Preparing Government for the 21st Century:

Initiating the Integration of State Management Systems

Final Report

Joint Interim Subcommittee on State Management Systems

November 1996

Membership

Senator Mack Cole (R)
Presiding Officer
Senator Dorothy Eck (D)
Senator Delwyn Gage (R)
Senator Greg Jergeson (D)Representative Deb Kottel (D)
Vice Presiding Officer
Representative Peggy Arnott (R)
Representative Mike Kadas (D)
Representative Karl Ohs (R)

Staff

David D. Bohyer, Study Coordinator
Lee B. Heiman, Jr., Attorney
Christen Tecca, Secretary

Published by
Montana Legislative Services Division
State Capitol, Room 138
Helena MT 59620-1706
PHONE: (406) 444-3064
FAX: (406) 444-3036
INTERNET (Home Page): <http://leg.mt.gov/>

Robert B. Person, Executive Director
David D. Bohyer, Research Director
Gregory J. Petesch, Legal Director

TABLE OF CONTENTS

SENATE JOINT RESOLUTION NO. 23

Preparing Government for the 21st Century:
Initiating the Integration of State Management Systems

  Issue 16: Intergovernmental:
   State Enterprise Environment

EXHIBIT A

A JOINT RESOLUTION OF THE SENATE AND THE HOUSE OFREPRESENTATIVES OF THE STATE OF MONTANA REQUESTING AN INTERIMSTUDY AND PLANNING PROCESS TO PREPARE MONTANA STATEGOVERNMENT MANAGEMENT SYSTEMS FOR THE 21ST CENTURY; ANDREQUIRING A REPORT TO THE 55TH LEGISLATURE.

 WHEREAS, the state has enacted, over a number of years, statutesgoverning state fiscal and personnel management and has amended the statutesto reflect varying theories of management and budgeting; and
 WHEREAS, the statutes that have resulted and that currently exist areinternally inconsistent and unclear in many instances; and
 WHEREAS, modern information technology offers an opportunity tointegrate closely related but, at the present time, mostly separate systemspertaining to fiscal and personnel management, including accounting, budgeting,personnel and payroll, purchasing, and property management and control; and
 WHEREAS, these same information technology tools encourage usingprinciples of business process reengineering to achieve real efficiencies byredefining what work is done in addition to how it is done; and
 WHEREAS, effectively managing the transition to a fully integrated andreengineered set of management systems requires thorough planning at boththe policy and implementation levels, with careful attention to the role of newand legacy systems; and
 WHEREAS, major improvements in the core management support systemsof state government offer the most promising opportunities to improve overallgovernment operation that are available today and to truly prepare governmentfor the 21st century.

NOW, THEREFORE, BE IT RESOLVED BY THE SENATE AND THE HOUSE OFREPRESENTATIVES OF THE STATE OF MONTANA:
 That an appropriate interim committee be assigned to study:
 (1) the laws governing state personnel, finance, and asset management,with the goal of proposing revisions that provide clear, internally consistent, andsimplified language based upon clear and consistent goals, while ensuring thatthe state and its agencies are able to maintain strict accountability for bothstate and nonstate assets entrusted to the state; and
 (2) opportunities for and advantages of installing an integrated system ofasset management tools by employing an economical and effective transitionfrom currently nonautomated or automated but not integrated legacy systemsto a fully integrated, automated set of systems and an evaluation of what, ifany, statutory changes and other legislative actions would be required tosupport such a transition.
 BE IT FURTHER RESOLVED, that the interim committee form an activeworking group of state management and information system professionals,including personnel from the Department of Administration, the Office of Budgetand Program Planning, the Office of Legislative Fiscal Analyst, and the Officeof the Legislative Auditor, as well as separate user groups, to meet separatelyand with the committee to identify problems and opportunities and to advise thecommittee regarding potential solutions and planning details.

i

 BE IT FURTHER RESOLVED:
 (1) That the interim committee present a report and options forconsideration to the 55th Legislature and to the Governor.
 (2) That the interim committee include with its options recommendations forthe general revision of the laws governing state fiscal and personnelmanagement.
 (3) That the interim committee provide an estimated schedule by which atransition to fully integrated, automated asset management systems could beeffected, along with an assessment of legislative actions required to support theschedule.

-END-

ii PREFACE

Information technology. These words can mean anything from telephony tofibre optics to microchips to the Internet; their impact is a phenomenon thatcannot be ignored. The Internet alone has been described by some as thesingle greatest advancement since Gutenberg built the printing press. Theinformation revolution is with us, gaining strength and speed at alarming rates. Continuing developments in information technology present both opportunitiesand challenges to individuals, business and industry, education, governments,and others.

For the State of Montana, information technology and the employees using ithave been the cornerstones of increases in productivity. As governmentalresponsibilities have grown at the state level, as public programs have becomeincreasingly complex, and as citizens have had and continue to have both higherdemands and expectations of public entities, it is largely the effects oftechnology that have allowed greater productivity and efficiency.

That said, the basic constitutional requirements for the accountability of stateassets have not changed in nearly a quarter century. However, theconstitutional fundamentals have been translated into numerous requirements,principles, practices, and so on by any number of legislators, managers,accountants, auditors, and others having an interest in the state's financialaffairs. Furthermore, an increasingly interested, some might say suspicious,public has increased its demands for information about government affairs ingeneral and fiscal affairs in particular and has also increased its capacity toinspect and analyze that information.

As the end of the millennium approaches and the glimmer of the 21st centurygrows ever brighter on the horizon, it may be inevitable that the capabilities ofinformation technology will merge with the needs and demands for informationon the management of state assets. Although a confluence of technology andaccountability is predictable, the force, speed, and bearing of that confluenceare left largely to speculation. With some focused and determined planning,however, an opportunity for directing the inevitable change exists.

Recognizing the need to integrate the state's information technology systemswith each other, to provide enhanced accountability of the state's assets, andto establish the philosophical and legal foundations upon which practicalimplementation can occur, the 54th Montana Legislature adopted Senate JointResolution No. 23 and commissioned the Joint Interim Subcommittee on StateManagement Systems (Committee). Working to meet those needs, theCommittee labored diligently to lay the groundwork for continued progresstowards integration, accountability, and a vision for the 21st century. It choseto undertake its work in partnership with state professionals having expertisein information technology, budgeting, accounting, auditing, and themanagement of state assets, including personnel. That partnership workedwell, with the benefits of the collaboration accruing to the Legislature, theExecutive Branch, the Judiciary, and, perhaps unintentionally, localgovernments as well.

iii

In concluding its work for the 1995-96 interim, the Committee recognized thatit had taken only the first steps in this journey. There is much work to be done,some of which must be started immediately and more that will be ongoing. Bytaking a leadership role in embracing the challenges of information technologyin the 21st century, the 55th Legislature can continue and enhance the progressmade so far.

iv ACKNOWLEDGMENTS

The accomplishments of the Joint Interim Subcommittee on State ManagementSystems would not have been made without the substantial and significantcontributions of scores of people. Although all of those people deserveacknowledgment, several must be specifically recognized. The Committee givesspecial thanks to the following individuals:

 * Ms. Connie Griffith, Administrator, Accounting and Management SupportDivision, Montana Department of Administration, and Cocoordinator ofthe SJR 23 Accounting Task Force
 * Ms. Linda Belflower, Supervisor, Computing Policy and DevelopmentSection, Montana Department of Administration, and Cocoordinator ofthe SJR 23 Data Management Task Force
 * Ms. Taryn Purdy, Principal Analyst, Legislative Fiscal Division, andCocoordinator of the SJR 23 Budgeting Task Force
 * Mr. Steve Bender, Assistant Budget Director, Governor's Office ofBudget and Program Planning, and Cocoordinator of the SJR 23Budgeting Task Force
 * Mr. Gordon Morris, Executive Director, Montana Association of Counties(MACo), and Cocoordinator of the SJR 23 Data Management Task Force
 * Mr. Jim Oppedahl, Administrator, Computer Services and PlanningDivision, Montana Department of Justice, and Cocoordinator of the SJR23 Data Management Task Force
 * Mr. Scott Seacat, Legislative Auditor, and Cocoordinator of the SJR 23Accounting Task Force

Furthermore, because of the partnership approach adopted by the Committeeand the Committee's reliance on the resident expertise of state governmentprofessionals, special thanks also goes to the members of the three workinggroups commissioned by the Committee: the Accounting Task Force; theBudgeting Task Force; and the Data Management Task Force.

Membership of the Accounting Task Force: Representative Karl Ohs, Senator Greg Jergeson, Connie Griffith (Administration), Scott Seacat (LAD), BillSalisbury (MDOT), Pat Chenovick (Judiciary), Laurie Neils (UniversitySystem), Terry Atwood (Administration), Karen Munro (Justice), Bill Wells(DPHHS), David Clark-Snustad (FWP), Marvin Eicholtz (Administration),Gordon Morris (MACo), Beverly Gibson (MACo), Rosie Keller (UofM), KathyFabiano (OPI)
Membership of the Budgeting Task Force: Senator Del Gage, Representative  Mike Kadas, Taryn Purdy (LFD), Steve Bender (OBPP), Terry W. Johnson(LFD), Judy Paynter (Revenue), Mark Cress (Administration), Pat Chenovick(Judiciary), Tony Herbert (Administration), Kathy Fabiano (OPI), Laurie Neils(University System), Curt Nichols (OBPP), Beverly Gibson (MACo)

v

Membership of the Data Management Task Force: Representative Deb Kottel, Representative Peggy Arnott, Gordon Morris (MACo), Scott Buswell (OPI), Doug Kosty (OPI), Pat Chenovick (Judiciary), Larry Finch (Revenue), TomMulvaney (LSD), Jim Oppedahl (Justice), Steve Hellenthal (YellowstoneCounty), Judy Jones (Revenue), Bill Baldus (Gallatin County), Karen Hruska(Lewis and Clark County), Linda Belflower (ISD, Administration), Jeff Brandt (ISD, Administration), Dan Mossman (ISD, Administration)

vi

Preparing Government for the 21st Century:
Initiating the Integration of State Management Systems

Committee on State Management Systems

The Joint Interim Subcommittee on State Management Systems (Committee)was created through the adoption of Senate Joint Resolution No. 23 (SJR 23)of the 54th Legislature. Composed of four members of the Senate and fourmembers of the House of Representatives and equally divided by politicalaffiliation, the Committee approached its challenge with an abundance of energyand a modicum of trepidation.

