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." 9:24:57 AM SENATOR BILL WIELECHOWSKI, SPONSOR, introduced the bill. Senate Bill 25 would create a publicly searchable online checkbook. The state currently had an excel spreadsheet that could be downloaded. However, it was extremely difficult to download and very slow to operate. It was not intuitive and did not provide much information. It was also not easily searchable. Senator Wielechowski continued that all of the things he mentioned had led to the State of Alaska receiving a grade of F from groups that monitored access to government information. In the supporting documents there was a report from the United States Public Interest Research Group, a non-partisan organization, which rated states on financial transparency. The organization had given Alaska an F in 5 out of the previous 6 years. Alaska was currently ranked 49th out of the 50 states in terms of access to the state's financial information. In the prior spring the Department of Administration (DOA) removed the state's checkbook from the website. The information was back online after the most recent hearing in the Senate State Affairs Committee. The committee was displeased that the checkbook had been taken down. Senator Wielechowski asserted that Alaska was effectively the least transparent state in the United States when it came to providing access to government financial information. The bill was easy to implement, as the financial information was already collected by the state. It was simply a matter of someone putting together a publicly searchable website. He noted that when the website was taken down, he had his staff build an online checkbook which took about a day and a half. His staff's version was not as sophisticated as he would have liked, but the state's talented IT staff would likely be able to get the task done with ease. The bill had widespread support. He had introduced a bill in 2009 that was almost identical which passed in the Senate but not in the House in the final days of session. One of the arguments against it was that it was not needed because the state had already started doing it once the bill had been proposed. However, currently it was needed since the administration had taken it down. Senator Wielechowski relayed there were a couple of reasons why he thought the legislation could save the state in the long run. First, it allowed the public to see where state money was being spent and suggest efficiencies. He had heard from businesses and contractors who supported the bill because it allowed them to see the amounts of their competitors' contracts which would encourage more competitive bids to the state and save the state money. Currently, anyone who wanted information from the state had to submit a request. In other states where there were more sophisticated online checkbooks, it saved state resources. Instead of people having to submit formal requests for information, they would be able to go online and get the information themselves. It would reduce the efforts of state employees having to obtain the information in response to formal requests. He argued that the bill was a common-sense piece of legislation and urged members' support. Senator Olson wondered what other states did to try to make an online format more user friendly for looking at the state's finances. Senator Wielechowski noted that Ohio was one of the best states in terms of its access to state financial records online. He had talked to the department responsible for the State of Ohio's checkbook online to find out more. He deferred to his staff to provide additional insight. 9:29:59 AM NATE GRAHAM, STAFF, SENATOR BILL WIELECHOWSKI, replied that in Alaska if a member of the public wanted to see the state's financial transactions, they had to download an Excel spreadsheet that had 100,000 or more lines of data and search individually from the downloaded Excel sheet for the expenses they wanted to see. States like Ohio had a tool similar to a Google search where a person could type in a department or a vendor and the expenses would automatically pop up. Ohio used a system that did not use a giant Excel spreadsheet. The process was all online and it was easy to extract the necessary data. He suggested the search was similar to the one used on Alaska Public Offices Commission's (APOC) website. Senator Wilson directed a question to DOA. 9:31:44 AM HANS ZIGMUND, DIRECTOR, DIVISION OF FINANCE, DEPARTMENT OF ADMINISTRATION (via teleconference), introduced himself. Senator Wilson asked about the fiscal note and the new software upgrade to IRIS which was expected to conclude in FY 22. It would have to automatically be placed into the reporting requirement. He wondered if the new upgrade of IRIS already included a searchability function or whether it would be an additional cost. It looked like the additional consulting and development costs were expected to be $40,400. However, the fiscal note was zero. He wondered if the costs of the reporting requirement were already included. Mr. Zigmund responded that it was an additional fee. The IRIS upgrade was expected to conclude in January 2022 and was being paid for with the capital appropriations that had already been provided to the Division of Finance. The expense was a separate capability that required a separate capital expenditure. The monies that were in the online checkbook bill were for the servers and data visualization software that the state would be using to overcome some of the challenges that Senator Wielechowski presented in his testimony. For example, the current checkbook was not as visually appealing or as easily searchable as Ohio's. Mr. Zigmund continued that part of what the department intended to do was utilize software licenses and servers through the Office of Information Technology and would be ongoing operating expenses. There were also development costs for creating an online checkbook. The complexities of creating an online checkbook came from a number of different areas. He explained that when the Division of Finance was working with the data, they started at a level below what the public would see. The state had to do mass data for confidentiality, aggregate confidential payments, and avoid disclosure of anything that could not be disclosed. He also noted that conversations with the State of Ohio also highlighted some of the challenges they experienced in building their online checkbooks so that things like child welfare payments and victim restitutions were not improperly disclosed. The division would be using additional resources from CGI to help with the development beyond the cost of the IRIS upgrade. Senator Wilson wondered whether the vendor in Ohio would be the same vendor in Alaska. Mr. Zigmund replied in the negative. Senator Bishop asked Mr. Graham to walk through the sectional analysis of the bill. 9:36:11 AM Mr. Graham reviewed the Sectional Analysis (copy on file): 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. 