Legislative Budget and Audit August 14, 1998 1:00 p.m. Anchorage Legislative Information Office - Room 220 Anchorage, Alaska Tapes: LBA-981408 Tape 1 Side 1 and 2 LBA-981408 Tape 2 Side 1 and 2 LBA-981408 Tape 3 Side 1 and 2 CALL TO ORDER Chairman Phillips convened the meeting of the Legislative Budget and Audit Committee on August 14, 1998, at approximately 1:07 p.m. in the Anchorage Legislative Information Office - Room 220, Anchorage, Alaska. PRESENT The following members were present: Senators Representatives Chairman Phillips Representative Martin Senator Adams Representative Bunde Senator Donley Representative Croft Representative James Representative Therriault ALSO PRESENT Representatives Scott Ogan and John Cowdery; Fred Fisher, Acting Director, Legislative Finance Division; Pat Davidson, Legislative Auditor; Jane Demmert, Commission on Aging; Bill Herman, Stacy Moon, Nelson Page, and Mary Elizabeth Rider, Mental Health Trust; Rick Thompson, Division of Land; Jeffrey Johnson, Ron Crenshaw and Jim Price, Division of Parks & Outdoor Recreation; Ron Pitts, Director, AK ARNG Installations (DMVA); Janet Clarke, DHSS; Kelly Brunn, ASEA 52; Kathy Porterfield, John Bloedorn, Karen Collins, Chris Highfield, and Elaine Jennings, KPMG Peat Marwick; Frank Allan, DPS; Robbie Burns, PSEA; Craig Goodrich, State Fire Marshall; Bob Fisher, Finance Manager, Alaska Court System; Marveen Coggins, Senator Green's office; Bill Stoltze, Senator Halford's office, Dana LaTour, Division of Elections; George Buhite, Youth Corrections Administrator; Dale Bingham, State Parks; Mike O'Callaghan, John Cacy; Nancy Welch SALARY AND BENEFIT STUDY - DRAFT REPORT REVIEW BY KPMG PEAT MARWICK Kathy Porterfield introduced the representatives from the firm of KPMG who performed the wage and benefit study. Kathy Porterfield, Managing Partner of the Anchorage Office; John Bloedorn, Partner in Compensation Practice, Elaine Jennings, Partner in Benefits Practice, Karen Collins, Senior Manager, and Chris Highfield, Manager, Compensation Practice. John Bloedorn was introduced by Kathy Porterfield to make the presentation on the Wage and Benefit Study, Second Draft, which was made available to the Committee. On page three, the purpose of this study is to conduct an external compensation review essentially looking at salaries and benefits. It is limited in scope in terms of what is being undertaken to those elements of remuneration. Driving forces behind it - to attract and retain good people, high quality personnel; to know where you are relative to the market place; what is our external competitive status; and to seek some guidelines for managing compensation on a go forward basis that are cost effective; and to maintain our range structure successfully; what kind of salary increase budget may be appropriate and how do we maintain it. On page four, people undertake surveys for a variety of purposes. The primary one is to ensure external competitiveness or to determine our status in terms of the external market. It can also be used to validate job evaluation systems and to address questions such as which jobs are nonexempt and which jobs are exempt. Our purpose is to determine where you are, vis a vie, the market place in terms of what other organizations are paying. On page five, another important objective is what is the compensation strategy or philosophy that the state wishes to utilize. It ought to be one that can be supported by various state colas and interests, employees, legislative representatives, executive branch, as well. In looking at the market information, we devote a lot of time to identifying whom should we compare. And our primary focus was employment in Alaska, secondarily West Coast organizations, primarily other state governments like Washington. And then thirdly, national, but the primary emphasis is to look at where are we, vis a vie, other organizations in Alaska. The majority of the participants in the survey - and there were 68 organizations that participated - are in Alaska. Another subject was to look at geographic deferentials and this is a progress report today and this is an area we are still working on and will need further review. Our scope did not involve undertaking the gathering of data ourselves in terms of the bread basket considerations but to use sources that exist and that are still in process. What you are looking at and have received is a draft; it is not a final report. This is an interactive process and we are working closely with your people and still are. On page six, we have been aided significantly by representatives of both the administration as well as employee groups. The task force individuals are identified on page six and they have been very helpful and have looked at a variety of issues. It has been an important group in helping us. On page seven, the state has some 500 different titles and we worked closely with the task force to try to identify jobs that could serve as benchmark positions. These are jobs that we included in the survey which we felt others could compare, would have like positions to and would be able to respond to a survey "yes" we have that kind of position in our organization. The 89 benchmarks are a whittling down from a start of 130 positions. We then went forward with task force concurrence using essentially 100 jobs. We obtained data that we felt was statistically adequate for 89 so our report will be on 89 and of those 89 benchmark positions, there is a total of 3,183 incumbents in those jobs so out of your workforce population of something over 15,000, about 20% of the total population is represented by the benchmark positions. I might say it is fairly typical that when you are surveying you cover about 10-20% of your workforce population in undertaking the survey activity. The survey sources that were utilized, in addition to the private survey data which we've gathered both in Alaska and the West Coast was supplemented with some published survey data from three sources. The three sources we used was a very good survey from Mercer & Company, Watson Wyatt, and the third, Milkman & Robertson. If you take a look at the salaries that are provided by the state in comparison to the market median as defined as including the published survey sources and the survey information we have gathered, we are running about 111% of market median. Median is a middle statistic. In terms of looking at and I think a particularly relevant statistic on this page, we take a look at the salaries for the benchmark positions, and compare it to the market median for the data we've gathered, again primarily based on Alaska employers and then West Coast. The ones we've gathered came out to 113 so we are really quite close when we put ours together with the published survey sources and you are taking all of the 89 and putting them together so that is sort of a gross generalization as you apply that. Now when we apply the dollar value to the benefits because the study involved both the gathering salary information as well as benefit information, the dollar value of benefits were 132% of the market median. We also have been gathering information about cost of living statistics for cities in Alaska and one of the sources we have used is Economic Research Institute. Their statistic for average cost of living for all of Alaska cities is 118% of the national average. So when you take a look at your compensation information, we are 113% compared to the market, but your cost of living is 118%. It gives you a prospective as to what that is. Representative Martin - Is this the ISEA, the University's Research Institute? John Bloedorn - No sir. It is a national economic source based out of Redmond, Washington. One of the things I said earlier that we are still working on is to use some of the information available here in Alaska and so that information is going to be supplemented Chairman Phillips - Let the record reflect that members who came in late were Senator Donley, Representative James and not a member of the Committee, Representative Ogan. Senator Donley - Salary survey of 111%; the market being - this market is not limited to Alaska, this is a national market? John Bloedorn - That is from Alaska. Let me use the 113 first; it is based on the survey information that we gathered exclusively. It is composed of the survey of 68 organizations, the majority of whom are in Alaska but also included others on the West Coast. In that comparison, if we take the salaries for the 89 positions and add them up and average them and make that the enumerator. We make our comparison group all the organizations that participated and make that the denominator that would be the 113. So the survey group of 68 organizations that we actually gathered survey data for and saying where are we in relationship to that group in the aggregate we are 113% of them in the aggregate. If we then take our data and three other published survey sources, that statistic changes slightly from 113 to 111. Karen Collins - The first one includes national, West Coast and Alaska data; they are the three regions that are covered and the second one is the West Coast and Alaska. And the West Coast in particular was defined as California, Oregon and Washington State. Senator Donley - So how was that weighted between Alaska and non-Alaska data because I would need to know that to know the relevancy of the average cost of living number versus those numbers? Karen Collins - We did not weight any of the data from our KPMG private survey; we reported it as is in terms of, if you're competing in terms of salaries, you have to understand and be able to see what other entities are actually paying without it being manipulated so we presented it to you in terms of the external market what these entities told us they were actually paying, not what their salary structures were, but the actual dollars paid. And so the second which was just the KPMG private survey data is not weighted at all; it is pure data as reported to us by survey participants. So that's where you get to the relevance of the fact that 118% in terms of Alaska versus the national average. The first bullet includes the KPMG private survey data which is not weighted plus published survey sources. Of the three published survey sources, in some instances, there was national data for some jobs and in those instances, we applied a geographic differential to Anchorage which is different than all Alaska cities. Representative Croft - On Senator Donley's point, if the 113 and 111 were national, we could say they were underpaid since our cost of living is 18% above and we are only at 13%. How do we know the mix? Is it broken out somewhere in the detailed book? Chris Highfield - Yes. As part of the package you received, you should have received a legal size copy of the pricing results that we compiled. Basically, what we've done is for the survey that we mentioned that we used for the benchmark jobs what we did is we took the survey data that was available basically. So for instance if we have an accountant benchmark position and we have five survey sources that we want to use to determine a competitive rate for that accountant position, we take five survey sources and weight them in our initial analysis equally to determine a competitive rate for that accountant position and what we did was the data that we compiled was based on our initial discussions with the task force of what your world was like, what your recruiting world is for your positions and so we determined that your recruiting world was the state of Alaska and basically the West Coast so we compiled data based on that to determine in your world as far as your recruiting is concerned, this is what that accountant job is worth. John Bloedorn - This is a summary page and I think it is a generalization your salaries are somewhat higher but so is your cost of living here and as you look at this the answer may differ depending on whose included in the sample and the weighting so as a generalization I think it might be correct but including the details. Representative Bunde - Would it be fair to say then that our salaries put us in a positive footing as far as recruiting particularly with people in the job pool that you indicated on the West Coast excluding benefits, actual cost of living - if somebody doesn't do their research they might find the salary positive, but the actual cost of living does not bear that out? Karen Collins - When you are talking to people, to attract, to recruit, and to retain and motivate employees, it's hard to make generalizations because every employee group is different and so that is where the breakdown of more detailed data comes in. There may be positions where you're only recruiting within the state of Alaska and so your market that you'd be competitive with in terms of compensation, salary and benefits would just be within the state of Alaska. However there are other positions where your market is you must be competitive with the West Coast or Washington State on a job class by job class by what the labor market is for the position in particular. Representative Bunde - I understand because one of the University's on-going complaints is they are not competitive. Do we have somewhere a bottom line figure that puts the benefits in there, the benefits say 132.11, the salary 111.11? Neither one of these are issues that are not interconnected. What is the bottom line when you put it all together? Elaine Jennings - We do have in the second draft some additive figures. Keep in mind that in the benefits portion of the survey we were working with what we call average compensation for that group of employees as opposed to the compensation portion of the survey being specific to particular benchmark positions. So we don't have an identical comparison where we can say this benchmark job has this level of benefits on top of it. But in the overall analysis if we add average compensation dollars to dollars of benefits, the median for the state of Alaska employees is about 118% and the average is about 113%. So in a global comparison that would be the additive comparison. Karen Collins - Total compensation is running about 18% of the median. John Bloedorn - On page eight, there are 89 benchmark positions that we looked at and in looking at them, we asked the question, are there any that are outliers that are significantly different than what the market information is providing? We found a couple of positions that are below and I might say that outliers is plus or minus 20% from that going rate. So if we had a job the going rate was $50,000 so I say is the state outside of 40 - 60,000 plus or minus 20%. We found two positions that were slightly below that and they were quite close and 25 positions that were 120% so that is kind of the relationship for the 89. A total of 27 fell out of plus or minus the 20% range. There is a correction in the actuary salaries and we highlighted it here in case you are going through the big book and we also found one position called "reservation specialist" a field in looking at it and some of the respondents they may have misinterpreted the role. They were looking at it as a reservationists, someone who makes reservations, and this really is a more management position. So we just felt that some of the respondents didn't respond correctly to that position. Senator Donley - On the two noted below the benchmark jobs, I have particular interest in actuaries since I created that position in the Division of Insurance. Are those two part of the 25 considered above the mark? Karen Collins - Yes. Senator Donley - The actuary is part of the 25 above the mark? Karen Collins - There was a correction from the big book. For the actuary in the book it says it's at 166% of the market and the correction is it's at 121% of the market, give and take a couple of tenths, which still puts it slightly above that 20%. John Bloedorn - I might add that being more than that 20% is not necessarily wrong. Remember this is information; it is not answers or the right answer necessarily. It is just to give you a perspective. An important statement, we think, is the compensation strategy. On page nine, it simply says we have to address what's the overall goal; where do we want to be, vis a vie, the market in terms of positioning ourselves and it ought to address the salary guidelines we want. And we've taken a cut, on page ten, on a preliminary basis but based on our visits with focus group people, a statement that we think pretty much captures what we were hearing people say which seems to be an appropriate strategy for the state. Overall goal is to provide compensation opportunities which reinforce high performance from all of our employees; that the state will maintain competitive annual compensation opportunities relative to the market in order to attract and retain high quality employees. The primary competitive market for state employees is public and private sector employees located on the West Coast with emphasis on entities within the state of Alaska. In terms of total compensation opportunity, total compensation opportunity will be established at competitive market levels. Base salary range midpoints will be established at medians of the competitive market to be established slightly above the average of the competitive market. Put those together you have essentially a competitive market. Base salary increases will be based on competitive market increases and the employee's individual performance so one should monitor what the increase practices of organizations are on a go forward basis to help you determine the budget for increases. Representative James - At any time in your calculations, did you consider the job security