Program Review and Investigations Committee




<MeetMDY1> August 10, 2006


The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> August 10, 2006, at<MeetTime> 10:00 AM, in<Room> Room 169 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Ernie Harris, Co-Chair; Representative Tommy Thompson, Co-Chair; Senators Charlie Borders, Vernie McGaha, R J Palmer II, Joey Pendleton, Dan Seum, and Katie Stine; Representatives Adrian K Arnold, Sheldon E Baugh, Dwight D Butler, Charlie Hoffman, Ruth Ann Palumbo, and Arnold Simpson.


Guests: Jody E. Hughes, Executive Director; John S. Tapp, Ph.D., Executive Assistant; and Robert Potter, Executive Assistant; Kentucky Infrastructure Authority:  Melinda L. Wheeler, Director, Kentucky Administrative Office of the Courts: Mary Pedersen, E-Warrants Project Director, Kentucky Office of Homeland Security: Dan I. Abner, Executive Director, Division of Material and Procurement Services; Hiren Desai, Office of Legal Services; Finance and Administration Cabinet.


LRC Staff: Greg Hager, Committee Staff Administrator; Kara Daniel; Rick Graycarek; Jim Guinn; Margaret Hurst; Van Knowles; Nadezda Nikolova; Perry Papka; Deepsi Sigdel; Cindy Upton; Tanlee Wasson; and Jennifer Beeler, Committee Assistant; Program Review and Investigations Committee.


Minutes of the May 18, 2006 meeting were approved, without objection, upon motion made by Sen. Pendleton and seconded by Sen. McGaha.


Rick Graycarek, Program Review Staff, presented a summary and update of the report Planning for Water Projects in Kentucky: The Implementation of Senate Bill 409,  which was adopted by the committee on October 25, 2005.


Mr. Graycarek stated that the study had three objectives: describing SB 409 and the way water projects in Kentucky are planned, analyzing how SB 409 is being implemented, and comparing highway planning to planning for water projects. 


Mr. Graycarek explained that SB 409, enacted during the 2000 Regular Session, made significant changes to the water planning process.  The first was the creation of water management planning councils, which are local groups of public water suppliers, government leaders and others who identify, plan, and prioritize water and wastewater projects within their areas.  Most planning councils correspond to the territory established by an area development district.  Mr. Graycarek stated that SB 409 required area development districts to develop area water management plans. Mr. Graycarek said that a statewide management plan was to be created by combining the area development districts’ management plans.


Mr. Graycarek stated that project proposals begin at the local level and water management planning councils then prioritize the proposals.  Next, area development districts review all council plans within their areas, combine them into one prioritized document and forward them to the Kentucky Infrastructure Authority (KIA).  He said that KIA reviews the projects and sends them to relevant agencies for initial regulatory review and potential funding.  Projects then go before the KIA Board and the Capital Projects and Bond Oversight Committee for approval. 


In regard to implementation he stated that in the report 12 provisions of SB 409 were analyzed and more current information is available for 2 provisions: regionalization and the provision of potable water.


He stated that one measure of regionalization is the number of water systems that merge each year.  Around 25 water systems have merged each year from 1995 to 2004, which indicates that SB 409 did not initiate the merger trend, but may have helped continue it.  Mr. Graycarek stated that in 2005 the number of mergers dropped to 17, but that it is too soon to know whether this is part of a longer-term trend.


Mr. Graycarek explained that another measure of regionalization is the number of regional projects that receive state funding.  He said that one of every eight state-funded projects in the 2004-2006 Biennium was regional.


Mr. Graycarek stated that making potable water available to all Kentuckians by the year 2020 is a goal of SB 409.  He said that as of 2004, about 90 percent of Kentuckians had access to potable water; the national average was about 70 percent.  He stated that including the water projects approved during the 2004-2006 Biennium, the percentage of Kentuckians with potable water will likely rise.  Those projects are expected to provide access to potable water for an additional 24,000 Kentuckians.


Mr. Graycarek stated that the estimated number of Kentuckians who lack potable water is about 400,000.  This number is based on a survey conducted by the Program Review staff last year, but does not reflect the addition of any people who received access since that time.


