MINUTES ALASKA STATE LEGISLATURE BUDGET AND AUDIT COMMITTEE December 11, 1998 1:50 p.m. TAPES LB&A 12/11/98, Tape 1, Side A and B; Tape 2, Side A CALL TO ORDER The December 11, 1998 meeting of the Legislative Budget and Audit Committee was called to order by Chairman Randy Phillips at approximately 1:50 p.m. PRESENT The following members were present: Senators Representatives Sen. Randy Phillips, Chair Rep. Terry Martin, Vice Chair (Teleconference) Sen. Rick Halford (Teleconference) Rep. Con Bunde Sen. John Torgerson (Teleconference) Rep. Eric Croft Sen. Al Adams (Teleconference) Rep. Gene Therriault ALSO PRESENT: Pat Davidson, Legislative Auditor, Legislative Finance; Janet Clarke, Director, Admin. Services, Department of Health and Social Services; Da Hardengurgh, Director of Community Development Division, RurAL CAP; David Teal, Director, Legislative Finance; Dan Spencer, Chief Budget Analyst, Office of Bud Management; Pat Ladner, Exec. Director, Alaska Aerospace Development Corporatio (AADC); Laura Gould, Director of Business Operations, AADC; Joe Reeves, Deputy Director/ASM, Department of Corrections; Tom Williams, Senate Finance Committee Staff; Kathy Porterfield, Managing Partner, KPMG Peat Marwick; Annalee McConnel Director, Office of Management and Budget; Bob Poe, Y2K Project Director. APPROVAL OF MINUTES Rep. Terry Martin MOVED to approve minutes from the following meetings: August 1997; December 12, 1997; January 21, 1998; February 11, 1998; February 20, 1998 March 4, 1998; March 9, 1998; April 1, 1998; April 30, 1998; May 11, 1998; July 1998; October 2, 1998. There being no objection, the motion was PASSED by unanimous consent. EXECUTIVE SESSION Rep. Martin MOVED to enter into Executive Session in order to discuss legal iss pertaining to RPL's and preliminary audit reports. There being no objection, t Committee went into Executive Session at approximately 1:53 p.m. Sen. Adams joined the meeting during Executive Session. OPEN SESSION The Committee resumed open session at approximately 2:37 p.m. CONSIDERATION OF REQUESTS FOR AUDITS PAT DAVIDSON, Legislative Auditor, brought five (5) requests for audits to the attention of the Committee. The first was a request from Sen. Phillips to exam Division of Workers Compensation; this audit was to examine various policies an operational issues related to workers compensation. The second audit was reque Sen. Taylor, asking the Committee to examine special education programs in the Department of Education (DOE). She clarified that, since the issue had been re public, her staff had contacted the Department of Education to determine their to the issues. She noted that DOE had hired a team of specialists at the Schoo expense to bring the District into compliance. Ms. Davidson stated that the au would review the actions taken by DOE, as well as the remedial efforts put fort School District, and identify any outstanding issues. The third request for audit brought before the Committee had been put forth by Moses, asking for a ten-year analysis on the Board of Fisheries, including the the Board to complete work within its schedule. The fourth request had been brought by Sen. Phillips, asking for a follow-up au Child Protective Services, Custody and Determination. Ms. Davidson clarified t Philips had requested that the audit be delayed long enough to allow time for t to implement earlier recommendations, and that the report be made to the Legisl January 2000. The fifth audit was requested by Rep. Hudson for the Department of Administrati Rep. Hudson had asked for examination of the new hiring system now used by the of Alaska to determine whether it was in compliance with AS 39.25.150, which pr a hiring preference for veterans. Ms. Davidson noted that her staff had been i with Rep. Hudson's staff on the issue, and had come to the agreement to delay a until her staff had the opportunity to work with the Dept. of Administration on Rep. Martin then MOVED that the Committee approve four of the five requests -- from Sen. Phillips, Sen. Taylor, Rep. Moses and Sen. Phillips. There being no that motion was PASSED by unanimous consent. Rep. Martin also MOVED to release five (5) preliminary audits to their respecti Agencies and Departments, with provision for a 30-day automatic release, unless was requested by a legislator. He noted that the preliminary audits were as fo Alaska Science Technology Report for the Department of Commerce and Economic Development; (2) Community and Regional Affairs Report on computer data base; ( Fish and Game Sports Receipts Usage; (4) Organization Employment Center reorganization of employment security operations and charges; (5) Marine Pilot Mention also was made of the Rural Sanitation Report for the Department of Environmental Conservation. Ms. Davidson suggested that the Committee, in view of the upcoming holiday and of the Committee to Juneau, consider merely releasing the preliminary audits to respective Agencies for response and then bring the reports before the next Com meeting. Rep. Martin then so AMENDED his motion. There being no objection, the motion PASSED. CONSIDERATION OF RPLs 01-9-8033 Office of the Governor $78.8 Federal Receipts Alaska Coastal Management Program Grant Sen. Adams MOVED to adopt RPL 01-9-8033. There being no objection, the motion PASSED. 