Committee on Appropriations A/V — 2018

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Call to Order and Roll Call00:00:05
Co-Chair Anderson announced the Program Evaluation Committee: Senators Wiik, Nesiba, Partridge and Representatives Ahlers, Bartels and Hunhoff who will serve as Chair.00:01:34
Bureau of Finance & Management00:02:40
Liza Clark, Commissioner of the Bureau of Finance & Management introduced staff and gave a brief overview of the Bureau's duties.00:02:44
Commissioner Clark reported that the CAFR was completed within 6 months for the second year in a row.00:04:40
South Dakota received a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association for the 2016 CAFR.00:05:02
South Dakota's AAA bond rating. 00:05:30
State Board of Internal Controls.00:06:19
Annie Mehlhaff, LRC Fiscal staff, presented information on the Bureau of Finance (BFM) budget.00:07:15
The Bureau's budget consists of 6 budget units: BFM Finance, Computer Development Pool, Building Authority, Health/Education Facilities, Education Enhancement Funding and Salary/Bureau Pools.00:07:24
The Bureau of Finance & Management receives 51% of the Total Agency Funds appropriated. The remaining areas are pools or informational budgets.00:07:40
Distribution of Finance Office Funds: The only General Funds are in the Finance & Management section, the remaining funds are Other Funds.00:08:00
Page 3 - Bureau of Finance & Management: the recommended FY19 budget totals $6,306,420 and 36.0 FTE. $958,267 in general funds and $5,348,153 in other funds. 00:08:40
Page 4 - Prior Year Recap: Reversions totaled $30,562 in general funds and $469,112 in other funds. A one-time transfer of $280,206 in other fund expenditure authority from BFM Computer Services and Development to BFM Financial Systems and Operations for costs associated with the conversion and upgrade of the State's Human Resource Information System/Payroll System.00:09:10
Page 5 - Both expansion items are related to computer upgrades and/or software maintenance contracts.00:10:00
Ms. Clark explained the requests were mostly upgrades, moving to a cloud based subscription which will provide more features and licenses and software maintenance for the Human Resources system upgrade.00:10:20
Senator Tidemann question regarding the need for a computer system replacement for BFM.00:11:24
Ms. Clark said the accounting system/main frame is being evaluated and BIT is working on a long-term plan to how to move the Bureau off the main frame.00:11:50
Representative Bartels question on computer development pool funds.00:12:50
Ms. Clark explained the Computer Development Pool is one-time spending authority and used for one time purchases. 00:13:02
Page 7 - Sale/Leaseback: the final payment was made in December 2016. Ms. Mehlhaff provided history of the Sale Leaseback program.00:13:43
Page 8 - Computer Services and Development Pool - This is a pool of spending authority. It has no cash and no revenue sources. It is transferred to agencies that have the cash to pay for one-time computer development systems.00:14:28
The reversions from the Computer Services & Development pool in FY17 were $1.6 million.00:15:28
The next 3 budget units: Building Authority, Health & Education Facilities Authority, Educational Enhancement Funding Corporation are all informational budgets. There are no requests for increases.00:15:35
Page 14 - Employee Compensation and Billing Pool: This pool contains the salary policy funds. Depending on what is approved, the Bureau of Finance & Management distributes the funds to all state agencies.00:16:33
Employee Compensation hearing with the Bureau of Human Resources is scheduled for January 17th.00:17:20
Senator Tidemann question on Bureau billings and anticipated increases.00:17:59
Ms. Clark explained bureau billings in the BFM budget were for all Bureaus. BFM works with agencies on costs to determine the rates and looks at the agency budget to determine the need for an increase. If a rate increase is necessary, BFM looks at how it will affect all agencies.00:18:09
Senator Cronin question on postage rates changing mid-year.00:19:49
Ms. Clark said rates are billed quarterly and constantly reviewed and compared to other rates being charged. At times outside providers may perform the service at a lower rate.00:20:18
Representative Peterson question on bulk mailing rates. Commissioner Clark said agencies might be charged a specific rate for a bulk mailing, but the ongoing rate would not be affected.00:22:09
Department of Tribal Relations00:25:00
Steve Emery, Secretary of the Department of Tribal Relations gave a brief overview of the department.00:25:02
