Legislature(2003 - 2004)
04/27/2004 07:05 AM House BUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT
April 27, 2004
7:05 a.m.
MEMBERS PRESENT
Representative Ralph Samuels, Chair
Representative Mike Chenault
Representative Mike Hawker
Representative Vic Kohring
Senator Gene Therriault, Vice Chair
Senator Ben Stevens
Senator Con Bunde
Senator Gary Wilken
MEMBERS ABSENT
Representative Beth Kerttula
Senator Lyman Hoffman
COMMITTEE CALENDAR
APPROVAL OF MINUTES
ASCG'S VETERANS' HOME STUDY PRESENTATION
AUDIT REQUESTS
SCHOOL DISTRICT COST STUDY REVISION BY ISER
WITNESS REGISTER
SCOTT MILLER, Senior Manager
McDowell Group
Juneau, Alaska
POSITION STATEMENT: Presented ASCG's Veterans' Home Study
report.
PAT DAVIDSON, Legislative Auditor
Division of Legislative Audit
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information on six audit requests
and answered questions regarding other audit issues.
HENRY WEBB, Staff
to Representative Ralph Samuels
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reported on the School District Cost Study
revision by ISER.
ACTION NARRATIVE
TAPE 04-4, SIDE A
Number 0001
CHAIR RALPH SAMUELS called the Joint Committee on Legislative
Budget and Audit meeting to order at 7:05 a.m. Representatives
Samuels, Chenault, Hawker, and Kohring, and Senators Bunde and
Wilken were present at the call to order. Senators Therriault
and Ben Stevens arrived as the meeting was in progress.
^APPROVAL OF MINUTES
Number 0030
REPRESENTATIVE HAWKER made a motion to approve the minutes of
March 29, 2004, and February 19, 2004. There being no
objection, it was so ordered.
^ASCG'S VETERANS' HOME STUDY PRESENTATION
Number 0040
CHAIR SAMUELS said that the committee contracted out to the
Arctic Slope Consulting Group (ASCG), on a two-part basis for
the past two years, a study on the veteran's home. This is the
final piece of that contract, he noted.
Number 0050
SCOTT MILLER, Senior Manager, McDowell Group, spoke about the
transition plan [for the State Veterans' Home] by first making a
correction to the document before the committee. He said that a
new addendum has been added at the end of the document because
the administrative code language governing pioneer homes is
going to be changing. He said his company has prepared a
transition plan for the Palmer Pioneer Home to become a State
Veterans' Home and some of the specifics have not entirely been
worked out. He called his report a general scenario of how the
current population of the Palmer Pioneer Home is transitioned to
the proportions that are going to be needed under a State
Veteran's Home. Right now there are about 17 veterans in the
Palmer Home. Ultimately, there will be about 75 percent
veterans [in the State Veterans' Home] and the plan looks at how
that will be phased in, he related. The transition period would
last about two years, he said.
MR. MILLER explained that there are two scenarios described in
the plan. One calls for 25 percent of the veterans on the
waiting list of the Fairbanks and Anchorage Pioneer Homes to end
up at the State Veterans' Home. The other plan calls for 50
percent [of those veterans] to end up at the State Veteran's
Home. He said it is assumed that any veterans that want to go
to the State Home will go there. In either case it will take
about two years to get to 90 percent occupancy. At the end of
two years the home will need to attract about 55 or 56 veterans
from around the state. The demand assessment, which was part of
the original feasibility study, suggests that there will be at
least 65-70 veterans who will want to go to the home for
assisted living care, and probably that many again who will be
looking for nursing home care by the year 2015, he added. There
is substantial demand for the number of beds that will be
available in this [Veterans' State Home], he concluded.
[Ron Bisset and Donna Logan declined to make additional comments
(via teleconference).]
Number 0520
REPRESENTATIVE HAWKER made a motion that the Joint Committee on
Legislative Budget and Audit accept the State Veterans' Home
report by ASCG, Incorporated, and the supplemental documents.
There being no objection, it was so ordered.
^AUDIT REQUESTS
Number 0650
PAT DAVIDSON, Legislative Auditor, Division of Legislative
Audit, Alaska State Legislature, referred to a memorandum before
the committee which lists six audit requests from various
members of the legislature. She stated that the first one is
from Chair Samuels asking for a review of recidivism rate for
various treatment programs, specifically identifying [Alaska
Court System's] therapeutic court programs. The audit process
will review the mathematical accuracy and methodology of the
court's data, and then building on [those results], will look at
other therapeutic programs that are funded by the state and see
if recidivism rates can be developed. Standardization will also
be a recommendation, she said.
