Legislature(2023 - 2024)ANCH LIO DENALI Rm
11/08/2023 09:00 AM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Top Audit Issues Presentation | |
| Executive Session | |
| Alaska Broadband Office Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
November 8, 2023
9:05 a.m.
MEMBERS PRESENT
Representative Ben Carpenter, Chair
Senator Bert Stedman, Vice Chair
Representative DeLena Johnson
Representative Sarah Vance
Representative Frank Tomaszewski
Representative Andy Josephson
Senator Bill Wielechowski
Senator James Kaufman
Senator Scott Kawasaki
Senator Click Bishop (alternate)
MEMBERS ABSENT
Senator Lyman Hoffman
Representative Mike Cronk (alternate)
OTHER LEGISLATORS PRESENT
Senator Jesse Kiehl
COMMITTEE CALENDAR
APPROVAL OF MINUTES
TOP AUDIT ISSUES PRESENTATION
EXECUTIVE SESSION
ALASKA BROADBAND OFFICE UPDATE
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
KRIS CURTIS, Legislative Auditor
Division of Legislative Audit
Legislative Agencies and Offices
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint, titled "LB&A
Oversight Top Audit Issues."
THOMAS LOCHNER, Director
Alaska Broadband Office
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint, titled "Broadband
Equity, Access, & Development."
ACTION NARRATIVE
9:05:25 AM
CHAIR BEN CARPENTER called the Legislative Budget and Audit
Committee meeting to order at 9:05 a.m. Representatives D.
Johnson (via teleconference), Vance, Tomaszewski, Josephson, and
Carpenter and Senators Wielechowski (via teleconference),
Kaufman, Kawasaki (via teleconference), and Stedman (via
teleconference) were present at the call to order. Senator
Bishop (alternate, via teleconference) arrived as the meeting
was in progress. Also present was Senator Kiehl (via
teleconference).
^Approval of Minutes
Approval of Minutes
9:07:11 AM
CHAIR CARPENTER announced that the first order of business would
be the approval of minutes.
9:07:17 AM
REPRESENTATIVE VANCE moved that the Legislative Budget and Audit
Committee approve the minutes for the August 30, 2023, meeting,
as presented. There being no objection, the minutes were
approved.
^Top Audit Issues Presentation
Top Audit Issues Presentation
9:07:46 AM
CHAIR CARPENTER announced that the next order of business would
be a presentation on the top audit issues from the prior fiscal
year.
9:08:02 AM
KRIS CURTIS, Legislative Auditor, Division of Legislative Audit,
Legislative Agencies and Offices, presented a PowerPoint, titled
"LB&A Oversight Top Audit Issues," dated 11/8/23 [hard copy
included in the committee packet]. She explained that a few
years ago, the committee adopted a new oversight process to
encourage the resolution of audit findings. She summarized the
oversight process on slide 2, which read as follows [original
punctuation provided]:
Focus
Identify top audit findings in terms of fiscal or
societal impact and degree of difficulty in addressing
findings
Communicate
Work with Auditees to identify corrective action for
top audit findings
Evaluate
Determine whether legislative action is necessary.
Refer to legislative committee for consideration.
Measure
Examine progress through legislative finance
committees or other legislative committees as relevant
Repeat
Once the Single Audit is released repeat. Process
covers all reports issued over a fiscal year.
MS. CURTIS provided an overview of the top audit issues for the
previous fiscal year, beginning with the disclaimer of opinion
on international airports on slide 3, which read as follows
[original punctuation provided]:
1. Disclaimer of Opinion International Airports
Issues That Led to Disclaimed Audit Opinion
During FY 22, Alaska International Airport System's
(AIAS) controller retired and other key staff
resigned. Department of Transportation and Public
Facilities management decided to contract out AIAS's
accounting function. A controller was hired to
oversee the contractor; however, the controller was
not a CPA.
AIAS was unable to produce financial statements for
audit in a timely manner. As of the date of the
State's financial statement opinion, AIAS's audit
had not begun. Consequently, Legislative Audit was
unable to obtain sufficient appropriate evidence
regarding the financial information included in the
State's financial statements.
