Vermont Legislature SmartTranscripts:

[Martha Feltus (Vice Chair)]: Good afternoon, everyone. This is Wednesday afternoon, the twenty eighth at 02:20 almost in the afternoon and we are here today. We want to hear about the budget presentation from the Department of Finance and Management And Hardy Merrill is here to work with us today. Please take a seat. I understand Adam is not going to be able to join us, so all are in the capable hands.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: I hope so. Thank you, Madam Vice Chair. I know you got to spend some quality time with commissioner Gresham yesterday.

[Wayne Laroche (Member)]: Thank you. She is. Just launched it every

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: Fortunately, I think my allotment is shorter today. So for the record, ardent and Merrill debt commissioner, department finance and management. And does does everyone have the presentation that was sent over earlier today? Okay. I was gonna

[Martha Feltus (Vice Chair)]: access to an electron.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: Okay. Great. So I'm gonna first adjust my glasses, try a different pair and see if this works. And I will start walking you through, I would say, page number four of 33 with the summary and highlights. So first, I just wanted to provide a brief refresher of our of our organization. Department of Finance and Management actually has two separate divisions. Each one is funded by a separate appropriation in the big bill. So we've got the division of budget and management, which is b one zero six in the bill, and the division of financial operations. B one zero seven, we often refer to them in shorthand as bud man or fin ops. And if you look to the left at the department's mission statement, it it really describes there there are really two separate functions. One is these the statewide centralized accounting functions, which which provides internal controls and also has a reporting function and produces the annual comprehensive financial report, which is published on the website, due January 1 each year. And so there's that whole piece. That's financial operations, the statewide accounting function. And if you look at the pie chart below the mission statement, they're the majority of the internal service fund funding. So the statewide accounting function, which also provide it runs the the vision system, the financial system, all the business offices use and provides a help desk to provide support and maintains that system. That's all internal service fund operation, and that's about 20 employees that make up our financial operations division and provide those functions, under the direction of two two directors, our director of statewide reporting who focuses on the reporting component. That's John Becker, and Joe Harris is our director of accounting, and he manages, the accounting, and controls functions and really running and maintaining and providing support for the vision system. So that's financial operations b one zero seven. And the the budget and management function is, as you know, we are we certainly take the lead on, preparing and, and presenting the governor's budget recommendation. That's one of our functions in budget and management. And we also, with our team of in addition to the commissioner and myself, there's our director of budget and management operations, Aaron Broder, and a team of five analysts. And we've been at that level of staffing and budget and management. So a pretty pretty small team. We've been at that level of staffing since 2020 when I joined the department. I I do note that historically, there have been as many as seven analysts in budget and management. In addition to a director, we've been operating at this level of five successfully since 2020. Each analyst is assigned much as this committee is to specific areas of government to liaise with and and specialize in and also provide support and services as a point of contact to those departments on budget related matters, as well as things like contract reviews and administrative bullets in 3.5 compliance and a number of other financial functions. So when we look at the pie chart, the internal service fund component is 4,400,000.0 in the f y twenty seven governor recommend, and that's really there's about a a half million dollars of that as a piece of budgeted management. So we do have two budget analysts that spend part of their time maintaining the budget system that's used, which is separate from the vision system, but the system that's used by about a 120 users statewide to enter the budget information. So they they provide some support of that system, and they're and they they really do the system admin functions and pull all the information together that produces all these reports, that produces the numbers, that informs the budget recommendation, and ships the data over to joint fiscal and so on and so forth. So the hours that they spend on the system maintenance part of their job are charged through the VTHR payroll system to the financial management fund. So out of out of so their their salary time is charged to the internal service fund, as well as we've got some, you know, some operating costs related to that system as well. They actually are increasing quite a bit this year in budget and management, and there's about, $200,000 decrease in our expenses related to running the the budget system. And that's actually some good news and helps our our internal service fund budget for finance and management this year. That is that that decrease is actually related to the replacement of our of our budget system, which was successful and took place this year. This was the first phase to be implemented of the ERP modernization program, which is replacing Vantage, which was the former budget system, has now been replaced by Workday adaptive planning. And currently in in process is the implementation of a human capital management Workday system to replace VTHR. That work is ongoing, but the work for the budget system was complete. That's a relatively small piece of the overall ERP modernization project. It did cost about $1,100,000, the implementation associated with the new budget system. That's that was funded out of a $12,800,000 ERP appropriation made back in FY twenty two, and I provided the citation here. The good news is it was a it was a fairly it was a lot of work to do in a fairly compressed time period. The the work began during the last legislative session actually, and and while we were busy with regular operations, continued over the summer and really went live just in time for agencies and departments to start using it in October for their budget entry. It was down to the wire, we were successful in terms of the training and go live. We did receive positive feedback as well from the users. Once again, they number about 120, but in terms of the use of the program for data entry, there was a lot of positive feedback in terms of having a more modern and intuitive interface. Where we realized the $200,000 savings is basically we were spending about that money amount each year for extended support of the old no longer supported Vantage budget system. And and even though we spent that $200 for extended support, and the idea with that was they would even though they no longer support this system, that would pay for them to sort of host it this unique configuration even though they they wouldn't support it in general for customers. They would keep a copy, you know, on a server and theoretically, help us if we had trouble with it. Although, when we did have trouble, the support wasn't really there either. So we're we're we're glad to be on a modern system, I guess, to sum things up. And we're glad that it it was completed on time, and it was successful, and we've and we've presented we've presented the governor's recommended budget. So that $200,000 support cost goes away along with some additional ADS support costs that are also going away because this is really just in in the cloud, and there's not really anything to maintain. And actually, our two staff that spends part of their time administering the system have so far been able to make some configuration changes to it as needed. And and hopefully, we're not gonna have a lot of cost ongoing with this. So that was some that was some good news.

