Legislature(2009 - 2010)SENATE FINANCE 532
03/19/2009 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB75 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 75 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 19, 2009
9:09 a.m.
9:09:02 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:09 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
Senator Johnny Ellis
ALSO PRESENT
Senator Gene Therriault, Eric Swanson, Director, Division of
Administrative Services, Department of Administration; Kim
Garnero, Director, Division of Finance, Department of
Administration; Jim Kohler, Deputy Director, Enterprise
Technology Services, Department of Administration; Remond
Henderson, Craig Campbell, Adjutant General, Commissioner,
Department of Military & Veterans Affairs; Deputy Director,
Division of General Services, Department of Administration;
Leslie Houston, Division of Administrative Services,
Department of Corrections; April Wilkerson, Budget Chief,
Division of Administrative Services, Department of
Corrections.
SUMMARY
SB 75 "An Act making and amending appropriations,
including capital appropriations, supplemental
appropriations, and appropriations to capitalize
funds; and providing for an effective date."
SB75 was HEARD and HELD in Committee for further
consideration.
SENATE BILL NO. 75
"An Act making and amending appropriations, including
capital appropriations, supplemental appropriations,
and appropriations to capitalize funds; and providing
for an effective date."
9:10:53 AM
DEPARTMENT OF ADMINISTRATION
Reference Number 47048
ERIC SWANSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF ADMINISTRATION, began with reference number
47048 and the Statewide System Replacement Project Request
for $76,500,000 of master lease line of credit funds. The
purpose of the request is to replace the statewide
accounting system. The additional funding is necessary for
the massive undertaking of replacing access to the state
accounting and state payroll systems. Both systems are
nearing the end of their useful lives and must be replaced
while still functioning.
Co-Chair Stedman expressed concern about utilizing the
master lease line of credit and the impact on the operating
budget.
Mr. Swanson recalled a conversation with the Department of
Revenue's debt manager Devin Mitchell regarding financing.
He explained that the cost to retire the debt for the
project is $2.2 to $3 million in FY11 including an
additional $13.3 million of debt retirement from FY12-FY18.
Co-Chair Stedman asked if there is ongoing cost comprised of
built-in fees. Mr. Swanson answered that the necessary
software purchase and licensing could present an ongoing
cost.
9:14:02 AM
KIM GARNERO, DIRECTOR, DIVISION OF FINANCE, DEPARTMENT OF
ADMINISTRATION, stated that the department is contemplating
licensing products for software, which generally run 25% of
the licensing fee. She estimated ongoing license maintenance
software fees to run between $15 and $20 million per year.
Co-Chair Stedman asked if the $15 to $20 million in ongoing
expenses were listed in the budget document. He did not see
the expense documented for 2011 and 2012. Mr. Swanson
responded that the estimate was not added as current
estimates are between 18-22% of the software's purchase
price.
Senator Thomas asked who designed the system. Ms. Garnero
answered that the replacement systems have not been
selected. She informed that the procurement process is
slated to begin in late 2009. Requirements are documented by
state stakeholders.
Senator Thomas asked if the department was planning to
design the system. Ms. Garnero responded that the intention
is to buy off the shelf. She explained that the majority of
states have moved from the old system to an off the shelf
product such as PeopleSoft Inc. a popular human resource
management systems software solution.
9:17:13 AM
Senator Olson asked which departments are utilizing the
master lease line of credit. He asked if the ability to use
the master lease line of credit was unique to the Department
of Administration (DOA). He believed that appropriations
were made to other pertinent agencies in the past and those
agencies used the line of credit as part of their
operations. He offered to return to the committee with
additional information about the line of credit's history.
Mr. Swanson answered that other departments and agencies
have received appropriations from the master lease line of
credit. He recalled instances where other agencies used the
master lease line of credit to fund operations. He offered
to provide the committee with research about prior
appropriations.
Senator Olson expressed concern about the requested increase
and the potential lack of funds.
Co-Chair Stedman noted that the master lease line of credit
is present in various budget presentations this year and
moves cash flow call from FY10 into the operating budget.
