Interim Joint Committee on State Government


Minutes of the<MeetNo1> 3rd Meeting

of the 2011 Interim


<MeetMDY1> August 24, 2011


Call to Order and Roll Call

The<MeetNo2> third meeting of the Interim Joint Committee on State Government was held on<Day> Wednesday,<MeetMDY2> August 24, 2011, at<MeetTime> 1:00 PM, in<Room> Room 154 of the Capitol Annex. Representative Mike Cherry, Co-Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Damon Thayer, Co-Chair; Representative Mike Cherry, Co-Chair; Senators Walter Blevins Jr., Jimmy Higdon, Gerald Neal, R. J. Palmer II, and John Schickel; Representatives Dwight Butler, Larry Clark, Leslie Combs, Tim Couch, Will Coursey, Danny Ford, Jim Glenn, Derrick Graham, Mike Harmon, Melvin Henley, Martha Jane King, Jimmie Lee, Brad Montell, Lonnie Napier, Sannie Overly, Darryl Owens, Tanya Pullin, Tom Riner, Carl Rollins II, Steven Rudy, Sal Santoro, John Will Stacy, Tommy Thompson, Tommy Turner, Jim Wayne, Alecia Webb-Edgington, and Brent Yonts.


Guests:  Representatives Fred Nesler and Keith Hall; Greg Haskamp, Finance and Administration Cabinet; and Bill Thielen and T. J. Carlson, Kentucky Retirement Systems (KRS).


LRC Staff:  Judy Fritz, Kevin Devlin, Brad Gross, Alisha Miller, Karen Powell, Greg Woosley, Bill VanArsdall, and Peggy Sciantarelli.


Approval of Minutes

The minutes of the July 21 meeting were approved, without objection. (This occurred near the end of the meeting.)


International Interest in Open Door Transparency in Kentucky

Greg Haskamp, Executive Director, Office of Policy and Audit, Finance and Administration Cabinet, gave an update about Kentucky’s e-transparency web site, Open Door, which is serving as a model both nationally and internationally. Mr. Haskamp provided a one-page handout listing the numerous countries in Africa, the Middle East, and Asia that have expressed interest in Kentucky’s searchable portal. He explained that Kentucky is the only state nationwide that has online expenditure records for all three branches of government and all independently elected offices. Much of the global interest involves the International Visitor Leadership Program, a premier professional exchange program that brings visitors selected by U. S. embassies around the world to the United States for a three-week exchange program. It is handled under the auspices of the U. S. State Department and, in Kentucky, is sponsored by a number of groups, primarily the World Affairs Council of Kentucky/Southern Indiana and also the National Conference of States Legislatures. Since the Open Door’s inception in 2009, leaders from 20 countries have come to Kentucky to learn about the website. The Cabinet is working to expand salary search information to include universities and quasi-governmental agencies, prepare for compliance with Senate Bill 7 [transparency legislation enacted in the 2011 Regular Session], and, in the long term, expand financial literacy resources. There were no questions for Mr. Haskamp. Representative Cherry thanked him for his report and also briefly spoke about his own recent discussions with a South African delegation.


Kentucky Retirement Systems Fund Loss Reporting Error

(This was a late addition to the meeting agenda at the Chair’s request and is not listed on the official written agenda.) William Thielen, Interim Executive Director of KRS, and T. J. Carlson, Chief Investment Officer, were present to discuss why losses to the state employee pension fund in recent stock market volatility were not as severe as first reported. Mr. Carlson gave the following explanation.


The decline in the KRS financial portfolio had initially been reported by the media to be $1.7 billion—or 15 percent—when it was in fact only $500 million, or 5.4 percent. This happened because KRS staff released a pre-reconciled asset total for pension plan assets for the fiscal year through August 9, 2011. Due to a new asset allocation that took effect July 1, one section of the portfolio was being moved from the fixed income section, or bond section, to a real return section. When the KRS custodian ran the overnight account update, that account—valued at approximately $1.1 billion—was missing from the consolidation. The reported 15 percent loss was calculated by reporters and not by KRS. When KRS noticed the reported value of its portfolio to be dramatically below that of the other three public pension plans listed by the media, it became apparent there was an error because KRS, as a result of current reallocations, has more cash in its portfolio than average public pension plans. On August 18, KRS issued corrected information. Mr. Carlson closed by stating that the KRS Investment Committee has put in place new reporting procedures to prevent unreconciled information from being released in the future. KRS has also begun discussions with its custodian regarding the possibility of reconciling account information on a more frequent basis. When asked by Representative Glenn, he said that reporting could probably be done twice monthly with no increase in custodial fees; however, the KRS Board would have to decide whether increased fees would be justified for more frequent reporting.