of public employment versus private? Karen Collins - No, we did not. One of the issues in the focus groups in particular was that they felt that at one time being a state employee there was job security and the benefits were known to be very good. I'm saying these are employees' perceptions from focus groups. The general perception from employees is that job security is no longer, it's decreasing over the years. The dollar value benefits has been decreasing over the years. That is something we find with other kinds we find in the lower 48 within the private sector; that that type of job security is no longer the feeling the employees have within the public sector. And we did not take a dollar value. John Bloedorn - On page 11, I want to highlight. The task force was an important group; we asked them who should be in the focus groups for those kinds of discussions. We also asked them to help us determine who should be included on the list of survey participants as to which jobs should be benchmarks. We asked them to review the job descriptions, the survey format and what have you. I just wanted you to know the task force was both helpful and important to us. I already alluded to the participants in the survey; there were 68 in the compensation portion and 66 in the benefits portion. On pages 13 and 14, the survey participants on average had about 2,400 employees and they ranged from one organization having only four to as many as 50,000 so it's a pretty broad cross section. Many of these organizations are private as well as public sector and so we asked about their revenue and operating budgets and the average was 200 million and the range was from 400,000 to 1.4 billion. Two of the organizations reporting having union employees, ten of their work force was covered by collective bargaining agreements. A few of the other demographic statistics on page 14, the average salary increase was 3.3% which is fairly consistent with national information; 55 of the 89 had formal salary structures by that we mean a minimum and formal maximum of the ranges. We also asked them by what percent they were adjusting their salary structures and it was 2.5%. Fifty four of the 89 said they did have hiring ranges. Typically that is the subset of the overall range in terms of where they would hire. Fifty five had formal performance review processes. Most of them had a 40 hour work week. Twenty one of the 89 paid overtime pay to exempt employees, not just nonexempt. Typically it was for work in excess of 40 hours. Representative Therriault - How did you factor in the fact that most of the employees work a 37.5 hour work week? Karen Collins - What we did was we prorated the data that we obtained from the state to reflect a 20-hour work year, which is 40 hours a week. The same for the date, the actual market was a 20-hour work year, so we did compare apples to apples. Representative Bunde - Just for my education. The average salary increase was 3.3%; the salary structure increase was 2.5%. Could you define those two? John Bloedorn - The best way to describe this is to think in terms of two trains, one a little quicker than the other, but they are both moving. Companies and organizations, both public and private, will typically have an increased budget and they will budget a 3.3% of our current payroll for increases. They are also going to take our framework. Lets go back to my example of the range of 40 maximum 60. They adjust those periodically also. Some companies do it annually, some do it biannually. It moves a little slower. If it didn't move slower, no one would be moving through the ranges because the ranges are moving faster. On page 15, we also asked the participants how many holidays and the average was nine. And we asked them in determining salary adjustments, what were the considerations in making those determinations. Sixty five percent gave consideration to performance; 57% were using surveys, and so on. The percent of organizations, you'll see, exceed 100 because many of the organizations consider more than one thing. On page 16, there has been reference some of the exhibit materials that you have. This just provides an overall highlight of the results off those exhibits. We've already discussed the 111% compared to both the published data and private survey data. The 113% is using our data. When we looked back at the survey information to only Alaska companies participating it is only 102% of market. You may ask why that is so different. There are certain jobs that the state will have that no one else has so your comparison would be to Washington, California and Oregon but not necessarily to elsewhere in the state. We also have some breakdowns of various benchmark positions by geographic region within the state, northern, central and southern. The number of comparisons changes so this is not based on the benchmark of 89 in terms of the number of comparisons to which they pertain. Chairman Phillips - John, when you say Northern and Central, could you identify what part of the state since your definition may be different than ours. Karen Collins - Northern region includes Fairbanks, Central Region includes Anchorage and the Southern region includes Juneau. John Bloedorn - The number of benchmark positions associated with those numbers you're seeing on page 16, Exhibit B is based on 89 benchmark positions, Exhibit C is based on 52, Exhibit D is based on 20; Exhibit E is based on 40; and Exhibit F is based on 11. Elaine Jennings - Covering information on the benefits plan, we did a telephone survey and actually talked and had an interchange with the people at the company who were responsible for benefits administration, generally. The areas we focused on included child care, life insurance, accidental death and dismemberment, short and long term disability, medical benefits which include dental and vision, paid time off and retirement benefits. We reviewed benefits available for state of Alaska employees looking to the basic coverage. If an individual was in a particular bargaining unit, that was benefit level that we looked at for that individual. So we have included all the unions as well as the nonrepresented groups. In our exhibits in the big bound book, we have weighted the number of employees in each of those groups to come up with our weighted statistics for the state of Alaska. Representative Bunde - I noted known of the University employees were included; is that correct? Certainly not their labor groups. Elaine Jennings - Their labor groups were not. The first bullet point on the top of page 19 was that of which we referred to earlier in which we're trying to come up with an aggregate, sort of a bottom line. Where do we look and how do we look when we're adding compensation as well as benefits and these are the numbers we have put in the exhibit in the second draft. Actually there is a correction in the second draft. Instead of 18.1, it was 17.7. This 18.1 is the correct figure and will be in the final report. And compared to the average of all survey participants, the total, that is dollar value benefits plus average pay for each employee group, is 13.6% above the average for all 66 benefit survey participants. We look at various comparisons and we did comparisons in the exhibits, inside Alaska and outside Alaska, public and private section and groups of employers who have more than 500 employees or smaller groups of employees. So that is the way we sorted in the various exhibits in the binder. Just looking at a comparison for some general perceptions, the dollar value of benefits for the state of Alaska employees is a larger difference from the groups which are the state of Alaska employees in the survey groups and private employers. So there is a bigger difference in the dollar level of benefits between those two groups. If we look down to the level of where do the differences lie, basically they are in three components and they tend to be the most expensive components of benefits: retirement benefits, paid time off benefits - the larger of these tending to be in the paid time off area. And I should point out that the methodology which translates into some of the difference that could be showing up here in the paid time off calculation, we used an average tenure in each of the organizations to determine what the paid time off benefit amount might be. For example, an employee with five years of service might get "x" days of vacation or personal leave. For the state of Alaska, we use 7.5 years and for those organizations that participated in the survey we used what the benchmark positions indicated was the average tenure for that organizations. Chairman Phillips - Why seven years? I think the state average is five years. Elaine Jennings - The task force indicated to us that 7.5 was an appropriate figure and we did not have actual dates of hire in our data to go back and actually do a calculation but that was the thinking of the task force that that was an appropriate amount. I should also point out that within the various classifications of employees in the state of Alaska groups, the twelve unions and the nonrepresented, there is a significant difference in the number of days off. So the paid time off is going to swing between the dollar value benefits significantly for different groups within the state of Alaska. Representative Martin - I have two questions. Have you looked into the annual merit increase versus what they do for private industry or other private agencies and other government agencies and also, second, have we looked into our state and an employee can come into a low level, but knowing how to play the game they can really accelerate through the salaries and the jobs and ranges in a very short period of time? You said retirement benefits are higher than anything else but this part of the benefit accelerates the amount even more. Elaine Jennings - We did not take into consideration things like early retirement incentives or enticements to retire early. The focus was really on looking at the dollar value of the benefits provided in a given year. There are just a multitude of ways you can look at the dollar value benefits and that seemed the most measurable and easiest to do comparisons. Representative Martin - Who get merit raises? It is very costly for us. Karen Collins - In terms of your average increases because you have various bargaining units, you have state employees and nonrepresented employees, and the increases for them. That 3.3% is what you are benchmarking off of that John was talking about. In our survey, the average increase that they gave last year was 3.3% which means some were lower and some were higher. So that gives you an idea of how competitive your increases are within the state of Alaska on how much higher they are than 3.3%. Representative Therriault - (End, Tape: LBA-981408 Tape 1 Side 1) Karen Collins - What we are actually paying our employees today versus other employers are paying their employees, this is what it is. There is another whole host of issues that we cover in 20 and 21 of what you do with that data. But in given that the thing to keep in mind is that based on your increases if you are averaging a much higher increase that 3.3% and that is what your market is doing it gives you an idea going into the future whether or not you are pulling away from that picture in time. But that is where that comes into play. Representative Therriault - And the other clarification I wanted on page 17; retirement benefits is our SBS package plus our PERS package? Elaine Jennings - Yes, both of the packages. Representative Bunde - On page 19, it says that 13.6% is on an average above 13.6% above the average of participants. That includes people from the lower 48 with a lower cost of living. What we need to know is how does state employees compare to other state of Alaska , same cost of living folks, and what's that percentage difference? Karen Collins - We can calculate that number and get it for you because what we used as a base was our entire private survey but what we need to use as a base is that 102 which is just the state of Alaska. So what we'll do is get that number to you, but "yes" it is possible and you are right, that is an inaccurate. Representative Bunde - I understand we need the bigger parameters for recruiting. But I think for bottom line budgetary discussions we need comparing Alaska apples with Alaska apples. Karen Collins - Yes Elaine Jennings - If I can just add to that, in the benefits exhibits in the binder, there are cuts of Alaska participants so the numbers are there. We can get you the comparison. Karen Collins - I'm just going to walk through the last few minutes the last two pages, pages 20 and 21. It might address the questions that are coming right now is that data is what it is and what happens when you do an external survey what ends up in front of you is a lot of data that can be manipulated in a lot of different ways. You can add differentials; you can do different cuts so the question is what do we do now what it. So we would recommend in terms of next steps is that you take a look at your compensation strategy as applies to different employee groups and identify what the market is for each one of those employee groups that you want it to be and you have to finalize that. There might be some employee groups where it is the state of Alaska and the West Coast. There might be other employee groups that it's just the state of Alaska. You might make the decision that you're just going to do the state of Alaska for all employees and be consistent, but you need to develop that strategy and identify that as the first piece to interpreting the data in front of you because then you know what pieces to pull because we've presented to you in every possible way to enable you to do that. The question is in terms of recommendations of how you're going to cut that; we'll outline what we've been hearing and what we know based on our experience but the decision is ultimately yours. With that in mind one of the things you have to think of in terms of potential restraints is that, what are we able to play because that comes into place. I mean you can take a look at an entire scheme and then get to the end and say we aren't even able to pay that. So when you are outlining your compensation strategy, you have to think what are we able to pay as well as what do we have to pay. You also have to bear in mind in terms of your collective bargaining agreements, you know 80% of your work force, you have to work with your unions in terms of because that comes into play when you're outlining your compensation strategy and working with them so you can get in passed through the legal constraints and that has more to do with making sure in terms of the fair labor standards act and the equal pay act. Sometimes some job classes have or job titles have more encumbrance of protective classes than others so you want to keep that in mind to make sure you're not getting into any legal constraints. And your external labor market which you have in front of you is one of the pieces. Your formal communication plan once you have this set you have to have an idea in mind of how you are going to communicate this and to whom we are going to communicate this and in what form. So you have a unified ideas as to how you are going to go about doing that. Another piece in terms of your job evaluation process is as important as that external equity that we've been talking about today is that internal equity within the state of Alaska in terms of how do you rank order of employees of value high to low, positions in terms of value from high to low which can be as important as what your external market is paying. For your salary structure changes, once you've that definition of what is the external market for different position classes and how do you internally value positions which was not part of this study but should be something that is looked at then you make your changes to your salary structures and move forward on how you are going to give your salary increases and then review your current compensation practices in light of the information in front of you. You have a lot of very very good data in front of you that should be taken in place. Those two pages that John Bloedorn went over was in terms of what do other people give in increases, salary increases; what they increase their salary structure by; what are they basing their salary increases on. Those should be taken into consideration when people say others don't do that, you have in front of you what your external market is truly doing and you should take that into consideration when you make any changes to your compensation program. And then finally, in terms of performance, a big issue now in the public sector right now in terms of we want to make sure we are paying for performance, not just paying for people who are here year after year after year and valuing individuals for what they are contributing to whether or not the state meets their goals. As a final piece, we would recommend that you look at maybe in the future a performance evaluation system and some type of component of that so that it can be goal setting performance assessment, job, coaching career feedback. One of the things we heard in the focus groups was that there was a general feeling that in terms of career tracking and pathing, employees did not know where they could go; what additional skills they could get nor to move up within the state of Alaska. That was very important to them; day to day coaching was very important to them and feedback from their supervisors as to how they were doing and what their increases were based on was very important to them; they