Vermont Legislature SmartTranscripts:

[Robin Scheu (Chair)]: Good afternoon. This is the House Appropriations Committee. It is still Tuesday, 01/06/2026. It's about 01:30, and we have with us this afternoon the Agency of Digital Services. We've asked to come back because started getting an education on the whole billing process last year. And then as part of the budget, we said if there is a contingency, if there was additional money, that that would go to ADS to help with their process. We had the money, and now, as we're going to be doing with all the agencies, we're following up to find out how it's going and maybe get a little refresher on what is the problem, because I'm sure not all of us have remembered exactly what that is. So if you two would like to introduce yourselves, I would take it away.

[Kate Slocum (CFO, Agency of Digital Services)]: Good afternoon. I'm Kate Slocum. I'm the Chief Financial Officer for

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: the Agency of Digital Services. And I'm Denise Riley Hughes. I'm the Secretary for the Agency of Digital Services and the state's Chief Information Officer.

[Robin Scheu (Chair)]: We have great. We have your

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: yes. Put a couple of slides together just in case we needed a bit of a recap, and we've been able to, over the last six months, build what we've been trying to do going into FY 'twenty seven much more holistically, and then specifically looking at the appropriation or the $15,000,000 where did that go and why? And you are correct, there's a lot of complexity. And so I appreciate the opportunity to demystify as we can, when we can, because that's what we're trying to do, is actually take it from a very complex, unwieldy process into something that's a lot more predictable, transparent, explainable, and tied to services. Great.

[Robin Scheu (Chair)]: Well, we like

[David Yacovone (Member)]: that. Sounds good.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: So I guess we can just kick off, if that's okay, going through the slides, so we can have a bit of a recap. So one of the things that we've been focusing on specifically is that I know that this committee hears a lot and others do as well, and we do too, is that my IT bill is complicated and complex and I don't understand it and what am I paying for and what is being built. And so looking at all of the different services, we can't decouple budget from expenditure to recovery. Really have to look at them as a continued process, that we don't under budget, over consume, and then under recover or over recover. We want to make sure that everything's balanced. And we've been very transactional based over the eight and almost nine years. In April, we will be nine years as an agency. And so we've outgrown the model that we came into as an agency. Everybody's needs are different. And if we decouple the expectations of IT and IT services from the budget piece, it makes it very difficult to recover holistically for expenditures that are being consumed across the state.

[Robin Scheu (Chair)]: So when you say budget expenditure recovery, so you and the department or agency agree on a budget for XYZ project, and you spend all the money, and then you'd have to get the money back from that agency. Is that sort of what we're talking about?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: That's similar, yes. That's one example. And it's for everything. I could budget for a particular platform, And then in the middle of the year, the contract renews, and there is a percentage increase of inflation on that contract that wasn't accounted for. And if I were to look at the actual, let's say, SKU or single SKU, then an agency can come back and say, Well, I didn't buy that SKU. I can't pay for that. But what it also did is it helped us identify that we had less than 50% of the departments that had embedded field staff to be able to support them. And so it was creating a lot of flux and lack of controls within the different areas. And you'll see those like bespoke. Typically, would see this project based costs, but we were starting to see those as operating support costs that are under unique contracts that really should be part of holistic IT services. And so that made things confusing. It also didn't allow us to tie expenditure to either a general fund recovery versus a federal funded recovery or another revenue source. So we're looking to demystify a lot of that through this process.

[David Yacovone (Member)]: Do you have a question?

[Wayne Laroche (Member)]: Mean, terminology, just definitions, do we understand the same thing? When you say services, you're talking about programming, you're talking about installation of hardware, you're talking about all those different things, that's what you're talking about, services. You have multiple projects going at any one time, and they may use different number of those services, right? Yes. So, accounting problems. How do you account for that? You're an IT, so you have to come up with a nice system for making sure you're doing it. So to understand that, we need to know what services mean. I think I understand that part. I'm just wondering, we all know that there's always costs that you can't anticipate on a project comes in higher or lower. I don't And multiple But overlapping budgeting models, are the different budgeting models? Have different sources of budgeting, but how is it modeled that's different?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: So when we were created you could probably speak to this better than I can because you've been here quite a bit longer. When we were created as an agency, if the agencies were aimed for, let's say, for example, their embedded resources, their dedicated IT resources from ADS that were maintaining systems within their department or agency. In person. Yeah. Some agencies were recovering were being invoiced for that under an SLA model, some were using a timesheet model, and some were consuming and not being invoiced. So it was a complete disparate system that for the same person, for the same series of forty hours could have five different recovery models for it.

