Call to Order and Roll Call
TheProgram Review and Investigations Committee met on Thursday, July 13, 2017, at 10:00 AM, in Room 131 of the Capitol Annex. Senator Danny Carroll, Chair, called the meeting to order and led the audience in the Pledge of Allegiance and a prayer, the secretary called the roll.
Members:Senator Danny Carroll, Co-Chair; Senators Perry B. Clark, Wil Schroder, Dan "Malano" Seum, Reginald Thomas, Stephen West, and Whitney Westerfield; Representatives Brian Linder, Rob Rothenburger, Arnold Simpson, and Walker Thomas.
Guests: Mark Bunning, Deputy Secretary, Finance and Administration Cabinet; Tom Stephens, Secretary, Personnel Cabinet; and Cynthia Gaskill, Professor, Department of Veterinary Science, University of Kentucky.
LRC Staff: Greg Hager, Committee Staff Administrator; Chris Hall, 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 June 8, 2017
Upon motion by Representative Thomas and second by Senator Clark, the minutes for June 8, 2017 were approved by voice vote.
Overview of staff report Information Technology In Kentucky State Government (Adopted November 13, 2014)
Van Knowles summarized the 2014 Program Review staff report.
Information technology (IT) infrastructure consists of computers, servers, networking hardware, phone systems, operating systems, and productivity or utility software. Infrastructure provides the building blocks for business applications such as eMARS, KHRIS, or KAVIS.
Program Review staff surveyed agency leaders and staff about the stateís IT assets. Overall, state agencies rated their IT assets as better than average, but not excellent. Some older business applications still worked well but suffered from various weaknesses.
Agencies reported numerous instances of major IT applications that were difficult to use, and some needed imminent replacement. Several applications that needed replacement were very large projects costing millions of dollars. Agencies often submitted multiple requests for replacement that went unfunded for multiple capital planning cycles. Some smaller IT needs were also unmet, usually because of budget limitations. Agencies rated funding needs as the greatest challenge to improving technology.
At the time of the report, the executive branch was undertaking a technology infrastructure consolidation to bring all infrastructure assets, along with all related support personnel, under direct management of the Commonwealth Office of Technology (COT). New infrastructure purchases were to be made through COT, and only COT could hire infrastructure support staff. All IT personnel actions required approval by the Finance and Administration Cabinet (FAC). Agencies paid COT a monthly fee for the cost of equipment, software, and support services. COTís entire budget consisted of payments from other agencies.
COT had begun to intercede with agenciesí plans for their own business applications, attempting to ensure standard development methods, to share common solutions among agencies, and to improve sharing of data among agencies. Some agencies expressed frustration with COTís billing process for infrastructure services, other aspects of infrastructure consolidation, and the process of developing new business applications. The report recommended that COT address these concerns.
Many agencies reported difficulty hiring and retaining IT professionals. Partly as a result, much of the state government IT workforce consisted of contractors. The state might be able to save money by making changes to attract, hire, and retain IT employees rather than contractors. The report recommended that the Personnel Cabinet, in consultation with FAC and other agencies, conduct a classification and compensation study assessing the overall cost of equalizing IT compensation with private industry compared to the cost of continuing to use IT contractors.
Some large capital IT projects suffered from cost overruns and delays. Some problems appeared to arise from the procurement process and others from project management. Agencies were not required to consult with COT when developing their procurements. Each agency was responsible for its own project management with no direct oversight. Improved procurement and project management procedures might reduce losses on large projects. The report recommended that FAC and COT ensure that all agencies consult with COT at the earliest stages of considering new or updated business applications and that all agencies develop their procurement and project designs with input from COT and the cabinetís Office of Procurement Services. The report also recommended that FAC and COT, at their discretion, should ensure that all agencies employed certified or experienced project managers for capital IT projects. COT should actively review and measure the progress of such projects and maintain records to develop evidence-based best management practices.
Attacks on IT systems are increasing in frequency and sophistication across the private sector and government. Although Kentucky had not reported any major security breaches, the Auditor of Public Accounts found IT security vulnerabilities. HB 5, enacted in 2014, included provisions for reporting security breaches. Ten agencies reported breaches that would have required reporting under HB 5. IT security is not necessarily the province of specialistsóagency leaders and staff must be aware of potential threats for effective security across the enterprise. The report recommended that COT ensure that all agencies prioritize technology security initiatives and maintain continuing communication and training for their staff on evolving threats and best practices to safeguard sensitive information in their keeping.