MS. DAVIDSON explained that the second audit request is from
Representative Chenault and looks at two community center
grants. It will be a performance audit and it will be limited
to some degree because these are grantees of the state instead
of state entities, she said.
MS. DAVIDSON said that the third audit request is from Senator
Ben Stevens and asks for a review of the Department of
Administration's (DOA) Public Employees Retirement System (PERS)
Board and the Teachers' Retirement System (TRS) Board in terms
of how they have been dealing with recommendations coming from
the various contractors and specialists that help them manage
their funds.
REPRESENTATIVE HAWKER asked if the scope [of the audit] is
contemplated to go into looking at the decision-making process
and the various actuarial policies.
MS. DAVIDSON replied that it is a relatively briefly stated
audit request that will deal with how the boards deal with the
information coming from their actuaries and what sort of
guidelines and policies PERS and TRS boards set that the
actuaries have to follow. She said that the actuaries
themselves will not be audited.
Number 0900
SENATOR THERRIAULT responded, "You said it's briefly stated."
He requested a review of any kind of correspondence the board or
the department has that shows whether there is an indication in
advance from actuaries, or anybody, that a problem is
developing. He said he has been told there was a similar issue
regarding workers' compensation, and that the previous
administration had indications that a problem was developing and
those signs were ignored.
CHAIR SAMUELS recognized that Senators Therriault and Ben
Stevens had joined the meeting.
SENATOR BUNDE asked if the committee would be moving into
executive session to discuss audits.
CHAIR SAMUELS replied no.
SENATOR STEVENS said he wanted to make sure that the [Alaska
State Pension and Investment Board] is included in [the audit].
He asked Ms. Davidson if another request is warranted.
MS. DAVIDSON replied that the only the PERS and TRS Boards are
included and she requested that the inclusion of the Alaska
State Pension and Investment Board be stated as part of the
record.
Number 1042
SENATOR STEVENS made a motion to amend his audit request so that
the Alaska State Pension and Investment Board is included in the
audit. He said he wants to make sure that the Board is
diligently handling the money as well as following the criteria.
CHAIR SAMUELS asked if there was any objection [to the amendment
to Senator Steven's audit request]. Hearing none, Chair Samuels
said that the amendment would be included in the motion to
approve all of the audits.
Number 1111
MS. DAVIDSON continued to explain that the fourth audit request
is from Senator Elton and Representative Kerttula asking for a
review of the Alaska Marine Highway System's (AMHS) move to
Ketchikan. That request initially came in before the hearings
and a small amount of information analyzing the proposed lease,
as opposed to a standard lease contract, was provided, she said.
Given the limited time frame there was no way to answer
questions about how the move would affect management or improve
operations.
CHAIR SAMUELS asked if the results of the audit will be gotten
too late and if it is a good use of Ms. Davidson's time.
MS. DAVIDSON replied it will be more of an evaluation of how
good the decision was to make that move, because it will look at
how the operation has changed and what the real cost was. It
will be an evaluation post-decision, and the requesters knew
that the audit would take six to eight months before the audit
is started, she added.
Number 1248
SENATOR THERRIAULT asked when the completion date would be.
MS. DAVIDSON said it is tough to tell. The financial part won't
be that tough, she opined, but the question will be in
evaluating the operational changes.
SENATOR THERRIAULT asked if the audit is begun six months from
now, and the move is in the transition phase, will it be
difficult to evaluate.
Number 1400
MS. DAVIDSON replied, "If it got to be that point and we didn't
feel like we could actually do an evaluation, what we typically
would do is talk to the requesters and tell them - even if we
went in right now we wouldn't give you a very good answer
because it's in transition - and ask if they would like us to
delay the start of the audit, in which case, the next one in
line would come up."
CHAIR SAMUELS suggested that the start date could be delayed
until almost a year from now.
SENATOR THERRIAULT said that since the requesters are not
present to ask their opinions, he suggested holding off on this
audit rather than approving it and delaying the start date.
CHAIR SAMUELS said he agrees and would take that into
consideration when making the final motion [to adopt the audit
requests].
Number 1539
MS. DAVIDSON indicated that the fifth audit request comes from
the House Finance Committee and asks for a review of the Special
Education Service Agency (SESA). During testimony on the sunset
extension for that agency, questions were raised about having a
nine-year extension. Senator Green, as the bill's [sponsor],
was seeking a standard four-year extension. That audit did have
some significant recommendations for changes in its operations
and the House Finance Committee found a compromise and passed
out the nine-year extension; however, it asked that in four
years a sunset audit be done on SESA so that how the agency has
been implementing those recommendations could be evaluated. The
report would be available to the legislature for review in 2008,
which would have been a typical four-year time period, she
added.
