Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Date:03/10/2010
ATTENDANCE
Time:11:16 AM to 03:36 PM
Balmer
*
Bradford
X
Place:HCR 0112
Casso
X
Kerr A.
*
This Meeting was called to order by
Liston
X
Representative Rice
Middleton
X
Priola
*
This Report was prepared by
Soper
X
Christie Lee
Stephens
*
Gagliardi
X
Rice
*
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Judicial Department Discussion on PAS and E-file System
HB10-1166
SB10-155
SB10-116
SB10-158
Witness Testimony and/or Committee Discussion Only
Amended, Referred to the Committee of the Whole
Amended, Referred to Finance
Referred to the Committee of the Whole
Amended, Referred to the Committee of the Whole

11:16 AM -- Discussion on Judicial Department

Representative Gagliardi called the committee to order.

11:17 AM --
Judge Jerry Marroney, State Court Administrator, and Bob Roper, Chief Information Officer, from the Judicial Branch came to the table along with Representative Ferrandino. Judge Marroney stated that Representative Ferrandino would like to address the committee first. Representative Ferrandino said he was asked to come and give some background on the issue from the Joint Budget Committee's (JBC) standpoint and talk about why this issue has come up over the last couple of years. Representative Ferrandino explained that two years ago Representative Buescher placed a study in the long bill to look at bringing the E-filing and Public Access Systems in-house, and having the courts run it. He stated that the study was completed and reviewed by a national courts group and a senior analyst in the JBC who each concluded that this would result in cost savings to the state, allow more functionality, and provide better services to the people in Colorado. Representative Ferrandino noted that the majority of the JBC has supported this system.

Representative Middleton expressed her concerns with the feasibility study that was completed internally and said she is struggling with the lack of objective review that was done. She asked Representative Ferrandino to explain the review process that was used when Representative Buescher originally asked for the study. Representative Ferrandino explained that Representative Buescher asked the department to conduct an in-house feasibility study and that study was then reviewed by a national courts group and JBC Staff. Representative Soper talked about prior computer systems that have struggled in the state. Representative Ferrandino said that although other state systems have had problems, the systems within the Judicial Branch have been successful. Representative Liston asked how many new positions the department needs to implement the in-house system. Representative Ferrandino said he believes the department has requested 19 FTE for next year in order to bring the system in-house and stated that in the end it would end up saving the state money.



Representative Liston expressed his concerns over the Judicial Branch cutting 266 positions in the fiscal year 2010-11 budget. Representative Ferrandino explained that the Judicial Department has prioritized its budget request and has decided to cut 266 employees, including about 50 probation officers, in order to gain the 19 FTE for information technology in order to create a system the department can use. Representative Bradford noted that the Judicial Branch already has a system in place to gather the information it needs. Representative Ferrandino stated that the current system does not provide everything the Judicial Department wants and needs to be able to function. Representative Bradford referenced the E-filing cost benefit analysis that showed the number of employees that would be needed over time to be 134 new FTE. Representative Ferrandino stated that the analysis Representative Bradford referenced is from Engaged Consulting and not from the JBC analysis, which is what he is using, and does not come anywhere close to 134 FTE.

11:30 AM

Representative Rice explained that, to him, the purpose of the discussion is to talk about what is going on with the software system, what are the merits for bringing the system in-house, whether there are any negative consequences for bringing the system in-house, and what would happen if the system, once implemented, does not work. Representative Priola commented on bringing the system in-house and asked whether Judge Marroney or Mr. Roper were familiar with the principle of comparative advantage. Representative Rice stated that he would like the department to give an overview first before responding to questions.

11:32 AM

Judge Marroney stated that they were asked by the JBC to conduct a study with regard to bringing the Public Access System and E-Filing System in-house. He explained that the National Center for State Courts reviewed the feasibility study conducted by the Judicial Department and issued a letter to the JBC that stated that it believes the Judicial Branch is capable of doing the work, has the capacity to do the work, that the branch has a great reputation with regard to all of the court systems in the country, and that the branch can take it in-house. Judge Marroney explained that the branch used $750,000 of money that was in the branch's IT fund to fund the program up front and the legislature approved that and then some issues were raised with the branch bringing the systems in-house. He stated that the JBC voted unanimously to move this to the legislature following a review of the department's proposal by JBC staff. Mr. Marroney stated that the current system only handles civil, probate, domestic relations, water, and county court collection. He explained that the department needs the system to be able to handle criminal, mental health, juvenile, juvenile delinquency, and support and paternity. Judge Marroney explained that the system would not be an additional cost to the state and would not increase fees. He said the in-house program would allow all of the District Attorneys, the Attorney General, the Public Defender's Office, the Office of the Child's Representative, and all other state agencies that need to file into the state court system to do so with no additional cost. Judge Marroney talked about the other state programs in the state that have been mentioned and talked about the lack of funding that was provided to implement those programs. He talked about the Judicial Branch's programs, including the probation system and the number of agencies that request the data they house. Judge Marroney talked about a recent program the branch is implementing that would allow police officers' data they enter to go directly to the courts rather than having the courts re-enter the same data.

