Legislative Budget and Audit May 12, 1997 9:00 a.m. Senate Finance Committee Room Juneau, Alaska Tapes LBA97#5 Side 1 003-423 CALL TO ORDER Chairman Phillips convened the meeting of the Legislative Budget and Audit Committee on May 12, 1997 at approximately 9:00 a.m. in the Senate Finance Committee Room in Juneau, Alaska. PRESENT Representatives Senators Rep. Bunde Chrm. Phillips Rep. Croft Sen. Pearce Rep. Martin Sen. Halford Rep. James ALSO PRESENT Mike Greany, Director, Legislative Finance Division; Randy Welker, Legislative Auditor. REVISED PROGRAMS RPL 20-07-0026 Corrections Chrm. Phillips requested a motion to enable the first RPL to be discussed. Sen. Halford MOVED for approval of RPL 20-07-0026. Mr. Greany recommended approval by the committee, noting it is a relatively straightforward expenditure increase for the correctional industries. These industries anticipate doing this much more business prior to the end of the fiscal year. This expenditure would allow them to fulfill the industry orders. Mr. Greany acknowledged that the correct authorization numbers for the Department of Corrections has been an issue recently. He confirmed that this RPL request amount is accurate regarding the cost of their commodities and supplies. Chrm. Phillips asked if there were any questions. The MOTION passed unanimously, APPROVING RPL 20-07-0026. Chrm. Phillips noted for the record that Sen. Pearce had entered the meeting. RPL 41-7-0049 Court System Mike Greany MOVED for approval of a request that is a continuation of an existing fully Federally funded effort to address the issue of fairness and access for minorities to the Justice system. He noted that this was a one-time expenditure cost that would not generate any future obligations or require any additional general funds for the Court system. No objections being raised; the MOTION was APPROVED unanimously. Mr. Welker addressed a memo dated May 12, 1997. At Chrm. Phillips's request, last year's analysis of the consolidation of the Anchorage and Juneau data centers has been reviewed and updated. A year ago, the Department was indicating a savings of approximately $450,000 to $500,000, resulting from the proposed realignment. Concerns regarding capacity of the Juneau data center to handle the consolidation were raised at that time. Review a year later confirm that the concerns were legitimate. The data center did have to upgrade and buy a new computer, primarily due to capacity concerns. While savings did result from the consolidation, the extent of the savings was not as much as discussed a year ago. Mr. Welker then addressed a memo that was a follow-up on year-end operating encumbrances. Fiscal Year 95 year-end encumbrance practices of virtually all departments were examined. Some improvement has been seen. Mr. Welker noted that the Department of Law 96 was addressed by the Legislature through a supplemental. With the Department of Law's concurrence to cease the practice of carrying forward some of their litigation moneys, a sizable piece of amounts that are taken exception to will be removed from concern. He stated that significant concerns remain with the Department of Health and Social Services for the manner in which it encumbers funds at year-end. Many of the moneys encumbered at the end of the fiscal year are clearly for services to be provided in Fiscal Year 97. The moneys are being used primarily to contract with Senior Services in many instances. Mr. Welker stated that they take exception to those encumbrances. Chrm. Phillips stated for the record that Rep. Bunde and Rep. Croft were present. Mr. Welker then introduced the third memo regarding an analysis of expenditure trends. Previously Rep. Bunde brought to the committee's attention assorted State warrants. It was determined that this was information generated primarily from the Moznik Computer Services. Preliminary conclusions by the Committee were that there was not anything extremely critical in nature in the information summary, so it was moved to the back burner. Mr. Welker said the memo was a final result, discussing the alleged improprieties implied by expenditure trends, i.e. certain increases and decreases, in State warrant information. The reasons for those changes have been explained in dollar amounts in this memo. It does appear that there is adequate justification and that the expenditures were reasonable with explanations for why the changes took place from year to year. Finally, Mr. Welker addressed the memo listing seven special audit requests for consideration by the Committee during this session. A few on the list could possibly be satisfied with something short of an audit. Every effort will be made to see that this happens. All results will be shared in full with the full Committee. Chrm. Phillips requested that the special audit request be addressed first, to be followed by the MOTION for Executive session. Rep. Martin MOVED for Approval of the Special Audit Requests as listed in the memo dated May 11, 1997. No objections being raised; all seven audit requests were APPROVED. EXECUTIVE SESSION Rep. Martin MOVED that the Committee enter into EXECUTIVE SESSION for the purpose of discussing the preliminary reports on the audits. No objections being raised; the Committee then met in EXECUTIVE SESSION from ?? a.m. to ?? a.m. REGULAR SESSION The Committee resumed REGULAR SESSION. FINAL AUDIT Rep. Martin MOVED that the Blue Audits be released to the public, particularly the ones pertaining to the Department of Transportation and Public Facilities - The Alaska Marine Highway System as well as the one pertaining to the Department of Labor - the Division of Labor Standards and Safety. No objection being raised; the MOTION was APPROVED, making those reports available to the public. PRELIMINARY AUDITS Rep. Martin MOVED that the other four confidential audits, which are Preliminary Reports right now, be released for response from the indivivual agencies with an automatic release in 30 days or with response to Mr. Wilson??. No objection being raised; the MOTION was APPROVED. REQUEST FOR COMPUTERS Mr. Greany MOVED for an equipment purchase exceeding $10,000 for seven replacement PC's. These would replace PC's originally purchased in 1992 for development of the network based system. The machines' useful lives have been exceeded and the money requested from the FY 97 budget is a one-time savings in the Personal Services area, arising from personnel turnover. Sen. Pearce stated she understood that Mr. Greany had a concern regarding the