Legislature(2023 - 2024)ANCH LIO DENALI Rm
12/13/2023 09:00 AM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Approval of Minutes | |
| Top Audit Findings Update | |
| 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
ALASKA STATE LEGISLATURE
LEGISLATIVE BUDGET AND AUDIT COMMITTEE
Anchorage, Alaska
December 13, 2023
9:06 a.m.
MEMBERS PRESENT
Representative Ben Carpenter, Chair
Representative DeLena Johnson
Representative Sarah Vance
Representative Frank Tomaszewski
Representative Andy Josephson
Senator Bill Wielechowski
Senator Lyman Hoffman
Senator Scott Kawasaki
Senator Click Bishop (alternate)
MEMBERS ABSENT
Senator Bert Stedman, Vice Chair
Senator James Kaufman
Representative Mike Cronk (alternate)
OTHER LEGISLATORS PRESENT
Representative Ashley Carrick
COMMITTEE CALENDAR
APPROVAL OF MINUTES
TOP AUDIT FINDINGS UPDATE
EXECUTIVE SESSION
OTHER COMMITTEE BUSINESS
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
MIKE CHADWICK, Audit Manager
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Gave an update on the prior fiscal year's
top audit issues.
DEVEN MITCHELL, Chief Executive Officer
Alaska Permanent Fund Corporation
Juneau, Alaska
POSITION STATEMENT: Gave an update on the Alaska Permanent Fund
Corporation's Anchorage office expansion.
ACTION NARRATIVE
9:06:31 AM
CHAIR BEN CARPENTER called the Legislative Budget and Audit
Committee meeting to order at 9:06 a.m. Representatives Vance
(via Microsoft Teams), Tomaszewski (via teleconference),
Josephson, and Carpenter and Senators Wielechowski (via
teleconference), Hoffman, Kawasaki (via teleconference), and
Bishop (alternate) were present at the call to order. Also
present was Representative Carrick.
^APPROVAL OF MINUTES
APPROVAL OF MINUTES
9:07:35 AM
CHAIR CARPENTER announced that the first order of business would
be the approval of minutes.
9:07:48 AM
REPRESENTATIVE VANCE moved that the Legislative Budget and Audit
Committee approve the minutes from the [November 8, 2023,]
meeting as presented. There being no objection, the minutes
were approved.
^TOP AUDIT FINDINGS UPDATE
TOP AUDIT FINDINGS UPDATE
9:08:09 AM
CHAIR CARPENTER announced that the next order of business would
be an update on the prior fiscal year's top audit issues.
9:08:43 AM
MIKE CHADWICK, Audit Manager, Legislative Audit Division,
Legislative Agencies and Offices, referenced a chart [included
in the committee packet], entitled "Corrective Action Status of
the Top FY 23 Audit Issues," which summarized the status of
corrective actions for audit issues presented to the committee
[on 11/8/23]. He said the next step was to determine which
findings warrant additional consideration by legislative
committees during the next legislative session. He directed
attention to the last column on the chart, labeled "Next
Action," and proceeded to read the recommended action for each
audit issue, which read as follows [original punctuation
provided]:
1. Disclaimer of Opinion International Airports
Recommended Action:
Referral to the Finance Transportation Budget
Subcommittees as well as the House and Senate
Finance Committees for their consideration.
2. Financial Statement Errors
Recommended Action:
None. Will be reviewed by Legislative Audit as part
of FY 23 ACFR audit.
3. Division of Public Assistance Federal Program
Findings
Recommended Action:
Referral to Senate and House Health and Social
Services Committees for their consideration.
4. Medicaid Behavioral Health
Recommended Action:
Referral to Senate and House Health and Social
Services Committees for their consideration.
5. Shortfalls Increasing
Recommended Action:
None. Will be reviewed by Legislative Audit as part
of FY 23 single audit.
6. COVID Small Business Relief Program
Recommended Action:
None
7. Alaska State Commission for Human Rights
Recommended Action:
None
^EXECUTIVE SESSION
EXECUTIVE SESSION
9:11:58 AM
CHAIR CARPENTER announced that the next order of business would
be executive session.
9:12:10 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; any legislators not on the committee; and
staff of legislators on the committee. There being no
objection, it was so ordered.
9:13:55 AM
The committee took an at-ease from 9:13 a.m. to 10:45 a.m.