[Wayne Laroche (Member)]: Worked a lot better when I had my own IT guy in Spain.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: So you would think that, yeah. However, that's the challenge is that when we remove uniformity, we start creating a lot of unnecessary risk and a lot of overexpenditure. And so that's what we're trying to do is rein in the expenditure and rein in the cost because IT is expensive. And it is increasing because our digital footprint is increasing. So we're looking at this as way to move from a transaction based model, which is also a deficit sped model, into a service based model that is tied to measures and tangible things so folks know what it is that they're paying for and what they're getting. But then it also allows the legislature an opportunity to know what you are putting your money to and know where the budget is going. Because it's hard to do that with a series of thousands or tens of or hundreds of thousands of transactions every year.

[Wayne Laroche (Member)]: So have you built yourself your own system, IT system, accounting system to do this? Because it seems to me it'd be fairly, once it was built, it'd be fairly easy to maintain.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: I'm glad that you asked that. I think at some point you will hear me make a recommendation that we do put funding towards a more comprehensive IT asset management system. We do a lot of great magic with spreadsheets, but we've never actually made an investment in ADS systems or platforms to actually be used across the ecosystem.

[Robin Scheu (Chair)]: John, another question.

[John Kascenska (Member)]: Yeah, because I just want to make reference to that skew, kind of that unanticipated cost that may not be initially anticipated with a particular project. And so what an example of that, I mean, probably lots of examples you have here. So I'd like to hear a few of those, but one of those examples could it be just simply an unanticipated large increase in like a service contract if you're using a particular platform or agencies using a particular platform. Does my question make sense to you?

[Eileen Dickinson (Member)]: That could

[John Kascenska (Member)]: be And I'm just asking that question, because I ran into a few businesses in the last couple of months here that have, they use different platforms for like, you know, transfer of funds to the clients, buying something online, for example. Some of the fees that have come out this year have been like 300% of what they initially were in the previous year. So, I've experienced that as a business person, had to make a significant decision change here perhaps in that way. And I work with our hospital here at quite a bit, and they're going through all kinds of upgrades as well. And they get different kinds of service things that happen like now. They're coming to effect like now. The industry know about six months ago.

[Kate Slocum (CFO, Agency of Digital Services)]: Very similar. That

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: is an example of what we try to do is mitigate those where we can or at least be able to put something in place so that we can anticipate those and bring attention and resources where that is. But your hospital example is a good one where if we were to maintain in a transactional model, the only thing that you're ever recording is the individual roll of toilet paper here this many times, but you're not looking at the whole system. And that's what we're missing. Think that that also goes into the total cost of something. If you're looking at what are the total costs of an existing IT system, if the state never had that before and they didn't have a system to do that particular thing, it's really hard to anticipate what are going to be the total operating costs, what is going to be the resourcing costs. A good example that we've come into in our analysis have been that we had a really strong timesheet, we call it timesheet at a rate that was established nine years ago, dollars 88 and $84 the only two rates for timesheet recovery that we have. And if you do the math on the amount of time per hour that you can bill, it's a huge deficit spend model. And there's no way for me to put caps or controls on that because that's my only mechanism to track expenditure and cost in that particular area. So we've got to change that.

[Robin Scheu (Chair)]: Thank you. So you're kind of working to have that uniformity across agencies and departments that

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: we haven't had. Yes, and also establish what we call core enterprise services. So we've never looked at what are the foundational non negotiable services that must exist in state government that everybody is buying into. Everybody's consuming and everybody's using, but not everybody's paying for. And so I anticipate through this session, you're going to hear a lot about my ADS budget has gone up well. But when you look at the whole picture, your total ADS expenditure has not gone up. We're just charging you for what you've been using now.

[Robin Scheu (Chair)]: You might have, like everybody uses Microsoft Word probably. Everybody, But maybe not everybody's paying for it.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: Exactly. That's exactly what it is.

[David Yacovone (Member)]: Okay. So

[Wayne Laroche (Member)]: all the agencies, you get DEP IDs for everything, right? Revision systems, so there's So instructions to all the different agencies on how to use those, what to charge, how to put them in properly, were not consistent. And they don't know.

[Kate Slocum (CFO, Agency of Digital Services)]: So we all follow a chart of accounts, yes, across the executive branch. And each department or unit has an appropriation level, and then they have a SKU of debt IDs underneath that that they define. What we do at ADS is we say, for this type of expenditure, please use a specific count code so we can see transparency across. Doesn't always happen uniformly.

