The first meeting of the interim Appropriations Committee was called to order by Co-chair Randy Frederick at 9:00 a.m., June 8, 1999, in LCR 1&2 of the State Capitol, Pierre, South Dakota.

A quorum was determined with the following members answering the roll call: Senators Robert M. Benson, Eric Bogue, H. Paul Dennert, Bob Drake, Robert Duxbury, Dick Hainje, Marguerite M. Kleven, and Gerald Lange; and Representatives Quinten Burg, William F. Cerny, Judy Clark, Michael Derby, Ted Klaudt, Willard Pummel, J.E. (Jim) Putnam, Mitch Richter, and Richard Wudel. Senator Kermit Staggers and Representative Dan Sutton were unable to attend.

Staff members present included Dale Bertsch, Chief Analyst for Fiscal Research and Budget Analysis; Mark Zickrick, Principal Fiscal Analyst; David Becker, Senior Fiscal Analyst; Annie Mertz, Senior Fiscal Analyst; and Rhonda Purkapile, Senior Legislative Secretary.

A list of guests present during all or part of the meeting is on file with the master minutes.

(NOTE: For sake of continuity, the following minutes are not necessarily in chronological order. Also, all referenced documents are on file with the Master Minutes.)

Chair Frederick noted the addition of a discussion of the South Dakota Guardianship Program to the day?s agenda. There was no objection from the committee.

Mr. Bertsch presented the committee with the FY2000 draft Letters of Intent (Document #1).

Representative Putnam commented that he hoped this language would not jeopardize any efficiency efforts by the Unified Judicial System.

Mr. Michael Buenger, State Court Administrator, Unified Judicial System, asked if the committee would essentially be directing the courts that they could not move a trial out of any particular county. Senator Bogue commented that he would not foresee this scenario happening because moving of a trial is always agreed upon by the attorneys and the court. This language is merely asking that the courts maintain a presence in each county. Senator Bogue stated his opinion that the clerk of court should maintain a presence in each county. Mr. Buenger commented that the Unified Judicial System would be receiving two messages from the committee with the addition of this language--be more efficient but not too efficient.

Senator Kleven asked Mr. Buenger if the Unified Judicial System will be providing the committee with a report on the judicial redistricting hearings. Mr. Buenger replied that the Unified Judicial System has already placed out for public comment and hearing their recommendation to move one circuit judge and reduce the number of circuits to seven. The court will not be issuing a report but will merely make a decision once the hearing process has been completed.

The Interim Report, prepared by the Bureau of Finance and Management, is on file with the master minutes as Document #2.

Ms. Kathy Johnson, Board of Regents, reported that the Board of Regents is requesting $8,619,274 of FY1999 expenditure authority and authorization to transfer other fund expenditure authority between institutions to realign excess authority within the system. In addition, $4,455,388 will be transferred from other campuses to address the shortfall.

In response to committee questions, Ms. Johnson indicated that when the committee cut excess other fund authority they were actually working from two-year old data. She noted that a large amount of this funding is for base operating expenses. Ms. Johnson added that there are some new federal grants and some student fee increases that have figured into this.

Representative Putnam commented that the committee reduced excess other fund authority that the institutions were not utilizing and he felt the committee should receive more information on what has actually changed since the reductions were made. Chair Frederick commented that the committee could take action on the FY1999 request and defer action on the FY2000 request pending further information.

Ms. Johnson presented the committee with an expenditure analysis for FY1999 and FY2000 (Document #3).

Senator Benson requested a breakdown of these increases.

A motion was made by Senator Dennert, Seconded by Representative Richter, that the committee approve the request by the Board of Regents for $8,619,724 of FY1999 other fund expenditure authority. The motion carried on a voice vote. Senator Bogue and Representative Klaudt requested their "No" votes recorded.

Mr. Buenger, Unified Judicial System, reported that they are requesting $108,243 in FY2000 federal fund authority and 3.0 FTE to begin a Juvenile Intensive Probation Deinstitutionalization Program. The project?s primary goal will be to divert serious and/or repetitive offenders who have been committed to the Department of Corrections. Mr. Buenger reported that this grant will be used to hire three juvenile court services officers.

In response to committee questions, Mr. Buenger noted that if the Unified Judicial System can prove that this program is successful, then they will probably return to the committee and seek general funds in the event federal funds are no longer available.

Mr. Ray Christensen, Secretary, Department of Education and Cultural Affairs, reported that the department is requesting $2.5 million in FY2000 other fund authority for the wiring of the schools project. This increase in other fund authority is necessary to do cost recovery for wiring the private schools, regents, libraries, etc. Mr. Todd Vik, Department of Education and Cultural Affairs, presented the committee with cost estimates and projections of the projects as of January 1, 1999 (Document #4).

