MINUTES OF THE

Joint subcommittee on General Government

of the

Senate Committee on Finance

and the

assembly Committee on ways and Means

 

 

Seventy-second Session

February 13, 2003

 

 

The Joint Subcommittee on General Government of the Senate Committee on Finance and the Assembly Committee on Ways and Meanswas called to order by Chairman Sandra Tiffany, at 8:07 a.m., on Thursday, February 13, 2003, in Room 2134 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 Sandra J. Tiffany, Chairman

Senator Dean A. Rhoads

Senator Bob Coffin``

 

ASSEMBLY COMMITTEE MEMBERS PRESENT:

 

Mrs. Vonne Stout Chowning, Chairman

Mr. Joshua B. Griffin

Ms. Kathyrn A. McClain

Mr. David R. Parks

 

ASSEMBLY COMMITTEE MEMBERS ABSENT:

 

Mr. Bob Beers (excused)

 

STAFF MEMBERS PRESENT:

 

Mark W. Stevens, Assembly Fiscal Analyst

Bob Guernsey, Principal Deputy Fiscal Analyst

Jim Rodriguez, Program Analyst

James D. Earl, Committee Secretary

 

OTHERS PRESENT:

 

Terry Savage, Director, Chief Information Officer, Department of Information Technology

Shelly Person, Chief of Administration, Director’s Office, Department of Information Technology

Kathy Ryan, Deputy Chief, Planning and Programming Division, Department of Information Technology

Angela Grato, Software Systems Executive, Communication and Computing Division, Department of Information Technology

Mark Blomstrom, Deputy Director, Communication and Computing Division, Department of Information Technology

 

DEPARTMENT OF INFORMATION TECHNOLOGY

 

Senator Tiffany:

The Department of Information Technology (DoIT) budget is complicated. We want to focus on DOIT assessments, billing rates, direct vs. indirect billing, and how the department’s allocations are made on a person, department, and function basis. We are looking at these matters not only from a DoIT perspective, but also mindful of what we have heard from other agencies in their budget presentations. Some of their maintenance requests have increased dramatically.

 

Terry Savage, Chief Information Officer, Department of Information Technology:

 

Initially, I would like to touch on issues raised at our previous hearing. We delivered services at an 18 percent average cost below forecast in fiscal year (FY) 2002. For FY 2002 through 2004, we anticipate a caseload increase of 19 percent and have requested a budget increase of about 6 percent. Comparing the biennium 2002-2003 to biennium 2004-2005, we are requesting a 9 percent staff reduction, despite a continuing workload increase of that same 19 percent. We have been energetic in responding to requests both from the Legislature and the Governor to do more with less.

 

Assemblywoman Chowning:

The overall budget request is 52 percent.

 

Mr. Savage:

We are looking at $31.2 million authorized in 2002 including work changes. Our request for FY 2004 is $33.2 million.

 

Jim Rodriguez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:

I can clarify this issue. Mrs. Chowning is speaking about the FY 2002 actual expenditures versus what DoIT is budgeting for FY 2004 and FY 2005. The actual expenditures in FY 2002 were about $27.9 million. The Executive Budget recommends $42.4 million. This difference is the 52 percent referenced by Assemblywoman Chowning.

 

Mr. Savage:

I understand. That is how we were able to deliver 18 percent below forecast costs. We suppressed expenditures below what is sustainable in the long term. We kept the expenditures down in the short term. There are consequences to doing this even though it may be appropriate in the short term.

 

As requested, we provided a list of the 20 different information technology projects currently supported by our project management unit. Also provided to staff on February 10 was a description of the upgrades and modifications required for the digital microwave system. There were questions on the organizational changes. We have comparative organization charts showing “before” and “after,” and an accompanying text explanation at the “Organizational Chart” tab in the DoIT binder (Exhibit C. Original is on file in the Research Library.).

 

An explanation of the audit findings on overtime was provided to staff on February 10. My current understanding is 120 hours of overtime work was performed, employees charged 100 hours of work, but charged it at the wrong time. I could be wrong. With the approval of the Governor’s office, we engaged the Investigation Division (NDI), the internal affairs unit for the Executive Branch, to investigate the situation in detail. In addition to reviewing the documentation, which was also examined by Legislative auditors, the NDI conducted in-depth interviews of those involved. They are preparing a final report, which should be completed by the end of February. We will take disciplinary action if appropriate. If criminal activity is indicated, we will report that activity to the attorney general’s office for further investigation. I do not anticipate this will be the case, but we will take action as appropriate on the investigative findings. I want to emphasize we are taking the situation seriously.

 

There was also a request for the basis of estimate and assumptions for allocation of costs for the 2003-2005 microwave system upgrades. We provided a written response to Legislative staff on February 10. Materials at tab 5 of the binder cover assessments relating to the chief information officer (CIO), the security function, and enterprise access. Finally, an explanation of combining the programming and project management units is included at tab 8, part 2. I wanted to draw your attention to how we have met the concerns expressed in our last meeting.

 

DoIT, Director’s Office – Budget Page DOIT-1 (Volume1)

Budget Account 721-1373

 

Senator Tiffany:

We would like to deal next with the director’s office. The department has proposed several transfers and reclassifications that would impact assessments. There are three new assessments, information technology (IT) security, CIO, and common enterprise. It appears IT the security assessment includes costs associated with four new hires and a position transfer. It also appears you want to hire a consultant to deal with security‑risk issues. We do not understand the need to fund a consultant. How could you arrive at an appropriate number of security people to hire before an assessment is done? This is putting the cart before the horse, is it not?

 

Mr. Savage:

Security is of particular interest to me. Well before 9/11, I started a statewide information technology security committee. This committee represents the entire information technology (IT) community including all branches of government as depicted in Exhibit C, tab 3, page 18. Over the last 2 years, this group identified industry‑standard practices on a wide range of security issues. I had our one security planning person examine each requirement identified by the security committee and estimate how long it would take to implement it across the entire State enterprise.

 

Senator Tiffany:

Can we do the security risk assessment in-house? Why do we need to hire five people in the security field?

 

Mr. Savage:

Detailed vulnerability risk assessment is a specialized skill. We have staff with expertise in network security, and we have staff with expertise in data security. We do not have staff with the expertise and available time to undertake the needed threat and vulnerability assessments.

 

Senator Tiffany:

It looks as though you are going to be educating agencies on security issues. What additional protections will the state obtain by hiring these four people?

 

Mr. Savage:

This is only one of the actions we plan. The security committee identified needed work that would occupy about 40 security people. We can provide a listing of those tasks and their associated time estimates.

 

Senator Tiffany:

So, you do not have the expertise in-house. Is it correct you decided through committee action that we need to elevate security to the level of creating a new department and a new assessment?

 

Mr. Savage:

We need to create a new division.

 

Senator Tiffany:

Do you believe these changes are needed because they will make the State’s data more secure somehow? Do you want to hire the consultant to tell you how to do it, even though you already have hired the people?

 

Mr. Savage:

You are right, we need more people to increase security. However, the tasks identified are more than enough for four new hires.

 

Senator Tiffany:

Would you provide us with a list of who has asked for these things, and what the security committee has decided, and why you believe this is so important?

 

Mr. Savage:

We may have already provided that to the Legislative staff, but we will provide you with tailored information.

 

Assemblywoman Chowning:

We are looking at almost $1 million here, including $200,000 for a study. This seems backwards. We need to know how these numbers were derived. The State has spent hundreds of thousands of dollars for agencies to implement security measures like firewalls. What agencies are requesting guidance and assistance, or are you presuming that you know best? Why are we doing yet another study? Moreover, if the need is so great now, why did we spend so much money in past years to improve security?

 

Mr. Savage:

Some of the information you request is in your binder at tab 3. Individual security policies are listed there with an estimate of implementation time. This time line will show how the sequence and money we are proposing absolutely make sense. We already know some of the things that need to be done to improve the security of the State. This is what the headcount will do. We also know that there are holes and issues we do not know about. This is what the security assessment will address. The things we know we need to do are more than enough to keep the proposed security officers busy until the end of time. The purpose of the assessment is to identify the additional threats we have not yet identified. We need professionals to come in to do that. We can get you a list of agencies participating in the security committee. It is very wide-ranging.

 

Senator Tiffany:

We want to ensure that decisions are not made by one select committee rather than being driven by the agencies. We want to consider the additional protection afforded by more expenditure.

 

Assemblywoman McClain:

We did not get much detailed information from your department during your budget overview. Today we have volumes of information. Is this standard procedure, to get all the detail at subcommittee level rather than earlier in order to have an opportunity to read it?

 

Senator Tiffany:

Are you trying to baffle us with details? Would you spool out this information to us a little at a time, or provide us with information more in advance so that it becomes more digestible? This is a complicated budget.

 

Mr. Savage:

I need to apologize to both you and staff. For obvious reasons I have been reluctant to authorize overtime. Our fiscal staff is heavily loaded. I think I overreacted in that regard and this has been responsible for some of the delays. Unless there is a committee objection, I intend to authorize additional overtime for our staff to provide information in a more timely manner.

 

Senator Tiffany:

These assessments represent a big change. We see huge increases in other agency budgets because of DoIT assessments. I want you to be very specific about what you plan on doing for these agencies, including how the State will receive additional protection.

 

Mr. Savage:

We can do some of that. There is an inherent security problem. We are submitting Bill Draft Request (BDR) 19-536 to address the issue.

 

BILL DRAFT REQUEST (BDR) 18-536: Makes certain documents relating to information technology of state agencies confidential and authorizes appointment of advisory committee on security issues. (Later introduced as Senate Bill 175.)

 

Under the current public records law, if we hire a contractor or even do the study ourselves, and create a list of security concerns, current law could be interpreted to suggest that list should be made public. This is obviously crazy.

 

Senator Tiffany:

We are not a “Rolls-Royce state” like California, with 60 million people. We do not need “Rolls-Royce security”, maybe only “Volkswagen security.” This is why we want specifics about what you intend to do with these people and the budget, particularly because other agencies will be assessed based on it. Let us turn to the issue of the CIO assessment. You have always been the director; now, all of a sudden, you are the director/CIO. What is the difference you see between the two hats you now wear in terms of job description?

 

Mr. Savage:

We provided a basic version of the distinction in your binder at tab 5. To summarize, the director function is that of a service provider, constrained in terms of the agencies required by statute to use those services. The CIO is not a service provider. The CIO has a coordination, policy-setting, standards-setting function, not constrained to a particular set of agencies. It is enterprise-wide within the Executive Branch. Consequently, it is not appropriate for the CIO function to be charged, or allocated, on an hourly basis for services provided. Allocation is instead on an enterprise-wide basis.

