In response to Representative Sutton, Mr. Krusemark indicated the DECA Technology for Schools budget includes $8.1 million in general funds and another $2.5 million authorized in other funds.
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Representative Clark had questions concerning Citibank donations of $4.2 million dollars. Mr. Krusemark explained that these funds will be designated for three projects and but that there are no contractual obligations concerning these funds only the Citibank agreement. Representative Adelstein brought out that possibly another $8 million will be received from federal funds. Secretary Christensen said that these funds will end up in the K - 12 school districts, not DECA. Senator Drake questioned whether these funds could be used to relieve the demands on special education. Secretary Christensen said that federal rules won't allow these funds to supplant state and local funds, but that a federal task force is looking into this.

Secretary Christensen responded to questions from Representative Clark and Representative Richter concerning $715,000 in on-going costs for a student information system.

In response to Representative Clark, Secretary Christensen said he was not aware of a legal date for using the Citibank donation and explained three components that the program could be used for: web mail; student information system; and security.

Bureau of Finance and Management

Curt Everson, Commissioner, Bureau of Finance and Management, answered questions from the committee.

Senator Drake questioned the $400,000 in the development pool budget. Commissioner Everson said these general funds benefit the rest of state government, not the Bureau of Finance and Management. They are used to help defray state agency computer development costs and in the past have been used for 2000 conversions, e-government issues, and defraying software costs. Jim Melius, Bureau of Finance and Management, said that these funds have not been spent this year, but there is an e-government proposal.

Public Utilities Commission

In response to Senator Drake, Ms. Chicos said the only changes in the PUC budget were for the One- Call program.

Senator Drake questioned the increase in contractual services from $640,000 in FY01 to $918,284 in FY02. Ms. Chicos said this is the difference between actual costs and budgeted costs. She said the actual costs are dependent on the number of rate cases. She indicated that contractual services came out of the gross receipts tax.

In response to Senator Drake, Ms. Chicos provided a breakdown of FY01 Out-of-state travel (Document #2).

In response to Senator Apa, Ms. Chicos said that lawyer fees comes out of any refunds from favorable rate decisions.

Secretary of State

Tom Leckey, Secretary of State's Office, answered questions for the committee.

In response to Senator Drake and Senator Putnam, he said that due to a new bill passed through Congress, the Secretary of State's Office will be in need of 1 FTE for a grant writer to apply for funds to set up a new state-wide election system which is being mandated by Congress to be implemented by 2004. He indicated that each of 600 local precincts may need at least one voting machine for the disabled at $8,000 apiece and software for $25,000.

Senator Putnam commented that the committee is not accessing blame. He said the committee had been told that a program is up and running and now Congress is saying this program is not sufficient and the states need another program by 2004. Mr. Lackey said that small rural states need more flexibility.

Answering a question from Representative Richter, Mr. Leckey said that until the bill comes out of Congress, all the details of the program won't be known.

Representative Adelstein questioned whether Congressional staff could provide grant writing assistance. Mr. Leckey said he has contacted congressional staff, but the concern is that this will take a good deal of the election supervisors's time also.

In response to Representative Apa, Mr. Leckey indicated that the congressional bill is probably a direct result of the Florida vote in the last presidential election, and if South Dakota does not comply, it could be open to federal lawsuits.

Legislative Audit

Marty Guindon, Auditor General, Department of Legislative Audit appeared before the committee to answer questions. Mr. Guindon distributed a handout regarding the purchase of new notebook computers in FY03 and providing information regarding FY01 operating expense reversions (Document #3). He proceeded to review the handout and answer questions from the committee.

Mr. Guindon explained why it would be more cost effective to purchase new computers than to repair existing computers that are no longer under warranty. He indicated that with computer costs coming down to approximately $1,900 from a previously estimated amount of $2,500 per computer, that $15,000 could be removed from the computer hardware line of the FY03 budget request, and Legislative Audit would still be able to purchase the new computers.

In response to a question from Senator Kleven, Mr. Guindon indicated that Legislative Audit does audit 87 cost allocations and that the department does not compare BIT billings for different agencies. In response to Representative Pummel, he said Legislative Audit can obtain a breakdown of the operating funds for any agency in state government. Answering a question from Representative Klaudt, Mr. Guindon indicated that any encumbered funds carried over to another fiscal year are subject to auditing procedures.

Mr. Guindon then reviewed the department's operating expense reversions of $68,500 (page 2, Document #3). In response to Senator Apa, Mr. Guindon said that any funds the department might receive from non-state agencies would go into the general funds. In response to Senator Kleven, he indicated that it would be valid to ask every department as to central services billing charges.

Chair Drake recessed the committee at 10:35 am and reconvened it at 10:55 am.

Unified Judicial System

D.J. Hanson, Unified Judicial System, appeared before the committee to answer questions concerning increasing the salaries of magistrate judges to within 80 percent of circuit judges salaries. Mr. Hanson said this would be a target salary, that it is a matter of fairness. He said UJS has not discussed eliminating any circuit judge positions. In response to Senator Apa, Mr. Hanson said the salaries of the circuit judges are set by statute, which would prevent the pooling of all the magistrate and circuit judge salaries and then dividing it out.

Retirement System

Al Asher, Administrator, South Dakota Retirement System, appeared before the committee to answer

questions.

