MINUTES OF THE
JOINT SUBCOMMITTEE on general government
OF THE
SENATE COMMITTEE ON FINANCE
AND THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Seventy-First Session
February 16, 2001
The Joint Subcommittee on General Government of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman William R. O’Donnell at 8:05 a.m., on Friday, February 16, 2001, in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
SENATE COMMITTEE MEMBERS PRESENT:
Senator William R. O’Donnell, Chairman
Senator Lawrence E. Jacobsen
ASSEMBLY COMMITTEE MEMBERS PRESENT:
Mrs. Vonne S. Chowning, Chairman
Mr. Bob Beers
Ms. Christina R. Giunchigliani
Mr. Lynn C. Hettrick
Ms. Shelia Leslie
Mr. David R. Parks
SENATE COMMITTEE MEMBERS ABSENT:
Senator Joseph M. Neal Jr.
STAFF MEMBERS PRESENT
Gary L. Ghiggeri, Senate Fiscal Analyst
Mark Stevens, Assembly Fiscal Analyst
Jim Rodriguez, Program Analyst
Patricia C. Hampton, Committee Secretary
OTHERS PRESENT:
Terry Savage, Director, Department of Information Technology
Diane Jungwirth, Chief Assistant Budget Administrator, Budget Division, Department of Administration
Mark Blomstrom, Deputy Director, Communication and Computing Division, Department of Information Technology
Chris Apple, Nomads Project Manager, Application Design and Development Unit, Technical Operations Division, Department of Information Technology
Dave Richards, Director, Telecommunications Unit, Communication and Computing Division, Department of Information Technology
DEPARTMENT OF INFORMATION TECHNOLOGY
Terry Savage, Director, Department of Information Technology, stated the department’s overall budget request is $38.8 million for fiscal year (FY) 2002 and $36.8 million for FY 2003. He explained an additional one-time appropriation request for the phase II digital microwave upgrade will not be covered today. He stated this request will be covered in detail at a separate hearing.
Mr. Savage remarked most of the overviews presented at this meeting will be on new decision units as opposed to the base budget. He said there was a request at an earlier hearing for a comparison of the new positions and the organizational structure, which is displayed in Exhibit C. He explained that page 5 of Exhibit C is a summary chart showing, by each organizational unit, what the changes will be in each unit. He pointed out that the exhibit pages with red boxes indicate the proposed organization after changes, whereas pages without red boxes, represents the current structure.
Mr. Savage pointed out the only change at the director’s level is the reclassification of the current project manager position for the Nevada Operations Multi‑Automated Data Systems (NOMADS). He explained the proposal is to expand the scope of the position to include multiple Department of Human Resources projects, and at the same time reduce the costs and level of the position. He stated the position would be at a “chief level.”
Mr. Savage stated there is a proposal to add one position to the quality assurance unit. He explained that the Department of Information Technology (DoIT) would not perform quality assurance for all the various projects, but would provide technical oversite of contracted quality assurance for large projects. He said some hands-on quality assurance support will be provided for some smaller projects.
Mr. Savage pointed out that in the Application, Design and Development Unit a reduction of 19 positions is shown. This represents a pilot program for decentralizing the department’s programming function. He remarked there has been a great deal of discussion about decentralizing various DoIT functions and explained this reduction in positions represents the department’s proposal to decentralize its programming function.
Continuing, Mr. Savage stated the department is proposing to add 4 positions to the Planning and Research Unit and 2 positions to the Database Administration Unit. He stressed that employees in the Database Administration Unit are badly overworked. He said the trend in technology is that the database function and design is increasingly important to how efficiently the operation works and perhaps even whether it can be made to work at all. To improve efficiency on NOMADS, the department is tuning some of the database query functions, he explained.
Mr. Savage said 8 new positions are requested in the computer operations unit and 5 in the Communications Unit, including both personal computer (PC) and network technicians. He remarked that personnel and fiscal services will be covered in more detail when the rate structure issue is discussed.
Mr. Savage stated that in the Application Support Unit, DoIT has historically provided payroll data entry for a large number of organizations. He pointed out that because of the successful implementation of the Integrated Financial System (IFS) in many areas, there is a reduced need to provide this service. He noted that two of the five positions will be transferred to the Department of Personnel to perform the data entry required in that department. The remaining 3 positions will be reclassified to provide documentation and technical support to other engineering organizations within the group, he added. Mr. Savage said no staffing changes are proposed for Contract Administration or the Support Services units.
Mr. Savage called attention to a chronological summary of rate structures describing the historical rate problem in the department (Exhibit D). He explained Exhibit D covers both the history of how the department got where it is, what is going on today, and what may be happening in the near and long term future. He noted the rate structure issue came up in 1996 as a serious concern, during preparation of the budget for the 1997 Legislative Session. He said $20,000 was approved for a rate study and a request for proposals (RFP) was issued in 1998. The contract was awarded to David M. Griffith and Associates (DMG), a company that is now called MAXIMUS, he noted.
Mr. Savage said the report was completed in June 1998. The most important thing the report did was to identify the department’s cost pools. He explained that each of the services provided by DoIT has a separate cost pool. Agencies are charged to recover the total cost of services provided. He said the number of actual entries to compute what the department should charge each agency for each service is fairly complex.
Mr. Savage stated DMG recommended a forecast plan be done each year in advance to estimate what the cost will be for each service. This estimate would be based on the expected number of services to be used by each agency and the actual cost in each separate cost pool. He said it was also recommended that at the end of each fiscal year, a closeout summary be done, reflecting what actually happened regarding the actual cost and usage of services.
Mr. Savage pointed out that in October 1998 the revenue budget submitted by DoIT did not comply with the recommendations. Therefore, the budget office contracted with DMG again to look at the issue, he explained. He said the rates associated with the findings of the new review were submitted and approved by the Legislature in 1999.
Mr. Savage stated that DMG and the Department of Administration recommended DoIT purchase DMG software that does the calculations. However, DoIT did not purchase the software. He stated that, instead, a Microsoft Excel spreadsheet was developed based on the cost pool structure DMG had created. He emphasized this was a very bad idea. He explained that when large spreadsheets are developed, the chances for error, particularly if they are edited, are “legend.”
Mr. Savage said the spreadsheet initially did a fairly good job until it was updated. He said when an update is not done by the individual who created the spreadsheet, the likelihood of introducing error is extraordinarily high, and that is exactly what happened in this instance.
Mr. Savage said that between 1999 and 2000 the Excel spreadsheet mutated into an undesirable form, over-collecting in some cost pools and under-collecting in others. He explained the net result was an over-collection of revenues for the biennium of approximately $7.5 million. He stated that in January 2001, the Department of Administration discovered the problem and assembled a team to sort out the problem and produce a new rate model to forecast DoIT services for FY 2002-2003 budgets.
Mr. Savage indicated a thorough analysis is being preformed to determine the various services provided, what costs should be included, and what is the proper way to recover the costs. He said the process will be completed by March 15, 2001. Mr. Savage informed the committee that instead of using the Excel spreadsheet, as was done in the past, DoIT will purchase the cost plan software.
Additionally, Mr. Savage said, an adjustment to the overall budget will be proposed to provide for DMG to review the actual data to the forecasts on a quarterly basis. He explained that DMG will also assist with the creation of the forecast plans and the annual closeout for each fiscal year.
