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Draft Only – Approval Pending
M I N U T E S
Joint Appropriations Committee
PRESENT: Senator John Hines and Representative Frank Philp, Co-Chairmen;
Senators: Jim Anderson, and Rae Lynn Job;
Representatives: Alan Jones, Pete Jorgensen, Larry Meuli, Owen Petersen, Colin Simpson, and Jane Warren.
Legislative Service Office: Mary Byrnes, Bill Mai, Dave Gruver, Steve Sommers, and Dean Temte.
ABSENT: Representative Rosie Berger, Senators Cale Case and Phil Nicholas
Supporting documents on file with Legislative Service Office
Co-Chairman Hines convened the meeting at 8:00 a.m. He informed the Committee of his intent to cover the entire meeting agenda in one day (Appendix B).
Dr. Dwayne Oldham, State Veterinarian, gave an overview of the Livestock Board's responsibilities. He informed the Committee that the livestock industry is changing rapidly. Agriculture is the 3rd largest industry in Wyoming, and livestock receipts represent 85% of the state's agriculture economy.
Dr. Oldham provided the Committee with a list of personnel requests that the Livestock Board plans to include in their 2007/08 budget request to the Governor. (Appendix C). Dr. Oldham discussed the Animal I.D. program, which creates unfunded federal mandates for the Livestock Board. They have used available grant money to prepare a business plan for this program. The animal I.D. program is now voluntary, but will become mandatory in the near future. Therefore, the Livestock Board plans to include 7 additional positions for this program in their budget request to the Governor. Dr. Oldham also provided the Committee with his planned budget request for one-time equipment purchases (Appendix C, page 2). The Livestock Board also plans to include 3 new law enforcement positions and conversion of an AWEC position to a permanent position in their budget request to the Governor. The Board currently has 3 law enforcement positions in the field and one in the main office. Their law enforcement personnel have a current caseload of 900-1,200 cases per year. Of this number, 300-400 cases are dropped, leaving 600-800 cases to investigate. Their goal is to have one investigator per district. Dr. Oldham also described the additional administrative positions they plan to include in their budget request: Change a current AWEC fiscal position to a permanent position, a new grant writer, a new public information officer, and a new administrative support position shared by the grant writer and public information officer. A total of 13 new positions will be included in their upcoming budget request to the Governor.
Dr. Oldham then discussed the brand inspection program. Revenues to their earmarked fund have dropped off, while costs have increased, specifically mileage and health insurance. By the end of the 2005-06 biennium, they will be in a deficit position of $1.2 million if they continue as they have been. Dr. Oldham submitted handouts with proposed cuts and changes to earmarked account (Appendix D) and of planned strategies (Appendix E). The Livestock Board has eliminated 4 positions through attrition, and proposes to cut 6 more positions. Dr. Oldham indicated the Governor plans to visit with Committee after today to discuss the possibility of providing funding through the flex B-11 process. Many brand inspections do not pay for themselves, and current fees do not cover the current costs. They cannot charge for mileage, and per head maximum charges are set by statute. The Livestock Board will be working with the Agriculture Committee to get those rates changed.
Larry Biggio, Chief Information Officer (CIO), presented his Information Technology (IT) Organization Plan to the Committee (Appendix F). The state's CIO is responsible for developing an IT Organization Plan for all executive and judicial branch agencies, pursuant to the 2004 budget bill (2004 session laws, chapter 95, section 309). This plan was developed in coordination with state agency directors and the Information Technology Division (ITD) of the Department of Administration and Information (A&I). Mr. Biggio discussed the plan's elements (Appendix F, page 2, box 8) and the plan's approach to E-government (Appendix F, page 2, box 12). He indicated that the state has established a statewide electronic portal, which agencies are expected to use.