[David Yacovone (Member)]: Training probably.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: It's manual. So when you have the choice and you're looking at 1,000 different account codes, it's going

[Kate Slocum (CFO, Agency of Digital Services)]: to be tough to decide if you've made the right choice or not. It could be a training flaw. It could be simply just an understanding flaw as well. And departments have the ability to decide how they're going to structure their budget, even under the guidance that exists. So although we can say, you should record it this way if it's an IT expenditure for this type of service, we can't tell them exactly how much to put into that line item and how they should spend against that line. We cannot tell them that.

[Wayne Laroche (Member)]: Got it. But then there could be, coming from up on high, instructions to all agencies how to do certain things.

[Kate Slocum (CFO, Agency of Digital Services)]: There could be more informed uniform guidance.

[Robin Scheu (Chair)]: It sounds like that's

[David Yacovone (Member)]: your work.

[Kate Slocum (CFO, Agency of Digital Services)]: It is. Yes. We've been working very collaboratively with finance and management to that goal.

[David Yacovone (Member)]: Okay. Let's continue.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: So I'll let you speak to this if you'd like to. Why is we recovering hard? We covered a lot of this. But I think the biggest thing is that the bottom one is isolating the true cost is requiring a lot of manual reconciliation. And when you are manually touching things or trying to cross collate seven different reports under one, there's a lot of room for error. And then we also have, I think that you have heard me and this committee share about the credit card SLA, I call the credit card pay now, buy now, pay later. That is also another area that has to reduce dramatically, because that allows for the consumption without consideration of where the restrictions are going be in the future fiscal year to pay for that. So we hold the burden of that expenditure, and we don't invoice until the future fiscal year. And that puts the state at a huge disadvantage. So we'd like to see that model go away eventually, but dramatically reduce, because that's also one of those areas that has been increasing over time. You're sort of the

[Michael Nigro (Member)]: bank, really,

[Robin Scheu (Chair)]: all of the expenditures that the agencies have, And then you try to collect on the loan, and it's a surprise when they didn't know they had

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: a loan. Exactly, yes. That's a great example. I

[Eileen Dickinson (Member)]: think this is something that I've seen in other institutions. You really want to go to a purchase order system rather than to an SLA credit card, do it so that you know what to expect that has to be approved. I mean, maybe over certain, but even with that, you have to reduce that P Card or that SLA or whatever it is that's being used and put it in a different system. Are you trying to get that purchase order and you could also standardize some of that with your chart of accounts, all the things that do certain kinds of equipment, certain things, keep it simple. Have three of them instead of 50. Is that the stuff you're working on?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: That is absolutely what we're working on. And then as far as that purchase order goes, it's not an a la carte for core services, but it could be for field services. So when you look at the requirements that are needed, Agency of Human Services is always a good example because they make up so much of state government. When they have a particular need, but nobody else has that, then they get to have a custom purchase order. But it's unique to them. But they still have to pay for their poor services because that's who they have and that's how many people they have. So there are some things that are included whether you want them or not, the non negotiables, and then the field services that are an opt in model.

[Eileen Dickinson (Member)]: Okay, one more thing. It sounds like because you've had this thing that's sort of all over the map, it's hard to build in a budget to say, this is what we want for equipment because that's what we've done last year and we expect we're going to need one more or maybe not much more. And what you do for software and what you do for the little widget something or others, what you do for human services for their whatever the services So that because you haven't had that kind of continuity or that correct chart of account categories that are easy to look back at, it's hard for you to budget. It's hard to budget and it's hard to recover.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: Right. And apply. Easy to consume. Yeah. It's definitely easy for people to spend money, but it is hard

[Eileen Dickinson (Member)]: to use. When you talk about recovery, you're talking about getting it from the state versus getting it from the federal government versus you're talking

[Kate Slocum (CFO, Agency of Digital Services)]: about reimbursement to you, reimbursement We to actually don't receive any direct federal dollars. So federal dollars usually are received by departments and agencies across, And then they pay us with the federal dollar, if it's eligible for federal. So that's recovery, which a

[Eileen Dickinson (Member)]: revenue source. Yes. So I have

[Robin Scheu (Chair)]: a question about that, since you brought up federal dollars. Are there times when this structure causes us to leave federal funds on the table because, say, an agency or department doesn't have a tech person there, so they're not the lead or something? And then you end up or costs, if you're analyzing, say, a project that's happening in human services always seems

