P - Present
E - Excused
A - Absent
Roll Call
P Apa, Chair
P Bartling
P Dennert
P Earley, Vice-Chair
P Gant
P Glenski
P Greenfield
P Hanson (Gary)
P Haverly
P Hunhoff
P Klaudt, Vice-Chair
P Napoli
P Peters
P Rausch
P Smidt
P Sutton (Duane)
P Tidemann
P Putnam, Chair
OTHERS PRESENT: See Original Minutes
The meeting was called to order by Co-Vice Chairman Klaudt.
Senator Apa asked what effect the state's paperless initiatives and automatic deposits had on the
State Auditor's Office. Mr. Sattgast responded that it hasn't affected them yet other than not
purchasing as much warrant stock and the mailing costs are down.
Mr. Sattgast gave an update on the scanning project approved by the Legislature in 2004 in the
amount of $30,000. The project is in the final testing stage. The new program has completely
replaced the old program that was used only to track contract payments and to monitor current
contracts. The new program is in a supported system and can be used by other audit staff. The old
system was only available to one PC. The new program provides the same features; plus it is used
to maintain images of each contract. This eliminates the paper storage of old contracts and increases
the efficiency of retrieving contracts and monitoring active contracts. The program is approximately
90% complete. Only minor troubleshooting and fine tuning remains. Related expenditures are
proportional to the percentage completed.
The Auditor's Office has become a partner with the Internal Revenue Service. The agency works
with the IRS on putting together community coalitions to ensure that the citizens that are owed
refunds from the federal government get what they are due. No financial aid is provided to these
coalitions. The State Auditor provides information via the Internet, as well as press conferences and
meeting at the coalitions. There is a list on the Auditor's website of people who are owed money
by the Internal Revenue Service.
Representative Glenski asked if the Auditor's Office has notified the 211 System of their services.
The Office has not but will look into it.
State Auditor Sattgast distributed a copy of the State Auditor's Annual Report which was recently
completed and drastically reduced from past reports. (Document 2)
Mr. Sattgast reported to the Committee on the new Payroll Card Program which the Auditor's Office
has set up for people who were previously deemed “unbankable”. Every state employee is eligible
to sign up at no cost, and there was no cost to the state to implement the program. First Premier
Bank, the state's bank, approached the Auditor's Office with this proposal and was involved in the
program set-up. The bank offers free checking because they get use of that money for a short amount
of time. With enough people signed up the bank will break even or maybe make money.
Representative Peters asked if the Auditor's Office checks with other governmental programs, like
Child Support, before money is given to someone who finds a refund due them. Mr. Sattgast
answered no and that it would be difficult without a social security number.
Mr. Sattgast introduced Twila Hight, the Account Manager for the Auditor's Office. Ms. Hight went
through the adjusted budget requests (Document 3).
Personal Services: $867,043, a $1,571 increase for salary and benefits over the Governor's
recommendation and an additional 0.3 FTE. Combined with other vacancies in the Auditor's office,
this will create a full FTE. This auditor will help process vouchers. In FY 2004 approximately
292,000 vouchers were processed, an average of 1100 a day. It is estimated that in FY 2005, 324,500
vouchers will be processed with an average of 1278 a day. This additional 0.3 FTE will bring the
number of FTE to 17.6.
The 2006 budget request was completely zero based. The budget was calculated on what was
needed based on previous years and not on what increase was needed over last years budget.
Everything is based on actual expenditures.
Operating Budget : Includes $21,191 increase over the Governor's recommendation for:
Travel - $10,213 increase. This will help get the budget in line with expenditures and pay
bills in the year they are due. Increases are also due to increased travel due to Section 218
Agreement Referendum vote as mandated by the IRS.
Supplies & Materials - $898 increase over the Governor's recommendation in relation to the
increased mailings for the Section 218 Agreement as it relates to the new political
subdivisions.
Contractual Services - (continued education for CPA)
Contractual Services, Capitol Outlay - workstation for additional employee
Representative Peters asked about the $29,920 Computer Consultant requested to implement the
scanning project. Mr. Sattgast explained that different data fields are needed for each data base for
each department brought on-line. The money is going to the consultant to establish the data bases.
Representative Haverly asked if this is going to be an on-going cost would it be more cost effective
to hire an FTE. Mr. Sattgast said no because a consultant would have more expertise and would
possibly have 5 or 6 people working on the project at one time. The consultant will be needed for
possibly 3 or 4 years.
Representative Hunhoff asked what Phase 2 of the Scanning Project would be. Mr. Sattgast said it
would involve moving the state payroll system into the project.
Representative Klaudt asked the Auditor's Office to provide the Appropriations Committee with a
time line of the project with projected costs. Mr. Sattgast agreed to provide the information.
Representative Peters asked where the Auditor's Office could find an intern for $7,241. Ms. Hight
said the Intern would receive no benefits, and the salary was for approximately 20 weeks.
Representative Hunhoff asked about where the maintenance fees come from for these software
programs. Ms. Hight said the $30,000 currently includes maintenance fees.
Representative Hunhoff asked about the continuing education expenses and does the Auditor's
Office have a CPA on staff. Mr. Sattgast said they have one person who is very nearly a CPA. The
office has never had a CPA on staff.
