Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 larry.campbell@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Larry L. Campbell, Director Laura Kelly, Governor


March 13, 2019


The Honorable Elaine Bowers, Chairperson
Senate Committee on Ethics, Elections and Local Government
Statehouse, Room 223-E
Topeka, Kansas 66612
Dear Senator Bowers:
SUBJECT: Fiscal Note for SB 56 by Senate Committee on Federal and State Affairs
In accordance with KSA 75-3715a, the following fiscal note concerning SB 56 is
respectfully submitted to your committee.
SB 56 would require, for all contracts greater than $100,000, that state contractors use a
software program that verifies that the hours billed for work performed by contractor employees
on a computer are legitimate. State agencies would be prohibited from paying contractors for any
hours or work performed on a computer unless the hours worked can be verified by the software
program. Contractors would be required to purchase the software program and could not charge
state agencies or the Division of Post Audit for access to or use of the software program. All data
collected by the software program would be considered accounting records owned, kept and
maintained by the contractor.
The Department of Administration indicates the bill would add new requirements to
contract bids. The Department notes it is possible that some companies may choose not to submit
bids for contracts if the companies believe the requirements are too difficult to implement,
particularly small businesses who may not have the means to adapt to the requirements. The
Department indicates that any conditions that have the potential to limit the number of bidders
would reduce the Department’s ability to foster competition and negotiate more favorable terms.
However, the Department of Administration is unable to estimate the precise fiscal effect on the
agency or statewide. Below are examples of how SB 56 would affect state agencies.
The Office of the Attorney General indicates the bill may result in outside counsel being
unwilling to contract with the state for legal services. If this occurs, the Office would need to hire
additional in-house attorneys. The Office estimates $659,297 would be required from the State
General Fund in FY 2020 for 4.00 new Assistant Attorney General FTE positions and 1.00
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Administrative Assistant FTE position. Of the total amount, $579,878 would be for salaries and
wages and $79,419 would be for other operating expenditures such as office rent, supplies,
equipment and travel. The Office of the Attorney General also indicates the constitutionality of
the bill may be challenged by a state contractor. If this occurs, the Office estimates approximately
$100,000 would be needed to retain outside counsel if the workload of the case exceeds the
capacity of the Office’s attorneys.
The Department for Children and Families (DCF) estimates the bill would require
additional expenditures of $378,817 from all funds in FY 2020, including $238,593 from the State
General Fund. The total includes $239,098 for salaries and wages for 4.00 FTE positions. DCF
indicates 2.00 FTE positions in the Grants and Contracts Unit would be needed to review billing
statements submitted by contractors and access the software program to ensure billings are
accurate. An additional 2.00 FTE positions would be needed for information technology services.
Also included in the total is $27,220 for other operating expenditures associated with the positions.
DCF estimates increased information technology costs to establish and maintain a data
transfer interface. The interface would be used to obtain and review contractor data. DCF
estimates the total costs associated with the interface would be $112,500. Additionally, the bill
prohibits contractors from charging state agencies for the software program, which would result
in additional unreimbursed costs incurred by contractors. DCF indicates that while the costs could
not be directly billed to the agency, it is likely the costs would be included in future negotiated
rates. DCF also notes that the bill could cause some contractors to be unwilling to do business
with the state, which could result in DCF having to find new contractors at potentially higher rates.
The Board of Pharmacy indicates the bill would likely cause the agency to lose current
contracts for its e-licensing system and K-TRACS, the Board’s prescription drug monitoring
program. The Board notes the software programs used for e-licensing and K-TRACS are property
of the vendors. It is unlikely that the vendors would agree to the monitoring requirements in the
bill. The Board indicates its current contract costs for the e-licensing and K-TRACS programs
total $2.7 million. The Board estimates that replacing the vendor systems with state-owned and
developed systems would be more than the current costs.
The Board indicates that it currently contracts with outside counsel for attorney services.
Because of the confidential nature of attorney-client services, the Board believes firms would not
be willing to contract with the agency. As a result, the Board would have to either hire attorneys
or contract with the Office of the Attorney General. The Board estimates hiring in-house counsel
would require $186,822 per year from the agency’s fee fund for 2.00 new Attorney FTE positions.
The Board estimates that contracting with the Office of the Attorney General would require
additional expenditures of approximately $75,000 per year. Additionally, the Board estimates
there would be monitoring and compliance costs associated with the bill, which would require
additional expenditures of $46,700 from the State Board of Pharmacy Fee Fund and an additional
0.5 FTE positions.
The Kansas Department of Transportation (KDOT) estimates the bill would have a fiscal
effect on agency operations. However, the precise fiscal effect is unknown because KDOT is
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unable to predict the manner and extent to which contractors would build the costs of SB 56 into
future contracts. The Department is also unable to predict how the bill might affect the number of
bidders for contracts and contract prices. Additionally, KDOT is unable to determine the amount
of additional work that may be required by agency staff. KDOT also indicates that if the bill is
found to be in violation of federal law, federal funding used on contracts for engineering design
and inspections would be in jeopardy.
The Department of Corrections estimates the bill would have a fiscal effect on agency
operations, but the Department is unable to determine the precise effect on expenditures. The
Legislative Division of Post Audit indicates the bill would have no fiscal effect on the Division.
Any fiscal effect associated with SB 56 is not reflected in The FY 2020 Governor’s Budget Report.


Sincerely,

Larry L. Campbell
Division of the Budget


cc: Colleen Becker, Department of Administration
Chris Clarke, Post Audit
Lynn Robinson, Department of Revenue
Ben Cleeves, Transportation
Jackie Aubert, Children & Families
Linda Kelly, Corrections
Courtney Fitzgerald, OITS
Alexandra Blasi, Board of Pharmacy