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
E Klaudt, Vice-Chair
P Napoli
P Peters
P Rausch
P Smidt
P Sutton (Duane)
P Tidemann
E Putnam, Chair
OTHERS PRESENT: See Original Minutes
The meeting was called to order by Representative Hunhoff
MOTION:
TO APPROVE THE MINUTES OF JANUARY 13, 2005.
Moved by: Tidemann
Second by: Smidt
Action: Prevailed by voice vote.
Secretariat
The recommended budget for the Secretariat consists of $1,200,359 from other funds and 7.0 FTEs.
1 *
an increase of $99 in personal services.
Fiscal and Public Assistance
The recommended budget for general operations consists of $487,946 from the General Fund,
$9,603,000 from federal funds, and $27,574,945 from other funds, for a total budget of $37,665,891
and 61.5 FTE.
2 *
a decrease of $4,634 in Personal Services.
3 *
an increase of $646,169 in Contractual Services.
3.1 *
Legal Consultant - $250,000 for legal fees associated with BNSF lawsuits and
purchase issues of the state owned railroad
3.2 *
Computer Services - $201,786 increase to adjust the appropriation level based on FY
04 actual expenditures and FY 05/06 projected costs
3.3 *
Computer Software Maintenance - $213,420 increase for computer software
maintenance
3.4 *
Telecommunications - $198,630 increase for network upgrades in field offices
4 *
an increase of $269,017 in Supplies and Materials
4.1 *
Vehicle Maintenance & Repair - $56,400 increase for additional parts and
maintenance needed for the airplanes due to an increase in flight hours
4.2 *
Aviation Fuel Retail - $91,000 increase due to increase in flight hours
4.3 *
Aviation Gasoline Retail - $65,408 increase due to increased flight hours on the
Seneca and Navajo.
4.4 *
Gasoline Retail - $55,885 increase due to increase in fuel costs
4.5 *
an increase of $4,343,435 in Capital Outlay
4.6 *
Building & Structure - $156,000 increase for inflation in cost of construction
materials and $2,171,830 for replacement or addition of buildings.
4.7 *
Building Improvements and Remodeling - $436,282 increase for inflation in cost of
construction materials and $128,743 to address the ordinary expenses and backlog
of deficiencies for replacement of maintenance buildings and repair and maintenance
of existing buildings.
4.8 *
Motor Vehicles - $160,500 increase in inflation due to increase in steel prices and
$182,500 increase based on the results of the DOT equipment study.
4.9 *
Highway Maintenance Equipment - $814,500 increase for inflation due to increase
in steel prices and $842,500 increase based on the results of the DOT equipment
study.
4.10 *
Computer Software - $391,000 decrease in computer software.
Secretary Landguth told the Joint Committee the department recently conducted a study to reevaluate
the department's criteria for the need and replacement of heavy equipment. The criteria includes
mileage, wear/tear, repair costs, etc. This evaluation had not been done since 1980. The study found
that, not only did the department need to increase their equipment budget, there was equipment on
inventory that was no longer being used. The list was reviewed and the department disposed of the
surplus equipment. The department's equipment budget has been stationary since 1997 and the study
showed the budget should be increased to $10 million per year. The department's request for an
additional $1,975,785 brings the budget to $8.5 million. The study also gave the department a better
schedule for equipment replacement that could ultimately save the department about $2 million a
year. The study indicated the department has a $48 million deficit in replacement needs.
Senator Apa asked how the department disposes of excess equipment. Secretary Landguth said local
governmental agencies are given first option to purchase the surplus equipment and after that the
equipment is sold at public auction. The department has also been successful in selling specialized
equipment on eBay.
Representative Peters asked where the money from the auctions goes. Secretary Landguth said the
money goes back into the highway fund and is used for maintenance and construction of highways.
Representative Peters asked if that money was reflected somewhere in the budget. Ms. Rice said
on the Condition Statement, Schedule 1, under Sale of Assets. Representative Peters asked for a
disposal list. Ms. Rice said the department would provide the information.
Senator Apa asked what the average length of time the department would keep a piece of equipment.
Secretary Landguth said the life of a tandem truck would be 10-12 years. Senator Apa asked if the
department had ever explored the guaranteed buyback or guaranteed warranty program. Ms. Rice
said it was discussed during the equipment study; however, the department feels they can do the
work cheaper because they have their own maintenance shops and do most of their own maintenance
work. Ms. Rice said very little equipment is taken out for maintenance. Mike Durick, Director of
Operations said the guaranteed buyback program hasn't been looked at enough to know if it would
be a benefit.
Senator Apa asked if testing was still being conducted on using corn as a deicer in place of salt. and
if so, was there any cost benefit to using corn. Secretary Landguth said the research is continuing;
however, experimental projects often become cost prohibitive. The cost benefit of using corn instead
of salt has yet to be determined. The department is concerned about increasing the chemical content
on roads and bridges; however, there is a mag-chloride agent that has rust resistant components.
