Representative Dennert questioned whether the $53 in services to members per $100,000 in the member trust fund (Document #2), could decrease. Rob Wylie, Finance Officer, South Dakota Retirement System, indicated that this rate did fluctuate last year, but should remain at it's historical level.

Mr. Asher said SDRS is requesting an increase of three positions or 2.8 FTE. He said a recent national study showed 1,164 planned members/employee versus the South Dakota Retirement System's 2,149 members/SDRS employee. To achieve the national rate, he said SDRS would need an additional 23 staff. Mr. Asher indicated the requested 2.8 FTEs would account for the FY 2003 $100,064 increase in Personal Services and $42,342 in Operating Expenses. He explained that additional budget increases were being requested as follows: $15,000 for an office lease agreement; $13,000 for proposed office furnishings; and $75,000 for costs related to a quadrennial investment performance review. He said the $50,000 decrease (Document #2) was due to the completion of computer system upgrade.

Senator Drake questioned the $50,000 decrease in net data processing expenditure authority. Mr. Wiley indicated that the old SDRS computer software program has been replaced with a more user friendly software that can internally generate more reports. He said he would provide the committee with a breakdown of Bureau of Information and Technology costs.

Senator Drake had a question concerning overtime. Mr. Asher said in 2000, SDRS staff worked approximately 1,000 hours in overtime. This has been cut back to 200 hours annually. Mr. Wiley explained that only 10 or 12 Finance and Benefits staff receive overtime.

Representative Pummel asked whether there was an issue of undertime with SDRS employees. Mr. Wiley explained that with having a growing membership with increasing demands, SDRS staff never has a shortage of work, and no one is underemployed. Mr. Asher further explained that people now have more knowledge of retirement issues and are wanting 30 to 45 minutes in consultation with SDRS staff before their retirement.

Senator Drake indicated he hasn't received any complaints from people not receiving enough information from SDRS. Corinne Koch, Retirement Benefits Manager, South Dakota Retirement System, explained the responsibilities of the agency's two retirement planners - the weekly planning meetings they conduct throughout the state, the follow-up, and the planning for the next week's meetings. She also spoke about three retirement specialists located in Pierre. She said that the planners generate more work while they are on the road and also mentioned the walk-in traffic normally wanting immediate assistance. She indicated that the planners are able to answer 98 percent of retirement related questions directed to them.

Mr. Wiley said that a driving force in the SDRS now is not overtime hours, but in trying to get retirement information out to the people. He said planners now carry PC laptop computers that can access all of the available SDRS information.

In response to Representative Derby's question, Ms. Koch said that a benefit's calculator is available on the internet for people to use.

At Senator Drake's request, Mr. Wiley gave a job breakdown of the 28 SDRS employees.

Mr. Wiley provided Senator Drake with a breakdown of the approximate 60,000 SDRS members as follows: 35,000 active, 10,000 contributed in the past and left money in the system, and 15,000 actively drawing benefits. Mr. Asher indicated that 30 percent of SDRS members are over age 50 and Mr. Wiley indicated that about 5,000 of those members were classified as inactive.

In response to a question concerning employee turnover from Representative Pummel, Mr. Wiley indicated that the planners and clerical staff had the highest turnover, and that turnover varies by the year.

Senator Greenfield questioned the travel budget. Mr. Wiley indicated that in previous years the travel budget wasn't completely used due to staff turnover, but that this year to date, the SDRS travel budget is on target.

Finishing the budget presentation, Mr. Asher welcomed questions.

In response to questions from Representative Derby and Senator Drake, Mr. Asher explained a reserve fund which had been set aside for downside years. Last year there were negative 2.9 percent returns and approximately one-half of the reserve fund was used. Although Mr. Wiley said a 4 percent return next year would be livable and referred to a quadrennial independent report; Mr. Asher said that if the system does get in trouble in future years, the System would have to come up with a plan to decrease benefits. Mr. Asher indicated that an 8 percent assumption is still valid, even with the market returns this last year. If there are five bad years, this assumption would have to be looked at. Senator Drake hoped it would be reviewed before five years.

In response to Representative Derby, Mr. Asher said the employer retirement contribution will increase from 5 percent to 6 percent this year.

Senator Drake recessed the meeting at 9:30 and it reconvened at 10:30.

Mark Zickrick, Senior Fiscal Analyst, Legislative Research Council, distributed budget information (Document #3).

Senator Drake introduced Senate Intern Jeffrey Roby's father, Jim Roby as a visitor. Gary R. Viken, Secretary of the South Dakota Department of Revenue distributed a packet of information concerning the Department and then commenced his presentation using SDDR budget information (Document #4 and #5). He reviewed the Department's organizational chart (Document #4) and said the Department has 95 employees located in Pierre and 100 scattered across the state.

Secretary Viken referred to Document #5. He said the Department's FY 2003 Budget request of $13,961,136 includes $796,214 in general funds, which is a decrease of $22,932, and no changes in FTEs. Referring again to Document #5, Secretary Viken explained requested budget increases in the areas of Salaries, Benefits, Contractual Services, Supplies and Materials, and Capital Assets.

Senator Clark questioned why there hasn't been a drop in postage due to e-government. Secretary Viken indicated there will be a tremendous savings in postage once all the departments forms, which are now downloadable, are made interactive. He also said part of the postage costs were due to license plate expenses. Joan Serfling, Director, Administrative Services, explained that Department postage expenses cover the mailing of license plates from prison industries to the counties. Secretary Viken added that postage expenses also include the mailings of vehicle titles, with there being over one million vehicle titles in South Dakota presently.

In response to a question from Senator Kleven, Secretary Viken said that the Bureau of Information and Technology had increased their rates as of February 1, 2001 and although the Department had sufficient budget to cover these increases last year, through 2003 they will be approximately $79,000 short.

In response to Senator Drake's question concerning the FTEs that had formerly been assigned to the now repealed inheritance tax, Secretary Viken distributed a handout that contained job descriptions of an Attorney Position and an Auditor Position, both before and after the inheritance tax was repealed. The handout also included the proposed position of an Investigator (Document #6). He explained the Department's continuing need for these positions and answered committee member questions.

In response to a question from Representative Pummel, Secretary Viken explained that South Dakota does not have agents in other states.

Representative Burg questioned whether some companies deposit sales tax up front. Secretary Viken indicated that this was not the case, although some companies are required to post a bond if the state is at risk in collecting the tax.

Senator Dennert questioned a $606,741,163 amount concerning property taxes in 2001 and asked if this figure was accurate. Secretary Viken indicated it should be accurate.