Legislature(1999 - 2000)
01/18/2000 09:05 AM Senate FIN
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SENATE FINANCE COMMITTEE LOG NOTES 01/18/00 GENERAL SUBJECT(S): Overview: Cost of Y2K Readiness - HB 64 Appropriation Legislature, University, Courts, Administration The following overview was taken in log note format. Tapes and handouts will be on file with the Senate Finance Committee through the 21st Legislative Session, contact 465-4935. After the 21st Legislative session they will be available through the Legislative Library at 465-3808. Time Meeting Convened: 9:05 a.m. Tape(s): SFC-00 # 4 Side A & B PRESENT: Senator Parnell Senator Adams Senator Torgerson Senator Green Senator Donley Senator Phillips Senator Leman Not Present: Senator Wilken Senator P. Kelly ALSO PRESENT: PAMELA VARNI, EXECUTIVE DIRECTOR, LEGISLATIVE AFFAIRS AGENCY BILL MCCAULEY, MANAGER, DATA PROCESSING, LEGISLATIVE AFFAIRS AGENCY CHRIS CHRISTENSEN, STAFF COUNCIL, ALASKA COURT SYSTEM BOB POE, COMMISSIONER, DEPARTMENT OF ADMINISTRATION SENIOR PROJECT MANAGER, Y2K PROJECT, DEPARTMENT OF ADMINISTRATION FRANK RUE, COMMISSIONER, FISH & GAME NANCY SLAGLE, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES DAN SPENCER, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF ADMINISTRATION STEVE SMITH, DIRECTOR, INFORMATION TECHNOLOGY, UNIVERSITY OF ALASKA MARYLOU BURTON, Y2K COORDINATOR, UNIVERSITY OF ALASKA ANN RINGSTAD, DIRECTOR, GOVERNMENT RELATIONS LOG SPEAKER DISCUSSION 00 CO-CHAIR PARNELL Called the meeting to order. 26 PAMELA VARNI, EXECUTIVE DIRECTOR, LEGISLATIVE AFFAIRS AGENCY Gave an initial history of the Agency's Y2K efforts. As early as 1995 the Agency was aware of problems with its various computer systems, including the inability of many of these to correctly process Y2K dates. They committed to a comprehensive course to correct these problems, including the Y2K issues. In early 1997 Wostman & Associates produced the "Information Technology Systems Review Report," which addressed the Agency's serious system problems. For example, the mainframe functions such as BASIS, POMS, ALDEX, EMAIL, ALTB and the Voting Systems were critical to the functioning of the Legislature and these were considered compromised. The report concluded that eliminating the mainframe applications before the year 2000 was imperative. Late in 1997 the Agency proceeded on an ambitious project to standardize all of the Legislature's desktop PCs to Windows95. Over the last three years they've replaced 95 percent of these PCs throughout the Legislature to the required standard. Older software applications were upgraded. Ms. Varni gave additional details regarding these upgrades and the replacement of network servers. 65 BILL MCCAULEY, MANAGER, DATA PROCESSING, LEGISLATIVE AFFAIRS AGENCY In February of 1998 the Pyphia Corporation generated a comprehensive report entitled, "Summary of Findings and Recommendations," which addressed among other things, the Legislature's Y2K problems. The report recommended that they replace the obsolete Legislative mainframe applications with a fully integrated set of applications on the network. Pyphia also provided a comprehensive design package for such a system. After a lengthy Request for Proposal (RFP) process, the Agency realized there was not enough time or sufficient funding to implement the integrated design. In the fall of 1998 the Agency embarked on a fallback plan to eliminate all legislative mainframe applications before the end of 1999. Mr. McCauley then outlined the details of this elimination process. 98 PAMELA VARNI Outlined for the committee those changes that needed implementation for the Legislature's voting system as recommended by International Roll Call, Incorporated. 108 BILL MCCAULEY Noted that the Legislature's mainframe no longer exists. The inventory program on this system is the only one left to upgrade and the Data Processing Department is doing so in-house. 119 CO-CHAIR PARNELL Asked for what this inventory program was used. 120 BILL MCCAULEY Responded that this program was used to track all the computer hardware in the Legislature. About the overall rollover procedure into Y2K, all of their systems performed flawlessly. Mr. McCauley then outlined for the committee two glitches they did encounter. 134 PAM VARNI In summary, noted that the Agency was able to make the Legislature Y2K compliant within the allotted budget. 146 CO-CHAIR PARNELL Asked why the funds allotted to make the Legislature's system Y2K compliant were used to replace obsolete software. He wondered if these two issues were interrelated. 