04-9-0013 Revenue $50.0 Federal Receipts Federal Access & Visitation Grant Rep. Martin MOVED to adopt RPL 04-9-0013. There being no objection, the motion PASSED. 06-9-0017 Health and Social Services $1,605.8 Federal Receipts Juvenile Accountability Incentive Block Grant Rep. Croft MOVED to adopt RPL 06-9-0017. Rep. Martin questioned whether, since this was a new program, there would be General Funds accountability in terms of matching funds. Janet Clarke, Director, Admin. Services, Dept. of Health and Social Services, responded by stating that the General Funds match had already been identified f existing funds to match the $1.6 million for the program. There being no further discussion or objection to the original motion, the moti PASSED. 06-9-0126 Health and Social Services $3,100.0 Federal Receipts PASS Child Care Program Sen. Adams MOVED to adopt RPL 06-9-0126. Responding to a question from Rep. Martin, Ms. Clarke clarified that no General Match was necessary for the Federal Receipts. She stated that there was mainte effort requirement pertaining to the entire welfare reform program for which he department was in current compliance. Without further discussion or objection, the motion PASSED. 06-9-130 Health and Social Services $ 211.5 Statutory Designated Children's Health Outreach Rep. Martin questioned whether, since the funds were designated from General Fu there was a limit on all such funds, formerly Program Receipts. Ms. Clarke responded by clarifying that the funds were actually from a private foundation, The Robert Woods Johnson Foundation, and could not be accepted unle used for the specific grant purposes. Therefore, she stated that the funds wou into the General Funds unless they were appropriated for the specific program. pointed out that her department had received verbal and written confirmation th had been approved. Responding to a question from Sen. Phillips, it was confirmed that the program included in the Governor's budget. Sen. Adams MOVED to approve RPL 06-9-0130. Sen. Phillips OBJECTED in consideration of possible future impact on the General Fund. Rep. Croft questioned whether this program was to function as a means of locati children who were not being covered under the Medicaid Health Insurance Program Clarke affirmed that the Robert Wood Johnson Foundation intended to help States complete outreach work for the Congressionally authorized Children's Health Ext Program. Rep. Croft asked whether the process of locating children who were not being pr health care service was a temporary function. Ms. Clarke explained that curren approximately 11,000 children in the State would be eligible for the program, a outreach to encourage children to be enrolled in the program had not been compl a number of years. She noted that the grant provided $1 million over three yea would help in identifying unserved children. She stated that after that time, that the number of unserved children would decrease significantly as eligible c would become more routinely enrolled. She also noted the benefit of being able outside, private foundation dollars to complete the work at hand, rather than h utilize General Funds. Responding to another question from Rep. Croft, Ms. Clarke clarified that Medic provided using a 59.8% Federal participate rate, with a State matching of funds to maintain the program. Rep. Bunde stated his understanding that ultimately the program would have an i on State funding, since those children enrolled in the Medicaid program would b partially supported by State matching dollars. He also noted the importance of unserved children and having an impact on their health concerns. Rep. Therriault pointed out a document from Legislative Finance stating that th one-time appropriation, and that outreach efforts would be reduced after FY 200 relation to the reduction of grant funding. Ms. Clarke reiterated that the fun one-time grant from a private foundation, intended to underwrite the work of br large group of children into the existing program. Ms. Clarke responded to other questions by stating that in the Mat-Su Valley a percentage of eligible children were unserved, as well as in other areas statew A roll call vote was held: YEA: Sen. Adams, Sen. Torgerson, Rep. Martin, Rep. Bunde, Rep. Croft, Rep. Therriault NAY: Sen. Phillips RPL 06-9-0130 was therefore PASSED by a vote of 6 to 1. 