Program Review staff examined four specific business applications: the statewide accounting system (eMARS), the statewide human resources system (KHRIS), the public assistance eligibility system (KAMES), and the motor vehicle information system (AVIS).
The two enterprise applications were more up to date but received a greater number of complaints than the two agency applications. However, eMARS and KHRIS serve many different agencies, making them visible to more users with differing needs. EMARS is a comprehensive package that serves all state agencies. Some deficiencies were found, most notably its inability to serve all the accounting needs of all agencies. Many agencies supplemented the accounting system with their own business applications or manual procedures, creating extra work. The report recommended that COT work with the Office of the Controller and agencies that use the statewide accounting system to find out all the extra procedures and business applications that agencies use to meet their accounting needs. The offices should identify the reasons that agencies need these additional procedures and applications and then develop solutions so that agencies may use eMARS more efficiently.
Agencies rated KHRIS less highly than eMARS, but KHRIS was newer and had less time to mature and achieve acceptance.
KAMES and AVIS, the agency applications, were decades old and in the process of being replaced. Both were reported as performing their basic functions well but being difficult to modify when needed. They suffered from the same inefficiencies as other outdated applications.
It was not possible to determine accurately the total annual cost of technology in state government using the statewide accounting and personnel systems. Accounting for IT expenditures on goods and services was improving but still imprecise. It seemed likely that IT accounting would improve greatly if agencies better understood the use of object codes that describe the purpose of purchases in eMARS. The report recommended that FAC produce and maintain a document explaining the intended use of each object code in eMARS. The cabinet should implement an ongoing process to verify that agencies were using object codes correctly and take corrective action when needed.
The amounts spent for IT staff could not be determined using available information in eMARS and KHRIS. The report recommended that COT work with FAC and the Personnel Cabinet to develop a means to calculate the full-time equivalents and personnel costs of information technology work by state employees.
Response to recommendations in staff report Information Technology In Kentucky State Government
††††††††††† Mr. Bunning said COT can lower annual IT costs by $50 million. The two primary areas of focus in the COT budget are infrastructure and application development. COT spends $100 million on infrastructure and $20 million on application development. These revenues are generated through charges to other agencies for rated services and enterprise assessments.
Recommendation 2.1 of the report was that COT address concerns about costs and billing. COT has reimplemented the Technical Advisory Council (TAC), which meets monthly. There are three tiers of monthly billing to each cabinet.
Recommendation 4.1 was that eMARS object codes be clearer. The codes are clear for the $120 million of COT spending.
IT spending for the state is close to $500 million annually. Spending by COT is $120 million, IT operating expenditures by executive agencies are $200 million, and IT capital projects are $180 million. The $50 million reduction target is a 10 percent reduction in cost. By consolidating IT equipment and personnel into COT, costs have been cut by $12 million to $15 million annually.
TAC is looking at the $380 million budgets for capital projects and operating expenses to cut costs on about 2,400 agency applications. Each agency owns and manages its own applications, but consolidation may lead to savings. TAC has done an inventory of applications to categorize and consolidate to reduce redundancies. TAC will need to review statutes to make sure consolidation is compliant with requirements for data handling. COT is looking at trying to reduce legacy systems.
Recommendation 2.3 was that COT be involved at the outset of agenciesí large IT projects. COT is improving in this area. It has business relationship managers, each of whom should have intimate knowledge of every application at his or her designated cabinet. This past biennium, four agencies proposed IT capital projects to develop document management applications.. If COT had central authority for applications, this type of redundancy could be eliminated if one project could meet all the needs.
Recommendation 2.5 concerned security initiatives, communication, and training to safeguard information. The chief security information officer makes regular presentations to TAC to explain exposures and risks.
COT hopes to realize savings with oversight of applications. It may be helpful if the state adopted a program like the federal IV&V [independent verification and validation] process. Recommendation 2.4 would be met if COT could structure its budget in the next budget cycle to handle oversight of applications.