Jody E. Hughes, John S. Tapp, and Robert Potter, Kentucky Infrastructure Authority, presented an updated response to the report.


Dr. Tapp stated that they would be updating committee members on KIA’s activities for addressing the recommendations and discussing their view of the proper future direction regarding the implementation of SB 409.


Dr. Tapp stated that, in response to the report’s Recommendation 1.1, among the proposed changes in House Bill 623 from the 2006 Regular Session was allowing affected water management planning council members to continue to serve for up to two years following consolidation or merger.  He said that HB 623 was not enacted but KIA plans to address this recommendation through future proposed legislation.


He said in reference to recommendation 2.1 that KIA continues to streamline the State Revolving Fund application process.  He said revisions to 200 KAR 17:050 and 200 KAR 17:070 were promulgated in July to help with this.  Among other provisions, these regulations make KIA the single point of contact for the funding process.


Dr. Tapp explained that in reference to recommendation 2.2, KIA developed a new prioritization method for the priority lists generated by the area development districts and water management planning councils for the  Regular Session.  He said that of the 841 drinking water projects submitted for funding in the 2006 session, 147, or 17 percent, were classified as regional.  Of the 716 wastewater projects submitted, 110, or 15 percent, were classified as regional.  He stated that KIA staff reviewed the water and wastewater projects classified as regional and concluded that generally projects were classified correctly.  He said, however, the review indicated that the definition for regional might now be too general.


Dr. Tapp stated KIA’s new prioritization schedule for the 2006 Regular Session  was based on a point system that allowed for an annual statewide funding prioritization schedule.  The prioritization schedule was segregated by county prior to its distribution to members of the General Assembly.  He stated that there were 1563 projects submitted through the water management planning councils for prioritization for funding.  He said there were 523 projects funded as line items by the General Assembly with bond funds.  Of these 523 projects, 292 were from the priority lists developed by the water management councils. Dr. Tapp stated that of the top 10 percent ranked projects (156 projects) on the statewide prioritization schedule, 73 projects, or 47 percent, were funded.  He said that of the top 50 percent (781 projects), 231, or 29 percent, were funded.  He explained that for each county’s top 2 ranked projects, 105 projects of the possible 240 projects were funded.  Looking at each county’s wastewater projects, 49 counties each had their top ranked project funded.  For each county’s drinking water projects, 57 counties had their top ranked project funded.


Mr. Hughes stated that this is the first year KIA had a consistent statewide prioritization process.


Dr. Tapp said that in HB 623 KIA proposed changes to KRS 224 to clarify “potable” and “available.”  KIA proposed replacing “potable” with “an adequate supply of safe drinking water.”  In the regulatory context, potable means water produced by a public water system.  He stated that in some areas of the state, particularly extreme Western Kentucky, an adequate supply of safe drinking water is available from aquifers supplying private water wells.  He stated some residents do not want to be connected to a public water system. 


Dr. Tapp stated in reference to recommendation 2.5 the prioritization process that KIA developed for use by the area development districts and the planning councils for projects to be funded in the 2006 Session has received a lot of feedback. He stated that KIA will continue to refine the standardized criteria for use in developing further priority lists.


He stated that KIA has encouraged the planning councils to include wastewater agencies and wastewater projects as full partners in the planning process dictated by SB 409.  He said that wastewater projects have been priority ranked similarly to drinking water projects. 


Dr. Tapp stated that in the last four budgets funding has been provided for over $600 million in grants for water and sewer projects, primarily from bonds and coal severance funding.  In addition, in the last 5 years, over $1 billion has been allocated from other state, federal, local and private sources for water and wastewater projects in Kentucky.  He stated a survey conducted for KIA indicated that almost 92 percent of Kentucky families have access to public drinking water.  Many Kentucky counties are now approaching 100 percent of homes having access. Approximately 132,000 households with an estimated population of 320,000 still do not have access to public drinking water.


He stated that to meet the goal of safe drinking water for all Kentuckians by 2020, the General Assembly needs to focus its funding efforts toward that goal.


