Special

SUMMARY OF: Department of Family and Community Services, Office of Children’s Services Compliance with Foster Care Reform Laws, Part 2   Purpose of the Report This audit reviews DFCS’s compliance with House Bill 151 foster care reform laws with an implementation deadline of September 5, 2019, which include the requirements to disclose sibling contact information to separated siblings, implement a longer training program for employees, assist family members in obtaining foster care home licenses, provide or assist individuals exiting State custody with obtaining important documents, and approve or deny foster care license applications within 45 days. Report Conclusions The audit concluded that Office of Children’s Services (OCS) staff offered license assistance to relatives in a prompt manner; however, 80 percent of the unlicensed relatives reviewed as part of this audit did not obtain a license. Auditors could not verify OCS’s compliance with the requirement to approve or deny a foster care home license within 45 days of receiving a completed application due to unreliable completion dates within the license system. Using the application receipt date auditors concluded that license applications were processed, on average, within 77 days of receipt. The audit found that OCS staff made efforts to keep siblings in contact when separated, although the degree to which contact information was disclosed to siblings was not specifically documented in the child welfare information system (ORCA). The audit also noted that OCS staff did not consistently record whether individuals 16 years of age or older obtained birth certificates and other important documents. Further, the audit found a longer training program was implemented as a result of foster care reform. Training has been conducted virtually since the COVID-19 pandemic. The adequacy and effectiveness of the longer training program was not reviewed as part of this audit. Although auditors did not specifically test for the appropriateness of child placements, three cases were identified where children were placed at risk due to OCS staff not following background check procedures. Findings and Recommendations OCS’s director should improve training to ensure OCS staff follow procedures for background checks and address the safety risks identified by auditors. OCS’s director should strengthen training and implement procedures to ensure application dates are entered accurately and consistently in ORCA. OCS’s director should continue efforts to address staffing shortages to ensure foster home applications are processed and approved in a timely manner. OCS’s director should implement procedures for documenting efforts made to assist individuals with obtaining important documents. OCS’s director should continue efforts to address staffing shortages and ensure supervisors certify in writing whether OCS staff has searched for an appropriate placement with a relative or family friend as required by law. OCS’s director should improve security over access to …

SUMMARY OF: Department of Labor and Workforce Development, Technical Vocational Education Program   Purpose of the Report In response to concerns over the efficacy of TVEP, this audit was requested to make objective information available to lawmakers prior to reauthorizing the program. TVEP is set to expire June 30, 2024. Report Conclusions The audit concluded that $12.9 million of Technical Vocational Education Program (TVEP) funding was expended during FY 22. Thirty-two percent was spent to maintain and operate training facilities, 61 percent was spent to train participants, and seven percent was spent for administration. A total of 6,688 TVEP participants were trained during FY 22. The audit concluded that TVEP is not structured to effectively meet Alaska’s technical and vocational education needs or to ensure training providers have a fair opportunity to participate in the program. Access to training, need for specific types of training, and training capacity do not drive the annual award process. Further, TVEP statutory performance metrics are not evaluated against stated objectives or goals and the Alaska Workforce Investment Board (AWIB) does not use the metrics to evaluate the program or to allocate funding. As required by AS 23.15.835(d), TVEP funds are awarded in set percentages to specific training providers without regard to regional/industry training needs or performance. Further, the audit found TVEP training providers were subject to limited accountability and oversight procedures. Since the creation of TVEP through FY 22, a total of $204 million of Unemployment Insurance (UI) employee taxes has been diverted from the UI Compensation Fund (UI Fund) to the State’s TVEP account (a subfund of the general fund). The diversions reduced the UI Fund balance, which may have contributed to increased employer UI tax rates. Further, auditors noted the FY 22 TVEP fund balance of $2.4 million was swept into the Constitutional Budget Reserve Fund (CBRF), which effectively resulted in the use of employee taxes to repay the general fund’s CBRF liability. Findings and Recommendations The legislature should consider repealing AS 23.15.835(d) and allowing TVEP funding to be awarded via a grant process guided by AWIB goals and priorities. The Department of Labor and Workforce Development’s commissioner should work with the Office of Management and Budget to resolve the underpayments for seven FY 22 TVEP training …

SUMMARY OF: Department of Law, Spending on Contracts Related to Janus   Purpose of the Report An audit was requested due to concerns that the Department of Law’s spending on outside counsel for matters relating to Janus violated state law. Report Conclusions The audit’s opinions on whether the legislature’s restrictive Civil Division appropriations were legally constructed and whether the Department of Law’s (LAW) expenditures on matters related to Janus v. AFSCME (Janus) were allowable per state law are based on an evaluation of opposing legal arguments made by the Alaska Legislative Affairs Division of Legal and Research Services (Legislative Legal) and the attorney general. The basis for the audit’s opinions is included in this report; however, it is important to recognize that a final legal determination can only be made by the appropriate court. The audit concluded that the legislature, through constructing LAW’s FY 21 and FY 22 Civil Division appropriations with specific limitations, effectively restricted LAW’s ability to contract with outside counsel for Janus related matters. The attorney general interpreted the restrictions to be a violation of the Alaska Constitution’s confinement clause and an improper encroachment of the powers of a separate branch of government. Based on the attorney general’s opinion, LAW disregarded the legislative restrictions and spent a total of $315,034 during FY 21 and FY 22 for outside counsel services related to the Janus decision. The services included assisting the department with cases involving the Janus decision in which the State of Alaska, or an executive of the State, was named as defendant, and filing amicus briefs in support of the State’s position. The attorney general, Legislative Legal, and an attorney hired by the legislative auditor analyzed the legality of the Civil Division’s restrictive appropriations. The audit’s review of these legal analyses concluded that a court would likely find that the appropriations did not violate the confinement clause or the doctrine of separation of powers since the appropriation language did not prevent the attorney general from fulfilling statutory duties with in-house attorneys. The audit also concluded that limiting expenditures for specific legal cases was perceived by some as a legislative attempt to inappropriately influence the attorney general’s actions, which increased the risk of litigation. The audit further concluded that LAW’s decision to pay outside counsel for services related to Janus from an appropriation that expressly prohibited the expenditures likely violated AS 37.07.080(a) and Article IX, section 13 of the Alaska Constitution. Findings and Recommendations The legislature should consider whether judicial review and/or ratification is …

SUMMARY OF: Office of the Governor, Alaska State Commission for Human Rights, Select Issues   Purpose of the Report In response to concerns about investigation delays, an audit was requested to review ASCHR operations, with a focus on ASCHR’s complaint resolution process. Specifically, the audit evaluated whether the commission resolves complaints promptly and reasons for delays. Additionally, the audit reports steps taken by the commission to seek out and eradicate discrimination. Report Conclusions The audit found that state law requires ASCHR to investigate complaints promptly; however, the term “prompt” is not defined in ASCHR regulations or policies. Forty-three percent of ASCHR complaints closed during the audit period took longer than one year to resolve. The COVID-19 pandemic decreased the opportunity for discrimination, thereby reducing the number of complaints filed with ASCHR. Auditor review found many complaints were inactive for extended periods. ASCHR procedures contributed to inefficiencies. Turnover and vacancies also led to processing delays. ASCHR management expects operational changes made during 2021 and 2022 will improve the timeliness of complaint processing. ASCHR’s outreach activities were reduced during 2019 as a result of turnover and leadership changes. Activities increased after 2019, but were subject to preapproval by commission members through March 2022. Findings and Recommendations ASCHR’s executive director should adopt written policies and procedures to guide the complaint resolution process, establish timelines to encourage timely resolution, and continue efforts to fill …

SUMMARY OF: A Special Review of the Department of Commerce, Community, and Economic Development, Alaska Coronavirus Aid, Relief, and Economic Security Act, Small Business Relief Program   Why DLA Performed This Audit An audit of Alaska’s CARES Act Small Business Relief Program was requested to determine whether all eligible businesses were fairly treated and whether the process for procuring program operators complied with procurement laws. Additionally, the audit lists all grants distributed. Report Conclusions The audit concluded that the Small Business Relief Program disbursed approximately $282 million of CARES Act funds through the issuance of 5,754 grants; however, the distribution rate of grant funds fell far short of expectations. The State expected to distribute $150 million per month, yet only $18 million was distributed by the end of the program’s second month. Despite a federal extension to December 2021, authorization for the program lapsed at the end of June 30, 2021, at which point $823,000 of funds were still available and 669 grant applications were unprocessed. DCCED management was unable to explain why all of the funds were not awarded, because key decision makers were no longer employed by DCCED. The program’s initial eligibility criteria was widely criticized as being too restrictive. Pressure to reach a larger number of Alaskan businesses and fully utilize available funding led DCCED’s commissioner to expand eligibility multiple times. The most significant modifications expanded eligibility to include commercial fishermen, allowed applicants to apply for both the Small Business Relief Program and federal CARES Act loan programs, and opened the program to businesses that served as secondary sources of income. The audit found the grant application processing time was much slower than expected, partly due to the program design and partly due to the rate applications were deemed incomplete or inaccurate. Several program requirements were inconsistently considered and/or enforced by program operators. Some of the inconsistencies were the result of DCCED commissioner directives designed to speed up the approval process, some were the result of appeal decisions that were not applied to all applicants, while others were rooted in different interpretations by operators or between staff of the same operator. Results of testing found a high rate of unallowable grant awards. Auditors tested 155 grants and identified at least one error for 39 percent of the grants tested. The program design increased the risk of unallowable grants and post-payment controls were ineffective. In total, 13 percent of the grant amounts tested were unallowable. The audit did not find evidence that grants were awarded in violation of the State’s ethics laws. AIDEA staff generally followed procurement regulations; however, the procurement process discouraged potential bidders. Changes to the program’s design and eligibility criteria led to numerous request for proposal amendments, which delayed procurement and proved frustrating for potential bidders. A lawsuit that challenged how the program was authorized and designed also delayed procurement. Findings and Recommendations DCCED’s commissioner should work toward recovering the unallowable grant payments identified in this audit. Alaska Industrial Development and Export Authority’s executive director should ensure the chief procurement officer follows procurement procedures and adequate documentation is …

SUMMARY OF: A Special Review of the Department of Commerce, Community, and Economic Development, Alaska Coronavirus Aid, Relief, and Economic Security Act, Small Business Relief Program   Why DLA Performed This Audit An audit of Alaska’s CARES Act Small Business Relief Program was requested to determine whether all eligible businesses were fairly treated and whether the process for procuring program operators complied with procurement laws. Additionally, the audit lists all grants distributed. Report Conclusions The audit concluded that the Small Business Relief Program disbursed approximately $282 million of CARES Act funds through the issuance of 5,754 grants; however, the distribution rate of grant funds fell far short of expectations. The State expected to distribute $150 million per month, yet only $18 million was distributed by the end of the program’s second month. Despite a federal extension to December 2021, authorization for the program lapsed at the end of June 30, 2021, at which point $823,000 of funds were still available and 669 grant applications were unprocessed. DCCED management was unable to explain why all of the funds were not awarded, because key decision makers were no longer employed by DCCED. The program’s initial eligibility criteria was widely criticized as being too restrictive. Pressure to reach a larger number of Alaskan businesses and fully utilize available funding led DCCED’s commissioner to expand eligibility multiple times. The most significant modifications expanded eligibility to include commercial fishermen, allowed applicants to apply for both the Small Business Relief Program and federal CARES Act loan programs, and opened the program to businesses that served as secondary sources of income. The audit found the grant application processing time was much slower than expected, partly due to the program design and partly due to the rate applications were deemed incomplete or inaccurate. Several program requirements were inconsistently considered and/or enforced by program operators. Some of the inconsistencies were the result of DCCED commissioner directives designed to speed up the approval process, some were the result of appeal decisions that were not applied to all applicants, while others were rooted in different interpretations by operators or between staff of the same operator. Results of testing found a high rate of unallowable grant awards. Auditors tested 155 grants and identified at least one error for 39 percent of the grants tested. The program design increased the risk of unallowable grants and post-payment controls were ineffective. In total, 13 percent of the grant amounts tested were unallowable. The audit did not find evidence that grants were awarded in violation of the State’s ethics laws. AIDEA staff generally followed procurement regulations; however, the procurement process discouraged potential bidders. Changes to the program’s design and eligibility criteria led to numerous request for proposal amendments, which delayed procurement and proved frustrating for potential bidders. A lawsuit that challenged how the program was authorized and designed also delayed procurement. Findings and Recommendations DCCED’s commissioner should work toward recovering the unallowable grant payments identified in this audit. Alaska Industrial Development and Export Authority’s executive director should ensure the chief procurement officer follows procurement procedures and adequate documentation is …

SUMMARY OF: A Sunset Review and a Special Review of the Department of Commerce, Community, and Economic Development, Alcoholic Beverage Control Board   Why DLA Performed This Audit The purpose of the audit was to determine if there is a need for the board’s continued existence and whether its termination date should be extended. In addition, the audit examined the board’s license process and identified the cause of delays. The board is scheduled to sunset June 30, 2022, and will have one year from that date to conclude its administrative operations. Report Conclusions Overall, the audit found that board meetings were conducted effectively, regulations were adopted to implement statutory changes, and investigations were conducted in a timely manner. The audit also concluded that the Alcohol and Marijuana Control Office’s (AMCO) operations were impeded by the lack of an automated application process and significant vacancies. Further, deficiencies in controls over processing licensee fee refunds were identified. A review of the board’s license process identified that 76 percent of new license applications and 85 percent of transfer applications received during FY 19 and FY 20 were issued within six months. A backlog of renewal applications caused by unfilled vacancies led AMCO staff to issue approximately 300 temporary licenses in February 2021, which allowed licensees to continue operating pending application review. The audit identified the following opportunities for gaining licensing efficiencies: 1. Improving the completeness and accuracy of initial applications. 2. Reducing delays associated with waiting for compliance information. 3. Issuing licenses timely once all information has been received. Automating the application process and filling vacancies in a timely manner are key to improving efficiency. In accordance with AS 44.66.010(a)(1), the board is scheduled to terminate on June 30, 2022. We recommend the legislature extend the board’s termination date to June 30, 2026, which is four years less than the maximum allowed in statute. The reduced extension reflects the need for more timely oversight to evaluate the board’s progress in addressing licensing inefficiencies and filling vacancies. Findings and Recommendations The DCCED commissioner should ensure AMCO staff vacancies are filled in a timely manner and the AMCO director should implement written licensing procedures. The board should significantly enhance or replace its licensing database and automate the application process where possible. The board and AMCO director should strengthen procedures for entering restricted purchasers in the statewide database of written orders. The board and AMCO director should implement procedures to ensure municipalities receiving funds of biennial license fees are actively enforcing alcoholic beverage laws. The AMCO director should improve procedures and fill vacancies in a timely manner to ensure refunds to municipalities are appropriately …

SUMMARY OF: A Performance Review of the Department of Revenue, Alaska Mental Health Trust Authority, Status of Select Asset Management Issues   Why DLA Performed This Audit The audit was requested to evaluate the corrective action taken by the Authority to address the prior audit findings related to select asset management issues. Report Conclusions A legislative audit released June 2018 found the Alaska Mental Health Trust Authority’s (Authority) board of trustees violated State statutes and terms of the State v. Weiss settlement by diverting $39.5 million of the Alaska Mental Health Trust (Trust) cash principal from the Alaska Permanent Fund Corporation (APFC) to purchase seven commercial real estate properties and $1.8 million of cash principal to purchase/construct several program-related properties. During November 2019, Authority management reported that corrective action had been taken to address the prior audit findings. This audit evaluates the corrective action taken by the Authority. Specifically, the audit determines whether Trust cash principal diverted from the APFC was restored and whether policies and regulations used by the Authority to justify prior actions were amended to comply with statutes. This audit also evaluates the status of the commercial real estate investments and the Authority’s intent regarding future management of the investments. The audit concluded that the Authority’s board of trustees restored Trust cash principal with $41.3 million of Trust income reserves and continued to use the Trust Land Office (TLO) to manage the commercial real estate properties. The audit also found that Authority policies were partially amended to prohibit future investment of cash principal in commercial real estate outside of the APFC. Beginning in 2014, Trust income reserves significantly exceeded target levels because excess income was not used to fully inflation-proof the Alaska mental health trust fund. The board of trustees authorized inflation-proofing of up to $120.3 million during its March 2021 meeting. The Authority’s decision to invest $39.5 million of Trust income in the TLO managed commercial real estate properties decreased the liquidity of Trust income reserves and impaired the Authority’s ability to inflation-proof. If excess Trust income was used to inflation-proof the Trust, the TLO commercial real estate investments would make up 59.5 percent of the remaining income reserves. The illiquid nature of such a large percentage of reserves calls into question the Trust’s ability to meet its spending goals in a down market. Although AS 37.14.041(b) requires Trust income in excess of the amount needed for the State’s comprehensive mental health program be transferred to the State’s general fund, the audit found the Authority did not have a written policy for identifying the amount available for transfer. When evaluating income reserves, auditors noted deficiencies in the Authority’s methodology for calculating reserves and the annual withdrawal amount. After the 2018 audit was released, the Authority’s board of trustees transferred $16.9 million of cash principal to the APFC from the trust authority development account. Subsequently, no principal was transferred for 15 months. More routine transfers began April 2020. Further, the audit found that cash principal was inappropriately used by the Authority for land development activities approved prior to FY 20. Policies were changed beginning in FY 20 to require land development activities be funded with Trust income. According to Authority management, the value of the TLO managed commercial real estate investments increased by $9.6 million since the prior 2018 audit and provided a net equity value of $60.4 million; however, auditors note that the properties were not subject to an annual independent appraisal and two properties were projected to have negative cash flow for FY 21. At the time of the audit, the Authority intended to continue managing the commercial real estate properties as an investment of Trust income through the TLO. Findings and Recommendations The Authority’s board of trustees should consider liquidating the TLO managed commercial real estate investments or transferring the investments to the APFC as inflation-proofing. The board of trustees should develop written procedures to ensure that annual withdrawals are correctly calculated. The board of trustees should develop written policies to ensure Trust income reserves are correctly determined. The board of trustees should consider developing written policies that require inflation-proofing occur annually if Trust income reserves are sufficient. The board of trustees should develop written policies to annually evaluate whether Trust income must be transferred to the general …

SUMMARY OF: A Special Review of the Department of Health and Social Services, Office of Children’s Services (OCS) Compliance with Foster Care Reform Laws, Part 1   Why DLA Performed This Audit This audit reviews the Department of Health and Social Services’ compliance with House Bill 151 foster care reform laws effective September 5, 2018, or December 4, 2018, including the requirements to search for relatives and family friends, provide training on the reasonable and prudent parent standard, and refer families to community organizations when child protective services are not needed and community services are necessary and available. Report Conclusions The audit concluded OCS procedures do not require supervisors to certify in writing whether a search for relatives and family friends was performed; however, auditors generally found searches were conducted. The audit also found that training regarding the reasonable and prudent parent standard was not consistently provided to foster parents. Further, OCS staff did not formally identify and document foster parent training needs. Due to the COVID-19 pandemic, auditors were unable to obtain the documentation necessary to identify whether OCS staff sought parental consent to refer families to community organizations when child protective services were not needed, or for those families that provided consent, whether referrals were timely. Additionally, auditors were unable to calculate the degree families provided consent because OCS staff did not track the referrals when child protective services were not needed. Findings and Recommendations OCS’s director should implement supervisor certification procedures for relative and family friend searches. OCS’s director should improve procedures to ensure foster parents and caregivers in residential child care facilities are provided reasonable and prudent parent standard training. OCS’s director should consider amending regulations to require written training plans. OCS’s director should improve security over access to the Online Resource for Children of Alaska …

SUMMARY OF: A Special Review of the Department of Commerce, Community, and Economic Development, Regulatory Commission of Alaska, FY 19 Annual Report Purpose of the Report In accordance with AS 24.20.271(11), the audit evaluates the accuracy of RCA’s FY 19 annual report concerning statutory timelines, timeline extensions, and performance measures. The audit does not evaluate the effectiveness of RCA’s decisions. Report Conclusions RCA publishes its utility and pipeline activities in one annual report, including information regarding compliance with its statutory timelines and other performance measures. Performance measures are established annually by the commission and included in the annual report. RCA’s FY 19 performance measures are noted below. Target 1: Review all utility and pipeline filings within applicable timelines.Target 2: Review all utility and pipeline dockets within applicable timelines.Target 3: Complete disposition of all informal complaints within established timelines.Target 4: Participate in outreach opportunities to consumers. The audit concluded RCA’s annual report was materially accurate. Specifically, RCA accurately reported its compliance with statutory timelines covered in performance measures 1 and 2. Additionally, information supporting performance measure 3, covering timelines for informal complaints, and performance measure 4, covering outreach opportunities to consumers, was accurately reported. Accuracy of information in RCA’s annual report depends on the reliability of the data maintained in RCA’s data management system. Auditors found that the data maintained in the system was reliable; however, auditors found instances where activity that occurred after FY 19 was incorrectly included in the FY 19 annual report. The inclusion of FY 20 activity did not impact conclusions regarding FY 19 compliance with statutory timelines. Findings and Recommendations RCA’s chair should ensure staff are trained to accurately present regulatory data in the annual report. RCA’s chair should develop written procedures for preparing the annual …

SUMMARY OF: A Special Review of the Department of Revenue, Mustang Operations Center 1 LLC Loan Why DLA Performed This Audit The audit reviews DOR’s tax credit-backed loan to MOC 1. Specifically, the audit evaluates DOR’s compliance with Alaska statutes, policies, and procedures, and the loan agreements. Additionally, auditors determine whether tax credit-backed loans were offered to other entities, whether the MOC 1 loan was accurately recorded in the State’s financial statements, whether there were any conflicts of interest related to the loan, and whether the legislature was notified of the loan. Report Conclusions The audit concludes that the MOC 1 loan was, in substance, an advance payment of MOC 1’s 2015 tax credits, legally permissible under DOR’s statutory investment authority. Although the loan was legal, DOR management did not comply with all statutes governing the investment function. The loan was not adequately collateralized for a period of 19 months. Additionally, the loan was made outside DOR’s established investment processes and not subject to procedures designed to meet investment objectives and minimize risk. Further, the loan was not properly managed, which led to inaccurate financial accounting and reporting. Although DOR obtained an opinion regarding the legality of establishing a tax credit-backed loan program, a “program” was never created. DOR management could not explain why tax credit loans were only offered to MOC 1. The MOC 1 loan created two conflicts of interest. The DOR commissioner’s interest in collecting payment on the MOC 1 loan conflicted with duties to represent the Alaska Industrial Development and Export Authority (AIDEA) in matters relating to MOC 1 as part of AIDEA’s board of directors. Secondly,the DOR commissioner’s statutory duty to ensure the MOC 1 loan was collateralized conflicted with the commissioner’s authority over the valuation and approval of tax credits. DOR recorded a gain of $4.29 million over the life of the MOC 1 loan, however, AIDEA’s assumption of the loan from DOR resulted in a decrease to AIDEA’s net income of $1.77 million. AIDEA management estimates the loss will decrease AIDEA’s FY 21 state dividend by $885.5 thousand. Given the decline in oil prices, it is possible AIDEA will record a significant allowance for loan loss, write off, or substantially write down the amounts owed to AIDEA on the Mustang project by Caracol Petroleum LLC, independent of assuming the DOR MOC 1 loan. Any loss incurred will reduce net income and further reduce AIDEA’s dividend. Overall, the audit found the DOR commissioner’s decision to loan up to $22.5 million to MOC 1 under the authority of the department’s investment statutes was inappropriate when compared with behavior that a prudent person would consider reasonable. In support of this conclusion, auditors noted the following: the loan was made outside of DOR’s established investment procedures and DOR management failed to adequately document consideration of the associated risks when making the loan; adequate internal controls were not implemented over the accounting, reporting, and management of the loan; and the loan created conflicts of interest that were not sufficiently mitigated. These facts demonstrate the need for additional oversight of DOR’s investment functions. Findings and Recommendations DOR’s commissioner should ensure investments are made in accordance with established investment objectives and procedures. DOR’s commissioner should ensure collateral is required in accordance with AS 37.10.071(b)(5). DOR’s commissioner should ensure conflicts of interest are avoided or prevented when carrying out the department’s duties and responsibilities. The legislature should consider enhancing oversight of DOR’s investment …

SUMMARY OF: A Special Review of the Department of Health and Social Services, Medicaid and Children’s Health Insurance Program Eligibility Why DLA Performed This Audit The audit was requested in recognition of the State’s declining fiscal condition and the high amount of State general funds spent on Medicaid and Children’s Health Insurance Program (CHIP) benefits. Audit objectives included determining whether Department of Health and Social Services staff properly determined eligibility and timely enrolled beneficiaries, terminated benefit coverage for individuals no longer eligible for benefits, and preserved and maximized the use of Medicaid and CHIP funds. Auditors were directed to estimate the amount that the State of Alaska paid for benefits on behalf of ineligible beneficiaries and to review the extent eligibility determination best practices were implemented. Report Conclusions The audit found that 42 percent of Division of Public Assistance (DPA) eligibility determinations tested were not accurate and 43 percent were not made in a timely manner. Many of the errors were procedural in nature with no fiscal impact, while some errors resulted in ineligible costs. Based on the testing results, the audit estimates $102 million of federal funds and $28 million of State general funds were spent on FY 19 benefits for ineligible recipients. The estimate is likely understated because DPA has no procedures for verifying household size, a critical component of eligibility, and auditors were unable to test the accuracy of household size. The widespread errors were attributed to inadequate staffing and training. According to management, Medicaid expansion and an economic recession created a large backlog of applications. During this time, processing applications was prioritized over quality control activities, such as supervisory reviews and training. As a result, the accuracy and timeliness of eligibility determinations declined. A new eligibility system implemented in 2014 to meet requirements of the Affordable Care Act (ACA) further contributed to eligibility errors. Rather than streamlining the eligibility process as envisioned by the ACA, the system was plagued with problems that created inefficiencies. At the time of the audit, the system continued to have material control weaknesses. The audit identified several system-related “best practices” that may reduce workload, streamline the application process, and improve accuracy. Implementing the best practices will require information technology expertise and adequate funding. Findings and Recommendations DPA’s director should improve Medicaid and CHIP eligibility training and reestablish a case review process. DPA’s director should continue to resolve system weaknesses in Alaska’s Resource for Integrated Eligibility Services System. DPA’s director should update Medicaid and CHIP regulations for modified adjusted gross income eligibility …