Senator O’Donnell asked how much the software costs. Mr. Savage answered the cost is approximately $5,000. Senator O’Donnell asked how much will have to be paid to the federal government in penalties because of the erroneous billings. Mr. Savage stated it is not yet clear whether penalties will have to be paid. He explained one option is that if the overpayment is returned through rate reductions, in a reasonably timely manner, typically within three years, there should not be a liability for penalties.
Senator O’Donnell asked whether the federal government will have to be paid back. Mr. Savage stated the payback would be the amount of over-collection, as long as the federal government is paid back by reducing the rates that would otherwise be in effect. He said the payback could be made over a period of time. Senator O’Donnell asked how much the payback would be. Mr. Savage answered the analysis is still in process, so those figures are not available.
Senator O’Donnell stated decisions cannot be made as to whether the payback should be done in a lump sum or paid over a period of three years unless the amount is known. He pointed out if there has to be a payback, someone will have to take a shortage. Mr. Savage explained that the method of payback would not be an immediate “hit” to any budget account. He said that over a three‑year period the usual charges would be reduced, which would reduce excess reserves over time and refund the balances over collected in the past. He maintained the federal government normally prefers this method of payback.
Ms. Giunchigliani asked why there is a need for another rate study if the software to be purchased is the same as recommended in the past. Diane Jungwirth, Chief Assistant Budget Administrator, Budget Division, Department of Administration, explained another rate study is being done. She stated the methodology used in the previous rate study will be used now and in the future. Rate plans now need to be made on a yearly basis, she added. She said this is similar to the statewide cost allocation plan that DMG develops every year.
Ms. Giunchigliani asked why the recommendation was not implemented in the last biennium. Senator O’Donnell stated it was implemented, but in an erroneous method, and now there is a $2.8 million differential in the reserve account. Ms Giunchigliani asked when the amount owed will be known so the budget can be developed. Mr. Savage reiterated the current rate plan and the amount of overpayment will be available by March 15, 2001. Senator O’Donnell asked whether the Legislative Counsel Bureau analysts would have the information on that date. Mr. Savage answered that they would.
Ms. Jungwirth agreed the budget numbers will be available on March 15. However, she pointed out, these figures will be based on the Governor’s recommended budget. She stated a commitment has been made to legislative staff, that once the legislative approved budget is complete, the rate model will be rerun.
Ms. Jungwirth explained the forecast plan is based on budget information and utilization. She stated the Governor’s recommended budget is being used and if the budget is changed in any area the rates for that particular cost pool will be changed.
Mr. Savage added that rates are based on costs, and costs are based on what the Legislature approves for spending. He said there will initially be a rate model consistent with the Governor’s proposed budget. However, he added, if what gets approved by the Legislature is different from the Governor’s proposed budget, the rates appropriate to be charged would change. If that happens, the rate model will be rerun to produce the proper rates based on the final approved budget, he added.
Mr. Beers asked if an agreement can be reached and the budget is closed before the budget deadline, whether it would be possible for DoIT to assume the closed budget would be a permanent modification to the department’s budget. He pointed out this could speed up the adjusted figures by several weeks. Senator O’Donnell agreed that could be possible. However, he pointed out, last session there was a $4 million error causing $4 million to be placed in the budget so various agency budgets could be adjusted if the charges from DoIT were over-billed or under-billed. He noted that this year there are no additional funds for that contingency.
Ms. Jungwirth explained that when the budgets were developed for the previous legislative session, it was known there was a difference between the amounts included in the agencies’ requested budgets and what DoIT needed to recover for revenues. She stated that difference was $4 million. She noted the funds were put aside because the funds would ultimately be needed to make up this difference. This year, she said, when the rates were available, the adjustment was made to the recommended budget. She pointed out that larger adjustments were made than needed, in the amount of approximately $7.5 million over the biennium. She explained that in March 2001, the figures will be available as to how the budget should have been adjusted. Once the committee approves the budget, there will be a readjustment, she added.
Mrs. Chowning called attention to the fact there is ongoing monitoring to be done. She asked whether there are costs built in for the monitoring. Ms. Jungwirth acknowledged the costs are not included in the budget. She said when the final information is submitted on March 15, there will likely be changes to the Governor’s recommended budget for DoIT. She stated those changes will include costs for the quarterly monitoring and the ongoing contract with DMG. The accounting structure is currently being reviewed, and there may be recommendations to increase staff or change the classifications of certain positions, Ms. Jungwirth added.
Mrs. Chowning stated she does not understand why, since this was the department’s plan, it is necessary to wait until March 15. Mr. Savage acknowledged the plan submitted by DoIT had significant errors in the amount of $7.5 million. He said what is occurring now is a correction process, to be completed by March 15, 2001.
Ms. Giunchigliani asked about the decentralization request. She inquired whether there is an accounting, not only for costs, but also for office space, to move personnel back to the department. Mr. Savage explained that the staff of the individual projects to be used for the pilot of decentralization, are already physically located outside normal DoIT office space. Ms. Giunchigliani questioned what the pilot will be if the positions are already elsewhere. Mr. Savage explained that the test is not in terms of supporting costs. He said the test is to see whether decentralizing the programmers, and having them managed by the agencies, as opposed to a unit specializing in programming, produce desirable results. Ms. Giunchigliani asked when the 22 positions would transfer. Mr. Savage answered the staff have been physically colocated with projects since the centralization went into effect in 1995. He said the proposal is to change the organizational reporting effective July 1, 2001.
Ms. Giunchigliani inquired whether there will be a cost for changing the reporting. Mr. Savage replied that he is not aware of any. He stressed he is not convinced that decentralization is the right solution, but it may be correct. He stated the point is not to speculate on what is best, but to get data supporting the move. He pointed out that colocation with a project is usually desirable; the question is whether it is equally effective or better for customer agencies to manage the application development projects. He commented his bias is that it can work, but it is not generally the right solution. A number of people think the opposite, he noted. Mr. Savage stated the objective is to make it work. He said if it is efficient for the customer agencies to run the application development and this does not produce any problems, DoIT will be able to focus on other things.
Senator O’Donnell stated a test requires a definitive set of questions and answers over a period of time. He asked what kind of analytical criteria will be used to come to the Legislature with information that decentralization does or does not work. Mr. Savage answered the ultimate test is whether the projects are completed on time and within budget. He stated more detailed ways to measure results with interim milestones are being discussed. He said the test is expected to begin on July 1 and specific criteria will be developed before that time.
Mr. Beers recalled one of the major problems with the Genesis project involved Department of Motor Vehicles and Public Safety employees’ signing off on “deliverables they had not looked at”. He said he is concerned about user agencies managing contracts and does not believe the agency staff are geared up to manage technology contracts. He inquired whether management of that type of contract would be decentralized. Mr. Savage answered DoIT expects to continue managing the Master Service Agreement (MSA) programmers, because a different level of management is required. Currently, he said, contract payments pass through DoIT. It is the pass-through of this funding that is being proposed to change. He explained DoIT will continue to review the contractor’s performance, but funding for the payment of MSA services will be handled directly by the customer’s accounting staff.