In response to questions from the Committee, Mr. Biggio discussed projects involving State Engineer’s office, the Department of Environmental Quality and the Oil and Gas Conservation Commission. Mr. Biggio also discussed the part of the plan related to Geographic Information Technology (GIS), including the 3 recommendations in the plan related to GIS (Appendix F, page 3, box 13). Mr. Biggio informed the Committee that the Office of the CIO has been asked to assist with coordination of IT projects, however they will not perform the work on those projects. Earl Atwood, Administrator of ITD, discussed ITD's role of coordination in projects that involve statewide issues, including keeping the involved parties at the table. Mr. Biggio then discussed the security/privacy protection aspects of the plan (Appendix F, page 3, box 14), and indicated that the plan emphasizes preventative security measures. Joe Ahern, CIO staff, discussed a national policy group concerned with data retention, storage and retrieval. He indicated that all states are involved in these issues, and the same issues that exist at the national level also exist at the state level. Mr. Biggio discussed the expenditure approval process included in the plan (Appendix F, page 3, boxes 15 and 16). and also discussed the plan's proposed statutory changes (Appendix F, page 3, box 17). Budget/Fiscal Manager Steve Sommers stated that he would talk to LSO Assistant Director Dave Gruver about this issue, and indicated that hopefully these proposed statutory changes could be included in one bill. The Committee directed LSO staff to draft an omnibus bill to address the proposed statutory changes.
Mr. Atwood discussed planned e-mail systems changes to centralize e-mail for state government by the end of the current fiscal year, and stated that this will have implications on the upcoming budget request for the 2007-08 biennium. Mr. Biggio discussed IT issues that state agencies are experiencing, such as business skills training and recruiting, in light of IT changes. Mr. Biggio then discussed potential OCIO budget requests (Appendix F, page 6, box 32).
Brian Foster, Administrator of the Human Resources Division of A&I addressed the Committee regarding state employee salaries. Mr. Foster presented the executive branch's proposal to bring state employee pay up to market levels, in hopes of receiving concurrence from the Committee. The funding needed for this proposal is currently appropriated in the 2005-06 biennium, from appropriations rolled over from the 2003-04 biennium, available due to cost savings. The executive branch proposes to use some of these funds for the next market movement.
Mr. Foster proceeded with his presentation (Appendix G). Important pieces of this issue are: Market pay equity, benefits, employee development, and employee retention. The Governor’s expectations for the pay plan are: 1) Implementation of a market based pay plan that is fair and equitable, 2) Recognition for exceptional performance, and 3) A total compensation package that can recruit and retain valuable state employees.
Market pay methodology: Mr. Foster stated that the Human Resources Division receives salary information from the Central States Compensation Consortium. The information they receive gives them baseline for what the state should be paying employees. The market concept lets them bring in other salary data to augment baselines. Human Resources uses salary data from 12 states (Colorado, Idaho, Montana, Nebraska, South Dakota, Utah, Arizona, Oregon, Nevada, New Mexico, North Dakota, and Washington).
Agency turnover is being eased by market adjustments. Turnover percentages are decreasing. Turnover in the Public Defender's Office has decreased from 17.8% in 1999 to 3.3% in 2004. In the Department of Health, turnover among human services aides has decreased from 50% in 2003 to 45% in 2004, and turnover of registered nurses has decreased from 27.8% in 2003 to 14.8% in 2004. The top 6 classifications for turnover (voluntary terminations) are human services aide, correctional officer, transportation technician 4, administrative specialist 4, administrative specialist 3 and casework specialist 4A. Mr. Foster stated that the turnover rate for employees in their first 5 years of state government employment is nearly 60%.
The largest employee classes impacted by movement to market are transportation technicians (246), human services aides (187), trades specialists (154), engineers (143), highway patrol (138), social workers (120), correctional officers (98), accountants (beginning professional level – 76), employment specialists (62), and benefit specialists (39). This estimated total number of employees that would receive raises in this proposed movement to market is 2,422 employees, which represents a little over 25% of state employees. Agencies impacted the most by this movement to market are the Department of Transportation, Department of Health, Department of Family Services, Department of Corrections, Department of Administration and Information, and Department of Workforce Services.
Voluntary terminations by length of service over a 10 year period are: 20% in the first year, 38% in years 1-4, 14% in years 5-9, 6% in years 10-14, 7% in years 15-19, 4% in years 20-24, and 11% in years 25 or more. Additional information was requested by the Committee for this last category. Information was also requested on nursing salaries, and on employees with 20 years or greater experience, and whether compression was a factor in these voluntary terminations. Total turnover in 2004 was 960 employees.
9.3% of state employees (708) were eligible to retire as of December 2004. In December 2007, 19.2% of state employees (1,454) will be eligible to retire. In December 2009, 27.5% of state employees (2,084) will be eligible. Mr. Foster then discussed potential retirement percentages by agency, to inform the Committee of agencies most affected.