felt this was lacking. John Bloedorn - In a way, what these last two pages are trying to convey to you is that we are going to provide you with a lot of data but just having data is not a design complete successful compensation program. It is information upon which to work and provides you with good information but having a defined compensation strategy, refining your job evaluation processes; you have a lot of salary ranges now; they have different breaths. They are all over the lot frankly and unknown framing. Hopefully, this will provide you with a good source of information as a starting point. There's a ways to go to have a complete and successful compensation program. Representative Martin - How much should our other sources of income come into play when considering salaries and negotiating with union contracts. What can we afford to pay? Last time we were that we could afford to pay these employees more because of the principal of the permanent fund. Binding arbitrators, not that you have anything to do with that, who make decisions could care less that we are going to pay for it. The legislators have to come up with it. From your scenario as experts maybe you could tell those who are in that position that these things are off the board; the constitutional budget reserve is off the board, our permanent fund is off the board, we can't use that as an incentive to justify given the employees whatever they want to give them. John Bloedorn - It is very difficult for us to respond. You are asking very substantive questions. The scope of which we undertook was not to address those and it would be inappropriate for us to try to respond. I use the analogy sometimes that McDonalds, Burger King or Wendys do not pay french fryers a whole lot of money. Could they afford to pay french fryers more money? I suspect they could but reality is it doesn't take too long to train those people. There are apparently enough of us who apply. What they can afford to pay probably exceeds what they need to pay. Other organizations with whom we sometime work and had the opportunity to meet with who are below market substantially but are in the position of what they need to pay can't afford to pay and therefore they have to rely on contingent forms of compensation incentives and so on. But from our activity here, we are really gathering external information and presenting it to you and the question of what we can afford to pay thank goodness I do not have to address. I don't have the answer to that. That is a much harder question and I'm afraid we have to defer to you all. Representative Croft - One of the ways I would like to see the data broken up is to divide the salary categories into thirds based on the base salary or some measure of compensation. I`ve heard that there are different generalities that apply to the bottom and the top in salary. In prior studies, it has been that the lowest ranges are paid substantially more than the going rate. The higher ranges are somewhat less and the middle is somewhere in the middle. That maybe a policy distinction that we need to make, do we want to pay our lower range employee a french fryer wage or do we think that it is important to give a living wage even to our lower range employee. Then the other side of the question being are we paying our higher level executive type positions enough to be competitive? Karen Collins - Yes, we will do that for you. And in fact, one of the purposes of the meeting is to get feedback from this committee. How would you like the final format to be presented is one of our questions today? Based on our discussions and questions we have an idea what to incorporate in the report that is not in there already. We can finalize in a format that meets your needs. Representative Croft - Very briefly and to the extent that benefits raises the differences, I would like to know what components of the benefit is the major aspect of that? Representative James - My concern is and you indicated that there is 89 different benchmarks, will there be a definition of the positions that will indicate the education and qualifications that are similar no matter do we similarize those with state positions as opposed to private positions? Karen Collins - In Appendix A, there is a brief position description of each one of those positions and we verified with the task force and worked closely with the task force and union representatives as well as administration as to what exactly is an accountant here. What is the education required, the experience required and what is the job scope of that position? In our private survey, we asked for, based on this description, what are you paying this position? And based on that description, the comparative job that you're giving what did you title it? And did that job have more, roughly the same or less experience and that's how you have it broken out within your final report. So it does address that issue and give you the education experience and so forth required for that job. Representative James - It would appear from an overview from my perspective that the accountant is not a good one to compare because that is too easy to compare. That there are a lot of public employee positions that have no private employee comparison because it is totally a different form of work but still the education requirement and ability to do the job certainly is comparable and that is kind of what I was talking about. Karen Collins - What we did was for positions that were unique to the state of Alaska, to the state of Washington or California, they have similar positions and scope of jobs so that is where your comparison lies. We did not take the position and say that this job requires a high school education, it's very easy to train someone; it's quick to train someone for this job and experience so we can compare it to our benchmark data. No, we did not do that. Representative Therriault - In regards to the cost of living in the state of Alaska, how did you deal with that because the state is so large and the economic condition varies so much, how did you normalize it for the state of Alaska? John Bloedorn - One of the things that we are still working on is this issue. We're relying on a number of sources. Chris Highfield - Basically what we've done, there is a couple of ways you can do cost of living percentiles. One thing you can actually do a survey of consumables and utilities of each of the different cities within the state or area you want to compare. That is not what our task was as part of the proposal given to us. What our task was to give some general guidelines as far as the survey data that is available for cost of living differentials so what we are in the process of doing is compiling survey data that actually did go out and do some comparisons in the different cities within the state of Alaska to come up with some comparable information. Now one thing that we want to present and will be included in the final report is a breakdown of what is actually prepared, consumable goods, utility, taxes, housing, and miscellaneous expenses. That is basically what we will provide you with and that is basically how the cost of living differentials are calculated, analyzed, based on those different kinds of categories. Representative James - Another issue that is a concern, particularly in Alaska, where we have so many remote locations, where we need both professional and nonprofessional people and some sort of a bonus to be able to live in remote locations where there is little conveniences is another factor especially in the area of professional people. Have you considered that at all and is it possible to consider that and give some indication what might be expected in that area? Karen Collins - In a broad scope, there are two issues when we start applying geographic differentials and one is you can apply geographic differentials on basis of two things. One is salary differential and salary differentials mean what are other entities paying for those jobs because what does it matter for the cost of living because I know an accountant makes $33 there so I need to pay an accountant $33 there because you're competing against other salaries. That is one way to look at it and it's the way some entities look at it. Another way to look at it what is the cost of living differential and that comes into play when entities have positions in multiple locations where the cost of living is different and they want them to maintain roughly the same lifestyle for that position so they take a look at cost of living differentials and then another issue which you are bringing up is what is called hardship pay or some type of value put on quality of life. That comes to what John Bloedorn was saying what do you have to pay to have somebody there so if you have to pay somebody extra amount to have them stay in a very remote area for two to three years because you don't want a high turnover then that is the reality of what we have to pay a position there and that is not something we can put a value on for you. All we can tell you in our external survey this is what your comparative market is paying for that position and this is what you are paying for that position and this is roughly what the cost of living differentials are but how that impacts as to how you actually pay people there are just a lot of issues involved with that and the bottom line is what you have to pay for someone to be there. Representative Bunde - I think the State should pay good employees absolutely as much as they can so that we can hang onto them but as you do the study and piggyback on what Representative James said there are other subsidies in some areas, power cost equalization, subsidized housing, do you put that into your equation? Karen Collins - When you gather external data there is a fine line that yes you can break it down in ever way but that costs money and the more detail and data you try to get it is still external data and you put in a lot of cost in gathering external data rather than putting it into actually gathering what the State is going to pay. So in our opinion when you're gathering this data and have the market data in front of you now let's address the internal issue what is the state of Alaska going to pay its employees and in their compensation strategy what is it you are going to take into consideration when you value your employee positions. Are you going to take into consideration cost of living and what do you deem to be cost of living and are you going to have additional pay to get a professional to stick with you in a remote location. What is the value you're going to put on that hardship pay and the bottom line is putting that into writing and thinking that through you apply it consistently across the board because it is more important in your internal value that you apply it consistently so you are fair to state of Alaska employees. John Bloedorn - One of the challenges for us as surveyors is that you all are saying or asking some substantive questions on how to use this information and recognize that the scope of this undertaking is to gather information. It is not how to apply it. Chairman Phillips - When are you going to finalize it? Karen Collins - I know you would like it to be broken out into different ranges and I know that you want us to add the sentence on based on state of Alaska plus benefits for total compensation and that the geographic section will be done in the next week. In terms of additional comments that you would like this data broken down into when would you have that to us? Chairman Phillips - We will send a memo to the members of the committee and follow up with a telephone call and have the members make their own recommendations to you. Karen Collins - Our deadline would be two weeks from today. - by the 28th. We would turn around the report two weeks from that date. MEMORANDUM OF AGREEMENT BETWEEN LEGISLATIVE AUDIT AND EXECUTIVE BRANCH FOR STATEWIDE FEDERAL COMPLIANCE AUDIT Pat Davidson - As part of the package is to approve the my signing of a Memorandum of Agreement between Legislative Audit and Executive Branch for Statewide Federal Compliance Audit. This Agreement will allow us to conduct the Federal compliance portion of the audit required to keep the Federal money flowing into the state. We have been doing it since about 1984 and in terms of priority for our budget is just wasn't there anymore, however, they have deemed for us to do it. One of the additional items requested is that we will get assistance from internal audit staff of the executive branch agencies. Representative Martin MOVED that we approve the Memorandum of Agreement. Pat Davidson - It is going to be eligible for Federal reimbursement. There are some agencies that are not capped and will be able to generate Federal money to pay for it but that is going to be up to the individual agencies that actually are billed for it. Chairman Phillips - Hearing no objection, the motion was APPROVED. STATUS OF AUDITS Pat Davidson - We have a lot of audits. To give the Committee where we are at right now. We still have a number of audits that have not been started. We are starting the audits now that were requested back in October/November/December of 1997. The Chairman has been working with me over the last couple of meetings to try to deal with some of the audits on an informal basis so that we can get to them a little bit faster, to get answers, rather than a formal audit process. However, I would expect any audit requested is probably looking at six months before we start. The first of August I'll be updating where we are in terms of status and I'll be sending it to each of the members. Senator Donley requested a report on what would it take in terms of resources to catch up on the backlog of audits. This information was requested for the next budget cycle. REVISED PROGRAM REQUESTS Representative Martin MOVED to approve RPL#41-9-0003 - Alaska Court System - Federal Program - $20,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#41-9-0004 - Alaska Court System - Federal Program - $5,129 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#41-9-0012 - Alaska Court System - Federal Program - $27,505 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#09-9-0002 - Military & Veterans' Affairs - AK National Guard, Federal Scout Armories (CIP) - $1,350,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#09-9-0003 - Military & Veterans' Affairs - Disaster Planning & Control - $97,600 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#10-9-4002 - Natural Resources - Information/Data Management, Information Resource Mgmt - $125,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#10-9-4003 - Natural Resources - Mining Geological, Water Development; Geological De. - $210,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#10-9-4004 - Natural Resources - Mining Geological, Water Development; Geological Dev - $20,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#10-9-4006 - Natural Resources - Parks & Recreation Management, Parks Management - $300,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#12-9-0009 - Public Safety - Fire Prevention, Fire Service Training - $40,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#12-9-0010 - Public Safety - Violent Crimes Compensation Board - $73,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#12-9-0012 - Public Safety - AK State Troopers, Special Projects - $69,200 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#21-9-0006 - Community & Reg Affrs - Local Government Assistance Training & Development - $32,300 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#21-9-0009 - Community & Reg Affrs - Child Assistance, Child Care Assistance - $205,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#21-9-0010 - Community & Reg Affrs - Child Assistance, Child Day Care Assistance - $14,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Fred Fisher - Acting Legislative Finance Director - Pointed out that RPL#20-9-0003 - Dept. of Corrections - was withdrawn. Chairman Phillips questioned RPL#41-9-0001 and the differing figures in the written backup, $119,542 versus $101,624. What is the explanation? Bob Fisher - Finance Manager, Alaska Court System - The situation is the Federal grants are two year in duration and so we have a portion of funds that you approved previously that we have not spent. We have a new award, two awards, one from the fire grant and one from the new grant. Fred Fisher - The Court System documentation included a comment that they had not customarily included Federal receipts in their annual budget request and I had a brief discussion with Mr. Bob Fisher in regard to this and I understand that the Court System is willing to consider including the Federal receipts in their budget request now that they have begun to receive more grants so I think it would be a good idea and save the Committee time if they should do it. Representative Martin MOVED to approve RPL#41-9-0001 - Alaska Court System - Federal Program - $119,542 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Chairman Phillips questioned the inclusion of two separate dollar amounts on RPL#41-9-0002. Bob Fisher - Our grant request was for the lower, $8,242. Fred Fisher noticed that there was a document in the packet that awarded a higher amount. (End, Tape: LBA-981408 Tape 1 Side 2) Fred Fisher confirmed the amount $9,642 for RPL#41-9-0002. Representative Martin MOVED to approve RPL#41-9-0002 - Alaska Court System - Federal Program - $9,642 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#41-9-0005 - Alaska Court System - Federal Program - $103,600 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Therriault requested clarification on