Over the course of the 1995-96 interim, the Committee met seven times. Meeting agendas covered topics ranging from an overview of "business processreengineering" principles to regular reports from task forces commissioned bythe Committee to a review of the MT PRIME (Montana Project to Reengineer theInformation Management Environment) commissioned by the Department ofAdministration.

Mission, Goals, and Objectives

Mission

To ensure a strategic approach to the charge given under SJR 23, theCommittee adopted a mission statement and sets of goals and objectivesdesigned to accomplish the mission. As adopted, the Committee's missionstatement reads:

 It is the mission of the SJR 23 Interim Joint Subcommittee on StateManagement Systems for the 21st Century to present a report andoptions for consideration to the 55th Legislature and to the Governor,including its options and recommendations for the general revision ofthe laws governing state fiscal and personnel management, providingan estimated schedule by which a transition to fully integrated,automated asset management systems could be effected, along with anassessment of legislative actions required to support the schedule.

This mission statement, as enhanced by the additions cited below, guided theCommittee throughout the interim. To accomplish its mission, the Committeeagreed to study:

1. laws governing state personnel, finance, and asset management, with thegoal of proposing revisions that provide clear, internally consistent, andsimplified language based upon clear and consistent goals, while ensuringthat the state and its agencies are able to maintain strict accountability forboth state and nonstate assets entrusted to the state;

2. opportunities for and advantages of installing an integrated system of assetmanagement tools by employing an economical and effective transition fromcurrent nonautomated or automated but not integrated legacy systems toa fully integrated, automated set of systems and to evaluate what, if any,statutory changes and other legislative actions would be required to supportsuch a transition.

The Committee also chartered three active working groups, called task forces,composed of Committee members and state management and informationsystem professionals, including personnel from the Department ofAdministration, the Office of Budget and Program Planning, the LegislativeFiscal Division, and the Legislative Audit Division, as well as separate usergroups. The working groups met separately and with the Committee to identifyproblems and opportunities and to advise the Committee regarding potentialsolutions and planning details.

In chartering the task forces, it was the Committee's intent that each taskforce:

1. use, to the maximum extent possible, the work of other working groupswithin state government (and elsewhere, if applicable) that were addressingrelevant issues;

2. approach its work with the following primary objective: Develop a new,integrated asset management system, recognizing that business processreengineering precedes system development.

3. within its domain, work to answer the following questions for each issue oroption considered:

 * What are the short- and long-term advantages and disadvantages ofpursuing a given option?
 * Does relevant "off-the-shelf" software exist? If so, what platform doesit run on, and what is the cost? What emerging technologies areinvolved?
 * What is the return on investment if this option is implemented?
 * What are the costs involved with the transition from the old,nonintegrated systems to an integrated system?

4. assess: what data is needed by whom and for what purposes; data needsthat are unmet; data requirements, e.g., reports, that are unnecessary,unused, or unusable; and data that could, should, or must be shared, andhow data sharing can be facilitated.

In conjunction with the adopted mission statement, the Committee served asan executive committee for establishing and monitoring the overall project andfor coordination and clearinghouse functions within the context of and for thepurposes stated in SJR 23.

Goals

In carrying out its mission, the goals of the Committee included:

* reviewing and coordinating study plans and work schedules developed bythe budgeting, accounting, and data management task forces and ensuringthat projects undertaken by any of the task forces were coordinated withthe study plan, work schedule, and meeting schedule adopted by theCommittee;

* allocating sufficient resources, including those available to the ITAC(Information Technology Advisory Council), ITMG (Information TechnologyManagers Group), and ISD (Information Services Division, Department ofAdministration) and to each of the task forces to ensure that theirrespective missions can be accomplished effectively and efficiently;

* ensuring that the issues contemplated in SJR 23 were appropriatelyaddressed by the task forces with minimal overlap of jurisdiction andduplication of effort;

* providing guidance to the task forces as necessary or appropriate, includingassigning unforeseen issues to the appropriate task force for study, optionidentification, and recommendations if advised;

* addressing such other issues, consistent with SJR 23, as the members ofthe Committee would identify; and

* reporting to the other task forces on a regular basis with the purposes ofenhancing overall understanding, identifying issues in need of study by theother task forces or by the Committee, coordinating recommendations, andproposing options for further consideration.

In specific terms, the Committee's goals and objectives were clarified andadopted as detailed below.

1. Prepare a bill for recommendation to the 55th Legislature that will generallyrevise and clarify the laws relating to the management of the state'spersonnel, financial, and other assets.

 Objectives

 * Identify unclear, inconsistent, contradictory, or anachronistic statutorylanguage and revise it to provide clarity and consistency.
 * Identify statutory language that is unnecessarily restrictive or directiveor that contains policy that inhibits the flexibility and adaptability of statemanagement systems.
 * Revise statutory language to ensure accountability for the managementof state assets in the 21st century.

 * Draft a bill that is a stand-alone product, meaning that it achieves thegoal on its own and without regard to a transition to automated,integrated state management systems.

2. Develop a vision of automated, integrated state asset management systemsfor the 21st century.

 Objectives

 * Identify policy and management needs in regard to: accounting;personnel; property acquisition, accountability, and maintenance;purchasing; payroll; and warrant writing.
 * Identify policy and management needs in regard to legislative andexecutive budgeting and revenue estimating.
 * Describe policy standards for state systems that can form the basis forintergovernmental integration.

3. Develop a transition schedule to implement automated, integrated stateasset management systems.

 Objectives

 * Designate a target date for the full implementation and operation of theautomated, integrated management systems envisioned.
 * Identify a preferred approach to executing the transition. Approaches tobe considered might include:
  a. using available resources within current staffing, recognizing thatadditional resources are likely to be necessary;
  b. expanding the current staff contingent or creating a special staffingcomponent to accommodate the needs of the project;
  c. "outsourcing" the project;
  d. combining components of the approaches identified under a., b., andc., above;
  e. developing additional approaches.
 * Develop budget targets for FY 1998-99 and FY 2000-01 that are:
  a. sufficient to complete the project by the target date identified;
  b. likely to be acceptable to both the Executive Branch and Legislature;and
  c. consistent with the enterprise concept of state systems.

4. Design a core policy group to continually and consistently: address issuesof system transition, automation, integration, and other matters; andadvocate the systems, beginning with the transition and continuing throughbudgeting toward full implementation and operation.

 Objectives

 * Identify key legislators who can and will represent the goals and interestsof the Legislature and who are likely to provide continuity.
 * Identify key Executive Branch personnel who can and will represent thegoals and interests of the executive and who are likely to providecontinuity.

5. By December 1, 1996, deliver to the 55th Legislature and the Governor areport that fulfills the goals of the Committee.

Committee Activities

Introduction to Issues

At the Committee's organizational meeting, August 21, 1995, the memberswere initiated to the issues contemplated in SJR 23 and expressed in theCommittee's goals and were introduced to state government professionalshaving significant knowledge and understanding of the issues.

Using an approach somewhat foreign to legislative committees, Committeemembers and professionals from legislative and executive agencies worked inpartnership as members of the same team under the auspices of SJR 23. Intheir roles as partners, legislators and staff alike took a proactive posture inidentifying issues and worked collaboratively to identify options for Committeeconsideration.

Current Laws and Potential for Revision

There are a variety of reasons that state management exists at all, but amongthe reasons is the legal framework within which state government operates. This framework consists, primarily, of the Montana Constitution, state statutes,and administrative rules, but also must recognize external requirements imposedby such entities as the federal government and sellers and purchasers ofinstruments of state debt. Some of the legal guidelines are discussed below.

Montana Constitution: Fundamentally, the constitution requires strictaccountability for all money received and spent by government (Article VIII,section 12). Policy principles included also provide for appropriationrequirements, a balanced budget, control of investments, state debt limitations,and so on (Article VIII generally). The constitution requires the Governor tosubmit a budget setting forth anticipated revenue and expenditures for the state(Article VI, section 9). The Legislature is responsible for appropriations that donot exceed anticipated revenue (Article VIII, section 9). Fundamentally, aboveall else, existing laws and proposed revisions must be judged against theseconstitutional principles.

State statutes governing state finance: Title 17, MCA, governs most of statefinance, including assigning accounting responsibilities and the treasury fundstructure, budgeting and appropriations provisions, disbursements andexpenditures, and other related matters. Most of these statutes are fairly soundin general, but with amendments having been made piecemeal over the years,it was recognized that they are much in need of review for clarity andsufficiency. Statutory detail exists that reflects policies no longer in vogue orthat may no longer be necessary. Laws governing budget systems and programplanning particularly fall into this category.