The movement to market-based pay (movement of 2,422 employees to the bottom of the fair and equitable range) provides the following benefits: It closes the gap between the same jobs between different agencies and it also allows for salary growth based upon competency. Additional benefits of movement to market are competitive wages for all state employees, decreased employee turnover rates, increased employee retention, and consistent pay growth. Future considerations of market-based pay are: Market can continue to address hot spots or high impact occupations, can help agencies to shift to competency based performance management, and can help with workforce/succession planning. It would cost $4.9 million (general fund) to move the 2,422 employees to the bottom of the fair and equitable range. The funds necessary to do this are available from funds already appropriated for state employee pay.
In response to questions from the Committee, Mike McVay, Administrator of the Budget Division of A&I described the total funding appropriated in the budget for employee compensation and benefits for the 2005-06 biennium (approximately $40.9 million general fund), and indicated that none of these funds had been spent yet. He indicated that $17 million (general fund) appropriated for employee compensation for the 2003-04 biennium was carried over to the 2005-06 biennium. The first round of the 3% and market raises (amounting to $15 million) was distributed to agencies via the B-11 process, leaving $2 million remaining from the funds carried over. The next round of 3% raises going into effect in July 2005 will cost $12-13 million. Therefore, the state is currently looking at reverting $30 million. The raises proposed by the Governor would come into the standard budget for the 2007-08 biennium at twice the amount of the $4.9 million increase ($9.8 million). The Governor brought this proposal to the legislative leadership for approval, since this proposal is different from what was previously presented to the legislature. There was additional Committee discussion and questions.
Mr. Foster then discussed the concept of a compensation pool, to provide agencies with a source of funds to move salaries to market in a more timely fashion, during legislative interims. Chairman Hines indicated that the Committee would revisit this issue later this afternoon. A chronology of events was requested to help the Committee understand how funds have been appropriated, spent and carried over.
The Committee recessed at 12:03 p.m. and reconvened at 1:15.
Ralph Hayes, Administrator of Employees Group Health Insurance gave the Committee an update on the retiree health insurance study. Mr. Hayes informed the Committee that he is currently in the middle of the request for proposal (RFP) process to select the consulting firm for the study. RFPs are due by June 15, 2005. The report is due November 1, 2005. Mr. Hayes then answered questions from the Committee.
Game and Fish Department Director Terry Cleveland gave an overview of the Wyoming Game and Fish Department’s responsibilities and funding sources. He indicated that 70% of Game and Fish funding currently comes from licenses, fees, and stamps, 20% comes from federal excise taxes on hunting and fishing equipment, and much of the remainder comes from interest received. 75% of license fees come from non-resident hunters and anglers, with the majority of this amount coming from non-resident deer hunters. Mr. Cleveland indicated that the current funding model has been successful for the past 70 years, but in his opinion, will not provide all of the necessary dollars to fund the Game and Fish’ mission in the future. During the 2004 legislative session, Game and Fish received over $4 million (general fund) for capital construction projects for 3 fish hatcheries and a wildlife habitat management area. Game and Fish also received approximately $2.5 million (general fund) during the 2005 session for bruscellosis and sage grouse programs.
Mr. Cleveland hopes to include future capital construction projects and funding for local sage grouse work groups in their budget request for the upcoming 2006 budget session. Their highest priorities for upcoming capital construction projects include the remodel of the main offices in Cheyenne, complete reconstruction of their regional office in Pinedale, and 3 fish hatchery projects.
The Game and Fish's current funding model relies primarily on license sales and funding from hunters and anglers. However, the current model based on those license fees does not meet the current wildlife management program and will not sustain the Department in the future. This funding model does not allow the Department to fulfill all of its current responsibilities, including those related to non-game species. Mr. Cleveland acknowledged that there is no simple solution to these funding challenges, but expressed his hope that for the upcoming budget session the Committee would consider supporting some basic capital construction and major maintenance needs that will benefit the general public, not just hunters and anglers.
