Joint Committee Committee on Capital Development (12/01/2009)

Final
STAFF SUMMARY OF MEETING

COMMITTEE ON CAPITAL DEVELOPMENT

Date:	12/01/2009	ATTENDANCE

Time:	01:34 PM to 04:37 PM	Kopp	*
		McFadyen	X
Place:	SCR 356	Schwartz	*
		Sonnenberg	E
This Meeting was called to order by		Bacon	X
	Senator Bacon	Riesberg	X

This Report was prepared by
	Kori Donaldson
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Overview of FY 2010-11 Capital Requests Revenue Update OSPB FY 2010-11 Capital Projects Presentation Department of Labor and Employment Department of Corrections Department of Human Services		Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only

01:35 PM -- Overview of FY 2010-11 Capital Construction Requests

The committee was called to order. Senator Bacon, chair, provided introductory remarks. Ms. Kori Donaldson, Legislative Council Staff, gave an overview of the FY 2010-11 capital construction requests submitted by state departments and higher education institutions. Committee members received a binder prepared by Legislative Council Staff, containing descriptions of the capital project requests submitted by state departments and higher education institutions (a copy of the binder is on file with Legislative Council Staff). Ms. Donaldson discussed a memorandum prepared by Legislative Council Staff that provides an overview of FY 2010-11 capital construction requests and projected revenue for capital construction (Attachment A). Discussion ensued regarding the status of the Adams County Youth Services Center capital request submitted by the Department of Human Services. Ms. Donaldson continued to brief the committee on the FY 2010-11 capital requests, noting certain differences in request type and project priority, and providing an overview of the information contained in the request binder.

01:45 PM

Ms. Donaldson continued to brief the committee on the FY 2010-11 capital construction requests. Discussion ensued regarding certain projects that were not approved by the Governor's Office of State Planning and Budgeting (OSPB), and the need to fund the Adams County Youth Services Center project. Representative Riesberg referenced a statement concerning the project from an OSPB summary, contained in the request binder (Attachment B). Discussion followed regarding the proper course of action for ensuring the Adams County Youth Services Center project is approved and funded in future years.

01:51 PM -- Revenue Update

Mr. Jason Schrock and Mr. Ron Kirk, both representing Legislative Council Staff, provided an update on revenue available for capital construction for FY 2010-11 from certain cash funds. Mr. Schrock first briefed the committee on the amount of money available for capital from Federal Mineral Lease (FML) revenue. Committee members received a collection of charts providing a forecast of expected FML revenue, and an overview of how these moneys are used to fund state programs (Attachment C). Mr. Schrock discussed the information contained in Attachment C, and explained how FML moneys accrue to certain funds dedicated to capital construction. Ms. Donaldson responded to questions regarding how certificates of participation (COPs) backed by FML revenue will be repaid in future fiscal years.

02:02 PM

Discussion continued regarding the ability of the state to meet COP payment obligations with FML revenues in FY 2010-11 and thereafter. Mr. Schrock discussed trends in the energy market that may lead to increased FML revenue. Mr. Kirk provided an update on limited gaming revenue projections. Committee members received a collection of schematics showing projected limited gaming revenue and how the revenue is distributed (Attachment D). Mr. Kirk provided background on the information contained in Attachment D, including the projection for limited gaming revenue in upcoming fiscal years. Discussion ensued regarding what specific fees and taxes are included under the heading "limited gaming revenue." Mr. Kirk responded to questions regarding device fees that are levied on limited gaming operators.

02:13 PM

Mr. Kirk continued to brief the committee on the limited gaming revenue forecast, explaining how limited gaming revenue is distributed for use on capital construction projects.

02:15 PM -- OSPB FY 2010-11 Capital Projects Presentation

Ms. Lisa Esgar, Deputy Director, OSPB, provided an overview of the FY 2010-11 capital requests forwarded by OSPB to the committee. Committee members received a packet of information on the capital requests recommended by OSPB and revenue sources for capital construction (Attachment E). Ms. Esgar first provided clarification regarding the ability of the state to fulfill its repayment obligations for COPs backed by FML revenue, and the impact of proposed refinancing of some of the state's COPs on the ability of the state to make the payments. Ms. Esgar then discussed other potential COP refinancing opportunities, and responded to questions regarding how COP obligations will be met if revenue falls short of projections.