Co-Chair Hoffman pointed out that the future expense is
substantial and includes a request of $86 million for
completion by 2015, which places an additional burden upon
the state budget.
Co-Chair Stedman reminded that the state has a line of
credit of $50 million, but this issue is separate and above
normal operating procedures of the past.
Senator Huggins expressed concern about the term debt and
the national economic scene. He asked about the effect of
deferring this project during the time of deficit spending.
Ms. Garnero asked if Senator Huggins was proposing deferring
the replacement of the accounting and payroll systems.
Senator Huggins clarified that he was referring to any
portion of the $76 million dollars.
Mr. Garnero responded that the state must begin the
replacement process as soon as possible to allow the luxury
of smooth transition to new payroll and accounting systems
before the current system fails.
9:21:02 AM
Senator Huggins agreed with the concept of replacing the
system, but he felt concern about potential employee layoffs
due to the high cost of the system. He requested mindfulness
about large deficit spending.
Co-Chair Hoffman asked about the time schedule. He
understood that the original request was for $72 million
over 2010, 2011, and 2012. The current request is for $76
million in 2010. He asked the reason for the time schedule
change.
Ms. Garnero explained that the proposal is separated by
year. The first year requires the greatest funding as
licensing fees are required to bring the new software to the
implementation process. The implementation process is a
multiyear activity.
Co-Chair Hoffman asked if the expense might be spread out
along the time frame originally requested for $50 million in
2010 versus $76 million in 2010. He noted that the original
request for 2011 was $10 million, but now that cost is
compacted into the first year. Ms. Garnero responded that
the timing was such to optimize the debt placement.
Co-Chair Hoffman asked if the originally proposed timeframe
would work. Ms. Garnero believed that the originally
proposed timeframe would work.
9:23:42 AM
Reference Number 47047
Mr. Swanson detailed reference number 47047 and the State of
Alaska Telecommunication System Critical Tower Repair
Upgrade and Maintenance. The requested funding is to provide
for deferred maintenance for the state's telecommunication
system enabling the focus on critical upgrades and repairs.
Reference Number 47053
Mr. Swanson addressed reference number 47053 and the Alaska
Public Offices Commission Online System Project. He
explained the request for funding to complete the web based
application for the state's administration of Alaska's
disclosure laws and to publish financial information
regarding the activities of election campaigns, public
officials, lobbyists and lobbyist employers. The goal is to
move to an entirely electronic environment.
Reference Number 47041
Mr. Swanson described reference number 47041 and the Network
Communications and Connectivity Upgrades. He explained the
request of $1.3 million dollars to provide necessary
enhancements and equipment upgrades to the state's network,
the data center, and the telecommunications systems. The
request will allow constant service and equipment
monitoring, which he opined was important for the network.
Co-Chair Hoffman pointed out that the funding of the request
requires commitment to future spending. Mr. Swanson opined
that the department would seek similar levels throughout the
process.
9:27:01 AM
JIM KOHLER, DEPUTY DIRECTOR, ENTERPRISE TECHNOLOGY SERVICES,
DEPARTMENT OF ADMINISTRATION stated that the project is one
of several required to update the network. The current
request is one portion of the project that allows both
hardware and software along with a service contracted to
monitor equipment with combined sites. He explained that
this is not a multiyear project, but instead one of several
projects anticipated across the next few years.
Co-Chair Hoffman asked if the $1.3 million is funded would
lead to obligation to fund subsequent years. Mr. Kohler
answered that the request is for a one time project.
Senator Olson asked if there would be another request for
$1.3 million in 2016. He asked why the request was not in
the operating budget. Mr. Kohler answered that the
projection beyond 2015 is not possible. He relayed a series
of costs incurred in the process of the project development.
9:31:14 AM
Senator Huggins asked the role of the Alaska Land Mobile
Radio (ALMR) project. Mr. Kohler answered that the ALMR
employs the state's telecommunication system to connect all
of its various sites. He continued that ALMR is a project
that utilizes the state's Information Technology (IT) and
data management systems. Senator Huggins asked if the
telecommunication system program request (reference number
47047) for $3 million was part of the integration process.