Mr. Cleveland then responded to questions from the Committee. During this discussion, Mr. Cleveland mentioned a powerball lottery as a potential funding source. Other states have done this. The creation of endowments was also mentioned as a potential new source of funding. Mr. Cleveland indicated he would like to discuss this idea with his staff and the Game and Fish Commission. Major maintenance of Game and Fish facilities was also discussed. Game and Fish currently spends between $2 and $3 million per year on capital maintenance. Mr. Cleveland indicated he would appreciate the opportunity to work with the Committee to discuss which programs should be funded through license fees, which programs should be funded from other funding sources, and then discuss what might be an acceptable funding vehicle for those programs.
In response to questions regarding the trend of license sales, Mr. Cleveland provided information regarding deer and antelope license sales over the past 28 years. The Game and Fish issued 177,000 deer and antelope licenses in 1977, 249,000 deer and antelope licenses in 1992, and 127,000 deer and antelope licenses in 2004, with an average of 167,000 licenses per year over the past 28 years. Mr. Cleveland indicated his opinion that the state will not see a return to the higher license sales of the past, and that license sales will continue to decline due to the decline of the deer and antelope populations in the state. The Committee requested a copy of the Game and Fish Department's strategic plan. It was also requested that the Game and Fish provide a listing all capital construction and major maintenance needs, and then propose which programs could be funded with license fees and which programs should be funded with other revenue sources.
Bubba Shivler, Director of the School Facilities Commission (SFC) provided a preliminary study of school capital construction costs to the Committee (Appendix H). SFC staff Del Foote discussed the study. He explained how construction costs are influenced by a variety of variables, and emphasized comparing comparable historical data (apples to apples). National average costs for school capital construction are $107/square foot for building costs and $121/square foot for building plus support cost.
Jim Coleman of Coleman Engineering continued the presentation with a discussion of construction economics. He informed the Committee about the specific increases in construction costs for lumber, steel, and cement/concrete. The price of energy has a major impact on the cost of materials. He also presented specific cost comparisons on eleven recent school construction projects in the state. The big differences in costs are in labor costs and mechanical systems. It is not any one thing that is driving up costs.
Mr. Shivler discussed the most recent national average cost data of school capital construction, and how school capital construction in Wyoming compares to those averages. In some cases, Wyoming costs are twice as high as the national average. Mr. Foote explained the engineer cost estimate for a school construction project included in the study, and explained how it is prepared. SFC staff Dave Laplante discussed 10 school capital construction projects in the state that will soon be completed (11x17 page in Appendix H,).
Mr. Shivler addressed questions by the Committee. He also discussed the growing issue of off-site development. Mr. Coleman indicated that a lack of available contractors is also increasing construction costs. SFC staff Teresa Kunkel updated the Committee regarding major maintenance payments to school districts (Appendix H, final page). Total calculated major maintenance payments for 2005-06 school year are $35,106,292, an increase of $2,432,179. SFC will use the B-11 process to transfer $1,380,404 from the School Capital Construction account to meet the required July 1, 2005 payment.
Attorney General Pat Crank discussed with the Committee his Attorney General's opinion dated January 10, 2005, addressed to Senator John Schiffer (Appendix I). This Attorney General's opinion was written in response to Senator Schiffer's letter to Attorney General Crank dated December 12, 2004 with questions pertaining to "permanent funds". The four questions posed by Senator Schiffer to Attorney General Crank are listed in Appendix I, pages 1 and 2.
Mr. Crank briefly discussed his answer to question 1 of the opinion, which relates to the investment of Worker's Compensation funds, and whether they can be invested in equities. Mr. Crank explained that in his opinion, Worker's Compensation funds could be invested in equities pursuant to Article 10, section 4 of the Wyoming Constitution, but that doing so is currently prohibited by Wyoming statute (W.S. 27-14-701(c)). His answer to question 1 is summarized in the final paragraph of page 9 of Appendix I.