Dr. Tapp said that in KIA’s October testimony, they suggested there was a need to begin transitioning from grant funding to a grant/low-interest revolving loan pool.  He said KIA recommends again that the General Assembly strongly consider placing at least a portion of any bond funding available for water and wastewater projects into KIA’s 2020 account for use as a grant/revolving loan pool.  He said to have any chance of becoming a self-sustaining fund for the future, the 2020 fund needs to generate at least $30 million per year in appropriated money plus repayments.


He stated that putting the dollars in KIA’s 2020 account reserves the funds for water and sewer projects, gives KIA the flexibility to develop a long term sustainable state revolving loan program, and allows KIA to implement the incentive portions of SB 409.  He said to continue the progress made toward regionalization and consolidation of utilities and services, KIA needs funding for the 2020 account to implement the incentives mandated by SB 409: encouraging consolidations of water systems and the elimination of duplication, correcting water loss from distribution systems, focusing on providing service to unserved and underserved areas, establishing and monitoring proper accounting systems for utilities, and monitoring the setting of user charges to reflect the cost of the service being provided.


Rep. Arnold asked what was the amount of bonds the General Assembly issued for water and sewer.


Dr. Tapp said it was approximately $210 million.


Rep. Arnold commented that it is good to consider grants and loans instead of just grants.


Sen. Borders asked for clarification that Appendix A of KIA’s handout did not take into consideration the current budget cycle.


Dr. Tapp responded that was correct.


Sen. Borders asked whether repairing old water lines will become an issue as access gets closer to 100 percent.


Dr. Tapp responded that in a sense this has already started because many of the projects funded in recent cycles dealt with aging infrastructure. He stated that the hope would be putting grant money into a system and generating additional customers so that a lot of the rehabilitation funding could be generated from money within the system.


Sen. Borders asked what kind of recourse is available towards private entities that are not willing to cooperate with other systems to provide water.


Mr. Hughes responded that there are incentives to encourage that cooperation but some systems are not connected. He stated he was not sure about private entities, but for all public systems subsidized by federal or state money, KIA should have the ability to encourage them to cooperate.


Sen. Borders asked what the approximate percentage with access to potable water was in the early 1990s.


Dr. Tapp estimated that the percentage has increased from 80 or 85 percent since the early 1990s.


Rep. Butler asked in reference to recommendation 2.4, if there is an area that could be served by wells, but they may be expensive to drill, is that type of area going to be considered as having adequate water.


Dr. Tapp stated that it depends on the situation. There are areas, as in Western Kentucky, with good aquifers and the water is generally of good quality.  He said that KIA hopes to get more detail on the unserved and the extent to which they are interested in being connected to public systems.


Sen. Harris asked if cisterns are considered a source of potable water.


Dr. Tapp stated that there has been discussion that one of the solutions to serving the unserved in remote areas is to encourage the water districts to develop a service to haul water to cisterns.


Kara Daniel, Program Review staff, presented a summary and update of the report Improved Coordination and Information Could Reduce the Backlog of Unserved Warrants.  The report was adopted by the committee on July 14, 2005.


Ms. Daniel stated that the report focused on three main study objectives: to determine the magnitude of the problem of unserved warrants, to describe the current warrant process, and to look at the current and future use of information systems in the warrant process.  She stated that the report discussed the three primary types of warrants: complaint, bench, and indictment.


Ms. Daniel stated that there is no comprehensive, statewide database that contains information about all warrants.  She stated that the three types of warrants originate with different agencies and are processed differently from county to county.  The information about them is held in various places and forms. The Administrative Office of the Courts (AOC) operates CourtNet, which has information on bench warrants and indictment warrants from all 120 counties.  AOC provided staff with CourtNet data on bench warrants and indictment warrants issued between January 2000 and January 2005 for the initial report and for warrants issued through July 2006 for this update.  She said that CourtNet also contains data on Jefferson County’s complaint warrants, which were provided to staff, but CourtNet does not contain information on complaint warrants for other counties.  She stated that to get information for the initial report, staff traveled to six counties and gathered data about their complaint warrants.


Ms. Daniel stated that based on data available in 2005, there were an estimated 205,000 to 293,000 bench warrants, an estimated 5,000 to 7,000 indictment warrants, and an estimated 55,000 to 85,000 complaint warrants. She stated staff did not update the statewide estimate for this follow-up because there was no new information about the number of complaint warrants.  She said that indictment warrants have increased by about 200 and bench warrants have increased about 26,000 since January 2005.  She stated that there were more unserved bench warrants in the state than any other type of warrant in 2005 and that is likely still the case.