Mr. Kohler responded that reference number 47047 is a
portion of the basic State of Alaska Telecommunication
System (SATS) network for physical upgrades required to
bring the system beyond its current maintenance
capabilities. He informed that the request would be made
regardless of the existence of the ALMR system.
9:33:47 AM
Senator Huggins asked about communities that opted out of
ALMR? He wondered if the project would address the system
chosen by those communities. Mr. Kohler replied that
Anchorage built its own emergency radio system, which
coordinated with the ALMR project.
Senator Huggins asked about user fees in Anchorage. Mr.
Kohler did not know who paid the user fees in Anchorage.
Senator Huggins asked about other areas utilizing ALMR. Mr.
Kohler answered that the ALMR project is built and
maintained in a consortium manner with four members of the
project. The members include Alaska, the Department of
Defense, all the federal agencies that are not part of the
Department of Defense, and municipalities. The past year
offered the opportunity to project with specificity about
the ALMR project. The consensus decision as of September
2008 was to apportion all of the maintenance and operating
cost equally on a "per handset" basis.
Senator Huggins asked if the communities are cooperating
with the agreement. Mr. Kohler responded that the payment
for maintenance and operation from a user fee basis does not
begin until July 1, 2010.
Senator Huggins asked about the state's expense in FY08. Mr.
Kohler answered that the combined contribution in FY08 was
approximately $1.8 million for the maintenance of equipment
and the network itself. The Department of Defense covered
the entire cost of management operations.
9:38:23 AM
Senator Huggins asked what the state share would be in July.
Mr. Kohler answered that Alaska's state share of handsets
would be approximately $1.8 million.
Senator Huggins asked if that commitment would change. Mr.
Kohler replied that the plan was state coverage of user
costs for municipalities for one year allowing them to plan
for their full participation.
9:40:00 AM
Mr. Swanson noted that reference number 47060 WAS DELETED.
Reference Number 47054
Mr. Swanson addressed reference number 47054 and the Alaska
License and Vehicle Information Network Replacement. The
project funding would occur for the total cost of $10
million.
Reference Number 47055
Mr. Swanson detailed reference number 47055 and the digital
driver license printers. He informed that this request would
enable the replacement of all digital photographic printers.
Reference Number 47052
Mr. Swanson described reference number 47052 and the
Combined Retirement System Upgrade. The funding is
increasingly important as the retiree population grows.
9:43:58 AM
Reference Number 47059
Mr. Swanson addressed reference number 47059 which was
deleted because the deferred maintenance was completed with
the prior year's appropriation.
Co-Chair Stedman asked about the governor's house and the
deleted improvements. He asked if the improvements might
encourage the governor to live in Juneau.
9:45:58 AM
REMOND HENDERSON, DEPUTY DIRECTOR, DIVISION OF GENERAL
SERVICES, DEPARTMENT OF ADMINISTRATION, answered that the
intention is to fund the projects with funds remaining from
the prior year.
Co-Chair Stedman stated that the total list equaled $2
million. He asked that for the information to be provided to
the committee. He highlighted the issues with the governor's
mansion and the state museum.
Reference Number 47058
Mr. Swanson addressed reference number 47058 and the
Facilities Deferred Maintenance. He noted that the
facilities in the group include the State Office Building,
the Alaska Office Building, the Court Plaza, the Diamond
Courthouse, and the Atwood Building. This request occurs
annually to provide deferred maintenance on these
facilities. The funding is collected through the public
building fund. He pointed out that the priorities requested
change causing projects to be shifted. The list of projects
is dynamic and the list presented to the committee is
intended to provide the total order of deferred maintenance
needed for these facilities. The annual request illustrates
the capacity anticipated to get the work finished.