Mr. Crank then discussed his answer to question 3 of the opinion, pertaining to whether a Wildlife Trust Fund could be created as a sub-fund of the Permanent Wyoming Mineral Trust Fund (PWMTF), which could be invested in equities, with the interest directed towards the Wildlife Trust Fund's purposes. Mr. Crank then discussed his opinion regarding whether the entire PWMTF is inviolate, including the additional funds appropriated or diverted to it. He explained that in his opinion, the PWMTF corpus generated by the 1.5% severance tax described in Article 15, Section 19 of the Wyoming Constitution is inviolate, but that the same cannot be said of the additional dollars that have been appropriated or diverted to the PWMTF. In his opinion, the word "tax" in Article 15, Section 19 defines the portion of the PWMTF that is inviolate (Appendix I, page 12). Mr. Crank indicated that in his opinion, funds other than 1.5% severance tax are not inviolate, absent additional constitutional amendment. LSO Assistant Director Dave Gruver indicated he thought there is room for other interpretations in regard to this issue. LSO Budget Fiscal Manager Steve Sommers reminded the Committee that the reason this issue came up was because of the proposed creation of sub-funds within the PWMTF, since only "permanent" funds can be invested in equities and investment in equities yields the highest return on investment. The January 10, 2005 Attorney General's opinion indicates that a trust fund could be created as a sub-fund of the PWMTF, which could be invested in equities, with the interest directed towards the trust fund's purposes, through general fund appropriation (Appendix I, page 13). Mr. Sommers indicated that a constitutional amendment could be drafted so trusts could be created and invested in equities. Following further discussion, the Committee took no action on this issue at this time.
Rich Cathcart, Administrator of the Construction Management Division of A&I and Sylvie Rupp, staff architect presented cost estimates and two layout options for the remodel of room 204 to the Committee (Appendix J). Ms. Rupp prepared the cost estimate, which totaled $76,750 (Appendix J, page 3). Mr. Cathcart informed the Committee that if the remodel of room 204 is to be completed in time for the upcoming budget hearings, agreement needs to take place today or very soon. Mr. Cathcart addressed questions from the Committee. He invited the Committee to offer suggestions or recommendations for the layout of the remodel, as his division is interested in the Committee's input and suggestions. The Committee discussed the two layout options offered by the Construction Management Division. It was moved, and seconded by the Committee to choose option 2 as amended, (with 3 more bookcases on the house side and 3 of the desks being moved a short distance to make room for the additional bookcases). Motion passed. There will also be a new sound system, with new microphones and a new recording system. Mr. Cathcart asked that someone be designated (either Committee member or staff) to be a point of contact for this project. Budget/Fiscal Manager Steve Sommers will be the designated point of contact for the project. Mr. Cathcart said the project should be completed in time for the upcoming budget hearings.
2005 Prescription Drug Cost Containment Study – Don Richards, Senior Research Analyst, LSO
Don Richards, Senior Research Analyst for LSO presented to the Committee a memorandum dated May 23, 2005 regarding the 2005 Prescription Drug Cost Containment Study (Appendix K). Section 310 of the 2004 budget bill (Chapter 95, 2004 Session Laws) requires LSO and the Department of Health to each prepare two annual prescription drug cost containment reports, with the first reports due December 1, 2004 and the second reports due October 31, 2005. With Management Council approval in June 2004, LSO contracted with the University of Wyoming (UW) for $20,000 ($10,000 per year) to participate in the study. UW has been paid in full for their participation in the first year of the study. Included with the May 23, 2005 memo is a draft Memorandum of Understanding (MOU) governing the delivery of Medicaid data from the Department of Health to LSO and UW for continuation of the study and completion of the reports due October 31, 2005. Since this MOU substantially amends the prior MOU between LSO and UW, it will need the approval of Management Council. It was moved and seconded to take this recommendation to Management Council for approval at their next meeting. Motion passed.
Discussion of Schedule for Future Meetings
The Committee discussed when to meet next. There are a number of reports due to the Committee, with most of them due on October 1 or November 1, 2005. The Committee tentatively planned to meet next during the 2nd week of November 2005.
Continuation of Employee "Market" Salary Discussion
The Committee briefly continued their discussion on the executive branch's proposal to bring state employee pay up to market levels. This proposal would move 2,422 employees to the bottom of the fair and equitable range, at a cost of $4.9 million per year (general fund). The Committee decided that they were not comfortable speaking for the entire legislature in regard to this proposal. It was moved and seconded for the Committee to send a letter stating this to Management Council and to the Governor. Motion carried.
Adjournment
Having completed all agenda items, Co-chairman Philp adjourned the meeting at 5:55 p.m.
Respectfully submitted,
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John Hines, Co-chairman Frank Philp, Co-chairman