06-9-0139 Health and Social Services $1,328.7 Federal Receipts Energy Conservation Initiative Sen. Adams MOVED to adopt RPL 06-9-0139. Rep. Bunde questioned in which areas the funds would be expended. Janet Clarke stated that her Department would contract with RuAL CAP, the grant the program, who works in a number of villages. She explained that the company provided a list of villages which they serviced last year, which was included i background materials. She stated that this year, the villages served would be serviced by RurAL CAP who have AmeriCorps volunteers. Sen. Adams added that those served would be predominantly low income households elders. He also stated that 70% of the funding would go out to rural communiti 30%, or $316,999 going to Anchorage and a portion to Fairbanks, where supplies be purchased. Responding a question from Rep. Bunde, Ms. Clarke affirmed that the work would completed largely by volunteers, with the majority of the funding going toward Sen. Adams also stated that the matching funds were provided by RurAL CAP and t the RPL was not approved, the Federal funding would go to another state. Responding to a question from Rep. Martin, Ms. Clarke pointed out that other weatherization programs, such as those provided by AHFC, reported being able to five to six villages per year. She also stated that the work done by these oth was more extensive and not geared toward lower income households. She explaine the work in the proposed program would reach a greater number of villages. David Hardenburgh, Director of Community Development Division, RurAL CAP stated that the matching funding for the program came from the Corporation for Service to provide funding for the AmeriCorps program, and came through the Ala State Community Services Commission under the auspices of DCRA. He explained t this funding provided over 25 AmeriCorps members per year. He stated that the Conservation Initiative would entail 25% of the time for AmeriCorps, while the 80% of their time was funded by another Federally supported program. Rep. Therriault added his understanding that the volunteers would be Alaska Nat from the villages and stated his belief that in future discussions about power equalization for rural Alaska, it would be important to have residents in the c become knowledgeable about how to consume less energy. He expressed his suppor the RPL. There being no further questions or comments, and no objections, RPL 06-9-0139 PASSED. Rep. Bunde added his hope that a press release would be issued communicating th million being spent on rural Alaska to reflect the attention given to this area 06-9-0184 Health and Social Services $ 705.9 Federal Receipts Alcohol/Drug Abuse Services Rep. Croft MOVED that RPL 06-9-0184 be approved. There being no objection or discussion, the motion was PASSED. 06-9-0187 Health and Social Services $ 50.0 Statutory Designated AK Public Health Improvement Sen. Adams MOVED that RPL 06-9-0187 be approved. There being no objection, the motion PASSED. Sen. Phillips elected to delay action on RPL 08-9-0062 until the end of the mee schedule, as a good deal of discussion was anticipated. It was noted that RPL's 08-9-0063 and 08-9-0064 had been withdrawn from the sch 10-9-4026 Natural Resources $ 73.0 Federal Receipts Volcano Monitoring Network Sen. Adams MOVED that RPL 10-9-4026 be approved. There being no objection, the motion PASSED. 10-9-4027 Natural Resources $ 50.0 Federal Receipts Minerals/Related Data Conversion Sen. Adams MOVED that RPL 10-9-4027 be approved. There being no objection, the motion PASSED. 10-9-4028 Natural Resources $ 53.0 Federal Receipts Sagavanirktok Mapping Sen. Adams MOVED that RPL 10-9-4028 be approved. There being no objection, the motion PASSED. 10-9-4032 Natural Resources $ 13.2 Statutory Designated Aleknagik Building Lease Sen. Adams MOVED that RPL 10-9-4032 be approved. There being no objection, the motion PASSED. 10-9-4033 Natural Resources $ 7.5 Statutory Designated Project Learning Tree Cirriculum Sen. Adams MOVED that RPL 10-9-4033 be approved. There being no objection, the motion PASSED. Rep. Martin requested that RPL 20-9-0007 be held until the end of the schedule anticipation of more lengthy discussion. 