9:49:54 AM
Co-Chair Stedman noticed that the presented list shows a
need of $80 million yet the request equals only $2.8
million. Mr. Swanson responded that the list is dynamic and
provides a total of what is expected for these facilities.
Mr. Swanson noted the annual request illustrates the work
that the department deems possible during an upcoming fiscal
year. Co-Chair Stedman asked if the possibility was due to
time or resources. Mr. Swanson answered that both aspects of
time and money affect the decision. Co-Chair Stedman
wondered if the annual allocation was a mere $2.8 million
with $80 million worth of total projects, will the state
ever accomplish the deferred maintenance goals.
Mr. Henderson pointed out that deferred maintenance
priorities change depending on environmental conditions
making the list an evolving one. He informed that the list
might encompass more or less projects next year.
9:52:04 AM
Co-Chair Stedman asked for the response to the maintenance
of the governor's mansion. He understood that the mansion
was lightly used and he advised performing needed repairs in
an effort to preserve the building.
Mr. Swanson detailed reference number 47040, and the DOA
enterprise security projects. The funding requested will
provide several security projects including enhancements to
the demilitarized zone, auditing and compliance, email
discovery, and privacy and server consolidation for disaster
recovery.
Mr. Swanson addressed reference number 47051 and the
Document Management System Microfilm Conversion Phase I. The
funding requested will provide for the migration of the
Division of Retirement and Benefits microfilm documents,
which currently exist on 16mm silver negatives. The goal is
to digitize the information allowing preservation. Some
images are beginning to fade on the old media, leading to
concern about loss of data. The new system provides much
improved search capabilities which will infuse efficiencies
in the operation.
9:56:47 AM
DEPARTMENT OF MILITARY AND VETERANS AFFAIRS
CRAIG CAMPBELL, ADJUTANT GENERAL, COMMISSIONER, DEPARTMENT
OF MILITARY and VETERANS AFFAIRS announced reference number
42900 and a request of $1.7 million of federal authority.
This request is traditionally made each year. The funds are
used for maintenance and construction operations for Army
guard facilities around Alaska.
Reference Number 47882
Mr. Campbell advised that reference number 47882 be deleted
from the governor's budget due to recommendations to cut
spending. A future request will be made for the amount of
$750 thousand or increments of $250 thousand over three
years. He pointed out that the division cannot formally move
forward in the federal selection process for validation
until the full $750 thousand is appropriated by the state.
Due the budget situation in Alaska the division requests
that the item be deleted.
10:00:23 AM
Senator Huggins asked if the Veteran Cemetery Bill will go
into the capital budget.
Mr. Campbell answered that we do not require the bill to
submit an application for the capital budget, but only the
$750,000. He noted that the discussed bill will provide for
construction of the cemetery in the future.
Co-Chair Stedman clarified that only an appropriation to the
capital budget is required for construction to begin.
Mr. Campbell informed that the legislation is not required
for the appropriation of capital money to construct the
cemetery. For the state to progress with the state cemetery,
the administration supports legislation that would encompass
the state's role in a state cemetery.
Senator Huggins stated that the bill consolidates funding.
He opined that the bill enhances the project and creates a
sense of calm in Fairbanks.
10:02:34 AM
Reference Number 35774
Mr. Campbell addressed reference number 35774 and the
Military Youth Academy for Deferred Maintenance Renewal and
Replacement. He anticipated that this would be the last
request for capital improvement as the final reconstruction
will be completed.
Reference Number 42898
Mr. Campbell addressed reference number 42898 and the
National Guard Counterdrug Support and Ropes program. A
portion of the program addressed education of youth in
Alaska through schools, community events, and an obstacle
type ropes program. He requested authority to accept $100
thousand from the federal government and $50 thousand from
state general fund.
Reference Number 42901
Mr. Campbell addressed reference number 42901 for an
estimated $9.5 million from the federal government into the
homeland security division. The funding is based on the
allocation from the federal government. He pointed out that
various states are working with the Obama administration to
determine how the money is allocated.