154 BILL MCCAULEY In regards to the mainframe system, it was determined more cost effective to replace it rather than to upgrade it on a long-term basis. 171 CO-CHAIR PARNELL Noted that the University would come forward to testify about Y2K issues and added that Ann Ringstad, along with Pat Pitney were sitting in by teleconference. 180 STEVE SMITH, DIRECTOR, INFORMATION TECHNOLOGY, UNIVERSITY OF ALASKA Stated that he was very happy with how the University came through with their Y2K conversions. He thanked the Committee for the funds and confidence they entrusted to the University's efforts. To date, they have spent a little over $1.3 million, with about $600,000 still encumbered. There are a few clean-up projects yet to complete, but he estimated that they would spend a total of $2 million for the University conversions, somewhat less than appropriated. Mr. Smith then listed the reasons for these savings: they were fiscally conservative by prioritizing only those upgrades that were Y2K related; they anticipated core system changes about six years ago and were able to absorb costs of the upgrades more easily; they used internal staff to make the necessary changes, the hours of which were not charged to the Y2K budget; and they established good vendor relations that facilitated cost savings where appropriate. Mr. Smith continued to note that where they could fix a Y2K situation with a simple software upgrade, they did so. He then used specific examples of system upgrades to illustrate his previous points. The University might still experience some minor glitches in months to come, but overall the system is up and running efficiently. 273 SENATOR WILKEN Noted that the Committee had asked the University last year to prioritize their needs with an appropriated budget of $3.4 million. He asked if all of the prioritized items had been completed. 278 MARYLOU BURTON, Y2K COORDINATOR, UNIVERSITY OF ALASKA Responded affirmatively. 280 SENATOR WILKEN Noted the effective budget summary sheet provided to them by the University. 294 SENATOR LEMAN Asked about the encumbered monies outlined and whether or not this represents work yet to be completed? 298 MARYLOU BURTON Responded that this money represented orders for equipment received but not yet paid for as of December 1999. 302 SENATOR LEMAN Asked if they anticipated their estimated final budget for Y2K compliance to rise significantly. 303 STEVE SMITH Responded that he did not anticipate any major expenses. 306 SENATOR GREEN Asked about a related issue regarding access to student housing by the general public if a Y2K situation should arise. She noted that this possible access would create a compromise to any student's privacy. She asked if they were aware of such a possibility and asked if so, whether or not this issue had been addressed. 314 STEVE SMITH Responded that a contingency plan for such a situation had been put into place. 318 MARYLOU BURTON Noted that some discussion had taken place, that if a need did arise and the community had to use University facilities during a Y2K event, student property would be boxed up in order that their privacy would not be compromised. She did not know what became of this discussion. 322 STEVE SMITH Added that by going through this Y2K exercise, it made the University stronger by requiring the development of various contingency plans to keep their systems up and running. 330 SENATOR GREEN Reiterated that if a situation such as this arose, she would be very upset. 334 STEVE SMITH Stated that he would look into the issue. 336 CO-CHAIR PARNELL Asked about the $1.3 million lapse in the University's Y2K budget and what portion of their expenditures were in FY99, as versus FY00 340 MARYLOU BURTON Stated that FY99 expenditures were not very significant and around $300,000 of the $1.3 million. 344 SENATOR WILKEN Added that his numbers showed a lapse of $1.53 million. 347 STEVE SMITH Responded to an earlier question by Senator Wilken regarding the future of the University's communication and technology systems. The University has been developing positive partnerships with the private sector to develop a communications infrastructure regarding education and research. He mentioned instituting optical fiber in the University's communication system, about 100 times the existing capacity. This was worked out with a partnership agreement via the University of Washington and Alaska Fiber Star. This fiber connects the University to the lower 48 and its research fabric. This system is state-of-the-art and also connects each of the University's branches to each other. He generally spoke to future upgrades to this system, including improved interfacing with rural communities in Alaska. 