Mr. Beers asked who has the authority to authorize payment to a MSA contractor. Mr. Savage replied that, under this new proposed system, ultimately the agency does, but it is important for DoIT to remain closely involved in the evaluation process. He stated a policy has been drafted on specific procedures to deal with contract payments and a final policy will be ready within one month.
Mrs. Chowning asked how the decision was made regarding what project to include in the department’s pilot decentralization program. Mr. Savage responded the department did not want to use the largest project and it was desirable to use a stable project, so as to not set up the customer agencies to fail. He reported that the Department of Taxation and the Unified Nevada Information Technology for Youth (UNITY) projects were selected to be used in the test and were chosen based on size and a number of other criteria, including project maturity.
Ms. Chowning asked about the bonuses to be paid to contractors working on the Nevada Operations Multi-Automated Data Systems (NOMADS). She asked whether the bonuses were paid, whether all of the funding was used, and whether the bonus program was effective. Mr. Savage answered the bonus situation with NOMADS was a particularly confusing program and has been since its inception. He reported a final closeout meeting to discuss bonus payments had been held on the previous day and final payment arrangements are currently in process. He stated that, at this point in time, there is insufficient data to determine whether the bonus program was effective.
Ms. Chowning insisted it should be known whether individuals stayed in their jobs, or whether signing bonuses helped to recruit new employees. Mr. Savage explained that “signing bonuses” were not given. He agreed a summary of how many stayed on the project could be compared to projects that did not have bonuses. He stated this comparison will be provided.
Senator O’Donnell said that although there is an understanding of what DoIT would like to see done regarding decentralization, more information is needed. He asked the Senate fiscal staff whether they have the necessary budget information.
Gary Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, inquired whether a revised budget, with additional staff for accounting and various other functions, will be submitted. Mr. Savage answered it is likely there will be some proposed adjustments to the Governor’s recommended budget. Significant changes are not planned, he said, but there is an expectation of additional funding or shifting of funds to provide for the DMG ongoing support.
Continuing, Mr. Savage explained the Department of Administration is helping to review the accounting structure. He said it is possible that out of the review, additional accounting staff or position upgrades might be proposed.
Mr. Ghiggeri pointed out the Legislature is on a very tight schedule to get through everything. He stated that waiting until March 15 to provide information not related to the cost allocation would probably hinder review of the need for additional resources. He pointed out it would be very beneficial if information not pertaining to the department’s budget is provided as quickly as possible.
Senator O’Donnell agreed. He inquired whether the information to come is predicated on something that is going to happen. Mr. Savage explained the evaluation process is ongoing. He stated the information is contingent on the completion of the rate forecast plan, and the review of the accounting structure. He said DoIT will work with the Department of Administration to determine whether there is a way to accelerate the rate review. Senator O’Donnell clarified the discussion is on enhancements to the budget, not rate models. He said things within agencies change every day and it is difficult to plan and establish a budget when requests are fluxuating daily. He stressed that the Legislature has to put fixed amounts in the budgets so the budgets can be approved and funds made available to the agencies.
Mr. Savage pointed out there are only two possible changes to the expense part of DoIT’s budget: One is additional funding to support the company that would provide monitoring and support for the next biennium; the other is possible additional staffing and upgrading of present positions within the accounting group. The possibility of transferring funds within the existing budget is also being reviewed, he added.
Ms. Chowning asked why this department should be any different from any other department. She stated it would seem that every department should be able to say they are not ready and they want to make changes. She stressed that she finds it offensive that DoIT does not have the necessary information available.
Ms. Giunchigliani said she is uncomfortable about the proposal to decentralize. She stated she does not want to see, as part of the testing, a question asking whether an agency feels comfortable managing DoIT personnel. If this is part of the test question, the answer will be that the agency does not feel comfortable, she said. This will result in a request from the agency for another position to manage the personnel, she added. She remarked that as the decentralization idea is pondered, the test case should not include a question regarding the management of DoIT personnel.
Mr. Savage apologized to Mrs. Chowning. He agreed that preparing the necessary budget information has not been done appropriately. He stated that reference to a “comfort level” did not mean this would be a specific measurement criterion for whether decentralization is a success or not.
Ms. Giunchigliani requested a list of projects being monitored so there would be a way to track what is being done. Mr. Savage agreed to provide more details.
Senator O’Donnell stated it is important to remember that decentralization, in terms of DoIT, should not be an overall encompassing change. He said the management and in-service training that keeps all of the agencies “on the same page, on the same equipment, on the same software,” at least to the point of transporting data, is important. This is how he envisions DoIT, he added.
Mr. Savage commented his vision is very similar. Various methodologies are being explored that would provide statewide standards and commonality, even with decentralization of some specific functions.
Senator O’Donnell requested a list of expected changes be provided to committee staff by Tuesday, February 20, so they can be analyzed. He stressed the problem is that if information is provided at the last minute, fiscal staff has no time to analyze the information and inform the committee whether the changes are good ideas.
Senator O’Donnell asked whether there is an actual plan for decentralization. Mr. Savage answered the actual plan is in development, but there are selection criteria for the projects. He said the department is working with both of the agencies to be used as a test for decentralization, to develop not only a plan for how things will work, but also a transition plan. He stated the target of completion has been July 1, but this date can be easily accelerated.
Senator O’Donnell stated that Mr. Savage is a welcome addition to the State of Nevada and to the Department of Information Technology. However, he noted, the problems that technology people have is they negate or push aside the administration part of the operation. He maintained that when administration suffers, sooner or later the technical side suffers. He stated that many technical problems have been solved, but there must now be a concentration on department administration.
Mr. Savage responded that he could not agree more. He stated the technical situation is now fairly entirely under control and he will shift attention to the administrative and fiscal operations.
Mr. Hettrick inquired whether there is a plan to eliminate some of the programming languages being used. Mr. Savage replied there are two ongoing aspects related to languages. He stated one aspect is the mainframe and what languages and versions are supported. He explained that currently, in some cases, three versions of one language used on the mainframe, are being supported. He pointed out there is a license fee of $10,000 a month for each version. The second aspect is DoIT needs to support only the current version of a language, and perhaps the previous version, but that is all. The total lifecycle cost needs to be considered, not just the development cost, when a decision is being made as to whether a project should be done, he added.
Continuing, Mr. Savage explained the department has a number of ongoing efforts to perform an early review of what the right platform is for a project. There needs to be some flexibility, but the department cannot be vendor-driven and attention has to be paid to each situation. The real key to solving the problem, is that when a project is being proposed, focusing decisions need to be made in the beginning, he stressed. He stated that the methodology is currently being worked on to accomplish that.
Mr. Hettrick stated it appears a modification to upgrade language versions would be indicated if the state is paying $10,000 a month in licensing fees. He pointed out if it appears the various agencies can buy any kind of equipment and software they want, DoIT needs to have greater control. He suggested a performance indicator identifying the number of languages supported with the intent for the number to decrease each year. He emphasized that if agencies are told they cannot buy a particular software, the vendor will not be given consideration.