Reference Number 43330
Mr. Campbell addressed reference number 43330 and the
Estimated Compliance Cleanup Site Restoration with a request
for authority to receive $17 million from the federal
government.
10:07:55 AM
DEPARTMENT OF CORRECTIONS
Reference Number 47567
LESLIE HOUSTON, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF CORRECTIONS, discussed reference number 47567
for Goose Creek Correctional Center Utility and Energy
Construction Costs. Due to the revenue shortfalls, the
original request of $20 million was amended to $6 million
and spread out over three fiscal years.
Co-Chair Stedman asked for a little more detail on the
original $20 million request. Ms. Houston noted that the
department originally requested $20 million as it
represented the amount between the revised construction
costs and the bond sales at the time. In an effort to
downsize due to the revenue shortfall, a decision was made
to break the request into smaller pieces.
Senator Huggins asked about a prior appropriation for $20
million that was vetoed. He requested further history about
the appropriation.
APRIL WILKERSON, BUDGET CHIEF, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF CORRECTIONS stated that the $20
million item that was vetoed for debt reimbursement. She
requested time to research the question and return to the
committee with the answer. Senator Huggins appreciated the
upcoming response.
Co-Chair Stedman asked for further information including
details about the bond sale, the dates that the bonds were
issued, market conditions one year previous, and the market
conditions today.
10:12:29 AM
Senator Huggins commented that Goose Creek attracts doubt
from citizens regarding the validity of the project. He
expressed frustration that the project had not come to
fruition.
Senator Olson asked if there was already a facility located
on the Goose Creek property. Ms. Houston responded that she
was unsure. Senator Olson asked if the facility in need of
renovation was the one that formerly housed the reindeer
farm. Ms. Houston admitted that she was not familiar with
the area. Senator Huggins added that the reindeer were gone.
He stated that the property is the prison farm near Goose
Bay.
10:14:48 AM
Co-Chair Stedman reiterated the request for a swift response
back to the committee about the bond information.
Ms. Houston described reference number 46994 and the
Fairbanks Correctional Center Space Renovation and
Remodeling. The program space within the facility was
converted into a 38 bed dorm space to accommodate
overcrowding. This request is to convert storage space for
the parole and correction officers in the education programs
who were displaced.
Senator Thomas asked if the rate was consistent with the
rest of the state and country for the individuals entering
the correctional facilities or shipped outside.
Ms. Houston answered that the Fairbanks Correctional Center
is a combined facility serving as a community jail and a
prison. She noted that combined facilities tend to suffer
from overcrowding. Approaches are taken to accommodate
additional beds without upsetting the facility.
Senator Thomas recalled that the gymnasium at the Fairbanks
Correctional Facility recently housed over 100 people. He
asked about possible future expansions. Ms. Houston replied
that the gym is currently clear and used for recreation
purposes. She stated that there are some expansion plans for
that facility offering future relief.
10:17:36 AM
Co-Chair Hoffman asked to know the time frame for the future
expansion plans. Ms. Wilkerson responded that the
information will be provided to the committee following a
planning meeting held by the management team.
Co-Chair Hoffman stated that SB 65 provided current
legislation allowing Bethel the Goose Creek facility. He
stated that the number one priority has been the Bethel
expansion. He did not see any requests to address the
overcrowding in the Bethel facility. Ms. Houston responded
that the expansion team is meeting currently to develop a
report requested by the legislature to be distributed next
week.
Co-Chair Hoffman asked if a supplemental request for the
budget would follow the report. Ms. Houston noted that
without the results from the report she could not answer the
question. Co-Chair Hoffman asked if the supplemental request
might be a future possibility. Ms. Houston answered yes.
10:19:50 AM
Senator Huggins pointed out the most common theme with
corrections is the promise of reports, yet there is rarely
any change. He noted that the facilities, concepts, and
costs tend to lead to different directions.
Reference Number 46995
Ms. Houston introduced reference number 46995 and the
Medical Information System for $1.5 million of Permanent
Fund Dividend (PFD) criminal funds. She noted the multi
state consortium between Alaska, Utah, Idaho, and New Mexico
to develop and improve upon the existing system and
implement the medical model into the information tracking
system. Currently medical files are in paper form and must
travel with the inmate, which can occasionally get lost.
