Bill Summary for Bill Number SB09-076

Date: 01/26/2009

Final
BILL SUMMARY for SB09-076

SENATE COMMITTEE ON BUSINESS, LABOR AND TECHNOLOGY

Votes: View-->	Action Taken:
Moved prepared Amendment L.001 (Attachment E). Th Moved to refer Senate Bill 09-076, as amended, to	Pass Without Objection PASS

02:37 PM -- Senate Bill 09-076

The committee reconvened. Senator Heath presented Senate Bill 09-076. Senate Bill 09-076 creates the Employment and Technology Training Fund for automation initiatives at the Department of Labor and Employment. It diverts 20 percent of employer surcharge taxes to the Technology Fund, which reduces to 30 percent the amount of taxes deposited into the Unemployment Compensation Trust Fund. The bill allows money to be transferred back to the Trust Fund if needed. Senator Heath distributed prepared Amendment L.001 (Attachment E). Senator Heath discussed the aging computer system at the Department of Labor and Employment and the pressures facing the system. He explained how the Employment and Technology Training Fund will be funded, and stated that his bill applies good business practices since the system is not going to be able to last.

02:40 PM

Senator Heath explained that Amendment L.001 changes language in the bill concerning when the Executive Director will transfer funds back to the Trust Fund. Senator Heath indicated that the bill puts many safeguards in place for the new fund. Senator Mitchell expressed his concerns about the bill. Senator Mitchell stated that needs such as overhead and information infrastructure are generally met by ongoing appropriation, and that Senate Bill 09-076 may parallel a situation in transportation where a separate revenue stream is created and maintained instead of calling on appropriations. Senator Mitchell also expressed concern that the new fund will become another "cash pot" that will be raided in the event of a budget crunch. Senator Heath responded that hopefully the legislators will safeguard the Unemployment Insurance system, but that it was true that no one could promise that the fund would not be raided in the future. Senator Heath added that capital equipment needs are separate from administrative needs.

02:46 PM

Senator Foster asked whether every department must have a maintenance budget, and whether this new fund would be a maintenance fund to help systems that are currently struggling to handle claims. Senator Foster wanted to ensure that the money in the new fund would be used to upgrade the technology of the system currently in place. Senator Heath replied that the fund would provide for replacement as opposed to maintenance, and that the outdated systems would be replaced with a new generation of technology.

02:48 PM

Senator Harvey asked if the Department of Labor and Employment currently was able to use Unemployment Insurance Trust Funds to replace its system. Senator Heath requested that the representative from the Department of Labor and Employment be allowed to answer Senator Harvey's question.

02:49 PM -- Mike Cullen, Director of the Unemployment Insurance Office within the Colorado Department of Labor and Employment, stated that the intent of the bill was to set aside money so that the office can begin to replace its antiquated computer systems. Mr. Cullen noted that the bill does not provide for maintenance, but that the bill gives the department a method of accumulating the money over time to replace the system. Mr. Cullen indicated that there is not currently adequate money within the Trust Fund to replace the systems. Mr. Cullen discussed the system currently in place, which was installed in 1985 and is very difficult to maintain and to change. Once the new system is in place, the department will go through the normal process of asking for money to maintain it. Senator Harvey asked for a clarification of how the Unemployment Insurance Trust Fund is funded. Mr. Cullen explained the different taxes that contribute to the Trust Fund and how the bill would affect the funding. Senator Harvey asked how the department is currently funding its technology and maintenance needs. Mr. Cullen responded that the department isn't doing it very well, and that it has limited money above its needs for running day-to-day operations and making small changes. Mr. Cullen discussed the failed Genesis Project from 1988 that was contracted with Accenture. Mr. Cullen responded to a question from Senator Harvey about the Solvency Tax surcharge and explained how it is calculated, what causes it to go into effect, and how long it has been in effect. Senator Harvey continued to ask follow-up questions.

02:56 PM

Mr. Cullen responded to a question from Senator Harvey concerning a period during the last recession when the legislature raided funds before they got to the Trust Fund. Mr. Cullen indicated that it takes time for the balance to drop low enough for the Solvency Tax surcharge to kick in. Senator Harvey asked why the funds weren't diverted when there was a lot of money before. Mr. Cullen explained that the Accenture contract for the Genesis Project wasn't settled until 2005, and that it was not possible to divert while the project was still ongoing. Senator Veiga asked Mr. Cullen to address Senator Mitchell's question about whether it was possible to protect the new fund from being raided. Mr. Cullen said that Senator Mitchell was correct in stating that the fund would be subject to raid. Mr. Cullen said that funds were raided in the past during recessionary times, and that he hopes that in the future, the Unemployment Insurance Trust Fund will be protected as legislators recognize its importance to Colorado citizens. Mr. Cullen also indicated that the language within the bill allowing the Executive Director to move the funds back to the Trust Fund may be one way to protect the new fund.

02:59 PM

Senator Veiga indicated that it may be a problem for businesses to suddenly have to contribute to information technology needs. Mr. Cullen stated that the current systems are old, hard to maintain, and that his department struggles to provide needed services. Mr. Cullen said that the systems have to be replaced, and that it is necessary to start looking ahead and putting money away now.

03:01 PM -- Dara Hessee, Legislative Liaison for the Governor's Office of Information Technology (OIT), spoke on behalf of John Conley, Deputy Chief Information Officer for OIT. Ms. Hessee indicated that OIT supports the bill and is heavily involved in such projects. She stated that the bill would provide a stable funding source for critical systems that need to be refreshed, and indicated that the systems are written in old programming language and that the skills needed to support the systems are harder to come by as state employees retire. Ms. Hessee said that OIT believes that the project will succeed under the current OIT Information Technology Consolidated Model and Project Governance Structure. She discussed OIT's role in helping to approve and govern major information technology projects such as this one. She discussed OIT's established project controls that increase project success, and stated that OIT helps set deadlines, control budgets, and determine whether a project is viable. Ms. Hessee discussed the Executive Governance Committee process, which is a new model designed to improve projects' success, and indicated that the model has had great success already. Ms. Hessee indicated that OIT would be working closely with the department to govern the project if the bill is passed.


BILL:	SB09-076
TIME:	03:05:12 PM
MOVED:	Heath
MOTION:	Moved prepared Amendment L.001 (Attachment E). The motion passed without objection.
SECONDED:
		VOTE
	Foster
	Harvey
	Mitchell
	Scheffel
	Tochtrop
	Heath
	Veiga

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-076
TIME:	03:05:36 PM
MOVED:	Heath
MOTION:	Moved to refer Senate Bill 09-076, as amended, to the Committee on Finance. The motion passed on a 6-1 roll call vote.
SECONDED:
		VOTE
	Foster	Yes
	Harvey	Yes
	Mitchell	No
	Scheffel	Yes
	Tochtrop	Yes
	Heath	Yes
	Veiga	Yes

Final YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

03:06 PM

The committee adjourned.