Legislature(2005 - 2006)SENATE FINANCE 532

03/14/2005 09:30 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
+= SB 63 USE SEAT BELT ROAD SIGNS TELECONFERENCED
Moved SB 63 Out of Committee
+ SB 93 FISHING PERMIT AND VESSEL LICENSE FEES TELECONFERENCED
Heard & Held
*+ SB 46 APPROP: CAPITAL BUDGET TELECONFERENCED
Heard & Held
Dept of Administration
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
10:42:40 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 46                                                                                                         
     "An  Act making capital  appropriations  and appropriations  to                                                            
      capitalize funds; and providing for an effective date."                                                                   
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
The Committee heard presentations  on the Governor's capital funding                                                            
requests for the Department of Administration.                                                                                  
                                                                                                                                
Department of Administration                                                                                                  
                                                                                                                                
     State of Alaska Network Security Infrastructure Upgrades                                                                   
     $3,537,500 Info Svc fund                                                                                                   
     Reference No.: AMD40606                                                                                                    
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     On January  18, 2005 the State of Alaska Wide  Area Network was                                                            
     the target  of a cyber attack which resulted  in the defacement                                                            
     of a web  server owned by the  Department of Health  and Social                                                            
     Services.  Upon further  investigation,  it was determined  the                                                            
     extent and scope of  the cyber attack was much larger than to a                                                            
     single  device.  In a  cooperative  effort with  SOA  agencies,                                                            
     approximately   110 servers   appeared  to have  experience[d]                                                             
     similar "signatures"  of this attack. The significance of these                                                            
     attacks  prompted  notification  to the MS.-ISAC  (multi  state                                                            
     information sharing and analysis center.)                                                                                  
                                                                                                                                
ERIC  SWANSON,  Director,   Division  of  Administrative   Services,                                                            
Department   of  Administration,   testified  this  project   is  an                                                            
extension  of the $5 million  FY 04 supplemental  appropriation  for                                                            
security activities.                                                                                                            
                                                                                                                                
STAN HERRERA,  Director, Enterprise Technology Services,  Department                                                            
of Administration  explained that a portion of these  funds would be                                                            
expended  to   assist  in  addressing   system  vulnerability.   The                                                            
remainder  of the funds would  be utilized  to complete the  project                                                            
undertaken  with the FY  04 supplemental  appropriation to  purchase                                                            
hardware and software in  response to the cyber attack identified by                                                            
a federal task force.                                                                                                           
                                                                                                                                
10:46:24 AM                                                                                                                   
                                                                                                                                
     Alaska Land Mobile Radio (ALMAR) Infrastructure Upgrades                                                                   
     $6,405,000 general funds                                                                                                   
     Reference No.: AMD40605                                                                                                    
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     Phased-underway                                                                                                            
     Funding in  the amount of $6.175 million is needed  in FY 05 to                                                            
     uphold  the State of Alaska's  obligation to the Department  of                                                            
     Defense  in a  joint  partnership for  the Alaska  Land  Mobile                                                            
     Radio (ALMR) Project.                                                                                                      
                                                                                                                                
Mr. Swanson noted an upcoming  presentation to the Committee on this                                                            
project.                                                                                                                        
                                                                                                                                
10:47:07 AM                                                                                                                   
                                                                                                                                
     Statewide  Administrative  System Replacement  Phase 1  - Human                                                            
     Resources and Payroll                                                                                                      
     $20,000,000 Debt Fin fund                                                                                                  
     Reference No.: 40081                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2009                                                                           
     One-Time Project                                                                                                           
     The Department  of Administration is responsible  for operating                                                            
     statewide  payroll and  accounting systems.  These systems  are                                                            
     aging, and need to be replaced.                                                                                            
                                                                                                                                
Mr. Swanson outlined this request.                                                                                              
                                                                                                                                
KIM  GARNERO,   Director,   Division  of   Finance,  Department   of                                                            
Administration, read a statement into the record as follows.                                                                    
                                                                                                                                
