch are they available
to the public now?
Representative Martin - Yes. The only one which is not public
pertains to the Department of Education.
Chairman Phillips - We need a motion to approve Pat Davidson as
Acting Legislative Auditor until the appointment of Dane Larson.
Pat Davidson - I am right now the Acting Chief Legislative
Auditor. We are recommending that you change that to Dane Larson
as Acting.
Senator Pearce - Why change it until both bodies approve it?
Chairman Phillips - We'll leave it as it stands now.
ADJOURNMENT
Chairman Phillips adjourned the meeting.
(End, Tape: LB&A-982101 Tape 1 Side 1 #842)
LB&A 8 01/21/98
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