HOUSE BILL NO. 342 "An Act extending the termination date of the Board of Certified Real Estate Appraisers; and providing for an effective date." REPRESENTATIVE TAMMIE WILSON presented an overview of her bill to extend the Board of Certified Real Estate Appraisers to June 30, 2014. She reported that the Board of Certified Real Estate Appraisers (BCREA) is comprised of a five member board to establish: (1) examination specifications for certification as a real estate appraiser; (2) rules of professional conduct to establish and maintain a high standard of integrity in the real estate appraisal profession; and (3) regulations necessary to carry out the purposes of the statutes. The conclusion of the Legislative Audit is a recommendation to extend the BCREA's termination date by four years rather than eight due to the deficiencies identified by the appraisal subcommittee. The deficiencies have or are being addressed by the board. The board is funded by the RSS fund through receipts from licensing fees. She stressed that no new funds will be required to implement the bill. 9:10:32 AM PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT DIVISION, LEGISLATIVE AFFAIRS AGENCY, recommended a four year extension for the board instead of eight years. There was concern the board failed to act in following up on issues identified during their federal review. She added that there were also administrative deficiencies in financial accounting and reporting by the board. She noted that there have been extended vacancies on the board this year as the governor's office failed to make timely appointments. There are recommendations to the governor's office to address more timely appointments of board members and a recommendation to the department to improve its administrative support to the board. Ms. Davidson stressed that these boards are self supporting and maintaining a fee level appropriate for their expenses. In FY2009, they substantially dropped their fees. 9:12:32 AM Representative Doogan inquired about the fiscal note. Ms. Davidson replied that she could not speak to the fiscal note. Representative Austerman asked for the reason to extend the board for four years rather than eight. Ms. Davidson replied that it was primarily due to the lack of board responsiveness and follow up to the federal review. The board is required to certify real estate appraisers, and then state residents could participate in federal loan programs. There is a federal agency that does periodic reviews of the activities of the board and that agency found that the board and department were not being sufficiently responsive to address the identified shortcomings. Representative Austerman asked if the board will be reviewed again within the four years. Ms. Davidson responded that there is currently a federal review in draft form that should be finalized soon, but legislative audit will not be going back to look at the board for the next four years. Representative Austerman maintained it does not make sense to wait four years if they are having a problem, but should be reviewed again in one year. Ms. Davidson reminded the committee that at any point in time the legislature can ask Legislative Audit to conduct an audit. There can also be a request to see if the problems have been resolved. Representative Austerman asked if there would be an automatic follow up due to the problems. Ms. Davidson indicated that if the legislature extends the board for four years, then Legislative Audit will follow up in four years. 9:16:04 AM Representative Fairclough referred to page 11 of the report under "Findings and Recommendations" where the second bullet point states that the board does not have enough authority to carry out its functions under TITLE XI. Representative Fairclough asked Ms. Davidson to speak to this finding (Alaska State Legislature, Legislative Budget and Audit Committee, Division of Legislative Audit, December 7, 2009, Pat Davidson, Legislative Auditor, copy on file). Ms. Davidson responded that the bullet points state that if the federal agency came in and found that the board did not meet these criteria, but it does not specifically indicate that they do not have enough authority. These are set out as criteria, not as findings. Representative Fairclough inquired if the state needs to act to provide additional authority to the board so they can carry out their mission under TITLE XI. Ms. Davison reported that they did a review of the federal report before it became final. The recommendations in the audit are minor housekeeping and statutory cleanups, but nothing substantial. 9:18:23 AM Representative Austerman asked if the statement that it was only minor problems was why the department was recommending the four years. Ms. Davidson responded that there were operational and statutory issues. The operational issues had to do with how well the applications were being reviewed and the follow up when the board really needs to take immediate action. In the draft report, federal level changes were made in some laws, statutes and regulations changes sometime get behind. They do not have the final report yet, but when reviewing the draft the problems appeared to be minor clean up that needed to be addressed. 9:20:06 AM JENNIFER STRICKLER, OPERATIONS MANAGER, DIVISION OF OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, answered some of the questions. The division went through difficulties with unqualified staff, but these individuals have moved on and new people hired. The issues in the audit regarding the board as not being in compliance with the appraisal subcommittee findings were related to three licensed individuals. These individuals lacked some submissions of work logs in their licensing files. The department took action to contact these individuals to have them submit their work logs; one complied, two did not. The department fell short on not being more assertive with the board to take disciplinary action against the two licensees who continue to hold their license. It has been brought to the attention of the board and the boar referred those two individuals over to the investigative until to start disciplinary proceedings.//// 9:22:37 AM Representative Doogan inquired again about the fiscal note. Ms. Strickler related that personal services are made up of licensing staff, management staff, and investigative staff. Licensing staff operates on a positive timekeeping basis because of the receipt supported services funding so the only time attributed to this board is recorded and charged. She continued that travel, consisting of transportation and per dieum is for the board and staff to meet at least two times a year. The contractual costs are high because in 2008 there were litigations and hearing costs which tend to drive expenses up. Representative Doogan asked what the contractual are being paid for. Ms. Strickler noted that the division has an investigation unit comprised of twenty investigators. They are assigned to this program so their salary is paid by the department as they are state employees. Representative Doogan asked if this was charged back from other agencies. Ms. Strickler replied yes. 9:25:04 AM Co-Chair Stoltze asked about a consistent failure to fill the board seats. He inquired if this problem had been fixed over the past several months. Ms. Strickler stated there have been a lot of appointments to various boards, but she was unable to say if it has been a problem. Co-Chair Stoltze questioned if there was any improvement. Ms. Strickler contended that she could not say. 9:26:27 AM BUTCH OLMSTEAD, VICE CHAIRMAN, ALASKA APPRAISAL BOARD (via teleconference), talked about the two recent vacancies on the board and believed there were two new appointees ready to fill those vacancies. In the past it was noticed that open seats on the board were vacant for a long period, therefore in that regard there has been an improvement. He referred to some of the housekeeping matters and problems from the audit and acknowledged that they have been addressed. Co-Chair Stoltze closed public testimony. 9:28:26 AM Co-Chair Hawker commented that he has noticed consistently that every single sunset audit has involved criticisms of the support services provided to the department or agency. He has asked for all the past reports on audit problems with plans to insist on a more consistent follow up by them. Co-Chair Stoltze responded that he preferred shorter sunsets when there are concerns. Vice-Chair Thomas MOVED to report HB 342 out of Committee with individual recommendations and the accompanying fiscal note. There being No Objection, it was so ordered. HB 342 was REPORTED out of Committee with "do pass" recommendation and with a previously published fiscal note: FN1 9:31:05 AM