Number 1634
MS. DAVIDSON reported that the last audit request is from
Representative Weyhrauch and asks for a review of the
implementation of a pilot program for state procurement that was
authorized in Chapter 51, SLA 03. The idea with that audit is
to determine if the implementation of the program is consistent
with the testimony that was provided to the legislature in terms
of the estimated savings to be achieved and the number of
departments to which it can be applied.
SENATOR THERRIAULT related that the original statute was a
three-year pilot program, but it took a year to get the contract
signed. He asked if that was correct and if Ms. Davidson had
looked at the statute.
MS. DAVIDSON replied that she was not able to do much research
on this request.
SENATOR THERRIAULT responded that it is a pilot program and he
does not know if it requests a report to the legislature at the
conclusion of the program two years from now. He wondered if
the question doesn't answer itself.
MS. DAVIDSON said that this audit request came in yesterday, so
she was not able to do much research on it, other than find out
that HB 313 turned into Chapter 51.
SENATOR THERRIAULT suggested that before a motion is made on
this audit request, that it be moved to the bottom of the agenda
while he directs his staff to look up the current statute.
CHAIR SAMUELS asked for a motion to accept audits 1, 2, 3, and
5.
Number 1853
SENATOR THERRIAULT made a motion for audit requests 1, 2, 3, and
5 to be accepted by the Joint Committee on Legislative Budget
and Audit, including the amendment to Senator Steven's request.
There being no objection, it was so ordered.
^SCHOOL DISTRICT COST STUDY REVISION BY ISER
Number 1930
CHAIR SAMUELS related that as a result of the peer review done
by the Institute of Social and Economic Research (ISER), ISER
determined that they could go in and fix some of the parameters
on cost found in the American Institutes for Research (AIR)
study. The issue before the committee is to approve of a
contract with ISER to go forward and work with AIR on that
project.
Number 2000
HENRY WEBB, Staff to Representative Ralph Samuels, as Joint
Committee on Legislative Budget and Audit committee aide, stated
that there were three areas that Professor Tuck said should be
cleaned up in the AIR study: travel, energy costs, and
personnel costs. He said an economist would be needed to work
through the personnel costs because there is no way to just plug
numbers into it. Professor Tuck estimated that cleaning up the
AIR study would not cost more than $50,000 and he estimated that
the work would be done by mid-December at the latest, Mr. Webb
explained.
MR. WEBB mentioned that Senator Wilken's staff is interested in
using the same model. He said that Professor Tuck had
suggestions on how to do that by moving the program from
Microsoft Access to Microsoft Excel because it is easier to
manipulate and more accessible. Professor Tuck also suggested
that it would be good to update this model every three to four,
or even five years, which would cost $10,000 to $20,000 to have
a university economist work on the personnel portion. It was
suggested that every ten years the whole model should be re-
evaluated, Mr. Webb added.
Number 2151
SENATOR WILKEN suggested that [ISER] move the schedule up to
before mid-December. He said it would be helpful to him and
others to be able to really digest the plan. He said that the
issues from Fairbanks' point of view are not going to go away,
and what was intended to be done two years ago should not be put
off any longer than it has to be. He agreed with the idea to
update the report every five years.
Number 2330
SENATOR THERRIAULT made a motion that the Joint Committee on
Legislative Budget and Audit authorize the chair to enter into
contract with ISER in the amount not to exceed $50,000 in order
to make corrections to the AIR School District Cost Study.
There being no objection, it was so ordered.
The committee took an at-ease from 7:20 a.m. to 7:23 a.m.
CHAIR SAMUELS, [referring to the audit request by Representative
Weyhrauch], stated that there is no requirement for a report
under [Chapter 51, SLA 03]. He said he would have a
conversation with Representative Weyhrauch, the sponsor of the
audit request to see if he wants to get more information on the
report.
REPRESENTATIVE THERRIAULT, looking at the language from last
year's [Chapter 51], said it does not require a report, but
talks about a contract, and there may have been a component of
the contract itself that required some kind of reporting. He
suggested that there is time to find out more information and
get back to it at a future meeting.
CHAIR SAMUELS requested that Ms. Davidson also research
[Representative Weyhrauch's] audit request.
MS. DAVIDSON said she would follow up on that, review the
request for proposals (RFP), and find out how long the contract
is for.
CHAIR SAMUELS mentioned that a contract has been entered into
with Bonnie Robson, a consultant to the legislature on gas line
issues. During the interim there will be meetings on this
topic, he said.
ADJOURNMENT
There being no further business before the committee, the Joint
Committee on Legislative Budget and Audit meeting was adjourned
at 7:25 a.m.
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