SB 25-STATE GOV'T FINANCES: WEBSITE  3:59:47 PM CHAIR SHOWER announced the consideration of SENATE BILL NO. 25 "An Act relating to the establishment and maintenance of an Internet website providing information on state government financial transactions and specifying the information to be made available on the website." 4:00:04 PM SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau, Alaska, sponsor of SB 25, stated this legislation will create a publicly searchable online checkbook for state government expenditures and revenues. He highlighted that the Department of Administration took down the online checkbook last spring, which made Alaska the only state in the nation that does not have one. Before that, the online checkbook was extremely slow, not easily searchable, and not intuitive. That led to Alaska receiving an F from a number of groups that monitor access to government information. A report in the supporting documents from the United States Public Interest Research Group (USPIRG) rated Alaska's financial transparency an F in five out of the last six years. At the last rating, Alaska was ranked 49th out of the 50 states in terms of public access to the state's financial information. 4:01:58 PM SENATOR WIELECHOWSKI said SB 25 would be easy to implement because the state already collects the financial information. It is just a matter of somebody spending a few hours to put a publicly searchable website together and regularly update the information. He noted that a wide range of people with diverse political ideologies, including Grover Norquist and Ralph Nader, supported nearly identical bills that he introduced in previous years. In 2009, Senate Bill 2 passed the Senate but died in the House because the then governor said it was not needed. Senator Wielechowski said he also introduced Senate Bill 180 in 2020 but the bill did not pass because of a shortened session due to COVID-19. SENATOR WIELECHOWSKI said the argument against SB 25 is that it would be expensive. He pointed out that last year his staff developed an online checkbook for the state in one day and at zero cost. It did not have all the bells and whistles that an IT department could provide, but it shows it could be done with little cost. SENATOR WIELECHOWSKI said the second argument is that the bill is not needed because the state will construct and post the website. However, the state has not had an online checkbook since last spring and the previous one received an F rating in five of the last six years. SENATOR WIELECHOWSKI said SB 25 is a good government bill because transparency in government is not an ideological issue. People from both sides of the aisle have voiced support. The bill would also save money by reducing the number of Freedom of Information Act requests for information that the public could easily access if it were in the online checkbook. Contractors and the business community have said this would give them the opportunity to see what the state is spending on items and contract, which would allow them to price and come up with better terms to save the state money. SENATOR WIELECHOWSKI restated that SB 25 is a good government bill that gives Alaskans a better opportunity to understand where revenues are coming from and expenditures are going. 4:05:31 PM SENATOR REINBOLD said she would probably become a co-sponsor and may offer an amendment to add grading the administration on freedom of information requests. CHAIR SHOWER suggested she work it out with the sponsor. SENATOR KAWASAKI, noting that the Palin administration created the online checkbook by executive order, asked if this administration took it offline because of associated costs. SENATOR WIELECHOWSKI said he could not speak to why the administration took the website down. 4:09:49 PM NATE GRAHAM, Staff, Senator Bill Wielechowski, Alaska State Legislature, Juneau, Alaska, presented the following sectional analysis for SB 25 on behalf of the sponsor: [Original punctuation provided.] Section 1  Names the act "the Alaska Online Checkbook Act." Section 2  Adopts legislative findings and intent: Subsection (a) establishes that this bill is intended to allow people identify and discover state revenue and expenditures. Subsection (b) requires that this act by interpreted in favor of disclosure and transparency. Subsection (c) finds that state revenue and expenditures must be accounted for and easily accessible to the public in order to maintain a fair and open government. Subsection (d) adopts intent that the state should strive to create a user-friendly website that gives the public access to the state's financial information in a centralized location. Section 3 Requires that the Department of Administration to make the financial transactions of the state and the annual audit available electronically for use in the public finance internet website. 4:11:00 PM Section 4 Creates a new AS 37.05.215. AS 37.05.215 (a) Requires the Department of Administration to develop operate and maintain a searchable, free to the public, website that provides financial information available from the central accounting system or the annual financial report. AS 37.05.215 (a) (1)-(3) Requires the following information and transactions to be posted on the online check book website and monthly state income including: • Receipts or deposits by a state agency into a fund or account established within the state treasury. • Proceeds from taxes received, categorized by source type, including compulsory contributions imposed by the state for the purpose of financing services. • Agency earnings including amounts collected for sales or services, licenses or permits issued, or otherwise received by an agency. • Revenue received for the use of state money or property including interest and lease payments gifts, donations and federal receipts and other revenue. Expenditures including: • The names and locations of any persons to whom payment was made. • The amounts of the expenditures disbursed. • The type of transaction, by account code, including the purpose of the expenditure. • Other information specified by the department. The balance of the following state accounts: • Statutory Budget Reserve. • Constitutional Budget Reserve. • Permanent Fund Earnings Reserve Account. 