     When  I  came  to  this  job 6  years  ago,  I  recognized  the                                                            
     vulnerability  we have  with our existing  payroll system.   At                                                            
     that time there were  just over 100 licensed users of Tesseract                                                            
     software,  and now there  are less than  50.  The days  of this                                                            
     software   product's  viability  are  numbered,   and  that  is                                                            
     something  that impacts almost  all of state government.   This                                                            
     application   processes  payroll  for  the  court  system,  the                                                            
     legislature,  and the executive  branch, including most  of the                                                            
     corporations (all but University, RR, AHFC).                                                                               
                                                                                                                                
     Replacing  the payroll system for an organization  as large and                                                            
     complex  as  the State  of Alaska  is  major undertaking.    We                                                            
     received  capital  appropriations to  begin the  process  in FY                                                            
     2003  and FY  2004.   We've spent  about half  of the  $900,000                                                            
     appropriated  to date, mostly  on this business case.  The work                                                            
     underlying this document  took about a year to complete and the                                                            
     scope  was  not  just payroll  and  human  resources,  but  all                                                            
     statewide administrative  systems.  We included accounting, and                                                            
     procurement,  and budget  functions and  involved the  business                                                            
     process  owners  for  each function.    The business  case  was                                                            
     completed  in  September  2003  and  it  is  available  on  the                                                            
     Division of Finance website.                                                                                               
                                                                                                                                
     Reading  it,  you'll  find  our  administrative   systems  need                                                            
     serious overhaul.                                                                                                          
     ·  Our accounting  system is  20 years old,  written in  COBOL,                                                            
        and becoming more difficult to maintain.                                                                                
     ·  Our  human  resource   systems  are  a  mix  of   standalone                                                            
        databases.                                                                                                              
     · We have no statewide system for procurement whatsoever.                                                                  
      · And the systems we do have, don't talk together well.                                                                   
                                                                                                                                
     Over  the next  several years,  we are  faced with  the job  of                                                            
     implementing current  technology to address these deficiencies.                                                            
      We  decided to  start  with the  payroll and  human  resources                                                            
     systems,  because  that is  where our  greatest risk  lies.   A                                                            
     necessary  related project  is a reporting  database that  will                                                            
     contain  information  from both  the  old and  new systems  for                                                            
     historic  and management needs.   The eventual goal  is for the                                                          
     reporting    database   to    include   data   from    multiple                                                            
     administrative  functions, which  would be a great improvement                                                             
     over our current reporting capabilities.                                                                                   
                                                                                                                                
     Our plan  is to work through  the complicated task of  defining                                                            
     our requirements,  choosing the best solutions, and negotiating                                                            
     long-term contracts  that we can afford.  The actual nature and                                                            
     cost of the  solutions will not be known until  we work through                                                            
     the process,  and we can't work through the process  without an                                                            
     appropriation to fund it.                                                                                                  
                                                                                                                                
Co-Chair  Wilken noted the  funding source  is "debt financing"  and                                                            
asked if this is a line of credit.                                                                                              
                                                                                                                                
Ms. Garnero understood the same.                                                                                                
                                                                                                                                
10:50:39 AM                                                                                                                   
                                                                                                                                
     Public Building Facilities Projects                                                                                        
     $9,902,000                                                                                                                 
          $6,902,000 Bond Funds                                                                                                 
          $3,000,000 Public Bldg fund                                                                                           
     Reference No.: 39025                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2004 - 06/30/2005                                                                           
     On-Going Project                                                                                                           
     Funding is  necessary for continued maintenance  of state owned                                                            
     facilities that make  up the group know as Public Building Fund                                                            
     facilities.   These   facilities  include   the  State   Office                                                            
     Building,  the Alaska Office Building, the Community  Building,                                                            
     the  Douglas   Island  Building,   the  Atwood  Building,   the                                                            
     Fairbanks  Regional Office Building, the Court  Plaza Building,                                                            
     and the Dimond Court House.                                                                                                
                                                                                                                                
Mr. Swanson reported  that priority deferred maintenance  needs have                                                            
been identified  for all the buildings.  He noted this list  changes                                                            
as boilers malfunction  or other emergency repairs become necessary.                                                            
                                                                                                                                
Co-Chair  Wilken  asked  if  the  bond  funds  are  related  to  the                                                            
settlement  from the  case involving  Amerada  Hess Corporation  and                                                            
other oil producers.                                                                                                            
                                                                                                                                