On the other hand, there are some issues that have never been effectivelytreated in the laws that can be remedied through a general revision. Forexample, the Legislature has recognized over the years that it is impractical andunnecessary to attempt to appropriate specifically all money to be spent bygovernment and thus has developed ways around the problem for somespending and somewhat ignored other issues. There appeared to be a clearneed to recognize a means for strict accountability in managing nontreasury-nonappropriated funds. By clearly identifying what money must pass throughthe treasury and what money can be managed outside the treasury, thenecessary accountability, flexibility, and constitutionality can be directlyachieved. Significant policy and systems changes were contemplated in orderto fully implement such a change. However, the first step was deciding thestatutory policy that those systems must be designed to implement.

Issues Overviews

As a first step, state staff professionals provided overviews of some of themajor management systems operating within Montana state government. Thefollowing list identifies a few of the state employees who became activepartners in the study, as well as the topical areas represented through theirknowledge and understanding.

 * Linda Belflower, Supervisor, Computing Policy and Development Section,Montana Department of Administration: Information technology overview
 * Connie Griffith, Administrator, Accounting and Management SupportDivision, Montana Department of Administration: SBAS (State Budgetingand Accounting System); PAMS (Property Accountability andManagement System); Warrant Writer and debt collection systems
 * Mark Cress, Administrator, Personnel Division, Montana Department ofAdministration: PPP (Payroll/Personnel/Position Control) System
 * Steve Bender, Assistant Budget Director, Governor's Office of Budgetand Program Planning: EBS (Executive Budget System) andappropriations management
 * Terry Johnson, Principal Analyst, Legislative Fiscal Division: LBS(Legislative Budget System) and appropriations oversight
 * Judy Paynter, Principal Tax Administrator, Montana Department ofRevenue: Systems associated with revenue collection, accountability,and distribution
 * Bill Salisbury, Administrator, Administration Division, MontanaDepartment of Transportation: Information management systems in theDepartment of Transportation; data base tools/applications
 * Mary Bryson, Deputy Legislative Auditor, Legislative Audit Division:Associated issues of state systems and applications
 * Taryn Purdy, Principal Analyst, Legislative Fiscal Division: Associatedissues with state budgeting systems

Initial presentations on state management systems and information technologyissues confirmed the Committee members' initial trepidation. Positioning thestate to effectively and efficiently manage its business processes was amonumental task composed of policy considerations, strategic and tacticalvision, management issues, information technology factors, cultural andattitudinal realignment, capacity assessment and development, and a host ofother issues, not the least of which was funding.

As the study progressed, largely through the work of the three task forces, itbecame clear to all parties that the issues identified or contemplated in SJR 23would take more time and resources to examine and resolve than had beenallocated or even anticipated. Consequently, available resources were targetedon issues critical to transition and necessary to progress towards implementingsystems that would accommodate 21st century demands.

Focus on Priorities

By the Committee's second meeting, in September 1995, there was looseconsensus that three task forces should be created and commissioned toaddress the following subjects:

 *  budgeting and the use of systems to support the functions and practicesassociated with budgeting;
 *  accounting and the use of systems to support the function and practicesassociated with accounting. This subject area would also include anexamination of the treasury fund structure, with the objective ofrewriting current Montana statutes to eliminate archaic, unusable, andconfusing provisions and constructing new provisions that aredescriptively clear and flexible enough to accommodate whateveraccounting/budgeting schemes that come into vogue in the future. Anynew fund structure should clearly identify and provide for themanagement of nonappropriated funds. There should also be provisionsfor the integration of the state's main accounting system(s) withspecialized systems, primarily enterprise funds. Some attention shouldbe invested in examining PAMS and in considering the automatedmanagement/accountability of the state's real and personal propertyassets and securities that are "investments" of public funds from stateand local sources.
 *  revenue estimating and the use of systems to support the functions andpractices associated with revenue estimating;
 *  personnel, including the relationships of the state's accounting andbudgeting systems with the PPP system. Current needs, uses, andlimitations of the PPP and other personnel systems should be considered,and the system(s) should be revised or a new system constructed toaccommodate the needs and uses for the 21st century.
 *  purchasing, defining the means and methods of such matters as bidletting, purchasing, electronic transfers, etc. Integration of thepurchasing system with the state's accounting, budgeting, propertymanagement, and warrant writing systems would also be a part of thissubject area.
 *  managers/users of systems, involving the people who work with thesystems, who update or maintain the data or the hardware or software,and who use the information for management purposes. An assessmentof what information is necessary and why it is necessary would fall intothis subject area.
 *  technical implementation, including indepth consideration of purchasingand maintaining optimal asset management systems, data conversion,enterprise and specialized software applications, data conversion andmaintenance, transition and phasing schedules, employee training, andthe like.
 *  intergovernmental integration of systems, including relationshipsbetween state and federal agencies' systems, state and state agencies'systems, and state and local agencies' systems. Some assessmentshould be provided of the state's systems and the systems employed bythe Montana University System, including recommendations for 21stcentury integration. The issues of hardware and softwarecompatibility/integration would fall into this subject area, as would allmatters of data integrity.

Task Forces Commissioned

With unanimous votes of the Committee, three separate task forces werecreated and assigned principal responsibility for specific issues from amongthose identified.

The Accounting Task Force (ATF) was chartered to examine the subjectscomprising accounting and purchasing. It was agreed that the subjects are soclosely related that splitting them among task forces would becounterproductive and that coordination with the other task forces would benecessary.

The Budgeting Task Force (BTF) was commissioned by the Committee toexamine the subjects comprising budgeting, revenue estimating, and personnelsystems. The subjects were recognized as sufficiently related to allow theefficient consideration of matters related to both, while acknowledging thateach subject has specific, perhaps unique, characteristics. As with the ATF,coordination with the other task forces would be necessary.

The Data Management Task Force (DMTF) was constituted to consider thesubjects encompassing managers/users of systems, technical implementation,and intergovernmental integration. These subject areas were combined becauseof the associated budgeting, phasing, coordination/cooperation, andjurisdictional (independence/dependence) issues.

Contributions of the Task Forces

It would be difficult to overemphasize the contributions of the task forces. Witheach task force meeting a half-dozen times or more between December 1995and September 1996 (in addition to the full Committee meetings) and with taskforce subgroups working on specific issues between task force meetings, theircontributions were significant, substantial, fundamental, and integral to thework of the Committee.

In achieving their own respective missions, goals, and objectives in support ofthe larger goals of the Committee, the task forces made regular reports to theCommittee members at meetings throughout the interim. The insights andinformation provided by the task force members were invaluable to theCommittee as it worked toward developing options and recommendations forconsideration by the 55th Legislature and others.

The nuggets of the task forces' work have been mined and concentrated in thisreport, especially as described in the "Findings, Conclusions, andRecommendations" section that follows. For the most interested reader, a copyof the final report and recommendations of each of the task forces is availablethrough the Legislative Services Division. Additionally, an array of relevantmaterial, largely appendices, submitted to the Committee through the taskforces is also available through the Division.

Findings, Conclusions, and Recommendations

After developing a foundation of knowledge and understanding during the fallof 1995, the Committee, working through the task forces, examined in depththe several topical areas that became the focus of the study of statemanagement systems. From January through September 1996, the Committeemet five times to hear reports from the task forces and others. These reportsenhanced overall understanding of: state management and information systems;the interrelationships of state-state, state-local, and state-federal systems; themutual and distinct management needs of state and local governments, ofpolicymakers, of program administrators, managers, and line staff, and ofinformation technology professionals; the pace of technological change andchanges in demands for and expectations of information; the rationale for"reengineering" the state's business processes rather than merely automatingcurrent procedures; the advisability of developing and implementing strategicplans to accommodate managing state government information regardingfinances, personnel, and other assets and to finance information technologytransitions; and a host of related issues.

As the respective task forces delivered their final reports, the Committeeachieved a position through which decisions could be made on the findings,conclusions, and recommendations of the task forces.

The following list is the culmination of the work of the task forces and the fullCommittee. Each recommendation discussed below was initiated by one of thetask forces but is stated as it was adopted by the full Committee.

Issue 1 --  Systems Reengineering: Consultation on Long-Term Options

 Recommendation 1

 The Committee recommends that the Department of Administration hire aconsultant to provide long-term, architecturally and technologically soundoptions for reengineering the state's financial management systems. Theoptions should include flexibility to accommodate future changes in thestate's infrastructure and strategic initiatives as state government changes. (ATF; Recommendation #1.)

 Discussion

 The ATF examined the current status of the state's asset managementsystems within the context of current needs, current resources (human,technological, and financial), future demands, and technological advances. Those involved in the investigation concluded that a comprehensivereengineering effort should be undertaken as soon as possible, but that thestate, i.e., the Department of Administration, was not positioned to do it"in-house". Consequently, the ATF also concluded that the Departmentshould contract with appropriate consultants to develop a global view ofpotential technological enhancements to existing management systems.

Issue 2 -- Systems Reengineering: Consultation on Long-Term Options --Contract Provisions

 Recommendation 2

 The Committee recommends that the contract provisions require theconsultant to review the following components of the state's financialmanagement systems: (ATF; Recommendation #2.)