Ariel Hammerquist, LRC Fiscal staff, presented the budget for the Department of Tribal Relations. The budget is approximately .03% of the total State General Funds. The budget is 96% general and 4% other and the department has .04 unutilized FTE. 00:34:40
Page 2 - Actual expenditures for FY16, FY17, the current budget year FY18 and the recommended FY19 budget. No changes are recommended for this budget.00:35:23
Page 3 - In FY17 there were reversions of $52,534 in general funds, $25,364 from Employee Salaries and Benefits and $20,178 from travel. There was also a reversion of $16,372 in other funds for a total revision of $68,906. 00:35:50
Page 6 - Revenue and Statistics and funding sources. The recommended FY19 budget totals $545,941 and 6.0 FTE. $525,941 in general funds and $20,000 in other funds.00:36:35
Page 7 details the other fund balance history and historical budget changes.00:36:56
Secretary Emery explained the 0.4 unutilized FTE was due to turnover.00:37:20
Senator Nesiba question on the duties of the 6 FTEs.00:37:48
Secretary Emery detailed the position titles and duties.00:38:02
Representative Ahlers question on the status of the tax agreement with the 9th Tribe. 00:39:00
Secretary Emery said the Lower Brule Sioux Tribe has never had a tax agreement; however, discussions are underway with the leadership for a partial tax agreement.00:39:20
Senator Cronin question on the Other Funds detailed on Page 7.00:39:40
Secretary Emery said the Tribal Relations fund is strictly by donation from sponsors of the Tribal Relations Day. The Bush Foundation grant has been turned back because it was never utilized. The Blood Run fund was for expenses for Tribal members to attend functions. This fund is no longer available.00:40:00
Senator Cronin question on Juvenile Justice Pilot Program.00:40:50
Secretary Emery explained the Juvenile Justice Initiative funds were for expenses for members of the Native American workgroup to attend the Juvenile Justice meetings. 00:41:06
Representative Lake question on the success of the Native American Achievement School Grant.00:41:23
Secretary Emery felt the grant is working well, two of the schools are in Todd County.00:41:41
Representative Hunhoff question on SD Health Care Coalition.00:42:08
Secretary Emery said it is the department's role to link the tribes to the Coalition. The department continues the outreach with Tribes on the Coalition activity.00:42:25
Senator Partridge question on law enforcement.00:42:50
Secretary Emery said the department, along with the Highway Patrol, have been conducting quarterly meetings with Tribal Police. In addition, information on drug trafficking and other criminal activity has been shared.00:43:05
Representative Hunhoff question on law enforcement training for Native American law enforcement officers.00:44:08
Secretary Emery said the department is working on a Memo of Understanding to getting more officers into the training. Secretary Emery feels there has been a lack of communication between the Tribes and the DCI on fulfilling the time frame for the Tribes.00:44:36
Senator Cronin question on Indian Health Services.00:45:31
Secretary Emery said the leadership at IHS has not been very stable and as result they have not been successful in meeting with that agency.00:46:14
Senator White question on working with Game, Fish & Parks across tribal lands.00:46:42
Secretary Emery said there are currently 5 Memos of Understanding with several Tribes to share wildlife data, licensing requirements and other activities to help with the wildlife issues and maintain resources. 00:47:16
Representative Hunhoff question on IHS and Tribal Health Committees.00:48:42
Secretary Emery said the department does work closely with the Tribal Health Departments and particularly working on behavioral health and suicide prevention.00:48:58
Representative Hunhoff question on possible grants available. Secretary Emery said they do receive a lot of federal grant notices.00:49:15
Secretary Jim Hagen, Department of Tourism, introduced staff and presented FY19 budget request as recommended by the Governor00:50:20
Department of Tourism has implemented a new strategic plan, work culture, vision and mission statement, and has a new department structure. Agri-tourism, tribal tourism, outdoor adventure, and sports tourism are areas that will be targeted.00:52:25
Secretary Hagen gave a revenue report and anticipated growth in South Dakota tourism over the next year. 00:55:11
Michelin Green Guide gave South Dakota a three-star rating which is the highest rating possible00:59:15
Many tourism awards were given to the State of South Dakota00:59:56