SUMMARY OF: A Special Review of the Department of Health and Social Services, Medicaid and Children’s Health Insurance Program Transportation Costs Why DLA Performed This Audit The audit was requested to identify total Medicaid and Children’s Health Insurance Program (CHIP) travel costs from FY 14 through December 2019, and ways to reduce costs. Audit objectives include identifying the most significant travel vendors and whether the State leveraged its purchasing power to reduce costs; reviewing the prior authorization process and system edits to ascertain whether the controls were operating effectively; testing a sample of travel transactions for reasonableness and proper support; and determining whether telehealth was used to reduce travel when possible. Report Conclusions The audit noted that a 2016 change in federal guidance allowed 100 percent federal reimbursement for services received by Alaska Native recipients through facilities operated by federal Indian Health Services or Tribes under specific circumstances. Prior to the change, the cost of Medicaid and CHIP transportation was shared equally between the state and federal governments. After the State implemented changes per the new federal guidance, the federal share of transportation expenditures grew to 92 percent during FY 17. The audit concluded that Medicaid reforms were not implemented to expand the use of telehealth as required by statutes. Regardless, use of telehealth did increase; however, the increase was not significant. Regulations to expand the use of telehealth were considered, but notpublished. The most significant State-funded transportation vendor was Corporate Travel Management North America Inc. (CTM), the State’s travel contractor. Most of the payments to CTM were for airfares. Other than a contract with Alaska Airlines, which included certain discounts, no procurement efforts to reduce Medicaid and CHIP transportation costs were identified. A total of 145 State-funded Medicaid and CHIP transportation claims were tested by auditors covering airfare, lodging, ground transportation, air ambulance, and ground ambulance. Testing found claims were generally supported, the prior authorization process was followed, and existing system edits appeared to be adequately designed to prevent improper transportation payments. However, the following unallowable or unreasonable costs were detected.• A Medicaid State Plan amendment approved in July 2016 authorized government-operated facilities to be reimbursed at federal per diem rates. This change was not federally required and allowed tribal owned lodging to be paid significantly higher rates than non-tribal owned lodging.• Ten percent of taxi claims tested were overbilled.• Three percent of ground ambulance claims tested were paid an incorrect rate. In addition, analysis of all ground ambulance claims during the audit period found 52 claims billed mileage in addition to an all-inclusive rate.• Eleven percent of airfare claims tested found medical services may have been available in the home community. The Division of Health Care Services’ (DHCS) prior authorization process did not document an evaluation of whether services were available in a recipient’s home community. The audit identified the following potential opportunities to reduce transportation costs:• establishing fixed rates for certain taxi routes/areas;• expanding access to transportation through ride sharing companies and/or through contracting for bus or shuttle services;• allowing and promoting the use of public transportation;• restructuring air and ground ambulance fees;• reconsidering higher rates paid to lodging facilities owned by tribal organizations; and• incentivizing the advance scheduling of non-urgent appointments to allow for the advance purchase of airfare. Findings and Recommendations DHCS’s director should adopt regulations and implement written procedures to encourage the advance purchase or airfare. DHCS’s director should consider alternatives to the taxi voucher system. DHCS’s director should improve controls over ground ambulance claims. DHCS’s director should consider restructuring air and ground ambulance rates. DHCS’s director should adopt regulations and implement controls to evaluate the availability of medical services in a recipient’s home community prior to authorizing travel. DHCS’s director should consider specific opportunities to decrease transportation costs. DHCS’s director should implement regulations to expand the use of telehealth for primary care, behavioral health, and urgent …

SUMMARY OF: A Sunset Review of the Department of Commerce, Community, and Economic Development, Alaska Gasline Development Corporation Select Financial Issues Why DLA Performed This Audit The audit was requested to examine and report on the corporation’s appropriations, spending, and available balances. Additionally, auditors were asked to determine whether appropriated funds were spent in compliance with legislative restrictions and whether significant spending decisions were approved by the board of directors. Report Conclusions The audit addresses the Alaska Gasline Development Corporation’s (corporation) funding and spending in terms of its two gas development projects: the integrated interstate gas infrastructure project (AK LNG) and the small diameter in-state pipeline project (ASAP). Since establishment in May 2010, the legislature appropriated to the corporation a net total of $479.8 million for the two projects which earned an additional $5.7 million in interest. From these revenues, the corporation expended $433.3 million and, as of July 24, 2018, had an estimated available balance of $52.2 million. The corporation’s statutes and appropriation bills impose two main conditions on funding: (1) appropriations should be spent to carry out the corporation’s purposes, powers, and duties, and (2) funding for the two projects should not be comingled. The audit found that the corporation’s spending generally complied with these restrictions, with one exception. The audit identified $150,000 of ASAP costs that were incorrectly coded to the AK LNG fund. This error was corrected once identified by auditors. The audit also found the corporation’s procurement procedures lacked an Alaska veterans’ preference. (Recommendation 1) The audit evaluated board approval of spending decisions in three operational areas: contracts, budgets, and hiring decisions. Prior to April 2016, there was no requirement for the board to approve contracts. Beginning in April 2016 large dollar contracts should have been either approved by or communicated to the board. The audit found no evidence the board approved or was specifically notified of the large dollar contracts, including those of embedded contractors and consultants. (Recommendation 2) In accordance with corporation bylaws and procedures, the board was required to approve operating and capital budgets. The audit found two operating and several capital budgets were not properly approved. The corporation had addressed the deficiencies associated with capital budgets prior to the audit, but deficiencies related to operating budget approval were not corrected. (Recommendation 3) Corporation bylaws only require the board approve the hiring of the corporation’s president. The audit found the board approved hiring decisions in accordance with bylaws. Findings and Recommendations The corporation’s board should include an Alaska veterans’ preference in its procurement procedures. The corporation’s president should create procedures to ensure contracts are approved by, or communicated to, the board in accordance with board bylaws. The corporation’s board should formally approve the operating budget …

SUMMARY OF: A Special Review of the Department of Fish and Game, Board of Game Regulatory Process Why DLA Performed This Audit The audit was requested to address concerns about the Board of Game’s (BOG) regulatory outcomes and decision process. The audit evaluated whether the Department of Fish and Game (DFG), BOG, and Advisory Committees (AC) followed established procedures and whether BOG decisions were made in compliance with State law. The audit also determined the extent DFG complied with legislative intent by making comments, reports, data, and recommendations available prior to a BOG meeting and prior to ACs’ consideration of proposals. Further, the audit determined the degree to which AC regulatory recommendations agreed with DFG recommendations and the degree to which BOG decisions were upheld by the courts. Satisfaction with, and knowledge of, the BOG regulatory process was evaluated by surveying AC and BOG members. Report Conclusions The audit concluded that BOG, ACs, and DFG followed established procedures and complied with State laws governing the regulatory process. AC member survey respondents generally believed BOG’s decision making process was effective, but were less satisfied with the transparency, objectivity, and thoroughness of BOG deliberations. The audit found AC meetings were consistently conducted in accordance with laws and procedures, except for public noticing. (Recommendation No. 1) Over a ten year period, few BOG regulatory decisions were challenged in court. The courts upheld the majority of board decisions. The audit also concluded that DFG comments, reports, data, and recommendations were not routinely made available to ACs via BOG’s website at the time ACs considered proposals; however, a biologist was generally in attendance at AC meetings. Auditors noted that information on BOG’s website may be updated without clearly identifying the update. (Recommendation 2) For most of the recommendations reviewed by auditors, ACs agreed with DFG recommendations. Philosophical differences between DFG staff and AC members may lead to different proposal recommendations regardless of the availability of DFG information. Findings and Recommendations BOG’s executive director should update the AC manual to define “reasonable public notice” and provide training to AC members. BOG’s executive director should ensure information updates are clearly identified on BOG’s …

SUMMARY OF: A Performance Review of the Department of Revenue, Alaska Mental Health Trust Authority Asset Management and Other Select Issues Why DLA Performed This Audit The audit was requested in response to allegations that the Alaska Mental Health Trust Authority (Authority) was not managing its assets and conducting its business in compliance with applicable laws. Report Conclusions The audit concluded that the Authority’s board of trustees violated State statutes and terms of the State v. Weiss settlement by diverting $44.4 million in cash principal from the Alaska Permanent Fund Corporation (APFC). Alaska statutes clearly and unambiguously command that cash principal be managed and invested by the APFC. Despite the requirement, the Authority’s board of trustees suspended transfers of cash principal to the APFC for almost 10 years. The board of trustees’ actions appeared to be well intentioned, driven by a desire to maximize revenue for use by beneficiaries. However, the actions did not comply with law and were contrary to the roles and responsibilities outlined in the settlement. Instead of transferring cash principal to the APFC for investment, $39.5 of $44.4 million was directly invested in seven commercial real estate properties (five located out-of-state) using the Trust Land Office (TLO) to facilitate the commercial real estate investment transactions and to manage the properties. Six of the seven properties were mortgaged and the proceeds were used, in part, for additional commercial real estate investments. The audit concluded that the TLO does not have the legal authority to manage commercial real estate investments. In accordance with the settlement and State law, investment is a function of the APFC. Furthermore, in approving these investments, the Authority’s board inflated investment costs and reduced the asset diversification of the Trust portfolio as a whole. It is more appropriate and efficient to carry out commercial real estate investments via the APFC. The remaining $4.9 million in diverted cash principal was used for land development activities, including constructing and developing properties primarily used by beneficiary programs. Because statutes require cash principal be managed and invested by the APFC, the only potential funding mechanism available in statutes for land development activities is Trust income. Development activities funded by cash principal included the mining exploration of Icy Cape. As of FY 17, the TLO had spent a total of $1.6 million in cash principal for Icy Cape mine exploration, and the board of trustees approved another $3 million for additional exploration activities. In 2017, the Authority’s management proposed draft legislation to its board of trustees to allow for the use of cash principal to purchase and develop real estate through the TLO and to ratify similar actions previously taken by the board. Public record provides no evidence that the Authority’s management or board of trustees considered the proposed statutory changes in context of the settlement. The audit concluded that proposed changes to the Authority’s statutes constitute a material change to statutes that present a substantial risk of provoking successful litigation to void the settlement agreement if the proposed changes become law. As part of this audit, an investment firm was hired to evaluate the Authority’s asset management policies for compliance with State investment law and industry best practices. The contractor concluded that the policies fall short in several areas including: lack of an entity-wide perspective that addresses all Trust assets; lack of guidance for the TLO’s commercial real estate investment program; and failure to provide a rationale for using the TLO as a real estate investment manager at the time the investment decisions were made. The audit concluded that the Authority’s board of trustees did not comply with the Alaska Executive Branch Ethics Act, Open Meetings Act, and the Authority’s bylaws when conducting its business. Evidence showed that multiple trustees were, at times, intentionally trying to avoid discussing board business in a public manner. Other times, evidence showed the board failed to recognize the importance of or need for adhering to State laws when conducting and noticing its meetings. The review of Authority activities and relationships did not identify less than arm’s length transactions. However, the audit found several employee and trustee professional and personal relationships that created an appearance of related parties or increased the risk of fraud or abuse. The audit found no indication that Authority financial statements materially misstated TLO-managed assets. Findings and Recommendations The Authority board of trustees should stop investing in commercial real estate through the TLO, consult with the APFC on the treatment of commercial real estate investments acquired to date via TLO, and transfer the Trust Authority Development Account’s cash principal balance to the APFC. The Authority’s board of trustees should fund future program-related investment (PRI) activities from the Trust income account and reconstitute the APFC with cash principal used on PRIs to date. The Authority’s board of trustees should work with the Authority and TLO management to revise the Asset Management Policy Statement and Resource Management Strategy to incorporate industry best practices and facilitate compliance with State investment laws. The Authority’s board of trustees and chief executive officer should design and implement written procedures to ensure trustees comply with the Alaska Executive Branch Ethics Act, the Open Meetings Act, and Authority’s …

SUMMARY OF: A Performance Audit of the Department of Commerce, Community, and Economic Development, Regulatory Commission of Alaska (RCA) FY 17 Annual Report Why DLA Performed This Audit In accordance with AS 24.20.271(11), the audit evaluates the accuracy of RCA’s FY 17 annual report concerning statutory timelines, timeline extensions, and performance measures. This audit does not evaluate the effectiveness of RCA’s decisions. Report Conclusions RCA’s FY 17 annual report data for dockets, tariff filings, and statutory extensions was materially accurate. An analysis of case management system data and hard copy files concluded that the commission accurately reported its compliance with timeline requirements for utility, pipeline, and regulatory dockets; tariff filings; and statutory extensions. The audit confirmed the performance measures relating to docket and tariff filing timelines, informal complaints, and consumer outreach were materially accurate. Findings and Recommendations The audit makes no …

SUMMARY OF: A Sunset Review of the Department of Natural Resources, Matanuska Maid Select Property Disposal Why DLA Performed This Audit The purpose of the audit was to determine if applicable statutes, regulations, and best business practices were followed when disposing of the former MatMaid bottling property. The audit also determined whether sale proceeds were appropriately accounted for and reported. Report Conclusions The audit concludes that the Board of Agriculture and Conservation (board) and Division of Agriculture (division) staff adhered to the applicable laws when disposing of the MatMaid bottling property. Specifically, the board followed a public process and properly established terms and conditions for sale. Division staff maintained adequate property disposal files and department staff appropriately accounted for and reported the sale proceeds in the FY 17 Comprehensive Annual Financial …

SUMMARY OF: A Performance Audit of the Department of Public Safety, Alaska Scientific Crime Detection Laboratory , Select Issues Why DLA Performed This Audit The audit of the Crime Lab was requested, in part, to determine if the new crime lab facility had an impact on available forensic services and the extent services were outsourced. The audit evaluates whether evidence control procedures at the new facility are suitably designed to ensure the integrity of evidence, identifies the number of untested Sexual Assault Response Team kits stored at the Crime Lab, and documents backlogs for all services. The audit determines staff turnover and evaluates personnel practices. Lastly, the audit evaluates and verifies the accuracy of the Crime Lab’s performance measures. Report Conclusions The audit concludes that the new Crime Lab facility has not expanded the forensic services provided or reduced the process time for service requests. Despite the completion of the new Crime Lab facility, no additional forensic services have been added. Toxicology related to traffic offenses is the only forensic service consistently outsourced. The cost of outsourcing traffic-related offenses is partially covered by a federal grant. The audit was unable to evaluate the costs versus benefits of expanding the Crime Lab to provide additional forensic services due to a lack of cost data. A survey of law enforcement agencies identified a demand for additional forensic services, especially toxicology. The audit found that from July 2007 through April 2016, backlogs existed in most services; however, backlogs have been reduced in 2016. According to a survey of Crime Lab forensic scientists and technicians, the primary reason for backlogs has been a lack of forensic scientists. The audit identified that 20 forensic scientist and technician positions were vacant in excess of six months during the audit period. There were 122 Sexual Assault Response Team (SART) kits stored at the Crime Lab as of July 20, 2016. Of the 68 SART kits awaiting analysis by the Crime Lab, 74 percent were in backlog status (older than 30 days). The total number of untested kits maintained by law enforcement agencies statewide is unknown, as Crime Lab management lacks a method for tracking the number of kits distributed or used. The audit concludes that Crime Lab evidence control procedures do not adequately protect against evidence theft or loss. Furthermore, improvements are needed in building security and access controls to adequately protect sensitive areas of the Crime Lab. A comparison to national benchmarks was not possible; however, the audit provides processing information to help gauge productivity between fiscal years. Fifty-five percent of the forensic analysis service requests received between July 2015 and April 2016 were completed within 30 days. The audit concludes that performance measures were not accurately reported by Crime Lab management. Additionally, turnaround time from the date evidence was received by the Crime Lab to the date results were provided to the requesting agency was not tracked or reported. The audit also found unreliable information was used to calculate performance measures related to the DNA database. The Crime Lab experienced consistent staff turnover from July 2007 through April 2016. The turnover rate does not appear excessive except for the FY 10 rate showing that 44 percent of physical discipline forensic staff left the lab. Review of personnel practices found improvements were needed over staff supervision and hiring. Findings and Recommendations 1. DPS’ commissioner should ensure building security and evidence control procedures minimize the potential for evidence loss and theft. 2. The Crime Lab manager should develop policies and procedures to ensure access to the Laboratory Information Management System (LIMS) is granted based on users’ business needs. 3. The Crime Lab manager should develop and follow detailed written procedures to ensure all employees complete security clearance verification prior to accessing LIMS. 4. The Crime Lab manager should comply with policies and procedures over drug standards. 5. DPS’ commissioner should develop policies and procedures to ensure performance measures are accurate, relevant, complete, and based on an appropriate …

SUMMARY OF: A Performance Audit of the Department Of Commerce, Community, and Economic Development and Department Of Revenue Commercial Passenger Vessel (CPV) Tax Program Why DLA Performed This Audit In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Department of Commerce, Community, and Economic Development’s and the Department of Revenue’s Commercial Passenger Vessel Tax Program. Report Conclusions The State has received approximately $271 million of CPV tax receipts since the program began in 2007 through FY 15. Of those receipts, $99 million (37 percent) was distributed back to port communities as part of the shared tax program. Another $130 million (48 percent) was appropriated as grants to communities or other recipients, and $35 million (13 percent) was appropriated as grants to the Department of Transportation and Public Facilities and the Department of Natural Resources. The audit concluded that the CPV tax structure could allow CPV tax receipts to fall short of the amounts to be distributed. To date, CPV receipts have been sufficient to fund the amounts required to be distributed to port communities. However, significant increases to the number of passengers that visit a high number of ports would threaten the solvency of the CPV fund. The audit also concluded that shared tax revenues spent by communities to improve port facilities and harbor infrastructure were spent in compliance with State law. However, CPV funds expended by communities for services other than port facilities and harbor infrastructure often lacked the documentation necessary to verify the expenditures complied with State law. One instance was found where CPV shared taxes were spent on unallowable activities. Additionally, the unspent balance of shared taxes was determined to be reasonable based on community efforts to initiate or complete CPV projects. Furthermore, the audit concluded that unexpended CPV grants are supported by ongoing projects. However, the audit noted grants have been provided to ineligible recipients. Findings and Recommendations Municipality of Skagway Borough management should only use CPV shared tax revenues for allowable purposes. Ketchikan Gateway Borough management should ensure CPV shared tax revenues are only used for allowable purposes. City and Borough of Sitka management should ensure CPV shared tax revenues are only used for allowable …

SUMMARY OF: A Performance Audit of the Department of Commerce, Community, and Economic Development, Regulatory Commission of Alaska FY 15 Annual Report Why DLA Performed This Audit In accordance with AS 24.20.271(11), the audit evaluates the accuracy of RCA’s FY 15 annual report concerning statutory timelines, timeline extensions, and performance measures. This audit does not conclude on the effectiveness of RCA’s decisions. Report Conclusions The Regulatory Commission of Alaska’s (RCA) FY 15 annual report data for dockets, tariff fi lings, and statutory extensions was materially accurate. An analysis of case management system data and hard copy files concluded that the commission accurately reported its compliance with timeline requirements for utility, pipeline, and regulatory dockets; tariff filings; and statutory extensions. The auditors confirmed the performance measures relating to docket and tariff fi ling timelines,informal complaints, and consumer outreach were materially accurate. Findings and Recommendations The audit does not make new recommendations and considers the prior audit recommendation …

SUMMARY OF: A Performance Audit of the University of Alaska (UA) Travel Why DLA Performed This Audit The audit of the university’s travel was requested to identify potential savings and efficiencies. This audit reports travel expenditures, identifies opportunities for reducing costs and gaining efficiencies, provides recommendations to reduce the university’s travel expenditures, and provides a status of prior travel audit recommendations. Report Conclusions The university’s travel expenditures fluctuated between $22.1 million in FY 12 and $21.9 million in FY 14 with a significant decrease to $18.6 million in FY 15. According to management, the number of trips was intentionally decreased in FY 15 to contain costs. Further savings could be realized if UA implements changes recommended in this audit. A review of UA’s procurement practices found UA did not leverage its buying power and did not take advantage of the State’s contracts to achieve the best possible price for travel. Numerous State of Alaska contracts are available to the university that would help reduce travel costs. The audit estimates that the university could have reduced travel costs in FY 15 by $257,000 in airfares and $132,000 in car rentals if the State’s contracts had been utilized. Although the State’s airfare contracts were not utilized, the university did take advantage of savings offered through the Alaska Airlines EasyBiz program. In FY 15, the university redeemed 3.6 million EasyBiz miles for 234 tickets. Using the EasyBiz program reduced UA airfare costs; however, internal controls over EasyBiz mileage need improvement to ensure the efficient and authorized use of miles. The audit found UA’s travel scheduling and purchasing processes are decentralized with no single system used by all departments. The system-wide use of a travel booking tool and a single university credit card account would improve efficiency, transparency, and reduce costs. In FY 15, UA implemented a new electronic travel and expense management system. Despite its benefits, several University of Alaska Fairbanks (UAF) departments opted out of using the new system and did not realize the improved efficiency and transparency provided by the system. The audit identifies four opportunities to reduce costs. First, purchasing airfares 14 days in advance would allow travelers to take advantage of the best rates available. Second, requesting the government lodging rate would have reduced UA’s lodging expenses by an estimated $44,000 in FY 15. Third, denying reimbursement of avoidable lodging taxes would have saved approximately $167,000. Finally, using campus lodging in the summer months would reduce lodging costs. In the transactions tested, using campus lodging during summer months could have reduced lodging costs by $24,000 in FY 15. To be effective, travel policy changes recommended by this audit should be codified in the university’s travel regulations. The audit found improvements were needed in the review of travel transactions. Testing of 140 travel transactions processed in FY 15 found 23 instances of noncompliance with UA regulations. The errors affected transportation, lodging, and per diem, resulting in incorrect calculations or reimbursements, inadequate approvals, and lack of documentation.   Findings and Recommendations 1. UA’s chief financial officer (CFO) should implement a consistent system-wide accounting structure to record travel. 2. UA’s CFO should take full advantage of State of Alaska travel related contracts to reduce travel costs. 3. UA’s president should consider acquiring a booking tool to obtain discounts and improve management of travel. 4. UA’s president should establish regulations to improve internal controls over EasyBiz accounts and mileage. 5. UA’s president should require the travel and expense management system be implemented by all UAF departments. 6. UA’s president should consolidate the three UA-issued credit cards into a single corporate account and limit use of personal credit cards for travel. 7. UA’s president should improve travel regulations to reduce travel costs. 8. UA’s CFO should work with each campus’ management to improve the review of travel …

SUMMARY OF: A Special Review of the Department of Administration (DOA), State Travel Office (STO) Why DLA Performed This Audit This audit of the State Travel Office was requested to determine whether centralizing travel procurement for the executive branch has resulted in effi ciencies and lower travel costs, to evaluate the relevance and reliability of reported travel information, and to make recommendations to reduce travel costs. This audit also evaluates whether the State has appropriately received their contractual discounts in airfare rates, and reports the status of prior STO audit recommendations. Report Conclusions The audit concludes centralizing travel procurement has reduced non-Medicaid travel costs and increased the efficiency of the procurement process. Non-Medicaid air travel costs were reduced in FY 15 by almost $700,000 through purchasing travel through the STO. Additionally, with minor exceptions, airfares tested as part of the audit reflected the correct contractual discount rates. Improving travel practices can further reduce State travel costs. The audit recommends revising travel policies to clearly communicate the expectation for advance purchase, enhancing the reporting of travel information to help reduce the expiration of air tickets, and limiting the number of agencies exempt from using the STO. The audit found discounted airfare rates reduced Medicaid airfare costs in FY 15, however the $1.9 million in booking fees charged by the State’s travel vendor significantly exceeded the savings of $990,000. It is the Department of Health and Social Services’ (DHSS) standard practice to purchase one of the most expensive types of airfare, the fully refundable class of airfare, for its Medicaid recipients in need of travel. Furthermore, the audit found 75 percent of the FY 15 Medicaid airfares were purchased less than seven days in advance of travel. Both of these actions increased DHSS travel costs. When evaluating Medicaid travel, the audit identified that $3 million in Medicaid airfare refunds were due the State; however, because of problems with the Medicaid system, DHSS has not been able to process those refunds. Improvements are needed to ensure the STO travel information is both relevant and reliable. The audit found important information was excluded from STO’s saving rate calculation and in STO’s monthly travel reports. Increasing the relevance and reliability of travel information may assist State agencies in actively managing travel costs. Two of the previous STO audit recommendations were resolved or no longer apply to current processes. Two prior recommendations to improve reporting of travel activity for management purposes have not been resolved. One prior recommendation for a statuary change is being worked on but has not been fully addressed.   Findings and Recommendations 1. DOA’s Division of Finance (DOF) director should revise the savings rate calculation methodology for airfare to ensure expenditures and revenues are appropriately included in the savings rate. 2. DHSS’ commissioner should revise procurement practices to reduce Medicaid travel costs. 3. DOA’s DOF director should collect the $3 million due from its travel contractor. 4. DOA’s DOF director should revise State travel policies to encourage advance purchase of airfares. 5. DOA’s DOF director should improve the reporting of travel activities. 6. DOA’s DOF director should reconsider agency STO …

SUMMARY OF: A Performance Audit of the Department of Commerce, Community, and Economic Development, Alaska Regional Development Organizations Why DLA Performed This Audit An audit of the ARDOR program was requested in recognition of the significant changes to the State’s economic landscape since the ARDOR program was created in 1988. The audit evaluated whether the program has stimulated economic development in the different regions of the state, including if ARDORs were successful in meeting their established goals, and if economic development projects conducted by the ARDORs served the regional needs. Additional audit objectives included identifying ARDOR program costs, amounts granted to ARDORS, and ARDOR director and staff salaries; identifying duplication of activities between ARDORs and other economic development organizations; and determining the extent DCCED is helping ARDORs fi nd addition fundingand advance projects. Report Conclusions The audit concluded that ARDORs encouraged economic development in their respective regions; however, the economic benefit was indeterminable due to nonspecific goals and a lack of performance measures. The audit found ARDORs implemented State grant projects based on the Comprehensive Economic Development Strategies (CEDS), which outlined the economic priorities and needs for each region. These activities are in line with the legislative intent of the program; however, barriers to regional economic development remain. While there are numerous entities pursuing economic development in the state, ARDORs are the only entities within the State that collaborate with local communities and businesses to develop and maintain a regional CEDS. Furthermore, the audit determined that DCCED staff predominately managed the ARDOR program in accordance with legislative intent, statutes, and regulations. Recommended improvements to DCCED’s program administration are discussed in Recommendation 1. The need to update ARDOR regulations is discussed in Recommendation 2. State ARDOR program expenditures increased from $649 thousand in FY 08 to $956 thousand in FY 15. Throughout the audit period ARDORs successfully matched State ARDOR grants with private contributions, service revenues, and federal grant funds. ARDOR organization director and staff salaries typically reflect the size and complexity of the respective organizations. Findings and Recommendations 1. DCCED Division of Economic Development’s (DED) director should evaluate procedures to improve administration of the ARDORs program. 2. DCCED DED’s director should review ARDOR regulations to determine if updates are necessary to ensure program requirements are relevant and in line with current program …

SUMMARY OF: A Performance Audit of the Department of Administration, Alaska Public Offices Commission Why DLA Performed This Audit In an effort to address concerns regarding the Alaska Public Offices Commission’s (APOC) performance, fairness, and integrity, an audit of the agency was requested. This audit examines and reports on the select APOC operations. Report Conclusions The audit concludes that APOC is operating within its statutory duties; however, operational improvements are needed. Implementing internal controls such as comprehensive written procedures and improving documentation will help promote fair and objective operations. The audit was unable to conclude as to the objectivity and fairness of APOC’s auditing process due to a lack of documentation. APOC’s audit process is made less objective by the agency’s inability to meet its statutory mandate to audit 100 percent of filings given that the determination of which filings to audit is left up to staff with no comprehensive written guidance. Comprehensive written procedures should be implemented to improve the audit process. (See Recommendation 1.) This report concludes that APOC’s methodology for assessing civil penalties is objective and defined in statute. However, mitigating factors used to reduce the penalty amount were not applied consistently. (See Recommendation 2.) The audit found that APOC experienced significant and consistent staff turnover during the six-year period 2009 through 2014. APOC management and the Commission took limited actions to address turnover. Complaint investigations, advisory opinions, and civil penalty assessment notices were not consistently issued within required timelines. Missed timelines were partially attributed to staff turnover. (See Recommendation 3.)   Findings and Recommendations APOC’s executive director, in consultation with the Commission, should develop and implement comprehensive written audit procedures. APOC’s executive director, in consultation with the Commission, should develop and implement comprehensive written procedures for the civil penalty assement and appeal processes. APOC’s executive director should consider automating certain workload tasks as a way to obtain efficiencies and meet …

