JOINT COMMITTEE ON LEGISLATIVE BUDGET AND AUDIT March 2, 2000 12:10 p.m. MEMBERS PRESENT Representative Gail Phillips, Chair Representative Con Bunde Representative Eric Croft Representative Gary Davis Representative Gene Therriault Senator Randy Phillips, Vice Chair Senator Rick Halford Senator Sean Parnell Senator Gary Wilken Senator Drue Pearce (Alternate) MEMBERS ABSENT Representative Eldon Mulder (Alternate) Senator Al Adams COMMITTEE CALENDAR APPROVAL OF MINUTES EXECUTIVE SESSION AUDIT REPORTS CONSIDERATION OF RPLs (Revised Program - Legislative) OTHER COMMITTEE BUSINESS WITNESS REGISTER DAVID TEAL, Legislative Fiscal Analyst Legislative Finance Division State Office Building, Sixth Floor P.O. Box 113200 Juneau, Alaska 99811-3200 POSITION STATEMENT: Introduced RPL 01-0-8040 and RPL 01-0-8041. SARA PEACOCK, Finance Officer Division of Administrative Services Office of the Governor 240 Main Street, Suite 300 P.O. Box 110001-0001 Juneau, Alaska 99811-0001 POSITION STATEMENT: Testified on RPL 01-0-8040 and RPL 01-0- 8041. PAULA HALEY, Executive Director Human Rights Commission Office of the Governor 800 A Street, Suite 204 Anchorage, Alaska 99501-3669 POSITION STATEMENT: Testified on RPL 01-0-8040 and RPL 01-0- 8041. JANET CLARKE, Director Division of Administrative Services Department of Health & Social Services 320 Main Street P.O. Box 110650 Juneau, Alaska 99811-0650 POSITION STATEMENT: Testified on RPL 06-0-0251. ACTION NARRATIVE TAPE 00-4, SIDE A Number 0001 CHAIR GAIL PHILLIPS called the Joint Committee on Legislative Budget and Audit meeting to order at 12:10 p.m. Members present at the call to order were Representatives Phillips, Bunde, Croft, Davis and Therriault, and Senators Phillips, Wilken and Pearce. Senators Halford and Parnell arrived as the meeting was in progress. APPROVAL OF MINUTES Number 0063 CHAIR PHILLIPS announced that the first order of business was the approval of minutes from previous Legislative Budget and Audit Committee meetings. She indicated that the first two sets of minutes were going to be approved as one meeting from the meeting held on January 14 and continued on January 24, 2000. SENATOR PHILLIPS made a motion for the approval of the January 14 and January 24, 2000, Legislative Budget and Audit Committee minutes. There being no objection, the minutes were approved. CHAIR PHILLIPS announced that the next item of business was the approval of the minutes from the meeting held on January 28, 2000. SENATOR PHILLIPS made a motion for the approval of the January 28, 2000, Legislative Budget and Audit Committee minutes. There being no objection, the minutes were approved. EXECUTIVE SESSION SENATOR PHILLIPS made a motion, in accordance with Title 44, to move to executive session for the purpose discussing audit reports, which are held confidential by law. There being no objection, the committee went into executive session at 12:15 p.m. CHAIR PHILLIPS requested that the following people attend the executive session: Pat Davidson (Legislative Auditor) and staff; Jim Griffin (Legislative Audit Manager; Nikki Rouget (Legislative Audit Manager); Danna Moser (Legislative Auditor); David Teal (Legislative Fiscal Analyst); and Pat Hartley (Legislative Budget and Audit Committee aide). SENATOR PHILLIPS made a motion to move back into public session. There being no objection, the committee was back in public session at 1:00 p.m. AUDIT REPORTS Number 0203 SENATOR PHILLIPS made a motion to release the following three audits to the public: DOA - Public Defender Agency (02-4530-00); DLWD - Division of Worker's Compensation (07-4601-00); DOA - Chargeback Review (02-4610-00). There being no objection, the three audits were released to the public. SENATOR PHILLIPS made a motion to release two preliminary audits for agency review, one dealing with the Alaska Housing Finance Corporation and the other one dealing with the follow-up review for the Division of Family & Youth Services. There being no objection, the two preliminary audits were released to the agencies. SENATOR PHILLIPS made a motion to approve Representative Bunde's audit request for the University of Alaska Retirement Incentive Program. There being no objection, the audit request was approved. CONSIDERATION OF RPLs (Revised Program - Legislative) CHAIR PHILLIPS announced that the next order of business was consideration of RPLs. Number 0466 DAVID TEAL, Legislative Fiscal Analyst, Legislative Finance Division, Alaska State Legislature, stated that the first RPL is 01-0-8040, from the Office of the Governor, for $5,500 in federal receipts. He explained that the money is available from the U.S. Department of Housing and Urban Development (HUD) to the Alaska State Commission for Human Rights to conduct fair housing workshops in 14 communities. He noted that the money is available on March 15, 2000, which allows them to jump-start the program by hiring a part-time administrative assistant and to begin gathering workshop materials. If it is