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: to be having

[Robin Scheu (Chair)]: projects. And so you bring out a consultant. And if you're paying for it, then they don't get federal funds reimbursement, but if it came through the agency, they would get federal funds reimbursement.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: There's a lot of different ways that we can answer that because it gets complex. What I would say is first is our current model before we moved to this inhibited our ability for state resources to be on the delivery side because of the legacy ADA $84 didn't fully recover for what was allowable federally. So the federal government a couple of years ago, I want to say it was during the pandemic, had said, we've already updated our model and yours does not match. And so we're forced to use contracted resources at a premium for those types of projects. And we'd like to stop doing that because state resources are the ones that are going to have to manage and support that operationally once it's up and running. And many times, we have the skill set internally. So we should be using that skill set. So this model actually allows us to do that. We've been working you worked closely with AHS's CFO team, the business office, working to make sure it's as explainable. But moving into a service based model, all of the components of the service, including resourcing is accounted for. And it is so far has been supported by what we've been trying to do. So it's an easier opt in model to be able to, if we have the capacity, bring those resources in when those funds are available versus I have funds, do you have any people?

[Robin Scheu (Chair)]: So you're saying that this new model will help draw down more federal funds than you're able to draw down now?

[Kate Slocum (CFO, Agency of Digital Services)]: That would be the hope, yeah. The plan is, yes, that it is more federally friendly. And I would say that this is also phased. Right now, we're identifying core services. We're going to soon be focusing in the field area, looking at restructuring our rate model to make it more federally allowable so departments can use that to adequately draw down federal funds and not have to turn to vendor resources every time.

[David Yacovone (Member)]: Go ahead, Lee.

[Wayne Laroche (Member)]: Very thorny problem. Of course I've had IT, had my own

[David Yacovone (Member)]: IT department for a while,

[Wayne Laroche (Member)]: when we transitioned together in Pennsylvania, we had IT down there, so I've been involved in these things for fifteen years or more. I've worked on this thorny problem, problem. We've many different agencies across the state. They have different kinds of needs. And you as an IT department don't know what those necessarily know what those needs are. And which that makes you trouble because if you have a service thing, you try to make one box where everything fits, everybody fits into the same box. They don't all fit into the same box. They have different funding mechanisms too. Like fish and wildlife, we have federal money. If you had to use it for specific purposes, it fled over into some other area, they were going to come after you and you were going to have

[David Yacovone (Member)]: to give that money back.

[Wayne Laroche (Member)]: There's a lot of complexities here.

[Kate Slocum (CFO, Agency of Digital Services)]: So there are a lot

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: of complexities. And if we were to use that example as a way for us to build our core model around, we would always be fighting fires. We would always be reactive to the support, and we would lose that opportunity for anticipated future costs. When we look at how do we create a like for like, the interesting thing is we're touching almost 2,000 systems across state government today, and so many of them are being used by the same Vermonters. So when we start focusing on user experience and the Vermonter impact, you actually start seeing a lot of those similarities. And then you can start looking at from an operating support on the business side, the agency side, what does that need to look like? From a finance side, what does that need to look like? And then from an IT support to those Vermonters, our portfolio model is actually structured in a way to look at that, because what we're seeing right now is we have systems that have IT connections from DMV to public safety to municipal law enforcement to the court system, and none of that is tracked if it's a transaction. It can only be tracked if we start looking at things as an ecosystem and as a service. So when I start looking at you can touch that system, you need to meet the security requirements, we need to make sure that we've built for the throughput, but then we also have to understand what's happening outside just that one little area. And if I am restricted by think about that now, do what you need to do, but I'll just charge you later for it, we miss a lot of that user experience impact to Vermonter and the usability of the system overall, but also the longevity of those investments that we're making in the IT systems.

[Wayne Laroche (Member)]: Right. And so SQL, I assume you're using that. And are you still dealing with other kinds of systems from the old days that are still out there that can't talk with SQL?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: There's fewer and fewer of those systems. We're moving a legacy Linux system right now that is using a legacy open source database system, and we're moving that over to SQL today. So there are some modern technology has allowed us to have some flexibility in fixing some of the restrictions and limitations of the legacy tech, but we want to do it thoughtfully, and we want to do it in a way that doesn't impact the user or the Vermont public who depends on the service. And tying systems to service delivery to Vermonters, that's also something that you can do much more readily in a service based model as opposed to a transaction when you don't know who your user community is, you make a lot of mistakes.