Senator Earley asked where, as a result of electronic warrants, the decrease in supplies and mailings
shows up. Ms. Hight responded that they had not seen the numbers yet. A non-negotiable paper stub
is still printed and a few warrants are still printed and mailed. There are some employees who do
not have access to e-mail. There has been a reduction in the number of warrants order though.
Senator Apa asked how the Auditor's Office ordered warrant stock. Ms. Hight said warrant stock
is ordered annually. Senator Apa asked why it wasn't ordered for a number of years. Ms. Hight
responded that it is partly because of the changes in technology. As technology improves, old
warrant stock may become obsolete.
Senator Apa asked Commissioner Hanson if the PUC had any control over where the cell phone
towers go in South Dakota. Commissioner Hanson responded that the communication organizations
determine the location of the towers. Towers are a technical and challenging investment for the
communications companies and generally cost between $200,000 and $400,000. The PUC has the
authority to designate companies as an eligible telecommunications carrier, which in turn makes
them eligible for the federal Universal Service funds. The PUC doesn't decide how much money
they get. It is supposed to be spent in a particular area and the PUC tries to encourage them to spend
these funds in the rural areas to improve service. The money has to be spent in South Dakota but
it doesn't have to be spent on capital improvements.
Senator Smidt asked who pays for the new towers in South Dakota and who decides where they go.
Commissioner Hanson said the challenge of getting more cell towers is an on-going one. The PUC
has held numerous meetings across the state receiving complaints about the cell coverage. The PUC
is unable to require the companies to put cell towers up or to put them up in a particular
location.Commissioner Hanson said the PUC Commissioners work with communication companies
to improve cell service to South Dakota citizens, to encourage the companies to provide additional
towers in South Dakota.
Senator Apa asked about the history of the FTEs in PUC. PUC currently has 28.7 FTE assigned and
currently 27.0 FTE are filled. Has that been the history for the past few years? Commissioner
Hanson responded no. With the 14 individuals who have gone through the office, there have been
vacancies at times. There is a period of time that you spend advertising, searching and going through
that process.
Senator Apa asked Commissioner Hanson to provide a 5-year history of the Gross Receipts Tax
Fund balance. Deputy Director Heather Forney distributed a Gross Receipts Tax Fund Condition
Statement for Actual FY 04 and Estimated FY 05 and 06. (Document 5)
Representative Hunhoff asked if, with all the changing technology, does the PUC upgrade the people
in the department to develop expertise? Does the PUC do any continuing education to keep staff up
on changes? Commissioner Hanson said yes, they continually go through continuing education
processes. However, there are specific areas that require more time and one of the challenges is the
requests for rate changes. There are people who have to specialize in those areas.
Senator Greenfield said after reviewing the graph, it appears to him that it is a trend in PUC to have
vacant FTE s. He asked if there is something in place now where there are no unfilled FTEs or
won't be in the future. Commissioner Hanson responded that there will never be a time when there
isn't a vacant FTE, because people are often looking for a better opportunity. Commissioner Hanson
and Commissioner Sahr, since election, have been responsible for restructuring the office. As you
rotate employees there will be fewer hours worked and a lower figure.
Representative Glenski referenced the paragraph on page 3 of the handout giving information on the
two FTEs requested. Representative Glenski asked if the PUC was trying to make sure that their
new Fixed Utility Analyst people were able to work with staff who are going to retire and in turn
pick up on their expertise. Commissioner Hanson responded that a number of staff are nearing
retirement. These employees are extremely valuable with a tremendous amount of knowledge. So
PUC does need a redundancy of training and knowledge among their analysts if they are going to
continue to do their job.
Representative Haverly asked Commissioner Hanson to justify the 2 requested FTE when they
currently have vacancies. Deputy Director Forney told the Committee that while they have 1.7
vacant FTE at this point, one FTE is General funded through the Transportation Warehouse
Division. PUC can not pay Fixed Utility Analysts from the General Fund. They must be paid from
the Gross Receipts Tax fund.
Representative Haverly asked how long the transportation position had been vacant. Deputy Director
Forney said there had been an employee in the position over the summer doing inspections.
Representative Haverly asked if it has been vacant since summer, does it require a full FTE. Bob
Knadle, Director of the Transportation Warehouse Division informed the Committee one inspector
has been gone for about a year. Currently there is a dispute with the federal government preempting
state statutes. If in fact they would preempt the state grain dealers license, there is a possibility that
the number of state warehouses would increase. Pam Bonrud, PUC Executive Director said if we
are preempted, we are statutorily required to do the inspections. PUC is currently using a former
inspector on a part-time basis.
Deputy Director Heather Forney presented the budget.
There are no requested changes in the Administration, Transportation/Warehouse Division, Pipeline
Safety, or Do Not Call List budgets. The Fixed Utilities budget request is as follows:
1 *
The Commission requests 2 addition FTEs and an increased appropriation of $65,000 from
other funds in Fixed Utilities for two fixed utility analysts.
2 *
An increase of $18,392 from other funds for personal services benefits in Fixed Utilities
3 *
An increase appropriation for operating expenses (travel) in Fixed Utilities of $14,782 from
other funds.
4 *
A decrease appropriation for operating expenses (contractual services, supplies and
materials) of $71,934 from other funds.
