Good evening, I call the legislative budget and audit committee to order.
Today is Thursday, February 5th and the time is 5.17 PM.
Please silence all cell phones.
We have the following members present.
Representative Fales, Representative Foster, representative Josephson,
Representative Cop, Senator Speaker Edgeman,
Senator Giesle, senator Wilakowski,
Senator Kawasaki, and a special welcome to our new member,
Representative Colom.
Welcome and then myself senator great Jackson, so we have a quorum to conduct business
We also have been joined by I thought I saw senator Kaufmann, but I don't see him now, okay?
I'd like to thank
Sofia Tenney from house records and Zachary Lorthorn from the LIO for supporting our committee this evening
I want to think everyone for being here today, please note that the senator
Next statement and hop in there out.
They're attending to legislative business in Sitka today.
And the House Finance Committee is taking public testimony on the fiscal plan, but I see that you're here.
So thank you very much for being here, the members from the committee.
Okay, are there any questions or comments before we get underway?
All right, great.
Vice Chair, we're now on agenda item two, approval of agenda.
Vice chair fields, may I please have a motion for approval the agenda?
I move and ask unanimous consent
and the Legislative Budget and Audit Committee
approve the agenda as presented.
Thank you.
Is there any objection?
Seeing none, the agendas approve.
We're now on agenda item three, approve of the minutes.
Vice Chair, may I have a motion for approval of minutes?
I moved the legislative budget and audit committee
approve them minutes,
the two meetings on November 19th, 2025,
and January 20th of 2026.
Thank You.
Is There Any Objection?
Seeing none the minutes are approved. We are now at agenda item for committee business a top audit issues part two
This item is for discussion only and no vote will be taken
Miss Curtis will walk us through a summary of the corrective actions addressing the division of legislative audits top
audit issue for fiscal year 2025 miss Curtis, please join us at the table welcome and
When you're ready, Please proceed
Thank you for the record.
My name is Chris Curtis.
I'm your state legislative auditor.
So at the last meeting, I presented the FY 25 top audit issues.
And that is in accordance with the committee's relatively new audit finding monitoring process.
So, at that committee meeting I was directed to request the status of corrective action
from the various state departments for 12 top-audit issues, so in your meeting packets
I believe you have a copy of the matrix that summarizes the Status of Corrective Action.
The plan today is to determine whether some of these findings should be forwarded to other legislative committees for further consideration and follow-up.
Now the last column of the matrix shows which findings I recommend forwarding to the other Legislative Committees.
As noted in the Matrix, I do not recommend following up on findings that are resolved or
on finding that the Division of Legislative Audit will be following in their annual financial and federal compliance audits.
The issues ripe for further legislative consideration is issue six,
which concerns the Department of Military and Veterans Affairs and the department of health,
not working together to bill 279.8 million of federal disaster grant expenditures in a timely manner,
which resulted in lost investment earnings.
Issue seven, which relates to the Department of Corrections, overspending their FY24 budget.
Issue eight, related to unaddressed budget shortfalls and three different state departments.
Issue 9, which is the Alaska International Airport's struggle to produce audited financial statements for inclusion in the state's financial
statements.
Issue 10,
which was the Division of Public Assistance, Material Internal Control Deficiencies and Material Noncompliance with several federal programs.
And issue 12, a special audit of the Office of Children's Services noncompliance
with foster care reform.
I'm happy to answer questions about these and if there's no questions, I'll continue to work with the chair
Formally referring these to the legislative committees that are identified in the matrix. Thank you
I'd like to recognize that senator Kauff and joined the meeting of 520
Are there any questions for mr. Curtis representative cop? Miss Curtis. Thanks you for being here. Can you tell us if the FEMA grant?
Did we eventually recover that money?
Yes, well
It's part of our ongoing audit
I can tell you that I believe that the department has finally billed for the revenues.
I, I I believed that is what my team has told me, but I think it'd be a great item to follow up during the budget committees to find exactly the timing of that.
Because as we noted in our finding,
I belive we estimated 1.3 million of lost investment earnings per month as
we waited to bill.
Yes, this this finding remembers as of the end of FY 24
And now we're in the middle of fy 26, so following up that in-the-budget
Process would be a good venue to understand and one exactly they build
Thank you. Thank You. You welcome any other questions for Miss Curtis
Okay, thank you, Miss Curtiss. We are now an agenda item for be
Consideration of contract amendment, Alaska Center for Energy and Power, also known as ASAP.
Mr. Vice Chair, may I have a motion for the Alaska center for energy and power contract?
