Program Review and Investigations Committee




<MeetMDY1> June 8, 2017


Call to Order and Roll Call

The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> June 8, 2017, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Representative Lynn Bechler, Chair, called the meeting to order and led the Pledge of Allegiance, and the secretary called the roll.


Present were:


Members:<Members> Senator Danny Carroll, Co-Chair; Representative Lynn Bechler, Co-Chair; Senators Tom Buford, Perry B. Clark, Wil Schroder, Dan “Malano” Seum, Reginald Thomas, and Stephen West; Representatives Brian Linder, Donna Mayfield, Ruth Ann Palumbo, Rob Rothenburger, Arnold Simpson, and Walker Thomas.


Guests:  Christine Trout, Commissioner, Carol Martin, Malt Beverage Administrator, and Trina Summers, Distilled Spirits Administrator, Alcoholic Beverage Control Board; Greg McCall, Special Assistant, Rick Woodruff, Acting Executive Director of Office of Infrastructure Services, David Carter, Executive Director of Security, Commonwealth Office of Technology.


LRC Staff:  Greg Hager, Committee Staff Administrator; Chris Hall, Colleen Kennedy, Van Knowles, Jean Ann Myatt, Brandi Norton, William Spears, Shane Stevens, Joel Thomas; Dexter Horne, and Eve Wallingford, Graduate Fellows; and Kate Talley, Committee Assistant.


Minutes for May 11, 2017

Upon motion by Senator Clark and second by Senator Buford, the minutes for May 11, 2017 were approved by voice vote.


Alcoholic Beverage Control

Ms. Trout said that, although both are in the Public Protection Cabinet, there is a distinction between the Alcoholic Beverage Control Board and the Department of Alcoholic Beverage Control (ABC). The department’s primary statutory obligation is to prevent underage drinking. It administers statutes and regulates matters involving alcoholic beverages; issues and renews licenses for distilled spirits, wine, and malt beverages; educates licensees and the public; enforces statutes against those who violate alcoholic beverage laws; and prosecutes noncompliant licensees in an administrative forum. The department is introducing a new IT-related system.


As of July 1, 2016, the department had a personnel cap of 69 full-time positions, of which 65 were filled. One year later, the cap was 82 positions. Of 71 full-time positions, 54 were filled. All but one of the other 11 positions were interim employees: veterans hired as investigators under a US Food and Drug Administration grant. Twenty-one employees have left the department since July 1, 2016. The budget for 2017-2018 is $7.7 million, up slightly from the previous fiscal year. This includes $591,700 from the General Fund.


The department is partnering with the Department of Parks to schedule monthly classroom training across the state. Employees are being cross trained to teach Server Training in Alcohol Regulations (STAR) classes. Classes will be tailored to the needs of licensees. Online courses will be increased.


There are 15,825 licenses to sell alcoholic beverages at 10,055 sites. The average processing time for an application for a license is now 20 days. A year ago, the backlog was up to 300 days for some applications. As of May 1, 2017, it is possible to apply for a license online. The department’s legal department provides legal advice and support, issues notices of violation, and is involved with administrative hearings and open records requests.


The three members of the board are the commissioner and the administrators for malt beverages and distilled spirits. The board promulgates regulations; conducts hearings on alleged violations of alcohol laws; fines, suspends, or revokes state licenses; and conducts hearings on local license appeals.       


In response to a question from Representative Bechler, Ms. Trout will send information regarding why the personnel cap increased.


Senator Buford commended the department for providing good service.


In response to questions from Senator Seum, Ms. Trout said there are three levels of investigators. The two higher levels must be POP certified.  Division director Paul Vido’s leadership has led to more professional enforcement.


In response to a question from Representative Rothenburger, Ms. Trout said online STAR classes are available now. The diversity of online classes will increase over time. Some local ordinances that require training be done in person. The department has been holding a biannual summit with the Kentucky League of Cities, Kentucky Association of Counties, and organizations of local ABC administrators. The summits are meant to communicate information and provide transparency.


Representative Palumbo commended the department for doing a good job.


In response to questions from Senator Carroll, Ms. Trout said the biggest changes that have taken place have been in education and information technology. Paper files have been replaced by electronic files.  Cross training and consistency have improved efficiency. Regarding turnover, 10 employees left state government, six went to other state agencies, two retired, and one co-op returned to school. There is no large scale concern about disgruntled employees. Applications and workload have increased, but efficiency has improved. The department has developed an internal database system. It is working to phase out using contractors as instructors. Specific information on savings can be provided in about 6 months.