383 CO-CHAIR PARNELL Asked how these upgrades will benefit the average student across Alaska. 389 STEVE SMITH Used an example of a student wishing to take a course in Juneau from another University branch. This new system would effectuate this exchange. 400 SENATOR WILKEN Thanked Ms. Burton and Mr. Smith for being good stewards of the people's money. 405 CHRIS CHRISTENSEN, STAFF COUNSEL, OFFICE OF THE ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM Stated that the Alaska Court System was one of the last of the three branches to computerize. This was a benefit in the long run, since five years ago when beginning the process of procuring computers, they made sure these were Y2K compliant. They have also used in-house resources to fix software that was not funded for replacement. Last year the Court System asked for $182,500 in order to bring them into compliance. To date, they have spent $107,000 of this amount. This money was used to fix the computerized telephone switches in Fairbanks, Anchorage, and Bethel, as well as the computerized security system in the Anchorage court building. He noted that the department had a number of obsolete personal computers that were not capable of networking into the system. They realized that they could keep these computers functioning by simply resetting their internal calendars to 1972. He then outlined two situations where the department encountered Y2K problems, one with their jury selection program and the other with a Petersburg defendant sentenced to a one-year probation back in 1992. After January 2000, the computer said he would not complete his probation until 2093. Because of the expense of fixing the problem, their computer staff suggested the department simply request that the governor commute this person's sentence. 440 BOB POE, COMMISSIONER, DEPARTMENT OF ADMINISTRATION Stated that before he became Commissioner, he was responsible for overseeing the department's Y2K efforts. They took a three front approach to this project. The first was to address the state's 105 mission critical systems. He referred to a packet that outlined the status of these systems. He noted that 104 of these are on line at this point. The Fish & Game's fish ticket system will not be needed until the end of February, which explains this delay. The second part of this Y2K effort was to make sure that communities, businesses and local governments were addressing their Y2K issues. They conducted an outreach effort during the year. The third was making sure they had a safety net for problems not anticipated. They worked with the Department of Military and Veteran Affairs to make sure that the necessary elements were in place. Mr. Poe then referred to 19 status reports included in the packet before the Committee. These reports were generated every month for the legislators. When the Y2K appropriations were made, there were three elements the Department was required to address. The first of these was the risk management funds used to get the Y2K project up and running initially. These were repaid. The legislature appropriated $7,421,495 to the Y2K office specifically, which was used through reimbursable service agreements to address the various agency problems. The Legislature appropriated a total of $7.3 million in other funds, including the University, Courts and the Legislature. These included the Marine Highway, Transportation, Federal Fund matches, and Constitutional Budget Reserve (CBR) funding to the University, Courts and Legislature. Of this $7.4 million appropriated directly to the Y2K Project Office, he estimated that a balance of $1.9 million was left over. Mr. Poe offered a caveat that they are not at the end of the month yet, taking into account possible unforeseen problems with upgraded computer systems. He stated in light of this, they were confident enough to shut the Y2K office down by the end of this week. By and large, their overall efforts of compliance have been very successful. Mr. Poe then gave examples of specific problems they had encountered with various computer systems, which are now in compliance, including a Lotus software situation with the Workplace Alaska System. This system was shut down for almost two weeks because of a software problem that was suppose to be Y2K compliant. Manual efforts were instituted to make sure applications were not lost. Recruitment periods were extended in those instances, which were affected by the shutdown. Mr. Smith mentioned that to bring Alaska's 105 systems into compliance, they were able to come under the cost of an appropriation of $16.3 million. The average