Legislature(2025 - 2026)SENATE FINANCE 532
01/29/2025 08:00 AM House LEGISLATIVE BUDGET & AUDIT
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| Audio | Topic |
|---|---|
| Start | |
| Committee Organization | |
| Approval of Agenda | |
| Approval of Minutes | |
| Roles and Responsibilities: Division Support for the Committee | |
| Revision of the Legislative Budget and Audit Committee Handbook | |
| Executive Session | |
| Top Audit Issues | |
| 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
January 29, 2025
8:01 a.m.
MEMBERS PRESENT
Senator Elvi Gray-Jackson, Chair
Representative Zack Fields, Vice Chair
Senator Bert Stedman
Senator Cathy Giessel
Senator Lyman Hoffman
Senator Bill Wielechowski
Representative Neal Foster
Representative Andy Josephson
Representative Chuck Kopp
Representative Cathy Tilton
Senator Scott Kawasaki (alternate)
Representative Bryce Edgmon (alternate)
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Jeremy Bynum
COMMITTEE CALENDAR
COMMITTEE ORGANIZATION
APPROVAL OF AGENDA
APPROVAL OF MINUTES
ROLES AND RESPONSIBILITIES: DIVISION SUPPORT FOR THE COMMITTEE
REVISION OF THE LEGISLATIVE BUDGET AND AUDIT COMMITTEE HANDBOOK
EXECUTIVE SESSION
TOP AUDIT ISSUES
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
ALEXEI PAINTER, Director
Legislative Finance Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Presented on the roles and responsibilities
of the Legislative Finance Division in support of the committee.
KRIS CURTIS, Legislative Auditor
Division of Legislative Audit
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Presented on the roles and responsibilities
of the Division of Legislative Audit; presented the revision of
the committee handbook; presented FY 24 top audit issues.
ACTION NARRATIVE
8:01:24 AM
REPRESENTATIVE ZACK FIELDS called the Legislative Budget and
Audit Committee meeting to order at 8:01 a.m. Representatives
Josephson, Kopp, Edgmon (alternate), and Fields and Senators
Stedman, Wielechowski, Giessel, Kawasaki (alternate), and Gray-
Jackson were present at the call to order. Representatives
Foster and Tilton, and Senator Hoffman arrived as the meeting
was in progress.
^COMMITTEE ORGANIZATION
COMMITTEE ORGANIZATION
8:01:50 AM
REPRESENTATIVE FIELDS announced that the first order of business
would be committee organization. He opened nominations for
chair of the Legislative Budget and Audit Committee.
8:01:58 AM
SENATOR GIESSEL nominated Senator Gray-Jackson as chair of the
Legislative Budget and Audit Committee for the Thirty-Fourth
Alaska State Legislature and moved that the nominations be
closed. There being no objection, it was so ordered.
8:02:18 AM
SENATOR GRAY-JACKSON opened nominations for vice chair of the
Legislative Budget and Audit Committee.
8:02:26 AM
SENATOR WIELECHOWSKI nominated Representative Fields as vice
chair of the Legislative Budget and Audit Committee for the
Thirty-Fourth Alaska State Legislature and moved that the
nominations be closed. There being no objection, it was so
ordered.
^APPROVAL OF AGENDA
APPROVAL OF AGENDA
8:03:20 AM
SENATOR GRAY-JACKSON announced that the next order of business
would be the approval of the agenda.
VICE CHAIR FIELDS moved that the Legislative Budget and Audit
Committee approve the agenda, as presented. There being no
objection, the agenda was approved.
^APPROVAL OF MINUTES
APPROVAL OF MINUTES
8:03:34 AM
SENATOR GRAY-JACKSON announced that the next order of business
would be the approval of minutes.
VICE CHAIR FIELDS moved to approve the minutes for the December
2, 2024, and December 23, 2024, meetings, as presented. There
being no objection, the minutes were approved.
^ROLES AND RESPONSIBILITIES: DIVISION SUPPORT FOR THE COMMITTEE
ROLES AND RESPONSIBILITIES: DIVISION SUPPORT FOR THE COMMITTEE
8:03:58 AM
SENATOR GRAY-JACKSON announced that the next order of business
would be a presentation on division support for the committee.