02:25 PM

Discussion continued regarding the proposed refinance of some of the state's COPs. Ms. Esgar began her briefing on the OSPB FY 2010-11 capital construction recommendations forwarded to the committee, and explained the criteria considered by OSPB in prioritizing its capital construction recommendations. Discussion ensued regarding the status of the Department of Revenue's Colorado Integrated Tax Architecture project, and the purpose of the project. Ms. Esgar returned to discussing OSPB's prioritization process, and clarified that most of the state-funded capital requests submitted by higher education institutions were not reviewed by OSPB. Ms. Esgar responded to questions regarding the prioritization of higher education projects. Ms. Esgar highlighted three capital projects to be funded in FY 2010-11 with federal stimulus moneys under the American Recovery and Reinvestment Act (ARRA) of 2009.

02:35 PM

Ms. Esgar discussed three capital projects requested by the Department of Military and Veterans Affairs to construct new National Guard armories, and provided detail on the source of funds for the cash-funded portions of the projects. Ms. Esgar confirmed that the National Guard owns properties that can be sold to repay monies used from the Veterans Trust Fund for the requested FY 2010-11 projects. Ms. Esgar provided an overview of proposed refinance of the COP payments for the Colorado State Penitentiary II High-Custody Expansion project and the Various Higher Education Projects -- November 2008 Issuance to be repaid from FML revenue. Ms. Esgar next explained OSPB's direction to state agencies to include in their capital budget proposals a building maintenance fund to address future controlled maintenance needs.

02:46 PM

Ms. Esgar continued to walk to the committee through Attachment E and addressed earlier concerns regarding future funding for a Department of Human Services project to replace the existing Adams County Youth Services Center. She summarized the consolidation of ongoing cash projects into fewer project requests by the Department of Natural Resources, Division of Parks and Outdoor Recreation and Division of Wildlife. Ms. Esgar reviewed the three priority lists compiled by OSPB, contained in Attachment E. Ms. Esgar addressed a question regarding the 100 percent federal or cash funds priority list on page 3 of Attachment E.

02:56 PM

Ms. Esgar continued her presentation of the OSPB priority lists. She reiterated that OSPB did not review all the submitted higher education state-funded requests. Discussion ensued about the higher education capital construction projects priority list on page 4 of Attachment E. Ms. Esgar outlined OSPB's calculations of projected available revenue from the Capital Construction Fund for FY 2010-11.

03:04 PM -- Department of Labor and Employment

Mr. Mahesh Albuquerque, Director, Division of Oil and Public Safety, and Mr. Scott Winters, Enterprise System Support Manager, both of the Department of Labor and Employment, presented one FY 2010-11 capital request and discussed future capital need for the department. Mr. Winters began by briefly addressing the department's future capital need. Mr. Albuquerque presented the FY 2010-11 request for the Consolidated Enterprise System project. Committee members received a copy of a letter regarding the division's outdated computer system (Attachment F). Mr. Albuquerque addressed questions about the source of funds for the project, and explained which fees generate revenue for the cash funds to be used for the project. Discussion continued about the source of funds for the project and the appropriate use of fees.

03:14 PM

Mr. Albuquerque addressed a concern about the project and the decision by the division to contract for the creation of single, consolidated system.

03:16 PM -- Department of Corrections

Mr. Aristedes Zavaras, Executive Director, and Mr. Karl Spiecker, Director of Finance and Administration, both of the Department of Corrections, presented two FY 2010-11 requests and the department's five-year projection of need. Director Zavaras explained that the department's main goal is to manage risk, and that in order to succeed in managing risk the department strives to put the right offender in the right bed, and provide him with the right resources. Director Zavaras continued his presentation by discussing the rate of decline in the prison population during the first few months of FY 2009-10. He next addressed the newly implemented early release program and said that the decrease in the corrections population is not a result of this new program. He explained that the early release program does partially address the department's need to find savings in its budget, but more importantly the program is evidence-based and possible because offenders have been provided with the right resources, including major support at the time of their release.

03:25 PM

Director Zavaras continued to discuss the early release program. He said that the department typically releases about 900 prisoners a month and that the additional parolees released pursuant to the early release program are a small fraction compared to the total number of parolees. Director Zavaras next addressed the growing incidence of violence in state prisons. He said that in the last nine years, the gang population in the state's prisons has increased about 88 percent, and that as of November 30, 2009, prison personnel have identified about 9,500 gang members and gang affiliates among the prison population. Director Zavaras continued to provide the committee with information regarding the increased incidence of violence in the state's prisons and responded to a question regarding available beds for close-custody offenders.