[John Kascenska (Member)]: Yeah, I assume that thread that you give the example of from department to department agency, whatever it might be here. The track value, you've got to get into each one of those things kind of manually using that loose right to do that. Because the systems don't connect to each other here at all, or the information, whether it's transactional or other documentation, lots of things. Right. Right. So what you're moving to is something that'll provide more of that.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: It'll demystify a lot of Exactly. Say

[Eileen Dickinson (Member)]: a lot, connective tissue.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: I do say connective tissue. We want to build a connective tissue because that dependency of uptime, reliability, performance, business continuity, that's critically important. And we can't keep our eyes off of the heartbeat. We've got to make sure that things continue running, then we have less of an excuse to be surprised when it doesn't work or not know why it's not working. So it does create greater accountability to ADS, and we have greater responsibility in making sure those systems are up and running.

[David Yacovone (Member)]: Thank you.

[Michael Nigro (Member)]: So I did not serve in the legislature when the agency was created. And I haven't really been part of these discussions, because it's not on my budget, but I think I'm having trouble understanding, I thought that the agency was created in large part to address those very things. Nine years later, I'm just wondering why we are not further along. I may be misunderstanding how far along we

[Kate Slocum (CFO, Agency of Digital Services)]: are compared to where we were.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: I'm asked the same question. In all fairness, our statutory obligation is to provide technology services and support to state government. And less than two years into being an agency, a global pandemic looked everything upside down, and we had to take our attention off of something else. So I've come in just shy of three years ago, and we started that work when I started. And we realized, or I realized, that the budget cycle is really the determination to that change, because it all ended up coming back to how we build, how we budgeted, and what we could charge for. We didn't have the mechanism or allowance to be able to charge for things that were being consumed. And feelings come into play, there's also a lot of sensitivities around whether or not it's general fund, whether or not it is federal fund, whether or not it is fluctuating fee based revenue. And so we had to be sensitive about how we approached it, and we needed to make sure we had the right buy in. So finance and management has been working with us for the last year and a half. And moving to a service model does level set that budget. And you'll see in future slides, because we were able to pull up some of that both current and future projected change that's happening around the cost. So moving to core enterprise services alone does level set the budget. And what we would like to do is make sure that as we continue maturing around that capacity performance and quality of those services, that that gives you all the information on whether or not we want to stop paying for something, that there's measures tied to everything that comes along with it. So that capacity is the resources and the people, and sometimes it's the technology. But we've got to look holistically at all of those services. And it also gives a chance that as we start dialing down old services that are not needed, when I say services, mean IT, that we can do so meaningfully and be informed because the information and the data is there. And right now, it's not. And I don't want to hire outside firms to run numbers on things that we do have the access to. This is something that would be reasonable for Vermont.

[David Yacovone (Member)]: I

[Martha Feltus (Vice Chair)]: recall, I'm Martha Feltus, and it's nice to see you separately. Marty has your budget. And when I worked with your I recall certainly some of this issue with Kate in terms of a budget, agency would come in and say, Oh my goodness, they charged me $500,000 And I didn't expect it. It sounds to me as if you're moving to a more of a core services that everybody is gonna pay for no matter what, whether you use a lot of it or a little bit of it, that gets covered. And then you can look at the specific things that are for those specific agencies. I would hope then that that would help you be more timely in advising people what their expenses might be. That's our plan.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: We'd like to see if

[Martha Feltus (Vice Chair)]: you have money, etcetera. Can give them an estimate of the ahead of time. If we go do this, this is going cost this much money and they can determine if that is what they want to do, if that fits within the budget they have or want to seek money for that. And then you can recover it as well. And it's understood ahead of time rather than coming across a a year later that oh my goodness we didn't count on this. Yes, you nailed it

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: and I don't like surprises so I can imagine that they don't either. So we do, I feel very responsible for fixing this. I

[Wayne Laroche (Member)]: think Wayne is at the front. So I'm assuming there never was in the beginning any attempt to look at all systems, all departments, all agencies and state government and try to at least get your arms around the mass of the network of the different things are out there that have to be dealt with so that you can start working on it. This is like a huge matrix of things going on there. And if you never have a handle on the whole thing, can't even chunk it up into show them something might be more manageable and so probably never happened.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: So I wasn't here and I know Kate wasn't here when the agency was formed as ADS but you were here as another agency. Having had an opportunity to talk to the former CIOs, I know that that was built into their plan, and I know that there was some of that that was done. But like I said, with the pandemic kicking off, you know, within that going into that second budget year, it changed things for them.