The One Call Notification Board budget request is as follows:
5 *
Increased appropriations for operating expenses (contractual services) of $264,000 from
federal funds and $64,025 from other funds for the PUC to conduct GPS mapping of all
underground utility infrastructures in the state. These requests are related to a federal grant
(80/20) and the appropriation from other funds is the match. This money will be generated
through an increase in the call ticket fee.
Senator Earley asked about the recommended reduction for contractual services in the Fixed Utilities
budget to reflect decreased printing and less mailing, as well as shifting legal consultant cots over
to Rate Case. Ms. Forney explained that when looking at the large balance in the Fixed Utilities
legal contractual services, it was apparent that most of the legal contractual work done is already
done through the Rate Case/Utility Investment Fund. Because PUC has not, in years past, incurred
more expenses than what was budgeted, it wasn't feasible to increase it. Contractual Services in
Fixed Utilities was over budgeted and reduced.
In follow-up to Ms. Forney's explanation of the Do Not Call List budget, Senator Earley asked if the
PUC was accruing funds to pay back the Gross Receipts Tax fund in three years as was agreed to
when the PUC implemented the list. Ms. Forney said that before PUC incurred any real expenses
they started receiving revenue, so no money has been taken from the Gross Receipts Tax Fund.
Representative Putnam asked why the PUC would anticipate needing the $200,000 appropriation for
the Do Not Call List budget. Ms. Forney said right now the PUC is not anticipating any change,
things are working well as a status-quo with the state being able to use the list and piggy-back with
the federal government. However, it's possible the federal government would no longer allow the
state to piggy-back on their list. Commissioner Hanson responded that one of the challenges they
are faced with is programs that are started by the federal government with a certain amount of cost
share provided to the states and then the federal government backs off and leaves the expenses up
to the state. This is a very important program and the PUC wants to be able to maintain it.
Representative Rausch asked why if the federal government changed their position, the PUC didn't
just come back to the Committee and ask for a special appropriation rather than have it in the budget,
never use it and have it revert back. Ms. Forney responded that the Do Not Call List is funded solely
by revenues generated by the list, no General Funds are used for the list. No money would revert
back. Representative Rausch questioned whether the Committee wanted to know ahead of time that
the federal government had pulled their funding or wait until budget time and find out the money had
been spent.
Senator Apa asked if the funds come from the federal government. Ms. Forney said no. The PUC
has established a fee that telemarketers must pay based on the number of employees they have. They
must register with the PUC each October so that PUC knows they are doing business in South
Dakota and have obtained the list. Senator Apa asked if the fee covers the cost of the list. Ms.
Forney said yes. Senator Apa asked how any excess revenue was handled. Ms. Forney said by
statute the revenue can be used for education. At the Commissions discretion it could be used to
inform the elderly and low income population on telemarketers, telephone practices, etc. Senator
Apa asked if the excess revenue could be transferred into any other fund. Ms. Forney said no, it has
to be used for the Do Not Call List.
Representative Peters asked how much money is received and what are the expenses. Ms. Forney
distributed a Do Not Call Fund condition statement (Document 6). The Fund had $27,700 in
revenue for FY 2004 and expenditures of $2,539. A net revenue of $25,161.
Senator Greenfield asked how much it costs a company to get its name on the list. Ms. Forney
responded that it is a sliding scale fee based on the number of employees. Some telemarketers may
not pay anything and the highest would be around $500. Senator Greenfield asked what it costs
South Dakotans to get their name on the list. Ms. Forney said it costs nothing.
Representative Hunhoff asked about the $20,000 increase in contractual services in the One Call
Notification Board budget. Larry Englert, Executive Director of SD One Call responded that the
fund is based on the volume of calls received in the center and the number of transmissions sent out.
They are currently operating at a 14% growth over the first 6 months of this fiscal year. All services
are contracted out. They are anticipating that type of growth and the money would go to pay the
vendor who answers those calls. Representative Hunhoff asked what the implementation time was
last year compared to 12 months. Mr. Englert responded the previous year they operated at about
a 2% increase. They have been as high as 18% growth and as low as 1% decrease. Year to year
volume is based on what type of construction that is going on.
Ms. Forney distributed copies of the Filing Fee Condition Statement (Document 7), Pipeline Safety
Fund Condition Statement (Document 8), Transportation/Warehouse Fund Condition Statement
(Document 9) and the One Call Fund Condition Statement (Document 10).
Committee recessed at 10:15 a.m.
Chairman Putnam reconvened the meeting at 10:30 a.m.
Secretary Hollingsworth went through the handout (Document 11). The department receives almost
half of their funding (almost $30 million) from the federal government. Other funds account for
37% ($22 million) and general funds 13% ($8 million).
The Department recently completed a Strategic Planning Process. This plan has goals and key
performance indicators to monitor the progress and named individuals for each objective. Following
the legislative session the department will take the plan out to statewide staff to get their input and
following that round-table discussions with the private healthcare sector and others in the public.
Representative Putnam asked if the Department would be able to give the Committee a success rate
on this plan. Secretary Hollingsworth said yes, the key performance indicators will let them know
if they are on the right track.
Appropriation Committee Question #1 - Provide an update of the Hospital Bioterrorism
Preparedness Program. The dollars for this program ($2.1m) come from the Health Resources and
Services Administration (HRSA). Eighty percent of the funding is a direct pass-thru to hospitals.