08-9-0062 Comm. & Economic Dev. $7,000.0 Federal Receipts Alaska Aerospace Development Corp. Kodiak Launch Complex Construction David Teal, Director, Legislative Finance Division stated that his original recommendation no longer applied, since the RPL had been revised to request $7 in Federal Receipts, changed from the original $5 million in Federal Receipts a million in Corporate Receipts. In response to a question from Rep. Croft, Mr. Teal clarified that his departme technical and legal concerns pertaining to the statutory authority. Sen. Adams asked for clarification of the breakdown between Federal and Corpora receipts in the request. Mr. Teal explained that, in addition to the $5 million in Federal Receipts, the $2 million in interest on those Federal funds. He further clarified that, alth originally classified as Corporate Receipts, they should technically be classif Federal Receipts. Mr. Teal noted that certain questions could be raised by the Committee. For in pointed out that although the Department was requesting authority to expend $2 in interest on Federal Receipts, they were likely to earn only $1.5 million. Rep. Therriault stated, as a member of the Board of Directors of the Alaska Aer Development Corporation, that the Board had instructed Pat Ladner, from the Aer Corporation, to come forward with the RPL request. He expressed his support of examining technical questions pertaining to the interest earnings on the Federa and stated his belief that authorizing the Department to collect the highest po amount of interest earnings seemed the most appropriate choice. He added that interest earnings represented not only interest on the $5.0 million in Federal interest on the total package of Federal allocations received by the Alaska Aer program, which he understood to be substantial. He recommended that the Commit approve the RPL in its modified form. Rep. Martin expressed his concern that, even though the terminology of the RPL been modified, the fact remained that a state agency would be utilizing program which were state funds that required authorization from the State. He also exp concern about the Corporation bonding for the greater earnings, since that crea possible cost risk to the State if the earnings were not realized. Rep. Austerman from Kodiak was introduced by Rep. Therriault as being present v telephone line. Rep. Therriault stated that Rep. Austerman was another legisla member of the Aerospace Corporation Board of Directors. Rep. Therriault pointed out that the revised RPL eliminated the bonding issue. clarified that the current RPL only requested the receipt of Federal Funds, in what was appropriated in the year's Federal budget, and a request for authority interest earnings from the Federal dollars. Rep. Therriault noted that AADC ha instructed to create the Kodiak launch complex and to seek contracts to operate complex. He explained that the time had come to do more substantial work with private sector, which required the launch tower construction. Rep. Martin MOVED that the question be divided, in order that the Committee mig approve the expenditure of $5 million in Federal Receipts and reserve the autho the next legislative body to expend the $2 million in interest earnings, which maintained became technically State funds after the Federal monies had been rec Dan Spencer, Chief Budget Analyst, OMB expressed his understanding that interes earnings could not be used for general purposes and were restricted by the term Federal appropriation. Rep. Therriault also stated that interest earned from a Federal appropriation a particular project could not be allocated to the General Fund to be used for an purpose. The proposed motion therefore could not be acted upon. Sen. Adams MOVED that RPL 08-9-0062 be approved. Sen. Phillips stated that he had received a complaint from a constituent regard project and was seeking more information. Mr. Teal noted that, although the Department may receive authority to expend $5 dollars, they may in fact only receive $4.8 million. He asked whether in that Department would reduce their appropriation by $200,000. Pat Ladner, Executive Director, Alaska Aerospace Development Corporation (AADC), responded that as the $5 million was routed through the Federal Governm the Federal Government may retain a portion of the funds; he pointed out that S Department agencies would not be retaining funds. He explained that his agency requesting the entire amount in the hope that they would, as they had in the pa the entire amount. Rep. Therriault stated that, at the most recent Board of Directors' meeting, th discussed the routing of Federal funds. He noted that Mr. Ladner would be work closely with the congressional delegation to ensure that the funds would not be which would increase the chances of funds being "skimmed". Sen. Torgerson asked whether the total budget for the launch tower project was million, or whether this only represented a phase of the project. Mr. Ladner replied that the launch tower itself was budgeted at slightly over $ Laura Gould, Director of Business Operations, AADC, clarified that the modified request in the revised RPL was $7 million, which represented the final funding