6. ACT NO. 185 (A) Itemize finances

 

This section addresses item (A) of ACT NO. 185.

6.1. Operating Expenses

The following table summarizes expenses from fiscal years 1993 to 1997. There is no activity prior to FY1993 that could be construed to be related to "GOVnet." It is important to note that not until FY1996 were finances segregated into the areas that could be identified as administration, state network infrastructure, and Internet access. Therefore, figures provided for years before 1996 are not useful for comparison. Figures that could not be segregated at all are listed as "Not Categorized".

Summary of Operating Expenses

FY

1993*

1994*

1995*

1996

1997

Administration

-

-

$125,581

$265,712

$284,777

State Network

-

$233,438

$438,584

$66,797

$94,473

Public (Internet) Access

-

-

-

$37,000

$37,000

Not Categorized

$1,128,900

-

-

$346,185

$413,000

TOTAL

n/a

n/a

n/a

$715,694

$829,250

* Estimates

6.1.1. Fiscal Years 1993 - 1995 Detail

The fiber-optic network, which is a core of the current network, evolved out of the HRMS project. Fiscal 1993 estimates [ Klein, Stephen A., Duncan W. Goss, Donald E. Dickson, Jr., "Study of Vermont State Data Processing System Purchases and Vermont State Information Systems Planning and Design," Joint Fiscal Office and Legislative Council, December 29, 1993, p.7.] of the costs not attributable to HRMS are $1,128,900. From a financial perspective, these are sunk costs, both operating and capital, and not comparable to any future expenses.

During fiscal years 1994 and 1995 administration of the network and financial segregation of its revenues and expenses were in transition. For those two fiscal years it is only possible to obtain estimates of the appropriate financial figures. The table below contains these estimates.

FY 1994 and 1995 Revenue and Expenses


FY '94 Network related (estimated)

FY '95 Network related (estimated)




Revenue (Actual)



11% Surcharge

n/a

$412,000

CIT charge

n/a

110,000

Other (passthrough)

n/a

38,000

Total


$560,000




Expenses (Estimated)



Personal services



  • 2 GOVnet staff
  • n/a

    $125,581

    Operating



  • Leased circuits
  • n/a

    112,831

  • Equipment
  • $233,438

    284,578

  • Training
  • n/a

    18,105

  • GSD Admin.
  • n/a

    17,560

  • Other operating
  • n/a

    5,510

    Total

    n/a

    $564,165




    Excess / (Deficit) (Estimated)

    n/a*

    ($4,165)

    * [Since no revenues could be segregated, it is not possible to guess whether an excess or deficiency may or may not have occurred.]

     

    Notes

    1. FY1994 was the partial year in which GOVnet and the surcharge was approved by IRMAC (Information Resource Management Advisory Committee). The surcharge was not implemented until July 1, 1994 – the beginning of FY1995. Therefore, there was no revenue and no itemized expenditures for FY1994.

    2. The GOVnet revenue and expenditures for FY1995 were embedded in the CIT division budget and were not set up in a separate account until FY1996.

    3. In fiscal years 1994 and 1995 there was no budget for GOVnet. The revenues and expenses are estimated from historical actuals.

    6.1.2. Fiscal Years 1996 - 1997 Detail

    Beginning in FY1996, revenues and expenses were itemized for the network support staff, the statewide network infrastructure and the Internet application. The current budget line items are described in the Budget Line Item Description table on the next page.

    The actuals from FY1996 and the budget for FY1997 are included below.

    FY 1996 and 1997 Revenue and Expenses


    FY 1996 GOVnet Actual (submitted to Auditor)

    FY 1997 GOVnet Budget




    Revenue



    Government users

    $588,310.77

    $555,000.00

    K-12 Schools

    97,921.35

    225,000.00

    Public libraries

    13,916.59

    29,250.00

    Other

    29,250.90

    20,000.00

    Total

    $729,399.61

    $829,250.00




    Expenses



    Personal services

    $230,297.75

    $242,777.00

    Operating Expenses

    35,413.91

    42,000.00

    Leased Circuits

    346,185.32

    413,000.00

    Equipment

    66,797.30

    94,473.00

    Internet License

    37,000.00

    37,000.00

    Total

    715,694.28

    $829,250.00




    Excess / (Deficit)

    $13,705.33

    $0

    Notes

    1. FY1996 revenues for K-12 schools and public libraries are partial revenues. The legislation allocating funds for distance learning was passed in calendar 1995 for FY1996. Deployment of the necessary telecommunications equipment did not reach all schools and libraries, and was not available for a full year at those schools and libraries where it was deployed.