Representative Cherry thanked the speakers. He also said he was heartened to see in KRS’ press release that investment return in the KRS Pension Fund for the fiscal year ending June 30, 2011, was up approximately 19 percent, well above the assumed return rate of 7.75 percent.


Redistricting—Technological Aspects

Judy Fritz and Greg Woosley, State Government Committee staff, Geographic Information Systems (GIS) staff Scott Hamilton, and Office of Computer and Information Technology (OCIT) staff Jim Swain and Joel Redding, gave an overview of the technological aspects of redistricting, in preparation for the General Assembly’s redrawing of legislative and congressional districts. Ms. Fritz, State Government Committee Staff Administrator, noted that a copy of today’s PowerPoint presentation is included in the meeting folders and that it contains information about constitutional and case law relating to redistricting that will not be discussed today.


Ms. Fritz said it is anticipated that the redistricting system will be ready for use the first part of September—that is, precinct boundaries will have been verified and populated with the most recent census data, and the bill drafting and data systems will have been checked and double-checked. Upon approval by the Senate President and the House Speaker, in-house training and distribution of work stations will take place. She explained the process for submission of redistricting proposals and preparation of proposed plans as bill requests or amendments to existing bills. The process requires LRC staff to verify all redistricting plans and to create maps and reports to accompany each plan. The Senate State and Local Government and House State Government are the usual committees of jurisdiction for redistricting.


Mr. Woosley, State Government Committee staff analyst, discussed the process and requirements for establishment of election precincts by each county board of elections, pursuant to KRS 117.055. He explained that proposed precinct establishment orders (PEO) must be submitted to the State Board of Elections (SBE) for approval, and SBE must provide a copy of each submitted PEO to LRC for review and comment prior to SBE approval. Once a PEO is approved it is resubmitted to LRC for incorporation into the LRC database. Effective July 15, 2010, precinct lines were frozen until after redistricting takes place. Mr. Woosley said that state law requires that no election precinct cross congressional, state senate, or state house district boundaries, as well as local magisterial district lines. Following redistricting, county boards of elections are required by state law to alter precinct boundaries so that they do not cross legislative district lines.


Mr. Hamilton, GIS Manager, discussed redistricting data preparation and the five-phase 2010 Census Redistricting Data Program, which provides states the opportunity to delineate voting and state legislative districts and to suggest census block boundaries for use in census redistricting data tabulations. He explained that in December 2005, LRC submitted legislative district boundaries under Phase 1 of the program. Kentucky only partially participated in Phase 2 (Voting District/Block Boundary Suggestion Project), since precinct boundaries were not submitted. The timeline for Phase2 submissions was January-March 2009, and Kentucky precincts were not frozen until July 2010. In Phase 3, redistricting data and geographic products were delivered to the states. Kentucky received the census GIS geographic layers in January 2010 and the census population data in March. Under Phase 4, the newly drawn congressional and legislative district boundaries will be collected, and 2010 Census data will be tabulated to those new districts. The data will then be released via DVD and to American Fact Finder, the Census Bureau’s online, self-service search tool that delivers a wide variety of population, economic, geographic, and housing information. Phase 5—evaluation and recommendations for the 2020 Census—began at the recent NCSL Annual Conference in San Antonio, Texas. In a roundtable meeting at the Conference with Census Bureau officials, a number of staff from different states suggested that submission of precinct boundaries under Phase 2 of the Redistricting Data Program be moved to a later date in order to allow for greater participation.