components for the project. She stated that the RPL would complete funding the in its entirety, including the launch pad and service structure. She also clarified that at this time, there was no proposal to complete a bond on discussions in coordination with OMB. Dan Spencer also addressed Sen. Torgerson's question by stating his understandi between $5 and $7 million dollars were needed above the $7 million dollars curr requested in order to complete the project. He pointed out that, if the $5 mil obtained through bonding, that the agency would once again have to approach the legislature, due the requirement that the legislature approve bonding in excess million. He noted that there had been some discussion about approaching Alaska Industrial Development Export Authority (AIDEA) for the bonding. Sen. Torgerson again questioned why the project in its entirety was not being r this time. He expressed that he would prefer to consider the total cost of the one time. He suggested that, since the agency was still awaiting 40% of its fu request could be brought before the next legislature in regular session. Annalee McConnell, Director, Office of Management and Budget, supported Ms. Gould's comment that, at this time, there was no proposal outstanding for addit bonding authority. She noted that, as part of the FY 2000 budget, to be releas following week, the remaining funds for the project would be requested. She ex that the currently requested portion of the funding was part of a process of re funding method that the AADC had originally planned, one that would have involv number of smaller bond issues. She explained that her department had advised A coordinate with AIDEA and Dept. of Revenue to find a more cost-effective way of obtaining funding. She stated that, while the entire package of revised fundin something which the Committee could currently approve, her Department did feel prudent to keep construction on schedule. She stated that approving this reque take the project to the next stage and give the next legislature the opportunit a bond package for the project. Laura Gould then detailed the funding history of the project. She explained th funding received for the project was through an RPL in 1996, which approved a g from NASA to fund one of the buildings in the facility. The total amount of th was $5.6 million, including $5 million in Federal receipts and up to $600,000 i corporate receipts. She explained that anticipated interest earnings which the not been allowed to retain represented the difference between the amount author received. Rep. Martin expressed his concern that, by coordinating various requests throug on a step by step basis, the full legislature and the general public was not gi opportunity to consider the scope of the entire, long term project being funded expressed concern over the competition that this project could create with the launch pad in Fairbanks. He stated that he would prefer to wait for the agency and approach the full Legislature, and to have the Governor place the request i or the Supplemental Budget, in order that it may be considered by the legislatu Annalee McConnell stated that if the agency waited to undergo the full legislat process, there would not be adequate time to put funds in place before May of 1 noted that this would not support the construction schedule for AADC. She clar no other state revenues would be requested for the project, and that no interes on federal funds for the project could not be used for any other purpose. Rep. Therriault stated that there was no competition existing between the propo facility and the existing one in Fairbanks. Responding to another question, Ms. Gould stated that the initial project budge $28 million, including $5 AFTF funding, $18 million in Federal Funding, and a $ million grant from NASA. She went on to clarify the total project budget, incl requested authority, was $40 million dollars. She explained that three indepen estimates were completed on the project: one by an architectural and engineeri one by a project management team, and one by a cost estimating firm in Anchorag noted that each of those estimates undervalued the cost of the project. She at to the fact that AADC did not receive their federal monies in a timely fashion, the time they were able to contract for work, there had been an escalation in t market which increased the cost of the project. She explained that their Board Directors had charged their management to locate other funding sources, which r in the current request for funding to complete the project. She stated AADC's create a facility which would meet the governmental and commercial markets. Sh that in November, the facility completed its first launch for governmental cust explained that to meet the