Legislature(1999 - 2000)
02/12/1999 12:02 PM House BUD
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* first hearing in first committee of referral
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+ teleconferenced
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JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT
February 12, 1999
12:02 p.m.
MEMBERS PRESENT
Representative Gail Phillips, Chair
Representative Con Bunde
Representative Eric Croft
Representative Gary Davis
Representative Gene Therriault
Representative Eldon Mulder (Alternate)
Senator Randy Phillips, Vice Chair
Senator Al Adams
Senator Gary Wilken
MEMBERS ABSENT
Senator Rick Halford
Senator Sean Parnell
Senator Drue Pearce (Alternate)
COMMITTEE CALENDAR
INTRODUCTION OF COMMITTEE STAFF
EXECUTIVE SESSION
FORMALIZATION OF SPECIAL AUDIT REQUEST POLICY
CONSIDERATION OF PRELIMINARY AUDITS AND SPECIAL AUDIT REQUESTS
REVISED PROGRAMS - LEGISLATIVE (RPLs)
OTHER BUSINESS
WITNESS REGISTER
DAVID TEAL, Director
Division of Legislative Finance
State Office Building, Sixth Floor
Telephone: (907) 465-3795
POSITION STATEMENT: Explained RPLs.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
State Office Building, Sixth Floor
Telephone: (907) 465-3830
POSITION STATEMENT: Presented Legislative Budget and Audit
Committee Handbook.
LAURA GOULD, Director of Business Operations
Aerospace Development Corporation
4300 B Street, Suite 101
Anchorage, AK 99503
Telephone: (907) 561-3338
POSITION STATEMENT: Supported the RPL on the Kodiak Launch
Complex.
ACTION NARRATIVE
TAPE 99-1, SIDE A
Number 0001
CHAIR GAIL PHILLIPS called the Joint Committee on Legislative
Budget and Audit meeting to order at 12:02 p.m. Members present
at the call to order were Representatives Phillips, Bunde, Croft,
Davis, Therriault and Mulder, and Senators Phillips, Adams and
Wilken. [roll call was not taped due to mechanical difficulties]
INTRODUCTION OF COMMITTEE STAFF
Number 0100
CHAIR PHILLIPS called David Teal forward to make a statement
about what the Legislative Budget and Audit Committee's staff and
policy people do, as well as, introduce his key staff.
Number 0106
DAVID TEAL, Director, Legislative Finance Division, explained
that the main interaction with the Legislative Budget and Audit
Committee consists of preparing Revised Programs - Legislative
(RPLs)requests that the Office of Management and Budget (OMB)
pass onto them seeking approval. The Legislative Finance
Division not only passes the RPLs onto the Legislative Budget and
Audit Committee, but they also do their own analysis of them.
There are two RPLs for this meeting. He asked the following staff
to introduce themselves: Jim Hauck, Department of Natural
Resources, Environmental Conservation and Community and Regional
Affairs; Phil Okeson, Department of Law, Department of
Administration and Department of Corrections; Tammy Stromberg,
Education, University and Salary and Benefits; Ginger Blaisdell,
Health and Social Services, Department of Revenue and Operating
Budget Coordinator; Brent Doutt, Department of Community and
Economic Development, Public Safety, Military and Veterans
Affairs and Fish and Game. He stated that Fred Fisher has
submitted his resignation, but he is responsible for Department
of Labor, Department of Transportation and the Capital Budget.
CHAIR PHILLIPS called Pat Davidson forward to discuss legislative
audits.
Number 0274
PAT DAVIDSON, Legislative Auditor, Legislative Audit Division,
introduced three members of her team; Merle Jenson, Deputy
Legislative Auditor, Jim Griffin, Audit Manager and Bob Bilden.
She went on to say that she felt the responsibilities of the
Legislative Audit Division and the Legislative Budget and Audit
Committee with regard to the audit are unique. She referred to
the Legislative Budget and Audit Committee Handbook and said,
"According to statute, audit reports are confidential unless the
report has been approved for release by the committee." When the
audits are sent from the Legislative Audit Division to the
Legislative Budget and Audit Committee they will come in two
forms. One form is termed the "preliminary report" or "red-cover
report" and that is handed out at the meeting. The other form
will come as a packet two days before a Legislative Budget and
Audit Committee meeting; it will contain the reports that were
presented last time as "preliminary" and are now presented as a
final report. They are still termed confidential because they
have not been released by the committee. She referred to a
memorandum prepared by her, which covers how to request an audit,
what the Legislative Audit Division is allowed to audit and
alternatives to audits.
Number 0502
SENATOR PHILLIPS made a motion to adopt the Legislative Budget
and Audit Committee Handbook as presented by Pat Davidson. There
being no objection, the handbook, as presented, was adopted.
