Call to Order and Roll Call
The second meeting of the Budget Review Subcommittee on General Government, Finance, and Public Protection of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, October 27, 2016, at 10:00 AM, in Room 171 of the Capitol Annex. Senator Danny Carroll, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Danny Carroll, Co-Chair; Representative Rita Smart, Co-Chair; Senator Johnny Ray Turner; Representatives Adam Koenig, Steve Riggs, and Tom Riner.
Guests: Mike Harmon, State Auditor, Auditor of Public Accounts; Alice Wilson, Assistant State Auditor, Auditor of Public Accounts; Sara Beth Gregory, General Counsel, Auditor of Public Accounts; and, Libby Carlin, Executive Director, Office of Technology and Special Audits, Auditor of Public Accounts.
LRC Staff: Ray Griffith, Stephanie Rich, Seth Dawson, and Jennifer Beeler.
Impact of SB 168 and Discussion of Ongoing Issues
Mike Harmon, State Auditor, Auditor of Public Accounts (APA); Alice Wilson, Assistant State Auditor, APA; Sara Beth Gregory, General Counsel, APA; and, Libby Carlin, Executive Director, Office of Technology and Special Audits, APA, provided a brief overview of the impact of Senate Bill 168 and ongoing issues.
In response to a question from Representative Smart, Ms. Gregory said the main issue with excessive spending by the Department of Criminal Justice Training (DOCJT) at Eastern Kentucky University (EKU) was that more than $500,000 each year was being spent from the Kentucky Law Enforcement Foundation Program Fund (KLEFPF) on the publication and distribution of a law enforcement magazine, which is a large amount and should have been dedicated to law enforcement training and incentives. There were no written agreements to clarify the authority for using restricted KLEFPF monies to make those payments and no clarity as to whether EKU or the DOCJT were supposed to be responsible for those building and maintenance issues.
In response to questions from Chair Carroll, Ms. Gregory said the decision that no laws were violated was made through discussions with law enforcement agencies. It was determined that some of the potential conflicts of interest should be sent to the Legislative Ethics Commission for review. Auditor Harmon said there had been over $56 million swept from the KLEFPF at one time over a twelve-year period, which may have caused the increase in taxes. He said there is a set procedure to determine the amount of the tax, rather than doing a full assessment.
In response to a question from Representative Koenig, Auditor Harmon said about two-thirds of the 1.8 percent insurance premium surcharge goes toward the KLEFPF, and about one-third goes to the fire fund. Representative Koenig stated that the rate is determined by the Commissioner of the Department of Revenue, but should be the responsibility of the legislature. Representative Riggs agreed.
In response to a question from Chair Carroll, Auditor Harmon said his office audits each state agency.
In response to a question from Representative Riggs, Auditor Harmon said county governments are audited annually. In some instances, county governments are allowed to go through a local Certified Public Accountant for those audits; however, the APA staff audits those local governments every four years. Representative Riggs commented that the APA should be required and be given the resources to perform the larger audits on a regular basis.
In response to a question from Chair Carroll, Auditor Harmon said his office maintains a good working relationship with the Attorney General, and refers cases to that office when necessary.
In response to a question from Representative Smart, Ms. Gregory said the Department for Local Government would be responsible for training local government elected officials.
In response to a question from Chair Carroll, Auditor Harmon said most people are honest and want to do the right thing. He said the APA provides a valuable service to those who sincerely want to get back on track.
A motion was made by Representative Riggs to approve the minutes of the August 1, 2016 meeting. The motion was seconded by Representative Koenig, and the minutes were approved without objection.
There being no further business before the subcommittee, the meeting was adjourned at 11:01 AM.