Ms. Daniel stated that for this update staff obtained more recent data from AOC about the number of active indictment and bench warrants.  She stated that as staff reported last year, the backlog of unserved bench and indictment warrants is continuing to grow.  However, the additional data show it may not be growing as quickly as before.  She stated that last year the backlog of unserved warrants was growing by about 17 percent, or 28,000, a year.  After analyzing the more recent data, the annual growth rate in the backlog in the last year and a half was about 11 percent, or 18,000 warrants.  She said the additional data did not show evidence of any large-scale, systematic purges of older warrants.  She stated that because warrants remain active indefinitely and because older warrants are less likely to be served, the report included one recommendation to address the problem by encouraging implementation of periodic review policies.  Because bench warrants make up the majority of unserved warrants, the report included five recommendations intended to reduce the number of bench warrants that are issued.


Ms. Daniel explained that among bench and indictment warrants analyzed for the report, the more serious the offense, the more likely the warrant was served.  The most recent data show that continues to be true and also indicate better service rates for all types of crimes.  Fourteen percent of felony warrants were unserved and 28 percent of misdemeanor warrants were unserved, compared to 16 percent and 31 percent last year. 


Ms. Daniel stated that at the time of the initial report, staff also looked at the types of crimes associated with unserved warrants.  Among bench and indictment warrants, theft by deception was the most common offense, followed by DUI, and offenses related to driver’s licenses.  She said that among unserved complaint warrants, theft by deception warrants were also the most common, followed by failure to pay child support and theft by unlawful taking.  She explained that overall, theft by deception was the most common underlying crime among the unserved warrants.  Theft by deception is typically committed by presenting a bad check.  Reducing the number of bad check warrants issued could reduce the backlog of unserved warrants, so the report included two recommendations intended to reduce the number of bad check warrants issued.


Ms. Daniel stated that at the time of the review, staff found that the warrant system lacked coordination.  Issuing, tracking, and serving warrants requires the cooperation of multiple agencies in two branches of government.  There is no single agency that is accountable for tracking or serving warrants.  The details of the process vary widely from county to county because each county has its own system set up by local officials.  She said that the report included one recommendation intended to foster coordination by assigning responsibility to an independent organization that has representation from the agencies involved.


Ms. Daniel stated that tracking a warrant’s status is vital. Before an officer can serve a warrant, the officer must know that the warrant exists and that it has not been previously served or recalled by the court.  She said there is no comprehensive statewide warrant database, but some statewide information is available. She said in the absence of any comprehensive database, counties have devised their own methods of tracking warrants.  Some use computerized databases and some rely on paper files to conduct a warrant check.  The databases that do exist are usually not connected.  As a result, law enforcement officers often have no way of learning about warrants issued outside their own county.  She stated that the lack of statewide tracking results in lost opportunities to serve warrants and an inability to evaluate an agency’s performance and address problems. Since tracking plays such an important role in the warrant process, the report included seven recommendations addressing it.


Ms. Daniel stated that the E-Warrant pilot project is an ongoing project that could eventually improve the warrant process and make information more available to law enforcement.  The pilot project is planned for Clark and Woodford Counties to handle complaint warrants that have a numeric identifier and are for more serious crimes.  She stated that the project is a Web-based system of processing warrants that would allow a warrant to be handled electronically without printing a paper copy. Future plans for the project include expansion to a statewide database that would include all types of arrest warrants.  She stated that it was expected to begin in September 2005 but has not yet started.  The report contained five recommendations about the E-Warrant project.


Ms. Daniel explained that, in practice, different law enforcement agencies serve warrants in each county and they handle them according to internal agency policies. She said in the absence of a statewide database or any reporting requirements, there is little information available that can be used to evaluate law enforcement’s performance at serving warrants.  Using the limited information available from CourtNet, staff were able to estimate the time it takes to serve bench and indictment warrants in Kentucky.  She said the statewide average is 576 days to serve 75 out of 100 warrants. She added that this is an improvement over last year’s data, which showed an average of 674 days.  There are no state or national standards regarding an acceptable length of time to serve warrants, so it is unknown how Kentucky compares.  The report included six recommendations intended to facilitate service of warrants by law enforcement.