Secretary Landguth said the department is also looking at a salt-brine that is currently used in North
Dakota. The brine is cheaper to use, but is not available in all areas.
Planning and Engineering
The total recommended budget consists of $4,563,595 from federal funds and $15,703,993 from
other funds for a total budget of $20,267,588 and 237.1 FTEs.
Operations
The total recommended budget consists of $6,343,567 from federal funds and $72,012,873 from
other funds for a total budget of $78,356,340 and 769.7 FTEs.
5 *
an increase of $2,291,900 in Contractual Services
5.1 *
Maintenance Contracts - $2,163,805 increase in the FY 06 maintenance program due
to identified needs in the Mitchell and Rapid City regions as well as increased needs
for gravel and sand stockpiles.
5.2 *
Other Consulting - $60,000 increase to provide for the department's safety incentive
program.
5.3 *
Equipment Service and Maintenance - $64,331 increase for the DMS Maintenance
agreement for 30 signs.
6 *
an increase of $764,650 in Supplies and Materials
6.1 *
Painting Supplies - $100,000 increase due to improved standard of highway stripping
6.2 *
Finished Signs & Decals - $167,700 increase in the sign shop
6.3 *
Calcium Chloride/Salt - $141,400 increase due to the increase in usage of spraying
to control vegetation and increased use of salt and Calcium/MAG to keep ice off
roads
7 *
a decrease of $106,870 in Capital Outlay
Construction Contracts - Informational Budget
The total recommended budget for Construction Contracts consists of $248,303,218 from federal
funds and $62,178,158 from other funds for a total of $310,481,376 and 0.0 FTE. The budget
consists of construction funding for roads, airports, bridges, railroads, and enhancements. The
money is continuously appropriated in statute and the Transportation Commission has authority over
the expenditures of this budget.
Secretary Landguth told the Joint Committee the $9.9 million in Airport Construction funds were
Federal dollars that are passed through the department. Senator Earley asked if these funds were
strictly for airport construction and did the state get $9.9 million. Secretary Landguth said the funds
were dedicated for airport construction projects only. Ms. Rice said the $9.9 million reflected the
expenditures, because the department spends the money first and is then reimbursed by the Federal
Aviation Administration. Ms. Rice explained that most airport projects are on a 3-year time frame.
The department estimates 20% of the construction costs the first year, 70% the second year and 10%
the third year. The total budget is likely an accumulation of 3 years worth of projects. Senator Earley
asked how much money is received each year. Ms. Rice said over the past 10 years, South Dakota
has received a number of discretionary grants, and these funds are for a specific project. The local
entities request the discretionary funds, do the project planning and the department administers the
funds. The amount varies between $12-20 million a year. Ms. Rice said the entitlement funds are
based on a certain percentage of tickets, etc. The amount varies between $10-12 million a year and
is split out by primary and general aviation airports. Ms. Rice said in FY 2005 there is $6.9 million
for primary and $12.5 for general aviation. Senator Earley asked how the entitlement funds were
allocated. Ms. Rice will provide that information to the Joint Committee. Ms. Rice said the federal
funds are a 95/5 match, and the department splits the match with the local units of government.
Senator Apa noted the $2 million for a new runway at the Highmore airport. Senator Apa asked if
the City of Miller had an airport and if the department had ever considered consolidating any of
airports. Secretary Landguth said Miller was a Category B airport and the Highmore airport did not
meet FAA criteria. Senator Apa asked if the FAA would allow the department to upgrade the Miller
airport using the funds designated for Highmore. Secretary Landguth said he wasn't sure and told
the Joint Committee the requirements for work at airports was between the local entities and the
FAA. The Secretary said most airport construction is initiated by the FAA, not the department.
In response to Committee questions, Secretary Landguth explained the department's request for an
increase in personal services for an IT Project Manager. This request was not recommended by the
Governor. Senator Earley asked how the department integrates with the Bureau of Information and
Technology. Mr. Landguth said the department has an IRB board that manages the projects and BIT
is a part of that board.. Ms. Rice told the Joint Committee the department is looking for someone
to manage the projects that currently are not managed well. The department does not have a
methodology for managing these projects. Ms. Rice said the department is looking at the business
side of managing, someone who can put a plan together and look at costs. The department is doing
the job now, just not very well. Senator Earley asked what a typical IT project would be. Ms. Rice
said electronic bidding.
Representative Glenski asked how this project would be handled since the Governor had not
recommended the request. Ms. Rice said instead of increasing their personal services budget, the
department would use money from vacant positions as long as it was available. Ms. Rice said
because of the departments size, they have on an average of 10-30 vacancies all year round. It takes
months to fill a technical positions. The department recruits at the colleges, but has to wait for the
candidate to graduate. Representative Glenski asked for an explanation of the difference in actual
and used FTEs. Ms. Rice said the department had an abnormally low usage year last year because
many of the department's staff were in Iraq.