COT has 520 staff who deal with infrastructure: 360 state employees and 160 contract employees. There are 887 state employees (33 in COT) and 573 SDS contract employees (29 in COT) who work on applications.
Recommendation 4.2 concerned a means to calculate the full-time equivalents (FTE) and personnel costs associated with IT work by state employees. These are known for the SDS contract, which is through COT. COT is unaware of FTEs of contracts outside COT. All agencies would have to cooperate to do a comprehensive FTE count. Identifying non-merit IT staff could be an issue.
For COT to reach its savings target, it needs to finish I3 [IT Infrastructure Initiative] consolidation, strengthen IT applications oversight, remove legacy systems, and move toward optimizing phases.
In response to a question from Senator Clark, Mr. Bunning said he was unsure if legislation or a change to regulations was necessary to give COT authority over applications to reduce redundancy.
In response to a question from Senator Carroll, Mr. Bunning said every cabinet has its own budget and there is a lack of oversight at a higher level to reduce redundancies. For example, five cabinets bought the same software before COT realized it. COT established an enterprise relationship for the software at the same price. It was then available to all cabinets.
Mr. Bunning said that COT needs to:
∑ finish I3 consolidation, which would save approximately $25 million;
∑ continue to collapse and optimize licensing and hardware, including leasing hardware and using cloud-based solutions;
∑ strengthen oversight on IT applications and have a centralized view on IT spending on applications, operating budgets, capital projects, and agency staffing; and
∑ focus on reviewing and measuring progress of projects to develop best management practices as suggested in recommendation 2.4. TAC is starting to do this, but it will be a long process.
Recommendation 2.2 is that a study should be done to compare the cost of IT compensation with private industry. This is challenging because some of the legacy system applications in use are so old that employees who know them are hard to find.
COT needs to adopt a mentality of buy versus build, which would typically be less expensive. COT could help agencies share existing solutions. TAC is working on a request for proposals that will allow COT to bid on turn-key solutions.
Standard platforms need to be established statewide. Utilizing the cloud is secure with lower upfront cost. COT oversight will help focus on enterprise-wide solutions rather than just cabinet solutions. IV&V will help to achieve this goal. COT is preparing a reorganization to include business relationship managers who will be liaisons with cabinets. In summary, central COT oversight of applications would help save money.
In response to questions from Senator West, Mr. Bunning said COT manages the hardware for the AVIS system, but information on the system update would need to come from the Transportation Cabinet. If COT gets involved in enterprise solutions, statutes that restrict data may need to be addressed and cooperation from all cabinets will be needed. COT hopes to present legislation in the 2018 regular session that would address statutes relating to data sharing. This requires identifying all relevant statutes for COT and each cabinet.
In response to questions from Senator Carroll, Mr. Bunning said that agencies have approximately 50 methods to collect fees. COT should be looking for an enterprise solution to accommodate all the ways to collect fees. Cloud storage is automatically backed up. Using cloud storage also changes spending from capital to operating, which is more consistent over time.
Senator Carroll asked for a comment on Deloitte and asked whether the experience with Deloitte had been studied sufficiently. Mr. Bunning said that COT uses many great outside vendors. Each application is unique. A good structure in the beginning and knowing the desired result will determine the success of a project. Communication would be better with COT having oversight of all IT spending and staffing.
Mr. Stephens said that he only recently became aware of Recommendation 2.2, that a compensation study be done. The committee adopted the report and its recommendations in November 2014. A current staff person who worked in the cabinet at the time told him that someone from the governorís office called to say that the study should not be done. In general, the benefit structure for the state is costly. It is difficult to maintain the type of workforce needed in COT. Turnover is a challenge.
In response to a question from Senator Carroll about developing IT talent, Mr. Stephens said Labor Cabinet Secretary Ramsey is an advocate for internship programs, but available funding is lacking.
In response to a question from Senator Carroll, Mr. Bunning said COT evaluates each decision to determine whether outsourcing is appropriate. It depends on cost.
In response to questions from Senator Thomas, Mr. Stephens said that the state has a compensation and classification system in place, but the salary scale has not been adjusted in over 10 years. If funds were available to adjust salary scales, the state could compete with the private sector for IT workers.
