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Legislative Audit Commission


March 9, 1999

The meeting of the Legislative Audit Commission was called to order by Representative Dan McElroy on Tuesday, March 9, 1999 at 3:05 p.m. in Room 300 South, State Office Building.

Members Present:

Representative Lynda Boudreau    Senator William Belanger, Jr.
Representative Phil Carruthers Senator Dave Johnson
Representative Chris Gerlach Senator Sheila Kiscaden
Representative Mindy Greiling Senator Thomas Neuville
Representative Kris Hasskamp Senator Deanna Wiener
Representative Peggy Leppik
Representative Dan McElroy
Representative Mary Jo McGuire
Representative Wes Skoglund

Members Not Present:

Representative Philip Krinkie Senator David Knutson
Senator Keith Langseth Senator James Metzen
Senator Ember Reichgott Junge    Senator Claire Robling

Representative McElroy indicated that because a quorum was needed for action on program evaluation topic selection, the first item of business would be a discussion of several financial audit reports. He noted that because of the number and seriousness of the findings in an audit of the Department of Public Safety, he would ask members after the presentation if they thought a special hearing on the audit and concerns raised by it should be held later in the legislative session.

He recognized Claudia Gudvangen, Deputy Legislative Auditor for the Financial Audit Division. Ms. Gudvangen presented information concerning a recently completed audit of the Department of Public Safety, which had seven findings. One major finding was concerning delays of four to twelve days in processing revenue from motor vehicle registrations and excise taxes, resulting in lost investment income. Ms. Gudvangen noted that auditors estimated income lost in 1996 was $800,000 and that because of some improvements in the process, approximately $450,000 of investment income had been lost in 1998. Members asked questions concerning the process used by Deputy Registrars for depositing funds and notifying the Department of Finance of those deposits. Ms. Gudvangen noted that some Deputy Registrars have access to the state's system for on-line deposits and that those funds are processed in one day. Representative Carruthers noted that those lost funds could have funded some of the extra staff that the department is asking for.

Representative Greiling suggested that a special hearing toward the end of session was warranted. Representative Skoglund suggested that another area that should be looked at is revenue lost because there is no system for reporting cars that are sold until their tabs are due for renewal. Members agreed that a special hearing should be scheduled for the latter part of the session, possibly during the time conference committees are meeting.

Ms. Gudvangen reported on the audit of the Minnesota State Retirement System, noting that there were two weaknesses found, which at the time, left MSRS in a high-risk position. Representative McElroy recognized David Bergstrom, Executive Director of MSRS. Mr. Bergstrom indicated that MSRS had converted to a new computerized general ledger system and that some of the delays noted in the audit report were due to the transition. He indicated that the new system is now fully operational and working well, resulting in staff time savings. He also noted that no funds were lost. In response to questions, he indicated that oversight of his office is also provided by the Department of Finance for their financial reports, and the Department of Employee Relations in their hiring practices. He also noted that the Legislative Commission on Pensions and Retirement looks at their actuarial soundness and that MSRS also hires an actuary to check on the work of the LCPR.

Representative McElroy noted that a quorum was present.

Representative McElroy indicated that he was asking Senator Kiscaden, Senator Langseth, Senator Wiener, Representative Boudreau, and Representative Greiling to serve with him on the Topic Selection Subcommittee.

Representative McElroy recognized David Chein, project manager for the program evaluation study on counties' use of administrative penalty orders for hazardous waste violations. Mr. Chein reviewed the background of the topic, research questions asked, methods used, and findings and recommendations contained in the report. He indicated that the the APO language was scheduled to sunset on August 1, 1999, and recommended this language be removed.

Representative McElroy recognized Michael Tibbetts, Program Manager in the Minnesota Pollution Control Agency. Mr. Tibbetts indicated that his agency worked extensively with metro area counties to help them in administering the program. He noted that there had been few appeals in the past, with most choosing to have their appeal heard by an administrative law judge. He noted that the process of appealing through district court is more cumbersome but effective.

Representative McElroy recognized Doug Carnival, spokesperson for the National Solid Waste Management Association. Mr. Carnival expressed concern that the power to issue administrative penalty orders could be misused, but since the program has been in place only two years and since only seven counties were involved, there was not enough history to warrant removing the sunset language. He suggested a better course of action would be to extend the sunset for four more years.

Representative McElroy indicated the next item on the agenda was topic selection and recognized Roger Brooks, Deputy Legislative Auditor for Program Evaluation. Mr. Brooks noted there were two topics for consideration. He presented the evaluation proposal for a study of welfare reform. Representative Greiling moved that the Commission direct staff of the Program Evaluation Division to complete this study. In response to a question from Representative Leppik, Representative McElroy recognized Joel Alter, project manager in the Program Evaluation Division. Mr. Alter indicated the study could look at how counties are interpreting rules and laws concerning higher education for welfare recipients. Mr. Brooks indicated that a roundtable of legislators and legislative staff would be scheduled in the near future at which time the focus and scope of the study would be fleshed out. The motion carried unanimously.

Mr. Brooks presented the evaluation proposal for a study of Minnesota State Colleges and Universities. He indicated that the MnSCU chancellor had requested this study be delayed. Mr. Brooks indicated that the Commission could elect to go forward with the study, drop it, or do some more preliminary assessment work to determine if a full study was warranted at this time. Senator Wiener moved that the Commission direct staff of the Program Evaluation Division to do a more in-depth preliminary assessment and report back to the Commission on whether or not a full study was warranted. Representative McElroy recognized John Asmussen, Executive Director of Internal Audits for MnSCU. Mr. Asmussen indicated he was pleased to see the proposal and that MnSCU staff were prepared to give program evaluation staff the data necessary for a preliminary assessment. Mr. Brooks indicated that it would take four to six weeks to complete this assessment. The motion carried unanimously.

Representative McElroy indicated that the Topic Selection Subcommittee would be meeting in the near future.

The meeting adjourned at 4:20 PM.

Representative Dan McElroy, Chair

Jean Barnhill, Acting Recording Secretary


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