SUMMARY OF: A Performance Audit of the Department of Natural Resources, Citizens’ Advisory Commission on Federal Areas Why DLA Performed This Audit The purpose of this audit was to determine if the commission has ably met its statutory mandate as established in AS 41.37. Report Conclusions Overall, the audit concluded that the Citizens’ Advisory Commission on Federal Areas (commission) had met its statutory mandates and objectives by monitoring management plans for federal lands within Alaska and providing comments to decision makers concerning federal land management plans. The commission has operated in the public’s interest by reviewing federal land management plans for consistency with current laws and holding hearings on the effect of federal regulations and decisions within the State of Alaska. Furthermore, on behalf of Alaska citizens, the commission provides written comments to federal organizations concerning federal land management plans within the state. The commission submitted 62 comment letters during the audit period. Comment letters were directed to federal agencies, congressional delegations, state legislators, and the governor.   Findings and Recommendations The commission’s executive director should strengthen procedures to ensure public notice requirements are met. The commission’s executive director should implement procedures to ensure commission meeting minutes are recorded and …

SUMMARY OF: A Performance Audit of the Alaska Agricultural and Fisheries Products Preference – Use by State Entities Why DLA Performed This Audit This audit was performed to determine whether the seven percent price preference designed to promote the purchase of Alaska agricultural and fisheries products is accomplishing its objective. Report Conclusions The Alaska agricultural and fisheries products preference does not significantly influence state entities’ decisions to purchase in-state products because food is rarely purchased directly from Alaska producers. State entities either purchase food products from wholesalers or through contracts with service organizations. To the extent in-state products are available, the audit recommends encouraging the purchase of in-state products through contractual requirements with wholesalers and service organizations. A survey of 12 state entities identified several factors that impede the purchase of Alaska agricultural and fisheries products directly from producers. Product availability is the most common barrier. Ordering and delivery systems also limit direct purchases from local producers. The audit reviewed the food procurement process and found that, with two exceptions, the Alaska agricultural and fisheries products preference was correctly applied in large procurements. The audit also found that three state entities incorrectly applied small procurement rules to large dollar food purchases. An evaluation of the Nutritional Alaskan Foods in Schools program, which offers grants to school districts for Alaska food product purchases, found the program was more successful at promoting the purchase of local products than the seven percent Alaska agricultural and fisheries products preference. Findings and Recommendations The Department of Administration’s chief procurement officer should promote the purchase of Alaska agricultural and fisheries products by educating and training state entities to include the seven percent preference in food-related contracts. The University of Alaska’s chief procurement officer should update procurement policies to include the seven percent Alaska agricultural and fisheries products price preference. The Department of Natural Resources’ administrative services director should use the formal large procurement solicitation process for Mt. McKinley Meat and Sausage Plant boxed meat purchases. The Department of Labor and Workforce Development’s administrative services director should use the formal large procurement solicitation process when aggregate Alaska Vocational Technical Center food expenditures are likely to exceed $100,000. The Department of Health and Social Services’ assistant commissioner should use the formal large procurement solicitation process when aggregate Division of Juvenile Justice food expenditures are likely to exceed …

SUMMARY OF: A Performance Audit of the Department of Fish and Game, Commercial Fisheries Entry Commission Why DLA Performed This Audit This audit was requested to determine whether efficiencies and cost savings could be achieved by consolidating CFEC within existing state agencies, while still meeting legislative intent for limited entry. Report Conclusions The audit concluded significant efficiencies could be achieved; however, efficiencies were not predicated on eliminating the agency and merging its functions with other state agencies. The audit recommends merging only the Commercial Fisheries Entry Commission’s (CFEC) administrative functions with the Department of Fish and Game. There was no compelling reason to move its other functions. Alternately, $1.2 million of annual savings could be achieved by reorganizing CFEC and maintaining its status as an independent agency. The audit also concluded that, in general, its commissioners have not adequately managed CFEC’s daily operations. Two projects, the licensing system upgrade and the archival of agency documents, have not been prioritized or properly managed. Finishing these agency-wide projects would greatly improve workflow and allow for significant reductions in staff. Furthermore, the audit found that the agency’s workload no longer justifies full-time commissioner positions. The audit recommends: (1) hiring an executive director to manage daily operations and facilitate an agency-wide restructure; (2) prioritizing the completion of CFEC’s licensing system upgrade; and (3) properly managing the archival project. These three recommendations should improve operations and result in significant savings while maintaining an independent agency capable of responding to future needs.   Findings and Recommendations CFEC’s commission chair should hire an executive director to facilitate an agency-wide restructure to improve operational efficiency. CFEC’s commission chair should prioritize the licensing system upgrade to ensure it is completed in a timely manner. CFEC’s commission chair should ensure the archiving project meets agency needs and proceeds in a cost-effective …

SUMMARY OF: A Performance Audit of the Department of Health and Social Services (DHSS), Division of Alaska Pioneer Homes (DAPH) Why DLA Performed This Audit In an effort to address concerns over the costs of operating the Alaska pioneer homes, an audit of the agency was requested. This audit examines the division’s operating costs and effectiveness of cost containment efforts, DHSS’ Medicaid waiver rate setting methodology, and the status of the prior audit recommendations. The audit was also directed to compare the degree of care required by residents in privately-owned assisted living homes to the degree of care required by residents in pioneer homes. Report Conclusions This audit concludes that pioneer homes are heavily subsidized by the State’s general fund. Total general fund subsidy for the five-year period, FY 10 through FY 14, was $191.7 million. Monthly resident rates have not been reviewed for adequacy since FY 09. Except for pharmacy operations, the audit found a general lack of fiscal accountability in administering the pioneer homes and a lack of efforts toward containing costs. Efforts to collect accounts receivable were minimal, and staff did not have an accurate accounting of amounts owed by residents. The audit also found certain grants made to residents were not within DAPH’s statutory authority. Furthermore, pioneer homes residents were allowed to apply and receive general funded payment assistance without first applying for payment assistance through Medicaid. No formal analysis has been conducted to ensure staffing levels are reasonable and efficient. The methodology for establishing the proposed Medicaid reimbursement rate was reviewed and found to be consistently applied and capture all allowable costs. The prior 1999 pioneer homes audit report contained seven recommendations. Five of the seven recommendations were implemented or resolved. The prior recommendation regarding compliance with federal regulations in the handling of controlled substances was partially implemented. The pioneer homes’ pharmacist established procedures for tracking prescribed controlled substances, including those sent to each home. However, the Sitka Pioneer Home registered nurse has not complied with these procedures. The prior recommendation directing the DAPH director to select the most effective method of providing pharmacy services to residents was not addressed. However, audit fieldwork found no compelling reason to privatize pharmacy operations. The audit was unable to examine the degree of care required for residents in the privately-owned assisted living homes due to the confidentiality requirements of the Health Insurance Portability and Accountability Act and the lack of authority to examine the records of privately-owned homes. However, the audit did compare the average age of pioneer homes residents to the average age of residents of private assisted living homes with more than 17 beds. Pioneer homes residents’ average age was 86 years, compared to private homes residents’ average age of 80 years. Findings and Recommendations DAPH’s director should obtain assistance from DHSS’ Financial Management Services accountants to properly deploy QuickBooks so that it can correctly function as a subsidiary accounting system. DAPH management should allocate resources to actively pursue collection of past due amounts. DAPH management should enforce all requirements for the payment assistance program. DAPH’s director should discontinue unauthorized grants to pioneer home residents. DHSS’ commissioner should annually review the pioneer homes’ monthly rates. DAPH’s director should ensure all pioneer homes comply with the pharmacy’s policies for controlled …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development, Regulatory Commission of Alaska FY 13 Annual Report, May 16, 2014 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Regulatory Commission of Alaska’s (commission or RCA) FY 13 annual report. Report Conclusions Overall, the audit found the commission accurately reported on the status of utility dockets, pipeline dockets, statutory extensions, and complaint resolution and consumer outreach performance measures. Data reported in the FY 13 annual report for tariff filings, regulatory dockets, and the timeline performance measure was not reliable due to errors in the underlying case management system data. Findings and Recommendations Recommendation No. 1 The RCA chair should continue to implement and enforce written procedures to ensure case management system data is consistent, complete, and accurately reflected in the annual report. RCA’s FY 13 annual report contains errors in tariff filing and regulatory docket information.  An examination of 75 of 318 tariff filings and two of 12 regulatory dockets open or opened during FY 13 found case management system data error rates of 21 percent and 50 percent respectively. Although commission management developed written procedures for entering tariff filing and docket data during FY 12, testing results showed procedures were not consistently applied. The data errors can be attributed to a lack of adequate training and documentation of data review and lack of ongoing quality …

SUMMARY OF: A Special Report on the Department of Revenue, Alaska Film Production Incentive Program, July 14, 2014 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Alaska Film Production Incentive Program (film credit program). This performance audit evaluates the Alaska Film Office’s (AFO) compliance with statutes and regulations in conducting the activities of the film credit program from July 1, 2013, through June 30, 2014. The audit also provides the current status of recommendations from the prior two performance audits. Report Conclusions The audit concludes: Statutory dollar limits for the film credit program were not exceeded. Except for the statutory requirement to obtain names of the proposed cast, applications for qualification were approved or rejected in accordance with statutes. The related internal controls were found to be operating effectively. Final applications for film tax credits subject to the original statutory framework were approved in accordance with applicable statutes and regulations. The related internal controls were found to be operating effectively. Except for the statutory requirement for film productions to include the AFO logo and required verbiage, final applications for film tax credits subject to the new framework were approved in accordance with applicable statutes. The related internal controls were found to be operating effectively.   Findings and Recommendations Recommendation No. 1 The Department of Revenue’s (DOR) AFO executive director should continue efforts to ensure qualification applications contain names of the proposed cast as required by statute. All 29 qualification applications approved since July 1, 2013, were examined to determine if the applications included names of the producers, directors, and proposed cast. Seven of the 29 qualification applications were incomplete in listing talent or persons highlighted in the film production. Recommendation No. 2 DOR’s AFO executive director and the film commission should ensure that film credit productions include the AFO logo and the required statutory verbiage. Film productions related to the two final applications approved after July 1, 2013, and subject to the new statutory framework did not include the AFO logo and the words “Filmed in Alaska with the Support of the State of Alaska” as required by …

SUMMARY OF: A Special Report on the Department of Revenue, Oil and Gas Tax Audit Process, June 20, 2014 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Department of Revenue’s (DOR) oil and gas tax audit process. This audit evaluates the effectiveness of DOR’s oil and gas production tax audit group (audit group) by comparing audit processes used for relevant tax structures and by comparing the current process to industry best practices. Impediments to the audit process were identified and recommendations for improvements were made. The audit also examined DOR staff’s professional qualifications and assessed whether resources were sufficient to address the audit backlog. Report Conclusions In summary, the audit concluded that under Petroleum Production Tax (PPT) and Alaska’s Clear and Equitable Share (ACES), fewer tax return audits were conducted, and audits took an average of 2.5 times longer to complete than under the Economic Limit Factor. Despite fewer completed audits, PPT and ACES audits continued to cover a significant portion of annual tax liabilities and resulted in $488 million in assessments for the 2006 and 2007 tax years. The audit found that oil and gas auditors were qualified to perform audit functions and auditors met the minimum education and experience requirements for their positions. However, productivity and effectiveness could be improved by implementing a formal training program. As of March 31, 2014, the audit group had a backlog of 55 tax return, 023 credit, and 025 credit audits. While DOR’s backlog of credit audits can be addressed by current resources, it is unclear if DOR will be able to address the backlog of tax return audits. DOR management is confident of its ability to address the backlog. However, our audit does not support management’s level of confidence. Given the number of planned audits and the impediments to the audit process identified as part of this audit, there is a risk that DOR will not be able to meet its audit mandate. This risk can be mitigated by implementing improvements to the audit process. Overall, the audit concluded that the audit group’s processes do not follow best practices applied by the auditing profession and other states in five areas: project management, risk assessment, materiality, audit documentation, and taxpayer communication. Implementing auditing best practices could improve DOR’s audit quality and timeliness. (See Recommendation No. 1.) The Tax Division is implementing the Tax Revenue Management System (TRMS) which could address several findings identified above. However, because the system is in the early development stages and the oil and gas production tax configurations have not been defined, the TRMS’ success in addressing these issues is difficult to predict. Findings and Recommendations Recommendation No. 1 The Tax Division director should ensure the procedures for conducting oil and gas audits incorporate best practices. DOR audit and review procedures do not reflect auditing best practices in the following areas: project management, risk assessment, materiality, audit documentation, and taxpayer communication. Applying best practices may help the audit group comply with the statutory time limit by improving audit efficiency and …

SUMMARY OF: A Special Report on the Department of Administration (DOA), Office of Public Advocacy (OPA), Select Procurement Issues, October 19, 2012 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of OPA. The audit objectives were to: Evaluate OPA’s compliance with state law when procuring professional services; Evaluate whether OPA’s professional service contracts were prudently administered; and Identify whether OPA’s professional service contactors were appropriately classified as contractors rather than as employees. Report Conclusions OPA has not complied with the State Procurement Code. From FY 06 through FY 12, over $17.8 million in state funds were paid for improperly obtained professional services. Additionally, OPA has not prudently administered its contracts. An evaluation of OPA’s contracts and invoices identified administrative deficiencies including: contract amendments that were not supported; contract prepayments that were not made in accordance with state rules; novations used incorrectly to increase contract amounts; and contract invoices that were not adequately supported. Additionally, OPA did not use the compensation requirements established in regulations. The deficiencies were caused by a number of factors including insufficient understanding of state laws by OPA personnel and inadequate oversight by DOA’s Division of Administrative Services (DAS) management. The deficiencies limited fair and open competition, led to overspending state resources, and increased the potential for fraud, waste, and abuse. OPA’s professional service contractors were appropriately classified as contractors rather than as employees. Findings & Recommendations DAS’ director should ensure that OPA professional services are obtained in accordance with state law. As a part of improvements, OPA management should not procure large contracts as they do not have large procurement authority. DAS’ director should ensure that OPA complies with small procurement rules. As a part of improvement, DAS’ director should consider limiting OPA’s small procurement authority until OPA personnel is sufficiently trained. DAS’ director should improve oversight of OPA’s contract administration to ensure compliance with the State Procurement Code and the Alaska Administrative …

SUMMARY OF: State of Alaska, Single Audit for the Fiscal Year Ended June 30, 2012. Purpose and Scope of the Report This report summarizes our review of the State of Alaska’s basic financial statements and the State’s compliance with federal laws and regulations in the administration of approximately $3.4 billion of federal financial assistance programs. The audit was conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. It also complies with the federal Single Audit Act Amendments of 1996 and the related United States Office of Management and Budget Circular A-133. The report contains an opinion on the basic financial statements of the State of Alaska for FY 12, recommendations on financial and compliance matters, auditor’s reports on internal controls and compliance, the Schedule of Expenditures of Federal Awards, and the Summary of Prior Audit Findings. Report Conclusions The basic financial statements for the State of Alaska are fairly presented in accordance with accounting principles generally accepted in the United States of America without qualification. Additionally, the State’s FY 12Comprehensive Annual Financial Report includes a Certificate of Achievement for Excellence in Financial Reporting which is presented by the Government Finance Officers Association. All borrowing from the Constitutional Budget Reserve Fund (CBRF) was completely repaid in FY 10 and no borrowing activity from the CBRF occurred during FY 11 or FY 12. The State of Alaska did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements applicable to the Social Services Block Grant (SSBG; CFDA 93.667) administered by the Department of Health and Social Services. Failure to comply with FFATA reporting requirements resulted in a material weakness and material noncompliance for the SSBG program. The State has substantially complied with the applicable laws and regulations in the administration of its other major federal financial assistance programs. The report does contain recommendations regarding significant deficiencies in the State’s internal control over financial statements and federal programs. Findings and Recommendations This report contains 41 recommendations, of which 17 are unresolved issues from last year. One of the 41 recommendations is made to Alaska Energy Authority whose audit was performed by other auditors. Some of the recommendations made in this report require significant changes in procedures or a shifting of priorities and, therefore, may take more than one year to implement. The Summary Schedule of Prior Audit Findings in Section III identifies the current status of most prior audit recommendations not resolved by the release of the FY 12 statewide single …

SUMMARY OF: A Special Report on the Department of Natural Resources, Agriculture Revolving Loan Fund, Selected Issues, June 24, 2013 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Agriculture Revolving Loan Fund (fund or ARLF). The purpose of this audit is to examine the fund’s performance and administration and compare fund administration to other loan programs and industry best practices. The goal of the evaluation is to identify how the fund’s performance could be improved and how efficiencies could be gained with an emphasis on whether the fund should be administered by a different state agency. Report Conclusions We conclude that ARLF’s fiscal condition is the result of agricultural policy decisions made over the past 30 years by executive and legislative branches of government. Many lending and management decisions were made in favor of supporting the agricultural industry over maintaining the fund’s fiscal health. Since inception, ARLF’s fund equity has declined by 69 percent, and it annually loses over $118,000 from operating Mount McKinley Meat and Sausage Company (MMM&S). Although ARLF’s default rate was found to be reasonable at the program level when compared to other agricultural loan programs, the audit identified numerous administrative deficiencies that, if not corrected, will likely contribute to future losses. Examples of deficiencies include ineffective and inefficient processes for loan evaluation and approval, property management, and loan management. Additionally, this audit found regulations do not promote fiscally responsible decisions on a consistent basis. Our review of comparable loan programs found that boards similar to the Board of Agriculture and Conservation (BAC) are not commonly used for lending decisions. It is more common for lending decisions to be made by professional lending staff or by a committee with lending expertise. Based on administrative deficiencies and opportunities for increased efficiency, we conclude that moving ARLF administration and loan decisions to the Division of Economic Development may improve the loan program’s efficiency and effectiveness, and help ensure the fund’s future solvency. Findings and Recommendations Recommendation No. 1 The legislature should consider moving the ARLF administration to the Department of Commerce, Community, and Economic Development’s Division of Economic Development. Report conclusions outline examples of deficiencies in the Division of Agriculture’s processes for evaluating and approving loans, managing property, and managing loans. Decisions to promote agriculture and support Alaskan farmers through the use of ARLF assets have not always been fiscally prudent. While BAC diligently works to serve the agricultural industry, improvements have not effectively eliminated the types of deficiencies noted in the audit. Recommendation No. 2 ARLF administrators should revise ARLF’s regulations to promote industry best practices. ARLF’s regulations do not promote consistent fiscally responsible decisions. Specifically, regulations do not include criteria for approving loans and do not provide sufficient guidelines for evaluating collateral. Recommendation No. 3 ARLF administrators should pursue disposal of business properties and revise property leasing rates to provide a return on ARLF assets. ARLF currently owns two active business properties, the MMM&S and the Alaska Farm Cooperative (cooperative). Operating businesses such as the MMM&S and the cooperative is not within ARLF’s statutory authority. ARLF’s statutory purpose is to promote more rapid development of agriculture as an industry by means of long-term low-interest …

SUMMARY OF: A Special Report on the Department of Administration, Alaska Land Mobile Radio Communications System, September 13, 2013 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Alaska Land Mobile Radio (ALMR) Communications System (system). The purpose of the audit is to report on the ALMR system’s use and degree of interoperability. The audit also identifies system expenditures and funding needs; assesses the condition of the divested assets; identifies ALMR functions required by law; and evaluates the reasonableness of the ALMR feasibility study. Report Conclusions Based on our audit, we conclude there are no federal or state laws that require the State of Alaska to have an interoperable communication system. However, there are federal and state directives that provide guidance for such systems. During 2012, ALMR assets at 41 sites were transferred from the Department of Defense (DoD) to the State. Prior to accepting the transferred assets, Department of Administration (DOA) and DoD representatives conducted an inventory of the assets. Based on the inventory, ALMR assets were determined operational, and $120,000 of upgrades were identified. As a result of the transfer, DOA’s annual budget increased by $1.5 million to operate and maintain the transferred assets. All ALMR system users could not be surveyed as part of this audit, in part, because ALMR management and user agencies do not adequately track equipment. Instead, ALMR system user agencies were surveyed. Survey respondents believed the system provides interoperable communications, but noted certain limitations. Limitations include: (1) the ALMR system does not provide coverage to all areas of the State, and (2) the ALMR system was not always available when needed. Survey respondents also commented on limitations with their handheld radio range and reception. In February 2012, the legislature directed DOA to recover a portion of ALMR costs from federal agencies. In FY 14, a cost share agreement was implemented that requires DoD to reimburse DOA’s Division of Enterprise Technology Services (ETS) for the cost of operating ALMR based on the percentage of ALMR sites owned by DoD. Federal non-DoD agencies are required to reimburse ETS based on system usage. According to DOA management, state agencies, local governments, and nonprofits do not reimburse ETS for their respective ALMR system usage. An ALMR feasibility study, conducted by DOA through a contractor, generally addressed legislative intent. The study identified the State of Alaska as the main funding source for operating and maintaining the system. Findings and Recommendations Recommendation No. 1 The ALMR Executive Council should ensure user agencies conduct an annual inventory of ALMR equipment. Due to a lack of oversight by the ALMR Executive Council and user agencies, an annual inventory of ALMR user agency equipment was not performed by either ALMR management or user agencies. Over half of ALMR user agencies (68 of the 120) stated they do not track ALMR equipment numbers and user names. As a result, there is an increased risk of unauthorized use or monitoring of the ALMR system.       …

SUMMARY OF: A Special Report on the Department of Natural Resources (DNR), the University of Alaska (UA), and the Department of Commerce, Community, and Economic Development (DCCED), Virus Free Seed Potato Project, March 2, 2012 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a special audit of the State’s Virus Free Seed Potato Project (seed project). The audit reports on the seed project’s financial activities and determines if the seed project provides a positive monetary or non-monetary return to the State or private entities. Additionally, the audit determines whether continued state involvement in the seed project will yield positive returns and whether seed potato funding has been used for essential state services. Report Conclusions This audit concludes that no significant monetary or non-monetary returns are being received by the State or private entities as a result of certifying seed potatoes for international export. The export market is stagnant, the number of acres used to grow seed potatoes is not large and the acreage has not increased. Furthermore, seed potato exports have not provided a positive return in terms of regulation costs compared to revenue generated by export sales. These factors are not expected to change. Consequently, the continued use of state resources to certify seed potatoes for international export will act as a subsidy for seed potato farmers. The report conclusions, as they relate to export certifications, should not be interpreted as negating the necessity for state certification. Inspections and certifications of seed potatoes have been conducted by the State since the mid-1960s to reduce the risk of disease. This audit does not conclude that continued state certification of seed potatoes is unwarranted or unnecessary. Whether or not regulation of seed potato crops is an essential state service is subjective and depends on the definition of essential. Diseased seed potatoes may create significant economic losses for producers; however, they do not result in illness or loss of human life. The agriculture industry views the inspection and certification process as essential to the success of the industry. Detailed conclusions regarding seed project funding, expenditures, administration, and monetary and non-monetary returns are listed below. A total of $5.5 million in state and federal funds have been appropriated for the seed project from FY 95 through December 2011. Of the total, $3.4 million (62 percent) were state funds and $2.1 million (38 percent) were federal funds. Seed project expenditures totaling $3.4 million from FY 05 through December 2011 were reasonable and necessary to carry out the purpose of the project. Expenditure activity includes state certification and export certification costs. The only significant UA facility used for the seed project has been the Plant Pathology and Biotechnology Laboratory. UA charged indirect cost rates as part of seed project grants and agreements. The seed project has resulted in minimal monetary returns to the State and private enterprises. Non-monetary returns associated with the seed project include expanding Alaska’s international market relations and expanding the knowledge base of seed potato diseases. Both of these non-monetary returns may yield benefits to the State of Alaska over the long-term. Export certification funding has provided a subsidy to growers. Without significant changes, future state funding for export certification will continue to be a subsidy to potato growers. Findings and Recommendations There were no findings or recommendations for the virus free seed potato project …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development (DCCED) and the Department of Revenue (DOR), Alaska Film Production Tax Incentive Program (AFPTIP), Financial Compliance, February 29, 2012 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a financial compliance audit of the AFPTIP. The AFPTIP is administered by DCCED’s Alaska Film Office (AFO) in cooperation with DOR’s Tax Division. The primary objectives of the audit were to: Identify Alaska Film Production Tax Credits (film tax credits) issued and redeemed by fiscal year, and determine whether the total film tax credits issued have exceeded the statutory cap of $100 million. Determine whether film tax credits were made available to qualified producers and whether the AFO appropriately approved productions after determining the productions were not contrary to the State’s best interests. Determine whether film tax credits were correctly calculated in accordance with AS 44.33.235(b)-(c) and (g) and whether producers spent a minimum of $100,000 in qualified expenditures in an agreed upon 24-month period as supported through verification by an independent certified public accountant (CPA). Determine whether film tax credits were used within three years of being issued to exclusively offset corporate income taxes. Report Conclusions The AFO and Tax Division generally adhere to film tax credit approval, issuance, and redemption statutes and regulations when administering the AFPTIP. Film tax credits are made available to qualified producers, are properly calculated using qualified expenditures, and are appropriately approved. The approved film tax credits included $100,000 or more of qualified expenditures that weregenerally incurred within the qualified 24-month expenditure period. Total film tax credits issued have not exceeded $100 million, and all redeemed AFPTIP credits have been used within three years of being issued to offset corporate income taxes. Detailed schedules of prequalified productions and approved film tax credits are included in the report as Appendices A and B respectively. Although state agencies materially complied with AFPTIP approval, issuance, and redemption statutes and regulations, areas for improvement were identified in the approval and redemption processes. Findings and Recommendations DCCED’s Division of Economic Development director and AFO development specialist should develop clear and measurable criteria to support best interest determinations. The AFO development specialist should ensure that expenditures reported as reviewed by a CPA are within the 24-month qualifying period. The AFO development specialist should ensure that the names of the director and proposed cast are included in the prequalification application as required by statute. The Tax Division director should improve procedures for tracking and reporting the use of tax …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development (DCCED), Regulatory Commission of Alaska (RCA or commission), FY 11 Annual Report, May 23, 2012 Purpose of the Report In accordance with AS 24.20.271(10), we audited the information in the RCA’s FY 11 annual report. The audit specifically addressed the accuracy of statutory timeline, timeline extension, and performance measure data. This report does not conclude on the effectiveness of RCA’s decisions or its measures. Report Conclusions The commission accurately reported on regulatory docket timelines and statutory timeline extensions. However, the data on tariff filings, utility and pipeline dockets, and performance measures is unreliable or not reported accurately. Findings and Recommendations Recommendation No. 1 RCA’s chair should implement and enforce written procedures to ensure that case management system data is accurate, consistent, and complete. The commission continues to have unreliable data in the annual report. The reliability issues have resulted from inaccurate and incomplete case management system data. Data errors can be attributed to a lack of: written guidance, adequate training, and ongoing quality reviews necessary to ensure case management system data is entered and maintained accurately, consistently, and …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development (DCCED) and the Department of Revenue (DOR), Alaska Film Production Tax Incentive Program (AFPTIP), Select Performance Issues, August 8, 2012 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the AFPTIP. The AFPTIP is administered by DCCED’s Alaska Film Office (AFO) in cooperation with DOR’s Tax Division. The primary objectives of the audit include: identifying the AFPTIP’s economic impact in Alaska, determining whether the AFO’s application review and approval process adequately protects the State’s interests, evaluating the extent to which the AFO is meeting its statutory duties, and determining whether a production tax credit is the most cost effective method for incentivizing film production activity in Alaska. Report Conclusions The AFPTIP has generated a net positive economic impact in the State. An AFPTIP economic impact study for the period July 2008 through February 2012 indicates direct spending from AFPTIP approved productions has generated $2 in economic output for every $1 in Alaska Film Production Tax Credits (tax credits) issued. While the study highlights a net positive economic impact, the AFPTIP does not generate tax revenues sufficient to pay for credits issued. Additionally, a significant amount of program benefits are realized outside Alaska. The AFO’s eligibility and application review is adequately designed to ensure the State’s best interests are reasonably protected. However, improvements are needed. Necessary improvements include developing written criteria for evaluating whether a production is not in the State’s best interests, and strengthening residency verification and documentation requirements to ensure the State is provided the information necessary to adequately review and approve credit calculations. Except for certifying internship programs, the AFO is meeting its statutory program responsibilities. The AFO is promoting Alaska as a viable film location, cooperating with private entity organizations, and providing production assistance. Although identified as one of its statutory duties, the AFO has not yet certified any internship programs. Whether the AFPTIP, as compared to other states, is the most cost effective method for incentivizing the film industry cannot be determined. The significant variations in design of film production incentive programs and differences in state tax structures make comparisons between states problematic. Available impact analysis reports of other states’ programs indicate that all film production incentive programs create positive economic impacts while in operation. Findings and Recommendations The AFO development specialist should strengthen qualified expenditure documentation requirements to ensure tax credit calculations are adequately supported. DCCED’s Division of Economic Development director should consider amending AFPTIP regulations to more clearly define Alaska residency and provide CPAs a more effective method of verifying expenditures claimed as resident wages. The AFO development specialist should strengthen procedures for collecting and reporting Alaska employment data to ensure reliable information is available for program evaluation. The AFO development specialist should develop film production internship training program certification …