Mr. Hettrick asked whether there will be more various software programs purchased if there is decentralization. He insisted there needs to be some specific answers to questions before decentralization is approved. Mr. Savage said these questions raise a number of good points. He explained the way the costs are currently accounted for in the software language DB2: If the computer facility purchases a software package it is included in the overall cost of the facility, and not charged to the individual customer using the software. He pointed out that the current way of dealing with this issue does not provide proper incentives for customers to absorb the full cost of staying on an older software version.
Mr. Hettrick remarked there should be something in the rate calculation formula stating that if an agency purchases a software language that is not supported by DoIT, the agency pays the maintenance cost. Mr. Savage interjected the department is considering something very much like that. He explained some constraints result from federal requirements on what can be done in that regard. Mr. Hettrick acknowledged that it will always be necessary to support several software languages, but the number currently being supported is too many.
Mr. Hettrick stated there is general agreement that what is needed is an information technology board that will set standards and review these issues. Ms. Chowning asked to be informed whether a bill draft request (BDR) has been submitted to establish a board.
Mr. Savage reported the “emerging technology group personnel” have been very helpful in doing research. He pointed out updates will be done each quarter.
Ms. Chowning asked when the department will have a decentralization plan. Senator O’Donnell interjected he does not want a commitment that might not be achievable. Mr. Savage stated he will provide a due date for the plan the following week.
Mr. Beers suggested it would be helpful if a copy of the current strategic plan were provided to each member of the committee. Mr. Savage pointed out the plan is in the binder titled Department of Information Technology, FY 2002 and FY 2003, Legislative Information (Exhibit E. Original is on file in the Research Library.). Mr. Beers recalled that DoIT came back well after the close of the last legislative session and requested very large budget changes. He remarked it appears things are now moving in the right direction.
DoIT Planning & Research Unit – Budget Page DoIT-7 (Volume 1)
Budget Account 721-1370
E-805 Major Reclassifications – Page DoIT-11
Senator O’Donnell inquired about the capacity planner position. Mr. Savage explained that the person in that position has become the facility manager, so the capacity planning position needs to be filled. Senator O’Donnell asked whether there is one or two positions. Mr. Savage clarified that there are two existing emerging technology positions having the general role of reviewing issues when a new vendor is coming out with a new technology or product. In addition to the emerging technology positions, a strategic planning position is being proposed. He pointed out that would be an upgrade of a vacant position.
Mr. Savage explained that he has redeployed one of the emerging technology positions as a capacity planner because the requirement was urgent.
Ms. Jungwirth explained that a number of years ago, DoIT came forward with the Division of Industrial Relations and requested a planning position to work solely on a particular project. She stated the position has been vacant for over a year. She pointed out that DoIT is requesting, in decision unit E805, an upgrade to the position.
DoIT Director’s Office – Budget Page DoIT-7 (Volume 1)
Budget Account 721-1385
Mr. Beers stated that in discussing the department’s cost allocation problems, it appears that DoIT is in need of an accountant position. He asked if the department’s current accountant positions are being upgraded. Ms. Jungwirth answered this is being reviewed to ensure the accountants are at the correct classification. Workflow analysis is also being conducted and perhaps other changes will be made. She stated the recommendations will be provided to the committee by Tuesday of next week.
E-710 Replacement Equipment – DoIT-4
Mr. Savage stated this request is to replace 5 personal computers each year. That is consistent with the existing personal computer replacement policy.
DoIT Application Design & Development Unit– Budget Page DoIT-7 (Volume 1)
Budget Account 721-1365
E-806 Unclassified Pay Changes – Page DoIT-19
Senator O’Donnell called attention to the position from the Department of Human Resources. He noted that the Department of Human Resources has indicated they will fund half of the position. Mr. Savage stated human resources will fund all of the position. Senator O’Donnell stated that is not the information the committee has been given. Mr. Savage indicated he will talk to the human resources director to clarify this issue.
Mr. Savage explained this is a reclassification of the existing NOMADS project executive position. He said NOMADS is under control and the expectation is that by July 1, it will not be necessary to have a full-time project executive solely for NOMADS. Instead, he explained, what is being seen is an increasing requirement for interfaces and compatibility between programs within the Department of Human Resources.
DoIT Planning & Research Unit – Budget Page DoIT-7 (Volume 1)
Budget Account 721-1370
E-275 Working Environment & Wage – Page DoIT-10
Senator O’Donnell pointed out that the major issue in this budget account is the funding requested, in the amount of $2,500, for each full time equivalent (FTE) position to be used for training. He asked how the $2,500 figure was arrived at. Mr. Savage replied he did not have that information with him, but it would be provided next Tuesday. He stated there was a specific method used in choosing that amount. Senator O’Donnell said he would expect justification of this request at that time.
DoIT Computing Division – Budget Page DoIT-7 (Volume 1)
Budget Account 721-1385
E-277 Working Environment & Wage – Page DoIT-28
Senator O’Donnell stated he will have the same question regarding budget account 721-1385 regarding the request for training totaling over $500,000 for the biennium. He pointed out that in budget account 721-1325 ten percent of the employees salary is being requested. Mr. Savage explained that seven to ten percent is the industry standard on what should be spent for employee training in the technology environment. He called attention to the training deficient that has built up over a number of years. He said there is very little cross training so, when someone leaves the department, a problem is created. There needs to be more than one person who understands each component, he added. He commented that was the basis on which the amount needed for training was arrived at. He stressed that adequate training is a significant component to employee retention.
Ms. Chowning queried why funding allocated for training in the past has not been used. Mr. Savage answered one reason for the lack of training has been the workload issue, making it hard to release employees for training. He added that internally in DoIT, there were some unnecessarily cumbersome procedures in getting employees approved for training. He reported this problem has already been solved. Regarding the workload issue, he said, the training must occur, in spite of the work “crunch.” He stressed there has to be a change in priorities, not only because employees need the skills, but to retain employees, DoIT must be learning and leading the way towards new technology.
Mr. Savage pointed out planning must be done to cover for employees who are out receiving training. He said some in-house training will need to occur, so there will be employees skilled to cover the responsibilities of those being trained.
Ms. Chowning asked whether the training materials are in place. Mr. Savage responded some training infrastructure is in place. He said the course schedule for the entire biennium is not known at this time, but the types of courses and training are known. Ms. Chowning stressed it is necessary to know what the training funding will be spent on and what the schedule will be.
Mark Blomstrom, Deputy Director, Communication and Computing Division, Department of Information Technology, addressed this training question. He said information would be forwarded to fiscal staff from a study. The study indicates that at the 7 to 10 percent level for training, there is significant employee retention realized in this type of job category.
Ms. Chowning indicated she understood that, but there was a need to know the plan for providing the training. Mr. Blomstrum stated there was a training program in place in that the types of classes needed were identified. He recited a list of typical types of classes, such as development fundamentals, network fundamentals, business planning, strategic planning, capacity planning, and Comdex.
DoIT Application Design & Development Unit – Budget Page DoIT-14 (Volume 1)
Budget Account 721-1365
E-250 Eliminate Duplicate Effort – Page DoIT-17
Mr. Savage explained the technical oversight of the Master Service Agreement contractors would not change. He said the methodology for providing payment was changing. He explained traditionally DoIT would pay the MSA’s after doing the technical review, and the agencies would then be billed. He said sometimes the collections would take a while and this would cause significant cash flow problems. With the change, the technical oversight would continue to be provided by DoIT, but once the technical performance is approved, the actual payment would be directly from the customer agency. This essentially removes DoIT as the “middle man” in the payment process, he added.