[Wayne Laroche (Member)]: Might be a good place to use AI.

[Eileen Dickinson (Member)]: Yeah, thank you. This is interesting. You're just talking about the ongoing service that you're providing now and trying to make it uniform and make it more predictable, which is, I think it was called DII. Yep, yes. I was here when we had DII. And I came in just after we had a couple of really big total bombs of IT created, DMV, judiciary, was held connect. I mean, you name it. Everybody had these terrible, terrible experiences with trying to implement new ID, IT, and we were going to customize everything. I mean, it just was a huge mess, millions and millions of dollars. And DII was mostly a matter of just helping train people to use it, and it was a very different kind of thing than what you're talking about now. Going back to what Wayne says, nobody had a system or a plan for the whole thing. It sort of kind of got built a little bit at a time. But we are supposedly in the process from what I can remember, maybe last year, the year before that, we're in the process of trying to implement an enterprise system or something that's Is it Workday or For ERP. Yes. And so you're involved in that as well. Yes. And that getting those things off the ground was often the real, I'd say difficult, it was the impossible task. So how are you doing? Now you're doing this, and now you are trying to build a new system that will be much more coordinated, and hopefully will answer some of these questions. At the beginning, are you having any success with that? Or where are you with that?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: We're having a great amount of success when it comes to our projects. We have a high success rating compared to industry when it comes to our projects and project completion. When I first came here, we were at about 120 active projects. We're scaled down to, I think, under 80 at this point, and we're going to continue seeing that trend going down is what that anticipation would be. We have just shy of 400 staff within the agency that is supporting across state government. And in some areas, it extends beyond that. So we do have a couple of municipal law enforcement that we support through the work that we do with DPS. What you're describing makes this all more critical because we have to make sure that we have dependencies and consistencies when we start doing some of these enterprise wide projects and also the agency based projects because technology I mean, technology in general is it's a small industry. And what I would say is we have less of a challenge with the tech, and we have more excitement happening in the people in the process side than anything else. So the human factor is what plays heavily on whether things are going not so great or great, and making sure that we've got the right champion teams through that makes it all the more successful.

[Eileen Dickinson (Member)]: So are you using, for instance, for this enterprise system, which is, from what I understand, is a huge system in any enterprise system, it's a huge system. Yes. And are you using Workday or other contractors to come and help you train so that you can still do the regular work with your regular employees? Or how are you handling that?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: Yes, we've got two partners that are part of the project team, and we also have Workday who is kind of on the outside making sure that if their technology is meant to do this, that they are part of that checks and balances on, are we following best practices? Are we doing the right thing? We're taking an extended time as well. So other states have done this in a matter of two to three years. We're taking four years to do the whole budget. Okay.

[Eileen Dickinson (Member)]: And are budgeting that separately so that we can see that cost versus the day to day integration of what you're doing now? How

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: do It's you see built as separate work stream. So we do see that across all of the project data, where we have funds going to training, where we're focused on the users, what's specific to each work stream. It is all being documented. But that's all broken down, so Probably not to the level that you're describing, but I haven't seen Well, it is separately tracked. You see it in your

[Kate Slocum (CFO, Agency of Digital Services)]: the ERP project, along with a number of other projects, is funded either through

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: a mix of general fund and IT Mod Fund or entirely under IT Mod Fund. Those are tracked differently. They are not part of base budget. They're not part of what we're talking about as far as the financial restructuring ADS. They are different in some way. Yes. But you would think if we have core enterprise services and field enterprise services as two specific areas around the operations of IT, this is where we would have the structure to be able to say, once the system is up and running, is this a core enterprise service, or is this the field enterprise service? Is an optional that people get to choose to use? Or is this something that everybody in state government is using? And that really allows That's an easy determination. So then we've got the opportunity to build for the maintenance of that and the capacity to support it long term, which we haven't had in the past. Thank you. Dave?

[David Yacovone (Member)]: Do we have many mission critical IT systems that serve Vermonters that are at risk?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: Yes. It depends on what your definition of risk is in mind. We have security risk, we have technical risk, and we have business risk associated with each one of those environments. There's been a huge investment that the state has made into modernizing some key systems, our D and B system, the UIM system, that have reduced all three of those areas of risk pretty dramatically. But yes, the risk still exists, and we still have a number of legacy systems.

[David Yacovone (Member)]: Is the access system still functioning?