9:10:18 AM
MS. CURTIS outlined the second audit issue on slide 4 related to
various errors found in draft statements, which read as follows
[original punctuation provided]:
2. Financial Statement Errors
Significant Errors in Draft Statements
There continued to be significant errors and repeat
findings related to the draft financial statements.
The Division of Finance is understaffed in terms of
resources and training. Department accounting staff
suffer from routine turnover and lack of experience.
9:11:16 AM
MS. CURTIS discussed the third audit issue on slide 5, covering
the findings related to federal programs administered by the
Division of Public Assistance within the Department of Health
(DOH), which read as follows [original punctuation provided]:
3. Division of Public Assistance Federal Program
Findings
Division struggling with staffing shortages, lack of
staff experience, poor training, and lack of
adequate internal controls.
Material noncompliance with federal laws and material
weaknesses in internal controls over the following
federal programs:
• Medicaid/CHIP
• Low Income Heating Assistance Program
• SNAP (Food Stamps)
• Temporary Assistance for Needy Families
9:12:47 AM
MS. CURTIS advanced to the fourth audit issue on slide 6,
related to the new Medicaid behavioral health system, which read
as follows [original punctuation provided]:
4. Medicaid Behavioral Health
Significant Errors with New Behavioral Health System
and With Provider Screening
Provider-related system edits and checks were not in
place during FY 22 and the new system had system logic
flaws. These deficiencies resulted in incorrect and
ineligible providers being paid, as well as providers
being paid for ineligible services and at incorrect
amounts.
Due to an unknown cause, Medicaid eligibility
information was not interfacing correctly into the new
behavioral health claim processing system. This led to
expenditures being claimed at wrong rates. There is
also a risk that ineligible people received benefits
and eligible people did not receive benefits.
Certain behavioral health providers were not screened
and enrolled in accordance with federal eligibility
requirements.
9:13:47 AM
MS. CURTIS reviewed the fifth audit issue on slide 7, concerning
appropriation shortfalls, which she defined as the overspending
of a department's general fund authorization. Slide 7 read as
follows [original punctuation provided]:
5. Shortfalls Increasing
Potential shortfalls identified in 9 departments
Staff shortages, turnover, and competing priorities
resulted in a high number of potential shortfall
recommendations.
Agency staff did not address the potential shortfalls
in a timely manner.
9:14:58 AM
MS. CURTIS discussed the sixth audit issue on slide 8, related
to a performance audit on Department of Commerce, Community &
Economic Development's (DCCED's) COVID Small Business Relief
Program, which read as follows [original punctuation provided]:
6. COVID Small Business Relief Program
2022 Audit Made Two Recommendations
1. Department of Commerce, Community, and Economic
Development's commissioner should work toward
recovering the unallowable grant payments identified
in this audit.
2. Alaska Industrial Development and Export Authority's
executive director should ensure the chief procurement
officer follows procurement procedures and adequate
documentation is maintained.
9:15:30 AM
MS. CURTIS summarized the final top audit issue on slide 9,
which read as follows [original punctuation provided]:
7. Alaska State Commission for Human Rights
2022 Audit Made One Recommendation
1. Alaska State Commission for Human Rights' executive
director should adopt written policies and
procedures to guide the complaint resolution
process, establish timelines to encourage timely
resolution, and continue efforts to fill vacancies.
MS. CURTIS detailed next steps in the process on slide 10, which
read as follows [original punctuation provided]:
Legislative Auditor sends letters on behalf of the
LB&A Committee to the auditees asking for the status
of corrective action. A summary of the responses will
be presented at the December LB&A meeting. For those
audit findings that warrant consideration by other
legislative committees, the findings may be forwarded
to the appropriate committees for consideration during
the 2024 legislative session.
9:16:29 AM
CHAIR CARPENTER sought questions from committee members.
9:16:40 AM
SENATOR STEDMAN recalled that there was quite a bit of COVID
money received by people who didn't qualify for it. He asked
whether the division had showed interest in dealing with that
situation; further, he asked how the legislature should address
it.
MS. CURTIS said the Department of Law (DOL) contacted the
division to request additional details; however, she was unsure
what happened after that point. She said [the oversight
process] would help discern the status of that corrective
action.
SENATOR STEDMAN shared his belief that it would be better to
address it in the Legislative Budget and Audit Committee rather
than through the legislative process.