denied, there will be a three-month delay and possible jeopardy to an eighteen-month grant. He noted that it is not in the "supplemental." SENATOR PEARCE wondered why they didn't ask for the grant in the supplemental. SARA PEACOCK, Finance Officer, Division of Administrative Services, Office of the Governor, stated that the actual award was not received until recently. She indicated that they have done a budget amendment for the fiscal year 2001 budget that would include the balance of the funding. Number 0582 SENATOR PEARCE indicated she is not quibbling over the $5,500 but over the process. She pointed out that the director of the Office of Management and Budget (OMB) had just put some additional supplemental requests on the table two weeks ago. She said she fails to understand why it was not included if it is that important. MS. PEACOCK said she was unable to address that question. REPRESENTATIVE CROFT pointed out that the first payment is scheduled for March 15, 2000. He asked whether $5,500 is the amount of the first payment. MS. PEACOCK explained that she believes it is a payment of $3,000 and then a subsequent payment of the balance. She indicated that often the supplemental is not available on the initial draw-down date. She pointed out that they have a draw of $2,500 on March 15, 2000, and then a draw of $3,000 on April 30, 2000. She added that the funding requests are tied into the completion of specific administrative tasks. Number 0715 SENATOR HALFORD made a motion for the approval of the RPL, 01-0- 8040, stating that it is below minimum. CHAIR PHILLIPS asked if there was any objection to the approval of the RPL, 01-0-8040. SENATOR PEARCE objected for the purpose of consistency. SENATOR PARNELL objected for the purpose of process. REPRESENTATIVE CROFT wondered if the supplemental is guaranteed to be done by March 15, 2000. CHAIR PHILLIPS explained that currently there is a fast-track supplemental, and it was not requested to be in the fast-track supplemental. REPRESENTATIVE CROFT said he believes that the request is appropriate. He pointed out that they do not know if the supplemental will be approved by March 15, and that is when they need the authority. SENATOR PARNELL stated that they will go through the exact same discussion every year unless they draw a line on the process. He agreed that $5,500 is below minimum for most of them, but it is the process that counts. Number 0804 REPRESENTATIVE CROFT suggested that it is absolutely correct to say that there is good reason to consider the RPL during session. For instance, when the timeline for the grant is not going to fit, it is especially interim funding. CHAIR PHILLIPS asked Paula Haley to speak to why there is the RPL before them. PAULA HALEY, Executive Director, Human Rights Commission, Office of the Governor, testified via teleconference from Anchorage. She stated that they applied for the grant that allowed them to provide Alaskans with education on the human rights laws back in June. She indicated that they did not receive notification that they had been awarded the grant from HUD until mid-to-late December. She stated that they are oftentimes hamstrung when they apply for grants by the timelines that the federal government sets, which do not coincide with the state budgeting time line. A roll call vote was taken. Voting in favor of the approval of RPL 01-0-8040 were Senators Halford and Wilken, and Representatives Croft, Davis and Phillips. Voting against it were Senators Parnell, Pearce and Phillips, and Representatives Therriault and Bunde. Therefore, RPL 01-0-8040 failed approval by the Joint Legislative Budget and Audit Committee by a vote of 5-5. Number 1019 MR. TEAL indicated that the denial of the RPL does not necessarily stop them from proceeding. If they have federal receipt authority from another place, they can use it for the grant. He pointed out that they do have additional federal receipt authority, and the next RPL up for consideration is also from the Office of the Governor. He noted that in the previous legislative consideration, they did receive $54,000 in federal receipt authority. He said that it is hard for him to say precisely what federal receipt authority they have; the federal fiscal year and the state fiscal year overlap. He indicated he believes that for $5,500 they can begin the grant with existing authority. CHAIR PHILLIPS announced that the next RPL before the committee was 01-0-8041 from the Office of the Governor, Alaska State Commission for Human Rights, requesting $18,000 in federal receipts. MR. TEAL indicated that the Alaska State Commission for Human Rights is requesting $18,000 for the fully funded Equal Employment Opportunity Commission (EEOC) contract. He explained that they received money in December of 1999 via an RPL, and they are requesting that the additional federal receipts be made available. They are also requesting that rapid action be taken - again, RPL versus supplemental. He pointed out that they have until September to spend the money they are requesting, and the RPL authority is only until June. Number 1140 MS. HALEY indicated that with the RPL, 01-0-8041, they are confronted with the need for an increase for their federal authorization for the money that they are most often receiving, and those are monies from the EEOC for charge processing. She stated that the vagaries of their contract with the EEOC are based on the dollars that EEOC has available and the number of cases they produce for them, which are not insignificant. MS. HALEY explained that over the years they have submitted many cases to the EEOC for which they have had no money to fund. In this instance, they are pleasantly surprised that based on the incredible amount of the work they did last year, the EEOC has upgraded their contract. Instead of paying last year's initial contract, which was 257 charges, this year they were notified that the EEOC would pay for 332 charges. She noted that they need to be able to draw down this particular contract where they actually do the work and are actually reimbursed by the EEOC. She added that she cannot answer the portion of the question about the supplemental, because she is not sure of its tracking or timing. MS. PEACOCK surmised, again, that it was a timing issue regarding the uncertainty of when the supplemental would be available. She explained that they did receive $54,000 for the federal fiscal year 1999 contract. Those funds have been received and expended, and this would be an increase to the federal fiscal year 2000 contract. Number 1241 REPRESENTATIVE CROFT wondered if they are up against the federal authority. MS. PEACOCK responded that the federal authority available in the current fiscal year is $82,444. She explained that they have already drawn $50,000 on their federal fiscal year 2000 EEOC contract. She indicated that they have basically $32,000 available to them. REPRESENTATIVE CROFT wondered if Ms. Peacock thought that it would be used up in other areas. MS. PEACOCK replied that it is possible. She explained that the main concern, particularly with the HUD agreement, was that they have funding available to receive and expend according to the lifeline of that agreement. Number 1293 REPRESENTATIVE CROFT made two motions. The first was to adopt a conceptual amendment to amend RPL 01-0-8041 from $18,000 to $23,500. The second was a motion for the approval of RPL 01-0- 8041. CHAIR PHILLIPS asked if there was any objection. After an objection was heard, she said the motion before the committee was for the adoption of RPL 01-0-8041. A roll call vote was taken. Senator Halford and Representatives Davis, Croft and Phillips voted in favor of the approval of the RPL, 01-0-8041. Senators Wilken, Parnell, Pearce and Phillips, and Representatives Therriault and Bunde, voted against it. Therefore, RPL 01-0-8041 failed approval by the Joint Legislative Budget and Audit Committee by a vote of 6-4. CHAIR PHILLIPS announced that the next RPL before the committee was 06-0-0251 from the [Department of] Health & Social Services, Probation Services, requesting $70,000 in statutory designated receipts for the Star Schools Program. Number 1400 JANET CLARKE, Director, Division of Administrative Services, Department of Health & Social Services, stated that they became aware of the funds on February 17, 2000, and the supplemental was due February 9, 2000, so it was after the deadline. She indicated that they do not object to putting it in the supplemental; however, they do need to spend the funds by June 14, 2000, so there is a timing issue. CHAIR PHILLIPS stated that without objection from the committee, RPL 06-0-0251 would be placed before the Finance Committee for consideration in the supplemental budget. REPRESENTATIVE BUNDE noted that they are contracting with the State of Washington for the program. He wondered if it is because they are giving them a better deal. MS. CLARKE replied that a special distance-learning school district in the State of Washington has provided the contracts for many years. REPRESENTATIVE BUNDE indicated that he understands that, and he asked again if they provide a better deal than, for instance, the University of Alaska. MS. CLARKE said she was not sure, and also did not know if they have ever been offered the opportunity by the University of Alaska. OTHER COMMITTEE BUSINESS Number 1455 CHAIR PHILLIPS expressed concern with the issue of follow-up with regard to recommendations. She indicated that they are working with Pat Davidson to put together a program that will take into consideration follow-up by the Joint Legislative Budget and Audit Committee. REPRESENTATIVE DAVIS said he is pleased to see that they are doing that. SENATOR PHILLIPS pointed out that he believes it is the responsibility of those who are requesting the audit to follow through as well. ADJOURNMENT CHAIR PHILLIPS adjourned the Joint Legislative Budget and Audit Committee meeting at 1:20 p.m.