 * Financial reporting system
 * Procurement
 * Human resources
 * Budgeting systems
 * Accounting systems

 * Fixed assets
 * Cash management (accounts payable/receivable)

 Recommendation 3

 The Committee recommends that the contract provisions require theconsultant to prepare a report that describes a process for the design andimplementation of a reengineering effort for the state's financialmanagement systems. The report should include the results of a "feasibilitystudy" initiated and completed by the consultant, including cost/benefitanalyses, anticipated efficiencies or estimated savings, estimated costs,funding options, and a proposed timeline for completion of the reengineeringeffort (from requirements analysis through implementation andpostimplementation review). The contract should require report deliveryprior to the 1997 legislative session to provide the best basis fordecisionmaking by the 1997 Legislature. (ATF; Recommendation #3.)

 Discussion

 The seven areas specified under Recommendation 2 cover the state's major(legacy) asset management systems, e.g., SBAS, PAMS, PPP, etc. Byrequiring review within all seven areas, the underlying goals of automationand integration would be furthered. Both economies and efficiencies canbe anticipated as a global perspective is pursued.

 Relatively quick completion of this work is critical if significant progress isto be made in the remainder of this century. As a result of anyreengineering recommendations, the Legislature may have to establish orrevise state policy vis a vis state management systems; it will also likelyhave to appropriate funds to accomplish automation and integration. Because the 55th Legislature convenes in January 1997, the results of theconsultant's efforts should be available as objective information on whichsound decisions can be based. Without good information at this time, theLegislature will not be well positioned to integrate the state's systems untilafter the end of this millennium.

 The Committee first endorsed Recommendations 1, 2, and 3 in June 1996. With the Committee's sanction, the Department of Administrationdeveloped and issued a formal Request for Proposals shortly thereafter. InAugust 1996, the Department contracted with Deloitte and ToucheConsulting Group for Phase I of the MT PRIME. The results of Phase I areexpected to be available by January 1, 1997, in time for consideration bythe Legislature and the administration.

Issue 3 -- Systems Reengineering: Financing Reengineered Systems

 Recommendation 4

 The Committee recommends that the Department of Administration proposeto the 1997 Legislature a funding source(s) and cost recoverymethodologies for completion of the reengineering effort for the state'sfinancial management systems. (ATF; Recommendation #4.)

 Recommendation 5

 The Committee recommends that the Department of Administration selectthe most appropriate funding source(s) that allows the hiring of a consultantand the completion of its report prior to the 1997 legislative session toprovide the best basis for decisionmaking by the 1997 Legislature. (ATF;Recommendation #5.)

 Discussion

 The ATF explored several funding options to finance the hiring of aconsultant and also discussed a timeframe for completion that would allownear-term analysis and consideration of relevant information. Fundingoptions considered included indirect cost recovery from federal SFCAP,money collected for SBAS Online Entry and Edit (OE&E) programming, andagency contracted services. The source of funding selected by theDepartment for the initial phase of the contract is through rates charged forOE&E transactions. The rates for SBAS OE&E transactions historically havebeen higher than the rates for other mainframe transactions to allow forenhancements to state government's accounting, budgeting, and propertysystems. Thus, this source was considered appropriate by the Department.

 The ATF also discussed timeframes for "Phase I" completion. The ATFagreed that completion prior to the 1997 legislative session was the bestpractical option, citing the need and opportunity for legislative andexecutive review as the primary considerations.

Issue 4 -- Information Technology Oversight: Involvement During LegislativeSessions

 Recommendation 6

 The Committee recommends that the legislative leadership of the 55thLegislature, with consultation and recommendations from the LegislativeFinance Committee, establish a distinct process to consider and reviewenterprise technology issues (including funding initiatives related toinformation technology) that is separate from the traditional subcommitteeprocess. (See Exhibit A.) The recommended review process should beinitiated early in the 1997 legislative session or even prior to the sessionconvening. (ATF; Recommendation #6.)

 Discussion

 The ATF, and subsequently the Committee, discussed strategies that itbelieved would assist the Legislature in dealing with the often complex andcompeting information technology issues. Several options were considered,including using a model similar to the Long-Range Building Program (forinformation technology investments only), expanding the InformationTechnology Advisory Council to include more legislators, or establishing thecontinuation of the SJR 23 study effort, expanded through an interimcommittee similar to the SJR 23 Committee.

 The result of the discussion was that a higher level of involvement by theLegislature in information technology issues is advisable. Each of theoptions discussed presented both challenges and opportunities. Ultimately,the ATF and Committee concluded that the Legislature should providefocused policy guidance and oversight during legislative sessions.

Issue 5 -- Information Technology Oversight: Involvement During LegislativeInterims

 Recommendation 7

 The Committee recommends that the 1997 Legislature establish an interimsubcommittee, consisting of two members each from the LegislativeFinance and Legislative Audit Committees and four additional legislatormembers, to provide oversight of asset management systems integrationbetween the next three legislative sessions. (See Exhibit B, LC 0258.) Thesubcommittee would receive status reports from the Department ofAdministration regarding the reengineering effort and address informationtechnology issues facing state and local governments. The subcommitteeshould operate for the three interims following the 1997 session. (ATF;Recommendation #7.)

 The Committee also recommends that the scope and role of the ITAC beexpanded to embrace a heightened recognition of local governments in stateinformation technology planning processes and to include representativesof local governments as more active partners in managing and integratingstate and local systems. (See Exhibit C, LC 0102.)

 Discussion

 Paralleling the discussion on session involvement of legislators ininformation technology issues, the Committee discussed strategies that theLegislature could adopt to provide oversight for and to keep apprised of

 information technology issues during legislative interims. Options similar tothose discussed with respect to session involvement of legislators wereweighed.

 Establishing an interim committee similar to the SJR 23 Committee garneredunanimous support from the Committee. Representation from both theLegislative Finance and Legislative Audit Committees is recommended aswell as representation by other legislators. Ultimately, the Committeeconcluded that the Legislature should provide policy guidance and oversightduring the interim as well as during legislative sessions.

Issue 6 -- Statutory Review and Revision: Clarification, Simplification, andConsistency

 Recommendation 8

 The Committee recommends that the Legislature adopt the statutorychanges reflected in the draft legislation denoted as LC 0103 and LC 0104(as Exhibits D and E, respectively). (BTF; Recommendation #1.)

 Discussion

 It was concluded by the ATF and affirmed by the Committee that the bulkof the "accounting statutes" are basically sound. Some minor revisions inseveral code sections are advisable to provide some additional clarity andconsistency.

 Examination of budget statutes was made a primary goal of the SJR 23study in part because current budgeting statutes are occasionally redundantand unclear, resulting in sometimes inconsistent interpretations and"arrangements" to implement the perceived purpose of the law. In addition,the statutes were viewed to be bound by specific requirements that reflectand have been subject to various budgeting fads.

 The BTF proceeded by adopting and pursuing a number of premises thatany change in budgeting statutes must entail, with specific changes withinindividual statutory sections that incorporate these premises. The adoptionof these premises was based upon the assumption that statutes shouldprovide a framework for budget development and presentation that allowsfor the provision of:

  (1) information that allows the Legislature to conduct its work in atimely and well-informed manner;

  (2) arrangements for additional data within the general framework,with penalties for noncompliance with either the statute or thearrangement; and

  (3) appropriate budget and appropriation controls (within the contextof accuracy and accountability).

 The following premises for change were adopted and pursued as the basisfor all changes proposed by the BTF.

  (1) The statutes should be general and flexible enough to allow thebudget director the opportunity to change procedures with changesin philosophy.

  (2) The statutes should specify the minimal level of information thatmust be routinely presented for each budgeted unit to assist in theLegislature's deliberations. Opportunities to present and collectadditional information would be provided within this generalframework through written guidelines and agreements. Remedies,even if they are minimal, should be provided for noncompliance.

  (3) The statutes should apply to the various funds, as defined by law,under the control of the Legislature.

  (4) The statutes should provide for some flexibility to allow forunanticipated events and management flexibility within a biennium.

  (5) The statutes should ensure the budget director's and legislativestaffs' general investigative powers and should ensure thatadequate responses to inquiries will be received and will allow thecollection of information that may extend beyond the minimalstatutory requirements.

Issue 7 -- Revenue Estimating and Collection Systems: Conversion to New,Integrated Systems

 Recommendation 9

 The Committee adopted and recommends that the Legislature recognizegoals for a new budget system and endorse the redesign efforts of theOffice of Budget and Program Planning (OBPP), the Legislative FiscalDivision (LFD), and the Legislative Services Division (LSD). (BTF;Recommendation #2.)

 Discussion

 The central, automated budget system used by the State of Montana for thepast decade consists of portions of six systems. These systems include theExecutive Budget System (EBS), Legislative Budget System (LBS),Legislative Appropriation System Reporting (LASR), Revenue EstimateSystem Reporting (RESR), Statewide Budget and Accounting System(SBAS), and a portion of the Payroll/Personnel/Position Control (PPP)System. Each of these systems share data that is used to develop andpresent the executive budget, record and monitor legislative action,implement appropriation and revenue measures approved by the Legislature,and maintain budgetary information on SBAS and PPP.

 The BTF proceeded by reviewing the EBS, LBS, LASR and RESR, focusingon the purpose of each of the systems, the processes involved in their use,the shortcomings of the current systems, and anticipated needs of futureusers. The BTF and system stakeholders implicitly acknowledged thatsignificant shortcomings are inherent in the current systems, shortcomingsthat suggest that major portions of the systems are obsolete.

 The OBPP, LFD, and LSD staffs are jointly developing a new, integratedbudget system to replace the EBS, LBS, LASR and RESR. This effortrepresents the primary BTF action in addressing its charge to examinebudgeting systems. The BTF monitored the project and provided feedbackto aid in this development.