9:17:48 AM
CHAIR CARPENTER questioned whether there was any indication from
federal agencies that state COVID monies would be audited.
MS. CURTIS said state auditors participated in the [Pandemic
Response Accountability Committee (PRAC)] with a compilation of
15 Office of the Inspector Generals (OIGs) from federal
oversight agencies. She explained that monthly meetings were
held to discuss oversight of the monies and the federal
agencies audit processes. She noted that at the beginning of
the process, there was a desk review that included Alaska;
however, a report had not been published since.
9:19:23 AM
REPRESENTATIVE VANCE referenced staffing and recruitment issues
within state agencies and asked whether state auditors were
getting a measure of the effort made by each department to fill
those positions.
MS. CURTIS answered no. She said it was up to the agencies to
determine the cause of those findings; however, as long as the
causes seemed reasonable, no additional audit effort was put
forth to take it a step further. She cited a lack of experience
and inadequate procedures as contributing factors.
CHAIR CARPENTER asked whether agencies typically followed up
with legislative auditors when they acted on the findings.
MS. CURTIS answered yes, by default. She explained that state
auditors were required to audit an agency's status, as provided
in the schedule of prior audit findings. If the auditors
inquired about corrective action, the agency was required to
disclose whether they planned to take corrective action and
provide a contact person. The auditors would then determine
whether that corrective action was reasonable.
9:22:18 AM
CHAIR CARPENTER asked whether outside the schedule of audit
findings, there was a formal process for the administration to
follow up with the state auditor.
MS. CURTIS answered no. She explained that the reason for the
new oversight process was to encourage agencies to follow up.
She noted that there was a mechanism in place for statewide
audits, but not for performance audits.
CHAIR CARPENTER sought to clarify who had the responsibility of
following up.
MS. CURTIS said the audit team had the responsibility of
following up and resolving findings.
CHAIR CARPENTER asked whether the legislature, through the
committee process, had the responsibility of following up on
audit findings.
MS. CURTIS shared her belief that the question posed by Chair
Carpenter was policy based. She said she was unsure whether
there was a legal responsibility [for the legislature to follow
up on audit findings].
CHAIR CARPENTER highlighted the distinction between something
that is required, versus something that is good practice.
MS. CURTIS agreed.
9:24:34 AM
SENATOR KAUFMAN shared his understanding that in discussions
around funding each budget cycle, the intent was to have a
deeper conversation about performance improvements on key
issues. He posited that there was a legislative responsibility
to ensure that "good money" was being put forward after good
effort.
^Executive Session
Executive Session
9:25:26 AM
CHAIR CARPENTER announced that the next order of business would
be executive session.
9:25:58 AM
The committee took an at-ease from 9:25 a.m. to 9:32 p.m.
9:32:47 AM
REPRESENTATIVE VANCE moved that the Legislative Budget and Audit
Committee go into executive session under Uniform Rule 22(b)(3)
for the discussion of matters that may, by law, be required to
be confidential. She asked that the following persons remain in
the room or online: The legislative auditor and, if necessary,
staff for the auditor; Megan Wallace, legislative legal counsel,
and necessary staff; Kevin Cuddy, attorney for Stoel Rives; any
legislators not on the committee; and staff of legislators on
the committee. There being no objection, it was so ordered.
9:35:56 AM
The committee took an at-ease from 9:35 a.m. to 10:45 a.m. for
the purpose of executive session.
10:45:46 AM
CHAIR CARPENTER called the Legislative Budget and Audit
Committee back to order at 10:45 p.m. Present at the call back
to order were Representatives D. Johnson (via teleconference),
Vance, Tomaszewski, Josephson, and Carpenter and Senators
Wielechowski (via teleconference), Kaufman, Kawasaki (via
teleconference), and Bishop (alternate, via teleconference).
10:47:32 AM
REPRESENTATIVE VANCE moved that the Legislative Budget and Audit
Committee approve an amendment to the existing contract with
Stoel Rives, dated June 6, 2023, to increase the contract amount
by $100,000 for a total amount not to exceed $300,000, for legal
services, litigation and appeal costs in the ongoing matter
Legislative Budget and Audit Committee v. Dunleavy, et. al, Case
Nos. S-18904 and 3AN-22-09637 CI, relating to the deposit of
certain state taxes and royalties resulting from Federal Energy
Regulatory Commission (FERC) decisions into the general fund.
