Committee on Appropriations A/V — 2019

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Ms. Liza Clark, Commissioner, Bureau of Finance and Management (BFM), introduced staff, explained the mission of BFM, and presented the FY20 Budget request as recommended by the Governor. 00:01:52
The Bureau of Finance & Management FY20 Budget Request includes $17,114,292 in general funds, $7,963,848 in federal fund expenditure authority, and $28,719,482 in other fund expenditure authority totaling $53,797,622 and includes 42.0 FTE. 00:05:53
Commissioner Clark indicated Standard and Poor's, Moody's, and Fitch's all gave South Dakota's an outstanding AAA bond rating. Commissioner Clark said the state annual report called Comprehensive Annual Financial Report (CAFR) was published on December 28, 2018. This is the third year in a row the CAFR was published in a timely manner. Commissioner Clark said she would be working on the agency's internal controls. 00:07:45
Commissioner Clark indicated there are different pools under of Bureau of Finance and Management and explained how each pool is used. The agency works with Legislative Audit, Bureau of Administration, Bureau of Information and Telecommunications, and Bureau of Human Resources, to make sure they are managing internal service rates accurately.00:10:35
Commissioner Clark indicated BFM has lost four long serving accountants recently which totaled 146 years of public service. Commissioner Clark is working on succession planning and documenting work for internal controls. The Bureau of Finance and Management currently has three open vacancies; an accountant, accounting assistant, and an economist.00:14:50
Mr. Jim Terwilliger was their only economist and is currently the new Secretary for the Department of Revenue. Mr. Terwilliger will do revenue projections for BFM this session to prevent having to contract for this service. This is an example of the need for succession planning.00:17:01
Representative Howard - question - how did Governor Daugaard's office determine a 2.3% salary increase for state employees last year.00:18:20
Senator Partridge - question - could you explain the two categories of the budget reserve and how do adequate budget reserves help bond rating agencies determine a AAA bond rating for the state.00:19:20
Commissioner Clark emphasized the 10% reserve has been established in previous administrations and has been followed which help determine South Dakota's AAA bond rating.00:24:39
Senator Partridge - question - when will the State of South Dakota use this reserve in an emergency.00:25:16
Representative Gross - question - have we done everything as a state to ease the bond rating agencies concerns.00:27:15
Commissioner Clark said South Dakota has obtained the highest bond rating possible. The bond rating agencies have inquired about internal controls, cyber breaches, and cyber security insurance.00:28:11
Representative Saba - question - what are we doing to enhance the AAA rating and how will this affect the State of South Dakota in the national stage.00:31:34
Senator Partridge - question - can cities and other municipalities use the State Aid Intercept Program for an optimal bond rate00:33:12
Mr. Dustin Christopherson, Associate Director, South Dakota Health & Education Facilities Authority, responded.00:33:38
Mr. David Flute, Secretary, Department of Tribal Relations, made FY20 Budget Request as recommended by the Governor. 00:35:13
General Funds- $532,675, Federal Funds Expenditure Authority - $0, Other Funds Expenditure Authority - $20,000 for a total of $552,675, with 6 FTE'S. The budget is 96% general funds, 4% other, and approximately .03% of the total State General funds. Pages 1 and 2. 00:36:12
There were reversions in General Fund of - $24,704, $13,972 for a total of $38,676. Page 4. 00:39:24
Representative Howard - question - how much was the Bush Grant00:40:58
Mr. Dovre from the Governor's office said the Bush Grant was $30,000. $15,000 was used for hosting the GIIC Conference. The remainder will be used for another event. 00:41:07
Senator Hunhoff - question - realizing you're new, what are your goals and what are you focusing on.00:42:06
Secretary Flute talked about the mental health crisis, assisting tribes, working with the congressional delegation to keep the pressure on Indian Health Services to fix areas that need to be fixed, economic growth with tourism and culture, enhancing and empowering the tribe, the meth problem is horrible on the reservations and how it affects the entire tribal nation and SD. Also, the opioid crisis and heroine problem.00:42:36
Representative Saba - question - having worked in tribal politics there is a concern why the tribes aren't getting together and working00:45:58
Senator Wiik - question - asked to have Secretary Flute explain where their office is.00:48:55
Senator Nesiba - question - what is the relationship between tribal relations and Indian Health Services00:51:00
Secretary Flute said that Secretary Emery had attended meetings to gather information from the tribes on issues with Indian Health Services. Secretary Flute wants to help facilitate discussions.00:51:20
Senator Nesiba - question - Do you have open FTE's00:53:50
Secretary Flute, in evaluating the office staff we need to look at restructuring. Need to bring in a person who's more well-rounded. We are short-staffed right now with 2 open FTE's that we are looking to fill.00:53:60