SUMMARY OF: A Special Report on the Department of Natural Resources (DNR), Alaska Coastal Management Program (ACMP), Part 2, December 29, 2010 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit to determine: (1) whether regulatory changes in 11 AAC 112 and 114 limit the establishment of district enforceable policies and whether this limitation is consistent with legislative intent and state law; (2) whether DNR is properly implementing the local concern requirement; (3) whether the Department of Environmental Conservation (DEC) carveout is being implemented in accordance with legislative intent and how it has affected the scope of the ACMP’s consistency reviews; (4) whether changes to the statewide standards limit the ACMP’s ability to meet the its objectives; (5) whether changes to the ACMP have diminished the State’s rights under the Coastal Zone Management Act of 1972 (CZMA); (6) whether DNR is operating the program openly and transparently, whether DNR will allow consultants to be consistency review participants, and whether DNR is an appropriate agency to administer the program; (7) whether the ACMP’s changes have affected participation, decision making, and consensus building; and (8) whether the ACMP is operating in the public’s interest and should be reauthorized. The assessment of the ACMP’s operations and performance was based on criteria set out in AS 44.66.050(c). Criteria set out in this statute relates to the determination of a demonstrated public need. This report is the second of two parts of a special report on DNR, ACMP. In this report, we address the ACMP issues identified above in numbers six through eight. The remaining issues are addressed in Department of Natural Resources, Alaska Coastal Management Program, Part 1, November 26, 2010 (10-30060A-11). Report Conclusions The ACMP is operated openly and transparently in many ways, but is lacking in certain aspects. For instance: the Division of Coastal and Ocean Management (DCOM) does not generally record minutes for working group meetings; DCOM does not distribute review participant materials to coastal resource district consultants; DCOM management did not respond in writing to ACMP reevaluation comments provided by coastal resource districts, other state agencies, industry, and the public; and DCOM has not kept participants actively informed about the status of the ACMP reevaluation process. DCOM’s policy regarding consultants disregards coastal district autonomy. DCOM’s unwritten policy is that consultants cannot be on consistency review participant lists. Management’s intent is to improve coastal district representation in the ACMP. However, such an unwritten policy denies coastal districts autonomy over what is ultimately a coastal district management decision. DNR is an appropriate agency to administer the ACMP. DNR’s mission and purpose are consistent with the ACMP’s objectives. Other agencies that would be appropriate to administer the ACMP include: DEC, the Department of Fish and Game, and the Office of the Governor. Changes made to the ACMP following the passage of Ch. 24, SLA 03 have centralized in the DNR commissioner’s office decision-making that was formerly the Coastal Policy Council and the resource agency directors or commissioners’ responsibility. The changes have also lessened the consensus-building aspect of the ACMP consistency review. First, the number of coastal resource district enforceable policies was reduced thereby contributing to fewer coastal resource district comments. Second, the movement of the program from the Office of the Governor to a resource agency may have strained relationships among program participants. Third, DEC is not the strong participant that it was before the DEC carveout. The legislature should reauthorize the ACMP program. The ACMP serves the public interest through coordinated consistency reviews by the State and coastal resource districts evaluating certain activities occurring in or having an effect on the State’s coastal zone. Findings and Recommendations DCOM should allow coastal resource districts to designate their own representation. DCOM will not distribute review participant materials to a consultant or allow a consultant to be designated by coastal resource districts as a point of contact for consistency reviews. While the intent of the unwritten policy is to encourage coastal resource district representation in the ACMP, it does not recognize coastal resource districts’ autonomy in determining how that representation is best achieved. DCOM should facilitate coastal resource district participation in the ACMP by allowing coastal resource districts to designate consultants as their point of contact if they decide it is in their best interest to do so. DNR should complete the ABC List revision and ACMP reevaluation it began years ago. Completion of the ABC List revision is three years past the deadline set out in Ch. 31, SLA 05. Additionally, while the ACMP reevaluation does not have a similar statutory deadline, DNR had planned to have a proposal ready for the 26th Legislature’s consideration. With both the ABC List revision and the ACMP reevaluation, lack of consensus was the reason given for not pursuing change. DNR should commit to completing both processes …

SUMMARY OF: A Special Report on the Department of Administration (DOA), Enterprise Technology Services Division (ETS), Telecommunication Procurement and Pursuit of New Technologies, May 4, 2011 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of ETS’ core telecommunication services contract (core contract). The objective of the audit was to identify and report the annual cost for services covered under historic and current core contracts; compare the current costs to the expected costs; identify and report “solesourced” telecommunication contracts; ascertain whether it is the responsibility of ETS to provide new telecommunication technologies; and identify and describe ETS and state departments’ efforts in exploring new telecommunication technologies. Report Conclusions Core contract expenditures are not specifically tracked in the State’s accounting system to allow for reporting and monitoring costs, but they can be approximated. The approximate annual core contract expenditures were less than the $10 million a year contract maximum and less than the budgeted contract costs. ETS issued 35 solesource contracts between FY 08 and February 28, 2011. Thirty of these contracts were licensing agreements for proprietary software, and five were for telecommunication services. All solesource contracts were approved by the State’s chief procurement officer. There was no solesource contract with the State’s core contract vendor during this period. Alaska Statutes direct ETS to provide a telecommunication infrastructure, but there is no statutory requirement to provide new technologies. A survey of state departments determined that pursuit of new telecommunication technology is occurring both in departments and at ETS. Findings and Recommendations 1. DOA procurement staff should work with the State’s chief procurement officer to ensure compliance with the “not to exceed” provision in the core …

SUMMARY OF: A special report on the Department of Revenue (DOR), Seafood Industry Tax and Assessment Revenues, May 19, 2011 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit on the DOR Tax Division’s completeness and accuracy of seafood related tax collections. Furthermore, we evaluated the Tax Division’s reconciliation of reported taxed values and volumes to state and federal reports of harvest as well as the Tax Division’s audit process. Report Conclusions DOR’s fisheries tax audits are too limited in scope to provide assurance that tax revenues are complete and accurate. Currently, fisheries-related tax audits are limited to Salmon Product Development (SPD) tax credits. There are no formal or established procedures in place for assessing risks in order to determine where to focus audit resources for fisheries tax programs or selecting taxpayers for audit. Additionally, there are no documented policies or procedures for auditing fisheries tax revenues other than those relating to the SPD tax credit. Regulatory changes are needed to support DOR’s accurate and complete collection of fishery taxes. Specifically, regulations for enforcing the SPD tax credit have not yet been adopted. The Commercial Operator’s Annual Reports can be a valuable tool in ensuring accurate tax payments for Fisheries Business Taxes. On a limited basis, reconciling reported taxed volumes or corresponding values of seafood harvest can be performed to verify components of the Fisheries Business Taxes. This could be an effective tool for identifying high risk taxpayers needing additional evaluations and potential audits. Alternative price reporting information is not available to DOR for comparative purposes. DOR is not permitted to access confidential federal resource managers’ harvest reports. Federal laws governing programs administered by National Oceanic and Atmospheric Administration, National Marine Fisheries Service prohibits sharing confidential harvest data with outside agencies unless the data is specifically needed for resource management. With the exception of one city, fish taxes collected by local municipalities are not comparable as a tax base to the Fisheries Business Tax. Therefore, local community tax data is not an effective source of outside information for the State to verify reported taxed values and volumes. Furthermore, the data contained in the Alaska Salmon Price Report is not useful to the Tax Division in their mission to collect taxes. This is because the report collects information on wholesale and retail values of processed fish rather than unprocessed values which is the basis for state seafood taxes. Taxpayer audits are necessary to verify that all year-end price adjustments or other bonuses paid to fishermen have been properly reported. Although it is possible to identify all bonus returns filed in a given year, this method would only capture bonuses paid after the original return is filed, thereby producing an incomplete record of actual bonuses paid. Furthermore, this method would not identify taxpayers who paid year-end bonuses, but did not report them to DOR. Findings and Recommendations 1. DOR’s commissioner should diversify audits of fisheries-related tax revenues based on a risk assessment. 2. DOR’s commissioner should adopt regulations to enforce the Salmon Product Development tax …

A Management Review of the Legislative Affairs Agency, State of Alaska’s Office of the Ombudsman, Management Review, June 15, …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development (DCCED); Division of Corporations, Business and Professionals Licensing (DCBPL); Select Occupational Licensing and Enforcement Issues, June 29, 2011 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit to determine: (1) whether DCBPL made the appropriate fee adjustments to licensing fees based on the results of the recent fee analysis; (2) whether FY 11 personal service time for occupational licensing and enforcement employees was accurately recorded; and (3) whether DCBPL has reduced its enforcement activities specified in Title 8 of the Alaska Statutes – specifically, in the area of unlicensed activity. Report Conclusions DCBPL did not make all of the appropriate fee adjustments resulting from the most recent fee analysis. In FY 11, personal service time was accurately recorded for occupational licensing and enforcement employees. However, DCBPL used an unreasonable method for allocating indirect costs that result in overcharges to occupations. Additionally, DCBPL no longer tracks costs directly to occupations. Due to a lack of complete and accurate investigation data, we could not reasonably identify all unlicensed activity cases. As a result, we could not determine whether DCBPL has reduced its Title 8 enforcement activities. An issue creating a potential conflict of interest for a Marine Pilot board member was not adequately entered into the public record. Findings and Recommendations 1. DCBPL’s director should ensure occupational licensing fees are adjusted annually in accordance with state law. 2. DCBPL’s director should improve the method for allocating division indirect costs and for tracking occupation direct costs. 3. DCBPL’s director should take immediate action to address deficiencies in the new investigations case management …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development (DCCED); Division of Corporations, Business and Professional Licensing (DCBPL); State Medical Board (SMB), June 16, 2011 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit to determine: (1) whether SMB complaints are processed in a timely, efficient, and effective manner; (2) whether the SMB applies disciplinary sanctions consistently in both adjudicated and non-adjudicated cases; (3) whether SMB disciplinary actions are reported to the Federation of State Medical Boards (FSMB) and the National Practitioners Data Bank (NPDB) as required by state and federal laws; and (4) whether the SMB executive administrator’s decisions to initiate a complaint against a licensee for a license renewal application issue are reasonable. Report Conclusions Based on our audit, we determined: Complaints are not processed in a timely, efficient, and effective manner. SMB disciplinary sanctions are consistently applied to both adjudicated and non-adjudicated cases. SMB disciplinary actions are not reported to FSMB and the NPDB in accordance with state and federal laws. Complaints initiated by the SMB executive administrator regarding license renewal application issues are reasonable. SMB disciplinary sanctions and reporting to FSMB and the NPDB are now similar to other states. Findings and Recommendations Recommendation No. 1 DCBPL’s director should implement improvements over complaint processing. The DCBPL Investigation Unit’s SMB complaint processing is untimely, has inefficiencies, and, in some cases, is ineffective. In summary, DCBPL’s director should: Establish regulatory timelines for processing complaints. Address inefficiencies in obtaining evidentiary documents. Implement oversight of the Investigation Unit’s workload, including staff assignments. Address the case management system deficiencies. Assess the processing of complaints from external sources. Recommendation No. 2 DCBPL’s director should implement procedures to ensure SMB disciplinary actions are reported in accordance with state and federal laws. Four of 18 cases with SMB disciplinary actions were not reported to one or both national data banks, and most of those reported were not submitted within the 30-day timeframe. Additionally, a board order was reported to FSMB and the NPDB when not required under state and federal …

SUMMARY OF: A Special Report on the Office of the Governor, Alaska State Commission for Human Rights (ASCHR), Selected Operational Issues, September 23, 2011 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of ASCHR to determine: (1) if ASCHR investigates all complaints received; (2) if ASCHR investigates complaints timely; (3) how many and what types of complaints are investigated; how many days it takes to resolve a complaint; and the reasons for delayed resolutions; (4) if complaint investigations take longer for different races; (5) remedies or protections available for retaliated complaints and their effectiveness; (6) if investigators are qualified and trained; and (7) if ASCHR is meeting its statutory obligations and legislative purposes. Report Conclusions Based on our audit, we determined: ASCHR is investigating complaints received, but not timely. Complainants’ race/ethnicity is not a factor in the timeliness of investigations. It is inconclusive if remedies are effective against eradicating or preventing discrimination. ASCHR investigators are qualified and receive on-the-job training. ASCHR is not meeting all of its statutory obligations and legislative purposes. Findings and Recommendations Recommendation No. 1 The legislature should consider establishing statutory timelines for ASCHR. From the calendar years 2008 through 2010, approximately 75% of ASCHR discrimination complaints took over 180 days from the complaint-filed date to the determination date. In addition to the investigation timeframe, complaints were also delayed in the hearing process. We recommend the legislature establish a statutory timeline of 180 days for ASCHR to complete a complaint investigation and for the Office of Administrative Hearing to issue a decision within 120 days. Recommendation No. 2 ASCHR’s executive director should improve and develop comprehensive policies, procedures and regulations to ensure complaint investigations are performed timely, and submit them to the commission for adoption. Many factors contributed to ASCHR not promptly processing complaints. ASCHR should ensure its investigations are operating efficiently and effectively by analyzing and improving processes, updating regulations, developing comprehensive policies and procedures, and using current technologies. Recommendation No. 3 The legislature should consider realigning ASCHR’s mission. Due to length of investigations, ASCHR is not able to operate as “more than a simple complaint taking bureau” as the legislature intended. If ASCHR is unable to find ways to improve the timeliness of investigations to full the legislative mandate “to seek out and eradicate discrimination,” the legislature should consider reevaluating ASCHR’s mission to improve ASCHR’s workload and resource issues. Additionally, ASCHR’s statutes could be modified to improve its annual report by using it to provide ongoing and public monitoring of the timeliness of investigations and the level of activity performed by ASCHR to specifically seek out and eradicate …

SUMMARY OF: A Special Report on the Department of Natural Resources (DNR), Alaska Coastal Management Program (ACMP), Part 1, November 26, 2010 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit to determine: (1) whether regulatory changes in 11 AAC 112 and 114 limit the establishment of district enforceable policies and whether this limitation is consistent with legislative intent and state law; (2) whether DNR is properly implementing the local concern requirement; (3) whether the Department of Environmental Conservation (DEC) carveout is being implemented in accordance with legislative intent and how it has affected the scope of the ACMP’s consistency reviews; (4) whether changes to the statewide standards limit the ACMP’s ability to meet the its objectives; (5) whether changes to the ACMP have diminished the State’s rights under the Coastal Zone Management Act of 1972 (CZMA); (6) whether DNR is operating the program openly and transparently, whether DNR will allow consultants to be consistency review participants, and whether DNR is an appropriate agency to administer the program; (7) whether the ACMP’s changes have affected participation, decision making, and consensus building; and (8) whether the ACMP is operating in the public’s interest and should be reauthorized. The assessment of the ACMP’s operations and performance was based on criteria set out in AS 44.66.050(c). Criteria set out in this statute relates to the determination of a demonstrated public need. This report is the first of two parts of the Special Report on the Department of Natural Resources, Alaska Coastal Management Program. In this report, we address the ACMP issues identified above in numbers one through five. The remaining issues will be addressed at a later date in the second report. Report Conclusions Changes to AS 46.40 and the ACMP regulations in 11 AAC 112 and 114 have limited the ability of coastal resource districts to establish enforceable policies. Currently, there are 25 coastal districts with approved plans. Prior to the ACMP’s changes, their plans had over 1,300 enforceable policies. During district plan revision, the coastal resource districts submitted approximately 490 enforceable policies for approval; of these, approximately 210 enforceable policies were approved. The reduction in number is partially due to local concern and designated area requirements as well as the requirement that district enforceable policies relate to statewide standards. Although limiting, these requirements are consistent with statutes and legislative intent. As intended by the legislature, the DEC carveout has excluded air, land, and water quality issues under DEC’s authority from ACMP reviews. It also eliminated district enforceable policies that addressed air, land, and water quality issues under the authority of DEC to avoid regulatory confusion and minimize delays in the ACMP process. The DEC carveout has been positive for industry, but from the coastal resource districts’ perspective, there are disadvantages. Changes to the statewide standards may limit the ACMP’s ability to meet its objectives. A review of the standards indicates that many of the modifications clarified the standards and others eliminated duplicate authorities. However, some federal and state agencies as well as coastal resource districts are concerned that the less robust habitats standard has lessened the ACMP’s ability to achieve some of its objectives. ACMP changes have not diminished the State’s rights under the CZMA. The State still has and does take advantage of its rights to weigh in on federal decisions through the consistency review process. While the State has retained its rights, regulatory changes may have affected the purview of the consistency …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development (DCCED), Regulatory Commission of Alaska (RCA), FY 09 Annual Report, September 21, 2010 Purpose of the Report In accordance with AS 24.20.271(10), we audited the information found in the RCA’s FY 09 annual report regarding the RCA’s compliance with the statutory timelines, timeline extensions, and reported performance measures. Report Conclusions Based on our review and analysis, the RCA met the statutory requirements of AS 42.05.175(a)-(f). However, the RCA did not accurately report their timeline extensions and performance measures. Furthermore, not all of the RCA’s performance measures were included in the annual report. Lastly, the RCA’s annual report does not contain the details required by statute. Findings and Recommendations Recommendation No. 1 RCA management should implement procedures to ensure information in the annual report is accurate, complete, and in sufficient detail . The RCA did not accurately report the number of final issued orders, timeline extension orders, and current and active dockets in its FY 09 annual report. Recommendation No. 2 RCA management should implement and enforce written procedures to ensure the case management system data is accurate, consistent, and complete. Errors in the annual report data can be traced back to errors in the RCA’s case management system. Errors included an incorrect number of issued final and extension orders and an incorrect number of opened and closed dockets. The errors were caused by data being entered into the case management system by RCA staff who lack adequate training and guidance to ensure the data entered is accurate, consistent, and …

SUMMARY OF: A Special Report on the Department of Transportation and Public Facilities (DOTPF), Alaska Marine Highway System (AMHS), Vessel Overhaul and Refurbishment Procurement, June 21, 2010 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of DOTPF’s AMHS procurement practices for state ferry overhaul and refurbishment. Our objectives were: To evaluate AMHS’ compliance with the applicable state and federal procurement statutes and regulations, which includes, when appropriate, the application of the interport differential. To evaluate the current state statutes and regulations to assess whether their application results in fair and unbiased contract awards. To evaluate the process of developing ferry maintenance schedules and assess the reasonableness of the process. Report Conclusions AMHS is adhering to state and federal procurement laws and regulations when contracting for vessel overhauls and refurbishments. Contracts for annual overhauls and refurbishments between July 2004 and March 2010 were issued in accordance with both state and federal procurement laws and regulations. The interport differential is applied following regulations. However, the regulations are not current. Alaska regulation 17 AAC 70.430 defines the base port for each AMHS vessel; however, this regulation has not been updated to include the last three vessels added to the system. Where applicable, interport differential costs were applied correctly, and bid specifications were developed without creating bias between competing bidders, however some of the interport differential components have not been updated since 1996. Current statutes and regulations governing state funded overhauls create a public-policy based bias by mandating the use of in-state shipyards whenever possible. AMHS has developed a reasonable process of overhaul and refurbishment scheduling which prioritizes the travel demand of their customers while meeting the regulatory requirement of the vessels. This process is complex and includes multiple factors, including a seven month window in which to schedule refurbishments and overhauls. Findings and Recommendations Recommendation No. 1 DOTPF’s AMHS division director should update the components of the interport differential calculation and assign the responsibility of regularly updating the components to an AMHS staff member. The interport differential components have not been consistently updated since the inception of the interport differential calculation in 1996. The responsibility for updating the interport differential components has not been assigned to a specific AMHS position. We recommend that all of the components of the interport differential be updated to ensure that they accurately reflect the costs for work at an out-of-state shipyard. We also recommend that the responsibility of regularly updating the components be assigned to an AMHS position. Recommendation No. 2 DOTPF’s commissioner should update 17 AAC 70.430 to reflect the current fleet. AMHS regulations are out of date and, therefore, not in compliance with statute. The base port for each AMHS vessel is designated in 17 AAC 70.430. However, 17 AAC 70.430 currently includes a base port designation for the M/V Bartlett which was decommissioned in late 2003. Furthermore, 17 AAC 70.430 does not include a base port designation for M/V Fairweather, M/V Lituya, or M/V Chenega, which were all added to the fleet in 2004 and 2005. By not designating a base port for these three vessels, DOTPF is not adhering to AS 39.90.049. We recommend that the regulations be updated to reflect the current …

SUMMARY OF: A Special Report on the Department of Corrections (DOC), Selected Health and Safety Issues, Part 2, March 5, 2010 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit to determine: (1) the extent of Methicillin-Resistant Staphycoccolus Aureus (MRSA) infections among inmates; (2) the frequency of MRSA infections among the DOC, Division of Institutions’ (DOI) correctional officers (CO); (3) the adequacy of protocols for staff when handling incidents of MRSA among inmates; (4) the validity of DOI’s methodology used for staffing patterns at Alaska’s correctional facilities; and (5) the reasonableness of the staffing policies and procedures, including the minimum level of correctional officers on shift at the correctional facilities. In this report, we address the staffing related issues identified in numbers four and five above. The MRSA-related issues were addressed in a separate report entitled, A Special Report on the Department of Corrections, Selected Health and Safety Issues, Part 1, July 21, 2009, 20-30053A-09. Report Conclusions DOI’s overall approach to determining staffing is a method recognized by the National Institute of Corrections and is used by other states’ correctional facilities. However, there were minor deviations from the national methodology for determining the shift relief factor (SRF). Additionally, for some facilities, DOI’s management did not accurately calculate the number of CO positions needed to implement the 2005 SRF study or the 2007 post study. DOI needs to update its post analysis and address current posts’ efficiency and effectiveness issues. There are deficiencies in staffing policies and procedures as well as each facility’s standard operating procedures. These deficiencies include no written policy identifying the minimum staffing level posts that must be filled on a shift; post orders do not reflect current practices, and some posts do not have a written post order. Findings and Recommendations Recommendation No. 1 The DOI director should address staffing deficiencies due to inaccuracies, update the SRF for each facility using current data, and appropriately apply the SRF to determine the number of CO positions needed. In 2005, DOC used a consultant to calculate a statewide SRF which is used in determining the required number of CO positions. In 2007, DOC engaged the same consultant to analyze the posts in five correctional facilities. DOI utilized the results of the 2005 SRF and the 2007 post studies to determine CO positions for the FY 10 budget request. DOI’s inaccurate application of these studies has created staffing deficiencies. The deficiencies in applying the 2007 study are partially offset by the fact that the data supporting the 2005 SRF study is now out-of-date. The cumulative effect of these deficiencies are Anchorage Correctional Complex (ACC) is short 12 positions, Anvil Mountain Correctional Center (AMCC) is short 3 positions, Fairbanks Correctional Center (FCC) is short 1 position, and Spring Creek Correctional Center (SCCC) is short 1 position. Recommendation No. 2 DOI’s management should address post efficiency and effectiveness issues. If DOI were to address all of the efficiency and effectiveness issues simply by increasing the number of positions, it would require an additional 13 posts with 47 positions to cover the posts: 17 at ACC, 5 at AMCC, 20 at FCC, and 5 at SCCC. However, some of these issues can be addressed through operational changes or facility modifications. Finally, DOI management may choose to recognize and continue to accept any risk associated with less than fully effective posts. In the long term, some post efficiency and effectiveness issues related to overcrowding could be partially mitigated with the opening of the Goose Creek Correctional Center in 2012. Recommendation No. 3 DOI’s director should ensure the superintendents update post orders. The current post orders of the four facilities reviewed do not establish the requirements for minimum staffing levels. Furthermore, the post orders do not accurately convey either DOI managements’ intent or actual facility practices in relation to which posts are considered mandatory. Recommendation No. 4 DOI’s management should ensure that facility management complies with policies for minimum staffing levels and, if needed, provide the resources to allow compliance. DOI is not consistently following departmental policies and procedures regarding minimum staffing levels. Each facility has a minimum number of COs required to be on duty during each …

