CS FOR HOUSE BILL NO. 75(FIN) am(brf sup maj pfld) "An Act making appropriations for the operating and loan program expenses of state government, for certain programs, and to capitalize funds; making an appropriation under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date." CS FOR HOUSE BILL NO. 76(FIN) "An Act making appropriations for the operating and capital expenses of the state's integrated comprehensive mental health program; and providing for an effective date." COCHAIR PEARCE reconvened the meeting after a few minutes. She noted the remaining budget to close out on today's schedule was the Information Technology Subcommittee, headed by SENATOR PARNELL. SENATOR PARNELL addressed the committee. He explained that the subcommittee was charged with pulling all the information technology expenditures out of each department, including the university, and examining the combined budgets that totalled between $120-140 million. The administration had commissioned a Compass America study which conducted an in-depth review of the state's information environment. Some of the noted findings included random, uncoordinated purchases of technology throughout state government, wide disparity of available technology among departments, and the fact that the state is comparatively more technologically advanced, but wasn't fully utilizing equipment in many cases. The subcommittee recommended a reduction of all agency expenditures on computer equipment on a proportional basis for a total reduction of $1.25 million. SENATOR PARNELL further explained that they would like the Department of Administration (DOA) to set up an account of $500 thousand for new computer purchases. The next major component was a reduction to DOA's Division of Information Services of $350 thousand, via the reduction of rates for services to other departments. SENATOR PARNELL summarized by noting the total reduction by the subcommittee was $1.1 million. COCHAIR PEARCE inquired whether the Compass America report specifically addressed the university. SENATOR PARNELL replied that it did not. He explained the university's concerns about contributing to the $500 thousand account and competing for a portion of the funds. SENATOR ADAMS inquired how departments would justify new technology and updated equipment when technology changes so quickly. He also requested a copy of the Compass America study. SENATOR PARNELL responded that the attempt was to slow down uncoordinated random purchases of computer equipment. As an example, he referred to the Telecommunications Information Council (TIC) which had just established a standard software suite for all of state government that would allow volume purchase. It basically changed the decision-making process. SENATOR ADAMS requested testimony from the university regarding a $459 thousand reduction and expressed his hope that it did not hurt students because of insufficient computers to handle their work load. SHARON BARTON, Director, Administrative Services, DOA, spoke about the departmental reductions, many of which would end up as an unallocated reduction from budgeted amounts that may have been for priority FY98 purchases. She suggested they not slow down on those purchases, although the intention was good. She agreed with the concept of buying smarter and taking advantage of volume purchases. Regarding the $500 thousand fund, the priority of the department and the TIC was to set standards for state government. The fund would be valuable to the anticipated difficult transition. MS. BARTON elaborated on a bigger concern for her department, that being the chargeback reduction and the complexity of the internal service fund. She referred to a multiplier effect of a $350 thousand reduction to the Division of Information Services that would result in a service level reduction of $1.4 million and provided additional information. In response to a question from COCHAIR PEARCE, MS. BARTON responded that the Information Services fund was very dynamic in that money was flowing in and out of it on a daily basis. KAREN MORGAN, Deputy Director, Division of Information Services, DOA, responded to the same question. She noted that they operate the fund at a zero balance level because of the accounting requirements to not make a profit. The federal government disallows a balance to be carried over sixty days. She further described the cash flow of the fund as it related to the fiscal year. SENATOR ADAMS asked for further explanation of the structure of the proposed fund. SENATOR PARNELL responded by describing the composition of the TIC. He added that it would have oversight of a limited pool of funds as an effort to get a handle on this area. In response to a question from COCHAIR SHARP about rates charged by the division, there was lengthy explanation and discussion from MS. MORGAN and MS. BARTON. SENATOR ADAMS restated his request to hear about the impact of a $459 thousand reduction on the university. WENDY REDMAN, University of Alaska (UA), stated that they had no difficulty with the chargeback portion for provided services, as they represented a small amount. She provided written information to the committee (copy on file) regarding the impact of the overall reduction, noting that the university's share totaled 37 percent, adding that it had been based on a study that didn't include the university. She pointed out that the university already had an integrated system and software standards. She called attention to a difficulty regarding the national standard of twenty students per computer, noting the university average was currently closer to fifty students per computer, so they were far behind in student computing. That was a major concern with regard to the reductions. End SFC-97 #87, Side 2 Begin SFC-97 #88, Side 1 MARYLOU BURTON, Director, Statewide Budget Office, UA, spoke briefly in response to a question from SENATOR ADAMS about a recalculation of what reduction the university could stand. MS. REDMAN commented that they were supportive of the TIC, but many of their discussions did not apply to the university. In response to a question from COCHAIR PEARCE, she further explained how they control spending through their integrated standards. SENATOR PARNELL requested an explanation from Mike Greany regarding how the university number was arrived at. MIKE GREANY, Director, Legislative Finance Division, testified that they treated the university similar to other agencies with regard to identifying a base amount for equipment and explained in detail. He acknowledged that the university didn't do their budget in the same way as other state agencies, so they made their best attempt to fit the university into the main scheme, purposely taking a conservative approach. He stated there was a policy question on whether or not the university should be included within this type of review. In response to a question from SENATOR ADAMS, MR. GREANY explained that the Legislature and Court System were excluded because they were separate branches of government with their own needs and governing structure. SENATOR PARNELL added that another distinction was that they were not voting members of the TIC. SENATOR PARNELL MOVED to incorporate the subcommittee recommendations into HB 75. SENATOR ADAMS objected. A show of hands was taken on the MOTION. IN FAVOR: Donley, Torgerson, Phillips, Parnell, Sharp, Pearce OPPOSED: Adams The MOTION CARRIED on a vote of 6 to 1. COCHAIR PEARCE announced upcoming committee agendas. ADJOURNMENT The meeting was adjourned at approximately 8:03 P.M.