needs of the commercial market, which she noted had stated as the goal of the new facility, the launch tower needed to be completed Mr. Ladner confirmed that AADC had signed an agreement with Lockheed Martin for two commercial launches, one in May of 2,000 and one in August of 2,000. He ex that, in order to meet the needs of this first commercial customer, AADC had to for the building of a launch tower, since a pathfinder launch was necessary to facility by October/November of 1999. He noted that the contract was based on order basis, in order to complete the project in stages during which funding wo place. He stressed that it was critical for the project to receive approval fo in Federal funds and $2 million in interest earnings at this time in order to m schedule of the new, critical commercial customer. Sen. Adams restated his MOTION to approve RPL 08-9-0062. Sen. Torgerson OBJECTED. A roll call vote was taken. YEA: Sen. Adams; Rep. Bunde; Rep. Croft; Rep. Therriault NAY: Sen. Phillips; Sen. Halford; Sen. Torgerson; Rep. Martin The motion FAILED by a vote of 4 to 4. 20-9-0007 Corrections $573.9 Federal Receipts Information System Rep. Croft MOVED that RPL 20-9-0007 be approved. Sen. Phillips noted that in Mr. Teal's report, he indicated that the project mi additional General Funds. He asked for clarification on this point. Mr. Teal stated his understanding that some modules of the information would re additional programming in the future. Joe Reeves, Deputy Director/ASM, Dept. of Corrections stated that in FY1995 his agency began a replacement of offender-based corrections information system. H explained that a contractor had been hired to develop a strategic plan, which w estimated at a cost of $1 million. He further stated that, to date, the depart expended $3.1 million dollars and a commitment to expend an additional $2.5 mil dollars, for a total of $5.6 million in expenditures, including the currently p He further stated that the department was currently in Phase IV of the process, entailed two steps, the first being to purchase the system from the state of Ut to hire the programmers to convert the existing system over the new one. He st for the additional $1 million needed, the department would seek a capital appro FY 2000. He also noted that additional resources would be needed to finalize the automat management systems which the new information system must accommodate, such as medical records, legislative demographics, etc. He stated that they were not y to how they would approach the legislature for these additional resources. He that their goal was to complete Phase IV so as to have a compliant system by th 2000. He explained that they were currently seeking additional Federal grants the project. Mr. Reeves stated that the total cost of the project in the long term was estim million dollars, not accounting for rising costs over time. Rep. Croft asked whether funding all steps of the process was necessary, or if some benefit involved in each phase as it was completed. He went on to clarify Committee had concerns over future expenditures of General Funds and pointed ou if the Committee merely approved the current RPL, then the new system could be updated and completed, even if not brought to the optimum level by future expen Rep. Croft restated his MOTION to approve RPL 20-9-007 for $573,938 of Federal Funds. Rep. Martin OBJECTED for sake of discussion. He expressed concern that the amou of future General Funds necessary was still unknown. He then suggested that th could be placed in the Supplement or the FY 2000 Budget. Sen. Halford suggested that if the appropriation was critical, it could be appr Session. A roll call vote was held. YEA: Sen. Phillips; Sen. Adams; Rep. Croft NAY: Sen. Halford; Sen. Torgerson; Rep. Martin; Rep. Bunde; Rep Therriault The motion therefore FAILED on a vote of 3 to 5. This concluded the discussion of RPL's for the Committee Meeting. Rep. Martin left the meeting. He was thanked for his years of service to the L STATE SALARIES AND BENEFITS Tom Williams, Senate Finance Committee Staff referred to the draft report prepa for the Committee by KPMG Peat Marwick, LLP. He noted that staff had assisted reviewing the contract to determine the draft report's compliance, as well as w KPMG to focus elements of the study on those outlined in the contract. He drew attention of the Committee to the Executive Summary, found on pages 1-2 of the draft report, as well as to additional information to be found in the section o which contained exhibits and appendices. Rep. Therriault commended the Senate Finance Staff on excellent work, but recommended that the report not be released. He noted that the report gave som information to the legislature regarding the level of state employee compensati