CHAIR PHILLIPS asked Pat Davidson if she would offer and explain
the amendment.
FORMALIZATION OF SPECIAL AUDIT REQUEST POLICY
Number 0531
MS. DAVIDSON discussed the voting requirements, referring to page
29 of the Legislative Budget and Audit Committee Handbook under
item number eight, which identifies the minimum number of votes
of the committee for approval of RPLs and release of audits being
six. If the Legislative Budget and Audit Committee Handbook
includes audit requests it will mirror the existing statute. The
former chairman, Senator Phillips, made a ruling that six votes
was required, but it was off the record. Tamara Cook of
Legislative Legal and Research Services recommended that the
committee actually adopt the policy.
SENATOR PHILLIPS referred to a memo he received on November 25,
1998.
MS. DAVIDSON explained that the memo has been revised, but the
draft change to policy and procedure is the same.
Number 0656
SENATOR PHILLIPS made a motion to adopt the amendment.
CHAIR PHILLIPS clarified the motion to amend the policy, which
involves putting into question the votes required that being six
and at least one from each body.
SENATOR WILKEN asked, if they approve the motion, whether or not
item eight on page 29 of the Legislative Budget and Audit
Committee Handbook will remain.
MS. DAVIDSON answered, "Yes."
REPRESENTATIVE CROFT wondered if the one from each body was in
the category of six votes and where that was stated in the
handbook.
SENATOR PHILLIPS stated that it is listed in the "other rules."
CHAIR PHILLIPS said that she believes it is stated in the
statute.
MS. DAVIDSON said that she also believes it to be stated in the
statute, but that she could confirm that.
REPRESENTATIVE CROFT clarified that under item eight it only
states that six votes are required, but somewhere else it states
that there needs to be one from each body.
Number 0739
CHAIR PHILLIPS asked if there was any objection to the amendment.
There being none, the amendment was adopted and the policy
revised.
SENATOR PHILLIPS asked Pat Davidson to state the number of people
she has in her office here in Juneau compared to the number in
Anchorage.
MS. DAVIDSON replied that two-thirds of the staff are in Juneau
and one-third are in Anchorage.
EXECUTIVE SESSION
Number 0820
SENATOR PHILLIPS made a motion to move to executive session to
discuss the audit. There being no objection, the committee went
into executive session at 12:20 p.m.
CHAIR PHILLIPS asked David Teal, Pat Davidson, and Tom Maher
(Legislative Budget and Audit Committee aide) to attend the
executive session.
CHAIR PHILLIPS made a motion to resume open session. There being
no objection, the committee resumed open session at 12:55 p.m.
CONSIDERATION OF PRELIMINARY AUDITS AND SPECIAL AUDIT REQUESTS
Number 0890
MS. DAVIDSON stated that the committee might want to make a
motion to release the preliminary audits, as presented, to the
agencies for response.
SENATOR PHILLIPS made a motion to release the audits. There
being no objection, the audits were released to the agencies for
response.
Number 0928
MS. DAVIDSON stated that there are two special audit requests;
one being presented by Representative Phillips looking at
prevailing wages for school district construction projects and
the other being presented by Representative Croft looking at the
effectiveness of the male awareness programs.
Number 0960
SENATOR PHILLIPS made a motion for the approval of both special
audit requests. There being no objection, both audits went
forward.
Number 0993
MS. DAVIDSON discussed the termination of an audit request. The
Department of Administration moved to close the Central
Duplicating Section about a year ago. Senator Duncan asked the
Legislative Audit Division to do a review, which they did; it was
not sufficient so he came to the committee and asked for an
audit. There was a union grievance filed at the time the Central
Duplicating Section was closed and an arbitrator agreed with the
union that the state had made errors. Given that it has been
almost a year, she believes that an audit would be of limited
value and that the Legislative Audit Division could spend their
time on more current issues. She asked the committee to consider
the termination of the audit request.
REPRESENTATIVE CROFT wondered if Senator Elton had been notified
since he occupies the same seat as Senator Duncan had previously
and may have the same interest.
MS. DAVIDSON stated that she had not notified Senator Elton, but
that she did speak with Roxanne, who works for Senator Duncan,
yet had not heard back from her.
REPRESENTATIVE MULDER wondered what the arbitrator had
determined.
MS. DAVIDSON said that she believes the key issue had to do with
privatizing issues, but that she wasn't really up to date on it.
Number 1150
REPRESENTATIVE MULDER said that he thought the legislature should
look at whether they need to tailor the statutes so that they
make the government look more effective. If this government has
to go into arbitration to close a small operation and pay the
people who are so called wrong, than something is not right. It
needs to be looked at and the statutes may need to be refined.