 

Senator Tiffany:

It seems there is a cross-over function with what the planners are supposed to do. You are bringing in people underneath you. You are attending all of these meetings. I do not see how you will have time to do anything other than attend meetings given all the committees you are on. Additionally, the CIO also has a function that planning personnel are already supposed to be doing. How are you going to allocate the CIO time and the director time in a rate model? How are you going to assess your time so that we can respond to an agency complaint that it should not be assessed for the CIO function because no CIO action has contributed to the agency mission? The rate model will be very curious.

 

Mr. Savage:

Actually, the rate model is pretty straightforward. The consultant we have had working with us has advised that the cleanest method was to allocate my entire time to the CIO function.

 

Senator Tiffany:

How are you wearing two hats then as a service provider and policy person?

 

Mr. Savage:

It is “additional duties as assigned.”

 

Senator Tiffany:

That does not make any sense. A CIO does not direct services. A CIO normally has someone who directs services, and that function is billed internally as opposed to externally.

 

Mr. Savage:

Actually, it is increasingly common within state governments, and is widely common within private industry, for the CIO to have these dual responsibilities. Of course a CIO has individuals doing detailed policy work and individuals doing detailed service delivery and operational work. This is also in our proposed structure.

 

Senator Tiffany:

I disagree that it is common practice. As you know, I have looked into this intensively. A CIO does not necessarily sit above all these other functions. I have looked at the Arizona model and the Utah model. They do not do this at all. This is not what we are getting into today. We want to ensure the rate model is understood. It sounds as though you are planning on the CIO to be 100 percent of that assessment. I then considered how you were assessing this. You had a specialist reporting to you, you have the chief of planning reporting to you, then you had staff to help you with the committees. That budget is about $700,000.

 

Mr. Savage:

I am going to ask Ms. Person to go into the specifics.

 

Shelly Person, Chief of Administration, Director’s Office, Department of Information Technology:

At tab 5 of our binder, you will find a five- or six‑page write-up addressing concerns from the preliminary budget hearing on the CIO, security, and enterprise-wide access assessments.

 

The CIO assessment includes costs for Mr. Savage’s position, 1 management analyst III, and the operating expenses associated with those 2 positions only. Is the $700,000 figure you mentioned for the biennium or for each fiscal year?

 

Senator Tiffany:

I do not know where I saw that. We will have to identify that more carefully. So, the CIO is both director and CIO with a staff of five to attend meetings?

 

Ms. Person:

Correct.

 

Mr. Savage:

The total direct reports would be five.

 

Senator Tiffany:

Now, the chief of planning is pulled over into the CIO’s office. Will the chief of planning wear two hats as well?

 

Ms. Person:

The chief of planning is proposed to be in the director’s office, but the costs associated with that position would be allocated to the six other budget accounts within DoIT. There is an internal assessment for the director’s office to the other six accounts based on full time equivalents (FTEs).

 

Senator Tiffany:

Will the Director, usually internally assessed, not be internally assessed in the future? Will the Chief of Planning now be brought into the office and assessed across the six budget accounts?

 

Ms Person:

Correct.

 

Senator Tiffany:

What if the planning goes out to the agencies? How will you allocate those costs?

 

Mr. Savage:

There is no change from the way allocation is done now.

 

Senator Tiffany:

But the time and the functions are split. Part of the chief of planning function is internal and part is external. How do you plan the right model for that?

 

Ms. Person:

The chief of planning, policy and research, as proposed, is to be brought into the director’s office. It would be part of the internal assessment to the other six accounts. However, other staff in the planning unit will remain as part of the current planning assessment. There is no change proposed for the assessment of these staff positions; it is based on FTE count per utilizing agency.

 

Senator Tiffany:

Are the other four staff being added all to support you to go to these committees?

 

Mr. Savage:

No. Well, I should get clarification regarding whether you are considering who would be direct reports to the CIO/director and who would be included in which cost pool, that is, the aggregation of costs upon which an assessment is based. These are distinct questions. If you are looking at the question of direct reports from the standpoint of an organizational chart, that issue is addressed at tab 8, page 2, in the binder. There will be five different units: administration, much as it is now; the IT security and quality assurance unit; the planning, policy, and research unit; project management and programming; and technical operations. There will be a division head for each unit. These personnel will report to the CIO/Director’s office. The IT security portion and the planning, policy, and research portion are more functionally related to the CIO. The administration, project management, and technical operations portions are more on the operational side of the house. We can provide a list of states where the CIO is responsible for both policy and operations. We can also show the growth trend demonstrating that use of such an organizational structure is increasing.

 

Senator Tiffany:

I do not think we are concerned with the organization as much as the assessments. We are trying to get a handle on the new assessments, the pools, and how you are going to cross-allocate these internally and externally.

 

Ms. Person:

I would like to provide a clarification that might help. We have to follow federal cost standards in our internal service fund. Those standards are contained in U.S. Office of Management and Budget (OMB) Circular A-87. You have heard us refer to this many times in the past. Basically, it requires that we charge for our services fairly and equitably to all agencies receiving the benefit of those services. The two components of the CIO assessment, the CIO position itself and one support position, historically have been paid for by internal assessment. However, the internal assessment filters up to the rates of the other services and the other budget accounts. The only agencies charged are those getting direct services from DoIT. However, the CIO function is a higher, wider-spanning service now being provided to the agencies. There are some agencies not paying for that benefit. Our proposal for the CIO assessment is to charge all benefited agencies their fair share of this assessment; it also pulls those charges out of other items.

 

Senator Tiffany:

I understand. We have to determine whether we want to create the CIO with the associated support positions. To repeat, it looks as though the same guy is going to a lot of committees. You have removed the director’s responsibility, the provision of services, from the CIO function. We will have to assess whether we want every department to pick up the associated cost.

 

Assemblywoman Chowning:

This is extremely difficult for us when we received all this information just this morning. It is obvious we are going to have another meeting. Looking at tab 5, page 4, the question is, “Who should pay the new CIO assessment?” It sounds as though everyone under the CIO’s purview should contribute. What are the dollar amounts, and how did you arrive at those amounts? The binder does not tell me enough. We do not know how much or what percentage. These seem like fair questions.

 

Ms. Person:

The CIO assessment covers only the two positions we have discussed. I do not have the specific dollar amounts in front of me.

 

Mark W. Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:

Referring to tab 5, page 4, and who should pay for the new CIO assessment, I understand there is a director assessment in each of the other budget accounts within DoIT, and that other supported agencies should also be charged. We are trying to understand the total dollar amount, what agencies are being assessed for the CIO, and how they are being assessed so that it adds up to the total.

 

Senator Tiffany:

We need to have that information. We realize this is complicated, changed, and new. I reviewed volumes of information last night, and was still confused about functions split among the CIO, director, and chief of planning and how these functions were allocated internally and externally.

 

Mr. Rodriguez:

One issue is common across all accounts: how the cost pools are built that are going to be assessed, who bears the assessment, and the assumptions used to make the allocations among the agencies. We need to know who is going to be assessed, how they are going to be assessed, and what built the numbers that will be assessed. We are now going through data we have requested, but we need to have more information. For example, are assessments based on FTE or based on other criteria?

 

Mr. Stevens:

We want to look at where those costs are built into the Executive Budget in each year of the biennium in the various agencies and try to track those expenditures back into the DoIT budget.

 

Senator Tiffany:

Review of the budgets of other agencies has left us scratching our heads over the DoIT charges. When we review those charges, we do not understand, for example, how something went from $10,000 to $60,000. We need billing details from you so that we can examine whether charges are appropriate and needed.

 

Mr. Savage:

The security assessment is the largest dollar assessment by far. Would it make sense to defer discussion, providing time for separate conversations and assessment of additional information?

 

Senator Tiffany:

I want to go over the common enterprise assessment and then address other issues in the director’s budget. It looks as though you are putting operators and Web page designers, totaling 5 people, into the common enterprise assessment. I have asked the Executive Branch personnel who have come before us what they are doing for Web hosting and development. Most of this is done outside of DoIT. I am unsure DoIT has a role in Web design in the future. How do you plan on recovering the 3 Web-associated positions, which were billable previously?

 

Ms. Person:

We propose to roll these services into the common enterprise assessment in order to bill more directly those agencies receiving benefit from the services. For example, last session we talked about telecom rates and the two included operators. In order to keep our rates stable and competitive, we had to consider what to do with the two operators and examine who was receiving the benefit. In the current biennium, only those agencies paying phone bills to DoIT are paying for the two operators. The new assessment is our attempt to share costs more appropriately for services shared among all Executive Branch agencies and all elected officials. We feel the assessments will be small, and, following the OMB Circular, will be more fair.

 

Senator Tiffany:

We are looking at the change in protocol. Before, we dealt with hardware, data communications, portals, data lines, and systems. Now, all of a sudden, you are throwing in three people who had been direct-billed before. It looks as though you are pooling all of this, then assessing everybody. I still do not have a good handle on why you think this should be done, other than you think everybody benefits.

 

Ms. Person:

Currently the three Web-page developers are not directly billed on an hourly basis. Their salaries and operating expenses are included in the Web services rates. Only those agencies today paying a direct Web-services fee to DoIT are paying for those Web-page developers.

 

Mr. Savage:

This may help the clarification. The bulk of the Web-development work is not done by DoIT personnel. When we developed rates for the 2002-2003 biennium, we had no experience with the Web-development unit since it had not existed before. We made a judgment to combine a certain amount of the Web‑development function in with the more technical, hardware, Web‑hosting function. That was a mistake. Most of the agencies wanted to, and could as a practical matter, do most of their own Web development. We have unbundled that service. Now when we charge for Web hosting, we charge only for the technical hardware aspects and the system administration, but not for the Web‑page development. If one looks at the total amount of Web‑page development in the Executive Branch, it is probably ten times that done by these three people. They represent the statewide home pages, including homeland security.

 

Senator Tiffany:

Do you need three people to do that? Is your cost recovery for them, even though they report out of the application design and development group, from a pool dealing with common enterprise access?

 

Mr. Savage:

Yes.

 

Senator Tiffany:

Have they never been billed directly before?