10:45:42 AM
CHAIR CARPENTER called the Legislative Budget and Audit
Committee meeting back to order at 10:45 a.m. Present at the
call back to order were Representatives D. Johnson (via
teleconference), Vance (via Microsoft Teams), Tomaszewski (via
teleconference), Josephson, and Carpenter and Senators
Wielechowski (via teleconference) and Kawasaki (via
teleconference).
10:46:52 AM
CHAIR CARPENTER stated that during executive session, the
committee discussed the final audit release of the Big Game
Commercial Services Board, Sunset, and decided to release the
final audit. In addition, the committee received and discussed
the preliminary audit release of the following: the Alaska
Commission on Aging, Sunset; the Marijuana Control Board,
Sunset; the Board of Massage Therapists, Sunset; the Department
of Labor and Workforce Development, Technical Vocational
Education Program; and the Department of Family and Community
Services, Office of Children Services Compliance with Foster
Care Reform Laws, Part Two.
10:48:30 AM
REPRESENTATIVE VANCE moved that the Legislative Budget and Audit
Committee release the audit on Big Game Commercial Services
Board, Sunset, as a final public audit report. There being no
objection, it was so ordered.
10:48:55 AM
REPRESENTATIVE VANCE moved that the Legislative Budget and Audit
Committee release the preliminary audit on the Alaska Commission
on Aging, Sunset; the Marijuana Control Board, Sunset; the Board
of Massage Therapists, Sunset; the Department of Labor and
Workforce Development, Technical Vocational Education Program;
and the Department of Family and Community Services, Office of
Children Services Compliance with Foster Care Reform Laws, Part
Two. There being no objection, it was so ordered.
^OTHER COMMITTEE BUSINESS
OTHER COMMITTEE BUSINESS
10:49:35 AM
CHAIR CARPENTER announced that the final order of business would
be an update from the Alaska Permanent Fund Corporation (APFC).
10:50:29 AM
The committee took an at-ease from 10:50 a.m. to 10:54 a.m.
10:54:43 AM
DEVEN MITCHELL, Chief Executive Officer, Alaska Permanent Fund
Corporation (APFC), informed the committee that APFC's Board of
Trustees had a strategic plan to open an Anchorage office for a
number of years. The plan culminated with an opportunity to
occupy a portion of the property located at 555 Cordova Street,
which the Department of Environmental Conservation (DEC)
otherwise occupied. The building was leased from the Department
of Transportation & Public Facilities (DOT&PF) with DEC's
allowance. He reported that the payment for the current fiscal
year was approximately $22,000 for the ground floor comprised of
nine work areas, three walled offices, and six cubicles, in
addition to a conference room and access to common facilities.
Some additional expenses were associated with set up and
technology equipment totaling an estimated $7,000 to $8,000. He
anticipated that several thousand dollars of additional cost may
arise to accommodate future occupants. He detailed the staff
members who planned to transition to the Anchorage office,
including an individual working in Information Technology (IT),
a private income group member, several private equity group
members, an individual from the trade reconciliation team, and
the chief investment officer. He reported that the FY 25 budget
proposal included a request for $100,000 for the Anchorage
office to cover the lease, office technology, an allowance for
the relocation of out-of-state employees, and any additional
office furnishings. He spoke to questions about the relocation
of an off-site data center in the event of a failure at the
primary data center in Juneau. The intention of opening the
Anchorage office was primarily to address recruitment and
retention issues by offering existing employees the flexibility
of working in Anchorage. He welcomed questions from committee
members.
11:01:39 AM
CHAIR CARPENTER sought to confirm that three or four individuals
with direct responsibility for investment decisions would be
working out of the Anchorage office.
MR. MITCHELL answered yes, four junior members of the investment
staff would be located in Anchorage with the ability to
influence investment opportunities for the fund.
CHAIR CARPENTER sought questions from members of the committee.
11:02:36 AM
REPRESENTATIVE JOSEPHSON said he observed "impressive"
technology equipment in the Juneau office, which he likened to
the National Aeronautics and Space Administration's (NASA)
monitors and screens. He asked whether the Anchorage office
would have the same technological capacity.
MR. MITCHELL stated that Representative Josephson was probably
referencing the Bloomberg machine, which wouldn't be used by the
Anchorage team. He shared his understanding that the "rollout"
in Anchorage would be minimalistic and would not be able to
support that direct trade activity.