Representative Peters asked about the 10% of the budget that goes to Department of Health
Administration. Secretary Hollingsworth said the money goes to hire staff to administer the grant.
The staff works at each region level to help coordinate activities, provide training and technical
assistance.
Representative Putnam asked if the department oversees the grants and if so, what then continues
on the next year. Secretary Hollingsworth said that every hospital that wants to participate, and they
currently have 66, receives a basic grant of $7,500. That's their commitment to pay staff and become
involved in the planning process for their own hospital and regionally. The good thing about this
funding is that while it prepares us for bioterrorism, it also prepares us for real life things that happen
in South Dakota right now like the flu, or West Nile. Representative Putnam asked if there will be
a similar request in FY06. Secretary Hollingsworth said yes, they are expecting a similar amount
of funding from HRSA in FY06. The continual process will be communication and training
exercises. South Dakota has a reason to use these funds now and not just in the case of a bioterrorism
attack. The focus of the dollars will change as the plans evolve.
Representative Hunhoff asked if the Department of Health gets a report back from the participating
hospitals on how they spent their money and how it fits into their regional plan. Secretary
Hollingsworth said yes and her staff is involved in that activity. Representative Hunhoff asked if
there is a document prepared that is available to look at. Secretary Hollingsworth said she didn't
know. Secretary Hollingsworth will prepare a document with this data summarized for
Representative Hunhoff.
Representative Glenski asked how the Department of Health is addressing the tobacco cessation
program, it appears there is no money in the budget for this activity. Secretary Hollingsworth said
there is money in the budget. There isn't an increase in general funds but there is a significant
increase in federal money. The state's recommended budget for tobacco cessation is approximately
$1.8 million as shown on page 16 of the handout. Representative Glenski asked about the $750,000
decrease from last year. Secretary Hollingsworth responded that last year at the end of Session,
$750,000 from the Education Enhancement Trust Fund was put in the Department's budget for
tobacco control. This was a one-time appropriation. This amount does not appear in the budget
request because the Governor is recommending that the Education Enhancement Trust Fund monies
come back before the Legislature to decide how it should be spent. The Department has applied for
and been successful in obtaining additional federal dollars for this use.
Senator Earley asked about the status of the annual report, required by law, on activity in the tobacco
area. Secretary Hollingsworth said the report was done, on time (October 1) and is on file in the
LRC Library. It was mailed to some legislators who were involved in the tobacco issue. Staff
provided the report to the Committee (Document 12).
Representative Dennert asked if, with the reduction in fund, the Department could continue the
programs with less money if they don't receive any of the enhancement funds back. Secretary
Hollingsworth said yes.
Question #2 - Will West Nile be a declining issue in South Dakota in 2005? Yes, but West Nile isn't
going away. It was better in 2004 for a number of reasons:
6 *
weather
7 *
greater awareness
8 *
local control grant programs
9 *
evolution of the disease
Senator Sutton asked what the cost was for the Mosquito Control Grants in 2004. Secretary
Hollingsworth said $900,000. Eighty-eight grants were awarded covering 290 different entities,
involving 223 cities. In addition, every county but 5, and five tribes were a part of the program. The
funding source was all federal funds and the Department asked local governments to match the
funding on a 50/50 basis. In February the Department of Health and Department of Agriculture along
with the Cooperative Extension will sponsor a West Nile Virus/Mosquito Control Conference in
Pierre. Last years over 500 people attended a similar conference.
Questions #3 - Provide an update on the new Disease Intervention Specialist and Chronic Disease
Epidemiologist, including budgeted versus actual expenditures and FTEs. Laurie Gill told the
Committee the Disease Intervention Specialist position was filled in July of 2004. The Federal fund
expenditure authority was $72,402 and projected expenditures for FY 05 are $69,506. The Chronic
Disease Epidemiologist position is very unique and currently remains vacant. However, the
Department is in negotiations with an individual at this time. It has a Federal fund expenditure
authority of $95,491.
Question #4 - Provide an update on Tobacco Cessation Health Program. Ms. Gill went through the
handout information on page 14-16. Senator Napoli asked if there was a move anywhere to just
simply ban tobacco products. Ms. Gill said she was not aware of any.
Representative Putnam asked if the Department monitors in any way the private sector programs.
Ms. Gill said they are aware of the programs and try to coordinate with them. The Department keeps
a database of the local efforts and refer people to these programs. The Department sees themselves
as a partner with the local effort. They pick up the success of the local efforts when the do the
surveys. Representative Putnam asked if the local effort results are included in the surveys. Ms.
Gill said the surveys cover the general public statewide so would include all efforts.
Senator Earley asked if there was any coordination in tobacco prevention between different groups.
Ms. Gill said the department has a good relationship with the Tobacco Free Kids Network and meet
with them on a quarterly basis. In addition the Department has the Tobacco Advisory Committee.
Some of the private groups include the American Lung Association, American Cancer Society, the
Medical Association, local school boards, dentists and more. Senator Earley asked if anyone had
a compilation of the effort and total dollars spent in South Dakota on tobacco prevention. Ms. Gill
said she didn't have a document prepared but could. Representative Putnam asked Ms. Gill to
prepare the information for the Committee.
