Legislature(1999 - 2000)
01/27/1999 09:03 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
GENERAL SUBJECT(S): OVERVIEW by Division of Legislative Audit
Pat Davidson, Legislative Auditor
The following overview was taken in log note format. Tapes and
handouts will be on file with the Senate Finance Committee through the
21st Legislative Session, contact 465-2618. After the 21st
Legislative session they will be available through the Legislative
Library at 465-3808.
Time Meeting Convened: 9:03 A.M.
Tape(s): SFC-99 #8, Sides A and B
PRESENT:
X
Senator Parnell
X
Senator Adams
X
Senator Torgerson
X
Senator P. Kelly
X
Senator Donley
Senator Green
X
Senator Leman
9:10
Senator Phillips
x
Senator Wilken
ALSO PRESENT:
PAT DAVIDSON, Legislative Auditor, Division of Legislative Audit,
NIKKI ROUGET, Audit Manager, Division of Legislative Audit; BOB
BILDEN, Supervising Auditor, Division of Legislative Audit; WANDA
COOKSEY, CLOSEUP; DAVID TEAL, Director, Division of Legislative
Finance; aides to committee members and other legislative members.
LOG
SPEAKER
DISCUSSION
000
CO-CHAIR PARNELL
Convened the meeting.
WANDA COOKSEY
CloseUp introduced students that were
observing the Senate Finance Committee
meeting this morning.
CO-CHAIR PARNELL
Introduced Pat Davidson, Legislative
Auditor and said she would be giving an
Overview this morning.
037
PAT DAVIDSON
Legislative Auditor, Division of
Legislative Auditor was invited to join the
committee. She thanked the committee for
reviewing the audit reports submitted over
the past several months.
She noted there may be issues left over
from last year that would still be brought
before the committee this morning.
She commenced with the Office of the
Governor. Suggestions were made to the
Office of Management and Budget.
She noted that five departments paid their
RIP obligations during the past year.
The Governor's Office was asked to provide
proper guidelines to the departments for
their RIP obligations.
She reviewed the Department of Revenue. It
was noted that CSED was not able to keep up
with their caseload and meet federal
performance requirements. They have
however made some improvements.
She explained the evaluation of the
regulation of gaming operations in the
State of Alaska.
Gaming process has been moved to more
sophisticated and efficient systems.
She explained the coordination between
gaming personnel and the Department of Law.
There have been no statutory changes.
Re: Sunset review of the Alcohol Beverage
Control Board date of 30 June 1999. It was
only extended for one year by the
Legislature last year and will be up for
review this year.
Ms. Davidson responded to a question by
Senator Donley. She noted that a report
was due April of this year regarding this
matter.
Re: Department of Education. There was a
review of the Division of Vocational
Rehabilitation. The department had done a
review of their own on the expense accounts
and approximately $1300 was returned to the
account by the Director. This was for an
insurance coverage.
There are concerns over the implications of
this situation. They suggested the
Department of Education work closely with
the Department of Administration regarding
medical claims and coverage.
There was a need for special education
buses. They did feel the drug testing,
driver training were sufficient.
They were considering a bid system so there
could be more competition for bus service.
CO-CHAIR PARNELL
Asked about the bid system for bus
services. He said if there was a flat rate
that may have impact on the bids.
MS. DAVIDSON
Said she would follow up on this matter
because there was concern.
SENATOR P. KELLY
Asked about confidentiality and the budget
for this department.
MS. DAVIDSON
Said confidentiality matters were not
available to the Legislature.
CO-CHAIR PARNELL
Asked about Adak School District.
MS. DAVIDSON
Said that with the Adak school the
Department of Education was going to take
over paying those bills. They identified
approximately $70,000 bills were paid by
the Adak School District that the
Department of Education should have paid.
Further pursuance of the matter, due to
grey areas, would need a Department of Law
opinion.
SENATOR DONLEY
Asked about pupil transportation. Some
districts were not complying and paying
twice the minimum wage. He asked if this
issue had been examined.
MS. DAVIDSON
Said the Department of Labor had looked
into this matter and found that they were
in compliance with State law. It may be
that the Department of Law may have another
opinion.