also expressed his concern, however, about the fact that no adjustment had been reflect a 40 hour work week. He recalled a specific request he had made for an adjustment to allow for adequate comparisons and was concerned that this had no done. He pointed out, for instance, that had adjustments from 37.5 hours vs. 4 been made, perhaps no jobs would have fallen below the market range. He sugges the adjustments be made before the report be released. Mr. Williams expressed that the staff shared this concern and therefore had req KPMG disclose in the Executive Summary that the numbers were not adjusted. Sen. Halford then left the meeting. Mr. Williams stated that the adjustment was not made since KPMG believed that, 37.5 was a full time job with the State of Alaska which was being compared to o time jobs, the comparison was reasonable. He noted that this was discussed on Project Approach, in the Draft Report. Sen. Phillips suggested that KPMG could be asked to complete an addendum based 40 hour week, or Legislative Finance could complete such a study, in order to p information. He noted that, in a similar case when he had released a draft cop study, ultimately the final report prevailed. Rep. Therriault suggested that this adjustment should be included in the origin eliminate confusion or the need to refer to an addendum. Mr. Teal noted that KPMG was reluctant to change their approach to the study si believed it would not change the overall outcome of the study, that being that State Employees were above market median by 18% He also noted that by adjustin the 40 hour work week, the numbers would increase by roughly 6%, which would pl Alaska State workers at 124% of the competitive market. Rep. Therriault requested that such information be placed in the report, to cre inasmuch as possible, an "apples to apples" comparison. Sen. Phillips asked whether the report needed to be immediately released. He r that Mr. Teal's division prepare an addendum to the report. Mr. Teal pointed out that the report would need to be approved in its present d that the addendum would occur after the fact. Mr. Williams stated that there was no one from the accounting firm currently pr the meeting, but a representative could be called. Rep. Bunde suggested that the Legislature should not adjust the figures in the since this might compromise the objectivity of the report. He also objected to definition of a full time job. He noted that for workers in the private sector of hours committed to a full time job varied widely. He supported Rep. Therria desiring an even comparison of 40 hours per week of work. Rep. Croft raised a question regarding stratification of jobs, as illustrated o the report. He noted that, if an adjustment was made, it should also be reflec stratified tables. He expressed his desire to have the final survey identify d the hiring ranges. Mr. Teal pointed out that cost of living adjustments affected the percentages a median reflected for those salaries in Range 23 and above. Mr. Williams also clarified that not all State jobs fell within the typical Ran therefore were not considered in that particular analysis. Sen. Phillips pointed out that the report could not be released at this time du quorum on the Committee. Sen. Phillips also suggested that the Committee would request that KPMG prepare addendum which adjusted figures based on a 40 hour work week for discussion at next Committee meeting. Rep. Therriault requested that the information be recompiled and a new report c with that information, rather than simply issuing an addendum. In response to a question by Rep. Croft, Mr. Williams pointed out that the meth determining benchmark salaries was outlined on page 11 of the report. Kathy Porterfield, Managing Partner, KPMG, Anchorage arrived at the meeting and explained the reason that the numbers were not adjusted for a 40 hour work week stated that the numbers were compared from job to job; the specific responsibil Alaska State employees were used to determine job value. This data was compare other workers in the United States who have the same responsibilities. Ms. Por also pointed out that many employees were exempt, which meant they may work mor than 40 hours per week and would not be paid for overtime. She noted that if o the data to 40 hours per week, the general conclusion of the report, the fact t significant number of jobs were over the market median, would not change. She conceded that more jobs would reflect as being above median, and that the perce the median would be higher. She noted that there was adequate time before January 20 to adjust the figures prepare a new report. Rep. Croft suggested that to make the analysis meaningful, it would have to det actual hours worked, unless another measurement of job