 

Mr. Savage:

The Web developers have not been direct billed on an hourly basis. They were included in the combined Web services, which is direct billed to user agencies. The Web services cost pool has now been split. The statewide developers have been combined into this access assessment, and the Web system people are included in the hosting charge rather than development.

 

Senator Tiffany:

I think Mr. Stevens and Mr. Rodriguez summarized our needs very well. We need more information, received by staff a week in advance so that we can better understand the information and cut down our questions.

 

Senator Coffin:

I am not certain we have a handle on security issues. You have indicated you are requesting four positions primarily for security. Can you list the agencies you are concerned about as regards hacking or security breaches?

 

Mr. Savage:

We have had an increase in attacks and hacking. At the discretion of the Chair, we do have an example of a recent Web site defacement. It is inappropriate for public distribution. We made a single copy and I would ask that you pass it around (Exhibit D). While this particular defacement is off-color, that is not the risk. Defacements are sometimes used as a test to see if a Web site can be entered and access to the data obtained. We do not want hackers to have access to people’s Social Security numbers, addresses, and bank accounts for automatic deposits. All this information is in our systems. This is what we need to protect.

 

Senator Coffin:

Was the defacement on an agency Web site you do not control?

 

Mr. Savage:

That is where we have the most problems. We can get you a list of all the agencies involved in the security committee and interested in this assessment. We are dealing with a classic security problem, that of the weakest link. This is why security makes sense on an enterprise-wide, common assessment basis. If any single agency determines that security is not important, the entire State is put at risk.

 

Senator Coffin:

I understand that the entire system is vulnerable if one agency is vulnerable.

 

Mr. Savage:

Yes.

 

Senator Tiffany:

Senator Coffin, normally what agencies have done here for security involves software, intrusion detection, and firewalls, rather than throwing bodies at a problem with someone going out to teach agencies how to put a plan together. We already have a lot in place.

 

Senator Coffin:

Let us see how good this agency was. What is that defacement?

 

Mr. Savage:

I would have to look up what agency was involved. We have spent a large sum of money on security, but, unfortunately, only a fraction of what we need.

 

Senator Tiffany:

We have to believe that the security assessment will add to the security of the State, considering our existing hardware and software protection. We were worried about problems at the millennium. Now we are faced with an additional $1 million and raising everyone’s assessment. I know you have a love of security issues, but that does not mean it is what the State needs.

 

Mr. Savage:

We are proposing the bare minimum; it is not excessive.

 

Senator Tiffany:

We would like to have a week and another meeting to go over this again. I would like to ask about the software executive position, enhancement E-276. If I recall, the Governor created this position to get a handle on the problems with Nevada Operations Multi-Automated Data Systems (NOMADS). This position is no longer needed, and it seems it is going to be absorbed by DoIT. What is this person going to do? How will it be different from what the current manager is doing? How do you plan on allocating the costs for the new person?

 

Mr. Savage:

As you mentioned, the original position was for NOMADS. In the current biennium, the roles and responsibilities were expanded to include software and IT projects within the entire Department of Human Resources. We propose to expand the responsibilities of this position even further to the management and coordination of software projects statewide, and all the projects managed by DoIT. We propose the funding for this position be allocated across all the projects supported by the State. This is not an FTE-based assessment.

 

Ms. Person:

The charges for this position are directly allocated to budget account (B/A) 1365, and are direct billed on an hourly basis.

 

Senator Tiffany:

Let me ask the question again. Are you bringing in another person when you already have a manager?

 

Mr. Savage:

The existing person is currently responsible for project management and coordination of IT projects within human resources. That person’s responsibilities are being expanded to include project management statewide, integration of the programmers into the project management function, and management of that combined unit.

 

Senator Tiffany:

You know, I am blond, but I still do not understand. You currently have two managers within the application development division. You also have a person the Governor brought in to get a handle on NOMADS who is no longer needed for that. Do you intend to bring the NOMADS person into the application group as a manager over the two current managers?

 

Mr. Savage:

That is not entirely correct. The individual responsible for NOMADS had her responsibilities expanded in the current biennium to cover project management and coordination throughout the Department of Human Resources. We also have programmers who are managed by the current managers of the division. We do not have an integrated project management and programming staff. We do not have a project management unit covering projects outside the Department of Human Resources. Our intent is to combine these units and expand their responsibility using the existing staff. There is no additional person being added. The responsibilities of the manager of the combined unit are being expanded from what they are now.

 

Senator Tiffany:

It sounds as though you are trying to keep this person even though the Department of Human Resources says it no longer needs, wants, or will pay for this person. You are going to keep the person, expand the responsibilities, and have everyone pay for this new person. I think the salary was $107,000 annually.

 

Mr. Savage:

That is the fully-burdened cost, not the actual salary. All the projects supported by the project manager and by the programming group will support that position.

 

Senator Tiffany:

Do any of the managers of any of your other units make $107,000?

 

Mr. Savage:

That includes fringe benefits. It is not as though they get a salary of $107,000.

 

Senator Tiffany:

Do any of your other managers come up to that level of compensation? This is a pretty expensive person.

 

Mr. Savage:

Yes, several managers have comparable compensation. If you consider the responsibilities of that position and the salaries in private industry, rest assured we are not overpaying for that position, or, indeed, for any of our IT managers.

 

Senator Tiffany:

This person already exists and human resources is paying for that position. Now that the demand for the position no longer exists, you are going to bring the position to DoIT and allocate the cost to the agencies.

 

Mr. Savage:

That is correct. We are expanding the responsibilities and spreading the cost over the expanded range of responsibilities.

 

Senator Tiffany:

We want to see what agencies and projects are associated with this position. Let us now turn to the issue of hiring a contractor for the rate model. The department is recommending we pay $15,000 for this person to provide quarterly updates and reviews. My bottom line is: when is the department going to assume sole responsibility for the model and not saddle the State with consultant fees?

 

Ms. Person:

Basically, the $15,000 is not for the quarterly assessment this person is doing in the current biennium. We want to confirm we are following federal cost standards and are federally compliant. We propose to spend $15,000 annually to pay for a review of the overall rate model once or twice a year.

 

Senator Tiffany:

Why is this being done outside rather than internally? This is our business, and rate assessment is one of our core businesses.

 

Ms. Person:

We agree. We are using the current biennium to learn those skills. We feel we can do the quarterly assessments next biennium. However, the federal cost policy is very complicated. We are not experts and we are not trained to be experts. The IT industry changes frequently. We are seeking information so that we remain federally compliant. We also want to minimize any potential payback of federal funds.

 

Mr. Savage:

I would like to add to that. We are capable of doing the review. The money spent so far has produced that result. This is an extraordinarily arcane field. The majority of the complexity of our budget and our rate model is driven by federal requirements. We will not be paid if we do not follow the federal rules. We consider the consultant as insurance.

 

Senator Tiffany:

We just overbill them anyway, do we not? Is that not the case, according to the audits?

 

Mr. Savage:

We can talk about that if you like, but that is somewhat of a mischaracterization.

 

Senator Tiffany:

Will this review cost $7500 per review?

 

Ms. Person:

Yes, approximately.

 

Assemblywoman Chowning:

We have appropriated funds over three Legislative sessions for studies on DOIT rates and rate models. Last session, we appropriated $60,000. The intent and ultimate result of that was supposed to be that DoIT would be able to gain the knowledge and skill sets to assume the responsibility without the assistance of a contractor. Did that work? Did the teacher just not teach the lesson correctly? When you say $15,000 annually, how many years will this have to go on?

 

Mr. Savage:

Actually, the teacher did a very good job. Let me use an analogy of my own. If you buy a car, there is the cost of purchase and then the cost of operation. There is an on-going cost relating to this federal funding. The rules change frequently and do not always follow generally accepted accounting principles. In fact, they do not always follow rational accounting principles. Unfortunately, the federal government has the money. We learned a lesson. We know we can do assessments based on current rules. However, the consultant review is an extraordinarily prudent insurance policy to ensure that, as the rules and technology change, we remain compliant with the federal cost accounting standards. My expectation is that this operating cost will continue indefinitely, as opposed to the original training, which was done well, and which we have absorbed.

 

Assemblywoman Chowning:

Are you saying this cost will go on indefinitely, or not? You still have not said how long the contractor will be needed. Regarding these past three Legislative sessions and the statement made last session, why were we not informed? The studies would indicate, “Warning, taxpayers, you may have to continue paying for this.” That was not the way it was. We were told it could be finished without the assistance of a contractor.

 

Mr. Savage:

We have learned a lot since then. We could go forward without the contractor’s assistance. However, based on what we did not know then, but do know now, it does not seem prudent to do so. We would be putting ourselves at risk, a risk we did not understand when we started these studies. We learned in the process that we would never know on an on-going basis unless we had expert guidance. Part of what we learned, part of what you paid for in the earlier studies, was that one has to keep on top of the federal rules on an on-going basis. This is not something that can be done once and be finished. We simply did not know this before.

 

Senator Tiffany:

How many people do you have assigned to review these rates, and do they work full time on this?

 

Ms. Person:

Two staffers have this as part of their duties.

 

Senator Tiffany:

Do these people have backgrounds and qualifications in setting rates?

 

Ms. Person:

Yes. One is an administrative services officer (ASO) III, Brian Spencer. He has been working with DoIT for years. He is dedicated to maintaining the rate model, developing rates, and tracking our cost pools. We also have a chief accountant, new to the department. He arrived within the last month. We are training him to complement the ASO.

 

Senator Tiffany:

Does the ASO also review your overbilling?

 

Ms. Person:

Yes, he does. We feel these two individuals can take on the quarterly reviews in the future.

 

Senator Tiffany:

Is there a management analyst also involved?

 

Ms. Person:

Yes, we have one management analyst.

 

Mr. Savage:

The analyst performs a support role rather than the higher-level analysis of the rate models.

 

Senator Tiffany:

Even with the years I have been in the Legislature, I have never really understood how rate models work. Could you please provide staff with more information in the next week regarding the generation of your rates?

 

Mr. Savage:

Sure. Actually, we may be able to get our consultant to be part of that discussion as well.

 

Senator Tiffany:

If Mr. Rodriguez would explain what format he would like, that would stop our back and fourth discussion.

 

Mr. Savage:

That would be hugely helpful.

 

Mr. Rodriguez:

Mr. Savage, did you say the management analyst is not dedicated to the model? We gave you that position two sessions ago specifically for the model and its maintenance.

 

Mr. Savage:

They work on the details, the buildup and backup information. They do not determine the structural issues, such as how the model is put together. That requires a higher level.