SUMMARY OF: A Special Report on the Department of Revenue (DOR), Alaska Natural Gas Development Authority (ANGDA),Selected Operational Issues, October 8, 2010 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of ANGDA. The primary objectives of the audit were to determine whether ANGDA duplicates the efforts of other state agencies or initiatives of the State, identify the extent to which ANGDA coordinates, cooperates, and shares information with other state agencies, and to determine whether ANGDA’s long range plans changed or were modified based on work of other state agencies or initiatives. Other objectives included identifying ANGDA’s assets, appropriations, and outstanding financial commitments as well as determining how ANGDA has expended its available funding for the period of July 1, 2003, through April 30, 2010. Report Conclusions ANGDA has not duplicated the efforts of other agencies working on a large-diameter main natural gas pipeline. This is due to ANGDA’s policy of modifying its plans based on other pipeline initiatives. ANGDA started out with a plan to acquire and condition North Slope (NS) gas and construct a pipeline. However based on other initiatives, ANGDA modified its goal to focus on a pipeline that would spur off a larger pipeline accessing the NS gas supply. ANGDA’s decision to pursue a spur line minimized its role in accomplishing its fundamental mission. It also resulted in ANGDA conducting activities that stretched the bounds of its statutory authority. ANGDA did not successfully coordinate efforts with the state agency pursuing a small diameter in-state pipeline (the Office of the Governor). This lack of cooperation resulted in both entities pursuing alternative projects that would achieve the same objective. ANGDA generally received adequate cooperation from other state agencies and routinely shares its information with other agencies and the public through a variety of mechanisms. ANGDA’s appropriations, spending, outstanding financial commitments, and detailed assets, are presented in Appendix A-D of this report. Findings and Recommendations The legislature should consider ANGDA for sunset after resolution of uncertainties surrounding the development of NS natural gas.ANGDA does not play a lead role in acquiring and conditioning NS natural gas or constructing a pipeline to transport the gas. Plans to develop natural gas, including building a large-diameter and/or a small-diameter pipeline, are being led by other private or public entities. The Alaska Gas Inducement Act (AGIA) licensees are guiding the progress of building a large-diameter pipeline. The Joint In-state Gasline Development Team, created by HB 369, is guiding the development of a small-diameter pipeline.Public entities should not outlast their public purpose. Sunset laws enacted throughout the nation ensure public entities do not continue in perpetuity. These laws subject public entities to periodic evaluation to verify their continued existence is justified by a public purpose, and the public’s interest is being adequately served.ANGDA is not subject to sunset provision and, therefore, is at risk of outlasting its public purpose. Once the AGIA and Denali open seasons conclude, and the pipeline plan required under HB 369 is complete, the legislature should evaluate whether ANGDA has a significant and unique role in state pipeline efforts. If ANGDA does not have such a role, the legislature should consider whether the continued existence of a separate authority to carry out ANGDA’s activities is justified and in the public’s best interest. ANGDA’s continued existence without a significant role is a waste of state resources and dilutes crucial decision-making in the State’s effort to bring NS gas to market. ANGDA should work with DOR’s accounting staff to properly present assets in its financial statements and note disclosures. ANGDA’s financial reporting and disclosure of capital assets associated with its conditional ROW lease is inaccurate and not in accordance with generally accepted accounting principles. Specifically, ANGDA’s financial statements for the period ending June 30, 2010, overstate capital assets by over $3.5 million. The required notes to the financial statements reported that ANGDA incurred capitalized costs in the process of obtaining a conditional right-of-way (ROW). However, the amount reported includes significant costs unrelated to and incurred after obtaining the conditional ROW, and is not adjusted for accumulated …

SUMMARY OF: A Special Report on the Department of Transportation and Public Facilities (DOTPF), Gravina Island Access Project (GIA), October 30, 2009 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of DOTPF and their progress in achieving the goal of Gravina Island access. The objective of the audit was to identify federal and state funds authorized, appropriated, and spent on GIA by project and phase, and to evaluate DOTPF’s use of redirected federal GIA earmarks for compliance with federal intent and state law. We also evaluated GIA’s work completed to date and the methodology for developing cost estimates for appropriateness. Furthermore, we evaluated whether GIA was managed in a cost effective and time sensitive manner, and assessed DOTPF’s progress in improving access from Ketchikan to its airport. Finally, we determined whether DOTPF transportation projects were delayed because of GIA earmarks. Report Conclusions Six earmarks, totaling $245.4 million were initially designated for GIA. Two earmarks were established in 1998 to develop the environmental impact statement (EIS); one was established in 2003 to construct bridges; and three were established in 2005 to design and construct the bridges and roadwork. In November 2005, just three months after authorizing the last three earmarks, Congress amended two bridge earmarks (shown as Earmark Nos. 5 and 6 in the table on the following page). The amendment redirected the earmarks away from bridge design and construction to be used by DOTPF for any federally approved transportation project. This reduced specific federal authorization for GIA from $245.4 million to $70.4 million. Because Congress redirected use of the GIA earmarks, DOTPF allocated the now non-restricted funds according to state regulations. Specifically, regulation 17 AAC 05.190(b)(1-4) requires 48 percent of non-restricted federal funds be used on National Highway System (NHS) projects. The remaining 52 percent is to be used for all other federally approved projects within the statewide transportation improvement program (STIP). After the bridge earmarks were redirected, Governor Murkowski’s administration directed DOTPF, in January of 2006, to preserve the NHS portion of the funds for use on the Gravina bridge.   Effect of Redirection over GIA Authorized Earmarks Earmark Purpose Authorized Redirected GIA Earmarks 1 EIS planning and development $ 15,000,000 $ – 0- $ 15,000,000 2 EIS planning and development 5,443,000 -0- 5,443,000 3 Bridge construction 1,975,000 -0- 1,975,000 4 Earthwork and roadway construction 48,000,000 -0- 48,000,000 5 Planning, design and construction of a bridge 100,000,000 (100,000,000) -0- 6 Construction of a bridge 75,000,000 (75,000,000) -0- Total $ 245,418,000 $ (175,000,000) $ 70,418,000 As a result, DOTPF identified over $75.9 million of Earmark Nos. 5 and 6 for future use on GIA. Governor Palin’s administration did not remove or change the previous administration’s directive over the reserved funds. Consequently, approximately $75.9 million of federal funds are available for obligation should DOTPF choose to go forward with GIA. Otherwise, in accordance with state regulations, these funds are available for other NHS projects. DOTPF has used a portion of the redirected earmarks on various approved STIP projects. Although the State received more federal transportation funding for FFY 05 than it received in the previous two federal fiscal years, a larger percentage of the funds were earmarked, making less available for funding STIP projects. At the same time, raw materials and labor costs increased substantially. Together, these factors resulted in projects being delayed or removed altogether from planned DOTPF work. In general, approximately $56 million have been expended on GIA work through May 2009. DOTPF properly interpreted federal intent related to the use of the GIA earmarks. Furthermore, roadwork completed on the underpass, Lewis Reef road, and highway portion of the GIA project was within the scope of the approved EIS. However, the decision to proceed with the highway construction in May 2007 was not in the public’s best interest given the lack of congressional financial support for the bridges and the significant increase in estimated cost. The highway terminates on the southern end of Gravina Island, yet DOTPF is uncertain whether a bridge will be constructed at that location. Some progress in achieving the GIA goals has occurred but improved access from Ketchikan to Gravina Island has not. The preferred access alternative is cost prohibitive and unlikely to receive sufficient federal funding. The project is awaiting the results of a supplemental EIS that will examine other access alternatives. Findings and Recommendations Recommendation No.1 The Director of the Southeast Region of DOTPF should ensure state laws are adhered to for construction …

SUMMARY OF: A Special Report on Selected Information System Security Controls in the Department of Administration and the Department of Transportation and Public Facilities, March 9, 2009. Please contact the Division of Legislative Audit by mail, e-mail, or telephone to receive a copy of this report. Mail: Division of Legislative Audit P.O. Box 113300 Juneau, Alaska 99811-3300 E-Mail: [email protected] Telephone: …

SUMMARY OF: A Special Report on the University of Alaska, Unit Cost Analysis, Part 3, Distance Education, January 16, 2009. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit of the University of Alaska (UA) use of distance education (DE) delivery and technologies. Report Conclusions • With limited exceptions, the University’s implementation of DE delivery currently lacks a coordinated, cohesive approach, and is not student-centric. • Generally, UA is not maximizing the use of available DE technologies. • It is questionable if more aggressive use of advanced technology for DE delivery is warranted and, in rural areas, may still be cost prohibitive. Findings and Recommendations Recommendation No.1 The president of UA should ensure distance education (DE) recommendations are implemented. There is no mechanism in place to ensure accountability, monitoring, and feedback of DE implementation to executive managers of UA. Many reviews, reports, and groups have developed recommendations to improve DE system-wide; however, UA has not successfully implemented a majority of them. Although, the president previously identified and delegated implementation of DE recommendations, the committee responsible has not been held accountable for outcomes or timeframes for completion. Instead, DE initiatives have been deferred to DE study and review groups. As a result, marginal system-wide support to improve DE according to the president’s directives has occurred. Recommendation No.2 The President should develop incentives for MAUs to collaborate on DE initiatives. Currently, there are disincentives in place for MAUs to collaborate on DE initiatives. These barriers include fiscal policies and administrative procedures, which constrain cooperation between MAUs in achieving a student-centric approach to DE. Resistance, more specifically, stems from performance budgeting measures, allocation of tuition revenues, and independently developed DE processes. Without development of performance measures that provide incentives for a student-centric approach, MAUs will continue to resist collaboration in developing system-wide DE processes. Furthermore, lack of incentives equates to continued independent development of DE initiatives by MAUs. More independently developed DE systems and student services increase the likelihood of access barriers for students taking courses delivered by campuses outside their geographical area. Access barriers increase the complexity of student navigation of UA system-wide which is contradictory to a student centric approach to DE delivery. Recommendation No.3 The Vice President of Academic Affairs should ensure faculty receive sufficient DE technology training and technical support. UA is not providing sufficient training and technical support for faculty teaching DE courses. Various reasons contribute to inadequate resources being available, including the minimal number of training sessions and IT design staff available. Recommendation No. 4 The Vice President of Academic Affairs should develop, implement, and enforce use of standard DE course parameters and uniform course description information recorded on the management information system. UA system-wide does not consistently use standard DE course parameters for identification on the management information system (Banner). Furthermore, descriptive course information contained on Banner and available to students on the DE Gateway is not uniform or complete in content. Instead, MAUs have independently interpreted and recorded course parameters and descriptive course information on Banner which is inconsistent, unreliable, or …

SUMMARY OF: A Special Report on the Department of Corrections (DOC), Selected Health and Safety Issues, Part 1, July 21, 2009. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit to determine: (1) the frequency of methicillin-resistant staphycoccolus aureus (MRSA) infections among inmates in Alaska’s correctional facilities; (2) the frequency of MRSA infections among correctional officers (CO) of the Division of Institutions (DOI); (3) the adequacy of protocols for staff when handling incidents of MRSA among inmates; (4) the validity of DOI’s methodology used for staffing patterns at the correctional facilities; and (5) the reasonableness of the staffing policies and procedures, including the minimum level of correctional officers at the correctional facilities. This report is Part 1 of the Special Report on Department of Corrections, Selected Health and Safety Issues. In this report, we address the MRSA related issues identified above in numbers one through three. The remaining selected health and safety issues relate to staffing levels, which will be addressed at a later date in a separate report. Report Conclusions • During the two-year period of 2007 and 2008, the population of inmates infected with MRSA was less than six percent in each of Alaska’s four correctional facilities. We reviewed medical records of inmates incarcerated at the four correctional facilities located in Anchorage, Fairbanks, Nome, and Seward to determine if inmates had MRSA. Inmates were identified as “having” MRSA if they either (1) had a confirmed positive MRSA culture or (2) had a skin infection that was not cultured but was treated by health care staff as if the infection was MRSA. • The exact percentage of MRSA infections among correctional officers cannot be determined. COs are not required to disclose MRSA infections to DOC or any other state or federal agency. However, we reviewed workers’ compensation claims filed by COs between January 2007 through December 2008. We identified nine claims that were filed by COs who had MRSA infections, and believed it was contracted at the correctional facility. • DOC’s health and safety protocols appear adequate. DOC’s policies and procedures contain the necessary health and safety protocols to prevent and manage MRSA …

SUMMARY OF: A Special Report on the Department of Transportation and Public Facilities (DOTPF), Ted Stevens Anchorage International Airport (AIA), Capital Projects Review, September 4, 2009 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of various capital project related issues at the Ted Stevens Anchorage International Airport (AIA). Our primary objective was to determine AIA’s process for approving the scope and funding for capital projects, to review capital projects approved over the last ten years for verification of the approval process, and to summarize capital projects in excess of $500,000 by expenditure amount, funding source, and timeframe for completion. Additionally, we assessed the operational effect of projects exceeding budget and completion timeframes. We reviewed two specific projects in detail – the airport director’s office renovation and airport hold room construction. For the director’s office project, our objective was to evaluate the office layout and determine if the layout exceeds professional office space standards. For the hold room project, our objective was to provide a layout of the room, determine the budget and source of funds to operate the room, and identify who is eligible to, and who has used the room over the last year. Report Conclusions AIA generally followed its process for approving projects. This includes the director’s office and hold room construction projects. However, we found AIA inadequately documents certain aspects of the capital project planning and approval process and project management avoids project control practices. Information inadequately documented includes the original budget and expected completion dates for projects. Furthermore, prior to 2009, airlines did not approve individual projects, and information concerning airline approval for projects was unavailable prior to 2002. There is no indication of significant negative impacts on airport operations due to budget or timeframe overruns. We found that the director’s office configuration and many other private offices exceed space allocation standards. Overall, AIA’s management allocated an unreasonable amount of space for administrative non-revenue generating purposes. In addition, AIA has no formal procedures for use of the airport hold room and does not keep a record of hold room use. Over the last six months, the room was used on four occasions – three times by the Governor’s office and once by foreign dignitaries. We also found that DOTPF is not meeting statutory requirements for annual reporting of International Airport Construction Fund activity, and the DOTPF commissioner, appointed in 2007, did not satisfy Alaska Executive Branch Ethics Act requirements until July 2009. Findings and Recommendations 1. AIA’s airport director should improve the project planning and management process. 2. The commissioner of DOTPF should ensure submittal of an annual International Airport Construction Fund spending plan to the legislature in accordance with state law. 3. AIA’s airport director should consider reducing the amount of space allocated for administrative purposes to maximize the amount of space available for generating rental …

SUMMARY OF: A Special Report on the Department of Environmental Conservation, Division of Spill Prevention and Response, Oil and Hazardous Substance Release Prevention and Response Fund, March 18, 2008. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Department of Environmental Conservation (DEC), Division of Spill Prevention and Response (Division). Specifically, we were asked to review the expenditures and cost recovery revenues from the Oil and Hazardous Substance Release Prevention and Response Fund (Fund). Report Conclusions The conclusions are as follows. The Report Conclusions section sets out our findings related to the other audit objectives, as follows: all expenditures are not recorded according to activities compliance with statutory cost recovery requirements is unclear Division is not efficiently and effectively recovering costs most expenditures were appropriate legal costs need an improved budgeting process certain contractual oversight practices are weak detailed information on the Fund’s financial activities is incomplete During the audit we reviewed a $9 million reimbursable services agreement between the Division and the Department of Law for legal services related to two transit pipeline spills on the North Slope. The contract was funded by the Response Account without specific legislative appropriation. It would have been more prudent to follow the established legislative budget process, especially for long-term legal activities. Findings and Recommendations The Division Director should improve the accountability for the Division’s activities and reporting of Fund expenditures.The Division’s current recording and reporting practices provide insufficient detail to adequately evaluate the programs’ activities. The Division is not recording expenditures in a way that allows clear financial reporting for the cleanup and containment costs of each site. The Division should improve its accountability for the use and reporting of the Fund. Improvements should include: reviewing and improving its current accounting structure in the State’s accounting system for tracking site and program expenditures; recording all site-incurred expenditures to specific sites to provide accurate reporting of the total costs incurred for cleanup and containment of sites; evaluating program administration expenditures and ensuring employees are recording personal service time to the appropriate sites and activities; reviewing its indirect rate methodology to ensure that the rate reflects the Division’s costs that are not directly charged to sites; providing detailed analysis and reporting of its program core activities by site, facility, and region; accurately recording state and state lead sites expenditures to the appropriate legislative authorization (i.e. capital appropriations); requiring that the Division’s database key fields correlate to the State’s accounting system; improving its site and program databases to ensure greater flexibility in responding to information requests posed in a variety of formats; and, modifying the Division’s biennial report to also provide information about the programs’ core detailed activities. The Division Director should improve the Division’s efficacy in the recovery of state expenditures and implement appropriate regulations.The Division’s current cost recovery system is archaic and cannot produce summary information necessary for appropriate management. The Division should either utilize the reporting features on the State’s accounting system or another cost effective alternative to enhance its collections and reporting process of cost recovery efforts. The Division should also implement regulations to strengthen cost recovery efforts, improve accountability, and fulfill statutory requirements. The contract management section manager should take action to improve the review of contractor …

SUMMARY OF: A Special Report on the Department of Natural Resources, Division of Agriculture, Agricultural Revolving Loan Fund, Matanuska Maid, Part 1, March 7, 2008. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit to address various issues and concerns related to the closure and eventual dissolution of the Creamery Corporation which does business as Matanuska Maid (MatMaid). The Creamery Corporation was a private sector, dairy product wholesaler. The State of Alaska through the Department of Natural Resources, Division of Agriculture (DoAg), Agricultural Revolving Loan Fund (ARLF) is the sole stockholder in the Creamery Corporation. Report Conclusions As part of a multi-stage audit, we were directed to identify the sources of funding for the Division of Agriculture (DoAg) and Matanuska Maid (MatMaid). We were also directed to report on funding sources used to finance activities of the Board of Agriculture and Conservation (BAC) and the Creamery Board (Board). This funding information is set out in the organization and function and the background information sections of this report. The Report Conclusions section sets out our findings related to the other audit objectives, as follows: The Creamery Corporation has appropriately paid federal and state income tax. All disbursements linked to state funding were consistent with appropriation language. Although the $600,000 General Fund appropriation was approved in June 2007, MatMaid did not receive the funds until November 2007. The funds were deposited in the corporation’s main checking account, commingled with the other corporate cash and operating proceeds. Since the state funds were commingled with MatMaid’s corporate cash, we analyzed all MatMaid expenditures between November 15, 2007 (the day after the state funds were received) and February 29, 2008.We confirmed the expenditures identified as being funded by the state appropriation was consistent with the language accompanying the appropriation and reiterated by the Department of Natural Resources (DNR) financial managers. Payment to dairy farmers inconsistent with the Creamery Board’s corporate responsibilities. Disbursements of just over $39,000 were made to four in-state dairy producers who had sold raw milk to MatMaid while it was an operating dairy. MatMaids’s governing board – the Creamery Board, decided to make a final payment to these suppliers after the end of operations, although they were under no contractual obligation. Such action is not consistent with the financial interest of the corporate shareholder – the State’s Agricultural Revolving Loan Fund. The funds were not attributed to the General Fund appropriation, but were made from other MatMaid funds. MatMaid financial records indicate sufficient assets to cover known liabilities and creditors. The cash position of the corporation at the end of February 2008, and the underlying value of MatMaid equipment and rolling stock, indicates sufficient assets to pay known existing liabilities and creditors. Property located in Anchorage (on Northern Lights Boulevard) and in downtown Palmer on which MatMaid operated is owned by ARLF. The proceeds from any sale of these properties would not be used to fund future or unknown, MatMaid creditor claims. State executive who oversaw MatMaid’s closure was compensated by the State, not the corporation. Since late August 2007, day-to-day management of MatMaid and wind-up has been carried out by a state official – a special assistant to the commissioner of Department of Commerce, Community, and Economic Development (DCCED). From our review of MatMaid expenditures, we saw no evidence this individual was compensated through the corporation. Rather, any compensation he received came through his capacity as a state employee.We estimate the total state personnel costs for this individual was more than $45,000 between September 2007 and February 2008 In our view a conservative estimate would be that MatMaid was subsidized by at least $25,000 for the efforts of the state executive. MatMaid equipment and rolling stock is accounted for and still sufficiently controlled. Restrictions over loans for board members with ARLF have been …

SUMMARY OF: A Special Report on the Department of Commerce, Community, and Economic Development, Alaska Energy Authority, Rural Power System Upgrade Program, Procurement Issues, August 15, 2008. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of procurement issues under the Rural Power System Upgrade (RPSU) program administered by the Alaska Energy Authority (AEA). The objectives of the audit were to review and assess the procurement process for RPSU projects and the related Switchgear Evaluation Report, dated November 21, 2007. In addition, we conducted a survey of communities with a completed RPSU project to obtain their perspective on certain aspects of the program. Report Conclusions Procurement policies and procedures for AEA’s Rural Energy Group (REG) projects need to be rewritten. Procurements for RPSU projects were not consistently made in compliance with the Rural Energy Group, Bulk Fuel Upgrade Program/Rural Power System Upgrade Program Project Reference Manual guidelines or the underlying federal regulations. The Switchgear Evaluation Report does not clearly meet the original intended purpose. The majority of communities with completed RPSU projects are generally satisfied with their upgraded power system; however, the program provides little community involvement in the design of the system or the procurement process. Findings and Recommendations Recommendation No. 1 The executive director of AEA should undertake revision to the REG procurement policies and procedures to more closely align with the state developed policies and procedures. The federal assistance agreements governing funding require AEA and its subgrantees to comply with federal procurement regulations. The following are areas of weakness in AEA’s procurement system related to informal and formal procurement methods. Approval authority listing is not maintained. The listing of AEA staff with purchasing authority along with the dollar limits placed on that authority is not updated regularly. Signatory records are not maintained. No signatory records are maintained to ensure only authorized personnel approve procurements and the payment for the purchases. A formal vendor listing is not maintained for various types of procurement. A vendor listing is not maintained for procurements that require AEA staff to only obtain price quotes from vendors rather than issuing invitations for formal bids. A formal record of the date and time bids or proposals are received is not consistently kept. Use of specific brand name equipment is not consistently justified. We believe there is no need to develop a written set of policies and procedures that are different from the state procurement policies and procedures. Rather, like DOTPF, AEA should use the state procedures as the base and only make changes where federal regulations differ. Recommendation No. 2 AEA Rural Energy Group procurements should be made in accordance with the required policies and procedures. There were three exceptions to established procurement standards related to the award of term contracts. These contracts, last awarded in 2002, put a group of firms on retainer to AEA. This allows AEA to make work assignments on an as needed basis, through what are termed Notices to Proceed (NTP). The exceptions included: The cost of services was not a part of the evaluation criteria for the term contract award. Business licenses were not confirmed. NTPs were awarded to term contractors in a non-competitive …

SUMMARY OF: A Special Report on Training, Policies, and Practices Related to Reporting Suspected Statutory Rape, Department of Health and Social Services, Division of Public Health, April 28, 2008. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of training, policies, procedures and practices related to the mandatory reporting of the form of child sexual abuse commonly referred to as statutory rape. More specifically, we were directed to evaluate these factors as they related to the provision of reproductive health services to adolescents. Our review was limited to health care professionals, specifically Public Health Nurses (PHNs) that fell into one of two groups: (1) those employed by the Department of Health and Social Services (DHSS), Division of Public Health, Section of Public Health Nursing (SOPHN); and (2) those employed by organizations receiving grant funding from DHSS. Report Conclusions A summary of the conclusions follows: SOPHN mandatory reporting policy addresses child sexual abuse and mandatory reporting statutes. One out of the four DHSS grantees lacks a written policy on child sexual abuse reporting. Revision to SOPHN policy lagged behind statutory amendments by more than one year. Most PHNs report receiving adequate training on child sexual abuse. Child sexual abuse training covers common risk factors of child sexual abuse. Findings and Recommendations The director of Public Health should ensure that SOPHN’s mandatory reporting policy more timely reflect changes in state law.In April 2006, the Legislature amended the child sexual abuse statute, effective immediately. SOPHN was not informed about the amended law in a timely manner. DHSS’ revision and review of the new policy by its legal advisors took over one year, with the new policy being implemented in August 2007. We recommend DPH improve its mechanism for informing SOPHN of changes in statute and for ensuring more timely revisions to policy and procedures. The SOPHN chief should amend mandatory reporting policy to better align written guidance with expected practice.Ostensibly, SOPHN’s standard practice is to ask a client who is 15 years old or younger and seeking reproductive health services the age of his or her partner(s). This practice is not reflected in SOPHN’s formal mandatory reporting policy. A third of the PHNs responding to our survey reported they did not routinely ask about the age of the partner during the course of consultation or treatment. This standard practice would be better communicated and more likely to be consistently implemented if incorporated into the written policy and procedures or practice guidelines. The SOPHN chief should further strengthen oversight of PHN child sexual abuse training.The majority of PHNs report receiving adequate, frequent, and recent training on child sexual abuse recognition and reporting. However, 12 percent of the public health nurses reported having either received training less than once every five years or having never received training in this area. We encourage management to continue to monitor training and to identify areas and individuals needing additional training.As part of their grant, the agreements between DHSS and the grantees include the assurance that the organizations comply with the State’s child protection statute. SOPHN may wish to consider increasing their oversight by including as an additional grant assurance that the grantee PHNs attend training specifically on child sexual abuse recognition and reporting at least once every five years. The commissioner should ensure DHSS complies with child abuse curriculum requirements.State law, at AS 47.17.022, requires all state agencies and local school districts with employees covered by the State’s mandatory reporting law must have a current copy of their training curriculum and materials on file with the Council of Domestic Violence and Sexual Assault. Currently the council does not have either a curriculum or materials for DHSS’ child protection training.We recommend DHSS seek the council’s technical assistance in developing future trainings on child abuse in general and child sexual abuse in particular. We also recommend DHSS file its current child abuse training curriculum and materials with the council for both the council’s review and for accessibility by state mandatory reporters and the general …

SUMMARY OF: A Special Report on the Department of Natural Resources, Division of Agriculture, Agricultural Revolving Loan Fund, Matanuska Maid, Part 2, September 22, 2008. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit to address various issues and concerns related to the dissolution of the Creamery Corporation which does business as Matanuska Maid (MatMaid). The Creamery Corporation was a private sector, dairy product wholesaler. The State of Alaska through the Department of Natural Resources (DNR), Division of Agriculture, Agricultural Revolving Loan Fund (ARLF) is the sole stockholder in the Creamery Corporation. Report Conclusions As the second of a multi-part audit, we were directed to analyze the disposal of the dairy’s assets and the accounting for the proceeds generated by disposal. We were also directed to review the process currently in place to manage and account for revenues still being generated by the lease of some MatMaid assets. The Report Conclusions section sets out our findings related to the other audit objectives, as follows: Sale of MatMaid assets were done in compliance with appropriate standards and practices. Given the classification of the assets involved and the private sector status of the Creamery Corporation d/b/a MatMaid procedures followed in the disposition of assets were appropriate. Buy out value of leased equipment would exceed likely auction value. Some assets with an appraised and assessed value of approximately $650,000 were leased to a start-up dairy operation in the Matanuska Valley. The start-up dairy operation has the option to purchase all the equipment identified in the lease for approximately $400,000. If the option to purchase is exercised, the Creamery Corporation would receive over 60% return, which is more than the 46% the auction received of appraised value. $600,000 of auction proceeds was not accounted for appropriately. In 2007 the legislature appropriated $600,000 to the DNR to pay for MatMaid operations. The chair of the Creamery Corporation board stated, in a letter requesting the funds, it was the intent of the board that the funds be repaid to the State of Alaska. The language of the appropriation does not require such a repayment and any proceeds generated from the sale of MatMaid assets should be credited to the ARLF. Public confused by the standards used for various decisions made by either the Board of Agriculture and Conservation (BAC) and Creamery Corporation board. The overlapping membership of the BAC and the Creamery Corporation boards generated confusion about what standards and procedures governed a particular …