8:04:25 AM
ALEXEI PAINTER, Director, Legislative Finance Division (LFD),
Legislative Agencies and Offices, made introductions and gave an
overview of LFD, which consists of six fiscal analysts, two
programmers, an administrative officer, and functionally, the
House and Senate Finance Committee secretaries. By statute, the
division's primary mission is to provide fiscal analysis
services to the finance committees. Historically, most of LFD's
interaction with Legislative Budget and Audit Committee involves
the Revised Program Legislative (RPL) process, which allows the
governor to request increases to appropriation authority for
certain items. Effectively, it's an advisory process, as the
administration may still proceed with RPLs that the committee
does not approve; however, there will be a 45-day wait period
before they can take effect. He noted that it's relatively rare
for a committee to vote against an RPL, as LFD works with its
counterparts in the Office of Management & Budget (OMB) to
resolve any technical errors or withdraw the RPL before putting
it to a vote. He described the RPL process, explaining that
typically, RPLs are submitted to LFD two weeks prior to a
Legislative Budget and Audit Committee meeting to give the
committee one week to review the division's analysis. In
addition to the RPL process, LFD completes studies and prepares
reports, memoranda, and other materials, as directed by the
committee.
8:07:35 AM
KRIS CURTIS, Legislative Auditor, Division of Legislative Audit
(DLA), made introductions and stated that DLA serves as the
state's independent auditor. The division audits the state's
financial statements, conducts the annual federal compliance
audit, conducts sunset audits - as prescribed by statute, and
conducts performance audits at the request of the committee. In
addition, DLA also provides fiscal support. She referred to a
supporting document [included in the committee packet] that
summarized the division's current workload: five performance
audits, one financial/federal compliance audit, and five sunset
audits. The financial/federal compliance audit takes around 75
to 80 percent of DLA's annual audit hours; however, cost of the
financial and federal audits is eligible for federal
reimbursement. Each year, the division sends a memo to state
departments identifying the eligible audit costs, and each
department seeks reimbursement through their federal oversight
agency. The audits are conducted in accordance with
professional audit standards and the quality control procedures
are audited by a national peer review team every three years.
She noted that DLA consistently receives the highest peer review
rating.
^REVISION OF THE LEGISLATIVE BUDGET AND AUDIT COMMITTEE HANDBOOK
REVISION OF THE LEGISLATIVE BUDGET AND AUDIT COMMITTEE HANDBOOK
8:09:37 AM
SENATOR GRAY-JACKSON announced that the next order of business
would be the revision of the Legislative Budget and Audit
Committee handbook.
8:09:44 AM
VICE CHAIR FIELDS moved that the Legislative Budget and Audit
Committee adopt the Legislative Budget and Audit Committee
Handbook, as presented, with permission granted to the Division
of Legislative Audit to make any additional technical or
conforming changes.
SENATOR GRAY-JACKSON objected for the purpose of discussion.
8:10:04 AM
MS. CURTIS explained that DLA is responsible for updating the
committee handbook, which is available on the Legislative Budget
and Audit Committee's website. The handbook houses the
committees' formal rules and procedures and includes general
information about the committee and its two permanent staff
agencies: DLA and LFD. Page 33 of the handbook addresses formal
policies and procedures, which guide the committee in how to
conduct business. Some of the more significant areas covered
include the release of audit reports, approval of audit
requests, and general administrative functions, such as
contracts and travel. She referenced a memorandum [included in
the committee packet] that was distributed to members and
outlined the following housekeeping changes to the current
version of the handbook:
• Throughout removed references to "performance
reviews" and relevant statutes, which were
repealed effective July 1, 2023.
• Updated statutes to reflect amendments.
• Updated the introduction to the Division of
Legislative Audit (DLA) section to clarify the
types of audits.
• Updated and clarified procedures including:
a. Clarified that audits may be delivered via
mail and that notices may be electronically
delivered.
b. Clarified that the annual report is issued
by the committee.
c. Removed the reference to "standing"
committees to clarify that audits and
findings may be distributed to any
legislative committee as appropriate.
d. Updated references to the types of audits
e. Clarified that audit workpapers are
confidential by statute and may only be
shared with Legislative Audit personnel or
outside auditors if considered appropriate.
For example, Legislative Audit may be
required to share audit workpapers with
federal oversight agencies or peer review
committee members to comply with federal
laws or auditing standards.
f. Cleaned up grammar and confusing references.
g. Updated the language required to be included
in each committee contract per guidance from
Legislative Legal.
8:12:55 AM
REPRESENTATIVE JOSEPHSON asked Ms. Curtis to remind the
committee of the policy call that deleted the performance review
requirement.