 

Mr. Rodriguez:

We gave you one position totally dedicated to this model. It was supposed to do input, track the model, and monitor the rates.

 

Mr. Savage:

The position performs at the input-output level, but not at the structural design and development level.

 

Mr. Rodriguez:

Right, but you just said they are not doing that now.

 

Ms. Person:

That was my mistake. We do have that third person in a supporting role.

 

Mr. Rodriguez:

So, are there three full-time people on the model?

 

Mr. Savage:

No. The one ASO is almost full-time on the model, but we draft him for other things as information is requested. The chief accountant is mainly responsible for the on-going operation of the department. We want him up to speed on the rate model, but that is not his primary responsibility. The management analyst provides clerical support for the model, but not the analytical part.

 

Ms. Person:

It is very labor intensive to maintain the rate model.

 

Mr. Rodreguez:

I want to make clear, we are not asking for the data, we are only asking for the assessments for all the cost pools. Is that doable within a week?

 

Mr. Savage:

I do not know.

 

Ms. Person:

Mr. Rodriguez, there are two levels of detail. We gave you a sample of the first level last week. I understand your request for additional detail. Again, that is very labor-intensive. We estimate 3 hours worth of work to put together that information for each cost pool. We have about forty-three cost pools we are proposing for next biennium. We can certainly prioritize those and start with the assessments. However, it is very labor-intensive to go back and document every bit of that.

 

Senator Tiffany:

Ms. Person, this just boggles my mind. How can you build your budget and not have this readily available? That is how you build a budget. How can you build the budget if you did not have that information available?

 

Mr. Savage:

If it were as simple as giving you the keys to the filing cabinet and pointing you to the copy machine, we could do that this afternoon. However, it is not that simple. It is pulling the information together.

 

Senator Tiffany:

You should have pulled all the information together to build the budget.

 

Mr. Savage:

We have it together in a manner that works for us. Pulling it together in a manner useful to you, and we want to do that, and we will do that, is different.

 

Senator Tiffany:

When I do not have the information in a form I can look at, I say to myself, “They just took last year’s biennium budget, added 7 percent, and added a couple of people.” That is what it looks like. If you do not have extra columns of information, that is about the only conclusion we can come to.

 

Let us talk about the chief of planning. I still do not understand why that position is being transferred over to the CIO. How will the chief of planning be involved with you as the CIO?

 

Mr. Savage:

The planning group has primary responsibility for policy development, for committee structure, and for coordination across the state. In fact, there is an existing planning assessment wider than the group of people we provide services to for exactly that reason.

 

Senator Tiffany:

What will the chief of planning do for the CIO?

 

Mr. Savage:

He will be the point person for coordinating the policy committees, researching, and undertaking that entire class of activity. We can ask the individual to respond directly, if that would be helpful.

 

Senator Tiffany:

Why is the chief of planning transferred to the CIO, and what will that person do that is different from what you are supposed to do, which is planning?

 

Mr. Savage:

The real distinction is that his planning is enterprise-wide as distinct from a service-oriented function. The CIO role has oversight responsibility for both of those functions, operations, as well as enterprise-wide coordination and planning. Obviously, I will need individuals to perform both of those sub-functions. That explains the five units we have identified on the organizational chart. This unit, the planning unit, as well as the IT security unit, perform enterprise-wide functions, and, therefore, are more appropriately identified with the CIO function than with the service provision function.

 

Senator Tiffany:

It certainly seems we do not need a CIO if we have a chief of planning. It seems like duplication.

 

Mr. Savage:

Well, it is not.

 

Assemblywoman Chowning:

I have questioned requests for additional travel in all the budgets we have reviewed because we are in such difficult financial times. In the past, conference travel may have made sense. Now, we really need to have details. How will attending these conferences benefit taxpayers, the functions and operations of DoIT, and ultimately the agencies? You do not have to do that now, you can provide a summary later.

 

Senator Tiffany:

Decentralization was a concern back in the time of Senator O’Donnell. DoIT was tasked then with an analysis project to consider decentralization and return to the Legislature with a report. When I reviewed what you had told the Interim Finance Committee, I did not hear what I needed to know about costs and optimization. Do you have an outcome of the decentralization project that I could read and understand in quantifiable and justifiable terms?

 

Mr. Savage:

I am not entirely certain I understand. The answer is probably not. It turns out that experiment was fairly ill conceived from the outset. For example, suppose one is studying a heart drug, and has a control group and an experimental group. If one of those groups consists of fat, out-of-shape guys like me and the other consists of Olympic athletes, the study will not involve a valid comparison because the underlying samples are not comparable. That is the fundamental problem with the design of the decentralization study. The idea was to consider whether decentralization works better or worse than centralization from both a financial and an operational standpoint. Because the underlying workload and structures of the groups were so different, no meaningful comparison was possible.

 

However, cost data is available. We have provided that piece, and can do more, if that would be helpful. We will be able to do that for the biennium once we get the final accounting numbers. The problem is that the issue is larger than just the one programming cost pool we were considering. This is an important issue. I did a preliminary analysis, the Department of Administration did a somewhat more detailed analysis, and it became very clear we need a complete statewide analysis of all cost pools.

 

We need to look at three characteristics for each cost pool. Should we perform the function in an internal, centralized manner; an internal, decentralized manner; or should we simply outsource the function to outside contractors? The only thing that is obvious is that the correct answer is not obvious.

 

Senator Tiffany:

Agency testimony indicates all agencies are adopting technology, particularly the Web. All have a tendency to bring Web operations in-house. When asked for an explanation, every agency responds that it can hire its own people to produce the desired quality, cheaper than out-sourced to DoIT, and controlled internally. I have observed consistency among agencies to decentralize and internalize the IT function. An agency then makes a determination as to outsourcing and might get support from DoIT under a master support agreement (MSA).

 

Mr. Savage:

There is a consistent, mistaken viewpoint that leads to that consistent conclusion. If you consider the paper provided on our compact disk (CD), unfortunately not in our written materials this morning, called The Hidden Costs of Local Optimization, you will see a demonstration that, looking at these questions on an agency-by-agency basis instead of looking at the impact of those decisions on an enterprise-wide basis, leads to the wrong answer.

 

Senator Tiffany:

I do not know about that. Agency decentralization will make DoIT competitive. It will make DoIT rates competitive. If agencies consistently come to us reporting that their needs for programmers could be met at less than the $75 per hour DoIT charge, then this illustrates agencies are looking at DoIT as one of several options from which they can select based on quality and price.

 

Mr. Savage:

I understand. It is entirely possible there are some IT services businesses DoIT should not be in. However, examining the problem only on an agency-by-agency basis will not solve this issue. One must examine the overall picture. Doing otherwise leads to the wrong answer. For example, if it makes more sense for DoIT not to provide Web development service, based on actual analysis rather than my opinion or that of an individual agency, then DoIT should go out of that business. I have no problem with that.

 

Senator Tiffany:

It is not just that. I was talking to agency representatives at a recent technical exposition. Several reported they knew what software they needed, what problem had to be solved, what solution was necessary based on study. However, since they had to use DoIT for project management, they found themselves enmeshed in DoIT personnel issues delaying by 6 months the implementation of the solution initially identified by the agency. The agency almost lost federal funding as a result. This is not an unusual story. We see agencies determining that it is cheaper, faster, and better to outsource to someone other than DoIT while keeping federal funding intact.

 

Mr. Savage:

It is an extraordinarily mixed bag. The usage of the state common e-mail system is growing. We are merging networks that used to be duplicative. We are merging communications systems that used to be duplicative. Anecdotal evidence can be helpful in identifying the need for analysis, but anecdotal evidence cannot be substituted for analysis. Decisions need to be made on the basis of clear, detailed analysis of the financial impact on the Nevada taxpayer. If analysis of statewide impact shows DoIT should not be in a certain line of business, I will be the first to champion our withdrawal from that business. I do not want to cost the taxpayers anymore than it costs to provide particular services. Anecdotal evidence from some agencies to the effect that they have saved money absolutely does not demonstrate the taxpayers will save money by going in that suggested direction. The Department of Administration budget contains money for this type of comprehensive study. It is in that budget because they would manage the study.

 

Assemblywoman Chowning:

We sit here today, February 13, 2003. In our hearing of February 16, 2001, we were told almost exactly the same thing. You said that a decentralization test would produce desirable results. You said the point is not to speculate on what is best but to get data supporting the move. Further, you said the test was expected to begin on July 1, 2001, with specific criteria developed before then. What did this mean? You said the test would be done. You seemed not to have any problem with it, having stated July 1 would commence the test. There was a letter of intent. Now, you appear to be saying the same thing. Where is the report? Was the test made? This is appalling. Will we be sitting here 2 years from now with the same promise? These were your words.

 

Mr. Savage:

Actually, there is a subtle but critical distinction between what I said then and what I am saying now. Two years ago I said the test was a way to get the necessary information. That was wrong. The reason I was confident I could make it work was because I was naïve and clueless. I am substantially less naïve and clueless 2 years later. A test was not practical. We found that out. We could not get the data that way. What is needed is not a test, as I then mistakenly thought. A detailed analysis of the underlying financial elements of each cost pool is what is needed. This may seem like a subtle distinction, but it is an extremely important one. A test requires certain conditions be in place to produce a valid result. There was no way to put those conditions in place. I did not know that. I was wrong. I thought it would be easy. However, drawing on the knowledge we have gained in the last 2 years, the right way to make this determination is by an analysis, which explicitly includes the federal payback implications of the way the service is organized. Two years ago I did not know anything about the implications of federal funding. Now, I know more than I ever wanted to know. This is a critical element of the decision, more so than anyone, not just me, realized at the time. Based on the knowledge we have gained in the last 2 years, instead of doing a test, we need a professional who understands the issues to analyze them in order to maximize the federal dollars we can get back to the State.

 

Assemblywoman Chowning:

To conclude, we have no report. You are proposing we spend money, some $100,000, to get the report we had promised to us 2 years ago. You are now telling us you could not do the report because you were “clueless”, and we now need someone else to do the report.

 

Mr. Savage:

You have a report that includes the financial information we could provide. You do not have what was promised 2 years ago.