Department of Tourism challenges include adverse agriculture economy, fierce competition from other states, and retaining staff01:01:57
Mr. Jeff Mehlhaff, Budget Analyst, Legislative Research Council, indicated the Department of Tourism FY19 Budget Request includes $878,000 in Federal Funds and $16,666,535 in Other Funds totaling $17,544,535 and includes 36.7 FTE01:04:45
Page 3 - Major Items Summary - Department of Tourism01:05:14
Page 4 - Tourism Programs and Functions by Division List01:05:25
Page 6 - An increase of $229,408 in other fund authority was approved for tourism in a supplemental bill for FY17. Increased marketing occurred since there was an increase in promotion and gaming tax revenue. 01:05:34
Page 7 - There is excess authority in contractual services. The department is changing from contracted employees and trending toward hiring state seasonal employees 01:06:03
Department of Tourism requested a decrease of $24,578 in other funds to remove excess authority in contractual services and requested an overall increase of 8 FTE which resulted in a decrease of $17,814 in other funds.01:06:15
Secretary Hagen explained the change in employee structure at Information Centers and why changes were made.01:07:05
Office of the Attorney General advised the Department of Tourism there were liability issues under the current contract the with South Dakota Missouri River Tourism.01:09:04
Page 7 - Personal Services Shortfall and Cushion - The Department of Tourism requested a .7 FTE and $42,392 in other funds to cover $24,999 in projected personal services shortfall and $17,393 for a 1% personal services cushion.01:12:05
Representative Hunhoff - question - requested more details why the State of South Dakota is breaking the contract with South Dakota Missouri River Tourism01:12:50
Representative Lake - question why aren't there more savings from terminating contractual services and employing state seasonal workers01:13:57
Senator Cronin - question will there be an increase in benefits for state seasonal employees01:15:39
Page 8 - Reversions: Tourism - Chart01:16:27
Page 9 - Revenues and Statistics Chart and Governor's Budget Performance Indicators01:16:42
Page 10 - South Dakota Arts Council - FY19 Budget Request includes Federal Funds $878,000 and Other Funds $947,860, 3.0 FTE01:17:11
Page 11 - Budget by Decision Unit - Arts - Prior increase of $58,492 in other fund authority was approved for the arts in a supplemental bill for FY17 to increase marketing. Source is taxes from gaming revenues.01:17:25
Page 13 - Tourism Promotion Fund - History01:18:10
Representative Howard - question why has the number of performance indicators decreased in the budget book01:19:15
Representative Carson - question why did the hotel tax revenue decrease and do you track it monthly, by region, and requested a report01:20:20
Senator Tidemann - question is the Department of Tourism in charge of the Dignity Statue in Chamberlain01:22:25
Senator Tidemann - raised a concern why there isn't any signage to promote the Dignity Statue on Interstate 9001:23:30
Senator Tidemann - question is it possible for Game Fish and Parks and the Department of Tourism to work together to promote Pheasant Habitat since CRP is going away01:24:00
Representative Carson - question did the Department of Tourism bring the Vietnam Memorial Wall to Chamberlain01:26:31
Representative Hunhoff - question has the federal government also given $878,000 in funding authority to the Endowment of the Arts - why are expenses increasing - Page 1401:27:05
Representative Ahlers - comment about Tourism Promotion - Dell Rapids - Quilt Shop was mentioned in Better Homes and Gardens 2018 Top Ten Quilt Shop in the United States01:30:34
Mr. Aaron Scheibe, Deputy Commissioner, Governor's Office of Economic Development, made FY19 budget request as recommended by the Governor 01:31:48
Mr. Schiebe, GOED, presented successes in Governor's Office of Economic Development over the past year GOED emphasized business development in value added agriculture, advanced manufacturing, financial services, and bio-sciences resulting in 40 projects and creating 1,400 jobs 01:33:45
The Community Development Division has four FTE promoting in-state business and are engaged with 127 communities to be ready for potential economic development01:35:53
Finance Team has grant administrators, loan underwriters, credit analysts, and used existing resources to promote economic development - Example Dakota Provisions expansion01:38:45
Mr. Scheibe said the downturn in the agriculture economy and retaining staff has presented challenges01:41:45