MS. CURTIS clarified that the deletion was not a policy call, as
the original statutes contained an automatic repeal provision,
effective July 1, 2023. She said the idea was to review all
state departments over a 10-year period; however, in 2017, the
legislature ceased the program's funding. Consequently, each
year Ms. Curtis said she had to come before the legislature to
request an appropriation for the reviews, and each request since
2017 was denied. In 2023, the provision was automatically
repealed.
REPRESENTATIVE JOSEPHSON questioned the impact of removing the
performance reviews of state departments.
MS. CURTIS explained that the program was partially intended to
quantify savings, which in one instance, generated savings of
$2.2 million for the Department of Health (DOH). Nonetheless,
she said she was critical of how the program was used, as the
results were not incorporated into the legislative process. She
added that she has many ideas on how the improve the program if
it were to be revived.
8:15:18 AM
The committee took a brief at-ease at 8:15 a.m.
8:15:29 AM
MS. CURTIS called the committee's attention to page 39 of the
handbook and clarified the confidential report distribution
procedures. She emphasized the importance of legislators and
staff taking the necessary precautions to prevent the premature
release of audit information until the committee has had the
opportunity to approve its release, as statutes make the audit
process confidential. She stated that audit reports not
approved by the committee should not be copied or distributed
for any purpose and concluded by reviewing the confidential
release process.
SENATOR GRAY-JACKSON removed her objection. There being no
further objection, the Legislative Budget and Audit Committee
Handbook was adopted.
^EXECUTIVE SESSION
EXECUTIVE SESSION
8:17:40 AM
SENATOR GRAY-JACKSON announced that the next order of business
would be executive session.
8:17:49 AM
VICE CHAIR FIELDS 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. He asked that the following persons remain in
the room or online: Kris Curtis, legislative auditor, and
necessary staff; Emily Nauman; any legislators not on the
committee; staff of legislators on the committee. There being
no objection, it was so ordered.
8:18:23 AM
The committee took an at-ease from 8:18 a.m. to 8:28 a.m. for
the purpose of executive session.
8:28:54 AM
SENATOR GRAY-JACKSON called the Legislative Budget and Audit
Committee meeting back to order at 8:28 a.m. Representatives
Josephson, Kopp, Foster, Tilton, and Fields and Senators
Stedman, Wielechowski, Giessel, Kawasaki (alternate), and Gray-
Jackson were present at the call back to order.
8:29:25 AM
VICE CHAIR FIELDS moved that the Legislative Budget and Audit
Committee approve a contract for federal compliance audit
services to CliftonLarsonAllen for an amount not to exceed
$225,000 to be paid from existing funds.
SENATOR GRAY-JACKSON objected for the purpose of discussion.
8:29:47 AM
MS. CURTIS requested the committee's consideration and approval
of a contract for federal compliance audit assistance. She said
the division is asking to contract out the federal compliance
audit of three major federal programs: Medicaid, Children's
Health Insurance Program (CHIP), and the Temporary Assistance
for Needy Families (TANF). This assistance is needed to meet
the federal audit requirements for an amount not to exceed
$225,000.
SENATOR GRAY-JACKSON removed her objection. There being no
further objection, it was so ordered.
8:30:42 AM
VICE CHAIR FIELDS moved that the Legislative Budget and Audit
Committee approve the contract assignment for specialized
information technology services from Berry, Dunn, McNeil &
Parker, LLC, to BDMP Assurance, LLP, for the duration of the
contract and any optional renewal period, and that the
Legislative Budget and Audit Committee approve the extension of
the contract for an additional amount not to exceed $175,000, to
be paid from existing funds.
SENATOR GRAY-JACKSON objected for the purpose of discussion.
8:31:16 AM
MS. CURTIS requested the committee's consideration and approval
of a contract extension for BerryDunn, the Information
Technology contractor that audits the state's accounting and
financial reporting systems' internal controls, in support of
the annual financial and federal compliance audit. She
explained that the company was split in to two companies, so the
legal process of assigning the contract to the new entity must
be followed.
SENATOR GRAY-JACKSON removed her objection. There being no
further objection, it was so ordered.
^TOP AUDIT ISSUES
TOP AUDIT ISSUES
8:32:04 AM
SENATOR GRAY-JACKSON announced that the final order of business
would be an update on top audit issues.