Mr. Swanson answered yes.                                                                                                       
                                                                                                                                
Co-Chair  Wilken clarified  that  the public  building  fund is  the                                                            
account  paid  into by  agencies  occupying  space in  the  included                                                            
facilities.                                                                                                                     
                                                                                                                                
Mr. Swanson affirmed.                                                                                                           
                                                                                                                                
10:52:31 AM                                                                                                                   
                                                                                                                                
     Enterprise IT Projects                                                                                                     
     $3,706,000 Info Svc fund                                                                                                   
     Reference No.: 40437                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     One-Time Project                                                                                                           
     This  category consists  of the 10  IT implementation  projects                                                            
     developed  with a contract with  Unisys Corporation,  and other                                                            
     enterprise projects requested by State agencies.                                                                           
                                                                                                                                
Mr. Herrera told  of the IT projects and operations  constructed for                                                            
various  departments  that total  approximately  $260 million.  This                                                            
request would implement  systems that would increase efficiencies to                                                            
the  State   and   include  a   server  consolidation,   help   desk                                                            
consolidation, and asset management.                                                                                            
                                                                                                                                
10:53:32 AM                                                                                                                   
                                                                                                                                
     Data Center and Equipment Upgrades                                                                                         
     $3,297,000 Info Svc fund                                                                                                   
     Reference No.: 40435                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     Phased - new                                                                                                               
     The purpose  of these projects  is to upgrade the outdated  PBX                                                            
     phone  systems; upgrade  the failing  environmental systems  in                                                            
     the data centers such  as air conditions, fire suppressant, and                                                            
     power  distribution; update the  Anchorage Data Center  to make                                                            
     it  "production  ready"  for  Anchorage  based hosting  and  to                                                            
     mirror  Juneau operationally  for 24x7 backup purposes;  and to                                                            
     replace  the IBM Mainframe  serve as it  is projected  to reach                                                            
     processing capacity in early FY06.                                                                                         
                                                                                                                                
Mr. Swanson overviewed this item.                                                                                               
                                                                                                                                
Mr.  Herrera   stated   this  request   is  for   funding  for   the                                                            
establishment of a disaster  recovery system. The State operates two                                                            
data centers, one located  in Juneau the other located in Anchorage.                                                            
                                                                                                                                
Co-Chair  Wilken  asked  if Reference  No.  40437  is a  phased  new                                                            
revenue project.                                                                                                                
                                                                                                                                
Mr. Herrera affirmed.                                                                                                           
                                                                                                                                
10:54:48 AM                                                                                                                   
                                                                                                                                
     Maintenance   Projects  for   Facilities  Outside  the   Public                                                            
     Building Fund                                                                                                              
     $3,098,000 Bond Funds                                                                                                      
     Reference No.: 39034                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2007                                                                           
     On-Going Project                                                                                                           
     Funding is necessary for maintenance projects in facilities                                                                
     outside the public building fund.                                                                                          
                                                                                                                                
Mr. Swanson gave  examples of facilities not included  in the Public                                                            
Building  Fund. A list of  priority projects  has been compiled  for                                                            
these facilities.                                                                                                               
                                                                                                                                
Senator  Olson asked  why these buildings  are not  included  in the                                                            
Public Building Fund.                                                                                                           
                                                                                                                                
Mr. Swanson  replied  that the  Public Building  Fund was  initially                                                            
established  as a pilot  project and included  eight buildings.  The                                                            
program  has been  successful  and considerations   are underway  to                                                            
include additional buildings.                                                                                                   
                                                                                                                                
Senator Olson  asked if funds  would be more  readily available  for                                                            
these  projects  if  the facilities  were  included  in  the  Public                                                            
Building Fund.                                                                                                                  
                                                                                                                                
Mr. Swanson responded  that the manner of funding  would change with                                                            
rent being charged  to the State agency occupants  of the buildings.                                                            
Some buildings, such as  the Governor's residence would be addressed                                                            
individually.                                                                                                                   
                                                                                                                                
Senator Stedman  asked if the funding  for this item relates  to the                                                            
fund source referred to as Amerada Hess, as well.                                                                               
                                                                                                                                
Mr. Swanson answered yes.                                                                                                       
                                                                                                                                