11:41 AM

Judge Marroney talked about the Public Access System and explained that the new system would be tested before the system would actually go into use. He stated that if the program does not work, there is nothing that prohibits the branch from going back to the current vendors, including Axiom and Lexis. Judge Marroney talked about the on-line pay systems that have been implemented by the branch among other programs. Representative Rice asked how much this system would increase the department's current IT workload. Judge Marroney said most of the new system would just add on to the current case management system and stated that the goal is to stop the redundant data entry. Judge Marroney talked about the benefits of having an in-house system as opposed to using an outside vendor.



11:51 AM

Representative Gagliardi said she was concerned about the 266 positions that would be cut and asked whether the 20 new IT hires are already included in that number. Judge Marroney explained that the department is offering the 266 positions and that it would be up to the JBC to decide how that is broken down. He also mentioned that the Public Access System would produce $2.6 million which would fund the staff needed to create the in-house E-filing system, which by the end of 2012 when the agreement with Lexis ends, is expected to bring into the state $9 million. Representative Gagliardi asked about the current outside vendors that are used. Judge Marroney explained that Lexis is the agent under contract until June of this year for the Public Access System and that Background Information Services and Axiom buy court information and sell it to others that want to use that information. He explained that in December of 2012, the contract for the Lexis E-file system is up. Representative Liston mentioned the 266 positions that are proposed to be cut and clarified that the number of probation officer positions that will be cut are actually 93 and not 50. He asked whether this is the right time to implement the in-house system. Judge Marroney responded. Representative Soper stated that the department is already spending money on the current system and if they were able to bring the system in-house the department could do more with the system using the same amount of money. Judge Marroney agreed and stated that they would use same amount of money to bring the system in-house and get the program the department needs.

12:02 PM

Representative Rice announced that the committee would stand in recess until 1:30 p.m.

01:33 PM

Representative Rice called the committee back to order. A map was distributed by the Judicial Department illustrating the proposed fiscal year 2010 court and probation FTE reductions by judicial district and a handout regarding the Judicial IT staffing capabilities (Attachment A).

100310AttachA.pdf

01:34 PM --
Leah Lewis and Dara Hessee, representing the Governor's Office of Information Technology came to the table and stated that they would be happy to answer questions and explained that the office does not have jurisdiction over the Judicial Branch. Representative Rice stated that he recalls people mentioning that OIT has reviewed the system and asked them to comment on their involvement. Ms. Lewis explained that the office has looked at the system at a very high level face value and said that there has not been any in-depth assessment done by OIT and that they have not been a party to the creating the system. Representative Middleton asked whether they have seen this type of situation come up before in other areas of the state where an agency has taken a system in-house that was previously handled by an outside vendor. Ms. Lewis stated that the best practice in a situation like this is to complete an assessment that looks at the people, processes, technology, and costs involved in creating this system and its sustainability. Representative Middleton asked whether OIT could conduct such a feasibility study. Ms. Lewis said they would be happy to help, but ask that it be conducted this summer or that they be allowed to find a third party to help.


01:40 PM --
Marc Milligan and John Nehel, representing Background Information Services, Inc. (BIS), talked about their involvement with the Judicial Branch. Mr. Milligan said as a customer of the Judicial Department, this system could potentially put them out of business. Mr. Milligan explained that they were the first company to get approval to disseminate and collect Colorado court records and got that approval through the state court administrator. He said they went through the first RFP process in 2000 and paid $15,000 a month for unlimited access to the court records, then in 2005, a second RFP was conducted and their costs jumped up to $146,000 to $160,000 a month for unlimited access. Mr. Milligan said they are concerned about the in-house system taking over their clients. He said they were not told about the feasibility study, but found out about it through a third party and then set up a meeting with the Judicial Department. Mr. Milligan said the department wants them to be their customer and pay for the new in-house system.