 

Senator Tiffany:

Agencies want to keep their budgets as lean as possible, providing services in the most cost-effective manner. They want the ability to compare DoIT to others as regards pricing and timing. DoIT’s core business is to provide services to agencies. It is either cost-effective or it is not. I see DoIT downsizing rather than upsizing. I see DoIT becoming competitive, much as a private sector entity would. You should know your rates, what services you can provide, what your staffing should be, and what your revenue should be. You should have a reserve pool you can draw on in case you experience peaks and troughs. You should know whether you should use a mainframe or transition to servers. If you were to have to write a business plan without knowing these answers, your business would not be alive today. I am a little surprised, since you came from the private sector, to see the growth in the DoIT budget. We see agencies getting budget cuts and determining how to provide services more efficiently.

 

Let us turn to the contractor issue. This dovetails into my concern. In the private sector, you would already know whether you wanted to hire someone.

 

Mr. Savage:

We know a great many of the answers. In terms of DoIT’s cost-effectiveness, the key distinction is that looking at this from the isolated perspective of a single agency is not the correct approach. Analysis should proceed on a total‑cost‑to‑the‑taxpayer basis.

 

Senator Tiffany:

But the agencies are your customer. If I were a copy company and I determined my prices simply on my fixed costs, not looking at my individual customer’s interest of paying 3 cents a copy versus 10 cents a copy, I would lose customers.

 

Mr. Savage:

There is an important distinction. In the private sector, the customers and the providers are distinct groups. If individual providers go out of business, the people who bear that cost are the investors or owners of the businesses. In the case of government services, the economics are very different. The customers and the providers are the same people.

 

Senator Tiffany:

Departments may not go out of business, but they are all cutting their budgets. That means being lean, mean, and effective. We are talking about raising a billion dollars in taxes. Every agency is sincere about sharpening its focus.

 

Mr. Savage:

I understand. DoIT is providing 19 percent more services for a 6‑percent increase in costs. I am pretty proud of that.

 

Senator Tiffany:

Please tell us about the contractor you want to hire. What will be done specifically, and when would we have the ability to review that?

 

Mr. Savage:

To ensure I understand, you are talking about the contractor for the optimization study. The contractor would look at each of 43 IT service cost pools individually. The contractor would consider different models for providing the associated service, an internal centralized model, an internal decentralized model, and an outsourced model. The contractor would also consider each of these organizational models on the amount of federal money the State gets back.

 

The completed NOMAD (Nevada Operations Multi-Automated Data Systems) study is a classic example. Had we decentralized those programmers, using the same number of people and assuming the same amount of work, we would have lost more than $400,000 per year in federal funding because of the way the federal funding rules work. The contractor will consider these issues for each cost pool. If we obtain funding, we will release the request for proposal (RFP) on July 1 with the intent that the study be completed by December 2003 so it could be included in the budget planning process for the FY 2006-2007 cycle. Our intent is to maximize federal payout to the State and minimize cost to Nevada taxpayers on each individual IT service. It may mean outsourcing some services; it may mean re-centralizing existing decentralized services. I am comfortable with whatever answer emerges based on a service-by-service analysis. Minimizing taxpayer cost should determine IT organization for the next biennium budget.

 

Senator Tiffany:

Let us turn to the audits. There are a number of recommendations about tracking overtime and overbilling. How have the seven recommendations been implemented?

 

Mr. Savage:

We can address the audit at your discretion. We did not bring audit information because our audit response is due on March 11. We can give you a brief review.

 

Ms. Person:

As a result of the audit, we learned the form DoIT uses for overtime pre-approval lacks an important component, the approval date. The existing form included the supervisor’s signature and a box indicating approval or disapproval. What was missing was an approval date. We have added that in the aftermath of the audit. This is one way to confirm overtime has been requested and approved in advance.

 

Senator Tiffany:

How are work activities supervised?

 

Ms. Person:

Supervision of work activities is a management function. That requires training for managers on specific requirements of time sheets, the approval process, and matching pre-approval forms to the time sheets themselves to confirm the time worked matches the time approved.

 

Senator Tiffany:

Do you have to train a manager to do that?

 

Ms. Person:

There are a number of statutes involved.

 

Mr. Savage:

We do not have to train managers in a general sense, but compliance with the State rules is a non-trivial process.

 

Senator Tiffany:

Have you implemented that?

 

Ms. Person:

Yes. In the past week, my personnel analyst has clarified the application of some of the rules for callback pay. The rules governing call-back pay are confusing. Working with staff, she generated a document to clarify when someone is eligible. Many of our staff receive phone calls in the middle of the night, and some of them are required to return to the site to fix problems. This is the nature of our business.

 

Senator Tiffany:

How were travel reimbursements handled?

 

Ms. Persons:

The problems with travel reimbursements involved only a few individuals. Those remain under investigation.

 

Senator Tiffany:

I recall you mentioning that earlier. When is the report due?

 

Mr. Savage:

We do not have an explicit due date. We expect it to be completed by the end of February.

 

Senator Tiffany:

I thought the attorney general was investigating.

 

Mr. Savage:

The Nevada division of investigations has an intermediate step, called a personnel investigation. That is what we are performing. It is distinct from a criminal investigation. The Office of the Attorney General only conducts criminal investigations. If the personnel were to reveal that a criminal investigation was warranted, we would turn the matter over to that office.

 

Senator Tiffany:

The last item deals with decentralization of the programming services and monitoring the performance of the agencies. I think we have beaten that to death.

 

Can you give us the status on the federal payback?

 

Mr. Savage:

The short answer is that the State needs to pay back an amount estimated to be between $1.1 million and $1.5 million. The facility reserve has sufficient funds to cover this amount. We are still negotiating the details, but we owe something in that range.

 

Senator Tiffany:

When will that report be available?

 

Ms. Person:

I met with our consultant about 2 weeks ago on this issue. We expect a rough estimate at the end of the week. That is how we came up with the $1.1 million to $1.5 million estimate. Two accounts are involved, the computing facility and the telecommunications accounts. Most of the money would be payable from the computing facility. I have been told the dollar amount will be defined and payback made during the course of this Legislative session. I will have to get back to you with dates, the date the amount is finalized, and the date payment is made.

 

Assemblywoman McClain:

Where did you say the money to be used in the payback is now?

 

Ms. Person:

Two accounts are involved. The first is the computing facility account, B/A 1385. The telecommunications account is B/A 1387. As background, increased utilization going back several years caused us to over-collect funds, thereby increasing our reserves. A regular federal audit found we needed to pay back money. This is not uncommon in the state IT industry. In fact, it goes beyond IT. I believe purchasing was involved in an analogous payback several years ago.

 

One of the reasons we want to let the contract we have discussed is to minimize such paybacks in the future.

 

Assemblywoman McClain:

Do you mean you did not have a clue you were doing something wrong? Was there not a message when you were building reserves?

 

Mr. Savage:

That is exactly the point I want to address. The term “overcharge” is somewhat misleading. For example, a sales forecast of 100 units followed by actual sales of 120 units at the predicted price does not imply an “overcharge.” What actually happened is that more services were delivered than forecast. If the agencies end up using more services than they forecast, and they pay DoIT at the agreed rates, we build up the reserve. This is what happened in the period in question, 1991 to 2001.

 

Assemblywoman McClain:

Excuse me, but you are building reserves as your overhead. This is basically a profit. I would think this should be a red flag to a state agency. You are not supposed to have all this slush money.

 

Mr. Savage:

That is absolutely correct. When I started at DoIT in 2000, it was clear we did not accurately forecast agency service volume. We did not have a close tie with the agencies. We have done an overhaul. For example, during the last Legislative session, you approved, and we subsequently hired, a capacity planner to develop models for service utilization and to work with agencies in generating requirements. We are now at the point where we see a huge improvement in our ability to forecast what agencies will use when compared with the period when these surpluses were generated. You are correct; the surpluses were a red flag. We took corrective action to improve our forecasting process.

 

Assemblywoman McClain:

If you have improved the forecasting, then is that not the basis for all your cost pools?

 

Mr. Savage:

Absolutely.

 

Assemblywoman McClain:

That is what we need to know.

 

Mr. Savage:

I understand.

 

Senator Tiffany:

I understand that building reserves in this way is not unusual, not okay, but not unusual. The ASO should keep a better eye on that. The source of some of the overpayments ultimately was the General Fund. When you break out the settlement funds for the federal government, could you provide us with an explanation of your separation between federal and General Fund monies? We want to recapture them both appropriately.

 

Mr. Savage:

We have to recalculate that in any event. The ideal way to correct small build-ups in the reserve is to adjust the rates downward for a future period so that the reserves drop to an appropriate level.

 

Senator Tiffany:

You cannot do that when you have a mix of federal money.

 

Mr. Savage:

Actually, federal authorities prefer that method. DoIT adjusts the amount it charges the customer agencies. As long as we charge the same rates to the federally funded agencies as we charge to the General Fund agencies we are following the preferred path.

 

Senator Tiffany:

Do you know what percentage is General Fund and what percentage is federal so the rates can be adjusted?

 

Mr. Savage:

The rates are the same across the board. In fact, it is illegal to have different rates. We will provide you the information, including how we derived it.

 

Senator Tiffany:

Let us talk about your BDR. Has it been submitted? Is it being drafted?

 

Mr. Savage:

We have two BDRs; BDR 19-535 addresses the CIO issue, BDR 19-536 addresses the security issues. BDR 19-535 does not explicitly create the committees we have discussed; rather it authorizes their creation.

 

BILL DRAFT REQUEST (BDR) 19-535: Revises provisions relating to Department of Information Technology. (Later introduced as Assembly Bill 88.)

 

BILL DRAFT REQUEST (BDR) 19-536: Makes certain documents relating to information technology of state agencies confidential and authorizes appointment of advisory committee on security issues. (Later introduced as Senate Bill 175.)

 

Senator Tiffany:

What committee will hear that?

 

Mr. Savage:

It will probably be government affairs on the Assembly side.

 

Senator Tiffany:

I looked at the intent section. I have to tell you, the power you bestowed on yourself is pretty sweeping. Would you like to talk about how you can now add, delete, and subtract from all the projects of all of the agencies, as well as move money from one project to another? Where the heck does this authority come from?

 

Mr. Savage:

That provision, that entire process, was dropped in the revision process. The original intent was that, with the concurrence of the Governor and a Legislative committee, the CIO could exercise broad powers. The CIO would not have that power on his own. The Legislative counsel drafting the bill determined that the proposal violated the separation of powers principle. As a result, the entire process was dropped.