In response to committee questions, Secretary Christensen indicated that the wiring for all K-12 schools is nearly finished. The majority of the wiring efforts this summer will be directed to the college dorm rooms on the campuses, then the classrooms.

A motion was made by Representative Richter, seconded by Senator Drake, that the committee approve the request of the Department of Education and Cultural Affairs for $2.5 million in FY2000 other fund expenditure authority. The motion carried on a voice vote. Representatives Klaudt and Wudel requested their "No" votes recorded.

Mr. Scott Bollinger, Department of Corrections, reported that the department is requesting $2,480,250 in FY2000 federal fund expenditure authority for the Juvenile Accountability Incentive Block Grant. He reported that this is pass-through dollars for local units of government for programs that hold juveniles more accountable for their actions. Mr. Bollinger presented the committee with information on the grant (Document #5) and with a list of the federal fiscal year 1998 awards (Document #6). He noted that this $2.4 million will cover two federal fiscal years.

It was moved by Representative Richter, seconded by Senator Duxbury, that the committee approve the request from the Department of Corrections for $2,480,250 of FY2000 federal fund expenditure authority. The motion carried on a voice vote. Representative Klaudt requested his "No" vote recorded.

Animal Industry Board--$176,626

Dr. Sam Holland, State Veterinarian, reported that the Animal Industry Board is requesting $176,626 of FY2000 expenditure authority ($78,313 federal authority and $78,313 other authority) for the implementation of the Field Automated Inspection Management System, which the USDA has chosen to implement as part of the President?s food safety initiative. Dr. Holland reported that the implementation of this system will involve the training of all meat inspection personnel and placing laptop computers with each inspector. The requested authority will provide for the initial computer hardware, software, maintenance and support, and personnel training costs.

In response to committee questions, Dr. Holland noted that they are proposing to transfer dollars from an existing federal fund into other funds to provide the match for this expenditure.

School and Public Lands--$19,854

Mr. Bryce Healy, Office of school and Public Lands, reported that they are requesting $19,854 of FY2000 federal fund expenditure authority for a federal grant to allow the continuation of weed control on state school land in Harding and Butte Counties.

Ms. Johnson, Board of Regents, presented the committee with information on the transfer of funds for redistribution among the campuses (Document #7). The first transfer request is for $28,900 of FY2000 general funds for Datatel Redistribution. This transfer redistributes the costs of the ongoing maintenance for the Datatel System based upon the most recent student headcount and should be made on a permanent basis. Ms. Johnson noted that these costs will be adjusted annually to reflect the movement of students throughout the regental system and assesses the campuses based upon their use of the system.

Ms. Johnson reported that a transfer of $251,425 in FY2000 general funds is requested for the salary competitiveness redistribution, which will provide a realignment of general fund dollars between all agencies in the regental system for the second year of the salary competitiveness program.

A motion was made by Senator Dennert, seconded by Representative Richter, that the committee approve the transfer request of $251,425 in FY2000 general funds from the Board of Regents for salary competitiveness redistribution. The motion carried on a voice vote. Representative Klaudt and Senator Bogue requested their "No" votes recorded.

Ms. Johnson reported that a transfer of $358,950 in FY2000 general funds is requested to redistribute resources earned through performance in the incentive fund pools for the new funding framework, noting that this should be a one-time transfer for FY2000.

In response to committee questions, Ms Johnson indicated that the Regents have only redistributed four of the incentive funds and the fifth one will be redistributed in October. She noted that $154,000 was not earned but was redistributed based on technology as an incentive. The board office did not receive any of this money.

Mr. John Jones, Secretary, Department of Human Services, and Ms. Kim Malsam-Rysdon, Director of the Division of Disabilities, Department of Human Services, presented the committee with the department?s plan for future guardianship services (Document #8).

Ms. Malsam-Rysdon reported that the department reviewed its contract with the South Dakota Guardianship Program (SDGP) with regard to the quality of service and the cost of those services. It was discovered through the review of the contract that administrative costs were 27 percent of the budget and travel costs were high. An average of 2.84 hours per month were being billed on behalf of the individuals served by the program. Based on these findings, the department decided not to renew the contract with the SD Guardianship Program. The Division of Developmental Disabilities will restructure how these services are provided. During the transition, the department will continue to reimburse SDGP for those services rendered. The department will continue to be the legal guardians of these individuals. The department will seek individuals local to the community where the protected person lives to carry out guardianship duties, which will eliminate much of the travel time and costs. Training of these guardians will be provided by the department. Any cost savings realized will be redirected to serve people on the waiting list and assisting families with legal costs associated with obtaining guardianship. Administration of the guardianship services will be absorbed by the Division of Developmental Disabilities and the Department of Human Services.

Secretary Jones added that the department?s intent is not to decrease services but to operate more efficiently so services can be increased to those who need them. The money that is currently being spent on administration will be redirected to serving the waiting list. He acknowledged that there may be some court costs associated with changing this service from the SDGP to the Department of Human Services.