SUMMARY OF: A Special Report on the Department of Environmental Conservation, Division of Water, Village Safe Water Program, December 5, 2007. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of the Village Safe Water Program (VSW) administered by the Department of Environmental Conservation (DEC). The objectives of the report fall into two categories. The first category involves how the VSW program distributes grant funding to various communities served by the program. Objectives include: (1) assessing the reasonableness of the criteria used to identify and scale sanitation projects for various communities; (2) reviewing how funding priorities are established for construction grant funding; (3) assessing how well the program has done in communicating ranking and assessment criteria to communities seeking grant funding. The second category of objectives involves reviewing and assessing the changes made by DEC in how the VSW program is administered. Changes have been made primarily in response to a November 2003 Legislative Audit report and concerns by federal funding agencies. Objectives include: (1) assessing the effectiveness of newly established controls over project construction costs; and (2) the impact over how administrative costs being charged to outstanding projects will have on the final cost and design. Report Conclusions Systems selected for communities are consistent with both established DEC criteria and legislative intent. Construction and financial controls have improved in recent years, but minor exceptions persist. Ranking of applications for construction grant funding is consistent with established criteria. VSW program managers did a good job of communicating the changes made to construction grant criteria to affected communities. Use of the Rural Utility Business Advisor (RUBA) evaluation process has delayed starting projects already appropriated, and is preventing some rural communities from submitting grant applications. VSW’s retroactive assessments of administrative costs on past projects and, more significantly, construction material cost increases have an impact on the scope and nature of already appropriated projects. Findings and Recommendations The legislature should consider clarifying the eligibility requirements for the Village Safe Water (VSW) in order to better target funding.The VSW program has historically been used as the primary conduit for funding directed to improve the sanitation conditions in Alaska’s remote rural, primarily Native communities. In recent years, the VSW program has provided construction grants for communities that do not fit this profile.The program has begun receiving interest and applications from neighborhood subdivision organizations or nonprofit corporations representing a group of households rather than being affiliated with a local governing body. VSW managers report they have dealt with organizations that have been specifically formed to apply for sanitation grants. Although managers are uneasy whether such communities meet the central intent of the VSW program, they have been advised by the Department of Law (DOL) that such organizations are eligible for grant funding. DEC’s Division of Water Facilities Program Manager should ensure that project application files are complete and provide fully documented support for inclusion the VSW budget request. Managers of the VSW program should require communities to receive a successful utility business assessment as a condition for applying for a construction grant.VSW requires communities to successfully complete a RUBA assessment prior to releasing appropriated funds necessary to start construction. Currently, there are 17 communities, involving 22 separate appropriations totaling over $44.7 million, with projects on hold awaiting successful completion of a RUBA essential indication assessment.We recommend VSW management require a successful RUBA assessment as a condition of applying for a construction grant. Such a requirement would avoid situations where funding is held up over multiple construction seasons and would provide greater assurance the community is administratively capable of sustainably operating the newly built …

SUMMARY OF: A Special Report on the Department of Administration, Governance Framework for Selected Information System Security Controls, July 15, 2008. Please contact the Division of Legislative Audit by mail, e-mail, or telephone to receive a copy of this report. Mail: Division of Legislative Audit P.O. Box 113300 Juneau, Alaska 99811-3300 E-Mail: [email protected] Telephone: …

SUMMARY OF: A Special Report on the Use of Recidivism Rates by State Agencies, Overview of Current Practices, February 23, 2007 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the use of criminal recidivism rates as a measure of effectiveness of state rehabilitation programs. As part of the audit, we reviewed the collection of data by state rehabilitation programs as a basis for generating recidivism rates and evaluating outcomes. Report Conclusions We concluded there is no universal standard when it comes to calculating recidivism rates. Calculation methodologies need to be customized to provide recidivism data to answer specific questions. While there are no industry standards for calculating recidivism rates, there are critical components in describing the methodology that should be included in any report. The three components are: a clear description of the population to be studied; the time period reviewed; and, a detailed description of what constitutes a “relapse into criminal behavior.” Without these components, a recidivism study does not give a sufficient framework to understand and accurately interpret the study’s results. We also concluded that the routine calculation of recidivism rates is cost prohibitive, mainly due to the availability of data. Most data are collected manually through the use of intake logs and client files. Manual data collection severely limits the State’s ability to efficiently evaluate program effectiveness, including the calculation of recidivism rates. For those programs that do have an electronic database, its usefulness is limited because the information is incomplete, unreliable, or too new to be of current use. Appendix B provides a summary of various recidivism studies for state rehabilitation programs that have been issued between July 1996 and February 2007. Findings and Recommendations The report includes the following three findings and recommendation: Recommendation No. 1 The commissioner of the Department of Public Safety (DPS), as chair of the criminal justice information advisory board (CJIAB), should reestablish the board as a first step towards integrating the State’s criminal justice systems. We recommended the commissioner of DPS reconvene CJIAB. We further recommended CJIAB leverage the structure and accomplishments of the Multi-Agency Justice Integration Consortium by providing the group strategic direction that allows the state to work towards full integration of criminal justice systems. Recommendation No. 2 The Department of Health and Social Services (DHSS) director of the Division of Behavioral Health should institute quality control procedures over the data collected and stored in the Alaska Automated Information Management System (AKAIMS) behavioral health database. We recommended that the division director institute procedures to ensure accurate and complete data is entered into AKAIMS by behavioral health grantees. Once reliability of the data is established, we recommended DHSS utilize this valuable information to gain insight into the factors that affect recidivism. Recommendation No. 3 The commissioner for the Department of Corrections (DOC) should improve the data collection for its institutional programs aimed at reducing recidivism. We recommended DOC’s commissioner institute and enforce standard data collection procedures for its inmate education/training programs at each correctional facility. This should allow for the collection of program data that could be used to evaluate program effectiveness, including the calculation and analysis of recidivism rates. Auditor’s Comments The following auditor’s comments were included: The Alcohol Safety Action Program’s program manager should explore the possibility of using its new central web-based database to generate annual recidivism data. Significant changes are needed for the organization and administration of the Batterers Intervention Program to allow for the collection and analysis of program …

SUMMARY OF: A Special Report on the Use of Recidivism Rates by State Agencies, Recidivism Rates for the Alcohol Safety Action Program, March 13, 2007 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit on the recidivism rates of the Alcohol Safety Action Program (ASAP). This audit was part of a larger review of recidivism rates of state rehabilitation programs – Use of Recidivism Rates by State Agencies, Overview of Current Practices (Audit Control No. 06-030035A-07). To facilitate the dissemination of results, the calculation of ASAP recidivism rates are contained in this report.. Scope and Methodology Recidivism rates were calculated on a sample of offenders with a new ASAP case during FY 02. The professional services of the Urban Institute were used for assistance in designing a sampling plan; designing a database for collection of recidivism information; and statistical expertise in calculating recidivism rates. The Urban Institute’s full report on ASAP recidivism rates, including methodology, can be found as Appendix A. Report Conclusions The key recidivism findings are as follows: Overall, 52.6 percent of ASAP clients were rearrested for any crime within 42 months of their ASAP judgment date, and 44.2 percent had a new conviction over the same time period. Overall, 8.9 percent of ASAP clients were rearrested for an alcohol/drug-related offense within 42 months of their judgment date, and 7.6 percent were convicted of a new alcohol/drug-related offense during the same period of time. ASAP clients who completed alcohol and substance abuse education were less likely to be arrested or reconvicted for any crime than those that were never assessed [1]. ASAP clients that complete treatment were less likely, on average, to be rearrested or reconvicted for any crime than those that were never assessed. However, the difference was not statistically significant. ASAP clients with a greater number of prior arrests were more likely to to be rearrested for any crime. Older subjects were less likely to recidivate. Race and gender were not significantly related to the risk of rearrest after controlling for other factors. ASAP clients with greater numbers of prior arrests for person or society offenses or a greater number of prior convictions were more likely to be reconvicted for any crime during the follow-up period. ASAP clients with a greater number of prior convictions for offenses against society were less likely to be reconvicted for any crime after controlling for the other effects. ASAP clients that completed the substance abuse education were less likely to be rearrested or reconvicted for an alcohol/drug crime than those that were never assessed. White ASAP clients were less likely to be rearrested or reconvicted for an alcohol/drug crime than clients from the “Other” race category (i.e. Black, Hispanic). Older ASAP clients were more likely to be rearrested or reconvicted for an alcohol/drug related crime. ASAP clients with a greater number of prior crimes against society were more likely to be rearrested for a new alcohol/drug crime. For those individuals that completed ASAP (education or treatment), the hazard rates [2], measured after completion, were not significantly different than the hazard rates measured after judgment. This indicates that impact of the program is realized immediately upon entering the program rather than upon completion of the program. Survival times for clients that did not complete treatment or did not complete education were similar to the survival times for those never assessed. Footnotes [1] “Never assessed” means that a person was court-ordered into the program but never showed up at the ASAP office for an assessment. [2] Hazard rate is the instantaneous rate of …

SUMMARY OF: A Special Report on the Use of Recidivism Rates for State Agencies, Recidivism Rates for Alaska Sex Offenders, March 8, 2007 Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of recidivism rates for a group of Alaska sex offenders. This audit was part of a larger review of recidivism rates of state rehabilitation programs – Use of Recidivism Rates by State Agencies, Overview of Current Practices (Audit Control No. 06-30035A-07). To facilitate the dissemination of results, the calculation of sex offender recidivism rates are contained in this report. Scope and Methodology Our scope included sex offenders convicted in Alaska of a sex offense that required the offender to register with the Department of Public Safety as a sex offender. Specifically, all offenders convicted between July 1, 1986 through December 31, 1987 were selected for review. The professional services of the Urban Institute were used for consulting on research design and advanced statistical analysis. The Urban Institute produced a sex offender recidivism report, included as Appendix A, that forms the basis for conclusions contained in this report. Report Conclusions The key recidivism conclusions are as follows: 60.5 percent of sex offenders were rearrested for any crime within 15 years of their qualifying judgment and 52.4 percent were reconvicted within the same period. 17.8 percent of the sex offenders were rearrested for sex [1] crimes within 15 years of their qualifying judgment and 10.1 percent were reconvicted for sex crimes during the same period. Subsequent criminal activity data shows that 33 percent of the reconvicted offenders committed 72 percent of the crimes recommitted by the group overall. Several variables were analyzed to determine their effect on recidivism. This analysis indicates: Completion of the sex offender treatment while on community supervision did not impact an offender’s likelihood of being rearrested or reconvicted. Being on community supervision did not impact an offender’s likelihood of being rearrested or reconvicted. Sex offenders were less likely to be reconvicted while on supervision than after they were released from supervision. Convictions for sex crimes were rare events and none of the variables reached statistical significance. Sex offenders whose community supervision was revoked or who absconded from supervision were 2.7 times more likely to be rearrested. Older offenders were significantly less likely to be rearrested or reconvicted for any crime. Each additional time offenders were reincarcerated increased risk of rearrest and reconviction for any crime. Alaska Natives or American Indians were at a higher risk for rearrest and reconviction for any crime compared to other ethnicities. Those offenders that completed high school were less likely to be rearrested or reconvicted for any crime and those that completed more than high school were less likely to be rearrested for a sex crime. Offenders were less likely to be rearrested/reconvicted for any crime and less likely to be rearrested for a sex crime with each additional year offenders spent incarcerated during the follow-up period. Offenders were more likely to be rearrested or reconvicted with each additional year offenders spent incarcerated for their qualifying crime. Footnotes [1] Sex crimes are crimes that require the offender register as a sex …

SUMMARY OF: A Special Report on the Alaska Aerospace Development Corporation, April 11, 2007. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the Alaska Aerospace Development Corporation (AADC) administrative and financial controls in place to compensate for the centralized state government controls that were removed. Additionally, we were directed to review and assess (1) the reasonableness of the compensation of the AADC staff and governing board; (2) the validity of the corporation’s college scholarship program; (3) the adequacy of the corporation’s investment policy; and, (4) the feasibility of the corporation paying a dividend to the State. Report Conclusions The conclusions are as follows: AADC has adequate financial management controls in place; Administrative controls over personnel practices are weak primarily due to minimal documentation of the basis for employee compensation and job performance; AADC board member compensation is consistent with provisions of the corporation’s statute; AADC’s scholarship program is allowed under the corporation’s statutory authority; AADC’s investment policy should be improved to address important aspects of fiduciary care; and AADC’s current operations do not support payment of a significant dividend to the State. Findings and Recommendations The AADC Board of Directors (Board) should direct the President to establish a documented personnel management system that includes a formalized salary structure system and more formalized evaluation process. AADC’s Board of Directors should direct the President to develop regulations or policy for the corporation’s education programs. AADC’s Board of Directors should take action to improve the corporation’s investment policy and document that key precepts are understood and followed by corporate staff and outside investment managers. To encourage AADC’s Board of Directors to actively consider distribution of a dividend to the State, the legislature should require the Board to formally evaluate such action each year, and report to the legislature. There is now interest in directing AADC to distribute a dividend to the State from the earnings of the corporation. For an organization such as AADC, with a business model and a market that are not fully matured, the income and asset balances do not reflect the corporation’s capacity to pay a significant dividend to the state. Capacity to pay dividends is not clearly reflected in financial statement account balances. Any assessment of dividends must consider using the “fees and profit” proceeds generated by the corporation’s primary operating contract. These proceeds are available to be spent on what are termed “non-billable” items. While these proceeds are reflected in the corporation’s financial statements, they are not specifically identified as revenues available for spending on discretionary items – such as bonuses and scholarships. Accordingly, trying to develop legislation that would require a certain amount or percentage of these funds be paid in dividends would be difficult to define and clearly set out in state law. Such action could not adequately account for such factors such as cash flow, other commercial prospects, and infrastructure needs. Whether funds used to pay for such things as scholarships or bonus compensation could alternatively be used to fund a relatively small dividend to the state’s General Fund, is a valid policy question. Developing a specific language, however, that requires dividends be paid based on a formula applied to balance sheet accounts would be difficult. Accordingly, we recommend the legislature amend state law related to AADC to require the Board to annually consider payment of a dividend to the state. The statute could require that the Board report to the legislature whether a dividend is available or not, and the basis used by the Board in making its …

SUMMARY OF: A Special Report on the Department of Corrections, Community Jails Program, April 13, 2007. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit to review and assess the equity of funding allocated through the community jails program administered by the Department of Corrections (DOC). The program provides funding to 15 communities for the short-term confinement of persons detained under state law. BACKGROUND INFORMATION It has been more than ten years since the funding levels for community jails have been thoroughly reviewed. The last review was performed through the efforts of the governor’s task force in 1993-1994. The task force established the funding levels for each community that essentially have been brought forward annually ever since. With the exception of the FY 06 increase provided to Kotzebue, the most recent ten percent raises were applied evenly across-the-board. With the passage of time and turnover in personnel, DOC is not certain how the task force arrived at the funding levels for the various communities. According to a former member of the task force, each community’s funding was based on budgeted, direct operating costs submitted by the community officials. These totals were adjusted upwards by the task force to provide funding to cover indirect or overhead costs. The task force expected that the communities would cover a small percentage of the total jail operating costs. Report Conclusions A summary of the conclusions follows: Most communities report that state funding is still insufficient to cover operating costs; The extent of the funding shortfall varies substantially between communities; The current funding process does not require reporting or review of actual local jail operating expenditures; and Reimbursement for jail operating costs are not related to actual local operating costs. Two communities indicated that funding was sufficient to cover their operating costs; however, the other 13 communities reported that they were required to cover some of their jail operating costs. Our initial analysis of local jail budgeted operating costs, compared to program funding, indicated that most of the communities were being required to bear some operating costs for their local jail. Additionally, the amount of the local subsidy appeared to vary significantly among communities. Our detailed analysis of four communities, using FY 07 budget totals, showed a 40 percent disparity between communities for similar operating cost factors. The detailed budgets attached to each year’s contract do not represent the actual community jail budgets and expenditures. Additionally, DOC does not require contractors to report their actual expenditures. As a result, DOC is funding a program without clearly knowing what operational costs are involved. There is no direct relationship between the funding provided and the actual operating costs to communities with local jails. Rather than an analysis of operating costs, the contracts are based on historical amounts with substantial increases in the last two years. Findings and Recommendations DOC’s commissioner should restructure the community jails program to promote equity between communities. The current allocation of funding for the community jails program is based on decade-old financial information, resulting in an unequal distribution of funding to communities operating jails. DOC should develop allowable standardized costs for jail operations. While this would not necessarily lead to full funding, it would provide a basis for correcting the inequitable distribution of funds between participating communities. The department should then implement procedures to ensure the financial information submitted by local communities is accurate. The department could expand its existing operational standards reviews to include confirmation of some financial information. Alternatively, the department could modify its distribution of funds from contracts to grants, bringing the financial assistance provided to the communities under the State’s single audit …

SUMMARY OF: A Special Report on the University of Alaska, Fairbanks – School of Education, Selected Issues, August 16, 2007. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of the University of Alaska, Fairbanks – School of Education (SOE). The primary objective of our audit was to determine if the University of Alaska, Fairbanks – School of Education is consistently applying admittance requirements for the school’s teaching programs. The secondary objective was to confirm students of the undergraduate student teaching program have all passed the competency examinations – Praxis I prior to graduation. Background Information Beginning in July 1998, state law required applicants for teaching certificates to pass competency examinations. The examinations eventually incorporated into state regulations were a group of tests referred to collectively as Praxis I. The Praxis Series is administered by, and is a trademark of the Educational Testing Service (ETS). ETS provides the Praxis Series examinations to states to be used as part of their teacher licensing process. Praxis I is a series of tests that assess academic skills in reading, writing, and mathematics. Praxis II essentially assesses subject-specific knowledge. To help ensure that students would meet the standards for obtaining a state teaching certificate, the University of Alaska, Fairbanks – SOE made passing Praxis I an admission requirement for its student teaching programs. SOE’s teaching programs involve both instructional study and classroom teaching work in a school district setting. Starting with spring 1999 admission cycle for the 1999-2000 school year, undergraduate applicants were admitted into SOE’s teaching program with the provision they pass Praxis I before starting work in school classrooms. In spring 2004, SOE began to require undergraduate applicants to submit their passing Praxis I scores with their application for admission. Report Conclusions We concluded that SOE consistently followed its admission requirements; and, since the implementation of Praxis I at SOE, all but one graduate of the degreed teaching program required to pass the competency examinations did so. These conclusions are discussed further as follows: SOE has consistently followed its admission requirements for its student teaching programs For the 2005-2006 and 2006-2007 school years, SOE consistently followed its admission requirements for its various student teaching programs. All admitted applicants submitted the required admission documents; admitted faculty reviews were completed; and, all admitted applicants passed Praxis I. With one exception, graduates of the degreed teaching program passed the competency exams when required by the SOE In our review of the 229 graduates of the student teaching degree program since the 1999-2000 school year, we identified 17 graduates that did so without passing Praxis I. Fifteen graduates were not required to pass the competency examinations because their SOE admittance date was prior to the implementation of the Praxis requirement. One graduate was not required to pass the tests because she was a transfer student who already had student teaching credits. The last graduate in question was required to pass Praxis I but did not do so. Except for the one error that occurred during the implementation year of Praxis, graduates of the degreed teaching program have passed competency exams when required by …

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SUMMARY OF: A Special Report on the University of Alaska, Unit Cost Analysis and Other Selected Issues, Part 2, November 15, 2005. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit of the University of Alaska (UA) faculty and staff travel using fiscal year 2004 travel financial data. There were two main objectives of this audit, identified as University of Alaska, Unit Cost Analysis and Other Selected Issues, Part 2. The first objective was to review and evaluate travel by UA faculty and staff. Specifically, we were asked to determine if travel was necessary, or if the travel objectives could have been otherwise accomplished, through the use of audio/video conferencing technologies. The second objective was to determine whether travel arrangements had been made with an eye toward controlling costs. University of Alaska, Unit Cost Analysis and Other Selected Issues, Part 1, issued in August 2005, presented the unit cost analysis and addressed other issues regarding housing and prior audit findings and recommendations. Part 3, which will be issued in the future, will address whether UA is maximizing the use of distance education technologies. Report Conclusions We concluded the following: No significant opportunities found to avoid University travel through increased use of audio or video conferencing technologies. With additional planning and advance airfare purchases, UA has an opportunity to recognize further cost savings. An in-depth travel cost analysis can not be easily performed because UA’s financial software does not have a dedicated data field that is utilized to associate every travel transaction with a travel authorization number or a traveler’s name. Travel reimbursements are generally accurate; however, a considerable number of travel authorizations and travel expense reports are not properly completed, nor adequately reviewed. Therefore, UA travel policies and procedures are not being followed; travelers are being under- and over-paid for travel reimbursements; and the accountability by travelers, supervisors, and reviewers may not always be at the highest level possible. Findings and Recommendations UA’s controller should update, clarify, and enforce its travel policies and procedures to ensure that the highest level of accountability is …

SUMMARY OF: A Special Report on the Department of Administration, Division of Finance’s implementation of the state travel office, state travel procurement, and agencies’ use of the Alaska Airlines EasyBiz program. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit to analyze and evaluate the changes being made to processes for procuring state travel, as well as review of the Alaska Airlines EasyBiz mileage program used by state departments. Report Conclusions The benefits from the State Travel Office (STO) should outweigh the costs after its full implementation. During the implementation period the costs are at least as much as the benefits achieved by the State to date; the extent to which is extremely difficult to ascertain at this time. The process of implementation is ongoing, with only a few departments currently using STO. Furthermore, information prior to the establishment of STO was limited to expenditures and no data exists related to travel patterns. According to Alaska Airlines, the State has been purchasing travel at the highest cost (full coach) airfare 44% of the time. And again, according to Alaska Airlines, the industry standard for businesses for full coach fare is about 10%. A key component of travel savings is in the use of negotiated government rates, but those rates are not available until the department begins using STO to purchase air travel. Alaska Airlines required the State to have a central point of contact for travel requests before serious negotiations could proceed. Once the decision was made to create a central travel office, extensive planning and input from “customer” agencies occurred. Approximately two years elapsed from the initial concept to implementation; most of that time was spent in planning activities. The benefits of travel purchase information, identifying savings and other travel activity, is essential for managers. This kind of information can only be generated by a travel agency. The STO can provide this information which the departments cannot, otherwise, economically prepare for themselves. Until report development is completed and all state agencies are using the STO, the State is not capable of realizing the full benefits of relevant and reliable information available through the STO. The STO has some measures in place to ensure its objectives are met; however, improvements and additional measures are still needed. DOF has identified the primary objectives for the State’s centralized travel office as obtaining least cost, better travel purchasing enforcement, and the ability to provide relevant and reliable information about state travel. Agencies have large inventories of accrued mileage accounts with minimal purchases of mileage ticket activity during our review period. As of December 31, 2005 the State had approximately 18,800,000 miles within EasyBiz accounts. The State of Alaska needs a policy to guide departments’ use of business miles. Overall, we conclude that the concept and framework of a central travel office is viable for the State and can provide costs savings for travel purchases. However, improvements in the STO’s processes, procedures, and reporting will assist the State in achieving the greatest benefits from centralization. Findings and Recommendations   The director of Finance, working with the STO manager, should summarize and report travel activities to commissioners on a monthly basis. Lost Savings should be reported. Additional travel activity should be reported to management The STO manager should work with department travel coordinators to enhance travel request processes. The directors of administrative services should work with travel coordinators to improve travel desk operations. Additional training for travel desk staff is needed. Improve efficiencies by reducing the number of travel desks. Cross train departmental travel coordinator prior to implementation. The director of Finance should develop guidance for the use of mileage and seek revision of travel statutes. The STO manager should refine the complaint process used by state …

SUMMARY OF: A Special Report on the Departments of Administration and Revenue, Public Employees’ Retirement System, Teachers’ Retirement System, and Alaska State Pension Investment Board, Selected Issues. Report Conclusions In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of selected issues related to the Public Employees’ Retirement System (PERS) and the Teachers’ Retirement System (TRS) and their respective former oversight boards. In addition, our audit included selected issues regarding the Alaska State Pension Investment Board (ASPIB). The purpose of this audit was to review and assess the fiscal history of the state-administered PERS and TRS (Plans). Both plans currently face significant projected unfunded liabilities. Our primary objective was to review the past decisions made by the PERS board, the TRS board, and the ASPIB to assess to what extent, if any, the boards’ decisions contributed to the plans’ current unfunded liabilities. Scope The scope of the audit varied depending on the audit objective. PERS and TRS employer contribution rate decisions – Adopted rates for FY 90 to FY 06 were reviewed for consistency with the consulting actuary’s calculations and advice. ASPIB asset allocation decisions – Adopted asset allocations for FY 99 to FY 05 were reviewed for consistency with the Treasury staff and investment consultants’ advice. PERS and TRS funding ratios – Funding ratios from July 1, 1992 through June 30, 2000 were reviewed to determine the internal and external factors causing the changes in ratios with a focus on the period July 1, 1999 through June 30, 2004. Other state public pension plans – Five public employees’ pension plans and five teachers’ retirement plans were selected from 127 public pension plans surveyed by the National Association of State Retirement Administrators in 2004. Report Conclusions A summary of the conclusions follows: It is unclear if state law mandates that retirement funds maintain funding ratios of 100 percent. Decreases in funding ratios were primarily due to investment losses and rising medical costs. Rate-setting decisions had a small impact on each Plan’s declining funding ratios. In three instances, the PERS board set rates below the former consulting actuary’s calculated rates. TRS did not adopt the annual actuarially-calculated employer contribution rate, but rather set a level rate as recommended by the consulting actuary. Administrative decisions of oversight boards had limited impact on the Plans’ liabilities. Regulations with financial effect need to be updated. Asset allocations were more conservative, but investment returns were consistent with those of comparable retirement plans in other states. An administrative two-year lag between determining the contribution rates and using them has contributed slightly to the Plans’ declining funding ratios. Recent state appropriations partially offset higher contribution rates faced by participating employers. Findings and Recommendations The director of the Division of Retirement and Benefits (DRB) should review and update the Public Employees’ Retirement System’s and the Teachers’ Retirement System’s (Plans) regulations. Certain regulations that financially affect the Plans have not been updated for a number of years. According to the DRB staff, the division has contracted with a former assistant attorney general to review the existing Plans’ statutes and regulations and provide potential revisions to the commissioner of the Department of Administration early in 2006. We recommend that certain regulations be considered for change under this …