I move in asking him as consent of the legislative budget and
audit committee authorized the legislature to add $100,000 to the existing Alaska
Center of Energy Empowering and Percival Service Agreement for a total not to exceed amount of $1,100.
$150,000, and to extend the completion date of the RSA
from June 30, 2026 to June30, 2020-7.
Thank you.
And I will object for the purposes of discussion.
And then I'm going to first, I want to ask my staff, Jeff,
step to provide a staff report on this issue.
Thank, you, welcome, Geoff.
Thank You.
Good evening.
Madam chair, my name is Jeff Stepp. I'm Steph to the chair
For background the committee first authorized the reimbursable service agreement with the Alaska Center for Energy and Power or ASAP at its February 26, 2025 meeting
for an amount not to exceed
$50,000 to provide independent expert analysis on energy related topics to support legislative decision making at the June 30th meeting later that year
25. The chair noted that the contract period would be extended into the following fiscal year
with no increase to the original not to exceed amount and if any additional funding would
be needed in the future, a request would brought back to committee for approval during the fourth
coming session. So here we are.
The current request reflected in joint letter from Representative Fields and Senator Giesel
explains that ASAP completed multiple technical tasks in 2025.
including original research, policy briefs, and testimony on issues such as LNG import facilities,
rail belt transmission regulation, battery storage, load growth projections for the rail
Legislators anticipate continued or even increased demand for the that support this session throughout the interim and into 2027
Just as a reminder aset provided a comprehensive report summarizing the work they have completed
Under this contract we shared a link to that report with members by email
On january 21st and it's also posted on the lbna committee website for easy reference by legislators and the public
It's common practice to carry an LB&A committee contract
through the end of the fiscal year, overlapping
with the new legislature so consultants are ready to go
when session starts without any delay.
Accordingly, this request is to add $100,000
to the existing agreement for a total not to exceed amount
of $150,00 and extending the completion date
from the the current fiscal years.
to June 30th, 2027 to allow ASAP to continue providing their valuable analysis, briefings
and expert testimony as requested by the legislature.
I'll also add that they're on standby right now in anticipation of this passing because
there have been several additional requests for their services, but their bucket is empty
at the moment.
That concludes my staff report, Madam Chair.
Thank you, Jeff.
Senator Giesel.
Thank you, Madam Chair.
I strongly support this extension of their contract and the funding for it.
I'm at the onset of my 10th year chairing the Senate Resources Committee.
And this agency, the Alaska Center for Energy and Power, has been indispensable in providing
expert testimony, analysis, madam chair.
They're just really outstanding.
So I fully support these.
Thank You.
Any other comments or questions?
Okay, therefore I remove my objection and if there are no other objections
I don't see any other
Objections in the motion to increase to not to exceed amount to 150,000 and extend the completion date of the reimbursal service agreement with ASAP to June 30th
2027 is approved
Thank you. We are now at
Agenda item 5 executive session the committee will now be going into executive
session for consideration of a contract amendment for outside council for a personal matter and to discuss
illegal analysis related to concern about a potential conflict of interest one of the legislators
Contractors also known as gaffney Klein our energy advisory. Mr. Vice chair may have a motion
I move and ask unanimous consent and the legislative budget and audit committee
go into executive session under uniform rule 22B1 discussion matters.
The immediate knowledge of which would adversely affect the finances of government unit.
and Uniform Rule 22B3, 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.
Chris Kirsten, any staff from the legislative auditor, Emily Nauman and Megan Wallace with legal services,
Karen Jones, partner from Stole Reeves, Matt Armstrong from Baker Hughes,
Zachary Lawhorn, moderator will be helping us today with remote testifiers,
any legislators, not on the LBNA committee, and any Staff of LBMA members.
Thank you. Are there any questions or any objections?
Okay, if there are no objections in the committee, we'll now go into executive session
But we need to take a brief at ease while we clear the room
We are now out of executive session and back on the record at 6.09 p.m.
We have the following members so present.
Senator Giesel, Senator Wieckowski, senator Kawasaki, Representative Fiel,
Representative Cop, representative Colomb,
Representative Ed Sman, and myself, Senate of Great Jackson.
So therefore, we still have a quorum to conduct business.
During the executive sessions,
we discuss the topics that sit on each end and we'll be taking action related to each of them.