Representative Napoli asked if we are now spending more time and money with a little lower rate
of non-usage, are we spending more to see less people smoke? Ms. Gill said it is easy at first to get
a large percentage, and when working toward a goal, the last percentage is the hardest. The
Department feels they are making progress but still have work to do. Senator Napoli would like to
see when the Department gets to the point when people can not be helped anymore. He asked the
Department to keep an eye on this and provide that financial information.
Representative Haverly asked about the bullet on page 14 regarding conduct surveillance. What does
that mean? Ms. Gill said it refers to the surveys that are conducted regarding tobacco use.
The Tobacco Control Program budget (page 16 of the handout) was discussed. In the Other column
those dollars represent funds no longer available involving the American Legacy Foundation and
Intergovernmental Transfer funds. They have been committed and spent in FY 05. In response to
a question from Representative Putnam, Secretary Hollingsworth said the Intergovernmental
Transfer funds were put in the budget several years ago and the Department is finishing off that
money.
Representative Hunhoff asked if criteria for how communities use the dollars that come through
federal funding for specific programs is different than what was allowed under the Education
Enhancement funds. Ms. Gill said yes, the funding that comes from the CDC has very specific
stipulations.
Representative Glenski asked if the $212,500 CDC grant for expansion of the Quit Line would
enable them to go back to providing pharmaceutical supplies, if not, how will it be expanded. Ms.
Gill said the way that the Department offers the product now is that the consumer pays half and the
state pays half. It has been very successful and the Department has seen continued participation.
The Department feels if the person has financial commitment they are more committed to quit.
However, the Department can market the Quit Line to make more people aware of it. The
Department will hire a coordinator to coordinate the efforts of the Quit Line. The day to day
operations have become quite intense. We are developing a fax referral system so that providers can
be proactive in getting people in their offices to use the line. Traditionally the only way you could
use the Quit Line was to actually make a call. We are now piloting a project so that providers who
see people in their office that would benefit from the Quit Line, the provider can fax the information
and the Quit Line will call them.
Representative Putnam asked if the Department of Health was involved in the sting operations that
go on regarding underage smoking. Ms. Gill said no.
Representative Glenski asked why the Quit Line contract was now with Avera McKennen instead
of the American Cancer Society. Ms. Gill said the contract was transitioned to an entity that is in-
state.
Senator Greenfield asked about a pilot program funded 3 or 4 years ago in 4 communities across the
state, is there any follow-up on these programs. Ms. Gill said there is information available
regarding lessons learned and that the communities were surveyed before and after the event. This
information was rolled into the adult smoking survey which is currently being tabulated.
Question #5 - Provide an update on Correctional Health Program: Jerry Hofer, Director of
Administration discussed this budget as outlined on page 17 of the handout. Mr. Hofer said their
budget for this fiscal year was currently in good shape. He reminded the Committee that the
Department of Health provides the physical health care portion of the Correctional Health Care
budget and that Human Services provides the mental health.
Representative Glenski asked when the two inmates requiring renal dialysis left Corrections did they
become a county responsibility. Mr. Hofer said no. Part of the process Corrections goes through
is to make sure the inmate doesn't become a county responsibility. Corrections looks to other federal
and state programs to provide these services.
Representative Peters asked if this information included those on parole. Mr. Hofer said no, only
those in custody.
Representative Putnam asked if the Department of Health gets budget guidance from the Department
of Corrections on estimated inmate numbers. Mr. Hofer said yes. Corrections shares projections
on inmate population and the Department of Health projects costs based on our past experience.
Representative Klaudt asked if the Department had increased staff at Custer. Mr. Hofer said no,
Custer is at the same level as before. There was a new FTE last year at the Rapid City Trustee Unit,
which is part of Custer.
Representative Gant asked in follow-up to the 50% savings in renal dialysis, is the Department
looking at other areas of inmate health care that might be put out to bid. Mr. Hofer said yes, they
are always looking for ways to save. They currently have 2 RFPs out for the provision of
prescription drugs and the utilization management services. Representative Gant asked if they
anticipate substantial savings or is the state performing the work at a cheaper rate. Mr. Hofer said
they won't see substantial savings in either area but are hopeful to see savings or the best deal out
there. Both of those services are currently done by private contractors.
Senator Smidt asked Mr. Hofer to explain the increased Pharmacy costs. Mr. Hofer said the
Department experiences the same increases in drug costs as the rest of the country. They don't have
a cap on prescription drug costs. The Department gets them at a discount but they still have to pay
the inflation costs coming from manufacturers. Senator Smidt asked if the Department is making
any changes on pharmaceuticals or preventative measures to lower the costs. Mr. Hofer said they
are making changes as referenced on page 17 of the handout. The Department has a Pharmacy and
Therapeutic Committee that meets regularly with the medical director to decide if the drugs are the
best for the population at the least cost. In the last year we have focused on generic drugs whenever
we can and we have a process where we don't automatically go to the most expensive drug. We also
have our providers prescribe the least expensive and move up the step if they need to continue with
the therapy. Senator Smidt asked if pharmacy discount cards work for inmates. Mr. Hofer said no,
they are not eligible when in custody. Mr. Hofer feels the prices negotiated are probably better than
what you could obtain with a discount card.
