NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

General Services Department

LFC Files

SUMMARY

Synopsis of HAFC Amendment

The House Appropriation and Finance Committee's amendment to House Bill 640 as amended inserts the phrase "is subject to appropriation by the legislature" on page 6, line 15 and on page 7, line 7. Before the amendment, the language read "money in the fund is appropriated."

Synopsis of HGUAC Amendment

The House Government and Urban Affairs Committee's amendments to House Bill 640 serve to clarify the proposed legislative intent with the exception of the proposed amendment for page 2 line 24 which changes the word "shall to "should". This word change has the effect of no longer mandating state agencies consult with the Information System Division prior to seeking other means of achieving their information system objectives.

Synopsis of Bill

House Bill 640 proposes to create the Information Systems Division Act. The bill provides for the repeal of the Communications Division and the Telecommunications Bureau. HB640 mandates the Information Systems Division (ISD) charge a fee for services rendered. The fees shall cover the cost of depreciation and replacement of equipment and software. The proposed legislation creates the ISD operating fund and the ISD equipment revolving fund. The portion of the fees covering depreciation and replacement shall be deposited in to the ISD equipment revolving fund. The remaining fees shall be deposited into the ISD operating fund. The balances in the funds are non-reverting.

Significant Issues

The General Services Department (GSD) provides a broad range of voice, radio and data services to all state agencies, boards and commissions. Pricing of these services is based on ISD costs. Specific to radio communications, rates are based on the actual costs for the operation of the radio communications section plus an indirect cost allocation. Telecommunication rates are based on actual billings from carriers (U.S. West, MCI, Octel, etc.) and operating costs associated with the telecommunications section. With respect to information processing, rates are developed in accordance with the policies and procedures outlined in the Office of Management and Budget (OMB) Circular A-87 using actual expenditures. A portion of the revenue generated by the information processing rates has been used to subsidize the radio and telecommunication operations. During FY98, ISD merged the information processing, radio communications, and telecommunications sections in order to better recognize the technological advances in voice and data communications and to standardize the rate methodologies.

FISCAL IMPLICATIONS

House Bill 640 appropriates the money in the funds to the ISD for the purpose of carrying out the provisions of the proposed Act. For FY98, ISD generated $45,781.3 in fees. The projected revenue for FY99 is $39,703.4. Through budget adjustment requests, GSD has increased the FY99 operating budget by $4,098.4 from cash balances.

The bill provides for the transfer of cash balances in the current funds to the proposed ISD operating fund. As of September 1998, the projected June 30, 1999, cash balances are as follows:

Office of Information Processing $11,386.5

Office of Communications 3,572.5

Data Processing Equipment Replacement Fund 732.4

Radio Equipment Replacement Fund 273.2

TOTAL $15,964.6

Fees are collected from clients or user agencies by ISD. The clients pay the fees from a variety of funding sources (i.e., general fund, federal funds, fees, interest income, etc.).

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

HB 640 is related to HB 33 and SB 93 proposing the Information Systems Management Act.

TECHNICAL ISSUES

Perhaps the phrase, "subject to appropriation" should be used in lieu of, "money in the fund is appropriated" (page 6, line 14 and page 7, line 7).

OTHER SUBSTANTIVE ISSUES

House Bill 640 proposes to repeal obsolete sections of the statute. The bill provides for the distinct role of ISD in state and local information services and communication systems management.

WJC/njw