RPL#41-9- 0012, the statement, "the matching requirement for this grant will be satisfied with in-kind contributions of staff time and through use of state funds for travel costs.". Where are we traveling to, why are we traveling and how much traveling? Bob Fisher - The Program Manager and Judge would attend a workshop in Washington, D.C.; that is one of them. The Program Manager would fly to Fairbanks for data collection and Court files; travel to Palmer for data collection and also a Judge would travel to Anchorage on Phase I of the implementation for workshops and consultation. The total of all that travel is $9,387; of that $7,800 is paid by the grant and $1,587 paid by the Court System. Chairman Phillips - This RPL has been approved. Chairman Phillips requested clarification on RPL#02-9-0001 on the statement that "training is open to public ... as well as Pioneers Homes' staff.". Who is the public and how are they notified? Jane Demmert - Executive Director, Alaska Commission on Aging - This is a new initiative that the Pioneers Homes would start in relation to the public and there are two ways it would be done. One, there are families who are very involved with their family member in the home and the families are just a natural point of contact. There is a very large volunteer core of people who work in the Pioneers Homes who will also benefit from this training. Third, Chairman Phillips - Is this strictly for Pioneers Homes? Jane Demmert - This is specifically for the Pioneers Homes and what makes it quite distinctive is that it is centered around care in fairly large settings. The training will be offered in the Pioneers Homes. There will be sessions scheduled that are specifically available to the public. It will be available to other institutions as well, including assisted living homes. Representative Bunde - The Pioneers Homes have made a transition to long term care; would you anticipate the vast majority of the people who attend this training would be family members of residents of the Pioneers Homes, staff, volunteers with general public being a smaller percentage? How would the general public become aware of the training? Jane Demmert - Yes, the public would make up the smaller percentage. There are a couple of ways. There are now organized networks to bridge the assisted living facilities in the state who are now participating so they are available. Sending out notices, advertising in the newspaper and the homes are very interested in actually being able to become a resource to people who have ailing members so there is a more proactive approach being taken to letting people know what is available. Representative Martin - Why are you coming to the Legislative Budget and Audit Committee rather than through the regular budget process? Nelson Page - Chair, Mental Health Trust Authority - The reason you see some rather major requests coming to the Committee is part in result of the way the settlement of the Trust litigation works. We provide to the Legislature in September budget recommendations which are then considered through the legislative process. At the end of the legislative process sometimes the Legislature has not agreed with our recommendations and sometimes there have been suggestions about different ways to fund, sometimes we've found there are emergencies that arise. The result is at the end of the legislative session, the Trust has funds left over that haven't been appropriated or allocated or restricted to a particular purpose and then we have to decide how we are going to spend the beneficiaries money after the legislative session has occurred. The decisions that we make about that occur usually in May or June after the session has ended and of course to be included in the next fiscal year they have to come to this Committee. Representative Martin - There are important programs which are state funded and the Legislature benefits especially the Health & Social Services Committees by the process in awarding these funds. I think it would benefit the Legislature to know how much extra money is available in the Trust instead of using general funds all the time. I think this may be an effort to circumvent full acknowledgment of various moneys. I don't think this has been done in the past that an accelerated amount of program receipts were used by every agency to circumvent the budget process. You know what your budget lines are and you know what the Federal budget lines are and a lot of those agencies do get permission to use receipts up to "x" point and I think you should do that from now on. Representative Therriault - The budget that was submitted in September was it projected to use all the available Trust revenues? Nelson Page - We left a little bit behind because we wanted to make sure we had enough to fund things like emergency situations. An example is emergency funding for ARCC of Anchorage. They lost their HUD funding and we are providing emergency funding. We didn't know about it until this Spring so the Trust was asked for emergency bridge funding so they could get their funding stream back on line with the Federal Government and wouldn't have to close down a very valuable program in the interim. We have tried in the past to make sure the vast majority of Trust funds go through the legislative process. Very little is held back from the budget request that we submit to the Legislature in September. Representative Therriault - Give me a ballpark for a little bit held back? A couple hundred thousand dollars. Nelson Page - I would say between $500,000 and $1 million. Representative Therriault - So when the Legislature was done, how much was available? Bill Herman - About $2.1 million. Representative Therriault - And through the legislative session, if you become aware of things or needs do you actively come to the Legislature and have them worked into the budget process? Nelson Page - Absolutely. I can't give you the exact time where our budget recommendation changed in time for inclusion in the regular legislative session but yes we do make those changes. There are RPL's here which are also in direct response to things we learned were of concern to Legislators. That would be our funding of the healthy families study. We supported the healthy families funding throughout the legislative session but Senator Parnell, Representative Hanley had some serious concerns as to whether we were in fact supporting a program that worked. As a direct result of hearing about those concerns, we decided it would be appropriate for us to assist with Trust funds to get some hard data through a study that is going to take place over several years. That is also included in RPL's today. Representative Therriault - If you held back about a half million dollars and you come up with $2.1 million somewhere in the process the Legislature turned down the one and one half million dollar figure? Nelson Page - One of the things we try to do is to provide opportunities for matching funds with the Legislature and that is probably the place where the money comes back most frequently. The Legislature for reasons which are obviously yours to decide on chooses not to pick up things which we feel are programs to match. When that happens we pull back and look at where else to spend the money. If you, Representative Martin, feel we are going in a different direction that is being helpful to our beneficiaries, not only would we welcome but ask for your guidance and assistance in telling us that. Representative Therriault MOVED to approve RPL#02-9-0001 - Administration - Alaska Longevity Prog - Pioneers' Homes - $100,000 - MHTAA Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative Bunde was not present for the vote) Representative Martin MOVED to approve RPL#02-9-0002 - Administration - Div of Senior Services; Protection, Comm Svs & Admin - $145,000 - MHTAA Receipts. Representative James - Are we talking about a permanent part-time person on the long-term care ombudsman? Jane Demmert - No, it would be established as a temporary position. Representative James - I don't have any real concern with this appropriation with as much as wanting to make a statement. One of my observations is we certainly need long-term care ombudsman assistance but the point is one of the reasons we need it is because other agencies are not doing their work right, i.e., OPA and also the work of the guardian ad litem. I wanted to bring attention to the issue that if we were watching them more closely maybe we wouldn't need another person in this capacity. Representative Martin - I have the same concerns. Here we are going to hire another person to investigate senior centers when we already have others for that. We have the commission of senior citizens and other regional commissions for senior citizens and we also have the Legislature and now we're going to have an ombudsman person. Here again is how much of your money are you going to use outside the mainstream appropriate to mental health. Jane Demmert - It might be helpful just to know that there is a long term ombudsman in every state. There is a provision for that under Federal and state Statute. I would say that a good 80% of the state have active volunteer long term care ombudsman programs and in our state we have a staff of long term care ombudsman service that consists of two positions and we have recently added a clerical position and that is for the entire state of Alaska. In an effort to be very economical in providing this kind of support to families in residence we think in our working on the strategy that having a volunteer coordinator who consistently in training and support to volunteers in a cost effective way to extend that function outside Anchorage to other areas of the state. We understand we have a very modest resource to do this kind of work and certainly working as effectively as we can with other state agencies is a key piece to realize as much benefit as it possibly can and we are intent on doing that. Representative Martin - Is the system broken? Can't people tell to the advisory boards in their local areas? Do you have that many complaints? Jane Demmert - I would just say that when family members are receiving long term care, particularly if they are effected by dementia, it is very difficult for the resident, the care givers, family and staff, and sometime having an informed outsider come in to sort out difficulties really helps everyone. That is the ideal of the long term care ombudsman. I would not in any way characterize the system as being broken. It just helps to have that independent dedicated focus on the needs of those residents. Representative Martin - Is it one time money? Jane Demmert - Last year the Commission did request a full-time volunteer coordinator with general fund mental health funding. It was approved and included in the Trust request and it was included in the Administration request as well. In the final round of decision making of the Finance Committee you were working with caps that we respected so that did not quite make the cap and we will be requesting it again. Representative Therriault - The history is what bothers me. This is one of the instances where the Trust puts in money to try and entice the Legislature to cough up some general funds and the response from the Legislature is no. Now the Trust comes back and says we are still willing to expend our 50%. The problem I have with that is after a legislative decision and answer being no, the Committee is being asked to obligate the Finance Committee Subcommittee next year to keep this person. I think it is more appropriate for the full Legislature to expend the general fund dollars and not for the Committee. Representative James - I have that same concern. In defining what this money is going to be spent for, I hear you define is kind of like a sunshine person; someone able to determine the stress between the provider and the family of the person. Did you mean it that way or did you mean they are going to recognize where the fault is and do something about changing the fault? My personal experience is that people who are representing these vulnerable people are not doing it as well as they should and in fact they are not doing anything. I'd like to see time and effort making them do their job rather than pacifying people with trying to explain the difficult situation. Jane Demmert - The work of the long term ombudsman has several facets to it. One of them is that when a situation arises that is potentially illegal that there is a timely intervention. I think that the overall standard of care in Alaska's long term care facilities is generally very good. However mistakes can be made and the work of the long term care ombudsman in that regard is to be responsive when a mistake has been made so there is a timely change in practice. A second aspect of the ombudsman and is the case with hospitals if a resident has someone who looks in on them and is knowledgeable about the type of care that under their contract they should be receiving and can advocate for them if there are small minor problems to be worked out that is an approach which is preventative and which provides for an opportunity for consultation and resolving problems before they escalate. The work of the volunteer and small staff works in both of those respects, it is complimentary team approach. Representative James - I understand. You anticipate this is a sunshine person more than a problem solving person. A person to keep things going smoothly. If it is called preventative, that is their function. The $145,000 is quite a bit for what I've heard defined. Jane Demmert - The amount is $30,000. It is broken down in three separate parts. Representative James - And none of this is going to be recommended for permanent hiring in the next Legislature? Representative Bunde - While this person would be more knowledgeable about certain issues would they not be a duplication of the current ombudsman's office and certainly the elected representative? Jane Demmert - One of the benefits of the role of the long term care ombudsman and they are active in each state in the Country is that they are able to focus their full attention on the situations that arise where people who are in long term care or needing long term care services. Often this may involve people who are affected perhaps by dementia who have difficulty in expressing themselves and who generally are quite dependent on others for their survival and well being and when this long term care ombudsman function is most effectively used it is a way to respond to the needs of people who truly at times have great difficulty independently for example pick up a telephone and make a call. So the purpose of these volunteers is to be present on a regular basis in these facilities to provide continuing contact. Representative Bunde - So this is a person who not only responds to problems but observes problems and initiates action. Nelson Page - On this issue let me say when the Trust Authority was faced with the Legislature's decision not to fund the long term care ombudsman the Trust respected that determination. The funding before you in this RPL is for a slightly different animal instead of hiring a long term ombudsman with these funds the purpose is to hire for the temporary basis until you have time to look at it in legislative session. To hire someone who will coordinate and train volunteers to do volunteer ombudsman work so we are not ignoring the fact the Legislature made a decision that they did not want to fund the long term care ombudsman rather what came to the Trust Authority was slightly different proposal. Let's find somebody who will work with volunteers and not hiring a professional to do the work. Chairman Phillips questioned the language in the backup material that "an increment will be requested in the FY00 budget ... for a full time volunteer coordinator position.". It sounds like they are going to have an increment whether or not we approve this RPL. Is that the impression? On the personal care attendant, are they going to be RFP? How does that process work? Mary Elizabeth Rider - Planner, Mental Health Trust Authority - The personal care attendant project that you see described here is to see if we can improve the way we deliver personal care attendant service. The Division of Senior Services has not determined on the individuals receiving the service; how the individuals would come off the wait list. There are 270 on the wait list now. There will be an RFP for vendor to develop a manual. Fred Fisher - In regard to the Administration and Trust Authority's intent in the FY00 budget, the statement was taken from their write-up. The proposal is to provide $30,000 from Mental Trust dollars as an interim measure then the request will go back to general fund mental health dollars in the FY00 budget. Representative Therriault - What we heard then is rather than come to us at this time and say let's get half a loaf with an alternative proposal in addition there is a plan in the administration to go ahead and resubmit the original request that was turned down. That is a little different than the way I viewed it originally but if this $30,000 is funded for this temporary position will there be an ongoing request to continue that effort? Nelson Page - The statement that is here about the increment is not entirely correct. I think it is indication that the Commission on Aging will come through the Trust Authority and request that the Trust Authority pass onto the Legislature in its budget recommendations such a request. The Trust Authority has made no determination whether they would agree with the request we expect to receive from the Commission. Representative Therriault - If