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. 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 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. 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. Requires the Department of Administration to continue to make their current Alaska Checkbook Online Internet website operational until the bill goes into effect. Transitional Provisions Requires the Department of Administration to continue to maintain their current online checkbook, until section 4 of this act take effect. 9:42:05 AM Senator Hoffman pointed to page 5, and the definition of "expenditure." He remarked that at the end of each fiscal year the State of Alaska had encumbrances that committed to making payments of substantial amounts. He did not see encumbrances as a category. He wondered why it had not been included in the definition of expenditure. Mr. Graham would have to get back with an answer. There were a few issues with the expenditure that Senator Wielechowski was trying to address. For example, a Permanent Fund Dividend would be included, yet it was not the intent to list every Alaskan who was paid a PFD in the checkbook. There were some issues that still needed to be resolved. Senator Hoffman noted that it was not a small item, rather it was huge. Individuals would not see the total amount until an encumbrance was paid. He suggested that encumbrances be included in the expenditures to provide Alaskans a clear picture of committed monies. He provided an example of building a school. At the halfway mark of a project $10 million was expended, but $20 million was appropriated. The appropriation amount was important information for the public to know about as well as the amount already expended for the school project. Both pieces of information were critical for transparency. Co-Chair Stedman added to the topic of accrual. He thought it was also significant when looking at the state's savings. For example, the Constitutional Budget Reserve (CBR) had encumbrances, and it was nice to know about available cash balances. He wanted to avoid as much misinformation as possible. 9:46:10 AM Co-Chair Bishop asked if the bill sponsor had any anecdotal or analytical figures regarding the traffic accessing the checkbook in a given year. Mr. Graham deferred to Mr. Zigmund. Mr. Zigmund replied that he would have to research the answer and get back to the committee. Senator Wilson asked if the bill sponsor would consider including the reimbursable service agreements (RSAs). He was aware of one department having about $17 million of unbudgeted RSAs. He wondered if it had been a consideration and why it was excluded. Mr. Graham agreed to provide the information. Co-Chair Bishop asked Mr. Graham if he understood the senator's question. Mr. Graham replied in the affirmative. 9:48:00 AM Co-Chair Bishop OPENED public testimony. RYAN MCKEE, STATE DIRECTOR, AMERICANS FOR PROSPERITY, WASILLA (via teleconference), testified in support of the bill. Senate Bill 25 would create a free searchable website that would provide Alaskans with easy access to detailed and comprehensive information on state spending. It would encourage better understanding of state operations and ultimately reduce waste and ensure that funding was directed to the state's most important needs. All 50 states operated websites that made information on state expenditures and revenue open to the public. However, compared to other states, Alaska's website was ranked as one of the worst in the nation. Additionally, the state's online checkbook website removed all of FY 20 expenses and has not been updated in nearly a year. Although the state had an online checkbook, it did not provide any big picture context about state expenditures versus revenue. The checkbook codified in law. Mr. McKee continued that the ability to see how Alaska's government used public funding was fundamental to transparency, bolstered public confidence in government, and promoted fiscal responsibility. Americans For Prosperity also believed that if the state maintained a better website, it could save the state time and money. State employees currently spent time responding to freedom of information requests for public information that could and should already be accessible online. It was his hope that the state and federal government would champion economic opportunity-focused reforms that allowed Alaskans to keep more of their hard-earned paychecks and recover stronger from COVID-19. He encouraged the Senate Finance Committee to pass the legislation. 9:50:27 AM PORTIA NOBLE, SELF, ANCHORAGE (via teleconference), testified in support of the legislation. She was grateful for Senator Wielechowski's approach to giving Alaskans more access and transparency. Nearly every state in the nation had some kind of transparency website including Alaska. However, some websites were better than others. Alaskans deserved to know exactly how tax dollars were being spent. The checkbook site would be a user-friendly tool that would help Alaskans understand where public dollars were being used. More importantly, her hope was that the bill would help elected officials root out wasteful government spending. Increasing transparency and accountability was key to restoring trust in government and to not be a partisan issue. She was grateful that Senator Wielechowski addressed the concerns of the former commissioner of DOA regarding the number of independent contractors engaged by each agency and the total long-term debt owed by the agencies. She reiterated her support for SB 25. 9:52:10 AM Co-Chair Bishop CLOSED public testimony. 9:52:13 AM AT EASE 9:52:55 AM RECONVENED Co-Chair Bishop stated that there were many outstanding questions that needed addressing before an amendment deadline could be set. He discussed the following day's agenda. SB 25 was HEARD and HELD in committee for further consideration.