10:56:57 AM                                                                                                                   
                                                                                                                                
     State of Alaska Telecommunication System (SATS) Projects                                                                   
     $1,615,000 Info Svc fund                                                                                                   
     Reference No.: 40438                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     One-Time Project                                                                                                           
     These  projects will provide  maintenance on the degraded  SATS                                                            
     infrastructure  which is  the backbone  of the state Wide  Area                                                            
     Network   (WAN)  and  the  Alaska  Land  Mobile   Radio  (ALMR)                                                            
     projects.  Also included is an  inventory of all equipment  per                                                            
     site   and   an  assessment   of   structural   integrity   and                                                            
     performance.                                                                                                               
                                                                                                                                
Mr. Swanson overviewed this request.                                                                                            
                                                                                                                                
Mr. Herrera  explained this  funding would  be utilized for  various                                                            
projects, including  purchasing battery  upgrades for 12  sites, and                                                            
SATS test equipment replacement  at approximately 128 sites. Some of                                                            
these  sites are  over 30  years old  and site  assessments must  be                                                            
completed  to  determine  necessary   upgrades.  The  project  would                                                            
determine  the users  of the systems  and reinstate  the  chargeback                                                            
method  that  was  eliminated  at  the  time  the  State  entered  a                                                            
contractual  agreement  with  a  telecommunications   company.  That                                                            
contract  has since  been terminated  and the  chargeback method  is                                                            
again necessary.                                                                                                                
                                                                                                                                
10:58:40 AM                                                                                                                   
                                                                                                                                
Mr. Swanson clarified  that the Governor's proposed  FY 06 operating                                                            
budget contains  a section that capitalizes  the funds proposed  for                                                            
these capital projects.                                                                                                         
                                                                                                                                
10:59:09 AM                                                                                                                   
                                                                                                                                
     License Plates, Tabs, and Manuals                                                                                          
     $385,000 Rcpt Svcs fund                                                                                                    
     Reference No.: 40440                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2010                                                                           
     On-Going Project                                                                                                           
     Funding  will provide  for the purchase  of license plates  and                                                            
     tabs  to  maintain statewide  inventory  levels  necessary  for                                                            
     their required continued  issuance. The division is required by                                                            
     statute  (AS 28.10)  to issue  plates and tabs  and cannot  run                                                            
     out.  The funding also  provides for the  purchase of  the four                                                            
     different  driver manuals and law books that  must be available                                                            
     at all DMV offices.                                                                                                        
                                                                                                                                
Mr. Swanson read the summary information.                                                                                       
                                                                                                                                
10:59:45 AM                                                                                                                   
                                                                                                                                
     DMV Take-a-Number System                                                                                                   
     $100,000 Rcpt Svcs fund                                                                                                    
     Reference No.: 40073                                                                                                       
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2005 - 06/30/2007                                                                           
     Phased-new Project                                                                                                         
     Expansion of the take a number system used in the Anchorage                                                                
     office.                                                                                                                    
                                                                                                                                
Mr.  Swanson explained  this  system  allows  customers  to "take  a                                                            
number" and  know the amount  of time before  they would be  served.                                                            
This also provides  a method to determine  the amount of  time taken                                                            
to provide services.                                                                                                            
                                                                                                                                
11:00:56 AM                                                                                                                   
                                                                                                                                
     AOGCC Leasehold Improvements                                                                                               
     $75,000 AOGCC Rcpt funds                                                                                                   
     Reference No.: 40072                                                                                                       
     Category: General Government                                                                                               
     Location: Anchorage Areawide                                                                                               
     Election District: Anchorage Areawide                                                                                      
     Estimated Project Dates: 07/01/2005 - 06/30/2007                                                                           
     One-Time Project                                                                                                           
     Funds will be used to purchase a space saving filing system                                                                
     and to purchase and install a ventilation system for the                                                                   
     confidential samples storage room.                                                                                         
                                                                                                                                
Mr.  Swanson  explained  that  the  space  would  be  remodeled  and                                                            
reconfigured to  allow for the new filing system.  Also, because the                                                            
mineral samples  held in the office emit toxic odors,  a ventilation                                                            
system would be installed for the comfort of staff.                                                                             
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             

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