01:48 PM

Mr. Nehel explained that 85 percent of the Public Access System is internal state access and that BIS, Axiom, and Lexis will pay for that internal use of the system. Representative Gagliardi asked why they were not asked to be involved in the discussions around these systems. Mr. Nehel stated that they are much smaller than the department. Representative Gagliardi asked the witnesses to suggest a possible remedy to the issue. Mr. Nehel responded. Representative Middleton asked them to characterize their customer base and who they are serving and what assurances they would need to stay in business and provide the services they currently provide. Mr. Milligan explained that his consumers range from single users to multi-million dollar companies, including schools, hospitals, and day care centers.

01:55 PM

Representative Liston talked about the feasibility study and how they found out about it since they were not consulted on the issue. Mr. Milligan said he had heard about it through a journalist. Representative Liston asked what the effect of the system would be on their business and how that would impact state revenues. Mr. Mulligan stated that the branch would put up a site of their own and put them out of business. Representative Liston asked whether Mr. Nehel had been told he would be put out of business by the Judicial Branch. Mr. Nehel said the branch stated that they do not need vendors. Representative Stephens asked whether BIS has proprietary information. Mr. Nehel said they have developed a computer system, but they are a customer of Lexis and explained how that works.

02:00 PM --
Jon Burton and Scott Wetzel, representing Lexis Nexis, came up to the table to testify together. Mr. Burton explained that Lexis has not had a chance to share their concerns in person with the department. He explained that Lexis is the current vendor for the state's E-file and Public Access Systems and that they are different systems, each have different contracts, different personnel, and different RFPs. Mr. Burton stated that in the fall of 2008 they were given the feasibility study. He also mentioned that fact that 85 percent of the users of the system are government users and BIS, Lexis, and Axiom will have to pay for the system and the government will not. Mr. Burton stated that once the in-house program starts in July, there is no turning back and that they have not seen anything that would allow them to continue being a customer.

02:04 PM

Mr. Wetzel stated that he drafted Lexis' response to the 2004 RFP and was named the point person when they were awarded the RFP. Mr. Wetzel explained that once they were awarded the RFP they created a government access system. He mentioned that currently one third of the revenues that flow into their system are returned to the Judicial Branch. Mr. Wetzel stated that now that their contract is terminated in July, the relationship between them and Judicial has changed and gave some examples. Mr. Wetzel stated that currently they provide name and case number searches and would like to improve that, but have not been given the chance to innovate in Colorado. He listed the three functions Lexis provides: litigant name and case number searching, litigant alerts, and case tracking on a weekly or monthly basis. He said currently, they are limited to one of those functions in Colorado.




02:12 PM

Representative Liston asked whether they have any incentive to provide the additional services the department is seeking to obtain through the in-house system. Mr. Wetzel said the Lexis Nexis File and Serve Contract required file and serve to develop E-filing in criminal, appellate, and juvenile cases, but that the Judicial Department did not like Lexis' time line and told them to stop development. Representative Liston asked whether they offered an increase in revenues to the department. Mr. Wetzel said they did and explained that currently the department is paid a third of all the revenues and when they offered more, it was rebuffed. Representative Liston asked how much they offered and asked if it was around $3.6 million dollars. Mr. Wetzel said he did not have that information and could not respond. Representative J. Kerr asked how long Lexis has been providing their service. Mr. Wetzel said that they were awarded the Public Access System contract in 2004 and went live in 2005. Representative J. Kerr asked why they think the department wants to take this over. Mr. Milligan said they are unsure of their motivation. Representative Middleton talked about Lexis as a customer and the amount of money they would have to pay to access the system. Mr. Wetzel responded. Representative Bradford read a statement from Mr. Roper. Representative Rice gave some comments about the discussion and asked Judge Marroney if he would like to briefly respond to the witness testimony.

02:19 PM

Judge Marroney returned to the table with Mr. Roper. Judge Marroney addressed the comments from the vendors and the fact that they were not part of the initial discussions. He explained that when they are asked to provide a report to the legislature, the legislature is given that report first and that is what they did. Judge Marroney stated he did met with all three vendors to go over the terms of the contract. Judge Marroney said they do not need a vendor to handle their public access system and that he just wants to be held accountable for the systems they use. He explained that the only reason they used a vendor 10 years ago was because they did not have the capacity for that system, but now they do. Representative Rice gave suggested the parties get together and try to work this issue out. Judge Marroney said they have set up a meeting for next week. Representative Priola said it seems that no one is listening to each other. Judge Marroney commented. Representative Rice noted that the Association of Collection Agencies left a letter of support for the Judicial in-house system.