 

Senator Tiffany:

My concern was not whether the Governor had the power and the Legislature does not; rather, I was concerned about the sweeping power. Never before in Nevada have I seen a situation where DoIT could tell agencies that it would turn funding on or off or shift funding among agencies.

 

Mr. Savage:

I may not have been very clear. The provisions you mentioned are not in the current bill draft.

 

Senator Tiffany:

That is what it looked like to me. We will have to take a careful look at it.

 

Mr. Savage:

The current bill draft does not increase the power of the Executive Branch at all. It does require additional coordination with the Legislative Branch, but it does not increase the existing authority of the Governor.

 

DoIT, Planning & Research Unit – Budget Page DoIT-7 (Volume 1)

Budget Account 721-1370

 

Senator Tiffany:

We will look at that in detail. We will probably talk more about this regarding your budget. Let us now go over B/A 1370 dealing with planning and research. It looks as though there has been an exponential rise in training funds. Would you cover that for us?

 

Kathy Ryan, Deputy Chief, Planning and Programming Division, Department of Information Technology:

When the Governor asked that we make 3‑percent budget cuts, we cut our training budget in half. We are a small unit and had few other areas to cut. As a result, our request is to have our training funds restored to the previous level.

 

Senator Tiffany:

This looks like a 30‑percent increase. Do you see any more training taking place?

 

Ms. Ryan:

We try to train on an annual basis. We try to keep analyst skills up to date, particularly since they deal with our client agencies. We also provide annual training for our capacity, strategic planner. Training is very important to the unit.

 

Assemblywoman Chowning:

The thing confusing me is the fact that we have fewer positions, a decrease from 17 to 11, and yet there is a 32-percent increase in training. That does not make sense. Do we have to train fewer people better? Why do we need the increase when we have fewer people to train?

 

Ms. Ryan:

Where we show fewer people, we are actually transferring personnel to other budget accounts within DoIT. When those transfers take place, training dollars go with them. Using an average of $2500 per person per year, we transferred that money out. By this request, we are trying to reinstate the level of training we believe we need. We have tried to be cost-effective by bringing training sessions in-house so our personnel do not travel.

 

Assemblywoman Chowning:

I need to have that spelled out, the estimated training, who will receive it, whether recipients reside in other budgets.

 

Ms. Ryan:

No, that does not happen.

 

Assemblywoman Chowning:

You just mentioned people transferring and changes of money.

 

Ms. Ryan:

I am sorry. I am referring to this biennium where, for example, we are transferring the security planner out of this budget account to a different budget account. When that person is transferred, training dollars are transferred as well, as are operating expenses.

 

Assemblywoman Chowning:

I need more details when there is a 32‑percent increase in money and a 35‑percent decrease of staff.

 

Senator Tiffany:

How many departments come to you and request planning assistance?

 

Ms. Ryan:

We serve 130 agencies. Last September we held an informational workshop with the agencies about preparation for the budget process for the upcoming biennium. We also offer the agencies technology planning services as well as our research unit services. In the last 2 years, I believe we had requests from about 30 or 40 agencies.

 

Senator Tiffany:

Was that for requests other than budget preparation?

 

Ms. Ryan:

Most of what we do is to help people with the budget.

 

Senator Tiffany:

I thought you did cost estimates and alternative studies.

 

Ms. Ryan:

We do technology planning whereby we look at existing situations, processes and personnel, and technology utilization. Then, working with the agency and considering the direction it wants to take, if asked, we will also help do cost estimates in order to provide the full picture.

 

Senator Tiffany:

I have not heard an agency tell us how badly they needed IT planning. In fact, I have not seen it as a line item.

 

Ms. Ryan:

It is an assessment, Senator, so it would not appear as a line item.

 

Senator Tiffany:

I am talking about how it would appear in their budget. Typically I do not see “planning” in a breakout of agency expenditures for DoIT.

 

Ms. Person:

I would have to confer with my budget analyst, but it may be included in category 26 funds.

 

Senator Tiffany:

How many researchers do you have now?

 

Ms. Ryan:

We have one.

 

Senator Tiffany:

Is this researcher going to be transferred to the CIO?

 

Ms. Ryan:

No, this person stays with the planning and research group.

 

Senator Tiffany:

Is there a researcher under the CIO for planning?

 

Ms. Ryan:

No, there is not.

 

Senator Tiffany:

Does this researcher have the expertise to do internal estimates and consider what business we should be in? Can that researcher be used internally rather than hire an external consultant?

 

Ms. Ryan:

That would depend on the research topic. This person spends a lot of time answering questions from other staffers and other agencies. This person has been of considerable support to the security committee. He passes information to agencies when he is aware of their concerns; he was a great help providing information on the mainframe upgrade. I do not know if this person has the skill set that would be required.

 

Senator Tiffany:

We want to know about performance indicators. When will they be available?

 

Ms. Ryan:

I submitted them along with the budget information.

 

Assemblywoman Chowning:

I am looking at the performance indicators. That is what I do not understand. You just mentioned cost savings, yet here it says, “Not applicable,” again and again. In “Percent of Favorable Responses on Customer Evaluation,” nothing is entered in that category.

 

Ms. Ryan:

We just changed our performance indicators. The indicators that show “Not applicable” are those that have been replaced with new performance indicators we believed would be more specific to our mission. So, if you look at the old set of indicators, you will see information for FY 2002. We do not yet have all the information for FY 2003. The new performance indicators will pick up in FY 2004 and FY 2005.

 

Assemblywoman Chowning:

We only have two. One states, “Percent of Projects Completed According to Agreed Upon Deliverables,” 100 percent. Does this mean you really did complete all the projects?

 

Ms. Ryan:

Yes, and I have six indicators in front of me. I am unsure why you have only two.

 

Assemblywoman Chowning:

Then there is “Percent of the Favorable Responses to a Survey.” That also was 100 percent. We have six indicators as well, but only two have answers.

 

Ms. Ryan:

I believe the old indicators are mixed with the new indicators. We do not have data for the new indicators because they are new.

 

Senator Tiffany:

Please talk to staff about this. We are talking apples and oranges. We looked at our book, read the numbers, and it did not appear to us that anything was there.

 

DoIT, Application Design & Development Unit – Budget Page DoIT-12 (Volume 1) Budget Account 721-1365

 

Senator Tiffany:

If there are no other questions, let us move on to B/A 1365, for the application design and development unit. Are there general comments?

 

Angela Grato, Software Systems Executive, Communication and Computing Division, Department of Information Technology:

I am also acting chief of the project management unit.

 

Senator Tiffany:

We are concerned with several issues: reinstatement of the five NOMADS programmers, the position transfers, cost recovery for Web developers, position reclassifications, and the new project manager position. Requests for programmers are declining. Do you have a plan to account for this?

 

Ms. Grato:

Under tab 8 in our binder you should see a presentation I prepared with that information.

 

Senator Tiffany:

You will have to elaborate on that book. We cannot digest an 8-inch document delivered 2 hours before the meeting.

 

Ms. Grato:

The first substantive slide in the presentation at tab 8, entitled “Budget Overview,” illustrates that several different groups exist in B/A 1365, not just the programming staff for the Application Design and Development Unit. The NOMADS team and Quality Assurance (QA) staff are also in that budget account. The chart indicates the billable position adjustments made over the last biennium.

 

Senator Tiffany:

Let us go back to your action plan.

 

Ms. Grato:

Our action plan is to transition more programmers to NOMADS. We have kept vacancies open and then cut a total of seven in this budget. We took one programmer to be used for project management work. We reclassified another position for project management work. We have transferred additional people to NOMADS.

 

Senator Tiffany:

So, you are doing a shell game with people.

 

Ms. Grato:

We are doing a shuffle to get people to where the work needs to be done. We are doing this on a monthly basis.

 

Mr. Savage:

I should clarify what we are doing regarding the NOMADS programmers. The total amount of work in NOMADS has not gone up. Rather, some contractors have been let go and, consequently, State staffers have been transferred to NOMADS to cover work the contractor’s personnel had been doing. We have worked closely with project management staff to ensure the transition was smooth. Our preference is to use State staffers where we can when the workload declines.

 

Senator Tiffany:

You say you have cut positions, but it looks like staff positions have increased from 59 to 64. That is not a cut.

 

Ms. Grato:

We have transfers both in and out.

 

Senator Tiffany:

That is the shell game again. Okay.

 

Ms. Grato:

It is the shell game, but we actually have some rationale behind it. The concept is to combine billable software system support functions, then to move the database analysts in with the programming and project management staff. The functions of these different groups are similar. We did move the Web server support staff out; they have more of a hardware function. They will go over to technical operations. We are trying to separate and align software and hardware functions.

 

Senator Tiffany:

With declining requests for programmers, is the established rate justifiable?

 

Mr. Savage:

We have reviewed what the agencies believe they need for programming services and the costs we believe we will incur to deliver those services. That is how we determine our rates. It tracks from their budget to our budget. What we are forecasting as revenue, they are forecasting as an expense.

 

Senator Tiffany:

Do you believe the rate is okay even though demand is declining? We just talked about how rate adjustment is appropriate if you get more requests and fewer people. Do you feel comfortable with the rate for 2 years?

 

Mr. Savage:

Within the programming cost pool, and B/A 1365 includes more than the programming cost pool, we had a decline in forecast revenue and a corresponding decline in forecast staffing and expense. The result of that is the rate we currently project for FY 2004 and FY 2005.

 

Senator Tiffany:

It looks as though you are pooling like functions.

 

Ms. Grato:

Yes.

 

Senator Tiffany:

Do you really believe a programmer can do Web work and a Web person can do programming? Do you believe a database guy can do project management, and a project manager can do database work?

 

Mr. Savage:

On the edges they can do that. Some high-level programming/application design tasks that can be done by a project manager. There are some simplified database tasks that a programmer can do. These skills are not substitutable. However, there are commonalities. Here the core commonality is these are all billable functions and all personnel are working on the same projects. Having them collected in one budget account makes a lot of sense, since they are working on the same class of thing.

 

Senator Tiffany:

Do you believe pooling these personnel together and creating a billable rate adds value to these agencies and to your department?

 

Mr. Savage:

There are distinct rates for database analysts and programmers. They are in separate pools even though they are in the same budget account. The payoff to the agencies, and to DoIT in particular, is that it will be standard in the future to have different people on the same project, Web developers, programmers, and database analysts. Having these people in the same unit is an advantage; cross-unit coordination becomes unnecessary. This reduces overhead time in a particular project.