SUMMARY OF: A Special Report on Residency Requirements of State Benefit Programs, Various Departments, February 28, 2006. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of the residency requirements for State of Alaska benefit programs. In this report we use the word “benefit” broadly. We recognize the financial advantage given residents in reduced fees for purchase of a license, permit or tuition, is more accurately described as a surcharge on the nonresident instead of a benefit to the resident. General state revenues, in conjunction with user fees, financially support program operations; therefore, the surcharge is a mechanism used to equalize, or balance, the charge for both resident and nonresident. So whether it is an exclusive opportunity given to residents, such as participating in the WWAMI program or a cost differential in the price of a license or permit, our report will refer to them generically as a “benefit.” Report Conclusions Our review and analysis of the ten state benefit programs concludes that inconsistencies in the residency requirements are prevalent. These inconsistencies are reasonable due to the benefit differences and are generally due to: the amount of and type of benefit, level of interest by the legislature, the governor and stakeholders, and public policy issues. The proof of residency required from applicants varies in each program. Programs with a higher benefit such as the Permanent Fund Dividend require the applicant to provide proof of residency status through submission of documents supporting their intent to remain in Alaska indefinitely. In contrast, the sport fishing and hunting license program simply relies on self-certification by the applicant to the vendors selling the licenses. The degree of verification performed by the agency in determining applicant eligibility is generally commensurate with the benefits received. The one exception is the Pioneer Homes which have a high benefit but low verification of applicant residence status. Also, some programs, such as the Department of Natural Resource’s land disposal programs, use sport fishing and hunting licenses as proof of residency. Given that these licenses require only a self-certification they should not be relied upon to verify residency. With some exceptions, which are discussed in the Findings and Recommendation section, agencies are applying residency requirements as designed by law and regulation. Findings and Recommendations Recommendation No. 1 Program managers responsible for Pioneer Homes’ admission, land disposal programs, and university tuition should improve procedures used to verify residency status. We recommend these programs strengthen verification and evaluation procedures for applicant residency. Specifically, Pioneer Homes’ officials should perform a higher level of verification for an applicant’s compliance with the residency requirement; land disposal and University of Alaska resident tuition program managers should discontinue acceptance of sport fishing and hunting licenses as proof of applicants’ residency status. Recommendation No. 2 The University of Alaska/Southeast’s (UAS) Vice Chancellor for Student Services and Enrollment Management should ensure that students receiving resident tuition meet the University’s residency requirements. We tested applicants to UAS in 2003, 2004, and 2005. Insufficient support was found for 2 of 17 students in Spring 2003, 9 of 17 students tested in Spring 2004, and 2 of 5 students in Fall 2005 semesters. UAS should fully implement Regent Policy 05.10.02(G) and require students to provide adequate proof of the two-year residency requirement or support for the bona fide residency requirements. Recommendation No. 3 The University of Alaska/Anchorage WWAMI Program Director should develop eligibility criteria in accordance with UA policy and regulations. The WWAMI program is presently allowing applicants to meet residency requirements with a shorter durational period than required by the University of Alaska’s Board of Regents policy and regulations. Additionally, absences are being allowed that are not supported by Board of Regents Policy or regulations. The WWAMI Program Director should work with UA Statewide to develop eligibility criteria for WWAMI applicants in accordance with UA policy and …

SUMMARY OF: A Special Report on the Department of Transportation and Public Facilities, Benchmarking, July 28, 2006. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a review of the Department of Transportation and Public Facilities’ (DOTPF) performance on highway construction projects. The objectives were to: Identify existing relevant highway construction benchmarks and related data. After identifying relevant benchmarks, apply them to DOTPF’s highway construction projects. As part of this performance evaluation, we reviewed documentation related to the design, bidding, and construction of selected projects. Develop a narrative describing how highway projects are identified, reviewed, approved, funded, and built. Report Conclusions We were directed to identify any widely recognized cost and operational “benchmark” standards related to highway construction. After identifying such standards we were to use them to evaluate state highway design and construction operations of DOTPF. We determined that there were no such benchmark standards in wide use. Since most states maintain highway project cost and performance data in nonstandard formats, no existing data or studies were found which could efficiently and economically provide readily useful information for comparisons. As a result, highway construction efforts were evaluated using various applicable performance objectives from DOTPF’s “missions and measures” information prepared for Office of Management and Budget. For the projects reviewed, we determined DOTPF consistently did a good job of meeting benchmarks aimed at restraining what are typically thought of as overhead costs. However, the projects reviewed had less success when it came to measures reflecting how project costs were managed during construction. There may be a relationship between the department’s good performance at meeting overhead benchmarks and its lesser performance involving management of direct construction costs and bid design. In addition we concluded that DOTPF’s lack of certain design procedures limit opportunities for evaluation and improvement; specifically, decisions were not reviewed or documented. DOTPF also has no formal process is in place to incorporate construction experience into the design phase of future projects. Findings and Recommendations DOTPF should continue restructuring how it reports performance measurement information. DOTPF should provide more specific guidance regarding records and documentation related to design of highway projects.There are gaps in the DOTPF design process for highway projects. As a result, projects may not be managed as effectively as could be during the design phase. Specifically, there is little standardization in the recordkeeping requirements for design. This results in key aspects of the design processes, either, not being completed or not adequately documented. DOTPF should develop a formal process to ensure construction experience has more of an effective impact on the design and construction process for future projects.For the projects reviewed, we saw no evidence where DOTPF was using actual construction experience to perhaps modify design procedures or processes for future …

SUMMARY OF: A Special Report on the Department of Military and Veterans Affairs and Department of Administration, Alaska land mobile radio project, September 21, 2005. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit of the implementation of the Alaska land mobile radio (ALMR) project. Our review primarily involved the Department of Military and Veterans Affairs (DMVA) and the Department of Administration (DOA). Report Conclusions We were directed to review and assess various issues related to the implementation of the ALMR project. ALMR is a joint project among federal, state, and local governments. For its part, the State has not effectively or consistently managed the ALMR project. The State’s uncoordinated and inconsistent management of the project has contributed to the following deficiencies: Estimates of project costs appear unsupported and based on funding Loan proceeds were inappropriately used to finance purchases made by DOA Some costs and contracts were not consistent with funding conditions or the procurement code Operating site information is incomplete DOA did not specifically identify and allocate expenditures on a site-by-site basis There is insufficient data to estimate annual operating costs of the project There has been inadequate outreach and recruit of potential ALMR users The scope of the project was changed without approval from the ALMR Executive Council In recent months, DMVA has made significant effort to improve the State’s oversight and control of the project. While we recognize this, we still believe there are important improvements to be made in the way the State carries out its share of responsibilities. Findings and Recommendations The ALMR project manager should take steps to develop a more comprehensive, better supported cost estimate for the project.The project manager should develop a comprehensive cost estimate using actual historical expenditure information now available. This information can then be used to estimate the costs of the approximately 51 remaining sites. It is also necessary to develop a better estimate of radio costs. Department of Military and Veterans Affairs (DMVA) project and administrative support managers should continue making improvements in the oversight of the ALMR project.In August 2004, responsibility for the project was transferred to DMVA from the Department of Administration (DOA). In March 2005, DMVA appointed a new project manager to oversee the ALMR project. Many of our findings stem from actions or inactions of the prior DOA project managers.We identified a wide range of deficiencies, such as: (1) unallowable expenditures paid with grant funds, (2) lack of project documentation, (3) incomplete and inaccurate cost information for both individual sites and the project as a whole, and (4) changes to the project scope done without approval by the ALMR Executive Council. The director of DOA’s Enterprise Technology Services should ensure that site records are current and complete. The director of DOA’s Enterprise Technology Services should establish a tracking method to ensure all costs associated with operations and maintenance of the ALMR system are identified and recorded …

SUMMARY OF: A Special Report on the Department of Administration’s Professional Services Procurement Process, October 17, 2006. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit to review and analyze all formal professional services procurements at the Department of Administration (DOA) over the previous two years. In addition, we identified any improvements that could be made to the procurement code. Report Conclusions There were no systematic violations of Alaska’s procurement code by the Department of Administration; however, several avoidable errors did occur during the procurement process. Some changes could be made to the procurement code to improve efficiency and enhance competitiveness. Overall, vendors are generally satisfied with the procurement process. The avoidable errors were a result of (1) misplacing a portion of a vendor’s proposal combined with a subsequent misunderstanding between the State and the vendor on how to move forward with a modified procurement process; (2) poorly-designed timelines in a request for proposals (RFP) for a replacement payroll system; and (3) poorly written RFPs. Findings and Recommendations Changes to improve the procurement code are necessary. Consider removing or modifying the requirement that contractor listings be maintained. The DOA commissioner and chief procurement officer should seek to modify AS 36.30.210(e) and AS 36.30.110(b) to make a business license necessary at the time of contract award. The DOA commissioner and chief procurement officer should reevaluate the Alaskan offeror and Alaskan bidder procurement preferences. The DOA commissioner and chief procurement officer should consider policies to better safeguard vendor proposals. The Division of Administrative Services (DAS) should ensure RFPs contain clear and realistic timeframes for all phases of the proposal evaluation process. The Division of General Services (DGS) should institute review procedures to ensure RFPs are clear and unambiguous before …

SUMMARY OF: A Special Report on the Department of Health and Social Services, Kenai Peninsula Community Care Center, Selected Operational Issues October 13, 2006. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance audit of the operations at the residential child care facilities of Kenai Peninsula Community Care Center (KPCCC or the Center). Included in the scope of the audit were some operational decisions and functions of the Office of Children’s Services (OCS), and the Division of Juvenile Justice (DJJ), state agencies organizationally located under the Department of Health and Social Services. Report Conclusions We were directed to review and assess various issues related to the operations of KPCCC, in particular the Center’s residential child care facilities. We concluded the following: The treatment environment at KPCCC is not inappropriate or unduly harsh, even in the light of serious incidents and what appears to be a high rate of runaways. The basis for this central conclusion is: Notable incidents involving staff and residents were isolated events . We saw no report, nor received any report from contacts with state caseworkers, parents, or foster parents of ongoing abuse or harsh treatment of residents by KPCCC staff. OCS managers have commented that supervision of youth by staff could be improved. However, OCS and DJJ workers we interviewed do not believe the circumstances of the past serious incidents reflect a systemic deficiency in KPCCC’s behavioral treatment model or the general capability of staff. High runaway rates reflect the nature of the residential setting and youth involved, rather than major operational deficiencies . KPCCC has no written procedures on how staff is to handle youth who run away. The Center’s management trains staff to counsel youth against running away, but do not encourage the physical restraint of residents about to runaway. Since KPCCC provides treatment in a semi-secure setting, staff does not have the authority to forcibly hold youth who want to leave. State law requires youth in state custody, adjudicated or not, to be placed in the least restrictive setting. This policy often leads to situations where high risk youth are receiving treatment in a semi-secure setting. Before the youth can be placed in a more restrictive setting, the juvenile is given the opportunity to succeed in a less restricting placement. Doubt as to the level of supervision required for a given juvenile is typically resolved to the benefit of the youth, and the least restrictive option is chosen. Given this state policy, coupled with the semi-secure treatment setting, the rate of runaways is more a result of the combination of these factors rather than a reflective of a harsh treatment environment. Limited survey responses indicate few problems or concerns with KPCCC . Juveniles discharged from KPCCC to foster care were placed in appropriate settings Treatment and service delivery are generally consistent with Medicaid documentation requirements Facility and staff qualifications generally meet standards Work done at KPCCC by OCS staff is consistent with the agency’s staff development policy KPCCC’s expenditures and revenues are consistent with reported budget amounts Transportation expenditures for youth travel appears reasonable Findings and Recommendations The executive director of the Kenai Peninsula Community Care Center (KPCCC) should strengthen the procedures related to maintaining adequate documentation, required by state regulations, on the treatment of youth. The executive director of KPCCC should assign a staff member the specific responsibility to develop and maintain required personnel files documents. The ethics officer for the Department of Health and Social Services should coordinate with OCS’ management to develop a policy regarding disclosure of state employees’ work with community based agencies while on educational …

SUMMARY OF: A Special Report on the Department of Transportation and Public Facilities, Force Account Projects, March 3, 2005. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of the Department of Transportation and Public Facilities (DOTPF). The overall objective of the audit was to determine the extent to which DOTPF uses force accounts for construction projects. Additional objectives included review of policies and procedures over force account, comparison of state wages to Davis-Bacon wage rates, review and analysis of public interest finding. Report Conclusions The majority of force account work is for preventative maintenance projects. Beginning in 1998, the Federal Highway Administration (FHWA) allows the State to utilize funding for maintenance projects designed to prolong the life of federally-funded highways. In the past, these activities were paid for with state general funds. DOTPF has taken advantage of this change by expanding the preventative maintenance activities conducted by Maintenance and Operation (M&O) personnel. The work on these projects primarily consists of aggregate leveling, asphalt treatments, crack sealing and repairs, guardrail adjustments, drainage improvements, and other miscellaneous maintenance and repair activities. The purpose of these projects is to provide the treatments necessary to preserve road conditions, control deterioration, and reduce long-term maintenance costs. We found DOTPF’s policies and procedures over force accounts projects to be sufficient, that force account wages are generally equivalent to Davis-Bacon wages, materials, and equipment on force account projects were properly obtained, and the public interest findings were adequately supported and approved by DOTPF’s Chief Contracts Officer. Findings and Recommendations The Department of Transportation and Public Facilities (DOTPF) commissioner should improve procedures governing public interest findings on force account projects. One of DOTPF’s estimating methodologies may tend to overstate, albeit in minor amounts, the contractors estimated costs. In the adjustment factor methodology, estimates are based on percentages that are not well documented. For example, the guidance is unclear as to what portion of mark-ups is for profit versus overhead. In general, support for percentages used is not well defined. The guidance could be better supported to eliminate the appearance of overstatement of savings. In addition, final reports summarizing the results of force account projects are not reviewed and compared to public interest findings to verify if intended goals and cost estimates were met. The Chief Contracts Officer is responsible for review and approval of public interest findings for force account projects over $100,000, but does not receive a final report summarizing the outcome of the force account projects upon completion. For this reason, the final result of force account projects are not reviewed to verify if they met the intended goals and established estimates according to the PIF. DOTPF prepares and submits close-out reports to the federal oversight agency providing the funding for such projects. While these close-out reports meet federal agencies’ monitoring requirements, they are not sufficient for state purposes for two primary reasons. First, the Chief Contracts Officer does not receive a copy of the reports; and, secondly, the expenditures of all state funds are not included in the reports. For example, overruns borne by the State are not included in such reports. A separate report, summarizing the outcome of the force account project including all costs, would enhance internal control over the PIF process by providing additional monitoring and documentation to support the estimates contained in the PIF. Without a final report including all the costs related to the project, it is possible project costs could be significantly higher than estimated in the PIF, which could potentially change the Chief Contract Officers’ decision making on the cost effectiveness of using state forces. We recommend DOTPF strengthen internal control procedures over the PIF process by requiring a final report that summarizes the outcome of the project and it should include all related project costs as well as overruns. Secondly, DOTPF should clarify methodologies for estimates. Specifically, document the methodology supporting the percentages used in estimates. Finally, DOTPF’s Standard Specifications for Highway Construction Manual, section 109-1.05, should be updated to specify the portion of mark-up that applies to overhead versus profit. This will help ensure estimates are reasonable and improve the documented support for those …

SUMMARY OF: A Special Report on the Department of Health and Social Services (DHSS), Division of Family and Youth Services (DFYS), Division of Juvenile Justice (DJJ), and Office of the Commissioner, April 11, 2005. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of various management issues related to DFYS, now the Office of Children’s Services (OCS); DJJ; and the Office of the Commissioner. Scope and Methodology Current and former employees of DFYS and DJJ, totaling 1,635, were asked to participate in a confidential survey in the summer of 2003. In order to obtain stakeholders’ perspective on DFYS management, we reviewed a 2002 federal report, which included comments from various stakeholders regarding DFYS. In addition, a sample of stakeholders was interviewed. The social worker and juvenile probation officer job class series positions for DFYS and DJJ were analyzed to determine the turnover and vacancy rates for fiscal years 2000 and 2003. DFYS’ social worker positions from FY 00 through FY 03 were analyzed to determine the number of positions reclassified to an unlicensed caseworker job class series and to determine whether the employees in the social worker positions held a license. Positions in DFYS’ central office in FY 98 were identified. Additional positions and upgrades to positions in the central office were reviewed for the five-year period FY 99 through FY 03. An analysis was conducted of the requirements for DFYS’ Recruitment and Retention Stipend Program. Further, the programmatic activity from the fall of 1998 through December 31, 2003, and the financial activity for FY 99 through FY 04 were examined. Five of the nine fatalities of children who either were in state custody or had received DFYS services that occurred during the period 1999 through 2001 were reviewed. A review was conducted of supervisory and management practices applied to DFYS field offices statewide for the period July 2001 through March 2003. Statistical random samples of 100 each of DJJ intake and probation cases were selected from FY 02 and the first three quarters of FY 03 to determine compliance with policy and procedures. A listing of DHSS’ internal administrative investigations from FY 98 through January 15, 2004 was obtained. All investigations for client abuse were identified, and the dispositions were reviewed for consistency. FY 02 and FY 03 travel of 20 employees 1 and 26 employees 2, respectively, in upper- and mid-management positions was reviewed. Report Conclusions A summary of the more significant conclusions follows: Management faces high turnover at DFYS Both DFYS and DJJ management should address issues raised by employees Social worker licensure and the related stipend program are flawed Grantees providing services to DFYS and DJJ clients are not adequately monitored DFYS does not perform thorough internal child-fatality reviews when the child was in state custody at the time of death or had received services from DFYS Rural DFYS field offices are not adequately supervised DFYS caseloads are high and vary significantly statewide DJJ intake and probation services are not in compliance with policies and standards Instances of child abuse by state-employee caregivers are not properly reported DHSS needs to train its own employees, who are caregivers to children held in state custody, how to recognize and report child abuse DHSS’ commissioners and management employees within DFYS and DJJ do not use cost-saving policies and procedures for travel Findings and Recommendations This report contains recommendations to address the issues and weaknesses discussed in the Report Conclusions. Included are recommendations to improve the overall management of OCS (formerly DFYS) and DJJ. A recommendation is made to reevaluate the social worker Recruitment and Retention Stipend Program. Recommendations are made to strengthen supervision and supervisory case file reviews in both OCS and DJJ. Additionally, recommendations are made to address the weaknesses in the travel policies affecting both the Office of the Commissioner and the department as a whole. In total, 19 recommendations are made primarily to the Department of Health and Social Services.   Footnotes 1– The FY 02 scope included 6 individuals in the Office of the Commissioner, 10 with DFYS, and 4 with DJJ. 2- The FY 03 scope included 9 individuals in the Office of the Commissioner, 14 with DFYS, and 3 with DJJ. …

SUMMARY OF: A Special Report on the Department of Transportation and Public Facilities, Alaska Marine Highway System, Vessel Maintenance and Repair Procurement. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of the vessel maintenance and repair procurements administered by the Alaska Marine Highway System (AMHS). Our objectives were: to evaluate AMHS’ compliance with the applicable state and federal procurement statutes and regulations, which includes, when appropriate, the application of the interport differential; to evaluate the current state statutes and regulations to assess whether their application results in fair and unbiased contract awards; and to identify prior and ongoing federal, state, and local government subsidies and incentives received by shipyards used by AMHS for vessel maintenance and repairs. Report Conclusions Our review found that AMHS adheres to state and federal procurement laws and regulations when contracting for vessel maintenance and repairs, including the correct application of the interport differential when appropriate. Currently, Alaska Statutes provide for the maximum use of in-state shipyards, and AMHS complies with this mandate by contracting with either the Ketchikan or Seward shipyard for overhaul projects. Overhauls are typically performed at the shipyard in the vessel’s base port whenever possible. This reduces the chance of extended disruption of ferry schedules due to the additional transportation time created by sending a ferry out-of-region for overhaul. AMHS also believes, not unreasonably, that this practice ensures the safety of the vessel and crew while avoiding the risk of additional costs for possible damages when transporting vessels from southeast Alaska to Seward during bad weather and rough seas. As a longstanding matter of public policy, shipyards often receive government subsidies. Subsidies to shipyards are provided as incentives by local, state, or federal governments. Such incentives are designed to: (1) promote the industry; (2) entice an enterprise to move to, or stay in, a given community; or (3) in the case of federal government, assist in the interest of national security and defense. Subsidies may take the form of direct grants, low-interest loans, tax deferral, property tax exemption/reduction, lower utility rates, or acquisition of capital assets from the government entity at less than fair market value. At the end of World War II, the United States had a vast complex of shipyards that were used to support its wartime program of naval and merchant ship construction. The complex included nine government-owned and operated shipyards and approximately 132 privately owned shipyards. The government invested over a billion dollars in this complex. Since then, the U.S. government has had a number of subsidy programs, some of which still exist today. In Ketchikan and Seward there are government-owned and privately operated shipyards. The State built the Ketchikan shipyard at a cost of $38 million. The Ketchikan Gateway Borough granted the shipyard’s operator property tax relief and cash incentives totaling $800,000 from calendar years 1999 through 2001. Additionally, Ketchikan Public Utilities charged the shipyard a lower industrial rate for electricity. The federal government also awarded two grants for the Ketchikan shipyard. In 2001, the Federal Highway Administration (FHWA) provided funds to the Department of Transportation and Public Facilities for a $2.6 million shipyard improvement project. The U.S. Department of Commerce, Economic Development Administration awarded a $5 million grant, with a corresponding $5 million total match from both the borough and the State, for the purchase of a vertical lift. Construction of Seward’s marine industrial complex, which includes the shipyard facilities, was also partially funded by the State. In 1981, the legislature appropriated $13.7 million to the City of Seward to construct the complex. Another $4 million was appropriated to Seward by the legislature in 1982 as a grant for the industrial park associated with the complex. In 1986, the legislature appropriated just over $1 million for cradle and rails, and in 2001 an additional $1 million was appropriated for portable work stations at the shipyard. (See Appendix D for further …

SUMMARY OF: A Special Report on the University of Alaska, Unit Cost Analysis and Other Selected Issues, Part 1, August 12, 2005. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we were to perform a cost analysis of the University of Alaska (UA or University) FY 04 expenditures by academic unit and housing complex. We were also to evaluate the degree of resolution of findings identified in the University of Alaska, Unit Cost Analysis and Selected Operational Aspects, November 15, 1993, Audit Control Number 45-4448-94. Further, we were to determine if the University was maximizing the use of distance education technologies and was making travel arrangements in the most cost-effective manner. Maximizing the use of distance education technologies and the arrangement of travel in a cost-effective manner will be addressed at a later date under separate report cover. Report Conclusions This audit presents expenditures, revenue, and other cost information for the three main campuses—University of Alaska Anchorage (UAA), University of Alaska Fairbanks (UAF), and University of Alaska Southeast (UAS)—small campuses, and Statewide administration. Further, in the appendices of the report, costs are categorized in functional categories by college, school, small campus, research institute, or public service organization. These presentations compute cost per credit hour, cost per full-time equivalent student, and credit hours per faculty. This report also provides an analysis of housing financial and occupancy information, evaluates housing revenues collected in the summertime, and addresses the status of recommendations of the prior audit. Some of the observations and conclusions in this report are: UAF has the largest percentage of total University expenditures, while UAA has the largest percentage of instructional costs. The State’s General Fund is the largest single source of funds. Also, UA received almost $134 million (27%) in federal funding in FY 04, primarily related to research conducted at UAF. Tuition and fees account for $67 million (14%) of the total FY 04 revenue. UAA has the highest number of credit hours and lowest cost per credit hour. Graphs compare the costs for UAA, UAF, UAS, and the combined small campuses, presented on both a credit-hour and per-student basis. UA expenditures for research and administration exceed national averages. UA exceeds the national average in research, student services, operations and maintenance, and administration, while spending less than the national average on all instruction, public service, and student aid. In FY 04, UA housing revenues exceeded operating expenditures. In FY 04, University housing, in total, collected nearly $2 million more in revenue than its operating expenditures. When considering debt service, UA’s almost $2 million operating surplus is reduced to just over a $290,000 deficit. UAA seeks to maximize summertime guest revenues. The three main campuses have different eligibility requirements for individuals allowed to stay in campus housing in the summertime. The University has either resolved or made significant progress on the prior five audit recommendations. Findings and Recommendations University chancellors should improve enforcement of policies and procedures relating to faculty evaluations, sabbaticals, and faculty overloads and additional assignments. During our review of faculty evaluations, sabbaticals, overloads and additional assignments, we noted several weaknesses, specifically: The tracking, monitoring, and compliance of faculty evaluations and supporting documents require improvement. Procedures should be adopted to address late sabbatical reports. Payment for faculty overloads and additional assignments should not be allowed without a signed agreement. The vice chancellors of administrative services should continue to improve accounting for auxiliary services. More precise and consistent recording of financial activity related to housing services will ensure management has the best information to make knowledgeable decisions. UAF vice chancellors for administrative services should pursue opportunities to increase revenues in order to accommodate debt service requirements and/or future construction …

SUMMARY OF: A Special Report on the Department of Transportation and Public Facilities, Employment Opportunities for Women Engineers,November 8, 2004. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of the Department of Transportation and Public Facilities (DOTPF) related to employment opportunities for women engineers. Specific objectives of the audit are: To review management’s response to the history of settlements and awards concerning gender-based discrimination against women engineers during the past ten years, including Letter of Grievance Resolution No. 96 G-274. To evaluate progress in correcting the past underutilization of women engineers, both in terms of workforce composition and employee perceptions. To compare the advancement, turnover, and starting pay of men and women engineers. Report Conclusions During the last decade, women have overall become better represented within the mainstream career track for engineers at DOTPF. The longevity before and after career milestones is generally comparable for men and women. Turnover in recent years has varied little between the genders. Turnover after rehire is statistically insignificant. Hiring managers have little discretion to vary the pay rates for successful applicants, and we found no evidence that the personnel code is being manipulated to hire one gender at higher rates. Finally, our survey of DOTPF engineers shows that some women perceive that discrimination still hinders their careers. Findings and Recommendations Recommendation No. 1 DOTPF’s commissioner should proactively monitor both the statistical and intangible aspects of a gender-neutral work environment. Evaluations of employment opportunity have traditionally focused upon the degree to which various demographic groups are present or absent. Statistical analysis is an important tool in identifying possible pockets of unequal career opportunities. Targets showing the expected employment by gender are an accepted, though imperfect, measure of an employer’s success in developing a gender-neutral work environment. We recommend that DOTPF go beyond the heavily-aggregated analyses that it currently conducts for the reports required by law. Using regional gender targets for each engineering job class as guidance, DOTPF can monitor its goals of having a gender-neutral workplace. We recognize that DOTPF has made considerable improvements in creating a positive work environment for those employees moving through the engineering career ladder. However, DOTPF’s management needs to recognize that proactive and ongoing measures are still needed to meet its goal of a gender-neutral …