The department is requesting an increase in Contractual Services for a legal consultant to work on
the Burlington Northern lawsuits. A railroad map was distributed (Document #2). Representative
Glenski asked if the Attorney General was handling these lawsuits and was the department charged
for those services. Ms. Rice said yes, however, the department had employed an attorney
specializing in railroad issues.
Senator Earley asked what the state agencies are charged for use of the state airplane. Ms. Rice said
each airplane has a rate/mile that gets charged to the agency using it. Senator Earley asked if that
rate was based on the number of seats and number of people in the airplane, and where does that
money show up. Ms. Rice said yes and all revenue goes into the Aircraft Clearing fund. Senator
Earley said usage is going up, so will the Committee see that in the revenue next year. Ms. Rice said
yes somewhat, and also from the miles logged on the airplane. Ms. Rice said the Aircraft Clearing
Fund is a revolving fund, revenues in and expenses out. Senator Apa asked for a breakdown of all
moneys receipted in from the different state agencies in FY 04 and all the parts and equipment paid
out. Ms. Rice said she would provide that information.
Representative Peters requested a general ledger from June 30, 2004 to the latest date for all
department funds. A summary for the larger funds (General, DOT Federal, Transportation Highway)
and in detail for Aeronautics, Railroad, Public Transit, Railroad Trust, Aircraft Operations and
Maintenance. Cindy Jungman, Finance Accountant agreed to provide the information.
Representative Hunhoff asked about the reward incentive program. Secretary Landguth explained
the program which involves the maintenance and construction workers, who have the most
hazardous job. The department looked at what workers compensation and damaged equipment was
costing and hired a safety engineer who revamped the safety manual and practices used in the
department. To date the department has been very successful in doing what it takes to be safe,
reducing workers compensation claims and damaged equipment. This program is just getting
started, the new manual went into effect in 2001. The employees have to earn the reward by being
safe in their work.
Senator Smidt asked where the money comes from for buildings improvements. Secretary Landguth
said it comes from State Highway funds.
Representative Hunhoff asked for comments on the Committee's previously submitted questions.
Question 1 - What is the status of the lease agreement with JCP Leasing for the State Airplane
Hangar in Pierre. Mr. Landguth said the lease is still in effect. The department is 5 to 6 years into
the 10 year lease/purchase. The department leases with the option to purchase.
Question 2 - What is the status, including the costs of the four special projects. Leon Schochenmaier
referred the Committee to the map in Document 1.
Eastern Dakota Expressways:
8 *
Aberdeen east to I-29 - last project is scheduled for 2007, includes the completion of a 4-
lane across Rush Lake.
9 *
Huron to Mitchell - completed and open
10 *
Pierre to Vivian - will be completed in 2005.
Heartland Expressway - a project from Exit 61 south to the Nebraska border
11 *
the first major portion from Exit 61 south to Maverick Junction, (Highway 18 turnoff to Hot
Springs), will be completed in 2006, an investment of $150 million.
12 *
the next leg from Maverick Junction south 31 miles, the first 9 miles is in the 2008 program
for reconstruction and 2009 for surfacing, the remaining portion (22 miles) is not in the 5-
year construction program at this time.
Representative Rausch asked for the total dollar amount for these projects and the state match. Mr.
Schochenmaier said the Aberdeen to I29 Corridor was $53.9 million, the Huron to Mitchell Corridor
was $20.3 million, the Pierre to Vivian Corridor was $27.9 million and the Heartland Expressway
$148.2 million. Mr. Schochenmaier will provide the amount of Federal funds involved.
Discussion followed on speed limits on the interstate highways in and around Sioux Falls. Senator
Earley asked to visit with the department staff regarding the speed analysis process.
Mr. Bob Benson, Chairman of the Department of Transportation Commission and former legislator,
addressed the Joint Committee. Mr. Benson said the department's goal is to build and maintain safe,
smooth roads in South Dakota. Roads are categorized and money is spent in that fashion. Mr.
Benson said the department is required to perform the 5-year STIP process, and he encouraged the
committee members to come to attend the public meetings and provide input. Mr. Benson
commended Secretary Landguth on his nearly 40 years of service to the state of South Dakota and
wished him well in his upcoming retirement.
Meeting recessed at 9:40 a.m.
Meeting reconvened at 10:00 a.m.