they've come up with a Plan B which is somewhat different than the one turned down ... Representative Martin - That's the whole idea. They can be creative. I think the whole Legislature should review this; there is no crisis right now. I object to the original motion. Representative James MOVED TO AMEND the motion to delete $30,000 for the volunteer Long Term Care Ombudsman position from the RPL#02-9-0002 - Administration - Div of Senior Services; Protection, Comm Svs & Admin - $145,000 - MHTAA Receipts. Representative Croft objected to the amendment. Representative James - I certainly agree to the need for more attention to these folks. My concern is if you whatever is left of the year you do this volunteer coordinator position and then that person wants to keep on working and that has the problem we have with the whole legislative process. This seems like it is intended to subvert it. For this reason alone, this is why I'm not willing to go forward with it. Nelson Page - We appreciate your comments; we have tried to respect the legislative direction we were giving during the session as to where it was appropriate for funds to go. I think it is worthwhile to go back to fundamental principles and point out that the request is not state general funds be expended but that merely that the state be permitted to accept the receipt of mental health Trust Funds for this year. It is possible the Commission on Aging's request will come through; that we will seek additional funding from the general fund next year to fund this program or a similar one but we have not obligated the state to that nor has the Trust obligated itself to continue paying this after one year. Representative Croft - I would love to keep the $30,000 in there but it does seem to me appropriately put in; everybody seems to agree that the long term ombudsman's office does good work. I'd rather see half a loaf here than a whole. I don't think it makes sense to say if we give them a half a loaf and they do a good job that they may expect a whole next year and that's a reason not to do it. I wished we'd given them a whole; I think we should give them a half. Representative Bunde - Speaking to the motion to the amendment, I'm going to vote "no"; not that I think the idea is valid. One appropriation technique is to slip a little something in with other sweetening and I don't like the three issues. I think they should have stood alone. I will be voting "no". Chairman Phillips voiced a conflict of interest based on recent contact with the long term care ombudsman but was not asking to refrain from voting. Chairman Phillips hearing an objection to the amended motion called for a roll call vote. Yea Representative Martin, Representative James, Representative Therriault Nay Senator Adams, Senator Phillips, Representative Bunde, Representative Croft Chairman Phillips - Amended motion DEFEATED by a 3-4 vote. (Senator Donley was not present for the vote) Senator Adams - My question is basically you need to help me understand that this is both in Federal and state Statutes regarding long term ombudsman program and it is one that is needed to continue this particular program. It is only one year and we are talking about Mental Health Trust funds, not Federal funds. Is that correct? What happens if we don't approve this? Is there any implications in long term funding in any of their programs? Jane Demmert - No. What will happen is there will not be any ability to expand and create a volunteer cadre of long term care ombudsmen who would go outside Anchorage. Chairman Phillips hearing an objection to the motion called for a roll call vote. Yea Senator Phillips, Senator Adams, Representative Croft, Representative James, Representative Therriault Nay Representative Martin, Representative Bunde Chairman Phillips - Motion DEFEATED by a 5-2 vote, six votes needed for passage. (Senator Donley was not present for the vote) Representative Martin MOVED to approve RPL#02-9-0005 - Administration - Div of Senior Services; Home & Community Base Care - $167,500 - MHTAA Receipts. Chairman Phillips - Referring to the written backup, the question was raised as to why the request approved for expenditure in FY98 was not spent. Fred Fisher - My understanding was that for reasons unknown to me the project was not completed. Nelson Page - The idea behind the ADRD Project was to get information out to areas not served by assistance living facilities or by the Pioneers Homes as to how people in communities not served by these facilities can deal with their ADRD population. We started out with the idea that we were going to put this information on a CD-ROM that could be sent out to villages and village health aides. Frankly as it progressed through the concept stage we decided that was not a very effective or efficient way to do it. And the request was that we be permitted to extend the balance of the receipts in this fiscal year so we could complete the project in a slightly different direction. Representative James - If it was determined that the CD-Rom was not a good way to do this, how are we going to do it? Jane Demmert - There are lecturers who will travel and provide these presentations in regional and subregional settings in the state. Representative Bunde - On the mini-grants to consumers, there is $412,500 to consumers who receive state assistance and then this $137,500. Is that additional money to seniors who are already receiving money out of the $412,500. Jane Demmert - This is separate. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Senator Donley was not present for the vote) Representative Martin MOVED to approve RPL#06-9-0005 - Health & Social Services - Mental Health Trust Authority Projects - $1,436,500 - MHTAA Receipts. (End, Tape: LBA-981408 Tape 2 Side 1) Representative Martin - Is there any philosophy in saving what you have or do you spend your earnings every year? Nelson Page - It is a very good question. We have tried to balance the need to make sure our resources continue into the future with our obligation to our present beneficiaries. In other words we look at our present beneficiaries as part of the group we have a responsibility to and our future beneficiaries as another group. We have set a formula and under that formula we determine that we will be spending a certain amount of money in this particular fiscal year and that is what we recommended to the Legislature. That formula was designed to do exactly that to make sure we spent an appropriate amount this year without selling the farm. It is our general decision that our beneficiaries have a lot of unmet needs and to the extent that we are not able to specifically identify and fund programs we will do things like the mini-grants which get services directly to our beneficiaries in a particular fiscal year but don't necessarily create a lot of additional burden or new layer of bureaucracy, doesn't create new hirers but gets things directly to our beneficiaries. So the reason we are providing this recommendation for additional spending or funding or funding of this year's fiscal year funding this is the amount we determined is appropriate for us to spend on our beneficiaries. We thought we should do it; we do think our recommendations are well thought out and are appropriate uses of funds. Representative Martin - Did you anticipate this during the regular legislative session, how you would be using these moneys. Were they brought before the Finance Committees or regular standing committees? Janet Clarke - None of these requests were in front of the Finance Committees except for the capital request which at that time had matched funds. There was a request for the healthy families program and the healthy family control group study come out of that particular request. Representative Bunde - Studies I've read particular with Head Start say they work real fine until the special attention stops then the kids go right back to whatever level they were before the study started so I'm heartened to see you plan to continue this study. Representative James - Regarding that part of the Smart Start Initiative, I find it a little difficult trying to compare that with mental health even though mental health is a broad spectrum. To be able to concentrate this amount of money on what I call regular people when there are lots of people who suffer with mental health deficiencies even better. It seems your money might be more attuned to that. I have a little problem with why you are doing this. Nelson Page - It's part of our on-going defining of boundaries; where they start and stop. The Mental Health Trust has several different categories of beneficiaries, i.e., chronic alcoholics, Alzheimer's, traditional mental illness, developmental disabilities. Developmental disabilities is probably the program where we justify funding programs like healthy families. The other issue for us is it permissible to fund prevention programs as well as treatment programs. We decision we have made is "yes". Healthy families which we have supported in the past is one of those programs we have looked at as one that prevents children from becoming long-term beneficiaries throughout their lives. This particular increment is directly the result of legislators coming to us and saying how do you know this is going to work. We thought we had some good answers but we also heard some very good questions and this was designed as a study to get answers to those questions. Chairman Phillips - Who is making the request for the increase, Mental Health or HESS? Janet Clarke - The information Legislative Finance received was from our Department. Nelson Page - We support their request. Everything here - all the RPL's are ones we support. These have all been done in coordination with the Department so Trust supports and will provide the funds for these programs if approved. Chairman Phillips -What is the managed care study? Janet Clarke - The Mental Health Board contracted for a managed care study. This is actually a follow up to the previous report looking more focused at consumer outcome, family involvement, more detailed that the original study provided. Representative Martin - Do you anticipate this to be presented with the Governor's FY00 budget? Janet Clarke - Most of these are one time studies, pilot programs, or initiatives we have not undertaken before so I would think that most of these are one time to solve a problem. If they work out and show good outcome we may want to propose them to the Trust Authority and the legislature but at this point it is not our intention, other than the capital money. Mary Ellen Rider - I could go through project by project and tell you what we have gotten requests from the four boards that give us advice as to how to spend Trust money. The Trustees won't make those decisions until December 10 or 11 and then we will forward those onto to the legislature on December 15 as per Statute. Nelson Page - These are all intended to stand alone as projects worthy of funding on a one year basis. We are not saying or suggest they won't be funded by the Mental Health Trust general fund in future years but we are going to expect them to prove themselves to the Trust and the Legislature before that happens. These RPL's are for the fiscal year so the funding authorization would end at the end of the fiscal year. Representative James - I am concerned about the healthy families control group study. As a legislature and since this goes through the board of the Mental Health Trust, it seems they should know best how those funds should be spent and I shouldn't be second guessing them however have information that indicates there are a lot of mental health people who need a lot of help and I question the ability in this short length of time to meet those conditions that this study is suppose to do. I think that has to be done over ten or twelve years, especially when you're talking about children. It is not something you can do in a quick amount of time. I will vote for this but I wanted on the record I had serious concerns. I am very supportive of prevention but it seems we shouldn't use the Mental Health Trust funds as backup for things that have been already gone through the process. Representative Therriault - On the $50,000 for the private corporations and the grant writing request, are we training people to ask us for money? Mary Elizabeth Rider - The Trustees already obligated $50,000 for this project which went through the legislative process this fiscal year. The Governor's Counsel on Disabilities and Special Education will be hiring contractors, they'll be putting out an RP for contractors, to go forward and teach providers who sometimes write grants well or who are great providers but don't write grants well to bring other funding sources into the state of Alaska to reduce the pressure on the general fund and the Trust. It is to increase funding sources coming into this state. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative Martin was not present for the vote) Senator Adams MOVED to approve RPL#06-9-0006 - Health & Social Services - Administrative Services, Administrative Support Serv - $170,300 - Federal Receipts. Chairman Phillips - Are you complaining about the charge backs from the Department of Administration? Janet Clarke - No, we are not complaining; they do come as a surprise. We are very fortunate that we can received Federal funds when we get additional charges. It would be better if we could plan for that in our budget we develop so the Legislature is aware. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative James was not present for the vote) Representative Martin MOVED to approve RPL#06-9-0013 - Health & Social Services - Family & Youth Svcs Management - $270,100 - Federal Receipts. Representative Therriault - These funds will be considered in the Governor's FY00 budget request as Federal funds or? Janet Clarke - These will be Federal funds. No general fund money is involved. As part of our overall review of DFYS we discovered we have not been claiming Federal funds which are actually owed to us and we have a contractor on board who finished his work in May and June. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative James was not present for the vote) Representative Therriault - These are four new positions federally funded. Next budget year can four general fund positions be backed out. Janet Clarke - That certainly is always a legislative prerogative. We have discovered some issues about the DFYS management and we believe these positions will help. Each will focus on a different area; i.e., foster care, adoption, community liaison or constituent programs (a new position). This management change will actually help DFYS. Representative Martin MOVED to approve RPL#06-9-0017 - Health & Social Services - Purchased Svcs, Delinquency Prevention - $1,965,800 - Federal Receipts. Representative Martin - What new prevention programs are we paying for? Janet Clarke - This is a juvenile accountability incentive block grant for $1.6 million and $360,000 for an underage drinking program. These are Federal funds we've not seen in the state of Alaska that Congress authorized where they will require we use the funds for certain categories of activities. An advisory committee will advise the Department on how to use the funds, i.e., restitution programs, health core expansion. We have to comply with some of the Federal requirements to make sure we move kids more quickly through the system and more early accountability. George Buhite - Youth Corrections Administrator, DFYS - The short answer is we don't have the answer to that question. The requirement of the grant is that we have a committee that includes public and government members to look at the categories in which we can spend money and the committee has met twice and will meet again August 24 to finalize plans. One of the areas we are targeting is the Court System, and Youth Corrections in our rural areas there are a number of unmet needs in that area. We are also looking at targeting some funds to a new separate database system for Youth Corrections that would make data available to the Feds to make it more consistent with recommendations in HB6 and the opening of the records. There are a number of categories and how we are going to spend it exactly has not been determined. Representative Martin - Will you have a guideline for these people who suddenly come up with programs to solve juvenile problems? George Buhite - We have not developed all that criteria. We would certainly look at agencies that have a track record that we believe demonstrates they can do some things. Although some of the areas are underserved and we have to look at new people coming to the table. We aren't buying into the idea of any new idea; we'll look at very solid programs that provide resource to the communities. We are real interested in supporting some of the initiatives already started in the Youth Courts and the Elder Courts. We are looking at trying to put into areas where historically there hasn't been and to really hold juveniles accountable. Senator Donley - Paragraph 2 says the Department will use existing general fund match to secure the Federal funds but in next paragraph it seems to imply what you are calling general fund match dollars in the existing budget are really the capital dollars we put in for the youth facilities. I don't have any interest in diverting those dollars to be the match for this Federal money. Janet Clarke - Since the advisory committee had not come up with the final plan as to how the funds will be used, one of the categories that funds can be used is for facilities so for example some of the funds you have already authorized may be available to