Senator Sutton asked about the requested 5 FTE and associated personal services of $131,549 for
additional nursing positions. The numbers work out to about $26,000/year. Can you hire a nurse
for that amount? Mr. Hofer said they plan to hire 2 RN's and 3 LPN's. They currently pay about
$127,000 in overtime and $241,000 in temporary services. Our projection is $258,000 for the 5 FTE,
saving the department $109,000. Some of the costs to cover the $258,000 is offset by the overtime
that we are currently paying.
Representative Peters said private pharmaceutical companies often provide low cost or free drugs
to low income individuals. Does the Department explores free or low cost drugs? Mr. Hofer said
no, companies do not view individuals in the custody of the state as low income.
Representative Tiedeman asked if the Deportment of Health worked with those in custody on
tobacco cessation. Mr. Hofer said all correctional facilities are smoke free. In addition, the
Department of Corrections provides programs for tobacco, alcohol and other abuse prevention.
Representative Hunhoff asked about the 140 individuals listed on the Chronic Care Clinic with
tuberculosis. Mr. Hofer said these were individuals who tested positive in the screenings, so they
must be monitored. They are not active cases. Secretary Hollingsworth said, however there are
positive tuberculosis cases out there.
Senator Apa asked about the request from a few years ago to hire nurses and save money on
contractual services. Mr. Hofer said in the FY 04 appropriation we added 10 FTE, 10 nurses, at a
projected savings of $221,000. In actuality we saved $234,000.
Representative Putnam asked to reschedule the Department for the first week in February to continue
the budget discussion.
Meeting recessed at 12 noon.
Meeting reconvened at 3:22 p.m. at the Kneip Building Conference Rooms to hear the budget for
the Department of Social Services.
Secretary James Ellenbecker introduced staff as follows: Sharon Sonnenschein-Division of
Economic Assistance, Larry Iverson-Division of Medical Services, Gail Ferris-Division of Adult
Services and Aging, Virgena Wieseler-Division of Child Protection Services, Pat Monson-Division
of Child Care Services, Terry Walter-Division of Child Support, Rich Jensen-Office of Management
information.
Documents 13, 14, and 15 were distributed to all committee members.
Department of Social Services, presented by Secretary James Ellenbecker
Secretary Ellenbecker distributed Document 13 and gave an overview of the department.
Secretary Ellenbecker explained the current FY06 budget increase is mostly due to inflation. Another
major item within our budget is the FMAP, the Federal Medical Assistance Percentage, which is
based on the state's personal income.
Secretary Ellenbecker discussed three items of old business.
No emergency supplemental funding is needed for FY05. The budget for the current year will be
adequate to meet the needs of the current year. Second item: FY05 will be the final year of the
Intergovernmental Transfer program (IGT). The only new money into the Health Care Trust Fund
after this year will be earnings. The balance of the Health Care Trust Fund on December 31 was
$78.8 million. Third item: The department is challenging the Indian health service disallowance of
$4 million. North Dakota has joined the lawsuit. The department prevailed in Federal District Court
but the matter has been further appealed. If the department prevails in the appeal the $4 million
special appropriation of 2 years ago will be returned to the General Fund.
Division of Economic Assistance, presented by Sharon Sonnenschein, Division Director.
The people working in Economic Assistance interact and assist more SD citizens in need than any
other area of government. One out of fourteen South Dakota citizens are on food stamps. One out
of 8 SD citizens are on medical assistance.
Representative Klaudt asked about the Automatic Newborn Coverage. Ms. Sonnenschein replied
that when a baby is born to a mother on Medicaid the baby automatically has coverage for 12
months. If the father is living with the mother, his income would be considered for eligibility.
Representative Dennert asked what was being done to reach more families resulting in a higher
caseload. The answer was that yes, there is significant growth and these are generally people on
Supplemental Security Income (SSI).
Senator Apa asked what the criteria is for an application of Food Stamps. The response was that
individuals have to provide something in a written document, proof of citizenship, and the workers
refer to detailed instructions in the citizenship area. Senator Apa questioned how the department
handled a situation revealing an illegal person applying for food stamps. The response was that this
does not happen often but the department would not put the person on food stamps but would not
report them to authorities.
Representative Glenski asked about the number of additional people reached through the sales tax
on food refund program. Ms. Sonnenschein responded that they are not colleting that data
separately. Representative Haverly questioned what the department is doing to make sure people
are working to get off food stamps. Ms Sonnenschein referred to the mission statement language
to find other resources and make referrals to increase independence. The department has a training
component through a contract with the Department of Labor. Representative Putnum asked why
there is such an increase this year. To which Ms. Sonnenschein replied that it has to do with the
national poverty level. Senator Apa questioned the eligibility qualifications for food stamps and
does the department help people to become eligible? Ms. Sonnenschein replied no, these people are
low income, they should automatically be able to get on the program, we get our information from
SSI .
Senator Earley asked if there is a plan for the increased shift to general funds. Secretary Ellenbecker
responded that there is a shift taking place. The department tries to be creative and more efficient
to address the changes. Senator Earley stated that the department has been creative in getting funds
but what about a plan to decrease the amount of people on the program? Mr. Ellenbecker replied
that the department is willing to work with the Legislature on a plan. Representative Hunhoff asked
if recruiting people into this program actually occurred. Secretary Ellenbecker replied that yes, the
intent is to give those that are eligible the money that they are qualified for. Representative Haverly
asked what the rules for eligibility of food stamps are. Ms. Sonnenschein said the food stamps
income level is 130% of the Federal Poverty level and discussed the criteria. She noted these are all
Federal rules and the state cannot go beneath them.