value was utilized. Rep. Therriault suggested the alternative to encompassing the variety of hours different jobs was to choose 40 hour weeks as a common measurement. Discussion ensued as to the best method with which to compare data on the repor David Teal suggested that any adjustments should only be made to those job clas which are overtime eligible. It was requested by the Chairman that, if time were available and management wa amenable, KPMG produce a new report with adjustments made to those jobs which w overtime eligible. Mr. Teal also pointed out that State employees were part of a three-tiered syst benefits, which was omitted from the study. He stated that the study was conse since it only examined Tier III employees, the level at which new employees are hired. Rep. Croft suggested that such an approach was practical for a hiring analysis. Sen. Phillips suggested that the analysis should reflect two sets of numbers, o calculated at 37.5 hours and one at 40.0 hours, so that both sets of numbers co during the next legislative session. Discussion continued as to the best way to measure hours worked and salary paid Ms. Porterfield clarified the Committee's intent for KPMG to prepare a report w increased the gross wages of non-exempt employees by 2.5 hours per week and recalculated the analysis of the medians and market weighted averages based on new figures. Sen. Phillips confirmed that this was the sentiment of the four Committee membe present, although a formal vote could not be taken without quorum. Rep. Therriault and Rep. Bunde left the meeting at 4:30 p.m. WESTERN ALASKA FISHERIES DISASTER Since no quorum remained, Sen. Phillips suggested that the agency prepare a one brief on the discussion and send it to all members of the Committee. Annalee McConnell, Director, Office of Management and Budget referred to her summary which she committed to send to current LB&A Committee members. She noted that her department had answered the questions raised by a memo from Therriault as well as possible. She pointed out that there were still issues t with the Federal Government regarding Federal funds appropriated, as outlined i summary. She stated that expenditures to date were within the $12 million auth part of the statute declaration. Ms. McConnell stated that the average amount of aid for each eligible applicant $1,485.00. In response to a question posed at the previous LB&A Committee mee she explained that a comparison of this amount of relief to that given in other still under determination pending confirmation of the final amount of Federal f which would be received. Ms. McConnell referenced her summary of the current status of Federal aid. She explained that in discussions with Economic Development Administration, they ha suggested that the most efficient way to distribute funds was not to have it pa by the State of Alaska, but rather granted by EDA to particular projects. Ms. also noted that the plans for a grant to Fish and Game were still under develop that she expected to have a clearer update in time for the new legislature. Ms. McConnell also noted that all fish had been delivered at this point, after during the summer months. She also stated that program effectiveness was curre under examination. Sen. Phillips asked whether State and Federal relief for an economic disaster, viewed the current dilemma for the fishing industry, would be offered for a rea decline in South-Central Alaska due to decreasing oil prices. Ms. McConnell pointed out that the Federal relief was possible due to the natur which caused the decline in fish harvest. Sen. Phillips emphasized that he desired to have policies of this nature consis throughout the State. Ms. McConnell further clarified that the criterion for receiving Federal aid de whether the fish harvest for a particular area was biologically affected, and n whether the market for the harvest was affected. She stated that the situation natural disaster, and not merely an economic one. Y2K STATUS REPORT Bob Poe, Y2K Project Director reported that the data listed on the December 4, report represented the current status -- agency readiness reports were being co internally; 60% of all systems had been remediated and were awaiting testing on mainframe on January 1, 1999; 85% of systems had been assessed; all contingency would be submitted by the end of December, 1998; 30% of systems had been tested 15% had been implemented. It was noted that the Risk Management Fund was being utilized to fund the proce An agency readiness report would be released to the public in mid-January. Sen. Phillips suggested that the status report be added to the agenda for the n Committee meeting. There being no further business, the meeting was adjourned at 4:44 p.m. LB & A 12/11/98 Page 16 JPM