SENATOR DONLEY
Said he felt the Department of Labor
opinion was wrong and the matter should be
dealt with.
MS. DAVIDSON
Re: Federal Disabilities Act. She said
the federal government had looked into the
department's compliance. There were some
defects found but they were not crucial.
Department of Education has taken over the
special education program in Ketchikan.
Re: Health and Social Services. Ms.
Davidson said significant compliance had
not been adhered to.
She asked that the Legislature pay close
attention to their recommendations.
Re: Medicaid. There were flaws in the
design, implementation and integration of
Medicaid into community mental health
services. She noted poorly written
regulations, unsupported rates, lack of a
timely and cohesive quality assurance
program, and incompatibility between the
Medicaid system and general fund grant
system have created systemic problems
resulting in escalating costs.
She commented briefly to "double dipping"
and felt it could be averted through
regulation.
No pilot program for DMA and DMHD have been
implemented as of January 1999. However,
both divisions have been working with
caregivers to solve the problem of double
dipping.
CO-CHAIR PARNELL
Asked if there was any recommendation for
solving this matter.
MS. DAVIDSON
Said they were working on solving this by
summer, but this should be controlled to
see if the department was really working on
this.
CO-CHAIR PARNELL
Will ask the subcommittee, once it has been
established, to look into this matter.
MS. DAVIDSON
Continued her review of the Division of
Youth and Family Services. She hoped to
have a follow-up status report.
(a brief pause)
SENATOR PHILLIPS
NIKKI ROUGET
MS. DAVIDSON
CO-CHAIR PARNELL
SENATOR WILKEN
SENATOR PHILLIPS
MS. DAVIDSON
CO-CHAIR PARNELL
BOB BILDEN
SENATOR TORGERSON
SENATOR TORGERSON
SENATOR LEMAN
MS. DAVIDSON
SENATOR TORGERSON
MS. DAVISDON
CO-CHAIR PARNELL
CO-CHAIR PARNELL
CO-CHAIR PARNELL
MR. BILDEN
MS. DAVIDSON
SENATOR P. KELLY
MS. DAVIDSON
SENATOR P. KELLY
SENATOR TORGERSON
SENATOR WILKEN
NIKKI ROUGET
MS. DAVIDSON
MS. ROUGET
SENATOR LEMAN
SENATOR DONLEY
SENATOR WILKEN
SENATOR TORGERSON
SENATOR TORGERSON
SENATOR DONLEY
CO-CHAIR PARNELL
MS. DAVIDSON
SENATOR PHILLIPS
CO-CHAIR PARNELL
Asked about another follow-up audit. Ms.
Davidson said the second follow-up audit
would be available for next Legislative
session.
Audit Manager, Division of Legislative
Audit was invited to join the committee.
She explained her review of the Department
of Labor. There was a reduction in
services in the amount of approximately
$800,000. She explained the reduction of
budgeted positions, however, actual
personal service costs remained the same.
Continued her review of the Department of
Commerce and Economic Development. AMI
would retain all advertising. She said
there should have been an on the record
agreement for expenses. DOT disagreed with
the findings of the audit. She noted for
the committee that they would be paying
attention to this matter closely.
Re: Occupational Licensing. She explained
the statutes require the charges for the
licenses be borne by the individual. It
was found the division to be out of
compliance. They have been complying at
the board level, however, not at the
division level. Ms. Davidson said,
however, she felt the matter should be
attended to if the division felt this was
more economic to have the matter be handled
at the board level.
There had also been a review of sunset
dates.
Re: Alaska Science and Technology
Foundation review. Overall their grant
procedures were generally consistent with
statutory changes since 1995.
It was noted that many of the benchmarks
contained in the original grant agreement
had not been met but funding of the grant
continued until May 1999. In response to
Co-chair Parnell, she said they found
monies being used for television and
inventors to be an inappropriate use of the
funds but they found nothing else.