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: Yes, it is. And interestingly enough, the mainframe itself is very resilient. I would not consider that to be on our risk on the security side. What the risk is is a front facing interface for the users. Because the data is reliable, it's a lot harder to break into a mainframe system now than it is a cloud based SaaS So it's just a matter of making sure that we identify exactly where the issues are that we're having. And you may find out that it's not in the technology of the mainframe itself. You may find that it's in the web portal that was never updated with the appropriate level of user account security or something like that.

[David Yacovone (Member)]: I remember legislators asking me, this is regarding the SNAP program, it wasn't called SNAP, but in any event, today's SNAP program, how many people on the SNAP program receiving benefits work for large retail employers. They wanted to find corporate employers that weren't paying what they considered the living wage, and you could never, would do all kinds of work arounds to try to find that out. But the IT staff said these things are the system of the transactional beast, processing applications, very very hard, they always used to say, code was written like spaghetti. Simple things like, I'm looking at Mike because I know where he lives, but the Brattleboro district office was called LDL, and still is I'm sure today. And the Mooresville district office was V As In Victor, DL. None of the district office names, a new person's coming in, how many apps did they process in Morris? I asked them, can you change all the names to reflect, and they simply, they said it's impossible, it's impossible to do. And I said, it sounds so simple, you just can't, you know, they said, can't be there because the code over the years has been layered one on top of another, and if we go in, we risk hurting the capacity to do the transactional work to me too.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: Does any of that make sense of your advice? We ran into that with Beetle. Yes. Yes, very much so. And that had been customized and configured and reconfigured and I call it duct tape and band aids Yeah. So much that it was it was brittle, and we didn't want anybody touching it. It was so risky. Right. It was too risky. Yeah. We're not seeing that with access today, but what you what you also bring up too is the the extreme importance of ensuring that we've identified and qualified the requirements among on the business process before we start solutioning the technology. If we're asking a system to do something that it was never designed to do, then that could be an area of risk that you would consider both business and technical risk, but maybe not security risk. Those are things that we're trying to evaluate as we go through this process to ensure that we're accounting for that. None of that is tracked today.

[David Yacovone (Member)]: It was, and it probably still is, two quick stories. When we went through the last government shutdown, I remember calling the people who work in the SNAP program and said, could we have Vermont EBT cards? And they kind of chuckled, and they said, not gonna happen, but this is our system Dave, you know, the programming, but at least not quickly. Okay, I appreciate that. And then whenever a grant came through or extra funding and people were excited because there was an opportunity to do a new business system, a more productive, nimble, fluid system. The very best people on our production teams get the work done. The very best people would be pulled out of production and put on a work group for fifteen months to design the new program. And we'd hire, we'd backfill with temps who were good Vermonters who wanted to work hard, but knew diddly, you know, just didn't talk anything. And the production fell down so badly that we started to get what are called errors, federal food stamps, snap errors, very serious because there are big financial penalties. But when we tried to explain, well, we're building this new system, which is desperately needed because the current system was built in 1980, and you begin to worry about things, oh, it was a nightmare. And I fear that it's probably the same environment people are in today.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: We used the concept of core enterprise services when Summer EBT was kicking off last, not this past summer, the summer before. And there was a risk of rolling out the benefits in December for the summer prior. And clearly, that's not okay, not acceptable. If the summer starts in June, then the benefit should start in June. If the summer starts July 1, get them out. Using the concept of core enterprise services, we said, well, data is something that everybody's using. And we were able to bring in the different teams from EDS to be nimble and adaptable so that the developers could continue developing, but they had the right folks on the data team to make sure that we could accelerate that process. And that's the level of flexibility that Vermont needs to be able to make changes on the fly as we grow and change. Thank you for your story. We'd like to minimize those.

[David Yacovone (Member)]: I'm already breaking up.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: So I think we've really covered I mean, you went over this We've covered everything through all of the great questions. So current to future state funding model, I'm very visual. Words on a PowerPoint crush my soul. So I needed the visual here. And color coded wise, it shows you the list on the left, allocation telephony, timesheet, SLA bespoke. Those are those categories that you'll see in our budget planning. They're meaningless. So if we were to look in the services and support model, we have core enterprise services, what I call field enterprise, but it's agency solutions, opt in, opt out, and bespoke. Bespoke has to remain because that's one of those areas that it's like ad hoc, unique project. We put projects under bespoke so they can live on their own. Definition. Bespoke is tailor made. Tailor made. Custom. It's custom. Custom. Custom unique. But custom in