Sen. Seum asked if a complaint warrant could also be a felony warrant.


Ms. Daniel responded that it could.


Sen. Seum asked whether a bench warrant could also be a felony warrant and whether someone not showing up for court is also a bench warrant.


Ms. Daniel stated that a bench warrant can be issued in a felony case.


Rep. Baugh asked if some of the warrants require the offender to be picked up or just served with the warrant.


Ms. Daniel stated that if it is an arrest warrant they are supposed to be picked up and actually arrested, but there is such a thing as a criminal summons that is served on a person to provide notice of his or her court date.


Rep. Baugh asked for the less serious offenses or warrants whether a law enforcement official is required to deliver the warrant.


Ms. Daniel stated this is a requirement.


Rep. Baugh asked if law enforcement included the constable.


Ms. Daniel stated that it varies around the state, but by statute the constable can serve a warrant.


Rep. Baugh asked if there was a fee for serving a warrant.


Ms. Daniel responded that there is.


Rep. Arnold asked if some states mail out a letter stating that a warrant has been issued.

Ms. Daniel stated that some areas do that for minor crimes.


Rep. Arnold asked how much law enforcement officials receive for serving a warrant.


Ms. Daniel stated that it is $30 for a misdemeanor warrant and $20 for a felony warrant.


Rep. Arnold asked if that is the same amount no matter how many times they go searching for the offender.


Ms. Daniel stated that is correct, and it is only collected if the fee is assessed by a judge and collected from the defendant.


Melinda Wheeler, Director, Kentucky Administrative Office of the Courts and Mary Pedersen, E-Warrants Project Director, presented an updated response to the report.


Ms. Wheeler stated the Chief Justice has ordered that each case in the system must have court dates and the CourtNet system now allows defendants to go online and see when their next court date is.  She stated that all defendants leaving jail or the courtroom have future court dates in their possession. They have pre-trial follow-ups for all who qualify to make sure they attend their next court date.  She stated that all defendants can contact their local circuit clerk’s office if they have lost paperwork or cannot get on the Internet.  She stated that when an arrest is made, pre-trial officers go through CourtNet to check for bench or indictment warrants for the arrested individual. If yes, pre-trial officers contact the arresting agency or counties that have the warrants.  She said that pre-trial services assisted in serving 60,000 bench warrants through that process last year.  She explained that all police departments in the state have access to the CourtNet database and they are currently working with the Transportation Cabinet to be able to suspend licenses for offenses other than those related to driving.


Ms. Pedersen stated that they are still in the process of developing a pilot electronic warrant system. She stated that the plan was to launch the pilot last September, but there were personnel issues. She stated that by making the program Web-based, the timeline was increased, but accessibility and security will be better.  She stated they received a sign-off from the Kentucky State Police to proceed with the pilot. She said a demonstration for AOC resulted in useful suggestions and modifications to the system are being processed now.  She said demonstrations for two district judges from Fayette and Woodford Counties resulted in positive feedback, but also suggested modifications that will require additional coding time, such as suppression of certain offender information and updating the warrant form. She stated they are hoping to begin the pilot within the next 60 days. 


Rep. Baugh asked if the wanted person would have to provide an electronic signature.


Ms. Pedersen stated that at the point when the warrant was served the offender would receive a printed copy of the warrant. She explained that the system would be accessible by law enforcement, clerks, judges, and prosecutors as the primary user base.


Rep. Baugh asked whether Kentucky has a bounty hunter program.


Ms. Wheeler stated that in Kentucky using bounty hunters is illegal.


Sen. Seum stated that the large number of unserved warrants indicated widespread contempt for the law and sets a terrible precedent.  He stated that the most attended facility in Kentucky is the Jefferson County Courthouse. He said that the crime rate is increasing around the country and the murder rate is increasing rapidly in Jefferson County, and that law enforcement gets paid more to bring in offenders with misdemeanor crimes than felony crimes.


Sen. Harris stated that he and Rep. Thompson, the House co-chair, had agreed on two study topics to recommend that the committee vote to study.