Re: Alaska Railroad Corporation. She
briefly reviewed contracts with LoPatin,
Chena Landings development and the lease
between LoPatin and the railroad on the old
General Office Building. These were not
successful ventures. The financial status
of the Comfort Inn hotel investment
remained unclear. Contract with the
Flamingo Brothers for gravel extraction had
not provided a return for the Alaska
Railroad. It was recommended the State
would benefit from direct legislative
oversight of the railroad. She noted
specifically that the railroad appeared to
be "buying its way out of trouble" and this
was setting a bad example.
Noted specifically the drop in termination
payments to management employees in the
amount of $36,000 since 1997, which
reflected on the new management team.
Tape: SFC - 99 #8, Side B 2:58 PM
Asked if the Alaska Railroad would be
making a presentation before this committee
and Co-chair Parnell indicated that in the
past they had and believed that Senator
Torgerson would continue that policy.
Comments to the committee. He recommended
either LB&A or the Finance Committee submit
legislation that the railroad come under
legislative oversight.
Said that in the past it had been
discussed.
Senator Phillips said that LB&A had
requested this several years ago. He would
rather have the committee introduce it.
Said that if he wanted the committee to
entertain this legislation it should be
discussed further with Senator Torgerson
Supervising Auditor, Division of
Legislative Audit was invited to join the
committee.
Re: Department of Fish and Game. State
Hatchery loan program. There was concern
with the financial conditions of the
hatcheries. To protect the State's
investment in private nonprofit hatcheries
it was felt that statute and regulation
should be modified to allow roe extraction
from salmon that exceed hatchery broodstock
requirements. This would impact those fish
that cannot be marketed due to
deterioration of quality and which would
die normally.
He explained a modification process on debt
payment. There was a concern to the
viability to the FERLF (Fisheries
Enhancement Revolving Loan Fund). They
would not have operating capital to
continue loans.
Asked if hatchery loans have to be paid in
30 years? Mr. Bilden said there was a 30-
year cap. He noted that there were severe
repayment problems. Senator Torgerson
asked if that 30-year cap should be
extended. Mr. Bilden felt they should try
to work out the troubled loans rather than
extending the 30-year pay-off. However, it
was an option still open.
Asked about the fishery disaster this year.
Mr. Bilden said he would investigate this
matter and advise the committee.
Asked about a Chapter 11 situation and
pending judgment. Mr. Bilden was only just
made aware of this matter and would
investigate it.
Commented on maintaining hatcheries. Many
loans had been made to keep them going.
(brief pause)
Re: Sport Fish revenue.
Commented on over a million dollars spent
on board meetings.
Said she would provide the actual schedule
of the meetings and the specific costs
incurred. She noted these were costs
incurred by the State rather than citizens.
The state employees provided overviews,
reports, etc. They do make use of
teleconference, however, many locations
preclude use of video and teleconference.
Asked about costs for state employees
attending these meetings. Ms. Davidson
said the costs incurred did not include
members of the public.
Asked for a specific breakdown of the
costs. Ms. Davidson included travel, per
diem, personal services costs. Did not
include preparation time, only attendance
of the state employees.
Asked or clarification of personal services
time. Ms. Davidson said all incremental
costs were looked at. Personal services
were identified as work hours spent at the
board meeting.
Continued his overview of the division of
sport fish. He explained the sport fish
budget was distributed approximately 48%
going to salmon management and assessment
programs, 28% to hatchery programs and less
than 25% allocated between resident
species, ground fish and shell fish
programs. He said there was a slow shift
from general funds to fish and game funds
supporting fishery programs.
Continued with the Department of Natural
Resources. In particular was the
Agriculture Revolving loan fund. Loans
made in recent years were more likely to be
paid on time. However, the fund had not
been properly managing its collecting of
old court judgments. The fund's cash
balance had declined but should be
sufficient for the next five years. The
fund had not adequately managed its
repossessed properties.
In response to Senator Torgerson, she said
they had not found any violations of how
their funds had been used.
Briefly commented. He said some choices
were going to have to be made regarding
this fund.