Legislature's ability to interface with OMB's massive rebuilding of its system. She asked whether the requested computers will be comparable and able to interface well with the new OMB automated system. Mr. Greany affirmed his confidence that the system would be able to bring in the information delivered from OMB with data being interfaced easily. He stated interest in OMB's intention to create a "budget bread machine". He pointed out that testimony in the Governor's Office Budget before the joint sub-Committee stated that $1.2 million would be spent developing this system, noting that the Legislature's system rebuild was much more modest and that cost was recovered in savings within a year. Sen. ?? stated her opinion that the lifetime of computers is becoming increasingly shorter. Now after five years, a system is outdated and the new system would undoubtedly be able to communicate to other systems easily. Sen. Pearce felt the new system would present enormous challenges to Mr. Greany and Mr. Welker. She was concerned that if the system is too complicated, it will not be easily usable by other members. She states that she thought that the proposed system is more complicated than needed. Sen. Pearce MOVED to approve the Legislative Finance computer purchase for $17,500. No objections being raised; the MOTION was APPROVED. OTHER BUSINESS Chrm. Phillips requested clarification on the agenda item regarding whether a motion was necessary for the Anchorage/Juneau Data Center. He was assured that those were public memos. Sen. Pearce stated that the Legislature has been unfairly criticized by the press and public due to the information gathered and disseminated every January on the annual payments to Legislators due to their allowance, moving costs, travel and other associated costs. She thinks it is fair that the information is available to the public, but would like to formally MOVE to ask Mr. ?? to work with Mr. Greany to develop a system that compares costs/payments to State-elected officials with the Commissioner and appropriate Executive-level employees in the Governor's office. She feels the public would be well served to be able to compare the costs associated with all of these officials. She would like to see this report produced in January or February, but would like a recommendation in the next LBA meeting for the best manner in which to accomplish this goal. Mr. ?? agreed that this is an excellent idea. In addition, he would like the public to see the tax consequences of what the Legislature members receive since much of it is tax free. Rep. ?? wished it clarified that the reason it is tax free is because it is expenses that result directly from work. This amount should be compared as well. It should be clarified that this is not necessarily more in salary, but is a cost of doing the job. ?? asked if a Commissioner-level employee's W-2 would show all their travel expenses as income like that of Legislative members. She agreed with Rep. Croft that it should be an "apples to apples" comparison across the board, both tax-free and taxable income. Mr. ?? clarified that compensations are handled through the State payroll system, enabling easy access to this type of data. Travel costs, on the other hand, are bundled under vendor accounts and must be extracted manually from a hard copy file. While this can be done, the number of people for whom this is done is directly linked to the level of resources required to accomplish the goal. Sen. Pearce replied that on July 1st, each department be directed to supply the necessary data. If a department did not appear to be showing accurate data, there could be a spot check next month. Mr. Greany responded that this type of request is received almost always received at the beginning of every session. Generally the agencies are willing to respond, particularly if they know in the beginning which people to collect data on. He anticipated difficulty with OMB since she likes all information funneled through her before being disseminated. He suggested that it be made clear that this is a Legislative request directly of the agency. Sen. Pearce stated she would like to have the report published in January, dependent upon the recommendation presented in the next meeting. Rep. James stated that she felt that the record keeping on a State level was inaccurate. She felt that it is the Legislature's responsibility to require an accurate record of this type of information. Mr. Greany responded that most agencies do maintain a file by the person who is doing the traveling. However, within the automated accounting system, the information cannot be extracted in that manner. ?? suggested that with the new equipment being acquired, that this type of data should be made more readily accessible. Rep. Croft asked if any Commissioners or administrative personnel receive per diem at home. Rep. Martin recommended that an audit would take be very time consuming and suggested a conceptual report. Sen. Pearce responded that this was not to be considered an audit per se. Sen. Torgerson stated that he is paid on an hourly basis. Therefore, if he works extra hours, he can put in for per diem as a wage - not to defray any costs. He finds it troubling that Mr. Greany has difficulty acquiring data from the different agencies. He recognized that the Governor's PR office can be a "choke point" since everything must be cleared through that office. Chrm. Phillips asked Mr. Greany and Mr. ?? to bring recommendations back to the next meeting. He recommended they contact all ten members of the Committee for input, pool the information and outline the big picture. Sen. Pearce responded that the experience Mr. Greany and Mr. ?? have with the various department would Rep. Martin MOVED to allow Mr. ?? and his staff to continue on the Railroad report and include the taxation or toll to be charged on the Alaska Railroad across the lines. No objections being raised, the MOTION was APPROVED. Mr. ?? responded that while the toll is not charged up front, it is mixed in with the ticket price and then they make a rebate. Sen. Pearce MOVED to enter into a contract not to exceed $50,000 with an architectural firm for co-compliance and renovations to the Juneau Capital School Building, subject to the conditions set out in the May 12th memo. This amount is allotted in the budget. No objections being raised, the MOTION was APPROVED. ADJOURNMENT Rep. Martin MOVED to ADJOURN. No objections being raised, the meeting was adjourned at approximately 10:30 a.m. LBA 5/12/97 Page 6