 The BTF embraced several goals for any new budget system. The newsystem should:

  (1) be forward-looking in its design to allow its integration with thestate's management systems as these systems are updated;

  (2) be flexible in its capture and use of budget data to maximize itsutility for all users and potential uses;

  (3) improve efficiency in the budget development, implementation, andmaintenance processes through the automation of manualprocesses, the use of validation rules to reduce discernable dataerrors, and the use of a common enterprise data base and forms;

  (4) provide legislative and executive staff more timely access tobudgetary management and development information throughoutthe biennium;

  (5) improve agency accountability to the Legislature by recording andmaintaining an electronic audit trail of budgetary changes andadditions throughout the biennium, as well as justifications for thechanges;

  (6) provide an integrated linkage between budget development,authorization, establishment, and tracking; and

  (7) allow far greater access to budget information throughout theprocess and by more users.

 At the completion of the final meeting of the Committee, September 6,1996, system development as outlined above was underway, with PhaseI of the project anticipated for completion by October 1 and Phase IIcompletion anticipated by January 1, 1997.

Issue 8 -- Revenue Estimating and Collection Systems: Updating,Automating, and Integrating Collection Systems

 Recommendation 10

 The Committee acknowledges the importance of revenue collection andother single-agency systems and that these systems should be included inany long-range system integration plan, with emphasis placed on thosesystems that must interact with major statewide management systems. Further, the Committee recommends that future administrations andlegislative committees reviewing information technology applicationsassociated with the systems develop and maintain an appreciation forsingle-agency systems. (BTF; Recommendation #3.)

 Discussion

 Neither the BTF nor the Committee explicitly examined the revenueestimating systems used by the Office of Budget and Program Planning orthe Legislative Fiscal Division, given that much of the integration goal willbe accomplished by development and implementation of the new budgetsystem.

 The BTF devoted considerable time, however, to concerns about legacyrevenue collection systems. These systems are vital to the operation ofstate and local governments and to the legislative process. Concern wasexpressed that because these systems are not statewide applications, theywould be overlooked in the SJR 23 process and in future processesaffecting appropriations and budgets and, more generally, strategic systemplanning.

Issue 9 -- State Personnel Systems: Conversion to New Systems

 Recommendation 11

 Tactical -- In the short term, the state must continue efforts to make theexisting personnel management legacy system--PPP--as accurate and usefulas possible in response to user-identified needs. Therefore, the Committeerecommends that the interface of state personnel systems with SBAS beimproved, that online access to information and reports be improved andexpanded, and that improvements be made to transactions to allow moredecentralized maintenance of information. Particular emphasis should beplaced on improvements to the position control portion of PPP, includingdeveloping a temporary replacement position control system. (BTF;Recommendation #4.)

 Recommendation 12

 Strategic -- For the longer term, the state should complete a study toredesign or replace the PPP system with a human resource systemintegrated with other financial management systems. The integratedsystems should provide decision guidance to agency managers and flexibleaccess to a variety of employee information and should provide centralpolicymakers with accurate, reliable, and timely data to enable audit andanalysis of pay practices and budget management. Therefore, theCommittee recommends that the Legislature and administration supportefforts to effect better integration of the state's personnel systems withother financial management systems. (BTF; Recommendation #5.)

 Discussion

 A subcommittee of the BTF examined the PPP system and reviewedinformation collected on the legacy systems through agency surveysconducted for the SJR 23 study. More detailed information on the use ofthe PPP system was collected through a number of focus group meetingsconducted with various users of the system. Focus group discussions wereheld with line managers, personnel officers, centralized services managers,and payroll/benefit officers.

 The administration also reviewed the state's personnel systems bysurveying agency directors and managers to assess the need for changesto the classification and pay systems. The survey results were presentedto the Human Resources Advisory Council and developed into broad goalsfor the state's pay and personnel systems. These goals envision apersonnel system emphasizing individual and team results, competence, andperformance and allow agencies to respond competitively to the increasingdemands for cost-effective service.

 Based on the focus group results, survey results, and the administration'sgoals, the BTF developed an outline of human resource information systemcharacteristics for the 21st century. As Montanans continue demandingevermore cost-effective, competitive government, it is essential that thestate's human resource systems give managers the tools that they need tomeet these challenges.

 The Committee, through the work of the BTF, recognizes that in the future:

 * the state will continue to decentralize human resource decisionmaking;
 * state managers will have expanded authority to impact employee statusand pay based on individual employee competence;

 * state managers will have greater responsibility for management ofemployees (FTE levels) and position budgets;
 * there will be increasing demands for accurate, timely data on employeecharacteristics and position costs to support management decisions andpolicy development;
 * there will be increasing pressure to streamline personnel decisions andtransactions to meet organizational needs, fill vacant positions, changejob assignments, authorize pay changes, and calculate pay increases;and
 * there will be increasing demand by employees for direct access torecords at the same time that there will be increasing demand to reducethe production and retention of paper records.

Issue 10 --  Enterprise Data Management: Information Management Principles

 Recommendation 13

 The Committee recommends that the Department of Administration, inconsultation with ITAC, develop and adopt information managementprinciples for managing data as a state resource. These principles shouldembrace data policies and standards, application development andmanagement, data access, information technology standards, data integrityand security, and data sharing. (DMTF; Issue #1--Recommendations.)

 Discussion

 Information management principles define the importance of information tothe state. Information management principles can be categorized underthese headings: people, management, data, and standards. The peoplestandard states that information management systems exist to provideinformation to people in an organized manner that will assist them in makingdecisions. The management principle states that information systemsshould reflect and support an organization's mission and functions and thatmanagement supports and takes responsibility for this principle. The dataprinciple states that all data collected, generated, and used by state
 government must be treated as a resource of the state to be managed andshared across organizational lines. The standards principle states that inmanaging data, the state must function as a "common community" thatneeds and wants to cooperate for mutual benefit, including setting andmaintaining certain information technology standards, protocols, andconventions. Issue 11 -- Enterprise Data Management: Information Resource ManagementPlan

 Recommendation 14

 The Department of Administration should complete a study to determine theapplicability and potential for the adoption of an enterprisewide InformationResource Management (IRM) Plan. If determined practical and appropriate,the Department should develop a plan, with cost estimates, to implementit. (DMTF; Issue #2--Recommendations.)

 Discussion

 The IRM concept has been adopted by many states for managing data,applications (software), and technology (hardware, networks, etc.). TheCommittee, relying on the work of the DMTF, agreed that the Departmentshould complete a study for developing and implementing an enterprisewideIRM plan for bringing about efficient and effective management ofinformation resources; integrated information systems; access to and useof information for meeting the business needs of governments; reduceddata, applications, and technology redundancy; and greater return oninvestment in information resources. The study should examine andrecommendations should address responsibility and authority for IRM;policies, standards, guidelines, and models of the organization's informationresources; project planning for specific application development projects,identifying schedules, resources, scope, costs, benefits, and risks; andinformation architecture control, development methodology control,schedule and resource control, and information technology toolmanagement.

Issue 12 -- Enterprise Data Management: Enterprise Application Inventory

 Recommendation 15

 The ISD should develop and maintain a data base (inventory) of stateapplications that describes the state's applications, gives the cost ofdevelopment and maintenance, identifies levels of human resources devotedto application maintenance, describes the platform on which eachapplication is running, and depicts how each application integrates withother systems, etc. (DMTF; Issue #3--Recommendations.)

 Discussion

 The DMTF was unsuccessful in obtaining complete data about the costs ofmaintaining state systems and the numbers of personnel dedicated tosystems' development, operation, and maintenance. The DMTF observedthat managers and policymakers need ways to monitor and manageapplications in use and under consideration for purchase andimplementation. Creating and maintaining a data base of this informationare advisable from both an applications management perspective and fromcost and efficiency perspectives.

Issue 13 -- Enterprise Data Management: Data Sharing

 Recommendation 16

 In the short term, the ISD should identify common agency administrativeapplications or functions that could be developed as an enterprisewideapplication, such as inventory, personnel, prepayroll, procurement, etc. Inthe long term, the ISD should develop an Information Resource ManagementPlan. (DMTF; Issue #4--Recommendations.)

 Discussion

 Existing data may be used by several agencies or in different applicationswithin subunits of a single agency or between levels of government. Whenthe use of data overlaps between agencies or applications, efficienciescould be gained by automatically accessing common data in an integratedfashion rather than separately and specifically for each application. The firststep is identifying what data and applications exist and where that data andthose applications have common use or the potential for common use. Subsequently, the implementation of an Information Resource ManagementProgram would enhance the use and useability of common data andapplications.

Issue 14 -- Interagency: Application Development

 Recommendation 17

 Interagency and intergovernmental partnerships and agreements should becreated for developing shared applications. A process for implementing thisrecommendation should be developed by the ISD and presented to the ITACfor review and discussion. (DMTF; Interagency Issue #2--Recommendations.)

 Discussion

 As a component of the discussion surrounding enterprise data managementgenerally, the DMTF recognized the need for one entity to take the lead insharing applications. The ISD was identified as the appropriate lead group,with review, revision, and adoption responsibilities delegated to the ITAC.

Issue 15 -- Interagency: Emerging Technologies

 Recommendation 18

 The ISD, other agencies, and local governments should continue researchingemerging technologies and develop strategies and cost/benefit analyses foremploying appropriate technologies enterprisewide. This research and thestrategies developed should be presented to the ITAC and ITMG for reviewand discussion. (DMTF; Interagency Issue #3--Recommendations.)