REPRESENTATIVE JOSEPHSON questioned the percentage of total
staff that would be working in Anchorage.
MR. MITCHELL replied that a specific target had not been
identified. He noted that the Anchorage office was meant to be
an ancillary office for maximum recruitment and retention of
employees, not intended to replace the Juneau office.
REPRESENTATIVE JOSEPHSON was unsure why Mr. Mitchell could not
share a specific number.
11:06:25 AM
SENATOR KAWASAKI inquired about space consolidation and employee
footprints. He calculated that startup would cost $120,000
plus an extra $50,000 per year to keep the new location open.
He asked whether that was accurate.
MR. MITCHELL said that was in the ballpark of anticipated costs.
He reiterated that there were no specific targets or goals
associated with the Anchorage office at this time.
SENATOR KAWASAKI asked whether there were any thoughts of moving
to Fairbanks, or whether the move to Anchorage was in pursuit of
a particular employee.
MR. MITCHELL shared his understanding that the move didn't have
anything to do with a particular employee, adding that he was
unsure how the strategic plan originated. He conveyed that the
board's priority was to open an office in Anchorage and that no
other potential locations were discussed.
SENATOR KAWASAKI commented that after touring several local
state office buildings with the Interior delegation, there was
free space available in Fairbanks.
11:11:05 AM
CHAIR CARPENTER asked whether there would be temporary office
space for employees traveling back and forth between Juneau and
Anchorage.
MR. MITCHELL answered yes, that was the plan. Specifically, one
of the nine offices was designated for the chief investment
officer who had indicated his plan to travel back and forth
regularly. He anticipated that six of the nine cubicles would
be assigned to the Anchorage staff with the three offices
available for rotating or visiting staff.
CHAIR CARPENTER asked whether there was meeting space or offices
for the board members to meet.
MR. MITCHELL said there was no office space for board members
specifically; however, the small conference room or other venues
in Anchorage could be used. He added that if the available
space were to be exceeded, APFC would consider moving to a more
permanent space similar to the Juneau office.
11:15:03 AM
CHAIR CARPENTER asked how to measure whether the move was
successful.
MR. MITCHELL defined successful relocation as fully occupied
office space and high-quality work product, in addition to high
employee satisfaction. He noted the difficulty of quantifying
success due to its subjective nature. He added that the
enhanced likelihood of employees staying long-term would be "the
proof in the pudding."
CHAIR CARPENTER shared his understanding that the Anchorage
office was created at the board's discretion. He expressed his
hope that the decision, which would increase cost to the
organization, was deliberate and intentional. He asked whether
the move would impact the utilization of the existing building
in Juneau.
MR. MITCHELL stated that space would not be easily reallocated.
He noted that the remote work policy, which applied to the
Anchorage office, required employees to return to Juneau from
time to time to interact with one another. He emphasized the
importance of designating space for remote workers to conduct
business while in Juneau.
11:21:20 AM
CHAIR CARPENTER sought further clarity on the Juneau office
space.
MR. MITCHELL relayed that APFC occupied the third floor of the
building with vacant space on the second floor. The first floor
was used by the Department of Administration (DOA) along with a
market research firm. He concluded that the space, valued at $7
million, was underutilized.
CHAIR CARPENTER expressed his hope that some attention would be
spent towards better utilization of the building.
11:24:38 AM
CHAIR CARPENTER asked whether there had been any further
discussion on potential losses around the U.S. that would
benefit the corporation's investment decisions.
MR. MITCHELL confirmed that there had been continued discussion
by the board. He said the board was considering a strategic
plan with the goal of considering offices outside Alaska, both
in the continental U.S. and internationally. APFC staff would
be tasked with considering the benefits of out-of-state
expansion. He pointed out that other investment funds had
offices in financial centers around the world; however, there
were certain differences that factored in. He expected that
prior to taking any action, APFC would come before the
legislature with a request to spend money on such an
undertaking.
CHAIR CARPENTER reiterated his hope that thought would be given
to quantifying success before opening offices around the world.
He invited final comment from Mr. Mitchell.
MR. MITCHELL thanked the committee for the opportunity to
dialogue and share information.
11:29:37 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
11:29 a.m.
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