This request would bring the medical information online
allowing easy access at each facility in the system.
Co-Chair Stedman asked about PFD fund source. He asked if
the PFD receipts had been adjusted for any impact of the
decline in the dividend. Ms. Houston answered yes. He asked
about a statute passed last year allowing inmate child
support to be paid by the PFD.
Ms. Houston noted that this year, due to the past growth of
the Permanent Fund, was the year to use the funds. She was
unfamiliar with the distribution of funds by the Department
of Revenue. Co-Chair Stedman asked Ms. Foster to return to
the committee with the answers.
10:23:19 AM
Co-Chair Hoffman asked about the past growth of the
permanent fund dividend. Is that growth including the $1,200
energy rebate? Ms. Houston answered that she was uncertain.
She offered to present the answer along with the others due
to the committee.
Senator Olson asked about the medical information system and
the prevention of death. Ms. Houston answered that the
medical information system might assist in the prevention of
a death as past medical history is readily identified and
observed.
10:24:44 AM
Reference Number 47014
Ms. Houston addressed reference number 47014 and the
Combined Highland Mountain Correctional Center Lead
Abatement and Buffer Fence. She explained that a
recreational trail system is encroaching on state land.
Approximately 2.5 acres of the land is an old firing range
containing lead contamination in the soil which must be
abated prior to an exchange of land with the Anchorage
municipality. Also, a 300 foot clear zone perimeter fence
will be added next year to keep the public away from the
inside fence.
Reference Number 46996
Ms. Houston addressed reference number 46996 and the request
for an online electronic procurement system. Currently the
Department of Corrections has an antiquated manual
procurement process. The system sought will provide
substantial savings and has the capability of cataloging and
supply management allowing for competitive analysis between
vendors.
Reference Number 45637
Ms. Houston detailed reference number 45637 and the Annual
Facilities Maintenance and Repairs request for $2.5 million
general funds. The facilities are over 27 years old and
require maintenance and repair. The issues listed are the
most critical.
Co-Chair Hoffman requested the maintenance list. Co-Chair
Stedman echoed the interest in the magnitude and content of
the maintenance list. He noted that the fluidity of the list
was also of interest.
10:28:08 AM
Co-Chair Hoffman requested that the list be prioritized. Ms.
Houston added the request to her list of items to present to
the committee. Co-Chair Stedman requested the list once it
is prioritized.
Reference Number 41515
Ms. Houston addressed reference number 41515 for
Institutions and Probation and Parole Equipment Replacement.
She identified the items to be replaced as metal detectors,
food service equipment, and laundry facility equipment
strictly to replace old obsolete capital equipment.
Reference Number 45248
Ms. Houston introduced reference number 45248 Inmate Health
Care Medical and Dental Equipment Replacement request of
$140,400 of the PFD criminal fund to replace essential
medical and dental equipment including hospital beds for the
medical segregation unit, microscopes, and a dental chair.
Co-Chair Hoffman asked which facilities were included in the
statewide request. Ms. Houston replied Fairbanks, Spring
Creek, and Anchorage Correction Facilities will be served by
the request.
Co-Chair Stedman asked if Lemon Creek Correctional Facility
required any upgrades. Ms. Wilkerson explained that Lemon
Creek received a dental chair from last year's capital
budget appropriation.
10:30:31 AM
Co-Chair Stedman asked about facilities in Western Alaska.
Ms Wilkerson responded that she would provide a list of
facilities that received updated equipment last year. The
current request is to provide the remaining facilities with
the rest of the equipment needs.
Co-Chair Stedman reminded about the list and the imperative
prioritization of the order. Ms. Wilkerson understood the
request and promised to comply.
SB75 was HEARD and HELD in Committee for further
consideration.
10:31:26 AM
ADJOURNMENT
The meeting was adjourned at 10:31 AM.
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