SUMMARY OF: A Special Report on Department of Commerce, Community, and Economic Development. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a performance audit of Alaska’s sunset review process and Department of Commerce, Community, and Economic Development’s (DCCED) occupational licensing investigative unit. Our objectives included determining whether the current sunset process is the most efficient use of state resources and make recommendations for improving the process based on national trends and industry best practices. Further, our objectives included evaluating the efficiency and effectiveness of DCCED’s occupational licensing investigative unit. Report Conclusions Alaska’s sunset process has been successful at identifying and correcting significant deficiencies. Consequently, sunset laws have evolved from a means of enacting change to the mechanism for monitoring continued operations. Entity operations have matured and warrant less frequent oversight. The sunset review period should be lengthened to eight years to more efficiently use state resources. Sunset evaluation criteria can be improved by specifically requiring an analysis of effectiveness and efficiency, including a review for duplication of effort. Both recommended changes are consistent with national trends in sunset law. DCCED’s investigation unit has increased protection of the general public and members of licensed professions by increasing the number of disciplinary actions taken. However, the unit’s case management procedures are in need of significant improvement. The investigative unit has difficulty in efficiently addressing its caseload. Case management is hampered by poor supervision of open caseloads, a lack of standards for completing critical aspects of the investigative process, and a prioritization policy that does not ensure cases are consistently addressed in a fair and equitable manner. Most findings noted during our review can be attributed to a need for improving case management procedures. Findings and Recommendations Recommendation No. 1 The legislature should consider amending sunset statutes. The legislature should consider amending sunset statutes for the following: lengthening the standard sunset extension period from four to eight years, expanding sunset evaluation criteria, and clarifying responsibility for regulation, in the event an occupational licensing board terminates. Recommendation No. 2 The director of the Division of Occupational Licensing should implement changes to address investigative inefficiencies and case management procedures. Changes should include the following: Restructure the organization of the investigative unit, Change case assessment and assignment procedures, Implement improvements to case management procedures, and Implement other changes to increase efficiency and effectiveness Recommendation No. 3 The director of the Division of Occupational Licensing should consider drafting a policy to guide investigators’ use of board members during the investigative process. Our review of case files found that consultation with board members was poorly documented and the degree they are involved in the investigative process was unclear. While most investigators seek out board member guidance in a significant number of cases, the unit does not have clear guidance on how to utilize board members in a manner that is consistent with legal …

SUMMARY OF: A Special Report on the Department of Environmental Conservation, Village Safe Water Program, Selected Projects, November 19, 2003. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of the Village Safe Water Program (VSW) administered by the Department of Environmental Conservation (DEC). Our objectives were to evaluate DEC’s oversight of engineering firm billings and project payrolls and to evaluate its purchasing practices in project communities. Report Conclusions Approximately $35 million in VSW construction is being monitored by a dozen engineers buried within a regulatory agency. Though well meaning and exemplary in dedication, these DEC employees suffer from a lack of the usual business support services that enable other state engineers to focus on engineering. In short, there is a mismatch between their professional training and the tasks that consume much of their time. Our summary conclusions were as follows: Unskilled oversight of construction management firms and other engineers allows waste Unskilled oversight of on-site managers allows waste Noncompliance with tax and payroll laws invites enforcement Better monitoring needed for safeguards over outside employment The move to projects in recent road system subdivisions reflects changing priorities Questionable purchasing presumes unlimited future funding Findings and Recommendations The governor should, by executive order, place VSW within the Department of Transportation and Public Facilities’ (DOTPF) public facilities section.We recommend that the governor place the VSW program within DOTPF’s public facilities section. The program will benefit from DOTPF’s support services, economies of scale, training opportunities, career paths, and business discipline. The state should mandate that on-site managers be paid with a salary rather than on an open ended hourly basis. The VSW program should institute traditional business safeguards to protect the integrity of force account payrolls. DEC’s designated ethics supervisor should, with comprehensive assistance from the Department of Administration, determine the extent of any conflicts of interest among VSW employees and establish clear boundaries. For force account projects, the VSW program should adopt regulations setting basic business standards for potential conflicts of interest, transactions with project employees, and nepotism. AUDITOR’S COMMENTS VSW program could require meaningful in kind contributions by capable communities. Though there have been some exceptions over the years, the usual assumption of the VSW program is that communities invest none of their own funds or property. Under DEC’s force account arrangement, the community gets a VSW facility along with paychecks for the local crew that builds it. DEC asserts that the use of force account labor, a business plan, and a local operator fosters a sense of community “ownership” in the completed project. However, as the program is extended to more capable communities, DEC should not presume that the program needs to fund every element of the project. Capable communities could be encouraged to contribute and the program could be viewed as a startup partnership, rather than a perpetual …

SUMMARY OF: A Special Report on the Department of Health and Social Services, Division of Family and Youth Services, Travel Issues, March 4, 2003. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of travel issues at the Division of Family and Youth Services (DFYS). The objectives of this audit were: To review DFYS’ processes for approving, paying, and recording state and federally-funded, client-related travel expenditures. Client-related travel includes travel for children under DFYS oversight, employee and nonemployee escort travel, and family travel. To evaluate the effectiveness of internal controls over the above processes. To evaluate DFYS’ compliance with statewide, department, and division travel policies and procedures. To review the travel credit card systems used by the division to procure client-related travel. Report Conclusions Our primary finding was that current procedures and internal controls are inadequate to control client-related travel costs. The four DFYS regions of the State do not follow the same guidelines and procedures for procuring travel. Specifically, we concluded: The DFYS Travel Authorization and Request for Funds approval process is lengthy, time-consuming, and costly to the division. Management review does not adequately control travel costs. Practices do not comply with current travel policies and procedures. Email communications may not adequately safeguard client information. Findings and Recommendations The DFYS director should redesign and simplify the division’s travel processes.Current policies and procedures are inadequate to control travel costs. The travel request approval process should be simplified. Travel clerks, rather than social workers, should make travel arrangements. Internal controls over travel costs should be amended. All four DFYS regions should follow department and division travel policies and procedures. The policy requiring the State to pay transportation costs for foster children to accompany their foster family on vacation should be clarified.Simplified processes for ticket purchases will enable the division to greatly increase its use of advance purchase airline fares. Our testing of 132 trips showed that 67 percent of the expenditures were for nonemergency, full-fare tickets. We conservatively estimated the potential savings for the division at $650,000 per year. The DFYS director should determine if additional safeguards over confidential client information communications are necessary.State and federal policies require DFYS to protect client information. The use of email by DFYS staff may compromise that confidentiality as we noted the use of client names and medical needs in email messages sent between division staff. DFYS should consult with the Department of Administration, Information Technology Group, to determine if additional security measures are needed to prevent unauthorized access to electronic client information.This issue may also affect other divisions in the Department of Health and Social Services. The Health Insurance Portability and Accountability Act of 1996 (also known as HIPPA) requires security and privacy of health information. The Divisions of Medical Assistance and Public Health may also need to have additional safeguards placed over their confidential …

SUMMARY OF: A Special Report on the Department of Community and Economic Development, Division of Investments, Commercial Fishing Revolving Loan Fund, March 18, 2003. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted a performance and financial audit of the Commercial Fishing Revolving Loan Fund (CFRLF). Our specific objectives were to: Perform an audit of the fund’s financial statements Evaluate administration of the loan fund and related loan program for compliance with Alaska Statutes and regulations. Ascertain the effect that Division of Investments (DOI) lending and collecting practices have on the financial position of the loan fund. Determine whether DOI is competing with private or public lenders when making commercial fishing loans and whether such competition is in accordance with the purpose of the program. Report Conclusions We have audited the FY 02 financial statements of CFRLF and concluded that, in our opinion, the statements were free of material misstatement. The statements, notes, and the accompanying auditor opinions are included in this report. Generally, we concluded the financial position of the CFRLF has declined due to its loan concentration in the troubled salmon fishing industry. In spite of the large number of borrowers that are not making their CFRLF principal and interest payments, the CFRLF continues to receive more cash than it loans to fishermen resulting in positive cash flow into the fund. DOI is charged with accomplishing two competing and sometimes opposing public policy goals: managing the state’s financial investment in the commercial fishery and assisting Alaska residents that do not qualify for alternate financing to enter or remain in the fishery. DOI has acted within its legal authority when responding to the salmon disasters, however, in the long-term their actions may not meet the intent of the program. DOI’s temporary policies are at risk of becoming standards of operation to the detriment of the fund’s financial position. DOI’s actions have far-reaching, economic implications that warrant input and direction from both the legislature and the governor. In general, we found DOI administers the commercial fishing loan program in compliance with statutes and regulations. However, we have noted instances where loan practices could be improved. We have also noted that DOI collection practices are limited by the agency’s failure to report CFRLF debt-to-credit reporting agencies. Further, due to its loan practices, the state has become the preferred lender for most types of commercial fishing loans. CFRLF lending patterns have changed significantly over the past 11 years. Quota share loans and refinancing vessel loans, originally financed with other financial institutions, have become increasingly important while the demand for permit loans has substantially decreased. Refinancing of other lenders’ vessel loans has increased the default risk borne by the state. The value of limited entry permits, which serve as the primary collateral of the CFRLF, has declined significantly. The decrease in value has several implications. In the event of a default, DOI’s ability to mitigate losses declines, collection efforts are hampered, and DOI’s inventory of repossessed permits will grow significantly. This may lead to the further devaluation of permits as DOI repossessed permits are “promptly” put up for sale as required by statute. To help limit the State’s exposure to loss due to default, DOI has accepted the assignment of Exxon Valdez Oil Spill (EVOS) settlements. In the event EVOS settlements are approved by the courts, DOI is slated to receive $8.3 million to be applied to CFRLF borrowers’ indebtness. Findings and Recommendations We recommend the commissioner of the Department of Community and Economic Development coordinate with the governor’s office to ensure that the CFRLF policy’s and regulations remain consistent with overall public policy goals. We recommend the director of DOI reevaluate the benefits provided by the pay-on-time program in light of the substantial administrative inefficiencies of the program. We recommend the director of DOI takes steps necessary to ensure EVOS assignments are not accepted when alternative collateral is available. The director of DOI should change its current policy to ensure EVOS settlements are applied to interest first. We recommend the director of DOI coordinate with other state agencies when replacing the current loan subsystem. The director of DOI should change several loan serving policies to improve administration of the program. The director of DOI should ensure that the availability of other financing is thoroughly documented and considered during the loan application …

SUMMARY OF: A Special Report on the Department of Health and Social Services, Division of Medical Assistance, Internal Control Over Medicaid Payments, January 31, 2003. Purpose of the Report The primary objective of our review was to evaluate the controls over the payments made under the State’s Medicaid program. The program is administered by the Division of Medical Assistance (DMA) and involves numerous payments made to a variety of service providers involved with meeting the medical needs of citizens that meet the program’s eligibility requirements. Additionally, our review addressed specific concerns related to Medicaid’s home and community-based (HCB) waiver programs. The issues in this part of the review involved primarily the billing and budgeting practices of private nonprofit community services agencies. Report Conclusions Internal controls over Medicaid program need to be improved Our central conclusion is that the internal controls related to a significant segment of the payments made under State’s Medicaid program are weak. There are weaknesses in both phases of the payment process: (1) the system involved in processing claims; and (2) the practices used to monitor the activities of recipient and providers involved in Medicaid. This second phase, we refer to as program integrity function, includes activities both at DMA and the Department of Law’s Medicaid Fraud Control Unit (MFCU). While the control weaknesses in the Medicaid system involve circumvention or neglect of established controls, the findings related to HCB waiver programs primarily stem from the lack of well-designed controls. In this instance, the primary control involves state regulations which permit reimbursement for expenditures in a manner inconsistent with good financial practices. The weaknesses in the internal controls over the review and electronic processing of payment claims include: Poor controls over provider enrollment. DMA’s procedures for enrolling eligible service providers in the State Medicaid program are not consistent with federal regulations. Additionally, DMA fails to inactivate providers with extended lapses of participation in the Medicaid program. Administrative data processing controls being ignored. The data processing system that generates payments uses an elaborate structure of edits to evaluate claims. The objective of these evaluative edits is to provide assurance the claim is legitimate and consistent with state and federal regulations, as well as established healthcare standards. DMA, through practice and policy, has weakened the effectiveness of some of these edit checks. Insufficient controls over nonemergency transportation. Many of the controls in this area are designed to contain transportation costs. There are a number of problems involving the application of controls over nonemergency transportation. There were many transportation claims paid without a related medical claim involved. Some travel costs appear to be unreasonable, while an established control procedure such as prior authorization, is applied in such a way as to be of limited value. The weaknesses in internal controls relating to program integrity involve: An ineffective provider and recipient review system within DMA. The section within DMA responsible for reviewing providers and recipients for possible abuse and fraud has not been adequately supported. This lack of support compromises DMA’s capacity to effectively manage program integrity information. Accordingly, known problem providers are not effectively monitored on an ongoing basis. Lack of effective coordination between DMA and MFCU. In recent years, two DMA policy decisions adversely affected MFCU investigations. Additionally, vague DMA policies and regulations hamper MFCU investigatory efforts. Weaknesses in the manner in which controls are designed for HCB services allow providers to be paid for levels of service higher than they actually provide. This is due to the way service costs are developed and billed, consistent with the requirements of state regulations. Findings and Recommendations To address the weaknesses in internal control outlined in the Conclusions section we make 13 recommendations. Recommendation numbers 1 through 4 address the data processing involved with payment of claims through the Medicaid management information system (MMIS). Recommendation numbers 5 through 9 address the internal monitoring and review of activities at DMA. Recommendation numbers 10 and 11 address the controls stemming from activities of other agencies such as the Division of Mental Health and Developmental Disabilities involvement with HCB waiver costs. Recommendation numbers 12 and 13 address actions the legislature should possibly take to improve the operations and controls related to administration of the State’s Medicaid …

SUMMARY OF: A Special Report on the Department of Community and Economic Development, Guides and Transporters, October 16, 2003. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted a review of various issues related to guide and transporter activities. Specifically, we evaluated: the level of impact the absence of a professional licensing board for guides and transporters has had in the enforcement of guiding statutes; the appropriateness of the fines and other enforcement mechanisms currently available; and, the adequacy of activity reports. Report Conclusions With the termination of the Big Game Commercial Services Board (BGCSB), oversight of licensed guides, assistant guides, and transporters has been left, for the most part, to the various governmental land-owner agencies at the state and federal level: (1) the National Park Service; (2) the U.S. Fish and Wildlife Service; (3) the U.S. Forest Service; (4) the Bureau of Land Management; and, at the state level, (5) the Department of Natural Resources’ Division of Mining, Land and Water. In this decentralized, uncoordinated regulatory climate, we were repeatedly told by various agencies that they would welcome a more vigorous, centralized licensing and regulatory board in order to better carry out oversight over transporters and, to a lesser extent, licensed guides. Guiding activities that take place in national parks, wildlife refuges, and forests were, with the exception of transporter activity, still highly regulated. Staff of the National Park Service, U.S. Fish and Wildlife Service, and U.S. Forest Service – utilizing many of the operating restrictions and requirements that were part of BGCSB regulations – has put in place systems emphasizing hunter safety and maximization of the “wilderness experience.” To a large extent, these agencies also provide an avenue for handling client complaints. Most guiding activity takes place on state land. This activity is regulated primarily under the guiding statutes and regulations initiated after the sunset of BGCSB. Guiding is being done with less emphasis on consumer protection or hunter-client safety. Annual activity reports from transporters are sufficient for occupational licensing purposes for which they are being used. Although the reporting requirements for guides is relatively more stringent, we do not see a clear reason why guide activity information needs to be collected as often as is currently required. Findings and Recommendations Recommendation No. 1 The legislature should consider enhancing the public protection and consumer safety aspects of current guide services statutes. Additionally, the legislature should consider reestablishing a guide/transporter services licensing board. After BGCSB ceased to operate at the end FY 95, new statutes and associated regulations were put in place by the legislature and the Department of Community and Economic Development (DCED), respectively. The statutes and regulations set the parameters for guiding practices in Alaska. With the new statutes and regulations, key requirements and standards which had previously existed under the auspices of the board were no longer in place. Many of the omitted requirements were key to enhancing consumer protection and safety. Additionally, some of the missing requirements promoted more compliance among guides and transporters with land and game management requirements. Revisions to current state law and regulation could put back in place important consumer protection and hunter safety elements that previously existed but are currently absent. While a guiding industry oversight board is not necessary to address the concerns set out above, a licensing-oriented board will likely provide a more dynamic regulatory regimen – allowing the revision of regulations on a regular basis to enhance professionalism by guides, consumer protection, and hunter safety. Accordingly, we further recommend that the legislature consider amending the current guide and transporter statute to reestablish a guide service licensing …

SUMMARY OF: A Special Report on the Department of Health and Social Services, Division ofBehavioral Health, SelectIssues, October 1, 2003. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budgetand Audit Committee, we conducted a performance audit ofselect issuesrelated to Department ofHealth and Social Services’ (DHSS), Division of Behavioral Health’s (DBH) administration ofsubstance abuse grants. Our objectives included determining whether clients are receiving adequate and appropriateservices from substance abuse grantees and to identify areas for improving program management.We were also asked to evaluate the grant award process and determine whether conflicts of interestexisted between the Division of Alcoholism and Drug Abuse (ADA) staff and recipients of grantfunds. In FY 03, DHSS’ mental health section was merged with ADA to form the Division of BehavioralHealth. Throughout this report, we refer to ADA as the entity audited. However, recommendationsare made to DBH in recognition of the department’s current organizational structure. Report Conclusions ADA needs an operational plan to ensure the effective use of limited resources. ADA has notidentified the state’s substance abuse needs nor communicated the state’s priority for addressingthe needs. Consequently, the division is in a poor position to ensure its limited resources are usedeffectively. General planning efforts by the Advisory Board on Alcoholism and Drug Abuse, theMental Health Trust Authority, and the Mental Health Board are hindered by ADA’s lack of anoperational plan. Such a plan would ensure the delivery ofsubstance abuse services was conductedin accordance with general guidance from these entities. DHSS needs to improve internal controls over reporting and investigating ethics complaints.Conflicts of interest did exist at ADA and complaints alleging unethical behavior (undue influenceover the grant process) were not reviewed and investigated asrequired by statute. Two letters weresubmitted to DHSS’ commissioner’s office alleging unethical behavior on the part of an ADAemployee. These letters were not forwarded to DHSS’ designated ethics officer forreview/investigation. The designated ethicssupervisor did become aware of complaints concerningactions taken by a spouse of an ADA management level employee involving an ADA grantee.However, no official investigation was conducted and the Department of Law was not informed ofthe complaint as required by statute. While we found that, in general, ADA appropriately awarded grants, several errors were madeduring the FY 02 and FY 04 grant award process. Errors included missing documentation, lack ofrequired approvals, and inconsistent application of minimum requirement criteria. Additionally, wefound one ADA grantee was overpaid $273,000 in error. Changes to the grant regulations improved the competitive grant proposal review process. Under the new regulations, 80% of substance abuse grants were awarded under a noncompetitive process.ADA effectively monitors its grantees. Grantees perceive ADA fiscal and program staff to be fair,responsive, competent, objective, and easy to work with. Standards used to certify substance abusetreatment facilities are outdated and may fail to adequately protect the public. The certificationstandards were adopted in the mid 1970s and have not been updated to reflect best practices. ADA’s MIS system is functionally inadequate and difficult to use. The system does not collect theinformation necessary to evaluate the effectiveness of ADA’s programs and it does not provideinformation useful to grantees in managing their programs. The division is working on acollaborative project with other states to develop a new MIS system. Findings and Recommendations 1. The Division of Behavioral Health’s (DBH) director should create a comprehensive program forprevention and treatmentservicesto guide the delivery ofsubstance abuse services.2. DBH’s director should take steps to improve its working relationship with the Advisory Board onAlcoholism and Drug Abuse.3. DBH’s directorshould take stepsto improve the grant award process.4. The DHSS commissioner, in cooperation with the Department of Law, should pursue recoupmentof the FY 03 overpayment to an ADA grantee.5. The DBH directorshould ensure the new MIS system is designed to addressthe deficiencies of itscurrentsystemand collect the information necessary to evaluate the effectiveness of its programs.6. The DHSS commissioner must implement internal controls over investigating and reporting ofpotential ethics violationsto comply with statutes.7. The DBH director should implement policies and procedures to guard against potential ethicsviolations.8. The DBH director should develop and implement written policies and procedures to ensurecompliance with state regulations governing subcontracts of grantees.9. The DBH director should update the standards for treatment facilities to reflect current practicesand technology.10.We recommend DHSS’ internal auditors provide training to DBH program managers and grantadministratorsto ensure that federal/state single audits of grantees are utilized to the greatest …

SUMMARY OF: A Special Report on the Department of Corrections and the Department of Administration, Divisions of Retirement and Benefits and Personnel, Correctional and Probation Officer Transfer Analysis, October 9, 2003. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we conducted an audit of the Departments of Corrections (DOC) and Administration (DOA). The overall objective of the report was to determine if DOC personnel practices are creating an under-funded burden on the retirement system and displacing local hire. Our analysis included the hiring and personnel practices of DOC, transfer of correctional and probation officers to rural areas, and the inclusion of the geographic pay differential in retirement base pay. Report Conclusions Some correctional and probation officers are transferring to rural communities near the end of their careers to increase their retirement pay. Particularly in Nome, these employees are living only part-time in the community and have their primary residence elsewhere. This Type of transfer has decreased the opportunities for hiring in the local communities and affects the ethnic make up of correction and probation officers in these rural communities. The transfer of these employees does add an under-funded financial burden to the State’s retirement system. Through analysis, we identified that the retirement fund will pay an additional $4 million to 22 employees due to the inclusion of geographic pay differential in the employee’sthree high year earning’s calculation. Findings and Recommendations 1. Future retirement plans should consider excluding geographic pay differentials (GPD) from average monthly compensation used to calculate retirement benefits. As an alternative, GPDs could be used as a post retirement cost-of-living allowance. Further, the flexibility of the GPD as stated in statute for Tier II and III employees should be clarified. The GPD was intended to address a need to provide additional cost of living compensation for living and working in the high cost areas of Alaska, typically rural Alaska. However, the inclusion of the GPD factor in the compensation base used to calculate retirement pay, regardless of whether the former employee retires in rural Alaska, results in under-funded retirement pay. 2. DOC’s human resources manager should develop a framework for Correctional Officer (CO) hiring decisions, within the confines of the Alaska Statutes and the COs union agreement. The CO bargaining unit contract does and should continue to give the department sufficient flexibility. The current administration has the opportunity to develop staffing policies by facility with the intent of addressing what is in the best interest of each facility. The facility-by-facility framework should be considered in lieu of a restricted statewide transfer preference in accordance with the CO bargaining unit agreement. Factors to consider in the staffing policy of each facility should include need for continuity of CO staff, need for more experienced staff, and the impact of high turnover. 3. The DOC directors of Institutions and Probation and Parole should take steps necessary to ensure that correctional and probation officers are in compliance with federal gun control laws. 4. DOC’s director of Administrative Services should increase correctional and probation officer recruitment efforts for rural communities. DOC’S director of Administrative Services should increase recruitment efforts by considering additional advertising, working with Native organizations, and flexing positions to provide a career path in rural communities. 5. DOC’s director of Administrative Services should strengthen internal controls over staff travel and prisoner transportation. Weaknesses were identified with approvals on travel authorizations and expenditure transactions. Additional weaknesses were identified with accountability over inmate and staff travel on contract flights coordinated by the Prisoner Transportation Unit. 6. The director of DOA’s Division of Administrative Services should not include a GPD to rural facility COs working at urban facilities on their week off. DOC’s director of Administrative Services should collect overpaid wages. Additionally, the COs bargaining unit agreement should clarify that COs assigned to rural areas will be paid a geographic differential only when performing the duties at a rural facility. 7. The director of DOA’s Division of Personnel Should consider conducting a cost-of-living …

SUMMARY OF: A Special Report on the Office of the Governor, Office of Management and Budget, 1996 Retirement Incentive Program Final Summary Schedules, for the Department of Administration, Information Technology Group, and the University of Alaska, January 15, 2001. Purpose of the Report In accordance with Title 24 of the Alaska Statutes and a special request by the Legislative Budget and Audit Committee, we have conducted an audit of the 1996 Retirement Incentive Program (RIP) Final Summary Schedules, dated January 15, 2001 issued by the Office of the Governor, Office of Management and Budget (OMB), for the Department of Administration (DOA), Information Technology Group (ITG) and the University of Alaska (UA). The purposes of this audit were to: Determine if the net savings reported as of January 15, 2001, by OMB to the legislature, presents fairly the results of the retirement incentive programs utilized by ITG and UA, in conformity with the retirement incentive program legislation and the underlying policies and procedures. Determine whether OMB, ITG and UA complied with the applicable laws, regulations, and mandated procedures in its use of RIP. Specifically, we were asked to review changes, reclassifications, and inequities in the eligibility determination process. Report Conclusions The Office of the Governor, Office of Management and Budget, overstated the 1996 Retirement Incentive Program savings for the Department of Administration, Information Technology Group, by $423,000 and the University of Alaska by a significant but indeterminable amount. These overstatements were due to the erroneous inclusion of vacancy savings and exclusion of rehires. In other respects, OMB, DOA, and UA generally complied with the laws and rules governing this program. Department of Administration, Information Technology Group: Savings overstated primarily by inclusion of vacancy savings OMB’s misstatement of ITG savings was made up of several errors, with an erroneous inclusion of vacancy savings representing $326,000 of the $423,000. OMB was responsible for adopting the program’s policies and procedures. OMB specifically prohibited the inclusion of vacancy savings, but it did allow the savings from position eliminations to be counted. That is, OMB decided that temporary vacancies were a normal result of employee turnover and should not be considered part of RIP savings. However, long-term position eliminations were to be counted as RIP savings. ITG had estimated a net savings from RIP of $875,000. However, when the staff of DOA, Division of Administrative Services, compiled the data to be submitted to OMB, it estimated $1,201,000. The $326,000 increase was largely due to inclusion of vacancy savings from positions remaining vacant rather than being filled. DOA’s Administrative Services erred by including vacancy savings and OMB erred by failing to remove them. In its January 15, 2001 report to the legislature, OMB erroneously stated that vacancy savings had been excluded. University of Alaska: Savings overstated by ignoring rehires UA rehired approximately 140 RIP participants after they retired. OMB instructed agencies to include the cost of replacement employees in the calculations. Had UA included the cost of these rehires, the savings presented would have been substantially less. However, how much less was not reasonably determinable by audit procedures, either by full examination or through sampling. Typically, there was a savings because these RIP participants only worked part-time or part of the year up to 49% of their previous salary and UA only paid into Social Security. That is, UA was no longer responsible for their health insurance and retirement …

SUMMARY OF: A Special Report on the Department of Natural Resources, Division of Agriculture, November 29, 2002. Purpose of the Report In accordance with a Legislative Budget and Audit Committee special request and Title 24 of the Alaska Statutes, we have conducted an audit of the Department of Natural Resources (DNR), Division of Agriculture (DOAg). The purpose of this audit was: To evaluate DOAg’s human resource management. To evaluate the use of DOAg assets, including expenditures for operations and management of physical resources. To evaluate the effectiveness of the working relationship among DOAg, the new Board of Agriculture and Conservation, and other entities involved in Alaska agriculture. Report Conclusions Since our last audit, the division has made very little progress in advancing agriculture. In fact, we found that the lack of innovative leadership is actually hindering the expansion of Alaska agriculture. We also found problems with the management of human resources and physical resources at the division. Findings and Recommendations The legislature should statutorily restructure services to agriculture for a more aggressive pursuit of distinctive Alaskan opportunities. DNR should consult the attorney general concerning state oversight of Mat …