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Legislative Audit Commission Meeting


April 17, 2009

Members Present:

Representative Rick Hansen Senator Joe Gimse
Representative Bill Hilty Senator David Hann
Representative Mary Liz Holberg Senator James Metzen
Representative Ron Shimanski Senator Ann H. Rest
  Senator Claire Robling

Members Absent:

Representative Michael Beard Senator Don Betzold
Representative Steve Simon


Senator Ann Rest, Chair, called the Legislative Audit Commission (LAC) meeting to order at 9:04 a.m.  The purpose of the meeting was to release the evaluation, Biofuel Policies and Programs; approve evaluation topics for 2009; and discuss the legislative auditor’s decision to reexamine an allegation concerning the Attorney General’s Medicaid Fraud Control Unit federal grant.

Representative Mary Murphy asked to address the commission regarding the topic of Public Libraries.  She was highly disappointed that it had not made the final list of topics on the Topic Selection Subcommittee’s list being presented to the LAC.  She told the members to think about libraries not as a local issue, but as a fundamental issue for Minnesotans.  Representative Murphy emphasized how OLA has never conducted an evaluation of libraries, and said that if there has ever been a time to do an evaluation of how libraries are funded, this is the time.  Senator Rest thanked Representative Murphy for sharing her views on the topic.

Senator Rest then introduced Jim Nobles, Legislative Auditor.  Mr. Nobles gave a brief overview on the complexity of the impacts the Biofuel evaluation discusses.  Mr. Nobles introduced John Yunker, manager for the Biofuel evaluation to give more details.  Mr. Yunker said that the overall conclusions of the study include:  1) traditional biofuels reduce petroleum use but have limitations such as land constraints; 2) the environmental impacts of traditional biofuels are complicated and unclear, particularly the impact on greenhouse gas emissions; 3) cellulosic ethanol—a second-generation biofuel not yet in commercial production—shows promise, but there are unanswered questions; and 4) subsidy programs such as the producer payment program should be reconsidered.  He said that one gallon of corn-based ethanol saves only about 7/10 of a gallon of gasoline.  He also explained that land resources constrain the overall savings from traditional biofuels.  Mr. Yunker said that the evaluation recommends that the Legislature consider ending the producer payment program and redirecting the funds to programs that will further reduce fossil fuel energy use and greenhouse gas emissions.  He said the evaluation also recommends that 1) the work of the Next Generation Energy Board be continued, and 2) the Legislature and administration consider funding a study of potential agricultural biomass sources for cellulosic ethanol and their land use and environmental impacts. 

Senator Rest welcomed Gene Hugoson, Commissioner of the Minnesota Department of Agriculture, to comment on the evaluation of Biofuels.  In response to Senator Rest, Mr. Hugoson said that the department does not audit the financial statements of ethanol plants, which are required to be sent to the department.  Senator Rest said that the department should be doing that as a matter of good internal controls.  Mr. Hugoson gave a brief overview of the history of how the ethanol plants first evolved in Minnesota.  He said that today there are 18 ethanol plants around Minnesota, and these plants have created over 4,300 jobs in the communities where they are located.  In response to a comment made regarding water usage, Mr. Hugoson said that it takes a lot less water to produce a gallon of ethanol than it did five years ago. 

The meeting turned to the approval of the evaluation topics for 2009.  In response to Senator Rest’s request, Mr. Nobles gave an overview of how the commission arrived at the list of eight topics.  Senator Rest said that even though the commission allowed Representative Murphy to address the members regarding the Public Libraries topic, which was not one of the finalists on the list, she was not willing to consider it at this point.  She added that there were several topics on the original list that she was very passionate about that also did not make it on the final list.  Senator Rest suggested that the commission not vote on that topic unless it could be an additional evaluation to be conducted only if time permits.  Senator Rest asked for a motion for the seven topics on the list and added that the members would make a decision between the Public Defender System and the Sex Offender Treatment Program. 

Representative Hansen moved the following list of seven topics to be approved:

Alternative Education Programs
Governance of Minnesota’s Transit Systems
Managing State-Owned Land
Medical Nonemergency Transportation Services
MnSCU System Office Services and Expenditures
Renewable Energy Development Fund
Workforce Programs

The motion prevailed. 

Senator Rest explained that the Topic Selection Subcommittee was undecided between the Public Defender System and the Sex Offender Treatment Program, so decided to bring the decision to the full commission.  Representative Hilty made several comments in support of postponing an evaluation of the Sex Offender Treatment Program.

Senator Hann moved the Public Defender System to be the eighth topic.  The motion prevailed.

Representative Hilty moved for the Public Libraries evaluation to be conducted only if time permits.  The motion prevailed.

The meeting moved to the discussion of the legislative auditor’s decision to reexamine an allegation concerning the Attorney General’s Medicaid Fraud Control Unit federal grant.  Mr. Nobles said that Paul Civello agreed to release his affidavits, which was why the commission members had received a copy of it.  He pointed out that members had also received the Attorney General’s response to the affidavits.  Senator Rest said that she had met with Attorney General Swanson, and Swanson said that she welcomes the additional scrutiny from the Legislative Auditor’s Office.  Mr. Nobles assured the members that his decision to reexamine this issue is his choice, and not because he is being pressured into it. 

With no further discussion or comments, the meeting was adjourned at 11:15 a.m.

Senator Ann H. Rest, Chair

Shelly Watterud, Recording Secretary


Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155