 Discussion

 The DMTF again recognized the need for one entity to take the lead intracking emerging technology, researching applicability enterprisewide, andanalyzing the costs and benefits. The ISD was identified as the appropriatelead group, with review, revision, and adoption responsibilities delegated tothe ITAC.

Issue 16 -- Intergovernmental: State Enterprise Environment

 Recommendation 19

 The Department of Administration, through the ITAC, should establish aLocal Government Technology Advisory Task Force (LGTATF) to improvethe coordination between state and local government informationtechnology systems and to identify areas of overlap and makerecommendations for achieving enterprise, team solutions among all stateagencies and political subdivisions of the state.

 Recommendation 20

 The LGTATF should be composed of appropriate state and local governmentofficials. State members should include representatives from departmentsof state government whose systems interface significantly with localsystems. Local government representatives should include city and county
 officials and employees who are significantly involved with the managementof county systems and the interface with state systems. (DMTF;Intergovernmental Issue #1--Recommendations.)

 Recommendation 21

 The Committee agreed that the LGTATF should study and developrecommendations in the following areas:

 Policies and Standards: Define policies and standards that need to bedeveloped for facilitating better data sharing in state and local governments.Data Transmission Systems: Define how SummitNet (or next generation

 data transmission systems) will be expanded to provide the infrastructurefor local government and political subdivision use.

 Funding: Identify funding mechanisms that need to be developed for the"enterprise" to distribute the costs of facilitating data sharing between stateand local governments.

 Data Ownership, Access, and Exchange: Answer questions such as:

 * Should data ownership reside at local government collection points orwithin state applications or elsewhere?
 * Should access to state agency data be provided to local governments ina more timely and cost-effective manner?
 * Should standards be developed that provide format and uniformity fordata exchange between state and local governments?

 Sharing of Resources: Design, establish, and maintain: (1) a single platformwithin the county (rather than several); (2) standard data base software andfile structures; (3) joint state-local government plans for coordinating andallocating maintenance resources (personnel); and (4) disaster recovery andbusiness continuation plans. (DMTF; Intergovernmental Issue #2--Recommendations.)

 The adoption by the 55th Legislature of LC 0102 (Exhibit C) would help toimplement Recommendations 19, 20, and 21.

 Discussion

 The DMTF's assessment of the relationships that currently exist betweenstate and local governments revealed that: (1) state and local governmentrelationships have suffered as trust and respect for each other's roles andresponsibilities have degenerated; (2) local governments want to have moreinput and representation into the state process for establishing stateinformation technology direction and policies and the development of stateapplications that affect local governments; and (3) both state and localgovernments have limited resources.
 
Strong collaborative and cooperative intergovernmental relationships betweenthe three branches of state government and between state and localgovernments are essential if state government is to manage its assets ofinformation and information systems effectively and efficiently. In addition, apositive and supportive relationship between state and local governments is akey factor in solving information technology issues and problems that mayoccur between these entities.

 Intergovernmental issues that are contemplated to be addressed include:

 1. Autonomy - State government must recognize local governments'autonomy.
 2. Poor relationships - Technical assistance and support services needimprovement, particularly for smaller counties.
 3. Limited resources - Unfunded mandates from state to local governmentsresult in resistance to change.
 4. Coordination of efforts - Communication between state and localgovernments must be improved; local governments must be involved inthe decisionmaking process. 
 
 Computer systems being implemented by various departments of the Stateof Montana and systems in place in local governments are not beingmanaged in an "enterprise" manner. For example, in a typical county, thereare state systems (applications) for Supreme Court automation, Departmentof Revenue, Department of Public Health and Human Services, Division ofMotor Vehicles (Justice), Extension Service, and schools. Most of thesesystems reside on individual, separate hardware (servers), and most havedial-in access to one or more state departmental systems located in Helena.

 State agencies and local governments have limited resources and servicesfor supporting the hardware, software, and applications in each county. Hardware, software, and personnel efforts may be expandable for state,county, and other local governments merely by sharing informationtechnology resources. This possibility is premised in part on the finding thatsome larger counties have available capacity within existing staff resourcesfor hardware, software, and network support that might be sharedelsewhere. Further, the sharing of hardware and of support personnelbetween state agencies and between state and county and other localgovernments could be realized through cooperative support agreements,sharing of system(s) resources, and blending of financing and systemsecurity. Such cooperation is most likely also in the best interests of theMontana taxpayer.

Summary

In retrospect, a legitimate question is: Did the SJR 23 Joint InterimSubcommittee on State Management Systems accomplish its mission?

A reasonable place to start to answer the question is with the Committee'scharge as stated in SJR 23 and as characterized in the mission statementadopted by the Committee.

 It is the mission of the SJR 23 Interim Joint Subcommittee on StateManagement Systems for the 21st Century to present a report andoptions for consideration to the 55th Legislature and to the Governor,including its options and recommendations for the general revision ofthe laws governing state fiscal and personnel management, providingan estimated schedule by which a transition to fully integrated,automated asset management systems could be effected, along with anassessment of legislative actions required to support the schedule.

Stated goals

As stated, the Committee's mission was two parts: (1) legal revision; and (2)transition to new systems. In more specific terms, the Committee's mission wasrecapitulated in five primary goals.

 Goal 1. Prepare a bill for recommendation to the 55th Legislature that willgenerally revise and clarify the laws relating to the management ofthe state's personnel, financial, and other assets.

 Goal 2. Develop a vision of automated, integrated state asset managementsystems for the 21st century.

 Goal 3. Develop a transition schedule to implement automated, integratedstate asset management systems.

 Goal 4. Design a core policy group to continually and consistently: addressissues of system transition, automation, integration, and othermatters; and advocate the systems, beginning with the transitionand continuing through budgeting toward full implementation andoperation.

 Goal 5. By December 1, 1996, deliver to the 55th Legislature and theGovernor a report that fulfills the goals of the Committee.

Committee accomplishments

With respect to Goal 1: The Committee endorses the recommendationsexpressed in LC 0103 and LC 0104 (Exhibits D and E, respectively). Each ofthe draft bills is specifically directed toward the first goal, i.e., clarifying andmodernizing accounting and budgeting statutes. If adopted and approved, thetwo draft bills can be viewed as a transition to clearer, more consistent, moreflexible language expressing legislative policy with respect to accounting andbudgeting.

Response to Goal 2: A vision for state management systems must beexpressed before an implementation or transition plan can be devised. Understanding that relationship, the Committee articulated a vision through theseveral recommendations stated previously. The Committee foresees thegradual installation of an array of asset management systems that is based onsound business principles. The future environment will be an enterprise inwhich asset management systems are automated and integrated, applicationsand hardware are shared among agencies and between governmental units,common data is readily available and its integrity ensured, limited resources areemployed for maximum efficiency and effectiveness, duplication is minimized,and costs are kept in check and financed in logical fashions. Systems of the21st century will be dynamic and nimble, able to accommodate the thinking,practices, policies, and technology of the day. In short, future assetmanagement systems of state government will reflect a client-driven,responsive, competitive, government-as-a-business approach.

With respect to Goal 3: The development of a transition plan is underway withthe pilot project for integrating the legislative and executive budget systemsand, in a more general sense, with the implementation of the MT PRIME. TheCommittee endorsed the foundations of the MT PRIME midway through thestudy, perhaps reflecting the natural dichotomy between policy andadministration. When the Committee, through its task forces, created a vision,it subsequently delegated to the Executive Branch the responsibility of designinga "best approach" means to the ends described. Responding to the challenge,the Department of Administration is confident in its efforts to deliver the firstinstallment of the transition plan prior to the 1997 legislative session.

Goal 4 can be achieved through the adoption and approval of LC 0258 and LC0102 (Exhibits B and C, respectively) and by legislative leaders implementingthe Committee's recommendation (Exhibit A) that information technology andasset management systems receive focused attention during legislativedeliberations, especially in the appropriations process.

The Committee's fifth goal, a simple reiteration of the Legislature's charge, isachieved with the publication and distribution of this report.

Conclusion

Although there is still much work to be done regarding the design,implementation, and oversight of state asset management systems for the 21stcentury, the Committee and the task forces worked diligently to accomplish theinstructions given in SJR 23 by the 54th Legislature. Therefore, therecommendations contained in this report, including the draft legislation, arerespectfully submitted to the 55th Legislature and the Governor for furtherconsideration and, ultimately, disposition.

l55 6318dbxa.

EXHIBIT A

October 18, 1996

TO:  Senator Bob Brown, President of the Senate
  Representative John Mercer, Speaker of the House
  Senator John Harp, Chairman, Senate Rules Committee
  Representative Larry Grinde, Chairman, House Rules Committee
  Senator Ethel Harding, Chairwoman, Legislative Finance Committee
  Members of the Legislative Finance Committee

FROM:  Senator Mack Cole, Chairman, SJR 23 Committee on State ManagementSystems  for the 21st Century

On behalf of the SJR 23 Committee on State Management Systems for the 21stCentury, it is my privilege to forward to you at this time one of the recommendationsof the Committee. In short, the recommendation is:

 The Committee recommends that the legislative leadership of the 55thLegislature, with consultation and recommendations from the LegislativeFinance Committee, establish a distinct process to consider and reviewenterprise technology issues (including funding initiatives related to InformationTechnology) that is separate from the traditional subcommittee process. Therecommended review process should be initiated early in the 1997 legislativesession or even prior to the session convening.