In response to the Committee's questions, Jerry Hofer, Director of the Division of Administration,
provided information on Question #6: Provide an update on the mobile lab. Mr. Hofer said the
department took possession of the lab in May of 2004. The lab is a fully self-contained laboratory
built to bio-safety level 3 standards. The lab was designed and built in South Dakota. The lab was
used at the 2004 Sturgis Motorcycle Rally to provide water testing at the campgrounds. Senator Apa
asked what the department charged for these services. Mr. Hofer said the random testing is part of
the licensing fee for campgrounds, no additional fee was charged. Senator Apa asked if the
department licenses all campgrounds and what was the fee. Mr. Hofer said yes, they license all
campgrounds, and there is a different fee for temporary and permanent campgrounds. The
department will provide the fee information.
Representative Glenski asked if there were any restrictions on the use of the lab, will it be used for
more than special events. Mr. Hofer said there were no restrictions. Representative Tidemann asked
if this laboratory was the only bio-safety level 3 lab in the state. Mr. Hofer said no, there are several
in the state. Representative Hunhoff asked how often the equipment was certified. Mr. Hofer said
because a bulk of the equipment is moved from the state lab to the mobile lab it is used on a daily
basis. The equipment that stays in the mobile lab is checked periodically. Representative Hunhoff
asked if the department could bill for services provided by the lab. Mr. Hofer said the lab is self
sufficient, it runs off the services provided. Any testing would be billed out.
Representative Rausch asked what the mobile laboratory cost and what is it's life expectancy was.
Mr. Hofer said commercial estimates were over $1 million; however, because the lab was built by
the Department of Corrections at Springfield, the cost was $450,000. Mr. Hofer said if the lab is
properly maintained it should be viable for 20-30 years.
Representative Hunhoff asked if the department purchased duplicate equipment in order to have the
same equipment in the mobile lab as in the state lab. Mr. Hofer said no, they share some of the
equipment.
Question #7 - What is your definition of a mandatory FTE? Secretary Hollingsworth told the
Committee the department's definition of an FTE is a person performing a function that has been
mandated either by Federal law, Federal rule, state law or state constitution. Secretary Hollingsworth
said a vast majority of the department's employees fit that definition.
Laurie Gill, Director of the Division of Health and Medical Services discussed the recommended
increases in Health and Medical Services:
13 *
Ryan White grant. This $300,000 Federal grant is used to fund prescription drugs for
HIV/AIDS patients. The amount of funding depends on the number of individuals in the
state who have AIDS. This is a “payer of last resort” program.
14 *
State Nutrition and Physical Activity grant. This $436,814 Federal grant has been awarded
for the prevention of obesity and other chronic diseases.
Representative Hunhoff asked if the department had expended last years money. Ms. Gill said in
the past the department has not spent all the money. Ms. Gill said currently 59 people in South
Dakota are eligible for the funding; the number of cases has been higher and is now on a slight
downward trend. Representative Hunhoff asked what the total is for this program in the budget. Ms.
Gill will provide that information to the committee.
Mr. Hofer discussed the recommended increase and decrease in Correctional Health:
15 *
Increase of 5.0 FTE and a Reduction of $109,833. The department is requesting 5 FTE, (3
RN's and 2 LPN's) at a cost $258,000. Funding for these positions would come from
transferring $131,549 from contractual services to personal services and the remaining
$126,451 covered in the budget under overtime currently being paid. The department is
currently paying $241,382 for contracted temporary nurses.
16 *
Increase of $482,356 for inflation in contracted medical providers, outsourced medical
services and prescription drugs.
Mr. Hofer said the $258,000 for the 5.0 FTE included salary and benefits. Mr. Hofer said when the
department took over management of Corrections health some 3 years ago, they did not have enough
FTE to cover the program 24/7/365. The department has used contracted temporary medical staff
since that time.
Representative Glenski asked about the differences in inflation increases between the contracted
medical providers and outsourced medical services. Mr. Hofer said the department is able to
negotiate with the contracted medical providers, those that actually come into the facility to provide
a service, i.e. doctors, physician assistants, dentists, etc. The department has no contract with
outsourced medical services (services provided when an inmate leaves the facility), although a
discount may be applied.
Mr. Hofer said the department worked with the Bureau of Personnel and the Department of Social
Services on inflationary charges for prescription drugs. There is a formulary in place, approval must
be obtained for prescriptions that are off the formulary. Representative Hunhoff asked if the
department works with specific drug vendors. Mr. Hofer said the department has a contract with
Lewis Drug
Ms. Gill discussed the increase and decreases for Tobacco Control.
17 *
$212,500 federal grant to fund a Tobacco QuitLine Coordinator. This program expansion
will help to increase awareness of the QuitLine Program.
Representative Hunhoff welcomed the USD Medical School students.
MOTION:
TO APPROVE THE MINUTES OF JANUARY 20, 2005.
Moved by: Gant
Second by: Peters
Action: Prevailed by voice vote.
MOTION:
ADJOURN
Barb Bjorneberg