    2. FY1997 budget is an eleven-month budget for revenue from government users and expenses for leased circuits. This change is a one-time change due to internal State accounting processes. After 1997 it will be a 12 month budget.

    Budget Line Item Description


    Line Item

    Description

    Notes

    R

    E

    V

    E

    N

    U

    E

    Government users

    State employees

    • CIT $110,000 (FY1996)
    • 11% telephone surcharge

    K-12 schools

    Elementary and secondary schools, approximately 250

    • $250/year dial-up service per line
    • $5,000/year direct connect, of which approximately $3,000 is the circuit charge, and $2,000 includes unlimited Internet access, and support and service from the GOVnet group

    Public libraries

    Approximately 200 public libraries

    • $250/year dial-up service per line
    • $5,000/year direct connect, of which approximately $3,000 is the circuit charge, and $2,000 includes unlimited Internet access and support and service from the GOVnet group

    Other

    Passthrough government Information Technology additional services






    E

    X

    P

    E

    N

    S

    E

    Personal services

    Salary and fringe, for (currently) four employees, not including CIO


    Operating expenses

    Training, offices, administrative overhead


    Leased circuits

    Digital services

    • The private State network is in year 6 of a 10 year lease for digital services with NYNEX.
    • 1 year contracts with NYNEX for all leased circuits to schools and libraries. These are renewed annually through an RFP process.

    Equipment

    Telecommunications equipment and technology supporting only the private GOVnet network. Dial-up communication servers are shared with K-12


    Internet license

    Internet license from MCI, providing a T1 circuit, router, and backup Directory Name Services.


    6.2. Capital Costs

    The capital construction bills for sessions 1994, 1995 and 1996 included monies for "Information Infrastructure" [ ACT NO. 233 of the Acts of the 1994, Sec. 12. (b)] , "Information Technology" [ ACT NO. 62 of the Acts of 1995, Sec. 2a] and "GOVnet." [ ACT NO. 185 of the Acts of 1996, Sec 2. (c)] The total of the allocated monies for each year are listed in the following table. That portion of the line item capital cost designated for network expansion - either administration or infrastructure - is identified as "GOVnet" capital costs. For example, the FY 1995 capital allocation of $300,000 for distance learning was not used for any network expansion or network administration, and therefore not attributable to GOVnet.

    Summary of Capital Costs

    Description

    FY 1995

    FY 1996

    FY 1997

    "GOVnet" portion

    Distance learning

    $300,000



    $0

    Libraries convert to GOVnet; Schools connect to GOVnet; Support dial-up access


    $978,000


    $0

    Support network access



    $250,000

    $0

    There are no other pre-existing capital bills with monies related to network administration, expansion or infrastructure.

    6.3. Distance Education Grants

    A review of federal funding of distance learning was completed to identify any other funds which may have supported infrastrucuture development.

    Vermont has received grants from several federal organizations to support distance learning. None of these grants has been administered by a State agency, nor has the network administration or infrastructure directly benefited from one of these grants. The following partial list includes grants that have been cumulatively funded or (applied for) since 1994.

    Department

    Grant

    Recipient

    Amount

    US Department of Agriculture

    Agricultural Connectivity Grant

    Center for Rural Studies, UVM

    $100,000

    US Department of Agriculture

    Rural Business Enterprise

    Vermont ETV

    (applied for) $490,000

    US Department of Agriculture

    REA Distance Learning Grant

    Grand Isle Supervisory Union

    $350,000

    US Department of Commerce

    TIIAP [Telecommunications Information Infrastructure Applications Program, US Department of Commerce]

    Fairfax Community BBS

    $3,962

    US Department of Commerce

    TIIAP

    Castleton State College

    $54,192

    US Department of Commerce

    TIIAP

    Vermont Technical College

    $91,445

    US Department of Commerce

    TIIAP

    Vermont Public Radio

    $49,105

    US Department of Commerce

    TIIAP

    Critical Language & Area Studies Consortium, Inc. Brattleboro

    $70,000

    US Department of Agriculture

    Rural Business Enterprise

    Vermont Technical College

    $1,300,000

    6.4. Summary of Findings

    FY1996 is the first year in which "GOVnet" revenues and expenses were separately appropriated, and segregated into network, administration and Internet service. There were no mechanisms in prior years to capture itemized revenues and expenses directly related to network services. Services provided to state employees (network administration) continue to be undifferentiated from services provided to Internet users. Comparison of expenses to prior years’ expenses cannot be done on a line item basis.

    Capital costs have been allocated for various distance learning initiatives. Although some of the funds have been administered through the network administration group, the funds were not directly used for network administration or development of the state’s network infrastructure. Total cumulative capital costs attributable to GOVnet are $0.