[Kate Slocum (CFO, Agency of Digital Services)]: a way that Fish and Wildlife comes forward, they say, we need this specific system only for the wartons. And so, Okay, we can work with you to help design what that looks like. Right.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: And so what I did, hopefully nobody has color blindness, and I apologize if you do. But if I look at core enterprise services being the dark green circle, those are the four areas that we're recovering today based on the services or the products, resources, and tools that we use that make up core enterprise services. So today, you're going to see that spread across four different areas on the budget and recovery side. So you can never really see the true cost of something, because you're seeing it's peanut butter across everything. Same with agency solutions, we would see agency specific requests coming in, telephony timesheet SLA and bespoke. And we'd really like to minimize and reduce that. And then bespoke, we will see in that current model where we were seeing timesheet SLA and bespoke as well for one particular snap or summer EBT is a good example. We would see that in all three of those areas. We streamline it and make it a lot less complex by just saying this is bespoke. And then anything and everything under bespoke, you would use your chart fields and you would have specific project codes that you would use, but everything would be very simplified into three areas.

[Wayne Laroche (Member)]: What's SLA? See, the definitions are interesting because there's a I've Yeah, heard

[Kate Slocum (CFO, Agency of Digital Services)]: we had that all last year with

[Robin Scheu (Chair)]: the service level of agreement.

[Kate Slocum (CFO, Agency of Digital Services)]: Service level agreement, what it really represents is products, enterprise products. Certain software, certain apps, yes. Like Adobe would live there.

[Wayne Laroche (Member)]: Or it could be a custom product that you can come up with yourself.

[Kate Slocum (CFO, Agency of Digital Services)]: Well, SLA, yes and no. It mostly was a product that was used across various agencies and departments as kind of an enterprise tool, but not everybody used it. Some people had need, not everyone had need for

[David Yacovone (Member)]: Okay. Let's get going in here.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: So I know one of the biggest things that we wanted to make sure that we covered is what was the $15,000,000 spent on. And so this is a chart that we had shared last session with the projection of what we anticipate. And you can see demand is SLA timesheet bespoke. SLA time sheet bespoke. Thank you. And the dark blue is what we would consider allocation. And in nine years, that allocation amount, it's not general fund, it's just what the ISF is. It just stayed flat for nine years. And so it kind of peanut butter. What we did here was take the $15,000,000 that we would have charged Cavelessio that is being consumed under SLA in '26, that agencies would have seen in their bill in '27, because remember the credit card pay, buy now pay later. And we applied it to those core services that they're not going to get a double bill for. So that drops the demand budget down dramatically, and it establishes the foundations of core services. And so we would see now over the course of the next continued years that we'd be looking at roughly that amount year over year, unless we anticipate a specific increase or if we now determine that we are, let's say, underfunded in security and the legislature says want to give you more money for security, whatever that may be. Or if something like a ERP system were to go live, and right now Vision and VTHR are paid under the Vision Fund. If the administration says we want to actually consider this under a core enterprise service because everybody's consuming it, it's just easier to build back that way, then you would see that CES change. But this is just the best visual to show where that money is being spent so that people aren't double billed.

[Robin Scheu (Chair)]: I really appreciate you coming in.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: I know it's a lot, thank you.

[Robin Scheu (Chair)]: More times we'll really understand you. It's hard, I understand a little bit more, but the rituals really help and I think this is a good conversation and helpful for us, so we really appreciate it. I know we'll see you back once we get the budget. So we'll more to talk about that. And Marty's your liaison. It's great to

[David Yacovone (Member)]: meet you. So you're in good hands. Thank you for all your

[Robin Scheu (Chair)]: you. Thank you all for coming in. So, committee, that is it for today. We're on your break in the AC today. That's good. We can continue to review your own budget adjustment pieces and connect with people as you need to. Tomorrow we're going to start at nine with the Human Rights Commission and then the Cannabis Control Board is coming in. We're going to have maybe some ARPA updates and some other things. In the afternoon, there's the Governor's table state address. So that's kind of just the broad view. The agenda you may see getting updated, so keep checking back. We won't start before nine minutes.

[David Yacovone (Member)]: Will we come back here after the State of the State?

[Eileen Dickinson (Member)]: At the

[Robin Scheu (Chair)]: moment we don't have anything?

[Wayne Laroche (Member)]: I'm not pushing yet.

[Denise Reilly-Hughes (Secretary of ADS and State CIO)]: Unless you're not here or if you'd

[Robin Scheu (Chair)]: like just to