4:12:30 PM CHAIR SHOWER asked if that was an all-inclusive list. MR. GRAHAM replied those accounts are all one might want to be included but it is not exclusive. CHAIR SHOWER asked if it would be a fair statement to say, "There could be more they may put in this or things that are out there now, for example what they're working on that might be rolled in." MR. GRAHAM answered yes. SENATOR REINBOLD voiced support for more detail, including fund sources. CHAIR SHOWER said he leans toward more rather than less specifics. SENATOR WIELECHOWSKI said his preference is to make it as specific and thus transparent as possible without triggering a large fiscal note. 4:15:27 PM MR. GRAHAM continued the sectional analysis. AS 37.05.215 (a) (4)-(7) Requires the following information be posted on the online check book website and updated monthly: The amount deposited into the Permanent Fund from all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments, and bonuses received by the state. State revenue and expenditures, summarized by: General fund revenue sources categorized by function, department, and account. Total general fund income compared to expenditures. Total assets compared to liabilities at the end of the fiscal year. For the preceding 10 years, by fiscal year the following: • The number of state employees by department. • The number of independent contractors engaged by the state by department. • The total long-term debt owed by the state. • Total general fund expenditures. • All general fund payroll by department. AS 37.05.215 (b) Describes the reporting requirements for the previous subsection. AS 37.05.215 (c)(1) Requires that the website have reference materials to assist the public in understanding the financial [information] provided on the website. AS 37.05.215 (c)(2) Requires the website to have a feature that allows users to search for information on the website by keyword and recipient. AS 37.05.215 (c)(3)  Requires the site to have a link to the website of the Legislative Audit Division. The site must also include electronic copies of information related to state service procurement contracts, including compensation and contract length and of information related to independent contractors engaged by the state, by state agency, including compensation and contract length. 4:17:08 PM AS 37.05.215 (d) Requires the Department of Revenue and other state agencies that use the central accounting system to provide information to the Department of Administration that is necessary to comply with this act. AS 37.05.215 (e) Clarifies that this bill will not require the disclosure of information that is confidential under state or federal law and requires that aggregated information be disclosed if it can properly protect confidentiality. AS 37.05.215 (f) Defines "expenditure," "searchable Internet website," and "state agency." Section 5 Requires the website to be operating on or before October 1, 2022. Section 6 Requires information from the previous fiscal year be on the website by October 1, 2023 and requires site to be updated. 4:17:54 PM SENATOR REINBOLD stated that October 2022 is not acceptable. SENATOR WIELECHOWSKI said he was trying to give the administration as much time as necessary, but his preference would be to have it effective tomorrow if that were possible. SENATOR KAWASAKI asked if the university and court system already account for this information. MR. GRAHAM answered yes, but not in an online checkbook. SB 25 would require both the university and the court to make their nonconfidential information public. SENATOR KAWASAKI referenced the $400,000 in capital costs in the Department of Administration's fiscal note and asked Mr. Zigmund to elaborate on what the money is for, given that a previous administration implemented the checkbook by executive order and the cost was zero. 4:20:21 PM HANS ZIGMUND, Director, Division of Finance, Department of Administration, Juneau, Alaska, stated that increasing transparency in public finance is a worthy goal. He advised that the Department of Administration traditionally has provided the state's online checkbook with reports from the Alaska Data Enterprise Reporting System (ALDER) that provide transparent reporting of nonconfidential state expenditures. The checkbook reported on what the state purchased, from whom, and what it cost, but it was not the full state balance sheet. MR. ZIGMUND explained that in April 2020, the Division of Finance took the state checkbook offline after a report of an unusually large expenditure to a legislator that raised red flags. Investigation showed that fields were misaligned and data was not translating correctly. MR. ZIGMUND said the expectation is that the online checkbook will be back online on February 5. The solution was to create a new ALDER report that assembles end-product data without any human intervention or manipulation. The division currently is analyzing the data to ensure that the checkbook data matches expected results and complies with statutes and regulations. This includes not sharing inappropriate or confidential information like child welfare payments and victim restitution. 