02:29 PM -- House Bill 10-1166

Representative Kefalas, prime sponsor, presented House Bill 10-1166 concerning the use of plain language in insurance policies. The bill was previously heard in committee on March 3. This bill requires that insurance policies and plans issued or renewed on or after July 1, 2011, be written at or below a 10th grade reading level. For policies and plans longer than 3 pages or 3,000 words, the text must be written in 12 point or larger type and contain an index or table of contents. Insurance companies are required to report readability scores as part of their annual filings with the Division of Insurance in the Department of Regulatory Agencies. An insurance company that violates these requirements commits an unfair or deceptive act or practice in the business of insurance and is subject to fines and penalties by the Commissioner of Insurance. The applicable policies and plans include:


02:32 PM

Representative distributed and explained the following amendments:

100310AttachB.pdf

BILL:HB10-1166
TIME: 02:35:43 PM
MOVED:Gagliardi
MOTION:Moved amendment L.005 (Attachment C), as amended (see following vote sheet for amendment). The motion passed without objection.
SECONDED:Casso
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

100310AttachC.pdf

BILL:HB10-1166
TIME: 02:36:34 PM
MOVED:Gagliardi
MOTION:Moved amendment L.011 which amends Amendment L.005 (Attachment D). The motion passed without objection.
SECONDED:Casso
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

100310AttachD.pdf


BILL:HB10-1166
TIME: 02:37:48 PM
MOVED:Gagliardi
MOTION:Moved amendment L.007 (Attachment E). The motion passed without objection.
SECONDED:Casso
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

100310AttachE.pdf

BILL:HB10-1166
TIME: 02:39:47 PM
MOVED:Gagliardi
MOTION:Moved amendment L.008 (Attachment F). The motion passed without objection.
SECONDED:Casso
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

100310AttachF.pdf


BILL:HB10-1166
TIME: 02:40:31 PM
MOVED:Liston
MOTION:Moved amendment L.009 (Attachment G). The motion passed without objection.
SECONDED:Casso
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

100310AttachG.pdf

BILL:HB10-1166
TIME: 02:41:58 PM
MOVED:Rice
MOTION:Moved amendment L.010 (Attachment H). The motion passed without objection.
SECONDED:Priola
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

100310AttachH.pdf


02:43 PM

Representative Kefalas gave some closing remarks on the bill.
BILL:HB10-1166
TIME: 02:44:46 PM
MOVED:Gagliardi
MOTION:Moved to refer House Bill 10-1166, as amended, to the Committee of the Whole. The motion passed 10-0.
SECONDED:Casso
VOTE
Balmer
Excused
Bradford
Yes
Casso
Yes
Kerr A.
Yes
Liston
Yes
Middleton
Yes
Priola
Yes
Soper
Yes
Stephens
Yes
Gagliardi
Yes
Rice
Yes
Final YES: 10 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS

02:46 PM -- Senate Bill 10-155

Representative Benefield, prime sponsor, presented Senate Bill 10-155. The bill establishes the following requirements for gift cards:

02:55 PM

Representative Benefield responded to questions from the committee regarding the type of cards covered under the bill and who is responsible for paying out the remaining balance of the cards if it is under $5.

02:57 PM --
Aaron Segel, representing COPIRG, testified in support of the bill.

02:59 PM --
Eric Rothaus, representing the State Treasurer's Office, testified in support of the bill. Representative Soper asked how gift cards are purchased and whether there is a fee.