03:37 PM

Discussion ensued about how to share the content of Director Zavaras' presentation with a wider audience. Director Zavaras told the committee that public safety will remain the department's top priority and reiterated that the early release program was a department plan before the advent of an economic recession. Discussion turned to the savings realized because state personnel served as general contractor for the Colorado State Penitentiary II High-Custody Expansion project.

03:47 PM

Mr. Spiecker presented two FY 2010-11 requests including: 1) Colorado State Penitentiary II, High-Custody Expansion (COP Project); and 2) Correctional Industries -- Miscellaneous Small Projects. Mr. Spiecker also gave a brief overview of the department's five-year projection of need and explained that this plan may change in future years because of the slowing growth rate of the prison population. Senator Bacon reminded the committee that federal dollars will be spent to refurbish the State Capitol Cafe and that Colorado Correctional Industries will be responsible for reupholstering and/or replacing the furniture. Mr. Spiecker responded to several questions regarding Corrections Expansion Reserve Fund (CERF) revenue earned for capital projects pursuant to House Bill 07-1040, which eliminated refunds for cash bonds paid by defendants that are subsequently deported.

03:58 PM

Discussion continued about CERF revenue earned pursuant to House Bill 07-1040.

04:00 PM -- Department of Human Services

Mr. Reginald Jefferson, Deputy Executive Director, Operations and Financial Services, Department of Human Services (DHS) described the department's prioritization process for capital projects and explained that specific needs will be presented according to division. Committee members received an overview of the DHS presentation (Attachment G). Mr. Ken Cole, Director, Office of Behavioral Health and Housing, DHS , presented two FY 2010-11 requests, including: 1) Suicide Risk Mitigation; and 2) F Cottage Life Safety Improvements. He told the committee that both projects will use ARRA dollars for FY 2010-11. Mr. Cole addressed a question about the project schedule for the F Cottage Life Safety Improvements project and explained that DHS hopes to commence the next phase as soon as possible because ARRA funding is only available through September 2011. Mr. Bradford Membel, Director, Division of Facilities Management, DHS, came to the table to address a question about whether hardware developed by DHS personnel and used for suicide risk mitigation has been patented.

04:12 PM

Mr. Cole continued his presentation and gave a five-year projection of need for the Office of Behavioral Health and Housing, of which the primary component is to conduct master planning at both the state's mental health institutes.

04:19 PM

Mr. John Bernhart, Director, Division of Child Support Enforcement, DHS, presented a FY 2010-11 request for the Automated Child Support Enforcement System Migration and Modernization project. Mr. Bernhart provided background on the Child Support Enforcement program and explained that the existing software systems used by the program are 23 years old and are written in an old software language that is hard to support. Mr. Bernhart responded to a question about the source of federal funds and planned future requests for the project.

04:24 PM

Ms. Gale Klingman, Manager, Program Performance and Information Management Services, Division of Vocational Rehabilitation, DHS, presented a FY 2010-11 request for the Colorado AWARE VR Case Management System project. She explained that the division hopes to customize the software to meet the state's needs and stated that most planning documents have been completed and that a project manager has been hired.

04:26 PM

Mr. Membel presented a five-year projection of need for Division of Facilities Management. He told the committee that some DHS facilities are more than 100 years old. Mr. Membel described a possible future capital renewal project.

04:28 PM

Ms. Susan Hunt, Associate Director, Office of Veterans and Disability Services, presented a five-year projection of need for her department and identified about $40 million in future capital need. In response to a question, Ms. Hunt said there are about 4,000 adults with developmental disabilities served by the system. Ms. Hunt addressed a question about community involvement with various programs.

04:32 PM

Ms. Viki Manley, Director, Office of State and Veterans Nursing Homes, presented a five-year projection of need for her office. Ms. Manley briefly spoke about projects at the Fitzsimons and Homelake Domiciliaries.

04:35 PM

Mr. John Gomez, Director, Division of Youth Corrections, presented a five-year projection of need for his division and explained that the division's primary goal is to construct a new northeast region Youth Services Center. Mr. Gomez also summarized the need for an addition to the division's Sol Vista facility.

04:37 PM

The committee adjourned.