Senator White - question - on the state working with the tribes on funding, and the reluctance for the required documentation.00:55:47
Secretary Flute said his tribe was working on UCC Code. The concern is on tribes who have challenges. We need to strengthen them and provide guidance to them. We need to get them to work on the goal to bring in some investors, jobs and revenue.00:57:14
Representative Saba - question - on tourism, people are interested in Native American Culture. How can you bring that to South Dakota?00:59:25
Secretary Flute worked with the US Secretary of State to bring in museum curators from other countries to visit the tribes and highlight the state. He is looking to partner with the tribes to share the process to bring foreigners to share our culture.00:59:65
Senator Maher - statement - we need help work with the tribes to curb the meth problem. We also need an agreement with DSS.01:03:08
Senator Nesiba - question - timeline in terms of interviews and hiring new staff?01:04:02
Page 1 - General Funds - $10,848,520, Federal Funds Expenditure Authority - $0, Other Funds Expenditure Authority - $755,040, with 71.6 FTE's. 01:07:35
Director Jason Hancock, Executive Director of the Legislative Research Council, presented an overview of the Legislative Branch Organization Charts. 01:07:38
Legislative Research Council and Legislative Audit01:08:13
Director Hancock, SDCL has increased legislator per diem at a cost of $29,400. CSG dues, NCSL dues, and Uniform Laws Commission have increased for a total of $38,563. Existing funding is enough for Legislative salaries. A change in employee compensation amounts to $50,121. Session travel and page costs increased by $12,785. 01:12:30
Senator Partridge - question - on budget request item 2, this person is hired already01:26:02
Representative Koth - question - On page 3, line C, what source do they use for the 1% move to market?01:27:20
Representative Howard - question - on page 4 of the briefing walk us through the reversions01:31:48
Director Hancock - The Legislature and LRC reverted $288,00 mostly in personal services $140,000 and travel $130,000. We need to maintain a balance for retirements. With turnover there is no normal way to repurpose salary to staff so employees who were below market level were raised 2.9%.01:32:10
Howard - question - what are the other fund reversions01:35:45
Tami Darnall, staff - the $288,000 is for LRC and legislative staff. $316,000 is for legislative audit.01:36:10
Representative Koth - question -There is a large amount of legislative travel. Who controls the money for travel 01:36:44
Senator Partridge - question - the budget vs actual is always an issue. Can you explain the gap01:39:48
Senator Partridge - question - This is the Legislator's budget and it needs to be watched. The budget vs actual is a concern01:42:00
Representative Saba - question - are retirements reflected in the budget01:42:46
Representative Hunhoff - question - break out in-state and out of state travel plus legislators and staff numbers to better understand01:46:16
Senator Nesiba - question - how many open FTE's and how do you manage during session01:47:00
Senator Nesiba - question - What do you see as a timeline for new staff and interviews01:49:52
Representative Howard - question - What can you share with us on exit interviews01:50:54
Senator Wiik - question - the chairs have talked to Jason about staff leaving and reasons.01:52:14
Representative Howard - question - No trend on salary and location01:52:55
Representative Hunhoff - question - could you go back to legislative contingency fund and track expenses01:53:45
Senator Partridge - question - With several IT projects going on is there a summary on projected costs01:55:55
Director Hancock - We will put that report together for you01:56:52
Representative Karr - I appreciate the transparency of what we are operating under and appreciate LRC01:57:00
Representative Gross - question - page 5 what is included in capital outlay fund 01:57:44
Senator Nesiba - question - For new members please tell how LRC compares nationally02:00:20
Presentation from Department of Legislative Audit by Martin Guindon Auditor General. General Funds - $3,927,756, Federal Funds Expenditure Authority - $0, Other Funds Expenditure Authority - $0, with 40 FTE's. The Executive Board is our governing body. Our mission is to enhance accountability of government. Staffing is all hands-on deck.02:02:55
Senator Partridge - question - Would it be within your future purview to consider doing proactive audits02:12:50
Auditor General Guindon - For operating expense inflation we are requesting $1,450, for BIT $$1,377, for insurance premiums and surety bonding $1,968, for change in employee compensation $151,024 in salary and benefits. Other adjustments decreased $800. 02:15:20
Senator Maher - question - Do you have salary concerns for your auditors 02:18:29
Representative Howard - question - concern for making up for depression wages02:26:20
Representative Koth - question - revenue side, $1.8 million fees coming in from other agencies 02:27:53
Representative Howard - question - is it 5 years you want to go back to 3.7% and cumulative effect on salaries02:29:28
Adjourned - White/Kolbeck02:30:00

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