Legislative Budget and Audit April 30, 1998 8:00 a.m. House Finance Committee Room Capitol Building Juneau, Alaska Tape: LBA-983004 Tape 1 Side 1 CALL TO ORDER Chairman Phillips convened the meeting of the Legislative Budget and Audit Committee on April 30, 1998, at approximately 8:00 a.m. in the House Finance Committee Room of the State Capitol, Juneau, Alaska. PRESENT The following members were present: Senators Representatives Chairman Phillips Representative Martin Senator Adams Representative Bunde Senator Donley Representative James Senator Halford Senator Torgerson (alternate) ALSO PRESENT Pat Davidson, Chief Legislative Auditor; Mike Greany, Legislative Fiscal Analyst CONSIDERATION OF AUDITS, RELEASE OF SPECIAL AUDIT REQUESTS AND PRELIMINARY AUDIT REQUESTS Pat Davidson - The agenda for today's meeting from Legislative Audit is to discuss the audit report of the Department of Natural Resources Agricultural Revolving Loan Fund to go final and to discuss a preliminary audit of the Department of Commerce and Economic Development the Alaska Railroad Corporation Land Appraisals and to give the Committee an interim briefing on our audit of the Department of Commerce and Economic Development and Department of Law related to the World Plus investment fraud. I would recommend to the Committee that they consider going into Executive Session to discuss audits. Representative Martin MOVED to go into Executive Session specifically for audits and other confidential matters. Chairman Phillips - Hearing no objection, the motion was APPROVED. EXECUTIVE SESSION Chairman Phillips re-convened the meeting to the public at 9:07 a.m. Representative Martin MOVED to release to the public the special audit on the Department of Natural Resources, Agricultural Revolving Loan Fund, within 24 hours by 5:00 p.m. tomorrow (May 1); to release the audit on the Alaska Railroad Corporation and ask them to get the response from the Railroad so it can be included as it is released tomorrow automatically; to allow the Department of Education Vocational Rehabilitation audit be released immediately for its 9:00 a.m. meeting in the Senate (urgency on that due to pending legislation); and to acceptance of the special request of Senator Green of the Department of Administration, Pioneer Homes, the special request of Senator Duncan of the Department of Administration Central Duplication, and the special request of Representative Hodgins, Department of Revenue, Child Support Enforcement Division. Pat Davidson - In Representative Hodgins' request, he asked that the audit be finalized by December of 1998. In order to meet that, it would have to displace other audits that have already been requested. I have talked with the Representative's aide and while he believes it is important to get it so that there can be legislative action if necessary in the next session, he does understand that it might not be possible. I would ask if the Committee wants it with that specific deadline? Representative Martin - I would recommend that we not honor that date because once we start that policy then everyone will put a date. Chairman Phillips - I would suggest that we delete the last sentence of his request. Representative Martin AMENDED the motion to delete the last sentence of Representative Hodgins' request for audit relating to the due date. Chairman Phillips - But with the intent that we will do our best to meet that December 1998 deadline. Chairman Phillips - Hearing no objection, the amended motion was APPROVED. Senator Halford MOVED that Budget and Audit request that the Administration appoint a special prosecutor to investigate the World Plus situation in cooperation with the Federal investigators so they do not do any damage to the Federal investigation, but with a particular look at State charges and any action that can be taken to toll the statute of limitations so State charges remain able to be prosecuted once we have the interaction with Federal charges taken care of. Chairman Phillips - Hearing no objection, the motion was APPROVED. Chairman Phillips asked Pat Davidson to draft a letter which would be circulated around the members. Senator Halford replied to the question that the letter should go to the Governor's office. Senator Pearce - Could you please go through your backlog of audit requests and estimate the time it would take to catch up, i.e., hours, days, weeks, months, whatever and estimate the man power you would need. Let's say the legislature decided to give you money to catch up, bring on contract people to get caught up by January 1 or some set date. Pat Davidson - I did a rough calculation estimating the number of hours some of these audits would take and I calculated last month that if we had no additional requests that we should be able to get every audit that I have back to the Legislature by the first of next session, excluding these. So everything that I have I believe that I can give back. That still gives us a backlog on these of eight to ten months, but I believe we are making progress on that backlog. Chairman Phillips - I believe you are sending out a progress report on the audits to all members of the Legislature tomorrow so each member of the Legislature knows where we are at as far as our audits. Do we have close to 50? Pat Davidson - Those that are active; those that are requested. Senator Halford - When are we going to have another meeting with regard to the Department of Military and Veterans Affairs' question? Chairman Phillips - I would think we should before the end of session. Do you have concern on the timing? Senator Halford - Two concerns. One I think his basic premise is absolutely right. I am concerned right now with the internal dispute going on in the Department of Military Affairs. Although I don't necessarily want to get into the middle of that, I would very much like to see someone come up with a recipe to revitalize the Guard in Western Alaska. I think the question is a very good one. Chairman Phillips - Obviously, we will have a few more like these requests. I suspect we will have a couple more before the end of session and we will try to get all that taken care of before we leave town. That way, we will get all those requests taken care of before May 12. ADJOURNMENT Chairman Phillips adjourned the meeting at 9:10 a.m. (End, LB&A-983004 Tape 1, Side 1, #378) LB&A 4 04/30/98