be used as match for some other capital project. That is one category these funds could be used for. They could be counted as match. One of the categories, the Law Enforcement Center has not completed its work, you can use 35% of this $1.6 million for facilities or management information systems not ongoing operations or grants. So one of the possibilities is that funds you've already authorized could count as match for some of these dollars if the committee believes there is a capital project that is worthy. George Buhite - The money in that category up to 35% can be spent in areas 1, 2 and 10. At this point, we're not looking to spend any on facilities; the other part of that category can be spent on the database which we consider crucial. We'll look at spending some of that money if we got some and that hasn't been determined to reopen Nome. We have funding for Nome, partial funding for staff but there are some capital pieces there which could come out of this category. It is not our attention to re- divert money from any of our existing capital allocations. Senator Donley - I want a guarantee you are not going to use that before I vote. Janet Clarke - Those capital projects are all individual appropriations; we have to spend the money on those projects and we will. Senator Donley - That is what I wanted to hear. My next concern is the national guidelines that are the basis of this grant specifically requires that state's consider these items. My understanding I you have consistently opposed item 1 "prosecution of juveniles as adults if 15 years old at the time of commission of serious violent offense". You objected to my legislation to do that and I don't understand how you reconcile using these funds without complying with this guideline. Item 2 - "graduated sanctions" - I don't understand how you propose to facilitate that guideline either. How you intend to spend this money and conform to these guidelines. George Buhite - The first cycle of this funding only says that we need to give consideration; it does not require that we do. So on the issue of the 15 year old, that has been a departmental stance and perhaps that stance has softened a bit. Whether we have to come up with legislation to get subsequent money will be the decision made by the Commissioner. I think the graduated sanctions are something we are looking at. I believe in a whole range of sanctions. I believe we have a lot of sanction at the end of the system. We do not have all the sanctions along the way and we are looking at them. We don't really have a developed plan for this yet. The possibility of this money came relatively late and we had to meet first to see whether we would seek an exemption for the passthrough so it has been an ongoing process and I don't anticipate we will have all the answers to these questions but if you have specific concerns about it we will address them in our advisory committee. Senator Donley - The presentation on how they intend to use the funds is inconsequent with the guidelines provided for the grant. I'd like to see a plan produced before we approve this which somehow does what the grant is required to do which is actively prosecuting juveniles as adults if 15 years old and moving toward development a graduated system. I think they are important goals that the Federal Government is giving us here and it doesn't sound from this presentation that this is how they intend to use the money. Representative Bunde - I needed a definition of actively considered. Does it involve proposed legislation? I think we are partially there on item 1 and 2 of the guidelines but item 3 and 4 have not been actively considered by the Legislature. Is that an active portrayal of what actively considered is; we thought about it and said "no" or does it require something more substantial than that. Two, on the underage drinking, I'm pleased to see you include enforcement activities because if it was another advertising campaign I'd have to be a "no" vote. What is actively considered? Is it briefly to think about or propose legislation? George Buhite - I frankly don't know. It is something between those. The Federal guidelines as I understand do not require legislation for the first go around; they may on the second, if there is a second grant cycle. It can certainly be within what we consider. Representative James - Going back to the capital issue, I want to make it clear that when we authorize capital projects there is an ongoing maintenance expense that no matter where the money comes from for capital project it should certainly be part of the legislative deliberation. The other one is the item 4 of the guideline - "develop parental accountability laws" -I know Representative Therriault had legislation several years ago which expanded the $2,000 charge to $10,000 but I'm not willing to do anything more to make parents accountable until parents can have the freedom to take care of their children at a young age to make sure they don't become delinquent when they are older. The perception these days is they parents cannot discipline their children. We have to change that mentality. I'm not saying I'm not going to support it but these are my concerns. Representative Martin WITHDREW the motion to approve RPL#06-9- 0017 and requested the Department look at its original request and re-adjust your program to respond to the concerns of the Committee. Senator Donley - I don't have any objection to the Underage Drinking Grant; it seems to be separate from the Juvenile Accountability Incentive Block Grant. I'd suggest we move ahead with that portion if possible and then to ask them to come back. Is this a separate grant which can be approved separately? George Buhite - Yes Senator Donley MOVED to approve RPL#06-9-0017 to include only the Underage Drinking Grant - $360,000 - and to delay the Juvenile Accountability Incentive Block Grant portion of the RPL and to request the Department come back with a proposal as consistent with the JAIBG guidelines. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Janet Clarke - I know the advisory committee is meeting later this month and perhaps we can spend some time with individual members who have concerns. Representative Martin MOVED to approve RPL#06-9-0018 - Health & Social Services - State Health Svcs, Epidemiology - $330,000 - Federal Receipts. Chairman Phillips - Is the statement in the backup that future funding will be included in the Governor's FY00 budget request general fund dollars? Janet Clarke - This is a three year grant - Federal funds. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Senator Donley was not present for the vote) Representative Martin MOVED to approve RPL#06-9-0020 - Health & Social Services - Public Assistance Administration, Child Care Benefits - $141,100 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#06-9-0021 - Health & Social Services - Alcohol & Drug Abuse Svcs, ADA Grants & ADA Admin - $3,000,000 - Federal Receipts. Representative Therriault - The remaining $350,000 will remain to establish two new positions to monitor the community grants. Doesn't it seem rather excessive? Janet Clarke - The positions we are going to establish are 1-1/2 and do not cost $350,000. We are required through this grant to spend 85% on community grant, 15% on administration and evaluation so our intention is to establish 1-1/2 positions to monitor this grant and the $350,000 is the calculation of what 15% is. The $350,000 includes the valuation component. The request in the Governor's budget is still Federal funds, not state funds. Representative Therriault - The $350,000 include the evaluation part but $150,000 reimbursable services agreement will secure the University of Alaska's services to evaluate projects. That seems like a separate evaluation? Janet Clarke - I think the verbiage is confusing. What I said is 85% will go into community grant and 15% will go for administration and evaluation and of that you are talking about a $150,000 RSA for the University. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#06-9-0074 - Health & Social Services - Administration & Institutions, API - $100,000 - Statutory Designated Program Receipts. Representative Martin - My questions apply to all of the RPL's where the designated fund source is statutory designated program receipts. What is the ceiling? We need to save some receipts for next year. Are these one time program receipts? Janet Clarke - This $100,000 from the Eli Lilly Pharmaceutical Company who has contracted with us to do a study on an FDA approved medication for schizophrenia. These are program receipts from Eli Lilly. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#10-9-4001 - Natural Resources - Land Development - $150,000 - Statutory Designated Program Receipts. Representative Martin - Where do the program receipts come from? Was this anticipated? Rick Thompson - Division of Land, DNR - The source of the revenue is from fees and revenues from leases and permits and other authorizations covered under this. Nico Bus - Budget Officer, DNR - The RPL in front of you was specifically identified in the budget, the legislative intent was that it come to the Committee. The program receipts are from customers who want to expedite their services and if we do not do the service then they don't pay. Representative Therriault - So this is payment above and behind statutory or regulatory requirements? Nico Bus - Yes Representative James - These are the kinds of program receipts I object to. If the state is in the business of doing these things we ought to provide the service and we ought not to charge extra to get the service because they are willing to pay. What that does is select out who can get the service and who can't. I object to that philosophy. I do intend to support the RPL. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin MOVED to approve RPL#10-9-4005 - Natural Resources - Parks & Recreation Management, Parks Management - $20,000 - Statutory Designated Program Receipts. Representative Martin - Is this an unusual, unexpected program receipt? Nico Bus - The receipts are from Princess Tours through an agreement with the Department and the National Park Service to provide interpretive programs at the Mt. McKinley Princess Lodge. The fees are coming from Princess Tours. Chairman Phillips questioned the language that no new positions will be established however an existing underfunded position will be filled? Are we committing ourselves in the future to fund this position with general fund dollars, a full time position? Nico Bus - What we would do is if we had a four month seasonal position we would extend that person by a couple of months so whatever amount of funding this buys us. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (End, Tape: LBA-981408 Tape 2 Side 2) Representative Martin MOVED to approve RPL#10-9-4014 - Natural Resources - Parks & Recreation Mgmt, Parks Mgmt, Symms Rec Trails Program - $300,000 - Federal Receipts. Jim Price - Parks & Recreation Division - DNR. Chairman Phillips - How does this program work with the local governments? Jim Price - We advertise for trail maintenance grant applications and local governments apply. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Representative Martin - the next four RPL's are for the Pipeline Office. Where are these program receipts coming from? Nico Bus - For the next four RPL's, these all come from pipeline companies. This specific one is coming from Philips Petroleum. Each one of these is a contract between the oil company and the Department of Natural Resources to coordinate their permits. We then contract with various state agencies and this is basically the role for the pipeline office. They already have $2.7 million in that budget to use for other companies and so these are new pipelines that want to come on-line and these are the amount of moneys they estimate it to take. Chairman Phillips questioned that three of the four RPL's gave reasons they did not submit their applications early enough; on RPL#10-9-4016, the North Slope Borough verbally indicated its intent. I want to know what the difference is and why that one appeared with the other three. Greg Swank - Deputy State Pipeline Coordinator. The North Slope Borough has not yet submitted their application. They anticipate submitting their application sometime the 20th of this month. It could be delayed another week. In response to Chairman Phillips questions about bringing this RPL up at the next meeting, Mr. Swank answered that the North Slope Borough is very interested in getting their pipeline looked at so they can implement construction during the same timeframe the Alpine Project is constructed. No, we have not agreed in the past to a verbal intent. We could very well be setting up a precedent in answer to Chairman Phillips questions. Representative James - Here is another perfect example people wanting to have a service provided and being willing to pay. There is also the perception that the people being hired with this money to do work are obligated to people paying the bill and I don't like this kind of funding. Representative Martin MOVED to approve RPL#10-9-4015 - Natural Resources - Oil & Gas Development, Pipeline Coordinator - $213,550 - Statutory Designated Program Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Senator Donley was not present for the vote) Representative Martin MOVED to approve RPL#10-9-4016 - Natural Resources - Oil & Gas Development, Pipeline Coordinator - $136,220 - Statutory Designated Program Receipts. Chairman Phillips objected to the motion. Since they anticipate meeting by the 20th this gives them time to re-submit this RPL. Greg Swank - Yes. Chairman Phillips - I just don't want to establish precedents like this, one verbal with another following the rules of the game. I don't object to what they are doing in their request. Senator Adams - Will it slow down any construction because of the construction by Alpine? What we are doing is taking a leg out of the three the one that goes into Nuiquisit to put in natural gas. Will it slow down construction of the Department holding until the next Committee meeting? Greg Swank - We do have some funds within the designated program receipt area that we could charge against to do work in the interim time between the actually approved for the North Slope Borough Nuiquisit construction. If we did it that way which is the way I would have to do it to keep on track with the Houston Contractors for the next construction season and the Alpine Construction then it would not impact. Representative James - On these four projects, how many new people are you hiring? Greg Swank - In the RPL we have no new positions identified in these. Representative James - We have program receipts that we are using to supplement our current budget for the people already on. So we're using these program receipts to fund the people we already have? Where does the general fund go for them? Greg Swank - The Statute requires reimbursement for pipeline work so it's not. Nico Bus - The whole Pipeline Coordinator's office budget is funded through the statutory designated receipts or Federal funds or RA receipts and so this is just following the pattern. This is not preempting anything to do with general fund. A lot of these expenditures are contracted out to different entities and the Pipeline Office is busy coordinating the permit review. Representative Martin WITHDREW the motion to approve RPL#10-9- 4016 and to hold it for consideration at the next meeting of the Legislative Budget and Audit Committee. Senator Adams - In the meantime, I don't want to delay this particular project. They go ahead and pay for it and get reimbursement. Just so long as it is clear. Chairman Phillips hearing no objection to withdrawing Representative Martin's motion and to hold this RPL for consideration at the next meeting, the end of September or first week of October. Representative Therriault - Just some comment on the designated program receipts. One of the things I am trying to keep track of is that this willingness to come forward and pay for special handling is truly voluntary. I don't want to get to the point that anybody feels like they are getting the shake down from the state agency to come up with money or else their permit will be stalled. If we get close to that type of situation, hopefully the companies will let legislators know there is a problem. There could be a benefit to the overall public but the legislature needs to keep an eye on it or we have to pull up more general fund to pour into the system to make the entire system work faster or we have to increase the actual permit fee or regulatory fee that is charged to everybody. Those are the different tradeoffs we have to consider. Representative Martin MOVED to approve RPL#10-9-4017 - Natural Resources - Oil & Gas Development, Pipeline Coordinator - $92,815 - Statutory Designated Program Receipts and RPL#10-9-4018 - Natural Resources - Oil & Gas Development, Pipeline Coordinator - $136,220 - Statutory Designated Program Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Senator Donley was not present for the vote) Representative Martin MOVED to approve RPL#10-9-4022 - Natural Resources - Trustee Council Projects - $450,000 - Exxon Valdez Oil Spill. Tracy Cramer - Exxon Valdez Trustee Counsel - The Counsel requested the expenditure of $450,00 from the Settlement to purchase approximately 76 acres of riverprime acreage along the Kenai River. Representative Bunde - Although I've seen the value of bank restoration and understand the value of that I also think that there are property owners in the state who look at this settlement as a retirement fund. How much are we paying for