Legislature(1999 - 2000)

02/12/1999 12:02 PM Senate BUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         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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