LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
Revision 1
 
March 23, 2011

TO:
Honorable Byron Cook, Chair, House Committee on State Affairs
 
FROM:
John S O'Brien, Director, Legislative Budget Board
 
IN RE:
HB2499 by Cook (Relating to the continuation and functions of the Department of Information Resources.), As Introduced

No significant fiscal implication to the State is anticipated.

The bill would amend statute relating to the continuation and operation of the Department of Information Resources (DIR). DIR is subject to the Sunset Act and will be abolished on September 1, 2011, unless continued by the Legislature. The bill would continue DIR for six years and would take effect on September 1, 2011.

Sections 2 and 36: The bill would continue the operation of DIR for six years, until September 1, 2017. The bill would take effect September 1, 2011.

Sections 3, 6, 8, 32, and 33: The bill would amend various sections of Chapter 2054 of the
Government Code related to the composition of DIRís governing board; create a Customer Advisory
Committee that is made up of customers of DIRís key programs; and add alternative dispute resolution
provisions. The bill would require the Governor to appoint the new board members by September 1,
2011.

Section 7: The bill would require DIR to adopt processes to determine the administrative fee charged
to administer its programs, including fees for the statewide technology centers and
telecommunications. The bill would require DIR to report to the Legislative Budget Board (LBB) all
administrative fees charged by DIR; the methodology used to determine the fees; and post on its
website each administrative fee DIR charges.

Section 9: The bill would require DIRís board to appoint an internal auditor and establish an audit
subcommittee.

Sections 10, 14, 15, and 20: The bill would require DIR's board to provide additional oversight which
includes adopting a policy to set a strategic direction for DIR and to regularly evaluate DIR's
operations. The bill would require DIR to: develop clear criteria for its use of consultants and outside
staff; develop a consistent method to measure costs and progress of an information resources
technology consolidations initiative; work with any entity involved in an information resources
technology consolidation initiative to determine baseline costs, and evaluate actual costs and costs
savings related to the consolidation; and report annually to the board, the LBB, the customers of the
consolidation initiative, and post on its website, the results of the evaluation of costs and savings.

The bill would require DIRís board by rule to: define what constitutes a major outsourced contract,
including statewide technology and telecommunications contracts; approve new, or amendments to
existing, contracts; establish one or more committees to monitor DIRís major outsourced contracts;
establish board approval requirements for all other contracts before the contract may be executed;
implement conflict of interest provisions; and train staff on the requirements of these provisions.

The bill would require DIR to: create a management plan for each major outsourced contract, as
defined by its Board; to specify procedures to administer, monitor, and oversee each major
contract; establish procedures to ensure customer involvement regarding each major outsourced
contract; develop a contract management training policy; establish training requirements for all staff
involved in contract management; and update the guide periodically. The bill would require the board
to adopt rules as necessary to develop and update the contract management guide.

Section 11: The bill would require DIR, upon request, to provide technical assistance to a state agency
to determine the agencyís information resources technology needs and to solve the agencyís
technology problems.

Sections 12, 13, 16, 17, 18, 21, 22, 23, 24, 27, 28, 29, 30, 31, and 34: These provisions relate
transferring the responsibility for the statewide purchase of information technology commodity items
from DIR to the Comptroller; require the Comptroller to provide training in contract negotiation;
manage and use planned procurement schedules; coordinate technology training; establish rules to
administer the IT commodity contract program; and transfer all powers, duties, money, contracts,
memoranda of understanding, records, leases, and rights of DIR related to the purchase of information
technology commodity items from DIR to the Comptroller.

Sections 19 and 26: The bill would require the Comptroller to establish in the state treasury: the
Statewide Technology Account under the purview of DIR, for the operation and management of a
statewide technology center or for any other purpose specified by the legislature; and the Clearing
Fund under the purview of the Comptroller, for the administration of the purchase of information
technology commodity items or for any other purpose specified by the legislature.

Section 25: The bill would require the Comptroller to adopt processes to determine the administrative
fee charged to administer its programs. The bill would require the Comptroller to report to the LBB administrative fees charged by the Comptroller; the methodology used to determine the fees; and post on its website each administrative fee the Comptroller charges.

ASSUMPTIONS

Sections 7, 9, 11, and 20: DIR reported that to implement certain provisions in these sections of the
bill, additional full-time equivalent positions (FTEs) and funding would be required. However, it is
anticipated that any additional costs associated with implementation of the legislation could be
absorbed within existing resources.

Sections 12, 13, 16, 17, 18, 21, 22, 23, 24, 27, 28, 29, 30, 31, and 34: Although not expressly
identified, it is assumed that appropriations and FTEs funded by the administrative fee charged to
agencies and local governments that use the information technology (IT) commodity contracts would
transfer from DIR to the Comptroller.

Approximately 57.3 FTEs were budgeted in fiscal year 2011 to be funded by fees from the IT
Commodity Contracts program. Of these FTEs, it is estimated that 32 FTEs would transfer to the
Comptroller to administer the IT Commodity Contracts program; 21.6 FTEs would remain at DIR; and
3.7 FTEs would be reduced from DIRís FTE cap.

In addition to the transfer of 32 FTEs, the Comptroller estimates that approximately $2,339,000 would be needed each fiscal year to administer the IT Commodity Contracts program. It is assumed this funding would be provided by the administrative fee charged to users of the stateís IT commodity
contracts out of the Clearing Fund.

It is anticipated that the 21.6 FTEs identified above and $4,012,947 for related salaries and operating
costs previously funded from the Clearing Fund would be needed by DIR to administer contracts
related to telecommunications, statewide technology services, and for statewide IT planning and
security initiatives. It is also anticipated that these costs would be funded out of the revenues from the
Telecommunications and/or Statewide Technology services. DIR may need to adjust its fees to cover
these additional costs.


Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
116 Sunset Advisory Commission, 301 Office of the Governor, 304 Comptroller of Public Accounts, 313 Department of Information Resources
LBB Staff:
JOB, KJG, MS, EP, SD, KY, RC