Senator O’Donnell inquired whether all customer agencies would be affected by the MSA charge. Mr. Savage said they have not as yet changed all payment processes, but they would in the near future. He pointed out the total cost would not change, but the process would be different. Senator O’Donnell pointed out agencies may have a problem making those payments on a timely basis because they do not get their revenues on a timely basis.
Senator O’Donnell asked how the payment for the contractor services would be coordinated with the evaluation of the services provided. Mr. Savage indicated this procedure was still in the process of being drafted, and that he would provide that data to the subcommittee upon finalization within the next few weeks. Senator O’Donnell pointed out the subcommittee would appreciate reviewing the draft, which Mr. Savage said he would provide immediately.
Senator O’Donnell asked Mr. Savage whether it would make greater sense to increase the MSA budget, having a position to manage the MSA’s; or whether it would be best to continue “pushing it out” to the agencies, which DoIT might think was a better cash flow risk. Mr. Savage replied he thought DoIT’s proposal was a better solution overall because it cut out an entire payment cycle. He replied, that as long as DoIT can coordinate technical approval with the agencies, along with their ability to pay in a timely manner, it would reduce the total amount of work required and would save money.
Mr. Beers reiterated his lack of confidence in DoIT and DoIT’s ability to manage technology projects and people. He said he understood managing the payment cycle and eliminating the duplicative effort of DoIT’s approval process. Mr. Beers pointed to the example of the experience of Project Genesis with the Department of Motor Vehicles and Public Safety, citing he did not have confidence in most departments’ ability to manage these technology contracts properly.
Mr. Savage replied that part of the reason DoIT had requested two additional project manager position was for precisely this purpose, to manage and provide oversight to these kinds of technology contracts. Mr. Savage agreed with Mr. Beers, indicating DoIT’s oversight of these projects in the past had been marginal, but that this might be offset by additional personnel.
Senator O’Donnell inquired how the MSA’s were doing regarding NOMADS and whether any of those MSA’s had been converted to state employees with bonuses. Mr. Savage replied the balance between the MSA’s and contractors had worked fairly well.
Chris Apple, Nomads Project Manager, Application Design and Development Unit, Technical Operations Division, Department of Information Technology responded to Senator O’Donnell’s question, indicating that at the current time, no MSAs had been converted to state employees. Mr. Apple said about three MSAs had expressed an interest in converting to state employment; however, during the current fiscal year, manpower at NOMADS had been at a premium as they have not been able to fill current staff vacancies.
In response to Senator O’Donnell’s question about MSAs, Mr. Apple explained that one MSA had been working under the service contract with NOMADS for as long as five years, having stayed on the project when it was first initiated with contract management. Senator O’Donnell queried whether that was analogous to getting around the state salary for programmers. Mr. Apple stated the average cost of an MSA was about $75 per hour and DoIT has let go many MSA contractors above that hourly wage, leaving DoIT programmers who average around $70 per hour. Mr. Savage indicated it was his preference to hire state employees for such contracts, whether they be DoIT or other agencies’ programmers, as it is a more efficient and cost saving method.
Mr. Savage emphasized it is DoIT’s hope to make staff conversions when the worst of the current NOMADS’ budget crunch passes at the end of this fiscal year. Senator O’Donnell asked whether there is potential to attract these MSA’s into state government by offering a signing bonus or incentives such as buying Public Employees Retirement System (PERS) benefits. Mr. Savage responded he had not talked about those specific issues, but had implemented non-monetary incentives for attracting and retaining new DoIT employees. He explained the Governor’s executive order issued a few months ago instructing the agencies to implement flexible work schedules had been a morale booster. Those kinds of incentives, he stated, particularly for technology workers, had been very attractive, especially during ski season. Mr. Savage agreed that DoIT should extend their incentives from non-monetary to some of those monetary incentives the Senator previously recommended.
Mr. Beers added the state did not pay to train MSA’s, and that the state is considering paying for training as a hiring incentive. He added that most of the professionals he knows worked for the “coolness of the new thing, rather than for their paycheck. People who love learning, go into technology.” Mr. Beers opined that paying for that instruction may be the strongest retention measure the state could take.
E-805 Major Reclassifications – Page DoIT-18
Ms. Chowning asked Mr. Savage about E-805, which recommends reclassifying three Data Entry positions to Computer Systems Technicians and whether they had the necessary higher skills. Mr. Savage indicated some of those staff persons had those skills, but others would require additional training. He stated that each of the positions being moved in this enhancement is being transferred to different organizations. So, he said, the training obligations would be spread among the different organizations. He explained that the cost of that training would be part of the training of that particular agency.
Senator O’Donnell suggested that a performance indicator should be added to quantify DoIT’s turnover rate and the money expended for training DoIT personnel. Mr. Savage indicated this study is being completed by personnel. When completed, those results will be provided to the subcommittee, he added.
DoIT Computing Division – Budget Page DoIT-23 (Volume 1)
Budget Account 721-1385
E-202 Demographics/Caseload Changes - Page DoIT-25
Mr. Savage indicated decision unit E-202 had a dual function: first, to provide for additional capacity for the older disk storage; and second to support future growth. Replacing the old discs with more compact disc provides additional space and saves floor space, he added. Also, the new tapes use less power, which Mr. Savage indicated is a more efficient operation. In addition, Mr. Savage stated, he is seeing a greater number of requests to store video, digital images, or multi‑media data, requiring that space.
Mr. Beers questioned Mr. Savage as to the identify of the vendor supplying the new disc storage, to which Mr. Savage replied DoIT had not yet recruited for that supply, but that International Business Machines (IBM) and EMC Corporation are expected to be competitors for the bid.
Mr. Hettrick asked Mr. Savage about DoIT’s need for future facilities considering the rate the state is growing in this area. He replied DoIT’s expectation last summer was to have the new office building completed, with people moving out of the computer facility into that new building, consequently freeing up space for equipment, server plantation for the website, and the state communication hub. Mr. Savage indicated that as long as there is leased space somewhere for DoIT personnel, they could migrate staff out into the Kincaid Building.
Mr. Hettrick inquired about the on-going cost of converting the NOMAD’s language over via support software or by other equipment. Mr. Savage replied that was built into DoIT’s budget.
Senator O’Donnell asked Mr. Savage about the $5 million approved the last biennium to implement the Sysplex system. Mr. Savage responded DoIT is currently conducting a study, including a complete history of what has been done and the cost to date of implementation of Sysplex. He said the study will also address what remains to be done including costs and timeframe to complete implementation. That study would not be completed for another couple of months according to Mr. Savage. Mr. Savage indicated the $5 million is not being held in reserve, and passed out the completed history portion of the Sysplex study (Exhibit F).