The first one was consideration of contract amendment for outside council for a personnel matter
Regarding the contract and memory for our side council related to a personal matter
I want to note that due to the confidential nature of personnel matters
We will not be providing public comment on the specifics at this time. Mr. Vice Chair may I please have a motion
I move in asking him as consent of the Legislative Budget and Audit Committee
approval amendment to the division of legislative audit's existing contract
with Stole Reeves dated October 10 2025 to increase the contract amount by
hundred thousand dollars for a total amount not to exceed two hundred ninety
five thousand for legal services related to a personnel matter. Thank you is there
an objection
Okay. Seeing none, the motion to approve an amendment to the Division of Legislative
Artists' Existing Contract with Stole Reads is approved. Renowned back to Gaffney Klein
Conflict of Interest Legal Analysis. Mr. Vice Chair, may I have a motion?
I move and ask unanimous consent of the Legislative Budget and Audit Committee authorize the chair
to amend the exclusivity and non-conflict of interest clause and any necessary related
provisions of The Committee's current contract with Goffney Kline.
I'm objecting for the purposes of discussion so that I can explain the intent behind this motion.
I take questions about the independence of the legislature's consultant very seriously.
And for that reason, we ask legislative legal services for a formal review.
which is included in the committee packet and posted on basis.
One of Gaffney Klein's consultants, Mr. Fulford, addressed this matter and testimony before
both the House and Senate resources committees.
And we received a detailed written explanation from Gafney Kline and his parent company Baker Hughes
confidentiality requirements and internal firewalls, they used to ensure their advisory
work remains independent and insulated from any commercial activities.
This letter was distributed to members and placed on basis for the public.
After reviewing all of that information and absent evidence of any actual conflict affecting
the committee's work, I'm comfortable that the consultant's analysis remains objective
But at the same time, I think it's reasonable and it is prudent for us to clarify our contract language.
So there is no ambiguity going forward.
The motion before us, it simply authorizes the chair
to amend the exclusivity and non-conflict of interest clause
to better reflect the current circumstances
and to protect the legislature's interest.
And to me, that's practical housekeeping step.
It's not finding any wrongdoing necessarily,
but it's a sensible way to acknowledge the concern,
strengthen our safeguards, and move forward
So finally, I want to be clear about roles.
Consultants provide advice.
They don't make decisions for us.
They provide advise.
The legislation returns, retains full authority to evaluate that advice and
determine what actions are in the best interest of Alaskans.
So with that understanding,
I support this motion as a reasonable resolution.
And I'm happy to hear any comments from members.
Ms. Nowman, Director from Legal Services,
she is available to answer any questions.
And Mr. Armstrong, we don't have to deal with that.
Okay.
All right, any questions from anybody or comments?
Senator Wieckowski.
Thank you, Madam Chair.
I appreciate you bringing this forward
and having this public discussion about it.
I appreciated Senator Giesle
having the public discussions and raising this
and flagging it for everyone.
I know the Public is concerned about this.
I share the concerns.
I'll just say from personal experience,
We've had Gaffney and Klein as an advisor for at least 20 years in the state of Alaska.
They, in my opinion, have always provided valuable advice.
I've found their advice to be objective over the years.
In particular, I remember we used them during oil tax discussions back in 2007, and at
the time they had clients who were producers.
Advice to us that quite frankly cost some of their other clients probably quite a bit of money and they were objective. They didn't try to
Persuade us in any direction.
They simply provided the answers to the questions that we needed and so I think it's important for us to understand that
Their honor is Baker Hughes who has an interest, but I still think the advice that they can provide us will be valuable and useful. Thank you.
Thank You. Vice Chair Fields.
I Think
this committee has approved consultant contracts for Pegasus and ACEF as well, so it's valuable
to have multiple perspectives and we'll be able to analyze those on their merits.
So I agree with Senator Wilakowski, but I also think when the public looks at the work
you've done, we will have a multiple well-informed perspectives.
Thank you.
Any other comments on this issue?
Okay.
Okay, I see in none then the motion to authorize the chair to amend the exclusivity and non-conflictive interest clause and any necessary
related provisions of the committee's current contract with the ethnic client as approved and thank you all for your input
We're now at agenda item six the German do any members have any comments before we adjourn?
Okay I want to let you know that we're planning to hold the next meeting in March
So we'll be reaching out to officers soon to check on members availability.
And I'd like to take a moment to thank Chris and her staff and Emily and
Megan and also the hired attorney who was answering questions on our behalf.
Of course, I want to think why I'll being a staff, and in particular, Jeff, who always makes it easy for me to do this job.
But with that said, if there's nothing else to come before the committee, we are adjourned at 6.16 PM.