 

Senator Tiffany:

I would like to see the utilization projections and have them provided to staff. Pooling these people together and asserting they can cross-perform on the same project causes me some difficulty.

 

Mr. Savage:

We can get that for you.

 

Ms. Grato:

Our strategy is not to turn a database analyst into a project manager. Our senior project management staff is quite small. This means we cannot do everything for every project. We are constructing cross-functional teams in order to spread work across all the resources of the unit. This balances the workload.

 

Assemblywoman Chowning:

I would like to return to the Welfare Division. What are they asking? Are they asking for the NOMADS programmers? If so, what are the requested tasks? How many billable hours are projected? This committee deals with numbers, and we want to know what the numbers are.

 

Mr. Savage:

We can get you that information.

 

Ms. Grato:

That staff exists at this time, and this is in their projections.

 

Assemblywoman Chowning:

Where do we see that? I am looking at tab 8, and I do not see support.

 

Mr. Savage:

The detailed utilization figures are not in the binder, but we can get them for you.

 

Assemblywoman Chowning:

Can we get them within a week?

 

Mr. Savage:

Those figures already exist, so getting them to you is not a problem.

 

Senator Tiffany:

Let us go back to the subject of Web developers for some additional clarity. Does building the cost of the Web developers into the common enterprise access assessment indicate there is no demand for Web development services sufficient to support three positions?

 

Mr. Savage:

There are two classes of demand. Presently the number of applications without a Web component is declining precipitously. Almost everything is moving in the direction of a “Webafied” application. The distinction between the activities of a programmer and a Web developer is declining rapidly. This merger is driven by demand for Web functions and enabling technology. As a result, there is Web development work that is billable because it is associated with a specific product. There is also overhead activity like the State homepage that is not. These non-billable activities are included in the three positions in the access assessment. The billable activities will be included with the programs.

 

Senator Tiffany:

Please ensure we see how you do that. Also, are the rates different for the programmers, database administrators, and project managers? We would like to see those. If you have crossovers where a database administrator functions as a project manager, how are you going to track that?

 

Mr. Savage:

I understand. We will provide this information.

 

Senator Tiffany:

Moving to staffing upgrades, can you provide us with justification? Are the responsibilities different?

 

Mr. Savage:

Absolutely, they are different. We can provide more details. However, the main driver is 19 percent more work with 9 percent fewer people.

 

Senator Tiffany:

I hate to tell you, but in the private sector, workload does not justify a salary increase. Different work gives one a salary increase.

 

Mr. Savage:

I understand that. But if you look at our salaries relevant to private industry, it is pretty clear we are operating under different rules.

 

Senator Tiffany:

People are now looking for jobs in Silicon Valley. It used to be difficult for us to find good people. That has now changed from 4 years ago.

 

Mr. Savage:

Obtaining staff and retaining staff are two different things.

 

Senator Tiffany:

If you want to give someone a salary increase, I suggest you not use this vehicle.

 

Mr. Savage:

We are not doing that. In most cases we are increasing functions. If you like, we can address the individual positions.

 

Assemblywoman Chowning:

Remember, our statute provides that, in order for there to be a reclassification, there has to be a significant change in the duties and responsibilities of a position. To comply with the statute, and to be fair to the taxpayers, we need to know what the significant changes in these positions are.

 

Mr. Savage:

We can address those now, or provide information to staff.

 

Senator Tiffany:

Please provide the information to staff, because we will look at this quite carefully. Not everyone in all these agencies is getting an upgrade or salary increase without much justification. I want to talk about the joint information technology involving the Division of Child and Family Services and the Division of Mental Health Developmental Services. Are you going to add a project manager for that?

 

Ms. Grato:

That request came from the Division of Mental Health and Developmental Services. It is going to replace a legacy system that is no longer being supported with a new system. The division has requested a full-time project manager.

 

Mr. Savage:

Is that federally funded?

 

Ms. Grato:

I do not know, but I can find out. I believe it is.

 

Senator Tiffany:

Could you provide us with the documentation of the request?

 

Ms. Grato:

Certainly.

 

DoIT, Computing Division – Budget Page DOIT-19 (Volume 1)

Budget Account 721-1385

 

Senator Tiffany:

Let us move on to B/A 1385, the computing division. Are there opening comments?

 

Mark Blomstrom, Deputy Director, Communication and Computing Division, Department of Information Technology:

I will be covering budget accounts 1385, 1386, 1387, and 1388.

 

Senator Tiffany:

In B/A 1385 we want to talk about the mainframe upgrade, the position transfers, and the position reclassifications. On the mainframe upgrade, we seem to be moving from multiple boxes back to a single, big box. This indicates a very heavy mainframe mentality. Has anyone considered, rather than moving completely off the R-system, the International Business Machines (IBM) 9672-R46 and the IBM 9672-R35, to a completely new computer, whether there is an interim transition that could be considered, in addition to transitioning away from a mainframe mentality and back to a server mentality?

 

Mr. Blomstrom:

We have conducted a study of mainframe transition issues. We have been looking at this for almost 1 year. Tab 2 in your binder contains an explanation of the mainframe upgrade. Continuing the IBM usage is addressed. This clearly appears to be the most cost-effective option.

 

Senator Tiffany:

It looks like a huge data server box to me as opposed to multiple analysis boxes.

 

Mr. Blomstrom:

It is.

 

Senator Tiffany:

We can have a repository, but we do not need mainframes for repositories.

 

Mr. Blomstrom:

Your depiction of the system as one huge database is a direction that mainframe usage is trending towards.

 

Senator Tiffany:

Is using this big hardware the best way to do what needs to be done?

 

Mr. Blomstrom:

We believe that it is. The primary reason is that it is extremely cost-effective in terms of data storage. It also allows the use of the database from several different avenues of approach.

 

Senator Tiffany:

You can also accomplish that with servers with the right networks. Assemblyman Beers has a real interest in this as well. Unfortunately, he is sick today. Could you give us both a call? We would like to talk about the mainframe mentality and explore other alternatives, or see if there is financial justification in moving in the suggested direction. We invite other members to join us. We will bring that discussion back to the next subcommittee meeting.

 

Assemblywoman Chowning:

There is a $2.5 million price tag on this. I have been around this issue for a while. It seems to be more cost-effective to lease rather than purchase. This is a large price tag, and you were going to tell us whether you thought it better to purchase or lease. This expenditure is spread over a 3-year period. We always have the question of obsolescence after 2 years, followed by additional purchases. Why should we purchase instead of lease?

 

Mr. Blomstrom:

This is a lease-to-purchase over a 3-year period. We have spread the hardware financing out to reflect that. The hardware component is $1.4 million of the cost you identified. The software upgrade cost is $1.2 million per year. Software is not leased, generally.

 

Assemblywoman Chowning:

The lease-to-purchase is ultimately a purchase. Do you think this is more cost effective?

 

Ms. Person:

I understand the additional purchase price is minimal at the conclusion of a lease-to-purchase term. As a result, we get more for our money than a simple lease arrangement.

 

Senator Tiffany:

We will bring this all back when we get into the question of the Z-machine versus the R-machine. I really question the mainframe philosophy. I see this as a big box repository. I would like to see applications migrated off the mainframes and on to smaller servers.

 

Mr. Blomstrom:

We are increasing the actual use of our server farm equipment, that is, the NT-type (Windows NT®) box. This is driven by customer demand. We are using both NT and RISC (reduced instruction set computing) boxes.

 

Senator Tiffany:

I understand. I would like to see more come off the mainframes. There is a whole mainframe philosophy here. Let us now turn to these positions. Can you tell me how they will affect the operation of the computer facility?

 

Mr. Blomstrom:

Are you talking about the database analysts?

 

Senator Tiffany:

I am looking at two UNIX programmers transferred from the applications budget to this budget account, the net result of the transfers, and reduction of computing division staff of 14 FTEs. So, ten database analysts, three Web developers, an administrative assistant are involved.

 

Mr. Blomstrom:

Recalling our discussions of last session, it was determined that the charge for database analysts would be levied for on an hourly basis. We had not been doing that up to that point; they had been included in the overhead rates of the mainframe. They were being used increasingly for many different purposes beyond mainframe database maintenance. Consequently, the rates are now hourly and closely associated with projects rather than development. We determined the best place to reflect this would be B/A 1365. That account increasingly works on an hourly-charge-for-IT-labor basis, as opposed to the infrastructure account 1385, which is charged for on a per-unit basis of capacity utilization.

 

Senator Tiffany:

Are you saying that it will not affect the operations? Do you feel it is more appropriate for billing purposes?

 

Mr. Blomstrom:

Yes. In fact, there are still two database analyst positions within the mainframe operations that work directly with the mainframe. The transfer of two people from B/A 1365 to B/A 1385 is to put them in the appropriate place for costing; they are becoming part of the UNIX cost pool. They work as system administrators.

 

Senator Tiffany:

Let us go to E-600. I want to talk about the maintenance and licensing fees. They seem to have disappeared from the budget. Can you tell us why?

 

Mr. Blomstrom:

That reflects the lowering of our costs through our very aggressive renegotiation of long-term software contracts. We use DB2, the IBM database application, on the mainframe. We have used two sets of products or utilities associated with that database to do maintenance. One set is provided by IBM, the other by BMC Software. We have moved to where all database administers use a single utility. As a result we no longer use the BMC utilities for maintaining DB2. This alone saves $200,000 annually in costs for maintenance software.

 

Senator Tiffany:

Does this not put you in a difficult position? Is it the result of better negotiation?

 

Mr. Blomstrom:

We have cut down what we are using. Our intent is to re-negotiate these contracts aggressively to obtain a reduction in price and a reduction in the portfolio of software we use.

 

Senator Tiffany:

Let us go to E-805, the reclassifications. Can you give us the reason for reclassifying?

 

Mr. Blomstrom:

In part, I would follow what Mr. Savage has said. These reclassifications are based on our comparison of work currently being done relative to the class series descriptions. If they meet the higher grade of a class series description, then that is the decision factor. This has not been done for some period of time. We have a buildup in this area. The NPD-19 position questionnaires have been done. We would be happy to pass them to staff.

 

Senator Tiffany:

I want to go to the capital improvement budget, specifically the bond you are talking about regarding expansion and renovation. What is happening here?