Explained the situation with Matanuska
Maid. They were unable to compete in the
modern market. It was noted that Mat Maid
purchased approximately 60% - 70% of their
milk from Seattle. The plant would need
substantial updating in order to compete or
a new plant may have to be built. It was
recommended that the Department of Natural
Resources aggressively seek purchase offers
from major dairy corporations. The
department had no plans to sell the dairy
and if the Legislature wanted to dispose of
Mat Maid they would have to directly
intervene.
Asked Ms. Davidson to explain the milk
purchase from Seattle. She explained that
the milk was purchased from Seattle in bulk
and then repackaged and sold in Alaska.
She said that a purchaser may be paying for
the trade name because Mat Maid had a high
recognition.
Asked about collateral rights. Ms.
Davidson said the State's investment in Mat
Maid was part of the reason the State
purchased it. The loans to the dairy farms
was the reason they purchased Mat Maid.
They were trying to protect their
collateral. She said cash invested was
long-term gone. The operations of Mat Maid
do not drain their cash flow, however.
They were looking at either not providing
cash to them or bringing new cash in.
Asked about their profit/loss picture. Ms.
Davidson said an analysis was done. Over
the past couple of years substantial loss
had been shown, but it was in depreciation,
which was not a cash item. She can provide
the committee with exact details of the
audit.
Rejoined the committee.
Returned briefly to Department of Natural
Resources Oil Company Hiring. They looked
at resident hiring. It was found the State
was not enforcing local hire. Resident
workers in the oil patches have declined.
If the local hire is not enforced by the
department then the oil companies do as
they want as far as hiring. This audit was
done last year.
Reviewed the Department of Environmental
Conservation. All residents needed to be
assured of safe water and proper
sanitation. A limited opportunity exists
for further privatization of village safe
water. It was suggested DEC provide an
accountability of the village safe water
program and safe water program.
Commented on authority for communities and
the bid system to encourage more local
hire. Ms. Davidson responded and said in
looking at the benefits of rural sanitation
projects it was to determine what they
provided. It was a benefit to the
community because the loan also brought
wages into the community for the length of
the project.
Said it was his understanding the VSW
program included Federal monies being
available and the State adopted regulations
consistent with this program.
Refers to page 50 of the handout. Ms.
Davidson said the $50 million was Federal
and State funding for the Rural Sanitation
2005 Action Plan. She explained there may
be multiple projects in a community
providing different services. One could be
looking at approximately 20 years
involvement in some projects. Therefore
continuing funding would be necessary for
these projects.
Re: Department of Transportation and
Public Facilities. She explained how
project costs were tracked and found the
department did basically comply. The main
deficiency was their inability to report
expenditure activity for discrete output.
She explained the department's outlook on
the description of the projects. They also
comply with legal reporting requirements.
The department is aware of these
deficiencies.
Tape: SFC - 99 #9, Side A 2:58 PM
Asked her to spend time on actual selection
of the projects . Ms. Davidson said they
outlined the process the department went
through. He asked if they were in
compliance with legislative requirements on
projects. She said they looked
specifically at marine and aviation
projects. It is up to the department's
discretion as to the projects to be funded.
Explained his frustrations with the
department. Veto power with respect to
projects was with some mid-class employee.
Asked about internal ranking of projects.
He asked if the department's policy was
looked at. Ms. Davidson said they looked
at if there was some reasonable ranking
criteria.
Asked for any concluding recommendations.
All recommendations were important. She
did suggest looking at Charitable Gaming
process to make it run more efficiently.
She said "don't just look at what was paid
in the past". It should be looked at
getting the monies to the permittees.
She also suggested looking at Community
Mental Health services.
Occupational licensing should be looked at,
in particular licensing process. It did
have an impact on state licensees.
Under Natural Resources they should
investigate Mat Maid and perhaps it should
be sold off in the short term. Otherwise
what are the long-term goals?
The hatchery program should be also looked
at under Fish and Game. They are rapidly
running out of money.
Asked that DFYS be added to the list
Adjourned the meeting at approximately
10:50 a.m.,
Tape Number 9, Side A, log 161.
SENATE FINANCE COMMITTEE
LOG NOTES
01/27/99
9:03 a.m.
SFC-99 12 01/27/99
| Document Name | Date/Time | Subjects |
|---|