acre? How much is it appraised per acre? Tracy Cramer - The appraisal was between $400 and 600,000. The landowners accepted the $450,000. Representative Bunde - I need more details before I can vote on this. Representative Martin - I feel the same way. There are legislators who absolutely oppose buyer any more land from the settlement. I would delay this one until we get more information. Representative Croft - It is about $6,000 an acre which I think is reasonable. Senator Adams - I thought we dealt with this last year. We dealt with the landowner and couldn't resolve the cost of this and now we are bringing it back. Tracy Cramer - We did not request authority in the capital budget. We were still negotiate with the landowner at that time. We did get approval from the legislature on three other parcels. Representative Martin WITHDREW the motion to approve RPL#10-9- 4022 and to delay consideration on the RPL. Senator Adams objected. Chairman Phillips hearing objection to withdrawing the motion called for a roll call vote. Yea Senator Phillips, Representative Martin, Representative Bunde, Representative James, Representative Therriault Nay Senator Adams, Representative Croft Chairman Phillips - The motion FAILED by a vote of 5-2. Six votes are needed for passage. (Senator Donley was not present for the vote) Senator Adams - The reason I objected is we have the money; it's gone through the Counsel, a public process. Spend the money. Chairman Phillips hearing objection called for a vote on the original motion to approve RPL#10-9-4022 - Natural Resources - Trustee Council Projects - $450,000 - Exxon Valdez Oil Spill Settlement Funds. Yea Senator Adams, Representative Croft, Senator Phillips Nay Representative Martin, Representative Bunde, Representative James, Representative Therriault Senator Phillips changed his vote from "yes" to "no". Chairman Phillips - The motion FAILED by a vote of 2-5. (Senator Donley was not present for the vote) Representative Martin MOVED to approve the RPL#11-9-0035 - Fish & Game - Divs of Admin & Habitat & Restoration, Special Projects - $173,800 - Statutory Designated Program Receipts. Representative Martin raised several questions. Kevin Brooks - The projects and amounts needed include: Cordova Electric Cooperative - $82,000; BP - $14,000; Teck Corporation - $65,400; Usibelli Coal - $12,400. They include lighting projects up in the interior for our Habitat Division. We have commitment in hand from three of the four, waiting for the Cordova Electric Cooperative. These are private and other receipts for Federal receipts that we talked about during the process but didn't have an agreements at the time so the alternative was to come to the Committee when we had an agreement. We are trying to live within the guidelines. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative James and Senator Donley were not present for the vote) Representative Martin MOVED to approve the RPL#11-9-0034 - Fish & Game - Divs of Admin & Habitat & Restoration; Habitat, Habitat Permitting & Special Projects - $566,100 - Federal Receipts. Fred Fisher - A misstatement was made in the written backup. The statement that $35,600 for EPA for a grant to the Mat-Su Borough for a fish habitat restoration program was incorrect; the $35,600 is a grant to the Department of Fish & Game for fish habitat restoration program which will take place in the Mat-Su Borough. I wanted to point out that the Mat-Su Borough was not going to be the recipient. Representative Bunde - In the statement, there is a comment they are going to evaluate stream crossing structures, are those bridges. Fred Fisher - Stream crossing structures are bridges. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative James and Senator Donley were not present for the vote) Representative Martin MOVED to approve the RPL#12-9-0008 - AK State Troopers, Special Projects - $70,000 - Federal Receipts. Chairman Phillips - After we approve this, would you personally call the Anchorage Daily News and tell them that we funded these positions; talk to the Editor. Ken Bischoff - Administrative Services, Department of Public Safety - I will be happy to do it. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative James and Senator Donley were not present for the vote) Representative Martin MOVED to approve the RPL#12-9-0011 - Public Safety - AK State Troopers, Special Projects - $194,700 - Federal Receipts. Chairman Phillips requested again that upon approval of this RPL, the Department advise the Anchorage Daily News. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative James and Senator Donley were not present for the vote) Representative Martin MOVED to approve the RPL#12-9-0049 - Public Safety - Council on Domestic Violence & Sexual Assault - $562,800 - Federal Receipts. Chairman Phillips questioned whether there was any commitment for general fund dollars. Fred Fisher - No. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. (Representative James and Senator Donley were not present for the vote) Representative Martin MOVED to approve RPL#21-9-0007 - Community & Reg Affrs - Local Government Assistance Training & Development - $100,000 - Federal Receipts. Chairman Phillips requested clarification of Mr. Fisher on his written recommendation in the backup documentation. Fred Fisher - Our recommendation is this request be deferred into the supplemental appropriation process during the regular session. Senator Adams - Is there anyone available for the Department concerning the RUBA Program? Mike Black - RUBA Program Supervisor, Community & Regional Affairs - At this point, we have contractual funds from an EPA grant to the Department, part of which is contractual funds. At this moment we have a solicitation on the street for a professional services contract. If it is delayed then we will have to terminate that solicitation. The reason we found ourselves in this situation is because our program started late and we ran past the deadline of June 30 with the grant and we are asking the EPA to extend our grant to September 30. Representative Martin - Here you are budgeting by obligation; you didn't have the money but you went forward. Mike Black - This was in our original budget for the previous fiscal year. Unfortunately because of delays in getting our staffing up which you approved we were unable to get this under contract before June 30 and that is where our problem is. Representative Martin - Based on principle, we should delay this. Chairman Phillips - If this is delayed for 30 days is that going to be a major harm to what you are trying to do. Mike Black - What it will do is not allow us to go ahead with the solicitation process and award contract. Senator Adams - Will the money be lost? Mike Black - As of September 30, it will be taken back by EPA. What we would then have to do is ask for an extension to the money. The biggest problem I see is the termination of the solicitation we are currently under where we having proposals coming in. Representative Therriault - Why is it an automatic that the money is lost? Why will option 2 work that you use this year's authorization to complete capturing those Federal funds and just come forward with a supplemental request. Mike Black - If we could ask for a supplemental for our current EPA contract, this current year's? I am not enough of a budget analyst to know. I know we were under contract to have this project basically solicited and under contract in the previous fiscal year with EPA; we had that obligation to them. We were unable to do that; we asked for an extension of 90 days and they granted that. Whether they grant any further extensions I don't know. Fred Fisher - Our understanding based on conversations with other folks in the DCRA was that the Department currently has a $1 million worth of budgeted authority for this program in FY99. There is no Statute or regulation that says they cannot apply this to a specific grant or portion of a grant. Our recommendation is based on the notion that they carry forward funding that is available because they didn't spend it all in FY98; that it could be applied against the $1 million in budgeted authority leaving $900,000 to carry the RUBA program through the remainder of the year to such time as the session occurs. It was the understanding of my staff that was a viable option according to the DCRA staff in Juneau. Mike Black - I am not in a position to tell you if that is a viable option. Fred Fisher - I do not think this is a big issue. It is at the discretion of the Committee. We presented options but we are not strident about it. Representative Martin - We've relied on the recommendations of Legislative Finance in the past, and I'd like to back them up with their recommendation so I would like to withdraw the motion to approve RPL#21-9-0007. Senator Adams - Which one was that? Representative Martin - That motion was to approve the RPL with the recommendation of the Legislative Fiscal Analyst that it come up in the supplemental process. It is for the principle of it; not the amount of money. We should not get involved in allowing agencies to spend money on obligation. Representative Martin - There is no motion; I'll WITHDRAW my motion on the table. Senator Adams objected. Representative Therriault - What was the original motion to accept option 1 or 2? Representative Martin clarified his motion was to accept the Legislative Fiscal Analyst recommendation of option 2. Senator Adams - That was not his original motion. Chairman Phillips hearing objection to withdraw the motion called for a roll call vote. Yea Senator Phillips, Representative Martin, Representative Bunde, Representative Therriault Nay Senator Adams, Senator Donley, Representative Croft, Representative James Senator Donley changed his vote for "no" to "yes". Chairman Phillips - The motion to withdraw the motion FAILED by a 5-3 vote; six votes needed for passage. Representative Bunde MOVED to approve RPL#21-9-0007 - Community & Reg Affrs - Local Government Assistance Training & Development. Chairman Phillips hearing objection to the motion called for a roll call vote. Yea Senator Phillips, Senator Adams, Representative Bunde, Representative Croft, Nay Senator Donley, Representative Martin, Representative James, Representative Therriault. Chairman Phillips - The motion FAILED by a 4-4 vote. Representative Martin MOVED to approve RPL#25-9-1000 - Transportation & Public Fac - Measurement Standards & Comm. Vehicle Enforcement - $30,000 - Federal Receipts. Chairman Phillips moved the motion. Hearing no objection, the motion was APPROVED. Senator Adams asked Senator Donley if there was any reconsideration on RPL#02-9-0002 from Mental Health Trust Authority receipts? If there are no reconsiderations, I will not make a rescinding motion. SELECTION OF LEGISLATIVE FINANCE DIRECTOR Chairman Phillips - The next Agenda item is selection of the Legislative Finance Director; you all should have gotten David Teal's resume. I sent a letter to Mr. Teal at the request of the subcommittee on the selection. We put some conditions on the appointment in the letter Representative Bunde MOVED to approve the report of the subcommittee in appointing David Teal as Legislative Financial Officer with the conditions so stated in the letter of August 5, 1998, to Mr. Teal. Representative Martin - I recommend Mr. Teal; I know he has done a good job in other departments. I want to make sure that he understands that the Finance Director is responsible to all Legislatures and should be open with all legislators when they are asked for details on the budget no matter who puts it in and no matter who might object to providing that information. Pat Davidson - There is something in Statute regarding the Legislative Fiscal Analyst; it says the Legislative Budget and Audit Committee should hire and determine the salary of the Legislative Fiscal Analyst. He should serve at both the direction and the pleasure of the Committee. Chairman Phillips hearing no objection. The motion was APPROVED. AUDIT REQUESTS Representative Bunde MOVED to approve the two audit requests (Senator Donley's audit request on the WAMI Program and Senator Adams and Representative Croft's audit request on Legislative Counsel's legal contract) before the Committee. Representative James and Representative Therriault objected. Pat Davidson - Senator Donley requested some information about transportation funding allocations over the past five years by election district. I talked with Legislative Finance and they've agreed to do the research on the request. The second one came up in regard to the Division of Elections by Senator Ward. I have contacted Senator Ward and asked the Division of Elections to take a look regarding those issues and get back to Senator Ward informally. The other two I couldn't quickly respond to are here in your packet as audit requests. The first was from Senator Donley on the WAMI program. Our ability to answer his question is really going to be limited because we are paying a rate established by the University of Washington and I do not have the authority to audit the University of Washington. So my information will be somewhat limited. The second request came in from Senator Adams and Representative Croft and that was to review the Legislative Counsel's legal contract. Representative Martin - The one I am concerned about is the last one. I think the information is such a nature that we need to go into an Executive Session. Chairman Phillips - Let's deal with the first request of Senator Donley. Representative Bunde WITHDREW his motion to approve the two audit requests before the Committee. Representative Bunde MOVED to approve Senator Donley's audit request on the WAMI program. Chairman Phillips hearing no objection, the motion was APPROVED. Senator Adams MOVED to approve the audit request to review the Legislative Counsel's legal contract. Representative Martin MOVED to go into Executive Session. Senator Adams objected. Representative Martin - Confidential information in the earlier notes leads me to make this motion. It is a very volatile situation here and I think it should be talked about in Executive Session. It is public money but at times we have information for various purposes which need not be public. Senator Adams - My motion is basically that we just vote up or down on the motion. I hate to see you leave the Legislature by denying legislators that requested this. This is state funded; this was Venetie litigation that we are talking about and we had the understanding that once that litigation was run the money would go back to the coffers, but no the Counsel took that money and used it. Basically, if you go and look for it, you talk about no paper trail; it has been terrible. For the $175,000 you have gotten nothing for it. We lost the lawsuit. We should look at that. You should know that the statute of limitations on some of those concerns that were filed were not there. The $175,000 belongs to a lot of people in the state; it does not belong to Legislative Counsel. It belongs to all the legislators and we should be able to look at it. What we are doing is flushing it down the toilet, Representative Martin. When we flush things down the toilet, even toilet paper, it has a purpose, but not this money. One of the things that happened, they voted on December 29, 1997, to approve a contract illegally because one of the things they did then was to go on April 3, 1998, to change the procurement procedures. That is not the right way to spend some money. If you are going to do that then besides changing the procurement procedures after the fact then you have written justification. Is there one? There isn't one. I would just like to see the money accounted for. Are we trying to hide something? Representative Bunde - The motion before us is should we approve the audit or not. It is not go into the arguments justifying the court suit, or at least, not for me. I will support the request for an audit because in my tenure on the Committee we have never turned an audit down and I don't intend to turn this one down. (End, Tape: LB&A981408, Tape 3 Side 1) The issue I would like to focus on right now is should we have an audit or should we not have an audit, not the reason behind the audit. Senator Adams - All I want is full accountability. I just want to see how they spend the money. Representative Croft - There may be times to go into Executive Session to discuss particular litigating strategy with the attorney sitting here and what we want to do. This has nothing to do with the merits or lack of merits of this case, it has to do with how public money was spent and that should be public. I'd asked for those records; how was the money spent and this contract to my legal eye not an accounting one looks very strange with some provisions for a set fee which is odd, no requirement for time and billing being sent or seen any time and billing records on this. When I was scolded for making this, all I had to do was ask, I said I did want the time and billing then, I was told "no"; they may be or are my private office information. I am not going to give it to you. I want to see those kinds of billing records. What has been requested? Whether we are paying this guy a $1,000/hour or $10/hour based on the work he has done. Also it appears from the pleadings that he hired someone else in addition, Robin Grossberg (sp) of a Chicago lawfirm is signing the vast majority (17 of the 20) pleadings. There is authority in the contract to hire but we don't know for how much we hired him for and we are liable for those costs, about $10,000 in cost, and we don't know at what rate or why this person has been hired. So we ought to know this and I don't think we need to go into