Jeff Mehlhaff, Budget Analyst, Legislative Research Council, reported the GOED agency requested $11,682,409 in General Funds, $11,493,565 in Federal Funds, and $55,531,985 in Other Funds totaling $78,707,959 in FY19. This includes 107.9 FTE01:43:40
Page 5 - GOED agency requested an in-house transfer. This transfer includes 2 FTE and $4,626,953 --- Broken out as $4,126,953 in general funds and $500,000 in other funds from the division of research commerce into the main GOED center01:43:55
Page 6 and Page 7 - Reversion of Authority History - Chart01:48:14
Page 11 - Office of Research Commerce - The agency requested a transfer of 2 FTE and a reduction of $4,626,953 with $4,126,953 in general funds and $500,000 in other funds to transfer the division of research commerce into the GOED center.01:48:56
Page 12 - Reversion of Spending Authority History Chart - Office of Research Commerce01:49:10
Senator White - question what are the Governor's workforce development ideas going forward and gave an example how Dakota Provisions recruited a workforce01:50:50
Representative Hunhoff - Page 9 - Proof of Concept Research Projects and asked who received these awards and what were the repayments01:57:07
Representative Hunhoff - requested additional information what is the success rate of Proof of Concept Research Projects02:00:27
Mr. Mark Lauseng, Executive Director Housing Development Authority, presented an overview and FY19 budget request included $6,782,409 in general funds, $9,480,254 in federal funds, and $34,713,293 in other funds totaling $50,975,956 which include 42.6 FTE02:02:44
Page 15 - South Dakota Housing Development Authority - The agency requested an increase in $300,000 in other fund authority for materials to build Governor houses 02:05:20
Representative Anderson - question how has the Canadian tariff affected lumber prices02:06:43
Page 16 - Capital Outlay Expenses - the agency requested an increase of $254,784 in other funds for capital outlay expenses. 02:07:30
Representative Anderson - question what will the capital outlay expenses for the housing authority be for the next year and requested additional information02:08:26
Page 17 - Housing Development Authority - State of Revenues, Expenses, and Changes in Net Position02:09:30
Senator White - question what is the cash to asset ratio and how do you determine where you want it to be02:09:53
Representative Hunhoff - question is there a waiting list for Governor Housing02:10:50
Mr. Mike Headley, Executive Director Science and Technology Authority, gave a report of the Sanford Underground Research Facility in Lead, SD and FY19 Budget Request is $3,789,397 in Other Funds and .3 FTE as recommended by the Governor02:12:45
Sanford Underground Research (SURF) Update - Projected Federal Fund Budget totalling $20.3M - January 11, 2018 - Handout02:18:20
Page 21 - Statement of Revenues, Expenses, and Changes in Net Position for Science and Technology Authority02:22:15
Senator Partridge - question why are we conducting Sanford Lab experiments and what are the benefits02:22:50
Senator Tidemann - question what is the economic impact to South Dakota during construction of the underground labs02:25:35
Representative Ahlers - question what is the practical applications of these experiments02:26:30
Senator Cronin - question what is happening with the Indemnification Fund and what are the needs for the remaining funds02:28:16
Mr. Scott Landguth, South Dakota Ellsworth Authority, presented an overview and indicated the authority is working with School and Public Lands and purchasing land surrounding mobile home park which is Senate Bill 40. Mr. Landguth requested $698,254 in Other Funds for FY19 as recommended by the Governor.02:31:40
Page 26 - Page 27 - The agency requested $14,000 in Other Funds for the Executive Director and Managing Director. The agency requested an increase of $4,010 in Other Funds related to insurance premiums and surety bonds. The agency requested $5,200 in Other Funds for an accountant consultant.02:34:06
Page 28 - Statement of Revenues, Expenses, and Changes in Net Position02:36:48
Representative Howard - question what are the contractual services Ellsworth Development Authority using02:39:14
Senator Patridge - question what year did the authority start, what are the plans to expand the authority's mission, and what is the status of Ellsworth Airforce Base02:40:50
Senator Tidemann - question what are the chances South Dakota will house the B-21 Bomber02:42:55
Senator Tidemann - question will Ellsworth Airforce Base have to build larger hangers to host the B-21 Bomber02:44:00
Senator Sutton - question when will there be an official airforce announcement for the home base of the B-21 bomber02:45:09
Adjourn Carson/Bartels02:47:55