state spent about $79 million to do the same with a comparable amount of systems to upgrade. One contributing factor for coming under budget was the use of in-house state employees. The Y2K project became priority. This helped to keep costs down. 510 CO-CHAIR PARNELL Asked if the $16.3 million included this employee time as well. 512 COMMISSIONER POE Stated that this employee time was not included. He added that it was not clear whether this employee time was included in the $79 million average monies spent by other states either. Many other states used consultants. Alaska only used consultants in three areas, which were the Medicaid, Voter Registration and Child Support Enforcement systems, along with a few other smaller systems. He estimated that the total cost to the state for Y2K testing and remediation (noted on the enclosed spreadsheets) was $14.8 million appropriated with $11.5 million spent overall. There was some discussion about accounting for state employee time used in the Y2K efforts. Commissioner Poe stated that these hours were not itemized within the $11.5 million budget spent. He reiterated that this amount reflected monies spent on hardware and software replacement, as well as contracts with vendors. 530 CO-CHAIR PARNELL Noted that the benchmark for Y2K remediation would constitute 20 percent of the information technology budget. Co- Chair Parnell asked if this estimate held true over time. 533 COMMISSIONER POE Responded that they were able to do much better than this. Noted that it had always been their concern that if they did a really good job fixing the Y2K problem, nothing would happen and then folks might think, maybe it did not need fixing in the first place. In testing, they found a number of problems. As an example, the state's operating system. If all of the state's mainframe system had not been converted to the operating system, referred to as OS390, all of these would have had problems. Because of the Lotus Notes problem with Workplace Alaska, it compromised the computer system being able to energize and operate. Because of a date problem, the servers were out of commission. This scenario affected the accounting, trooper support, motor vehicle systems, and others. 552 SENATOR LEMAN Referred to the issue of minimizing costs by the use of state employee time, and in some cases using consultants and part-time employees. He asked about the latter of these, if their time was allocated to the Y2K project specifically. 554 COMMISSIONER POE The Department of Transportation had a contract with some engineering consultants to look at 281 buildings. They found that in 12 percent of these buildings, there were Y2K problems. 566 SENATOR LEMAN Asked if there had been any problems with the Department of Corrections and their facilities with doors not opening or closing. 567 COMMISSIONER POE Responded that there had not been any such problems. 568 CO-CHAIR PARNELL Asked what the final total for the administrative costs were for this Y2K project. 569 POE Responded that $1.983 million was appropriated to the Y2K Project Office and then he referred to other fund sources noted on the second page of the handout. He added that a total of $3.02 million were spent overall, including the University numbers. The spreadsheet in the packet was their best estimate to date. The Court System number is a little lower than what they had itemized and the University number is a little higher. These numbers will probably move a bit in the next few weeks until all outstanding bills are paid. A total of $3.4 general funds were spent on this Y2K project. 583 SENATOR WILKEN Stated that the Finance Committee began working on this project in earnest last year about this time. He offered that the "lapse" that comes back to the people's money is largely due to Commissioner Poe's leadership in organizing these efforts. Senator Wilken personally thanked Commissioner Poe. 587 CO-CHAIR TORGERSON Asked if they could shift gears away from Y2K. He asked where the state is on negotiating their employee contracts and wanted to know when the Legislature would see what is being negotiated. 588 COMMISSIONER POE Responded that they continue to negotiate. They are getting very close with three of the contracts now. As soon as possible. He also noted that they would bring the contracts forward as they settle, rather than bring all 12 of them forward at once. He added that they wished to report to the committee, as they are required to legally. 584 CO-CHAIR PARNELL Adjourned the meeting at 9:48 am. SENATE FINANCE COMMITTEE LOG NOTES01/18/00 Page 1
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