Chair Frederick noted that the department?s current appropriation for this program is $280,000. Under the new proposal, at $665 per person, this will leave a $110,000 surplus in this program. Secretary Jones noted that part of this excess funding will be used to address the waiting list for guardianship and some will be set aside to assist families with legal costs for establishing guardianships. The department hopes to establish more guardianships with family members.

Senator Kleven asked if the department would be willing to contract with the SDGP for the $665 amount stipulated per person to perform these services. Ms. Malsam-Rysdon responded that the department would be willing to work with anyone qualified to provide these services for the amount stipulated.

Senator Benson asked how the $665 amount was determined. Ms. Malsam-Rysdon replied that they examined hourly wage information and settled on $18.50 per hour.

Mr. Bill Engberg, Executive Director, S.D. Guardianship Program, testified that the S.D. Guardianship Program is a private, non-profit corporation formed in 1982 to provide guardianship (for personal needs) and conservatorship (for estate issues) for those developmentally disabled individuals who have nobody else to act on their behalf. This program is governed by a seven-member board. The main source of revenue for this program is the contract with the Department of Human Services, which is two-thirds of the program budget. The remainder of their funding is derived from private contributions and fund-raising. The program also handles some private pay guardianships. Mr. Engberg reported their total budget is $400,000 per year, with a total of 223 individuals served by the program. The program employs nine individuals, of which four are guardian representatives. Travel costs are about five percent of the total budget.

Mr. Engberg reported that the current contract with the Department of Human Services expired on May 31. The SDGP received a letter dated April 28 from the department stating that its contract would not be renewed for the next year. Without this contract, Mr. Engberg stated that the SDGP will have to close its doors. He noted that a legal proceeding must take place to transfer guardianship in each one of these cases, whether or not it is contested. The SDGP will legally have to continue providing guardianship for these individuals with no funding or staff. Mr. Engberg commented that the hidden costs of guardianship are phenomenal and liability issues for the state are significant. He stated that the SDGP does have a liability bond.

Senator Duxbury expressed his opinion that this will turn out to be more time-consuming for the department staff than it anticipates and that the department will need more funding for this program in the future. Secretary Jones responded that once the department is finished with the court appearances and the guardians are hired, he did not feel the costs and administrative time would increase. He noted that the department will bring a report on this issue to the committee during session.

Senator Benson asked if the SDGP will be reimbursed for services they provide during the transition period. Secretary Jones responded that they will be reimbursed for services provided if they sign the interim contract. Mr. Engberg reported that the board has been given a copy of the proposed interim contract and it has not yet met to examine it and make a decision. He did note that one stipulation of the proposed interim contract requires that SDGP guardians get prior approval from the department before they can offer any services or it will not be considered billable, which is a very unworkable situation.

Senator Dennert asked if the department will also manage the trust accounts of these individuals. Secretary Jones replied that he does not know enough about this situation at this time. He stated that the department will have to analyze each individual case and determine how many of those have sheltered trusts.

Mr. John Culberson, past president of The ARC of SD, testified against the proposal from the Department of Human Services to assume guardianship responsibilities of these individuals. He felt that this plan is a rush to judgment. He especially felt that it would be impossible for the department to take a $400,000 program and operate it for $165,000.

Representative Derby suggested adding language to the Department of Human Services letter of intent specifying that the SDGP contract continue for one year until all the arrangements of any change to the program could be better addressed. Representative Putnam suggested the possibility of a subcommittee being appointed to further examine this issue.

Chair Frederick noted that the Appropriations Committee does not examine and approve individual contracts the state might enter into, it merely appropriates the funds for those contracts to be entered into. The details of the contracts are worked out between the agencies and the contracting entity. He also stated that a contract with the state is not a guarantee of a contract for life.

Chair Frederick recessed the committee at 12:40 p.m. for lunch and reconvened the committee at 1:35 p.m.

Mr. Ron Wheeler, Secretary, Department of Transportation, and Mr. Jim Jenssen, Deputy Secretary, Department of Transportation, presented the committee with revenue and expenditure information for FY2000 with regard to the additional gas tax (Document #9) and with a tentative map of resurfacing and construction projects for the next five years (Document #10). Secretary Wheeler noted that 79 percent of their expenditures go toward construction. He noted that the projects for the expressways have not yet been finalized. These projects should begin in 2002 and be finished by 2005.

In response to committee questions, Mr. Jenssen indicated that revenues are coming in according to projections.

It was the committee consensus to schedule the West River Tour at a later date. It was suggested that the committee might want to tour the South Dakota School of Mines & Technology, Bear Butte State Park, and the Training Academy at Ft. Meade.

Chair Frederick adjourned the meeting at 2:25 p.m.