4:22:34 PM MR. ZIGMUND reported that it took about eight months to fix problems associated with the implementation of the CARES Act, prepare the annual comprehensive financial report, and plan for the beginning of the Integrated Resource Information System (IRIS) upgrade. The initial root cause analysis took about 300 staff hours to get to the point of republishing the checkbook. MR. ZIGMUND advised that the online checkbook is substantially different from the one outlined in SB 25. The bill includes reporting of liabilities, revenues, long-term debt for the state, and information that is published internally but not in the online checkbook. The bill requires revenues from the preceding month, balances from the preceding month from the statutory budget reserve, constitutional budget reserve, and permanent fund earnings reserve account. It requires information on full time, part time, and temporary employees, independent contractors, general revenues and expenditures categorized by function, agency, and account. Reporting requirements are expanded to include public corporations and the universities. He explained that the fiscal note estimates that it will take about eight months and $400,000 to implement the new checkbook. It would be a capital expenditure to employ contractors to build the new website. Should the bill pass, implementation could occur once the IRIS upgrade is completed, starting in April 2022 and the go-live date would be October 2023. MR. ZIGMUND stated that the division and department have no position on the bill but would implement the legislature's policy decision. He explained that the estimated time and cost to implement the bill stem from conversations with the vendor for IRIS. CHAIR SHOWER commented that it takes a lot of time and money when government doesn't want to do something, but it can accomplish amazing feats when it wants to. He pointed out that in August of 1990, during Desert Storm and Desert Shield, the government moved the equivalent of every part of a medium sized Midwest town halfway around the world and back again, all in a couple months. He said he doesn't believe the department is stonewalling but he agrees with other committee members that it can move faster if there is a will. CHAIR SHOWER asked, aside from the confidentiality protections and university reporting that Mr. Graham mentioned, if there were any legal requirements or obstacles with the bill as written. MR. ZIGMUND replied he would defer any questions regarding confidentiality and reporting of revenues to the Department of Revenue. With respect to university and public corporations, he said their information is not in IRIS so DOA would not be able to include that information in reports and provide the information in the online checkbook. CHAIR SHOWER asked how finishing the IRIS update was relevant to constructing and posting the online checkbook outlined in SB 25. 4:28:49 PM MR. ZIGMUND explained that IRIS is the financial, procurement, payroll, and human resource management system where all the state's accounting takes place. ALDER is a reporting tool that pulls from the data warehouse where all the information is stored from the transactions that take place in IRIS. The request to delay implementation until after the IRIS upgrade is based on resource constraints because the department's programmers, business analysists, and database administrators will be working round the clock for the next year to complete the IRIS upgrade. He emphasized the need for the department to finish the IRIS upgrade so the foundation of the information that rolls into the online checkbook is complete and correct first. 4:31:14 PM SENATOR WIELECHOWSKI agreed with the chair that if DOA put its mind to it, they could get it done. He noted that the department used the same argument against the original legislation in 2008- 2009. He questioned the reason DOA sees the need to hire an outside contractor to develop an online checkbook and why it would take so long. "I'm deeply skeptical Mr. Chairman of the comments and statements I'm hearing." 4:32:17 PM SENATOR REINBOLD said she too questions the need to hire outside contractors. She asked if fund source codes would be included when DOA reposts the online checkbook on February 5. MR. ZIGMUND answered no; that enhancement would not be available February 5. DOA's intention on the 5th is to restore the information that the Division of Finance previously provided. He said adding fund source codes could be a future enhancemen.t He said he imagines she is looking at linking funding sources to the source of the expenditure, which should not be too difficult. He said he would consult with programing staff and follow up if that was incorrect. 4:34:08 PM SENATOR REINBOLD said fund source codes are elementary bookkeeping and not having them in the online checkbook makes it difficult to do budget subcommittee work. She said she would like to work with the sponsor and the administration on this issue. SENATOR KAWASAKI asked if the fiscal note would be zero if the online checkbook did not have the enhancements mentioned earlier. Rather, it would include general fund revenue sources categorized by function, state agency, and account, and then general fund revenue versus expenditure. MR. ZIGMUND confirmed that reducing the technical work makes it an easier lift for the department and reduces the cost. SENATOR KAWASAKI said he would like to tease out the analysis of the fiscal note to understand what is driving the $400,000 cost estimate and eight-month timeline. He offered to do this offline. MR. ZIGMUND said he would be happy to have those discussions. CHAIR SHOWER asked the members to submit their questions to his office so they could be answered before the bill moves to Finance. He restated his belief that a tighter timeline made sense. 4:40:05 PM CHAIR SHOWER held SB 25 in committee.