Senator O’Donnell indicated this budget account would not be approved until the completed study is available to be analyzed by the subcommittee. In response to Senator O’Donnell’s inquiry as to whether Mr. Savage had previously represented that DoIT would not be implementing the Sysplex system, he replied that in August 2000 it was not obvious to him that implementing the Sysplex system was the right thing to do. Mr. Savage then proceeded to refine his explanation stating that:
DoIT gets charged a license fee that is proportional to the capacity of the machine. Unfortunately, what that means is, for example, if we have a small user like the Department of Wildlife using a program infrequently, DoIT may be paying a license fee of $1,000 a year. If we double the capacity of the mainframe, the license fee on that particular piece of software doubles even if they don’t use it a single cycle more. That is an absolute rip-off, but that has been the industry standard on mainframe software pricing for quite some time. So when you actually look at that and you say, Okay, if we have a big dominant user, hypothetically, and we have to increase the capacity, not because all users are using more, but because that one user is using more, what we do in effect is we increase the license charges for all the software on that system. That applies across a Sysplex environment.
Given that NOMADS was the driving force of the Sysplex system, Mr. Savage indicated it may make greater sense not to implement the Sysplex system. He indicated it may make economic sense from a software standpoint to isolate NOMADS on it own machine. Given the outrageous software costs, it may make sense to do it on a platform other than a mainframe, he added. Curiously enough, Mr. Savage indicated, DoIT is not the only agency to notice this phenomenon. IBM got that feedback from other sources, and now IBM has recently proposed a new software-pricing model, which is based on the user paying for what is used. Therefore, Mr. Savage concluded, the reason DoIT is considering not implementing Sysplex is that the current software-pricing model will not work for DoIT if IBM’s pricing model does not change to a usage-based fee structure. If this change in software pricing does take place, then it may be that implementing the Sysplex system is in fact the way to go. Mr. Savage pointed out that such matters might not be fully understood for a few more months.
Senator O’Donnell repeated his question about what happened to the $5 million, if Sysplex was not implemented. Mr. Savage stated that was outlined in the disseminated exhibit, which tracked the Sysplex system’s history. Specifically, he noted, the graph on the fourth page of the exhibit shows what was spent by date and what was accomplished. Between hardware and software purchases, Sysplex implementation was roughly 63 percent of the way toward complete Sysplex implementation, he added. Mr. Savage explained what he does not have is the projected costs and time it would require to complete that process.
Senator O’Donnell questioned Mr. Savage about whether DoIT did any kind of fiberoptic installation as part of the agency’s expertise. Mark Blomstrom, Deputy Director, Communication and Computing Division, Department of Information Technology, responded:
Yes. DoIT did the basic transport layer of installing the fiber itself, terminating it, and also uses it at the application layer, plugging various pieces of end equipment into it. We use it between buildings. Right now we have a campus conduit system, in which the fiber end copper has been pulled through. We are moving that into the third phase of wiring, and will be connecting that up to move all sorts of communications.
Senator O’Donnell queried Mr. Blomstrom whether he had asked any private enterprise for private in-kind donations for DoIT for laying such fiberoptics. Mr. Blomstrom stated:
Not for laying fiber; however, DoIT did do that with the Williams Telecommunication Agreement, which runs provide for the installation of fiber optic line from the northern portion of the Interstate 80 corridor, in which four dark fibers was received as part of an agreement for exchange for a right of way. Those dark fibers have been made available for state use. DoIT also received an agreement for operations center (OC) Level 12 service, which runs from Reno through Salt Lake City, down to Las Vegas on Williams carrier system.
When asked about the manner in which these agreements were negotiated and whether those agreements were reviewed or brought to a public forum, Mr. Blomstrom replied these kinds of agreements are reviewed and negotiated with entities such as the Attorney General’s Office, DoIT, Nevada Department of Transportation (NDOT), and University and Community College System of Nevada (UCCSN). Also, on a parallel track, NDOT had an open and ongoing working group with industry looking at the aspects of the use of fiber in right-of-ways, he added.
Senator O’Donnell stated he is concerned about the ethics of a particular situation in which there was right-of-way the state owned, meaning the people of this state owned, and that right-of-way was used as a bargaining chip to get something from private industry. In order to get the permission to use that right-of-way, Senator O’Donnell pointed out, the agencies should have brought it before a public forum, such as a legislative body or the State Board of Examiners, as opposed to it being an inside agreement. Mr. Blomstrom stated the agreement was approved by the State Board of Examiners.
Senator O’Donnell asked what benefit the state of Nevada received for laying that fiber. Mr. Blomstrom indicated the state did not lay the fiber, and there was no active involvement in a construction project. He explained that when a third party laid the fiber, the state received benefits in two areas: first, the state realized a use of telecommunications service; and second, the public land and trust involved, the right-of-way, was used for the expansion of infrastructure in favor of industry and the service that industry provides to Nevada residents.
Senator O’Donnell asked whether the master plan for DoIT calls on the department to produce its own telecommunications system in the future. Mr. Blomstrom replied the department contemplates that through its plan for statewide networking and the many applications involved thereto. He stated that, fundamentally, the statewide network provides communications used by the state in the areas of telephone, public safety radio, and a vast amount of data communications. When Senator O’Donnell asked about the liability aspects of the state setting itself up in competition with private enterprise, Mr. Blomstrom deferred response to the Attorney General’s office.
Mr. Savage added the Attorney General was involved in DoIT’s discussions in this area, and DoIT is not competing in the sense that DoIT is selling capacity to the private sector. He stated when DoIT completed the project, they were using a third party strictly for internal state use. In the case referred to by Mr. Blomstrom, Mr. Savage indicated it was an “in-kind sway,” trading the right-of-way the state owned for capacity or bandwidth the state would need over time that otherwise the state may have had to pay for outright or build itself.
Mr. Beers asked about the timeframe to light some of the dark fiber appropriated by Williams Telecommunications, to which Mr. Blomstrom replied there had been a “one-shot” request for this biennium, but it was dropped. He stated:
The university system was using piece parts of grant money to light that fiber, and has lit several pieces of it thus far. DoIT will be looking at it as part of the digital phase II, the actual engineering involved for not only phase II, but phase III that would cross the northern portion of the state. We expect that in the integrated engineering package, the use of the dark fiber will be included and will reduce our costs from the original projection of phase III some four years back.
In reference to the department’s position requests for all of its budget accounts, Mrs. Chowning requested the department provide justification for all positions being requested. Mrs. Chowning requested the department provide this information by February 20, 2000, including position workload, hours, ratio and so forth. Mr. Savage indicated he would work with staff on that request.
DoIT Data Communications & Technical Services – Budget Page DoIT-31
(Volume 1) Budget Account 721-1386
M-200 Demographics/Caseload Changes – Page DoIT-32
Mr. Blomstrom commenced with decision unit E-200, which requests 3 Computer Network Specialist positions for the project he discussed earlier, regarding the data network carried statewide between local area networks, hosts and Internet access. The number of users, or Internet protocol (IP) addresses on this network, according to Mr. Blomstrom, has grown at about a 34 percent rate over the last five years, and now the state has 9,300 addresses on the system. The data traffic has increased at a much higher rate recently, about 113 percent over this last year. He said this reflects more information being sent and received by each of the IP addresses. Mr. Blomstrom indicated DoIT continues to expand the SilverNet data network to accommodate more users and greater traffic.
Mr. Blomstrom explained that one of the three specialist positions being requested would reside in Carson City, which would be a security specialist. The other two positions would be located in Las Vegas and Elko. Mr. Blomstrom indicated DoIT is trying to keep the workload stable at approximately 200 pieces of equipment per staff.