In response to questions from Senator West and Senator Westerfield, Mr. Stephens said that he will determine the origin of the compensation study request. A compensation study like the one requested would take 6 to 9 months to complete. Mr. Bunning commented that he was also unaware of the report until recently when he received the request to respond to the reportís recommendations.
Senator Carroll read recommendation 2.2 from the Program Review report and clarified that this is the recommended compensation study in question.
In response to a question from Senator Thomas, Mr. Stephens said the commissioner of the Department of Human Resource Administration in the current and previous administration said that she was told by Mary Lassiter, secretary of the Governorís Executive Cabinet, not to perform the compensation study. There is nothing in writing about this.
In response to questions from Representative Simpson, Mr. Stephens said it is challenging to obtain and retain talent for the Department of Corrections, largely due to locations in rural areas. The cabinet has looked at several initiatives to obtain personnel, including accepting military service to offset training requirements in correctional positions. In some other professions, it is difficult to provide services because of the lack of qualified personnel. For example, it has not been possible to hire HVAC personnel for the LEED-certified Sower building. Ultimately, there is a lack of funds to be competitive.
In response to a question from Representative Simpson about the frustration of hiring for COT, Mr. Bunning said he recently hired someone who left after 2 weeks to the private sector for double the salary.
2016 Study of Current Conditions of Kentucky County Animal Shelters and Degree of Compliance with Kentucky Animal Shelter Laws (University of Kentucky)
Ms. Gaskill said that 10 years ago she learned that the animal shelter in her county was an old barn. In 2004, legislation was enacted requiring that each county set up its own shelter program or contract with another county. Shelter standards are minimal. There are no requirements for adoption programs, spay/neuter programs, or prophylactic veterinary care. By 2007, counties were supposed to be in compliance of the 2004 legislation, but there are no enforcement provisions.
The University of Kentucky, Morehead State University, and Lincoln Memorial University provided funding for a study of conditions of county shelters. Veterinary students from Lincoln Memorial University visited each county shelter. There are 92 county shelters that serve the 120 counties. Overall, 12 percent of shelters followed all parts of the law, 27 percent violated one or two parts of the law, and 57 percent violated three or more parts of the law. Four percent were classified as undetermined. Shelters of different levels of compliance are spread across the state.
Shelters were also measured on a general grading system for good, modern, standard shelter practices but that are not required by law. Overall, 21 percent of shelters were good quality, 42 percent needed improvement in a few areas, and 36 percent needed improvement in many areas. One percent of shelters were classified as undetermined.
Nearly one-half of county shelters do not have quarantine areas, 75 percent are not adequately sized, and 25 percent do not accept cats. About a third of the shelters that accept cats are in deplorable condition. Some shelters were never open to the public and over half did not have impervious building materials.
The major problems identified by shelter workers were a lack of funding, lack of low-cost spay/neuter programs, and lack of education for shelter staff and the public. Over 50 percent of county shelters still have problems in complying with current standards. In 2004, $3 million was made available to counties to improve shelters, but no additional money has been made available. Self-regulation by counties is not working. Enforcement is necessary if all counties are to come into minimum regulatory compliance.
In response to questions from Senator Schroder, Ms. Gaskill said the undetermined measurements were shelters that were closed for legal purposes or in the process of being built. There are some requirements in statutes for humanely euthanizing injured or sick animals. If a shelter does not have an adoption program, the minimum hold time is 5 days. The students did not evaluate euthanization as part of the study. Many shelters participate in interstate adoption programs to address overpopulation. After the study was published, many shelters asked for help on ways to improve.
Representative Linder commented that this is a good example of how government should work. While he worked on the Grant County Fiscal Court, many local groups asked for improvements to the local shelters.
Senator Carroll agreed that many of the problems can be helped at the local level. Based on visiting Lebanon and seeing the amount of industry in the area, Senator Carroll said that for the next committee meeting he would like to see how the Cabinet for Economic Development presents packages to prospective companies looking to locate in Kentucky and see statistics on the past 10 years.
Representative Simpson commented that he would like to include information on incentives offered and whether there are mechanisms to assure performance. Reports are not received on what happens with the incentives.
The meeting adjourned at 12:06 PM.