A motion to initiate studies of 1) siting decisions for electric transmission lines and 2) pollution emissions trading was approved by roll call vote, upon motion made by Sen. Pendleton and seconded by Rep. Thompson.


Greg Hager, Program Review staff, presented a summary and update of the report Offshore Outsourcing of Kentucky State Government Services: Direct Contracting Is Limited but the Amount of Subcontracting Is Unknown. He noted that the report had been adopted by the committee on May 12, 2005.


Mr. Hager stated that the report had two main objectives: to determine the level of offshore outsourcing through Kentucky state government contracts and to examine relevant legislation of other states.  He stated offshore outsourcing is when organizations, such as state government agencies, contract with an individual, a firm, or an organization in another country to provide specialized services. 


Mr. Hager stated that staff identified 193 foreign contracts that have been awarded since fiscal year 2000 by Kentucky state government agencies.  In last year’s report, staff identified  40 offshore contracts.  He stated that the increase is not due to a big increase in foreign contracts in the past year.  In the report, staff concentrated on personal service contracts since one of the primary arguments of critics of outsourcing was the potential effect on U.S. employment.  He stated for the update staff looked at all foreign contracts.  He said the additional contracts were relatively small in total value. The total value of the 40 contracts reported on last year was $5.67 million.  The total value of the 193 contracts is $6.64 million.  He stated that the median contract value (of the 193) was almost $3,000. Because there were some relatively high value economic development contracts, the average contract value was $34,380.


Mr. Hager stated that staff categorized the foreign contracts to identify any patterns. More than half of the contracts were categorized as supplies, equipment, or advertising.  The most common item was nursing home equipment from a Canadian company.  He stated that most of the total money value of contracts is in the relatively small number of economic development contracts, for trade offices in Japan, Belgium, and Mexico. 


He stated that Canada has the bulk of the total number of contracts, mostly computer software and nursing home equipment.  Contracts for the economic development office in Japan accounts for almost half of total costs. 


Mr. Hager stated that since last year’s study, new information on subcontracting became available from a study by the U.S. Government Accountability Organization.  He stated that based on a survey of directors of programs, 43 states reported that offshoring occurred in at least one of the following: food stamps (31 states), Temporary Assistance for Needy Families (16), child support enforcement (12), and unemployment insurance (8).  He stated that customer service, primarily through call centers, was the most frequently outsourced task according to the survey.  Almost all the outsourcing identified by surveyed officials occurred through subcontractors, not direct contracts with foreign vendors.


Mr. Hager stated that most of the people who responded to the GAO survey who mentioned locations of offshoring mentioned India and Mexico.


For the report, staff identified 138 pieces of legislation introduced in 39 states in 2004, with 8 enacted into law.  For the update, staff added information from 2005. He said 97 bills were introduced in 39 states last year, with 6 enacted into law.


Mr. Hager stated that for the update staff looked at executive orders relevant to state contracting using foreign vendors.  Staff were able to identify executive orders still affecting contracting in six states.  He stated that in Arizona, an order requires that providers of services through state government contracts must be located in the U.S.  In Alaska and Missouri, providers of services must be located in the U.S., but there can be exceptions. A Michigan executive order establishes a preference for in-state contractors. Three states  require that vendors disclose any offshore outsourcing, which can be taken into account in the awarding of the contract.


Mr. Hager stated that through a 2005 law, New Jersey prohibits offshore outsourcing.  He stated that two states regulate handling of information by statutes.  Colorado allows offshoring if safeguards are in place to protect privacy and confidentiality and California prohibits sending information collected in voter referenda outside the U.S.


Mr. Hager explained that eight states, through law or executive order, give preferences in awarding contracts to contractors within that state or the U.S. in general: Illinois, Indiana, Michigan, Minnesota, Missouri, North Carolina, North Dakota, and Tennessee.  He stated that eight states require reporting of information related to offshore outsourcing: Alaska, Florida, Illinois, Maine, Michigan, Minnesota, Missouri, and North Carolina. 


Summarizing state policy on the subject, he stated that staff were able to identify 15 states that have legislation or executive orders affecting outsourcing of state contract work and 35 states that do not.


The meeting adjourned at 11:55.