Representative Peters asked how the department verifies that the SSI eligible individuals are actually
eligible for the food stamp program. Ms. Sonnenschein answered that they must fill out a form and
caseworkers check for any irregularities. Representative Klaudt asked if there is any flexibility in
the food stamp program or is everything set by the feds. Ms. Sonnenschein said that she was 99%
positive there isn't anything that the state can change and that food stamp programs are the same
nationwide.
The overall economic assistance budget increased by $1.4 million, however state General Funds
decreased by $415,764.
Additional federal funding from TANF is being utilized to reduce general funds expended for
educational costs for kids in DOC and DSS custody. This change reduces State funds by $926,756.
In November 2004, the Bureau of Personnel agreed with the Department that the caseworker position
needed to be studied in relation to comparable positions. The study resulted in a paygrade change.
The impact for FY06 is $222,880 in State funds and $479,698 in Federal funds. Senator Apa asked
if the department requested the review because caseworkers were being underpaid compared with
other state workers. Ms. Sonnenschein said the premise for the study was that their jobs had
changed. Senator Apa wanted to know when these pay grade changes will take place. Ms.
Sonnenschein said the department was notified within the last six weeks that BOP approved the
reclassification and they were brought up to minimum with an average increase of 3.5%.
Ms. Sonnenschein explained that based on the tremendous caseload increases in the Medical
Assistance and Food Stamp programs, the Division of Economic Assistance requires additional FTE.
19 *
One Program Manager position is required to manage the delivery of Medicaid eligibility
which critically drives expenditures in medical services. This is the largest multi-program
unit in the Division of Economic Assistance. There currently is no program manager position
overseeing this area.
20 *
One caseworker is required to implement the simplified nutrition program (Food Stamp) for
the elderly and disabled. This is a major efficiency for food stamps as without the
centralization, the number of additional filed staff would be significantly higher.
21 *
Eleven eligibility determination staff are required for the tremendous growth in Medicaid and
Food Stamp growth. These are critical positions in terms of need which is demonstrated by
the sheer growth in cases. These workers make final decisions on whether or not a person
receives Medicaid, Food Stamps, or TANF.
Ms. Sonnenschein stated initial eligibility decisions and approvals often open the gate for programs
that represent a significant part of the DSS budget. This is a costly door and we must have adequate
human resources to ensure accurate eligibility determinations.
Representative Glenski asked why the FTE request decreased from 41 to 15. Ms. Sonnenschein said
that the simplified nutrition program for people on SSI is saving 10 FTE. The difference is reflected
in the new drug program. People can apply at the Social Security office or the Medicaid office and
the SS office will administer this.
The Energy Assistance program has been placed under the Economic Assistance Division. Federal
funds for energy assistance are increasing $1,669,815 for FY06. The major energy assistance
increases are for Low Income Energy Assistance Grants, Weatherization Assistance, and the
Community Services Bock Grant.
The People Served
22 $
Disabled - primarily those who have obtained disability through the Social Security
Administration, automatically making them eligible for Medicaid.
23 $
1 in 8 South Dakotans have Medicaid/CHIP coverage in any given month.
24 $
3 in 10 children in South Dakotans have coverage in any given month.
25 $
In FY04, 122,000 different South Dakotans had Medicaid coverage.
Key Functions of Medical Services
26 $
Liaison _ DSS is the single state agency for flow of all Federal Medicaid/CHIP funds;
maintain State Plan with Federal Government.
27 $
Provider Enrollment - 7,000 unique enrolled providers with over 1,000 currently active
agreements.
28 $
Benefit administration - provider telephone service unit averages 263 calls daily; process
over 4 million medical claims for 122,000 eligible clients; have a provider payroll that is
generated every week of the year with total disbursements of over $650 million annually.
29 $
Managed Care - 650 enrolled primary care providers; average of 70,000 individuals monthly
in managed care.
30 $
SURS - mandated by Federal law to operate the unit; performs over 100 provider and 3000
hospital claim reviews annually.
Senator Early wanted to know about assigned medical professionals in the medical care area. The
response was that 70,000 individuals do have a primary care physician.
Mr. Iverson discussed covered services which are the same for Medicaid and CHIP.
Mr. Iverson discussed cost containment measures in Medical Services as follows:
31 $
Disease Management
32 .
Targeted program that will rely heavily on education and coordination of
services with client's current physicians.
33 .
Program focus will be on the 14,000 disabled individuals that comprise 17%
of our clients and 41% of our expenditures.
34 .
Will be implemented in FY06.
35 .
Estimate savings of $3 million annually.
36 $
Out-of-state Hospital Reimbursement
37 .
Reduction of current inpatient and outpatient hospital reimbursement.
38 .
Will be implemented this month.
39 .
Estimated savings of $3 million annually.
The charts beginning on the handout page 23 were discussed. The average rate of growth in the cost
per Medicaid eligible over the last 8 years has been 5.38%. Most of the costs are incurred in the
Disable category, but most of the growth in eligibles has been children. The department noted that
5% of the clients had services resulting in 50% of the expenditures.
Representative Klaudt asked if patients sent out of state were still covered. The answer was yes,
because they are still a Medicaid recipient we still pay for it but it is 100% Federally funded.