M-201 Demographics/Caseload Changes – Page DoIT-33
Mr. Blomstrom said decision unit M-201 requests 1 additional Computer Network Technician for the Las Vegas area. He explained last year DoIT’s helpdesk crew handled over 16,000 telephone calls generating slightly over 14,000 work orders. A great deal of those were in the Las Vegas area, which had seen a 36 percent increase in work orders over this biennium, he added.
Mr. Beers indicated Mr. Blomstrom’s narrative brings to mind the topic of performance indicators as submitted with the budget, which require some work by DoIT. Mr. Beers stated 92 percent of DoIT’s service requests were responded to within three days. Mr. Beers stated that is “excellent,” as long as the state is not paying $14 million correctly servicing 49 of 50 service requests. Explaining further, Mr. Beers indicated DoIT had only given the subcommittee the percentage of service requests without being able to gauge the volume for comparison on a year-to-year basis. Such indicators, he added, should incorporate workload information as well as ratios of success and efficiency.
M-204 Demographics/Caseload Changes – Page DoIT-33
E-711 Replacement Equipment – Page DoIT-35
Mr. Blomstrom indicated M-204 is for computer hardware and software to support the SilverNet data network, which, he said, he would like to talk about in conjunction with the E-711 request for replacement equipment. Fundamentally, he explained, the replacement equipment replaces old and obsolete equipment in the network and M-204 actually increases the port capacity of the existing equipment as well as improving the internal ability to process at greater speeds.
E-710 Replacement Equipment – Page DoIT-34
Mr. Blomstrom stated E-710 requests replacement for Systems Network Architecture (SNA) network router equipment, which is an IBM architecture system with technology about thirty years old. This equipment was being fazed out and used for dedicated communications into a mainframe environment. However, Mr. Blomstrom indicated, there were state workers who were still accessing programming via this type of technology. In 1994, IBM indicated to DoIT they would no longer support this type of equipment. In 1999, IBM ceased selling modules for it, and most recently DoIT’s “decision one contractor” went bankrupt. He stated IBM bought back their stock of parts and recently indicated to DoIT they could continue selling parts to the SNA network until FY 2002. However, Mr. Blomstrom stated, it was DoIT’s intention to replace the last of the old SNA routers in this upcoming biennium and be done with this type of equipment.
In response to a request from Senator O’Donnell regarding how many workers were using the SNA network, Mr. Blomstrom indicated he would supply that information to staff.
Mr. Beers asked Mr. Blomstrom what he would replace the SNA network route with, to which he replied equipment that provides a similar function; however, it would not be with the old IBM SNA-based components. The model of equipment to replace the old system was not known by Mr. Blomstrom, but he indicated he would also provide that information to staff.
Senator O’Donnell opined it is the intent of this subcommittee to get away from the three-letter companies the state has dealt with in the past, including IBM. He said the point is for state agencys to not be “vendor driven,” to use other emerging technology planners to determine the potential for new equipment, including routers.
Mrs. Chowning requested DoIT provide the subcommittee justification for E-710 as to how the cost of $55,000 was estimated. Mr. Blomstrom indicated he would provide that information and stated this figure was not “picked out of the air,” but an estimate based on current equipment pricing.
E-906 Transfer From Application Design and Development– Page DoIT-36
E-910 Transfer to Secretary of State– Page DoIT-36
Mr. Blomstrom indicated E-906 would transfer one of the data entry positions into this budget to handle technical documentation. He explained this position would handle administration of the technical documentation in this operational area. He said DoIT has had a great degree of success in technical operation of a system; however, DoIT has been less than successful in technically documenting what the department is doing as they do it, especially when it comes to transferring that information into the billing and accounting system. This technical documentation specialist would fulfill that function for DoIT, according to Mr. Blomstrom.
DoIT Telecommunications – Budget Page DoIT-38 (Volume 1)
Budget Account 721-1387
M-200 Demographics/Caseload Changes – Page DoIT-39
Mr. Blomstrom stated this decision unit recommends continuation of a position that was approved at the December 4, 2000, IFC meeting. He said this is a support position in Las Vegas, which provides administration support for the private branch exchanges (PBX) system in the Grant Sawyer State Office Building. This decision unit also includes the cost of the additional maintenance for that PBX system, he added.
Senator O’Donnell asked Mr. Blomstrom how much money had been saved on the implementation of the PBX system since 1999. Mr. Blomstrom stated he does not know, but believes the following:
DoIT had a previous estimate completed prior to the implementation of the Capital Complex PBX system. DoIT had an estimate based upon the implementation of the Las Vegas Sawyer Building PBX. The implementation of the Las Vegas PBX opened the flood gates to a great deal of savings because of the linkage north and south, and the way the state was able to take advantage on an ‘on system’ calling. In other words, all workers were within the state PBX system. We approximate there will be as savings of approximately $270,000 per year once the Las Vegas PBX is in operation and functioning in conjunction with the Capital Complex PBX system.
Mr. Beers stated, “with all due respect,” DoIT thought the Sysplex system was the “best thing since sliced bread two years ago.” Mr. Beers asked Mr. Blomstrom how the subcommittee could objectively measure this cost savings. Mr. Blomstrom replied that the saving could be measured fairly specifically in dollars. He added, there are several components involved in this estimation, some having to do with the way current telephone tariffs are imposed on the state. Calling between Reno and Las Vegas means crossing a Loral Access Transport Area (LATA) and therefore it imposes additional charges. When this type of calls are made, he added, a local exchange carrier on each end incurs Universal Service Fund (USF) charges, which are fees imposed through the Federal Communications Commission (FCC). Mr. Blomstrom said the state is “very legitimately and legally bypassing these fees by utilizing a telephone system that is fundamentally the state’s own line between north and south.”
Mr. Beers stated it had been 18 months since the Capital Complex PBX system had been implemented, thus asking why DoIT could not identify actual cost savings associated with the system. Mr. Bloomstrom said if DoIT were to go back and look at a cost comparison, they might be able to accomplish that; however, DoIT has not analyzed that specific cost data. Mr. Beers inquired whether it is possible to have a performance indicator so that in two years the subcommittee will see the possible cost savings to the state. Mr. Beers asked Mr. Blomstrom whether he could steer this project in such a manner that it would deliver that information considering the committees interest in it. He replied DoIT could ascertain the cost per minute of a long distance call, which refers to out-of-state calls. The department could address Mr. Beers interest by including the in-state calls and analyzing those in terms of cost per minute, he added.
Senator O’Donnell asked where DoIT derived the rates for the performance indicators. Mr. Blomstrom replied he could not tell the Senator how those numbers were derived. However, he said, DoIT’s manager of telecommunications, Dave Richards, is present to expound further on that issue.
Dave Richards, Director, Telecommunications Unit, Communication and Computing Division, Department of Information Technology, replied to the Senator’s inquiry, by indicating, “Most of that is determined by 1) the contract for the interstate, inter-LATA contract that DoIT has with the long distance provider. DoIT paid contractual rates for those.” He stated those fluctuated from year to year depending on federally imposed tariffs, most recently the Telecommunications Act of 1996. In 1999, he said, the imposed tariff associated with pay telephone service fluctuated rates. That was why there had been a fluctuation, he stated. Mr. Richards stated the rates are currently going down because of the new contract and lower state usage.