Our rationale for unanimously recommending this change in process is basically foundedon the importance, fiscally and otherwise, that information technology has within andoutside of state government. The Committee discussed strategies they believed wouldassist the Legislature in dealing with the often complex and competing informationtechnology issues. Several options were considered, including using a model similarto the Long Range Building Program (for information technology investments only),expanding the Information Technology Advisory Council to include more legislators, orestablishing the continuation of the SJR 23 study effort, expanded, through an interimcommittee similar to the SJR 23 Committee.

The result of our discussion was that a higher level of involvement by the Legislaturein information technology issues is advisable. Each of the options discussed presentedboth challenges and opportunities. Ultimately, the Committee concluded that theLegislature should provide focused policy guidance and oversight during legislativesessions and during legislative interims.

As the convening of the 55th Montana Legislature is fast approaching, the Committeerespectfully offers this recommendation for your consideration and, we hope, yourconcurrence.

cc: Clayton Schenck

c25 6292dbxa.

EXHIBIT B

Be it enacted by the Legislature of the State of Montana:

 NEW SECTION. Section  1.  Purpose. The purpose of [sections 1 through 9] isto ensure legislative oversight of the laws governing state personnel, finance, andasset management. The committee created in [section 3] performs a generaloversight function for the legislature, focusing on information technology withinMontana state government and on the management of assets entrusted to the state. It is also the purpose of [sections 1 through 9] to enable the committee to fullypursue and examine opportunities for and advantages of installing an integratedsystem of asset management tools by employing an economical, effective, andongoing transition from nonautomated or automated but not integrated legacysystems to a fully integrated, automated set of systems. The legislature also intendsfor the committee to conduct an ongoing evaluation of what, if any, legislativeactions, including the appropriation of funds, are required to support the transition.

 NEW SECTION. Section  2.  Definition. In [sections 1 through 9], "committee"means the legislative oversight committee on state management systems created in[section 3].

 NEW SECTION. Section  3.  Legislative oversight committee on statemanagement systems -- appointment and composition. (1) There is a legislativeoversight committee on state management systems.
 (2) The committee consists of:
 (a) two members of the senate appointed by the committee on committees;
 (b) two members of the house of representatives appointed by the speaker;
 (c) two members of the legislative finance committee appointed by thepresiding officer of the legislative finance committee; and
 (d) two members of the legislative audit committee appointed by the presidingofficer of the legislative audit committee.
 (3) Each appointing authority in subsections (2)(a) through (2)(d) may notappoint more than one member of the same political party.
 (4) Members must be appointed before the 90th legislative day of a regularsession.

 NEW SECTION. Section  4.  Term of office -- vacancies. (1) Appointments tothe committee are for 2 years. A member of the committee serves until themember's term of office as a legislator ends or the member's successor isappointed, whichever occurs first.
 (2) A vacancy on the committee must be filled in the same manner as theoriginal appointment.
 (3) An appointment to the committee under subsection (2) is for the unexpiredterm of the original member.

 NEW SECTION. Section  5.  Officers. (1) The committee shall elect one of itsmembers as the presiding officer and may elect other officers it considers necessary.
 (2) If the committee elects a vice presiding officer, the member elected may notbe of the same political party as the presiding officer.

 NEW SECTION. Section  6.  Meetings and compensation. (1) The committeeshall meet at the request of the presiding officer or at the request of a majority ofthe committee members. The committee may meet during and between legislativesessions.
 (2) Committee members are entitled to receive compensation and expenses asprovided in 5-2-302.

 NEW SECTION. Section  7.  Powers and duties of committee -- legislativeoversight of state management systems -- committee reports. (1) The committeeshall:
 (a) exercise legislative oversight of information technology and statemanagement systems, including without limitation the review of:
 (i) proposed budgets;
 (ii) proposed legislation; and
 (iii) major contracts and personnel actions as those contracts or actions mayapply to information technology or state management systems; and
 (b) provide a forum for and actively solicit participation by representatives oflocal governments in Montana to facilitate communication, collaboration, andcooperation between the state and its subdivisions with respect to informationtechnology and the management of state and nonstate assets entrusted to the state.
 (2) The committee may undertake the study of:
 (a) the laws governing state personnel, finance, and asset management, withthe goal of ensuring clear, internally consistent, and simplified statutory languagebased upon clear and consistent policy goals and ensuring that the state and itsagencies are able to maintain strict accountability for both state and nonstate assetsentrusted to the state;
 (b) opportunities for and advantages of installing an integrated system of assetmanagement tools by employing an economical and effective transition fromcurrently nonautomated or automated but not integrated legacy systems to a fullyintegrated, automated set of systems and an evaluation of what, if any, legislativeactions would be required to support such a transition; and
 (c) other matters that the committee determines are relevant to its purpose.
 (3) The committee may form active working groups of state management andinformation system professionals, including personnel from the department ofadministration, the office of budget and program planning, the legislative fiscaldivision, and the legislative audit division, as well as separate user groups, to meetseparately and with the committee to identify problems and opportunities and toadvise the committee regarding potential solutions and planning details.
 (4) The committee may:
 (a) review administrative rules relevant to information technology or statemanagement systems for the purpose of determining compliance with Title 2,chapter 17, part 5, and may take any action available as a remedy under theMontana Administrative Procedure Act; or
 (b) by an affirmative vote of at least five members of the committee, contractfor the preparation of an economic impact statement or require the departmentpromulgating an administrative rule related to information technology or themanagement of state assets to prepare an economic impact statement, following theprovisions of 2-4-405.
 (5) The committee may investigate and issue reports on any matter concerninginformation technology or state management systems.

 NEW SECTION. Section  8.  Staff support. (1) The legislative services divisionshall provide research and legal support as requested by the committee if therequest is within available staff resources as determined by the executive director ofthe legislative services division. The legislative services division shall also provideadministrative and fiscal support to the committee.
 (2) The committee may request staff assistance from:
 (a) the legislative branch;
 (b) the department of administration or any other department of stategovernment;
 (c) the judiciary;
 (d) representatives of local governments or the federal government; or
 (e) private individuals or others having information or capacity to assist thecommittee in its activities.

 NEW SECTION. Section  9.  Reports. (1) The department of administrationshall, at the request of the committee, report to the committee on the department'sprogress in meeting the requirements expressed in Title 2, chapter 17, part 5.
 (2) The committee shall report its findings, conclusions, and options forlegislative consideration on or before December 1 immediately before each regularlegislative session.

 NEW SECTION. Section  10.  Appropriation. There is appropriated from thegeneral fund to the legislative services division $20,000 for fiscal years 1998 and1999 for the activities of the legislative oversight committee on state managementsystems created in [section 3]. This is a biennial appropriation.

 NEW SECTION. Section  11.  Codification instruction. [Sections 1 through 9]are intended to be codified as an integral part of Title 5, and the provisions of Title 5apply to [sections 1 through 9].

 NEW SECTION. Section  12.  Transition. If [this act] is approved afteradjournment sine die of the 55th legislature, the appointments required in [section 3]must be made before June 15, 1997.

 NEW SECTION. Section  13.  Effective dates. (1) Except as provided insubsection (2), [this act] is effective on passage and approval.
 (2) [Section 10] is effective July 1, 1997.

 NEW SECTION. Section  14.  Termination. [This act] terminates December 31,2002.
-END-

EXHIBIT C

Be it enacted by the Legislature of the State of Montana:

  Section  15.  Section 2-17-502, MCA, is amended to read:
  "2-17-502.  State information technology advisory council. (1) The departmentof administration shall create a state information technology advisory council under2-15-122.
 (2) The members of the advisory council must be selected from a diverse groupin order to adequately represent the interests of state agencies, including theuniversity system, and local governments.
 (3) In addition to the advisory functions assigned by the department, theinformation technology advisory council shall review statewide information and dataprocessing policies, make recommendations regarding the application of newinformation processing technology in state government, and advise the departmenton long-term strategic planning for the use of information processing technology instate government.
 (4) The advisory council shall also provide a forum to:
 (a) guide state agencies and local governments in the development anddeployment of intergovernmental information resources;
 (b) encourage cooperative efforts among state agencies and local governmentsin the development of information resources;
 (c) develop and recommend to the department standards and policies forintergovernmental information resources; and
 (d) advise the department in the development of cooperative contracts for thepurchase of information resources."
-END-

EXHIBIT D

Be it enacted by the Legislature of the State of Montana:

  Section  16.  Section 17-1-102, MCA, is amended to read:
  "17-1-102.  Uniform accounting system and expenditure control. (1) Thedepartment shall establish a system of financial control so that the functioning of thevarious agencies of the state may be improved, duplications of work by differentstate agencies and employees may be eliminated, public service may be improved,and the cost of government may be reduced.
 (2) The department shall prescribe and install a uniform accounting andreporting system for all state agencies and institutions, showing reporting thereceipt, use, and disposition of all public money and property in accordance withgenerally accepted accounting principles, and shall develop plans for improvementsand economies in the organization and operation of state agencies and institutions,which must be submitted to the respective heads of agencies and institutions.Copies of all plans must be delivered to the governor, and additional copies must beretained in the office of the department for inspection by the members of thelegislature.
 (3) The uniform accounting and reporting system must contain three levels ofexpenditure. The first level must include general categories, such as personalservices, operating expenses, equipment, capital outlay, local assistance, grants,benefits and claims, transfers, and debt service. The second level of expendituremust include specific categories of expenditures within each first-level category. Thethird level of expenditure must include specific items of expenditure within eachcategory of the second level.
 (4) The department shall examine all financial affairs of each state agency andinstitution for the purpose of developing plans for improvements and economies inthe organization and operation of the agencies and institutions and for the purposeof enabling the department to properly perform any of the duties imposed upon thedepartment by this part.
 (5) All state agencies, including units of the university system but excludingcommunity colleges, shall input all necessary transactions to the accounting systemprescribed in subsection (2) before the accounts are closed at the end of the fiscalyear in order to present the receipt, use, and disposition of all money and propertyfor which the agency is accountable in accordance with generally acceptedaccounting principles, except that for budgetary control purposes, encumbrancesthat are required by generally accepted accounting principles to be reported as areservation of fund balance must be recorded as expenditures and liabilities on theaccounting records."