Executive Session. Representative James - What is the motion we are discussing right now - to approve or go into Executive Session? Chairman Phillips - I personally don't think that the categories for going into Executive Session are here. We have a motion to approve this request and a motion to go into Executive Session. Representative James - If I'm talking about the approval then I would object to the approval not because it is not proper for anyone to ask to have an audit. I agree with much of this information having to be available. I think it is not right at this time. So I'm not saying we shouldn't have the audit; I'm just saying it's not right at this time to put the audit on the list. We've already heard from the Legislative Auditor that they are already backed up and I would think once we approve this the pressure is going to get to this one because it seems the intent is to overturn something that has been done. So for that reason I object to approving the audit at this time and at some substantive time I might approve. Chairman Phillips - In the past, we have always tried to take care of these things informally so we wouldn't have to go through a full blown audit request because they are expensive and they are time consuming. We have approximately 50 audits. I've asked Pat Davidson yesterday to do an informal thing on this. Looking at it, you have the right to ask for an audit but if we can do it informally and if you're still not satisfied then this Chair will honor that request for the next meeting. I just got the request Wednesday late at night so we didn't have time. I got with Pat Davidson yesterday morning and I do think you have a legitimate concern about how the money was spent but if we can do this informally would that be satisfactory and if you're still not satisfied we can bring it up next month and have a full fledge audit. It is expensive and time consuming but I'm trying to do all these things informally. We just did one for Senator Donley informally, hopefully to your satisfaction and we had another one from Senator Ward that is being handled informally. If you want to trust the Auditor, I have full faith in her that she can do it fairly and impartially. Representative Martin - I think one of the first really surprises about this was seeing the evening news which showed Representative Croft on television quite upset. The first hint I had of it was Representative Croft on television stating I've demanded and requested and so on and so forth. Then in the next morning's paper, Croft says this and Croft says that. From the media attention, I thought it was a major crisis, like a hurricane or earthquake. My perception was you were taking this as far as you could in the media; that you could care less if an audit was done. You did what you wanted to do. It is very very seldom that an individual makes such a major public relations job to announce to the world that he'd requested an audit. There are many critical audits that have been asked for very quietly and they were approved. My major objection right now is that you don't do these things through the media and get out of it whatever you can. This Committee more than any other Committee has to protect itself from the media and you are going to find yourself time and time again reviewing really important confidential information and then when its ready to be released and it's justified then it is released to the public. Here you want everything at full disclosure and as a lawyer you know better than anyone that lawyers always keep an agenda and a calendar. I went down to Representative Barnes' office and asked what they had. Last night they gave me the two-page which I gave to Pat Davidson also a response which she could have given to you a breakdown of the minutes and the . . . Later I asked for a breakdown of the appropriations; those aren't available and as Representative Croft knows, as I'm just learning, everything is critical for the opposition. If you find out the super details you want to know as to how these people are spending money then you and the opposition have severely undetermined the efforts of the Legislative Counsel and others to pursue this on behalf of the citizens. I think Pat Davidson has the major briefs which have been presented to show you what the money has been spent for and I think confidentially the $175,000 that I'm told by the lawyers is confidential information until the case is completed. I don't know how you keep your law firm but it seemed to me that we should give benefit of the doubt to the Chairperson of Legislative Counsel who I also think has been severely criticized and characterized without any notification from you that this was coming up. When I asked her staff I received the information. I don't know what the problem is but we need to protect what is important the image of the Audit Committee and we don't do it by publicity to begin with. This Committee would be nothing if everyone talked about what they heard or saw and you used this Committee for media purposes. Senator Adams - I have never used any committee for public purposes. I view something is wrong with the process we have with Legislative Counsel. You can go back and look at those two pages and you would agree with on December 29 approving a contract that goes against the procurement laws in the state of Alaska and then try to make them up on April 3, 1998, again changing those but there was no justification behind them. Would you approve something like that? I never broker for publicity. It was voted on 9-2 with 3 absences. They don't represent all the people in the state. What they did was wrong, Representative Martin, and you have stayed in the Legislature long enough to know when you see something wrong you shouldn't approve it. Representative Martin - Then you ask questions and you do it in a confidential way before you characterize someone . . . Chairman Phillips - Pat Davidson, my intent is to have you look at it informally, just like we've done for all the others, at least since I've been Chair the last two years. If we can resolve it informally then I want to do that. If we can't then we have to honor the audit request. I think we can do it within 30 days, get some answers and if you aren't satisfied then resubmit it and I will honor it. Representative Croft - What did you receive from Representative Barnes' office? Pat Davidson - Just before the meeting, I met with Representative Martin who indicated he had some information. I passed out to the Committee the memo from Representative Barnes as well as I have three stacks of briefings. Representative Croft - Do you have any time and billing records? Pat Davidson - No, I don't know for sure because I haven't had a chance to look through it. I don't believe so. Senator Donley - I'd always understand that the internal functions of the audit were confidential until the Committee voted to release them. This sounds like we are discussing aspects of an audit which aren't discussed until the audit is complete. Chairman Phillips - What I'm trying to do is have Pat Davidson look at the request, meet with the principals and then if it is still not satisfactory to you two then come back for a formal request. This was handled the same way with audit requests of Senator Donley and Senator Ward. I would rather do it this way and come back next month. Senator Donley - I guess I see your point. We haven't authorized the audit. These questions are appropriate once we do authorize an audit. Chairman Phillips - I'd like to do an informal audit. Senator Adams - Getting back to our State Statute we've always been dealing with the six votes but as far as it says in Section 24:20:281 under special audit it's just the majority votes so if it was just us voting it would okay, the majority of the Committee members are here. Chairman Phillips - At least the four years I've been here we've never had a discussion like this audit; audit requests were an automatic thing. Representative James - As long as we are being so open about how we feel about this issue, I'm not an outsider. I'm an insider in this and in fact, I am one of the persons who signed on for this lawsuit so I have a conflict of interest of course. I don't consider it a real conflict of interest but my assessment of where we are today is more political than reality and I think they have the perfect right to ask the questions they are doing it is the way they are doing it which is distressing. I don't know what they are hoping to accomplish. I hear from the language of Senator Adams is that he is looking for some quick response to this and I'm saying that we already have a backlog of audits that need to be done and there is no quick fix to it. That the issue is not right as far as I'm concerned. Now if they are considering that the attorney should not have been hired in the first place then those certainly are right questions. When you are talking about how the money is or is going to be spent they are not right because we are certainly not done with the agreement. So those are issues which are of concern to me. I know the whole issue we have before us is a hot potato. We have people on both sides of that issue here. We ought not to let that cloud what we are doing. What happens when you get political is you get polarization and then defensive and I don't want to do that. Chairman Phillips - That is why I want to do this informally. I think Pat Davidson can do a good job. I think you have confidence in our own audit people, right? I think she should do it and come back. If you are not satisfied, I'll vote for the audit request. But until then she can go ahead and look at it and work with both of you. Pat Davidson - A lot of times we get very good cooperation from an agency when we handle things by an informal basis because they don't want to see us in a full audit situation. If you are going to recommend that we approach this on an informal basis, I think it would be appropriate for you as Chair or from the Committee that we draft a letter to Representative Barnes as Chair of Legislative Counsel asking for her cooperation. I have no authority to require anything unless I am auditing and it is always full cooperation from the agency that allows me to do informal looks. Representative Croft - In the audit request and the press release on it, I did not question Representative Barnes integrity. I wasn't auditing her office account or anything like that. The only time I mentioned her name at all was to say which is the truth she is the sole project director stated in the contract. There is no other way to state that except by saying that is who she is. I never mentioned her name in any other extent on the release. This was done on my continuing frustration about the way this contract was started, funded, worded and is now being financed. I think it raises serious question about the use of the public's money. That is why I am doing this. If we clarify from this Committee that Representative Barnes should give full cooperation including all of the time and billings under this contract and that directive is clear then I guess I am comfortable waiting another month. But when I talked to her as of yesterday it was her position that they were private documents in her private office; that seems to me outrageous. If we are telling her these are things she cannot keep as private and in particular they have nothing to do with the litigation strategy of the case. They are not confidential in that or in any other respect. Senator Donley - I am willing to go ahead and vote on a formal audit for portions of this request and I've discussed those with Representative Croft. There are portions which I think are legitimate and subject to audit. There are other portions I have concern with, are not legitimate portions subject to an audit. I would hope Representative Croft would work with the Chair to make it clear that we are only asking for those portions that are legitimate to audit review questions. If your intent is to proceed this way, that's fine with me but I'm willing to support a partial formal audit at this time for some of those things. I do share some of the concerns Representative Martin had. I've never seen this kind of politics but putting that aside is it legitimate, some of it is even though I disagree and I also disagree with some of the positions Senator Adams has taken. I don't think that's relevant whether I agree or disagree with the policy positions he's taking it's whether this is an audit request and I think there are legitimate things in it. Representative Martin - In regard to sending a letter, I would even be concerned about that because here we are saying she hasn't agreed but when I went to her office the staff gave me the stuff, even this morning they gave me the pleadings. They were willing to give them to me. This is what the money was spent on. They were very cooperative. You were assuming and I don't even know if you went to her that Representative Barnes is intolerable. And I think an informal letter is asking her to swear on the Bible she will cooperate to the fullest. I think that is questioning her character. I have had projects where we were solely responsible and I think we have one going on now making the chair responsible and you don't know the expenditures until after the project is complete, i.e., Peat Marwick. I think it is a little premature. We don't need an insulting letter. Senator Adams - If you asked for billings from Peat Marwick, you would get them. Chairman Phillips requested Pat Davidson draft a letter seeking this information informally. Representative Martin - I object to the letter. We have the information right in front of us now. Representative Croft - Then let's do the audit. Representative James - Why do you need us to tell you to do it? We don't have to have a motion to tell you to do it. Chairman Phillips - I would like to have the backing of the Committee; it's the way we've always operated but I'll draft a letter to informally get the information. Senator Donley - I haven't discussed this extensively; I understand there are some strategy tactical concerns and while I do think the audit is appropriate to proceed we ought to make sure that if there is some legitimate strategy or tactical concerns that the audit is kept within the Committee and not revealed to anybody outside. It is certainly appropriate to answer the questions. Representative James - The way we've always handled it before is say we would have approved the audit today. I agree with Senator Donley that there are some things in there that I wouldn't object to and there are some things that are argumentative and not appropriate. If we'd done that today and given it to Pat Davidson, it would be at least six months. Meanwhile until we have a final audit to release to the public it is confidential. So any information that would be gleaned from that audit is not available to anyone here anyway. So if we could get some quick information it seems to me the best way to meet the concerns of the requesters as well as be the right way to go. Representative Croft - If Representative Martin is going to object to us even sending a letter then I MOVE TO AMEND the motion to only include the first four subjects of the audit request starting with "Are the oversight and payment provisions appropriate. . ." and ending with "Does this sole-source contract"? and approve the audit as amended. Chairman Phillips took an at ease. Chairman Phillips reconvened the meeting. Representative Croft restated the amended motion to state that the motion would include the first four paragraphs, paragraphs, of the audit request and approve the audit as amended. Chairman Phillips hearing objection called for a roll call vote. Yea Senator Adams, Senator Donley Nay Senator Phillips, Representative Martin Representative Bunde wished to make a comment on the motion. Chairman Phillips VOIDED the roll call vote. Representative Bunde - I have never been part of a refusal on an audit request and some of those audits were based on political motivation. I don't know if that is the case here or not but I'd like to say that I have confidence in the lawsuit. I strongly support it. Because of my precedent of not refusing any audit I plan to vote for this audit. Chairman Phillips called for the roll call vote. Yea Senator Adams, Senator Donley, Representative Bunde, Representative Croft Nay Senator Phillips, Representative Martin, Representative James Chairman Phillips - The motion to amend the motion FAILED by a 4- 3 vote; six votes needed for passage. (Representative Therriault was not present for the vote) Pat Davidson - In answer to the question about six votes needed for passage, the way the Statute reads is "should the majority of the Committee vote to approve the request the Legislative Audit Division will make the audit." Representative Croft - When it says six on the RPL's it's six. On this it says the majority of the Committee. Representative James - What is the majority of the Committee? Does it mean the number on the Committee or the number present? Pat Davidson - I don't know. Senator Donley requested the Chair talk with Tam Cook for the legal interpretation. Chairman Phillips - I will check with Tam Cook. If it requires the majority present fine, if it doesn't I will notify you with a telephone call followed by a memo. OTHER Representative Martin - I'd like to thank Fred Fisher for the job he has done as Acting Legislative Fiscal Analyst. Representative Martin also brought to the Committee's attention information on the budget he requested the members read. ADJOURNMENT Chairman Phillips adjourned the meeting at 5:35 p.m. (End, Tape: LB&A981408, Tape 3 Side 2 #927) LB&A 14 08/14/98