 

Mr. Blomstrom:

This involves the renovation and expansion of the facility building that was completed in 1972. It is now 31 years old and has never been renovated or significantly altered. We have problems in a number of areas. We are extremely cramped, given the amount of equipment and personnel packed into the facility. The capital improvement program has two components. One is a renovation to meet current safety standards, including asbestos mitigation, and to provide upgrades to the electrical and heating-air-conditioning system. Secondly, it would include an expansion of approximately 10,000 square feet to allow for additional equipment.

 

Assemblywoman Chowning:

This is a bit confusing because the budget is recommending $40,000 in each year to allow you to keep up with increasing maintenance demands associated with the computer facility. Yet, we have what sounds like the same thing built into the capital improvement budget. How do these things relate?

 

Mr. Blomstrom:

I understand this is confusing. We do not expect the building renovation and expansion to be completed before the end of the next biennium. As a result, we are looking at an increasingly expensive facility plant to maintain through FY 2004 and FY 2005. This module addresses the increasing maintenance costs. By the end of the biennium, we hope the renovation and expansion will be well underway.

 

Senator Tiffany:

Can you explain the holiday pay increases? It looks as though these went from $3000 in 1999, escalating to about $22,000.

 

Mr. Blomstrom:

Normally the computer facility is a 24-by-7-by-365 facility. We are obligated to work three shifts on every holiday. This translates into additional salary, which traditionally is provided as a separate budget line item.

 

Senator Tiffany:

How did you get to $22,000 from $3000 and $4000?

 

Mr. Blomstrom:

I cannot address the increase at the moment.

 

The money in E-277 covers 11 holidays with 2 people on 3 shifts. The calculation is straightforward. Payment is double-time-and-a-half on those holidays.

 

Senator Tiffany:

Can you provide the staff with an explanation of how you went from $3000 to $22,000 with fewer people now that positions have been transferred out?

 

Assemblywoman McClain:

Do you not have scheduling flexibility with staff in order to avoid double-time-and-a-half on holidays?

 

Mr. Savage:

Historically, we have been understaffed from a safety perspective on holiday shifts. We run with two-person shifts. If one is sick, we end up with a serious safety problem. Part of the reason for this is so we can have more than a bare minimum skeleton crew.

 

Mr. Blomstrom:

We do use flexible scheduling. However, we are statutorily obligated to pay at the double-time-and-a-half rate to anyone working on a holiday. That is outside our ability to flex. We can adjust shifts, but the pay rate is not up to us.

 

Senator Tiffany:

Hopefully you are going to provide us with how you went to $22,000 in each year. When I go back to the capital improvement budget again, can you tell me whether the increase of space by 10,000 square feet is agency-wide or just the facility? Why request this amount?

 

Mr. Blomstrom:

We will provide information on the increase. Your question about the space increase is a good one. We have increased the overall equipment over 30 years. While boxes are getting smaller, we are getting more of them. Additionally, we are now to the point where we are building a network operations center (NOC). This is the central point for the communications operations within the State. We have little choice but to do this. The NOC is included within the building. This is the communications component of the computing operation. It is expanding rapidly. Additionally, we are hosting the machines of other departments within this more secure, better-protected IT environment.

 

Senator Tiffany:

Are you expanding and centralizing the network part, which requires more space? Also, agencies are having DoIT house their boxes?

 

Mr. Blomstrom:

That is correct. We expect to do more hosting for agency equipment as the need for security becomes more apparent.

 

Senator Tiffany:

Could you provide information to staff justifying the 10,000 square foot expansion? That seems like a lot.

 

Mr. Blomstrom:

Certainly.

 

DoIT, Data Communications & Technical Services – Budget Page DOIT-28

Budget Account 721-1386

 

Senator Tiffany:

Let us move to B/A 1386, Data Communications and Technical Services Unit. We want to talk about additional maintenance for SilverNet and your performance indicators. Can you explain the additional maintenance shown in E‑300?

 

Mr. Blomstrom:

I suggest considering E-300 in conjunction with E-710. These two items represent the equipment needed for the maintenance of the wide area network (WAN) known as SilverNet. We are requesting equipment to address our overdue maintenance. These two decision modules address both replacement of technically or functionally obsolete equipment as well as capacity expansion where needed. The SilverNet network is growing at approximately 26 percent. We expect that growth to continue over the upcoming biennium. The maintenance proposal will improve the situation, but not bring the network completely up-to-date.

 

Senator Tiffany:

You show a 61 percent increase on this. That certainly caught our attention. Do you need all of this; can you be more reasonable about the expansion?

 

Mr. Savage:

It is not so much an expansion. We have an overhang of overdue maintenance in many areas, particularly here. Our proposal is necessary to keep the system up and running.

 

Senator Tiffany:

So, is the answer “Yes”?

 

Mr. Savage:

Yes.

 

Senator Tiffany:

Let us move on to performance indicators. We have problems here again. Would you talk about why we do not have them and what we can do about them?

 

Mr. Blomstrom:

In the last session, and in discussions with you, we determined we would move the billing basis for the SilverNet WAN to a more equitable footing, charging for the amount of traffic being moved, rather than the pipe size that happened to be in place. We have begun doing that; the software is in place. We are collecting that information. The corresponding need is to implement a network monitoring software system enabling us to watch what was happening within the network, to keep the network tuned as necessary, and to collect data necessary to provide meaningful performance indicators. We did not have this in the past.

 

Senator Tiffany:

When do you think they will be available for us?

 

Mr. Blomstrom:

We have collected data for about 1 year. We are suggesting that these are the performance indicators we go forward with. We did have old performance indicators that were not included in the binder.

 

Senator Tiffany:

Can you tell us when you think they will be available?

 

Mr. Blomstrom:

We were limited to six performance indicators, and we can get them to you.

 

Senator Tiffany:

I want to talk about E-723, the maintenance for the State’s Capitol Complex conduit. Is this a duplication of E-721 from the communications division?

 

Mr. Blomstrom:

That is perceptive. You have identified a duplication. Working with our budget analyst, we have since removed E‑723 from B/A 1386; it now appears only in B/A 1388, where it should be.

 

Senator Tiffany:

Can you give me a one-paragraph description of the SilverNet?

 

Mr. Blomstrom:

SilverNet is a data network spanning the entire State. It connects almost all State agencies for purpose of data transfer and transmission.

 

Senator Tiffany:

When did you change the name?

 

Mr. Blomstrom:

The term “SilverNet” predates me.

 

Senator Tiffany:

I always thought it was the State wide area network.

 

Mr. Blomstrom:

“SilverNet” is the name of our wide area network.

 

Assemblywoman Chowning:

Going back to SilverNet, are we certain the needs will still be met if these seven positions are eliminated? Is the increased demand based on technology changes? Are we sure we will get this accomplished?

 

Mr. Blomstrom:

There are two components in this budget account. One is for the SilverNet; the other is for PC-LAN (personal computer local area network) tech support. The positions being eliminated are from that latter component. We have seen declining demand there because of financial circumstances affecting the State. This reflects that. I share your concern going forward; we are literally staffing for the trough right now. If we see a peak, we would look outside for additional staffing. Longer term, depending on the outlook, we would look to increase staffing levels.

 

DoIT, Telecommunications – Budget Page DOIT-35 (Volume 1)

Budget Account 721-1387

 

Senator Tiffany:

Let us go to B/A 1387. Concerns here are performance indicators, again, and the telephone monitoring system replacement. Talk about the performance indicators a little bit. We simply do not have a good handle on this department and what the performance indicators are.

 

Mr. Blomstrom:

I must apologize. For reasons I do not understand, we missed the second performance indicator, which is system availability. This should be included.

 

Senator Tiffany:

I have to log a complaint here on behalf of our reporter, Cy Ryan. He says, “Why can’t we have a more current telephone book?” I have to say I have called before, and been transferred to numbers that do not make any darned sense. The fourth time I became really frustrated. Why do we not do a better update on the telephone directory?

 

Mr. Blomstrom:

I share that concern. Part of the problem in keeping the directory updated is in getting responses from agencies. We do not know when they change numbers.

 

Senator Tiffany:

Can we make a little bit of effort at this? This is really not acceptable.

 

Mr. Blomstrom:

We have gone to an on-line directory.

 

Senator Tiffany:

They are not always current either. I have personally been transferred a number of times for people terminated, transferred, or numbers changed.

 

Mr. Blomstrom:

Keeping that database up to date is a real chore. We are now linking electronically to an online, standard Nevada Bell telephone book.

 

Senator Tiffany:

When?

 

Mr. Blomstrom:

I cannot tell you exactly, but it should be any moment now. This is not something that would happen next fiscal year.

 

Senator Tiffany:

“Any moment” in programming language can be from now until the next “any moment.” Is that right?

 

Mr. Blomstrom:

Let me put it this way; I thought this was going to be done several weeks ago.

 

Senator Tiffany:

Can you tell us how the replacement for the CMS (call management system) and the call accounting system is going to improve services for the agencies?

 

Mr. Blomstrom:

The call accounting system is linked to our ability to bill. The billing system for B/A 1388 has been problematic in the past. It is still a semi-automated process. It takes several inputs from several sources, such as Nevada Bell, Sprint local in Las Vegas, and Sprint long distance. It integrates that information with information from DoIT PBX (private branch exchange) use, then sends call details and charges to departments. It is a complex billing process. We have not had good integration of the software call accounting system. The old system is called DMT (discrete multitone), which is no longer even being offered or marketed. We expect to go to a new system that will radically improve our telephone billing ability.

 

DoIT, Communications – Budget Page DOIT-41 (Volume 1)

Budget Account 721-1388

 

Senator Tiffany:

Let us turn to our last account, B/A 1388. We could talk about the microwave mountaintop. It looks as though these projects will be funded by special revenue bonds and repaid by the DoIT enterprise fund over 20 years.

 

Mr. Blomstrom:

We are shifting the financial footing so that we are paying back the long-term capital improvement projects immediately, rather like a loan. Previously we would complete the project, and only then, at completion, would we commence payment. In those circumstances we used the General Fund as an intermediate or bridge loan. We no longer do that. What you see in capitol improvement projects C10, C11 and C13 is the immediate commencement of repayment of long-term bonds. The financing piece you see in the first year of the biennium represents approximately half of a normal year. The second year is a full year. The Department of Administration estimates it will take half a year to put the financing in place.

 

Senator Tiffany:

Having no other questions, we stand adjourned at 10:56 am.

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

James D. Earl,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Senator Sandra Tiffany, Chairman

 

 

DATE:                                                                             

 

 

 

 

 

                                                                                         

Mrs. Vonne Stout Chowning, Chairman

 

 

DATE: