Alaska Legislature: Joint Budget & Audit - October 7, 2026 10:00am

Good morning. I call to order the Legislative Budget and Audit Committee. Today is Wednesday, October 7th, and the time is 10:02 AM. Please silence your cell phones. Thank you.

We have the following members present: Representative Fields, Representative Foster, Representative Josephson, Representative Colon, Senator Steadman, Senator Hoffman, Senator Giesel, Senator Wielekowski, Senator Senator Kawasaki and myself, Senator Grey Jackson. So we have a quorum to conduct business. We've also been joined by Senator Olson. I don't see any other legislators in the room at this moment. I want to thank Sophie, Sophia Tenney from House Records and staff from the Anchorage LIO for supporting our committee today.

Thank you. This morning the committee will consider two revised program legislative requests or RPLs, one from the Department of Health and one from the Alaska Court System. We will then go into executive session to consider the award of a contract for the Department of Corrections cost driver study, the final release of 2 sunset audits, the preliminary release of 3 audits, and to receive an update on the Department of Natural Resources land conveyances. After the executive session, we will come back on the record, and if it's the will of the committee, we'll take action on several of those agenda items. And it's my intent to adjourn this meeting at noon, hopefully.

So are there any questions or comments before we get underway?

Okay, great. We're now at Agenda Item 2, Approval of Agenda. Vice Chair Fields, may I please have a motion for approval of the agenda? I move and ask unanimous consent that the Legislative Budget and Audit Committee approve the agenda as presented. Thank you.

Is there any objection? Great, seeing none, the agenda is approved. We're down at Agenda Item 3, Approval of Minutes. Mr. Vice Chair, may I please have a motion for approval of the minutes? I move and ask unanimous consent the Legislative Budget and Audit Committee approve the minutes of the meeting on August 20th, 2026.

Thank you. Is there any objection? Seeing none, the minutes are approved. We are now at agenda item 4, revised program legislative RPLs. For members of the public, I will offer a quick explanation, um, on this agenda item.

The legislature is appro— is the appropriating branch of state government, and this committee has the authority to approve certain new funds during the interim through the RPL process that would that would otherwise have been approved in the budget during the regular session. So an RPL, which stands for Revised Program Legislative, it allows the Legislative Budget and Audit Committee to increase an appropriation item based on additional federal or other program receipts received or to be received by an agency after an appropriation bill has already been passed. So that is the process that we're about to go through now. RPL 16— 2027-003, Department of Health, Assessment System for Disabled Individuals and Seniors. Mr. Vice Chair, may I please have a motion for approval of our first RPL?

I move and ask unanimous consent that the Legislative Budget and Audit Committee approve RPL 16-2027-0032, Assessment System for Disabled Individuals and Seniors, for $1,281,000. Thank you. And I will object for the purpose of discussion. And Alexi Painter, he's the director of the Division of Legislative Finance, He's with us online. And from the Department of Health, we are joined in the room by Tony Newman, Director, Division of Senior and Disability Services, and online by Pam Halloran, Assistant Commissioner, who are also available to answer questions.

Mr. Painter, would you please explain this RPL to the committee, and then we'll take questions from the committee members. Mr. Painter.

Thank you. For the record, Alexi Painter, Legislative Finance Division. The first RPL, number 16-2020-01, 7-0032 is for the Department of Health, the appropriation of Senior and Disability Services. The allocation is Senior and Disability Services Administration, and it is $640,500 each of federal receipts, which is code 1002, and Mental Health Trust Authority authorized receipts, which is code 10— 1092. That's a total of $1,281,000.

Purpose of this RPL is to support the ongoing Senior and Disability Services Assessment System. The system serves older Alaskans and persons with disabilities who participate in Medicaid home and community-based waiver programs or seek personal care services. This project has been funded by two previous appropriations. There was an FY24 through 26 multi-year appropriation totaling $1,119,000. And then there was a reappropriation of $1,841,469 that will be available from FY '27 through FY '29.

This grant was awarded in May, so it was not considered as part of the regular budget process. Legislative Finance does not have any technical issues with this RPL. It fits within existing activities and fund sources in this allocation and appears to meet the definition of an allowable RPL.

Thank you. Are there any questions for Mr. Painter?

Okay, seeing none, I withdraw my objection. Are there any other objections? Okay, seeing none, then RPL 16-2027-0032 for the assessment system for disabled individuals and seniors is approved. We're now at, uh, RPL 41-2007-0004, Alaska Court System National Criminal History Information Program Award. Vice Chair Fields, may I please have a motion for approval of the RPL?

I move and ask unanimous consent the Legislative Budget and Audit Committee approve RPL number 41-2027-0004, Alaska Court System National Criminal History Information Program Award for $863,073. Thank you. And I will object for the purposes of discussion. Mr. Painter is still online with us, and we also have the Alaska Court System, Noah Klein, Associate Counsel, and Rhonda McLeod, Chief Financial Officer. Mr. Painter, please explain this RPL to the committee, and then we'll take questions from committee members.

Thank you.

For the record again, Alexi Painter, Legislative Finance Division. So this is RPL 41-2027-0004. Agency is the Judiciary Appropriation Alaska Court System, and the allocation is trial courts. It is $863,000.

$1,073 Of federal receipts, code 1002. The purpose of this RPL is to receive a grant award from the federal Department of Justice, Bureau of Justice Statistics, for the Consolidated National Criminal History Improvement Program. Funding will be used to improve the accessibility and quality of criminal history records. It will support 5 positions to work on this effort. The courts expect to request continued funding as part of the FY '28 budget process for this grant.

Legislative Finance does not have any technical No concerns with this RPL. It fits with existing activities and some sources in this allocation.

Thank you, Mr. Painter. Are there any questions for Mr. Painter, Mr. Klein, or McLoyd?

Okay. Great. Seeing none, I withdraw my objection. Then RPL 41-2027-004 for the National Criminal History Information Program is approved. We are now at agenda item 5, executive session.

The committee is now going to be going into executive session for consideration of the award of contract RFP 273301, Department of Corrections Cost Driver Study, the final release of two sunset audits, the preliminary release of two audits, and the reissue of FY24 single— state single audit, and then to receive an update on the Department of Natural Resources Liam Conveyance. Vice Chair Fields, may I please have a motion? I move and ask unanimous consent that the Legislative Budget and Audit Committee go into executive session under Uniform Rule 22, discussion of matters the immediate knowledge of which would adversely affect the finances of a government unit, and Uniform Rule 22, discussion of a matter that may by law be required to be confidential. The following individuals may remain in the room or online during executive session: Mark Lundahl and any staff of the legislative Auditor JC Kestel, Alexi Painter, and Kelly Goode, Emily Nauman, Claire Radford, and Ian Walsh. Any legislators not on the LB&A Committee and any staff of LB&A Committee members.

Thank you. Are there any questions? If there is no objection, then the Legislative Budget and Audit Committee will now go into executive session, and we are going to take a brief at ease while we clear the room.

We are now out of executive session and we're back on the record at 11:41 AM.

The following members are present: Representative Foster, Representative Colombe, Senator Steadman, Senator Hoppins, Senator Giesel, Senator Willard Senator Kowalski, Senator Kawasaki, and myself, Senator Gray Jackson. So we now have a quorum to continue to conduct business. So during the executive session, we discussed the topics listed on the agenda. Next, the committee is going to take action on several of those topics. And the first action is award of— a motion for award of a contract for RFP 273301, DOC cost driver study.

I would like to share some quick background for the public. The operating budget, House Bill 263, including— included the following intent language. It is the intent of the legislature that the Legislative Budget and Audit Committee issue a request for proposals, RFP, to procure an independent third-party study to identify, evaluate, and analyze the primary cost drivers within the Department of Corrections. This action seeks to fulfill the intent of HB 263. So with that said, Representative Foster, may I have a motion, please?

Yes, Madam Chair. I move and ask unanimous consent that the Legislative Budget and Audit Committee approve the award of a contract for RFP 27-33-01, Department of Corrections Cost Driver Study, to Guidehouse, Inc., for an amount not to exceed $650,000 with funds appropriated to the LB&A Committee in House Bill 263. Thank you, and I'll object for the purposes of discussion. Mr. Kessel, online, would you please summarize the recommendation for the public record and then answer any possible questions. Thank you.

Thank you, Chair Gray Jackson. For the record, my name is JC Kestel, I'm an officer for the Legislative Affairs Agency. On behalf of the Legislative Budget and Audit Committee, the agency issued RFP 2733-01 to procure the contractor to conduct the cost driver study and report the study's results to the Legislative Budget and Audit Committee at a future date. The solicitation was publicly posted and closed on September 18th. 3 Proposals were received, 2 of which were deemed responsive.

A 3-member state employee proposal evaluation committee conducted independent reviews, then finalized consensus scoring. CGL Management Group received a total of 84.67 points, and Guidehouse received 86.92 points. Based on the scoring results, the committee recommended awarding the contract to Guidehouse Incorporated. I'm available to answer any questions regarding the procurement, and the evaluation team is available to address questions about the proposals and their evaluations.

Thank you. Are there any questions for Mr. Kessel? Okay, great. So I'll remove my objection. Are there any other objections?

All right, seeing none, then the award of the contract for the Department of Corrections cost driver study is approved. So we're now at a motion for final release of audits. Uh, Representative Foster, may I have a motion for the final release of the audits? Yes, I move and ask unanimous consent that the Legislative Budget and Audit Committee release the following audits as final audit reports: the Board of Marine Pilots and the Marijuana Control Board.

Thank you. Are there any objections? Okay, great. Seeing none, the, the final audit reports are released. We're now on a motion for the preliminary release of audits.

Representative Foster, may I have a motion for the preliminary release of the audits to the agencies to respond? Yes, Madam Chair, I move and ask unanimous consent that the Legislative Budget and Audit Committee release the following preliminary audit reports to the agencies for response: the Alcohol Beverage Control Board Sunset Audit, The Alaska Mental Health Trust Authority Special Audit and the Reissued FY24 State of Alaska Single Audit. Thank you. I'm going to object for the purposes of discussion, and I'm going to ask Mr. Lundahl to quickly explain the division's needs to reissue FY24 State of Alaska Single Audit. Thank you.

Welcome again. Good morning. Thank you, Madam Chair. For the record, Mark Lundahl, Division of Legislative Audit. We need to reissue the FY24 statewide single audit due to the identification of an additional, additional major federal program and also to correct a material misstatement in the schedule of expenditures of federal awards document in the FY24 audit.

The error was identified in FY25, and we found that it impacted the FY24 Federal Schedule or the Schedule of Expenditures of Federal Awards. The error omitted a major federal program and regulations— federal regulations require that we audit that program for FY24. So this new— the reissued audit will include the new program and a restated Federal Schedule. Thank you. Are there any questions for Mr. Lindell?

Okay. I will remove my objection. Is there any other objections? Seeing none, then the preliminary audits are released to the agencies for response. And please note that these audits, they remain confidential until they are finally released by the committee.

All right. Thank you, Mr. Lindell. So regarding the update on DNR land conveyance, while we were in executive session, the committee received an informational and legal update on the Department of Natural Resources land conveyances. No action is necessary at this time, but I would like to give Senator Guiso and any other members an opportunity to share their thoughts, if you like, on this issue. Senator Giesel?

Thank you, Madam Chair. The issue will be discussed in depth tomorrow afternoon at 1:00 p.m. by the Joint Resources Committee, so I will allow that committee hearing to take place before making any comments. Thank you, Madam Chair. Thank you. You're welcome.

Do members have any other comments before we adjourn? Senator Steadman. Before we adjourn on the subject matter of oil consultants, I think maybe we should have an update on our status. I think we may not have any. And then I'll have some comments or concerns.

Okay. Right now we don't have any contracts in place, correct, Jeff? Yeah. No. We don't.

Okay.

Decade and a half ago, we had the inopportunity not to have consultants, and the governor at the time took some action, left the legislature in quite the precarious position because we had no consultants, and it takes time to have them hired, get on board, get up to speed with their complex system, which is probably one of the most, if not the most complex on the planet, literally.

For us to take informed action. We also have, looks like a substantial turnover coming in the House of Representatives this year. And, you know, a new governor, new administration. And we don't know what's going to come down the pike, if anything at all, dealing with that subject matter. But I think it's just something that the committee should be concerned about.

In my opinion, we should always have a consultant in our toolbox. So when we have questions or concern, if it's the Resources Committee, the Finance Committee, or the LB&A Committee, we have somebody to go to other than just the administration, because we don't always agree with the administration. Most of the time we don't agree with the administration on a lot of this type of stuff where there's always nuances. And I don't have a, you know, particular consultant that we should have other than somebody— the consultant needs to be well informed and have to hire consultants. They get conflicted out because they're already under contract with one of the oil companies, energy companies, and/or the administration.

And we always end up scrambling. I don't know if we're going to need them next year, but it seems like we need a little bit of advice almost every winter dealing with oil and gas. And there is significant changes in the global environment. As we speak on trade routes and sources. Venezuela, example, is a source for heavy oil into the refineries of the Gulf Coast, which impacts Alberta, you know, and then we've got the third largest port now in Canada, BC, excuse me, in Prince Rupert, which is forecasted to go to their second largest marine terminal in their country.

So there is significant issues that will come into play that our historic data that we would have to rely on without a consultant is a decade old, it would be virtually worthless or very minimal in value because of the changes. So I just— a concern I thought I would bring to the committee. I would imagine most of us will be here at this committee next year, or at least a good portion of us. There's got to be some continuity of knowledge passed down, and I just think it's something that we need to be recognized or needs to be recognized. Thank you, Senator Stetman.

I appreciate your comments, and I agree. The contracts that we had expired before we had an opportunity to even talk about renewing them, but that's something that we can definitely look at. Senator Guiso. Thank you, Madam Chair. I will agree with Senator Steadman.

We will— and we say we will certainly have another gas pipeline project on our table, so it'd be very prudent to secure a consultant. No, I just agree with both of you 100%, and as a matter of fact, we're planning on holding our next meeting in December, followed by final meeting on Monday, January 18th. But before that, we'll So we'll figure out how to, you know, get another contract on board. Before we end, I just want to take a moment to thank our acting director, soon to be our state— our director, Mark Lundell, for his presentation and all the staff that you had on hand to assist since you're new in this position. And I want to thank JC and other LIA staff and also Alexis and of course Mr. Jeff, who always makes my job easy.

And I also want to lastly thank the committee for always making attending these meetings a priority. Thank you. With that said, we are adjourned at 11:53 AM.