Senator O’Donnell asked Mr. Richards whether DoIT knows exactly how much money is being saved. Mr. Richards replied, “To some extent.” He explained it varies depending on the amount of usage within the state. Senator O’Donnell then requested Mr. Richards show legislative staff where those savings are located for purposes of quantification, because any excess should be returned to the General Fund. Mr. Richards replied, “A lot of this revenue is used for enhancements.” Senator O’Donnell stated that is the wrong answer for this subcommittee, adding, “You cannot use that money for enhancements unless it is allocated for such.”
Mr. Savage indicated to Senator O’Donnell that DoIT could quantify the savings for the subcommittee and provide that information to staff.
Mr. Beers indicated for the first performance indicator DoIT was projected to service 95 percent of their requests with a four-hour acknowledgement in FY 2001. He stated, DoIT hit 82 percent in FY 2000. He did not see anything in the enhancements that addressed how to bring those percentages up to the target performance level. Mr. Savage indicated DoIT expects the proposed additional technician and support technician in Las Vegas to help with achieving that target rate.
Senator O’Donnell indicated that Mr. Blomstrom testified in a previous hearing DoIT has a $275,000 savings on the PBX operation. Mr. Blomstrom replied the estimated cost savings will be realized when the Las Vegas system becomes operational. Mr. Blomstrom added the department will provide the subcommittee with information regarding cost savings in this area and identify for LCB staff where those savings are located. Mr. Blomstrom added these cost savings and the reduction the subcommittee is seeing in the cost per minute are actually realized by all DoIT’s client agencies. Mr. Blomstrom said “DoIT did not, per se, see those in DoIT’s budget, but are passed through, and therefore, the department will not see this reduction in its budget.”
Senator O’Donnell asked Mr. Blomstrom whether he felt confident about the $275,000 being a real cost savings. Mr. Blomstrom replied that he did feel confident, and in fact, that figure might be a slight understatement.
Mr. Hettrick inquired that if DoIT feels confident about the $275,000 cost savings, which is not reflected in DoIT’s budget, then whose budget would see the cost savings, and why isn’t the subcommittee going to see this cost savings. Mr. Savage indicated DoIT would pass these savings through, but the costs DoIT had were built into its rates. Mr. Blomstrom corrected the record by indicating such lower rates could be reflected in the long distance billing, which would be a direct savings to the agencies. On in-state costs, he indicated, DoIT might see some reduction in the cost DoIT charges as a rate for the PBX system.
Mr. Hettrick commented the subcommittee wants to see those cost savings figures, but is not seeing them in the respective agencies’ budgets. It would help the subcommittee, he added, to see that. He asked whether there is an overall accounting of total minutes of telephone time used in the state, categorized by agency or otherwise. Mr. Blomstrom replied DoIT has a fair amount of “call message detailing,” which is simply the indication one might look at on a telephone bill of who was called, when, and the number of minutes. He said DoIT has not totaled that up, other than to estimate for purposes of providing this biennium’s “one-shot” request. He added DoIT does not do that regularly, but the call message detailing information is passed through on a unit basis to each agency billed.
Mr. Hettrick noted it would be interesting for the subcommittee to see a listing by agency of total minutes. Mr. Hettrick added that performance indicators noted by percentage do not mean much, without the foundational basis for such information. Providing the basis of the cost per unit would make greater sense to the subcommittee.
Senator O’Donnell noted Mr. Hettrick’s comments were sensible, and that if DoIT is telling the subcommittee there is $275,000 in savings, and other agencies are not providing that information to the subcommittee, then there is $275,000 floating around out there for staff to find. Senator O’Donnell then directed staff to work closely with DoIT staff to find out exactly where those savings are going and what agency’s are getting those savings. Mr. Blomstrom clarified the $275,000 per year cost savings is DoIT’s estimation, which would begin to be realized with the implementation and operation of the Las Vegas PBX system. It is that figure that would be distributed among the using agencies, he explained.
DoIT Communications – Budget Page DoIT-43 (Volume 1)
Budget Account 721-1388
M-200 Demographic/Caseload Changes– Page DoIT-45
Mr. Blomstrom indicated M-200 recommends the addition of 2 Maintenance Repair Specialists to support the aging mountain top communication sites that serve both the existing analog system and the new digital microwave system. He stated DoIT has gone from 53 to 58 sites this fiscal year, and expects to increase to 63 sites during the next biennium. Also, he added, DoIT is at a point where some of those sites are very old, and probably not implemented properly to begin with. He stated, they had been neglected over a period of time, and during the last biennium, DoIT has a total of 2900 hours of deferred maintenance. He noted, this biennium, DoIT has had over 4,000 hours of deferred maintenance. The trend, he pointed out, is in the wrong direction, and these two positions would provide maintenance for those sites.
Mr. Hettrick indicated the number three performance indicator projects the percent of projects whose cost estimates are within 10 percent of costs. He said he would also like to see one that said, “Projects exceeding 110 percent of costs, because, obviously, if you have a bunch of them that are under (100 percent), it never tells the subcommittee how many were over, and the subcommittee would like to know how many were over.” He requested DoIT give the subcommittee some indication of what it costs to perform the function. Mr. Hettrick stated, “We are a money subcommittee, not a mathematics subcommittee.”
Mr. Blomstrom commented it was apparent DoIT would receive the subcommittee’s message – that performance indicators require attention and correction by DoIT.
E-710 Replacement Equipment – Page DoIT-45
Mr. Blomstrom indicated this enhancement replaces service trucks, three in the first year of the biennium, and two in the second year. He stated these vehicles are on a standard replacement schedule, and the three vehicles to be replaced the first year, would have an average of 147,000 miles. He added that these vehicles are used for access to mountaintops and rough terrain, and carry a full load, close to the gross vehicle weight limits. Senator O’Donnell queried Mr. Blomstrom whether he had provided that vehicle information (mileage and usage) to staff, to which he replied he would supply same to staff.
Mrs. Chowning requested DoIT provide the number of vehicles the division currently has, and how many of the positions warrant the use of such vehicles. Mr. Blomstrom indicated he would provide that information, as well.
E-711 Replacement Equipment – Page DoIT-46
E-905 Replacement Equipment – Page DoIT-47
Senator O’Donnell asked Mr. Blomstrom to briefly explain these two enhancements, to which he replied E-905 is the transfer of a data entry position into budget account 721-1388, as a documentation specialist, essentially. He added that the same justification applies for this transfer as was previously given in budget account 721-1386, that DoIT needs to keep track of the technical documentation regarding accounting and billing to a much better degree than it had been doing in the past.
Senator O’Donnell reaffirmed Mrs. Chowning’s request to give staff the necessary information regarding this position, and the other requests relating to planning, positions, and the enhancements that will change. He emphasized the subcommittee needs this information as soon as possible, but not later than Tuesday, February 20, 2000.
Senator O’Donnell adjourned the hearing at 10:41 a.m.
Patricia C. Hampton
Committee Secretary
APPROVED BY:
Senator William R. O’Donnell, Chairman
DATE:
Mrs. Vonne S. Chowning, Chairman
DATE: _________________________________