  Section  17.  Section 17-1-111, MCA, is amended to read:
  "17-1-111.  General fiscal duties of state treasurer. (1) The state treasurer isthe custodian of all money and securities of the state unless otherwise expresslyprovided by law.
 (2) It is the duty of the state treasurer to:
 (a) receive and account for all money belonging to the state, not expresslyrequired by law to be received and kept by some other person;
 (b) pay warrants out of the funds upon which they are drawn;
 (c) upon payment of any warrant, take upon the back of the warrant record thereceipt of the person to whom it is paid;
 (d) keep an account of all money received and disbursed;
 (e) at the request of either house of the legislature or of any legislativecommittee, give information in writing as to the condition of the treasury or on anysubject relating to the duties of the office of state treasurer;
 (f) superintend the fiscal concerns of the state;
 (g) suggest plans for the improvement and management of the public revenue;
 (h) keep an account of all warrants drawn upon the treasury and of otherappropriation records that the treasurer determines to be essential for the support ofthe accounting records maintained in the department;
 (i) charge the outgoing state treasurer with the balance that was in the treasurywhen the outgoing treasurer came into office and with all money received and creditthe outgoing treasurer with all warrants drawn on and paid;
 (j) keep a register of warrants, showing the fund upon which each warrant isdrawn, each warrant's number, who received the warrant, and the date issued;
 (k)(j) require all persons who have received money belonging to the state butwho have not accounted for it to settle their accounts;
 (l)(k) draw warrants on the state treasury for the payment of money directed bylaw to be paid out of the treasury, except that a warrant may not be drawn unlessauthorized by law;
 (m)(l) authenticate with the official seal of the state all warrants drawn and allcopies of papers issued from the office of state treasurer;
 (n)(m) collect and pay into the state treasury all fees received; and
 (o)(n) discharge other duties as may be imposed upon the state treasurer bylaw."

  Section  18.  Section 17-2-110, MCA, is amended to read:
  "17-2-110.  Fiscal year and financial reports. (1) The fiscal year for statepurposes commences on July 1 of each year and ends on June 30 of each year.
 (2) At the close end of each fiscal year, the fiscal records of each state office,department, bureau, commission, institution, university unit, and agency (collectivelyreferred to as "state agency") must be closed as of the end of the fiscal year. Eachstate agency shall prepare the financial statements records and reconciliations forthe fiscal year as the department of administration may prescribe. These Thefinancial reports of the uniform accounting and reporting system prescribed in17-1-102(2) are to be completed and distributed not more than 31 days followingthe close end of each fiscal year. The department of administration may extend thistime limit if a state agency can show necessity for the extension.
 (3) The reports are to be distributed to the department of administration and thelegislative auditor and any other state agency that the department of administrationmay prescribe. It is the intent of this provision that these reports accurately andcomprehensively present the financial activities of the reporting state agency inaccordance with generally accepted accounting principles so that the reports can beeffectively used by the executive and legislative branches of state government.
 (4) Upon consolidation of the reports, the annual financial report by thedepartment of administration must be available for other individuals andorganizations interested in the financial affairs of the state of Montana."

  Section  19.  Section 17-2-201, MCA, is amended to read:
  "17-2-201.  Contingent revolving accounts -- when established. (1) Thedepartment of administration may authorize the establishment and maintenance atany and all of the state institutions agencies or in any of the departments, boards, orcommissions of Montana of contingent revolving accounts, transferring in trust tothe business offices of said the institutions such sums of money as may appearnecessary, to be used by said the institutions for the payment of demands requiringimmediate cash payment,. such Demands include the as payment of minor invoices,invoices for which the discount period is too short to take advantage of the discountif payment is made by warrant, freight and express charges, travel advances,postage, publications requiring remittance to accompany the order, and theestablishment of cash change funds, all under specific regulations to be establishedby the department of administration.
 (2) Each and every state institution agency granted a contingent revolvingaccount shall report to the department of administration monthly upon request alltransactions involving such the contingent revolving accounts, with proper vouchersfor every payment made therefrom. The department of administration may cancelsuch the authorizations and recall such the funds at pleasure as it determinesappropriate."

  Section  20.  Section 17-3-102, MCA, is amended to read:
  "17-3-102.  Definitions. As used in this part, the following definitions apply:
 (1) "Application" means a written request to a the form specified by a federalagency for federal assistance program funds.
 (2) "Federal assistance programs" means any financial assistance made to astate agency by an agency of the United States government, whether a grant, loan,gift, contract, or in any other form.
 (3) "Grantee agency" means any agency of state government receiving federalfunds.
 (4) "Indirect costs" means costs which that benefit more than one agency orprogram and that are not readily assignable to the agency or program specificallybenefiting.
 (5) "Service agency" means state agencies which that provide goods, facilities,and services to a grantee agency.
 (6) "State agency" means any agency of state government eligible to apply forand receive federal funds."

  Section  21.  Section 17-3-106, MCA, is amended to read:
  "17-3-106.  Fiscal officer for receipt of federal grants. (1) The state treasurer isdesignated as the fiscal officer of the state to receive from the United Statesgovernment or any of its agencies all funds that may be made available as a grant tothe state of Montana under any act of congress, or otherwise, for any purpose oruse. The state treasurer shall, upon receipt of the funds, deposit the funds in theproper fund in the state treasury.
 (2) The state treasurer A state agency may return to the federal governmentany from the state treasury, through the state treasurer, any federal funds and theinterest earned on the funds that may not be retained by the state according tofederal law or the terms of the federal grant that made the funds available. Thefunds are statutorily appropriated, as provided in 17-7-502, to the state treasurer forthe purpose of returning the funds under the provisions of this subsection."

  Section  22.  Section 17-4-101, MCA, is amended to read:
 " 17-4-101.  Definitions. In this part, the following definitions apply:
 (1) term "agency" "Agency" includes:
 (a) all state offices, departments, divisions, boards, commissions, councils,committees, institutions, university units, and other entities or instrumentalities ofstate government; and
 (b) with respect to delinquent taxes that the state auditor department isrequested to collect, state and local entities whose personal property taxes arecollected by the county treasurer;.
 (2) word "department" "Department" means the department of administration."

  Section  23.  Section 17-6-212, MCA, is amended to read:
  "17-6-212.  State purchase of general fund warrants. (1) The state reserves apreference right, prior to the right of any person, company, or corporation, topurchase state general fund warrants issued with funds under the control of theboard of investments and subject to investment.
 (2) When the board of investments has under its control any funds subject toinvestment that in its judgment it would be advantageous to invest in state generalfund warrants and there are not sufficient funds in the state general fund to paywarrants issued against the fund at the time that they are issued and presented forpayment, it shall authorize and direct the state treasurer to purchase state generalfund warrants, designating the fund or funds to be invested and fixing the amount oramounts to be invested. State general fund warrants registered by the statetreasurer pursuant to 17-8-304(1) and purchased by the board of investments mustbear interest at a rate determined by the board. When determining the interest rate,the board shall consider:
 (a) the duration of the investment by estimating the time at which the warrantswill be redeemed pursuant to 17-8-304(1); and
 (b) the interest rate of the investments liquidated to provide the funds topurchase the warrants.
 (3) The state treasurer shall attach to or stamp, write, or print upon eachgeneral fund warrant issued after the receipt of notice, until warrants totaling theamounts designated have been issued, a notice that the state will exercise itspreference right to purchase the warrant.
 (4) The state treasurer shall, when the marked warrant is presented, pay it outof the proper fund as designated by the board, and the warrant purchased must beregistered as other state warrants and must bear interest as provided by law.
 (5) When the designated amounts have been invested, the state treasurerdepartment shall notify the board of investments, which shall issue orders upon theproper funds addressed to the state auditor for warrants to be issued in favor of thetreasurer."

  Section  24.  Section 17-8-201, MCA, is amended to read:
  "17-8-201.  Authorizations for disbursements -- submission of claim todepartment of administration. (1) All authorizations for disbursements shall must begiven by the agency concerned, and a record shall must be kept by the agency of allthe authorizations and expenditures. Claims for any disbursement must be submittedto the department of administration.
 (2) The department may prescribe the claim form and may establish, in writing,rules governing the preparation, submittal, and processing of claims. All claims shallmust be processed in the order of their presentation, and all claims disapproved bythe department shall notify be returned to the operating agency with an explanationin writing of why the claim was disapproved of any disapproved claim."

  Section  25.  Section 17-8-202, MCA, is amended to read:
  "17-8-202.  Preaudit and transmittal of claims. (1) The department ofadministration is not required to preaudit a liquidated claim against the state.However, the department of administration may preaudit those claims it considersnecessary. The agency shall retain the original of all documents that support claimssent to the department. These documents are subject to postaudit by the legislativeauditor.
 (2) An office or entity of the executive, legislative, or judicial branch