In response to questions from Representative Simpson, Ms. Trout said the department is still using quotas, which are special licenses based on population. These licenses are a challenge for the department. Ms. Summers said quotas are not specific to our state. Restaurants do not need quotas, only bars and liquor stores.


Representative Simpson said it is at the General Assembly’s discretion to modify the law regarding quotas, but expertise from the department is welcome.


In response to questions from Representative Bechler, Ms. Trout said HB 183 should have cleaned up any issues in statute regarding class of cities. Statute dictates the age requirement of a person selling alcohol. The department interacts with the Commonwealth Office of Technology (COT) daily. The working relationship is good.


In response to a question from Senator Thomas, Ms. Trout said the distilled spirits industry has opposed selling liquor in grocery stores. The Kentucky Distillers’ Association could provide more information.


In response to questions from Senator Carroll, Ms. Martin said lawsuits over regulatory license fees for cities are pending. Ms. Trout said the department does not have a strong position to enforce the fees. The department would need a specialized group if it were to get involved.


Senator Buford commented that during prohibition, drug stores were they only means of purchasing alcohol. He pointed out that the General Assembly can designate the classification of a city.


Commonwealth Office of Technology

Mr. McCall said that a state technology agency has existed under different names, beginning with the Bureau of Computer Services, which was created to consolidate computer infrastructure in the 1970s. COT’s mission is to provide quality services affordably. COT, whose operations are funded by agency receipts, has 400 staff and 175 contractors. Its enacted budget is $132 million per year, but it rarely approaches this amount. He discussed four major COT initiatives. Under the IT Infrastructure Initiative (i3), executive branch infrastructure has been consolidated, centralization has been completed for most agencies, and optimization is just underway. Beginning with FY 2015, annual i3 annual savings have been approximately $12 million. The i3 approach has included engaging the Technology Advisory Council, which includes representatives of state agencies. COT is now paid a monthly fee for hardware by agencies, replacing a system in which an agency’s spending varied greatly depending on whether it was getting equipment upgrades. COT is responsible for refreshing hardware, and the agency’s spending is stable over time. Responsibility for applications remains with state agencies. A challenge of i3 has been that consolidation has sometimes resulted in staff with expertise in applications being moved from agencies to COT.


The second initiative, which is nearly complete, is to consolidate print devices in the executive branch. This has resulted in annual savings of nearly $4 million. The third initiative is the migration of Microsoft Office 365. This includes enhancing security features, moving some applications to the cloud, and improving management of mobile devices. Mr. Woodruff said that there are approximately 1,000 early adopters participating. Mr. McCall said that the fourth initiative is Kentucky Business One-Stop, which provides the tools needed to register and operate businesses. This is a cooperative effort among multiple state agencies, with leadership provided within COT. An executive director has just been hired.


Mr. McCall concluded by saying the primary emphasis for COT going forward will be security.


In response to questions from Representative Bechler regarding phase II of i3, Mr. McCall said the Kentucky State Police, the Department of Criminal Justice Training, the Council on Postsecondary Education, State Fair Board, and a number of boards and commissions are in the process of being consolidated. Phase II should be completed in 12 to 24 months. Mr. Carter said there is availability through VPN [virtual private network] to access the system remotely. Moving to Office365 will provide better security when a personal device is used. Cell phones are provided to contractors and COT urges the use of these instead of personal devices. Access to systems are encrypted through VPN or other means, and email is encrypted by the client.


In response to a question from Senator Seum, Mr. McCall said first responders should work with the state police or the Office of Homeland Security to ensure compatibility of equipment. The radio systems used by first responders is outside of COT’s purview. First Net is an initiative to level the playing field for first responders. The Kentucky Early Warning System is managed by COT.


In response to a question from Representative Thomas, Mr. Woodruff said COT partners with the Kentucky Board of Elections regarding the transition to electronic tablets for voting registration. The tablets do not create any undue risk. The Board of Elections has ownership of the application.


In response to questions from Senator Carroll, Mr. McCall said COT is actively working with the Cabinet for Health and Family Services to allow service providers to directly input data. Agencies request moving service applications to the cloud to allow providers access.


In response to questions from Senator West, Mr. McCall said COT is involved in the platform that the Automatic Vehicle Information System runs on. The Transportation Cabinet does most of the work on the application. COT has no information on the cost of the application.


In response to a question from Representative Rothenburger, Mr. McCall said Chief Information Office Barnhart is working directly with the KentuckyWired initiative.


Representative Bechler would like COT to encourage the LRC IT department to implement VPN access for the members of the General Assembly. 


The meeting adjourned at 11:40 AM.