OTHERS PRESENT: See Original Minutes

The meeting was called to order by Chairman Drake

South Dakota Retirement System

Mr. Asher, Administrator of SD Retirement System was introduced, as well as other members of SDRS and the Board of Trustees.

Annie Mertz distributed Document 1.

Mr. Asher, Administrator of SD Retirement System, addressed the committee in reference to the breakdown of funding sources in the FY2002 base budget on Document #1. He then discussed the FTE.

Senator Kleven questioned the administration costs of 3%. Mr. Asher replied that they can use 3% statutorily, but this budget uses only 2.5% of the current contributions.

Chairman Drake questioned the overtime hours listed in Document #1. He asked if current projections were in line with the 1,000 hours used in FY2001. If so, why the need for 3 new employees. Also, if the reason for new employees was a result of complaints resulting from overtime current employees. Mr. Asher replied that the 3 new employees were needed for the overtime and for the new upgrades being done, also that the complaints were not from current employees, rather from retirement fund recipients needing more assistance than they are currently receiving.

Chairman Drake questioned the need for an upgrade in the computer system. Mr. Asher replied that they are still working with five-year-old software and hardware and it is not capable of handling Internet applications. Mr. Asher also stated that using Internet applications will free up staff time.

Chairman Drake questioned the need for more staff if the Internet would free up time for current staff. Mr. Asher replied that with more information being available, the staff is receiving more questions.

Mr. Asher continued with the budget. He said that they were no longer requesting the total amount of the budget initially proposed, but $60,000 less.

The gavel was passed to Representative Derby at 8:35 AM.

Representative Derby requested that Annie Mertz, LRC Staff, explain the budget sheets provided to the Sub-Committee Members.

Senator Dennert questioned Mr. Asher on the increase in investment revenue over the three-year period. Mr. Wylie said the figures Senator Dennert was referring to were compiled in September of 2000. At that time, market conditions were much more favorable. The actual return on investments will be just level.

Representative Clark questioned the increase in benefits if the fund balance is reduced. Mr. Asher replied that SDRS does not give increases until the money is in the fund.

8:45 Chairman Drake resumes the gavel.

Representative Derby questions Mr. Asher about the Minnesota retirement system. Mr. Asher replied that South Dakota will not make that same mistake because they do not give benefit increases before guaranteeing the money.

Mr. Asher stated he had no further testimony. Chairman Drake excused the committee members to

reconvene at 10:00AM.

Senate Appropriations Subcommittee #2 was recessed at 9:00AM

Senate Appropriations Subcommittee #2 was reconvened at 10:00 AM

Chairman Drake called the meeting to order.

Bureau of Information and Telecommunications

Otto Doll, Commissioner, was introduced as well as the introductions of his staff members who were present. (See Doc. #2)

Mr. Doll explained the mission of the Bureau of Information and Telecommunications. He followed the scenarios drawn out in Document #3. He explained the growth in usage of the Information Systems and their need for further growth in each area.

Senator Dennert questioned the trouble tickets vs. scheduled tickets and what the possibilities would have been if they would not have reconciled at some point in time and why it took four years for them to reconcile. Mr. Doll explained that they just organized the BIT in 1996 and Governor Janklow's request to centralize was then made to them. They had to stabilize, organize, and standardize all of the hardware and software and it took four years to do so.

Representative Pummel asked if the courthouses were included in the standardization and the linking of state agencies. Mr. Doll replied that if the individual courthouses have state represented offices within them then they have been linked.

Senator Kleven questioned how the Department of Transportation and the Bureau of Information and Telecommunications was linked. Mr. Doll answered that the BIT has people in different agencies that represent the BIT but work with the individual agencies as well.

Representative Derby questioned whether there were state policy's set-up by BIT regulating the Internet access by state employees from their work station PC's. Mr. Doll stated that the use policies are in place and said that when an employee of the state uses Internet while at work they must use it only for work purposes. State policy also states that the agencies can take action against an employee using the Internet from work for personal reasons up to and including termination. He stated that the BIT had nothing to do with the policies and regulations but was there to assist the agencies in obtaining information on the sites accessed from any state owned PC.

Senator Kleven questioned if there was a history file contained in the individual P.C.'s. Mr. Doll related that the history file is unreliable and that B.I.T. maintains an information log for 30 days.

Mr. Doll continued with the BIT budget explanation.

Senator Drake questioned whether the teachers were trained for the proposed index of information or the mega web site project. Mr. Doll answered that the information obtained would be quite remedial as well as interactive for course material selections and coordination.

Senator Drake posed the question of whether this Index would assist smaller school districts to have access to course material they do not have access too now. Mr. Doll said that BIT was responsible for establishing the Index and that DECA would regulate it and provide explanation to schools.

Representative Clark asked how many employees would be needed to create the Index. Mr. Doll replied that one employee would be needed.

Representative Derby said he found it hard to comprehend that with the immensity of the Internet that this Index was not already created somewhere. Mr. Doll explained that it may be somewhat created, but by users who refer sites and not necessarily by experienced educators; neither is it created by South Dakota education standards.

Senator Drake asked if the E-Government Benefits in Document #3 would increase efficiency, and whether it would also eliminate need for staff. Mr. Doll replied that it would eliminate the workload in those certain areas and rather than deleting staff would reinvent the staff's role by redirecting their energies.

Representative Burg replied that all they were seeing was great in theory, but would they gain anything when they must replace equipment and suffer other costs. Mr. Doll said that Information Technology was an ongoing cost to everyone that must be maintained and upgraded. He also referred to the fact that we are unable to live without it within our state agencies and that our benefits may be in other areas besides commerce. He went on to say that we must be competitive with others states and that the federal government was going to require each state to be accessible within E- Government.

Senator Drake asked if there would be a decrease in employees when E-Government was established. Mr. Doll responded that at some point the answer would be yes. After the E-Government system is established and up and running. Now only 7% of the world has Internet. When that number increases, we would then see a decrease in the amount of staff needed.

Senator Drake questioned Mr. Doll for the total cost to each state agency to participate in the E- Government plan. Mr. Doll said he would provide it at a later date.

Representative Clark asked if some of the funds would come from other agencies. Mr. Doll responded affirmatively.

Representative Clark asked for a better explanation on fraud prevention, for example fishing licencing through the Internet. Mr. Doll answered that the check & balances may not be at the point of sale, but rather at a later date and that it will mimic what is done presently today on a case by case basis.

Representative Pummel asked Mr. Doll's opinion on Internet voting. Mr. Doll replied that it was Information Technology viable, but that extreme measures of security that would be costly to the states would have to be in place.

Senator Kleven questioned if wiring the schools is part of the BIT projects and if the local smaller schools are having problems in their budget for wiring etc. Mr. Doll stated that the BIT and DECA work together to establish it and that DECA surveys the schools every May and that he didn't think budget was included in that survey. Senator Kleven will direct her question to DECA.

Representative Derby asked about the increase in rates for individual state agencies. Mr. Doll replied that the major changes are to the billing structure of the rates and how they are calculated. It may seem that some agencies are charged more when it is actually a structure change.

Representative Burg questioned why people are paying more for State Radio and new radios. Mr. Doll said that with the new radio tower, they will make it universal so that others will not have to update their individual radios.

Senator Kleven questioned why the Digital Dakota Network was no longer in the budget and what would that mean to DDN. Mr. Doll answered that they were requesting federal grant monies to aid DDN.

LeAnn Allstot