He said that he knew they would be looking in finance at the bill
to pay these people.
Number 1176
SENATOR PHILLIPS made a motion to terminate the audit request.
There being no objection, the audit was terminated.
REVISED PROGRAMS - LEGISLATIVE (RPLs)
Number 1226
MR. TEAL discussed two RPLs that were submitted by OMB to be
reviewed by the committee; the first is a seven-million dollar
capital request to complete the construction of the Kodiak launch
complex, the second is a five-thousand dollar capital request
that has not been approved yet and is still being negotiated with
the National Guard. The seven-million dollars is split into two
pieces; two-million is interest, which was okayed by the federal
government and five-million has not been confirmed yet by the
National Guard and is still being negotiated. Many of the RPLs
contain requests to keep money that has not been confirmed, and
the reason for that is timing, so that they can move quickly if
and when the funding is approved. For example, Aerospace's
argument is that if they don't have the money when construction
begins it may increase their construction costs, because they
will have to pay a contractor for the first portion and then
re-bid for the other portion of the project. It might involve a
delay and the impact of a delay is up to the committee to decide.
He added that they only looked at the seven-million dollar
construction project, which does not include a review of
operations or profitability. He went on to say that there is a
twelve-million dollar capital request submitted in the 2000
budget. If this seven-million dollar RPL goes through than it
would reduce the twelve-million dollar capital request by
seven-million dollars, lowering the 2000 budget request to
five-million dollars. That five-million dollar request is
something they are negotiating with the Alaska Science and
Technology Foundation.
Number 1371
LAURA GOULD, Director of Business Operations, Aerospace
Development Corporation, commented by saying that David Teal
outlined well the funding and potential impacts of the project if
the RPL was not approved today. She said that she was open for
questions regarding funding or schedules.
Number 1390
REPRESENTATIVE THERRIAULT stated that the reason there were not
enough votes from the previous committee to accept this RPL was
that they were unsure about the interest earnings on the
two-million dollars, which has now been clarified. Even though
there is still negotiations on the five-million dollars the
federal appropriation was made and now the negotiations are
primarily on the routing of the money. He followed up by saying
that he thought aerospace has had a good track record because
Senator Stevens has made sure that the money coming from the
federal government does not make too many stops, therefore
federal agencies can't skim off any of the money en route. A
small percentage of the five-million dollars could be taken by a
federal agency involved in the transfer.
CHAIR PHILLIPS called an at-ease at 1:08 p.m. and called the
meeting back to order at 1:20 p.m.
Number 1473
REPRESENTATIVE MULDER made a motion to adopt the RPL for
construction of the Kodiak launch complex.
SENATOR PHILLIPS objected to the motion to adopt the RPL.
CHAIR PHILLIPS asked that a roll call vote be taken.
Representative Croft, Davis, Mulder, Therriault, Phillips and
Senator Wilken voted in favor of the motion to adopt the RPL.
Senator Phillips voted against it. Therefore, the RPL was
adopted by a vote of 6-1. [machine malfunction caused this
portion of the tape to be erased]
Number 1590
MR. TEAL explained that the second RPL is a five-thousand dollar
request; the funding comes from the National Institute of
Corrections. The money will be used to fund a private attorney
for part-time work for the Criminal Justice Assessment
Commission, which is part of the Alaska Judicial Council. The
money came available as of 1/15/99. There are no positions
affected. The additional fifteen-thousand dollars provided by
the National Institute of Corrections will be made available in
next years budget.
CHAIR PHILLIPS asked if there was anyone from the Alaska Judicial
Council that wanted to come forward and make a statement. Bill
Cotton, Executive Director of the Alaska Judicial Council, came
forward to answer any questions, but did not have a statement.
Number 1605
REPRESENTATIVE CROFT made a motion to adopt the RPL for the
Criminal Justice Assessment Commission staffing. There being no
objection, the RPL was adopted.
OTHER BUSINESS
Number 1641
CHAIR PHILLIPS stated that a request to draft legislation has
been presented to the Legislative Budget and Audit Committee by
the Alaska Permanent Fund Corporation, making a number of
technical and other changes to improve and modernize the
operation [under AS 37.13.120, the "legal list" of the
permissible investments of the fund]. She went on to say that
the language on their request has been sent to the committee's
legal services and it is being drafted; the draft will be
available before the next Legislative Budget and Audit Committee
meeting. She said that it is her intention to discuss it at the
next meeting, which will be held Friday, March 12.
ADJOURNMENT
Number 1681
CHAIR PHILLIPS adjourned the Legislative Budget and Audit
Committee meeting at 1:25 p.m.
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