Senator Drake questioned the agency's request for three additional FTEs. Mr. Asher explained that 2 FTEs would be used to provide the SDRS membership with additional retirement planning services in the field. He said that planners conduct meetings which are are very beneficial to the membership, that members are more knowledgeable about retirement issues than they used to be, and are asking questions at an earlier age. Mr. Asher said that the system's staffing has remained level for many years with there being only one additional FTE since 1974, and that the workload has increased over the years. He said 1 FTE is being requested to work in the accounting area.

Senator Drake and Representative Pummel questioned the amount of overtime in past years. Mr. Asher said that in 1997 there had been 13.9 hours in overtime, in 1998 - 198.5 hours overtime, in 1999 - 659.9 hours overtime, in 2000 1,000 hours overtime, and presently - 200 hours overtime. He said that about 10 employees generated the overtime. Senator Drake roughly calculated the amount of overtime per employees per week. Rob Wiley, Finance Officer, South Dakota Retirement System, said that the overtime is concentrated into short time frames - April, May, and June for some employees and in the fall for other. He said the Retirement System is not making an issue of overtime, but is looking at increasing services for its' membership. Mr. Wiley said that with a new computer system SDRS is now able to provide immediate information for walk-ins. Mr. Asher said that more information begets more information and that members want to talk to retirement employees in person.

Senator Drake questioned the planner's weekly meetings. Mr. Asher said the planners need to arrive a day early for the meeting and then provided follow-up after the meeting. Senator Drake commented that with 98 percent of questions being answered at the meetings, the 2 percent not being answered does not seem like a lot of follow-up.

In response to Representative Richter, Corinne M. Koch, SDRS said there may be up to a two-week backlog of requests on the research side. In response to Representative Lange, Ms. Koch said that people today are more financially savvy and what a few years ago could be handled in a 5 minute conversation now takes 15 to 20 minutes. In response to Senator Duxbury, she explained the retire and rehire policy also takes more staff time.

Mr. Wiley explained how the SDRS system is coordinated with BIT, in answer to a question from Senator Kleven.

Lowell Slyter, SDRS Board of Trustees, commented that it is very important to the SDRS membership to have increased services including face to face meeting.

Elmer Brinkman, SDRS Board of Trustees, gave closing comments.

Board of Regents

Senator Drake questioned the consequences making budget cuts in the Technology Fellows Program and the carbon sequestration project.

Mr. Kramer said that technology changes quickly. He said there are 200 technology fellows to assist several thousand employees. He would be concerned about which students would lose their fellowships.

Mr. Kramer indicated that it is critical that the state continue with the carbon sequestration project, that it is a $610,000 investment with the state part being $22,500. Senator Duxbury commented that he was impressed with the possibility of investment returns with this project.

Legislative Research Council

Jim Fry, Director, Legislative Research Council, appeared before the committee to answer questions.

Senator Drake questioned whether there could be cuts in LRC staffing. Mr. Fry indicated that LRC has been streamlined and has the smallest legislative staff in the country. He said last year's overtime during session was over 1,200 hours, and that staff is needed for summer studies and task forces.

Senator Drake questioned whether the Legislature could contract for legal help to fill in part of the staff needs. Mr. Fry indicated that this could be a possibility and that consultants could be hired for $200 to $250 per hour and would be needed for committees that are active during the months of March through October. He said that any consultants hired would have to have considerable knowledge of the legislative process, and that there are presently four lawyers on staff, with one being with the Code Council.

Senator Duxbury commented that the North Dakota legislative staff expenses are higher than South Dakota. He said that legislators have to have confidence in their staff and that with LRC, staff consistency and low turnover is important. Mr. Fry said that with legislative term limits in place, LRC staff provide continuity.

Representative Clark questioned the legislature's telephone expense budget. Carol Huber, Finance Officer, Legislative Research Council, indicated that $35,374 was actually spent in 2001 and this same amount has been requested for 2003.

Representative Derby commented that he spent a lot of time working with LRC staff this summer on the redistricting study, and that LRC does have the smallest staff in the country to keep things running. He said that the committee is looking at making cuts and thought it was only fair to also

look at the Legislature's budget.

Representative Derby questioned the voting machine upgrades. Mr. Fry explained that there had been a small hardware upgrade that had made the machine more reliable and that this $50,000 is to make upgrades necessary to prevent the kind of untimely breakdown that occurred during the cement plant special session.

Mr. Fry indicated that $200,000 was reverted last year to the general fund.

Senator Apa questioned the lease of laptop computers. Mr. Fry said that 75 machines would be returned to Gateway and that 105 machines will be leased. He said that $2,148 per computer would cover the machine cost, operating system, and office suite.

In response to a question from Senator Apa, Mr. Fry said that $27,000 has been budgeted for code counsel travel and $27,531 for NCSL travel. He said this was primarily money for legislators to travel to meetings for their benefit.

Social Services

Representative Richter assumed the Chair.

Darla Blaseg, Department of Social Services, responded to Representative Adelstein's questions concerning the TANF program. She indicated that the federal funding level of TANF would not increase even if there was increased state funding or a private donation to TANF.

Representative Richter suggested that Representatives Klaudt and Adelstein meet with DSS staff after the meeting concerning monthly green sheet questions.

School and Public Lands

Curt Johnson, Commissioner of School and Public Lands appeared before the committee to answer questions.

In response to questions from Representative Richter and Senator Putnam, he gave some background information on the School and Public Lands permanent trust fund. He said that the interest generated every year from this fund goes to the Department of Corrections and that this fund generated $100,000 for the Department of Corrections last year.

Rena K. Ortbahn