Meeting recessed at 5:09 p.m.
Meeting reconvened at 5:23 p.m.
Division of Adult Services and Aging, presented by Gail Ferris, Division Director
Ms. Ferris gave an overview of the division and discussed the Document 14, pages 32-41.
Ms. Ferris noted the division provides compensation to those that are not completely covered by
Medicare. The average age of clients is 80 years old.
Ms. Ferris discussed the state's growing commitment to the Elderly Nutrition Program. The cost of
putting a meal on the table is increasing, and the federal funding share is decreasing, additional funds
are needed to maintain the program. The grant award is only $2000 more this year than last year.
The long term care caseload was discussed (p. 38 of Document 14). Services from the department help them to delay placement in a nursing facility. The increase for the division is $2.5 million in State funds and no increase in FTEs. Representative Haverly asked if there were any vacant FTEs in this division. Ms. Ferris responded no. Nursing home caseload is expected to drop by 50 people for a decrease of $564,669 in State funds. Senator Smidt asked if Medicaid rates adequately cover costs of nursing homes. Mr. Ellenbecker replied that the rates probably do not adequately cover 100% of the cost.
There is an increase of $218,155 in total funds for assisting the elderly to remain in their own homes
which it will be used for contracted homemaker services, emergency response, and medical
management.
Senator Smidt asked about the Trust Fund and how it is related to those funds. Mr. Ellenbecker said
that it can only be used for health care purposes.
Division of Child Protection Services presented by Virgena Wieseler, Division Director
Ms. Wieseler discussed the division referring to the handout pages 42-28. When the department
determines that a family is at risk, it tries to keep the family together through different services such
as anger management, case management, and other services that will help.
Representative Klaudt asked what percentage of the clients coming in are Native Americans. Ms.
Wieseler said that the number is between 59% and 65%. Representative Klaudt asked about the
agreement with Standing Rock, and how its evaluations and licensing are accepted. Ms. Wieseler
indicated it is required to meet certain requirements for safety and the department does verify the
situation. Representative Glenski questioned if steps were taken to place Native American Children
in Native American homes. Some assurance was given by the department along with the answer that
there is a contract to do Kinship placement.
Child Protection Services increased a total of $1,546,852 and 5 FTEs. Major increases include
inflation in provider payments, an increase in the number of children in paid out-of-home
placements, as well as increases in foster care support, and the impact of the Federal Medical
Assistance Percentage (FMAP) change. There is also a decrease from cost containment initiatives
for foster children.
Senator Napoli inquired about funding that might be available from any source for the adopting a
child? The answer was that there is none. When a child is placed for adoption, the federal
government allows a subsidy of no more than what it would be for a foster parent. Representative
Hunhoff asked if the tribes provide any assistance. The response was that they have very limited
funding.
Division of Child Care Services, presented by Pat Monson, Division Director
Ms. Monson discussed the division and referred to the handout pages 49-56. Senator Apa asked if
parents pay a deductible of $471 at the 200% poverty level. The response was affirmative.
Representative Klaudt asked what the poverty level is currently. Ms. Monson responded that for a
family of 4 the amount is $1,571/month. There is no co-pay at poverty level. Ms. Monson indicated
that 90% of the families are single parent and 30% are at poverty level or below. Senator Earley
asked if the estimates were inflated. Ms. Monson responded no, they are conservative. The Child
Care Task Force was discussed and the department indicated the report will be available later in
session.
The major budget increase is in the growth of child care subsidy caseload, inflationary increases,
implementation of STAR Program, impact of the reduction in food stamp incentive awards and a
change in federal medical assistance percentage (FMAP). The 4% inflationary increase is based on
a federally mandated market rate survey.
Division of Child Support, presented by Terry Walter - Division Director for Child Support
Mr. Walter presented the budget for the division and discussed the handout pages 57-65. The
department serves families who need assistance in order to attain and maintain self-sufficiency and
minimize reliance on public assistance. The total cases are 43,300. The program goals and services
include: locate non-custodial parents, establish paternity, establish child support orders, enforce
support orders, enforce health insurance ordered, process modification of support requests, and
collect and distribute child support payments. Representative Putnam asked if this was by court
order or by a request in paternity. The response was that there are four different ways the department
receives the order.
Mr. Walter noted the two national awards received by the division as follows:
62 $
Western Interstate Child Support Enforcement Council's Outstanding Program of the Year
Award.
Support Offices: Secretariat and Program Management: Secretary Ellenbecker discussed the
final division and the handout pages 66-69.
There is a total budget increase of $1,832,539 and 3 FTE. Representative Haverly asked how many
fraud investigators there are currently. Mr. Ellenbecker answered 5. Representative Hunhoff wanted
to know the intent of the computer services request. The department indicated the decision was not
to fix the old system but to study the feasibility of replacing the Medicaid Management Information
System. Senator Apa asked if the electronic benefits transfer (EBT) will be less expensive even
though it is costing us initially. The Secretary responded that this is in fact correct. The program
is required to use Electronic Benefit Transfer (EBT) but is a proven cost savings.
MOTION:
ADJOURN
Moved by: Hunhoff
Second by: Bartling
Action: Prevailed by voice vote.
Barb Bjorneberg and Wendy Weinert