There being no objection, it was so ordered.
10:48:33 AM
REPRESENTATIVE VANCE moved that the Legislative Budget and Audit
Committee release the audit on spending on contracts related to
Janus, Department of Law, as a final public audit report. There
being no objection, it was so ordered.
^Alaska Broadband Office Update
Alaska Broadband Office Update
10:49:10 AM
CHAIR CARPENTER announced that the final order of business would
be a presentation from the Alaska Broadband Office.
10:49:34 AM
The committee took an at-ease from 10:49 a.m. to 10:51 a.m.
10:51:06 AM
THOMAS LOCHNER, Director, Alaska Broadband Office (ABO),
Department of Commerce, Community & Economic Development
(DCCED), presented a PowerPoint, titled "Broadband Equity,
Access, & Development," dated 11/8/23 [hard copy included in the
committee packet]. He discussed Alaska's allocation on slide 2,
totaling $1 billion to build broadband across the state. He
reported that in terms of the disbursement of that allocation,
the priority of the ABO was to ensure that unserved communities
received 100Mbps/20Mbps by the end of the program. He added
that the charter would be achieved through grants. He described
various Federal Communications Commission (FCC) broadband maps
in the communities of Nenana and Mountain Village on slides 3-
10.
10:57:25 AM
MR. LOCHNER continued to describe FCC broadband maps of "Patsy's
Cabin," Anchorage, Fairbanks, and the Upper Kenai Peninsula on
slides 11-17. He discussed the Broadband Equity, Access, and
Development (BEAD) milestone dates and ABO timeline on slide 18,
noting that the initial proposal would be reviewed by leadership
and public comment [by 12/27/23]. The initial proposal would
then be filed with the National Telecommunications and
Information Administration (NTIA) for approval, followed by a
"final proposal" period of 365 days, during which time the grant
opportunities would be put to the public for bid and money would
be distributed.
CHAIR CARPENTER sought questions from committee members.
11:01:59 AM
REPRESENTATIVE TOMASZEWSKI inquired about the second priority
outlined on slide 2.
MR. LOCHNER reiterated that that goal was to get the unserved
and underserved to 100Mbps/20Mbps.
REPRESENTATIVE TOMASZEWSKI asked where the 25 percent funding
match was coming from.
MR. LOCHNER clarified that matches would come from the
subgrantees.
11:03:20 AM
CHAIR CARPENTER asked whether Congress had already appropriated
the funding.
MR. LOCHNER answered yes.
CHAIR CARPENTER recalled that Mr. Lochner had stated that Tribes
may be the recipients of state grants. He asked under what
circumstances Tribes would receive money from both the state and
federal government.
MR. LOCHNER said a robust set of conversations was happening
between the ABO and federal entities, such as the NTIA and the
U.S. Department of Agriculture (USDA), to avoid the double
funding of projects.
11:05:53 AM
CHAIR CARPENTER asked whether the state had an obligation to
fund broadband services in unserved communities wherein Tribes
were appropriating their own money.
MR. LOCHNER responded that the ABO may not have visibility into
scenarios where funding from the federal government was not
specific to broadband; consequently, if the community was still
shown as unserved, the ABO would still fund that area to bring
the location to a "served" status.
11:07:53 AM
REPRESENTATIVE VANCE asked whether any of the $1 billion
allocation was being used for satellite services.
MR. LOCHNER explained that the ABO had a charter through the
notice of funding opportunity that had preference and priority
for fiber. In the extremely high-cost location of Patsy's
Cabin, he said, there were 25,000. He characterized the
broadband office as technology agnostic, explaining that the
focus was getting broadband serviceable locations to
100Mbps/20Mbps for the next 10-20 years through whatever
technology could sustain it. He added "Satellite is in," but it
must follow through the grant program like all the other
technologies.
11:09:52 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee was adjourned at 11:09
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Legislative Budget & Audit Meeting - Alaska Broadband Office Update 11.8.23.pdf |
JBUD 11/8/2023 9:00:00 AM |
Alaska Broadband Office Update |
| Top Audit Issues FY 23.pptx |
JBUD 11/8/2023 9:00:00 AM |
2023 Top Audit Issues |