Mr. Hamilton reviewed the timeline for redistricting data preparation. From October 2008 to June 2009, LRC staff realigned precinct boundaries to the newly improved census geography; June 2009 to February 2011, known precinct geography and data discrepancies were resolved; February 21-May 4, 2011, precinct layers were created for each county, using the newly released 2010 Census Redistricting GIS layers received January 25; May 10-18, 2011, precinct maps were created for each county; May 19, maps and accompanying documents were sent to county clerks for verification; May 25-July 19, precinct verification maps were returned to LRC by all 120 county clerks, and 60 counties required corrections to be made. The return rate from counties was only 60 percent in the previous round of redistricting. In July 2011, a statewide precinct layer was created. Kentucky has 3,578 precincts—an increase of 218 from the 2000 Census—and 161,672 census blocks—an increase of 29,373. Mr. Hamilton concluded by pointing out that the redistricting system would have been ready for use upon release of redistricting data by the Census Bureau if Kentucky could have fully participated in Phase 2 of the Redistricting Data Program. Full participation was not possible, though, because of election filing deadlines and the requirement to freeze precincts.


Mr. Swain, Chief Information Officer, briefed the Committee regarding storage and sharing of redistricting plan files and security procedures that are in place to protect the confidentiality of plan proposals and bill requests. He explained that, in addition to the security provided by the Maptitude software, there will also be instant offsite replication of data via fiber optics, nightly backups to a robotic tape system, and uninterruptible power systems. Computer stations with redistricting software for public use will be located in the LRC library, and unique logins and security will be provided for all users.


Mr. Redding, Deputy Chief Information Officer and LRC Webmaster, gave an overview of LRC’s “Redistricting 2010” web page that will go online at a later date. Included in the web site will be links to redistricting bills and plan reports that have been made public, 2010 population information, current district maps, and census and redistricting information from the U. S. Census Bureau and the National Conference of State Legislatures. He noted that LRC’s web site currently contains a link to “2010 Census Redistricting Data.”


The staff presentation concluded with an on-screen demonstration of the Maptitude software by Mr. Woosley. This was followed by questions and comments from committee members.


When Representative Lee asked who is responsible for changing or establishing precinct lines, Mr. Woosley explained that county boards of elections, in conjunction with the State Board of Elections, control the creation of precinct boundaries. State law says that after each election the county board should review any precinct in which the votes cast in the last election totaled 700 votes or more. The only statutory provision that speaks to a mandatory change says that the State Board may withhold funds to counties for administration of elections if a precinct population increases by more than 1,500 registered voters.


Representative Lee asked about the legality of local governments moving precincts from one legislative district to another through annexation—a situation that had occurred in his own district. Mr. Woosley said that he cannot render a legal opinion but explained that state law prohibits precinct lines from crossing legislative boundaries and prohibits county boards of elections from altering legislative districts.


Responding to a question from Representative Montell, Mr. Hamilton explained that even though Kentucky did not gain significant population in the 2010 Census, the number of census blocks increased by 29,373 in order to accommodate the population increase in some areas that caused existing census blocks to become too populated.


Representative Graham asked whether the population in his district is properly represented now, since it had been altered by the moving of two precincts from the city into the county in error after the 2010 Census. Mr. Hamilton said that the mistake had been rectified. Responding to another question from Representative Graham, Representative Cherry said that state legislative and congressional redistricting plans can be filed either in separate bills or in the same bill, as was done in House Bill 1 (2002 Regular Session).


Representative Stacy and Representative Combs stated their opinion that in some counties there are split precincts where legislative district boundaries do not follow precinct lines. Mr. Woosley indicated that precinct boundaries have historically been used in the redistricting process, in accord with state law. Representative Cherry said he, too, believes there may be some split precincts, and he directed staff to research this question and advise the Committee.


Representative Stacy and Representative Overly asked about the timetable, requirements, and authority for the redrawing of judicial districts. Mr. Woosley said that the Kentucky Constitution speaks to judicial redistricting with permissive language, while sections applying to legislative redistricting speak in mandatory language. Representative Cherry requested staff to research this issue also.


Senator Thayer said he has been contacted about judicial redistricting and is of the opinion that it should be addressed in the next legislative session. He said he was told it has been 20 years since judicial districts were last redrawn and that some judicial districts are completely out of balance with regard to population.


Subcommittee Report and Adjournment

Senator Thayer, Co-Chair of the Task Force on Elections, Constitutional Amendments, and Intergovernmental Affairs, reported on the Task Force’s July 26 and August 23 meetings. The report was adopted without objection. Business concluded, and the meeting was adjourned at 2:25 p.m.