03:00 PM --
Greg Glischinski, representing the AARP, testified in support of the bill. He said the bill is sensible for the consumer and talked about the benefits of the cash return.
BILL:SB10-155
TIME: 03:03:24 PM
MOVED:Gagliardi
MOTION:Moved amendment L.007 (Attachment I). The motion passed without objection.
SECONDED:Bradford
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

1000310AttachI.pdf

BILL:SB10-155
TIME: 03:05:37 PM
MOVED:Middleton
MOTION:Moved to refer Senate Bill 10-155, as amended, to the Committee on Finance. The motion passed 10-0.
SECONDED:Gagliardi
VOTE
Balmer
Excused
Bradford
Yes
Casso
Yes
Kerr A.
Yes
Liston
Yes
Middleton
Yes
Priola
Yes
Soper
Yes
Stephens
Yes
Gagliardi
Yes
Rice
Yes
Final YES: 10 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS

03:06 PM -- Senate Bill 10-116

Representative Rice and Representative Priola, co-prime sponsors, presented Senate Bill 10-116 concerning the reimbursement of costs incurred on change orders in public works contracts. Under SB10-116, any public entity that requires additional work on a construction contract is required to reimburse the contractor's costs on a periodic basis until the change order is complete. Contractors are required to submit an estimate to the public entity before receiving payment. Representative Rice explained the bill and gave some examples of when change orders are used. Representative Priola talked about the changing nature of the construction industry and explained that many projects are done in a design and build fashion, thus more change orders are being used. Representative Soper asked whether the money has to be available prior to the change order being issued. Representative Rice responded, stating that the money does have to be available.

03:10 PM --
Bud Starker, President of Starker Construction Company, representing Building Jobs for Colorado, testified in support of the bill and provided an overview of construction change order procedures. Mr. Starker explained why projects change and what that means for contractors. He said the bill will help contractors' work flow and will provide a sense of certainty, leading to more efficient contracting.


03:12 PM --
Craig Clark, representing Building Jobs for Colorado, testified in support of the bill. He described cash flow issues faced by contractors.
BILL:SB10-116
TIME: 03:16:55 PM
MOVED:Rice
MOTION:Moved to refer Senate Bill 10-116 to the Committee of the Whole. The motion passed 10-0.
SECONDED:Priola
VOTE
Balmer
Excused
Bradford
Yes
Casso
Yes
Kerr A.
Yes
Liston
Yes
Middleton
Yes
Priola
Yes
Soper
Yes
Stephens
Yes
Gagliardi
Yes
Rice
Yes
Final YES: 10 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS

03:17 PM -- Senate Bill 10-158

Representative Rice, sponsor of Senate Bill 10-158, presented the bill. Currently, the Office of Film, Television, and Media, the State Council on the Arts, and the Art in Public Places program are all established within the Colorado Office of Economic Development. However, they are not in the same statutory location. The bill creates a Creative Industries Division within the Colorado Office of Economic Development and reorganizes statutory provisions into a new part. The State Council on the Arts is renamed the Council on Creative Industries and is authorized to establish policies for the council, the office, and the program.

03:20 PM --
Nancy Stalf, the Executive Director of Littleton's Town Hall Arts Center, testified in support of the bill and talked about the benefits it would provide the arts center.

03:22 PM --
Elaine Mariner, representing the Colorado Council on the Arts in the Office of Economic Development, testified in support of the bill. She talked about a study on the industry that Representative Rice referred to earlier that showed 122,000 jobs in 8,000 enterprises that are in creative industries and another 64,000 in creative occupations in noncreative industries, making it the fifth largest employment sector in the state. She talked about the benefits of reorganizing the statutes. Ms. Mariner mentioned a couple people who testified in support of the bill in the Senate that could not attend the meeting today: Jeff Newell, representing Newell Design,and Mike Freeman, representing the City of Fort Collins.


03:30 PM --
Margaret Makar, representing herself, testified in support of the bill. She related her experiences as a film student and said she would like to see the state do something to retain the talent that is here. Ms. Makar talked about the various types of industries that are involved in film making.
BILL:SB10-158
TIME: 03:34:07 PM
MOVED:Rice
MOTION:Moved amendment L.001 (Attachment J). The motion passed without objection.
SECONDED:Casso
VOTE
Balmer
Bradford
Casso
Kerr A.
Liston
Middleton
Priola
Soper
Stephens
Gagliardi
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:SB10-158
TIME: 03:35:03 PM
MOVED:Rice
MOTION:Moved to refer Senate Bill 10-158, as amended, to the Committee of the Whole. The motion passed 10-0.
SECONDED:Priola
VOTE
Balmer
Excused
Bradford
Yes
Casso
Yes
Kerr A.
Yes
Liston
Yes
Middleton
Yes
Priola
Yes
Soper
Yes
Stephens
Yes
Gagliardi
Yes
Rice
Yes
Final YES: 10 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS

03:36 PM

The committee adjourned.