8:32:24 AM
MS. CURTIS, in providing an update on the fiscal year 2024 (FY
24) top audit issues, referred to a PowerPoint presentation,
titled "LB&A Oversight Top Audit Issue" [included in the
committee packet]. She discussed the new audit finding
oversight process, which was adopted by the committee several
years ago to encourage corrective action. The process starts
with the Legislative Auditor identifying the top audit issues
from the previous fiscal year. The committee then asks state
agencies to provide the status of corrective action, which is
subsequently presented to the committee for its consideration on
forwarding these issues to other legislative committees for
continuous monitoring. Ms. Curits recalled presenting the
committee with the FY 24 top audit issues in October 2024. She
proceeded to summarize the eight FY 24 top audit issues as
follows:
1. The first topic relates to the FY 23 financial
statement opinion on the Alaska International Airports
Fund (AIAS). Since FY 21, AIAS has been unable to
produce financial statements for audit in a timely
manner.
2. The second issue is new for FY 23. Alaska
Aerospace Corporation was unable to provide any
financial statement information for inclusion in the
state's Annual Comprehensive Financial Report.
3. The third issue is the late FY 23 audit and
disclaimed opinion on the Alaska National Guard and
Naval Militia retirement system. The outside auditor,
KPMG International Limited, was unable to obtain
information that was needed to test the actuarial
evaluations.
4. The fourth issue is a compilation of significant
errors in the FY 23 draft financial statements that,
if not identified by auditors and corrected, would
have resulted in material misstatements. The draft
financial statements were provided to DLA
significantly late which led to a delay in issuing the
single audit.
5. The fifth audit issue encompasses the struggles
faced by DOH's Division of Public Assistance, as well
as the material weaknesses in internal controls and
material noncompliance identified by DLA.
6. The sixth audit issue is related to shortfalls,
which means a department overspent its general fund
(GF) authorization. This is tested for every year and
in FY 23, there were three departments that routinely
failed to address their shortfalls: Department of Law
(DOL), Department of Natural Resources (DNR), and DOH.
The final two audit issues come from performance
audits.
7. The sunset audit of the Marijuana Control Board
found that the board was struggling to issue licenses
in a timely manner. The Alcoholic Beverage Control
Board was also struggling with timely issuance of
licenses. In response, The Alcohol and Marijuana
Control Office (AMCO) is implementing a new system to
resolve these issues.
8. The final audit issue comes from a performance
audit of the Technical and Vocational Education
Program (TVEP) that identified seven TVEP
beneficiaries had been underpaid in FY 22. This audit
made one recommendation to the Department of Labor and
Workforce Development (DLWD) to work with OMB to
resolve the underpayments.
MS. CURTIS called the committee's attention to a document,
titled "FY 24 Top Audit Issues Corrective Action" [included in
the committee packet], which compiled the agencies' status of
corrective action. Referring to the "Next Action" column, she
made the following recommendations:
• Forward the AIAS audit finding to the House and
Senate Transportation Standing Committees' Budget
Subcommittees for consideration during the budget
hearing process.
• Forward the Division of Public Assistance audit
findings to the Department of Health's Budget
subcommittees and the House and Senate Finance
Committees for continued legislative monitoring
during the budget process.
• Forward the shortfalls for DOL, DNR, and DOH to
their respective budget subcommittees for
additional consideration.
• Forward the finding regarding AMCO's new
licensing and enforcement system to the House and
Senate Labor and Commerce Standing Committees for
their consideration.
8:39:16 AM
REPRESENTATIVE FOSTER expressed his appreciation to Ms. Curtis
for highlighting public assistance, which is in the worst state
he's seen during his 15 years in the legislature.
8:39:44 AM
REPRESENTATIVE JOSEPHSON sought to confirm that legislators must
facilitate contact with the budget subcommittees.
MS. CURTIS said she would work with the chair to help craft the
letters to committees.
SENATOR GRAY-JACKSON thanked Ms. Curtis for her presentation.
8:40:39 AM
ADJOURNMENT
There being no further business before the committee, the
Legislative Budget and Audit Committee meeting was adjourned at
8:40 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| LBAC Agenda 01.29.25 - REVISED FINAL.pdf |
JBUD 1/29/2025 8:00:00 AM |
|
| Audit Status, DLA -- 01.29.25.pdf |
JBUD 1/29/2025 8:00:00 AM |
|
| LBAC Handbook, 34th Legislature -- DRAFT.pdf |
JBUD 1/29/2025 8:00:00 AM |
|
| Summary of LBAC Handbook Changes.PDF |
JBUD 1/29/2025 8:00:00 AM |
|
| Top Audit Issues PowerPoint -- 01.29.25.pdf |
JBUD 1/29/2025 8:00:00 AM |
|
| Top Audit Issues - Corrective Action -- 01.29.25.pdf |
JBUD 1/29/2025 8:00:00 AM |