[Martha Feltus (Vice Chair)]: And I will comment that I'm personally excited to hear that because the last time I was in appropriations this is when we when we appropriated the money for that. That was a big project talk about at that point. So I'm glad the first phase

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: is The first the first phase is I I I should I I I just should comment that this was the sort of the smallest and easiest piece of the of the whole puzzle. And, you know, this was the 1,000,000 out of this $12,800,000 appropriation, and there's actually, in addition to this, another $11,800,000 appropriation. And those replacing the VTHR, the the human capital and the financial system are much, much larger, more complex tasks and with with much more at stake in terms of being critical, you know, day to day day to day functions and, you know, maintaining our our our payroll and finances. But hopefully, this is hopefully, this is a good sign. So thank you, madam vice chair, for for that acknowledgment. So in terms of the in terms of the overview, the internal service fund budget, I you know, we're we're pleased to report that we're actually for Budman and FinOps combined, we're we're actually down year over year, which is, again, really, that's just due to that cost savings that are that's related to the new budget system is really is really what's driving that. I do I do want to point out, however, I thought I would segue into a little bit, not included in this presentation in terms of the paperwork, but I wanted to discuss the financial management fund, also referred to as the vision fund, a little bit and give you an overview of that because that is it's an internal service fund that the Department of Finance and Management has responsibility for managing. So I guess we we sort we quote unquote own the fund. However, we're only one of several several op discrete operations that are that are funded by the financial management fund. So DFM is funded to the tune of the $4,400,000 you see here on the pie chart. We're 4,400,000.0, but we've also got ADS funded, which receives spending authority from the fund to the tune of 3,200,000.0. We've got DHR, which is funded to the tune of 5,100,000.0 in addition. So so those pieces all add up to 12,700,000.0. Last year, those same three pieces, DFM, ADS, and DHR, received spending authority of 12,500,000.0. So we're really only about a a a percent and a half up for those three discrete operations and the funding they receive from from the the vision fund or the financial management fund. However, there is a new expense that's now being funded by the financial management fund this year, and that's causing, an increase of actually about $1,400,000 on top of that 12.7. So the total for the Vision Fund, financial management fund is now 14,100,000.0 this year that's being allocated out. And that's a so that's a that's a significant increase. And that's real that's related to the VTBIE system, which is actually maintained and supported and operated by BGS purchasing. So now I'm not sure if you've talked to BGS yet. That will be something different in their budget. When you review BGS purchasing, they now have $1,400,000 related to the VT buys in BGS purchasing. Now about half of that is the license cost for the VTBIE system. There's an annual license cost of $600,000, I believe, is the approximate amount. And then there are positions in addition. I believe it's a quantity of three. I know we've got AOAFSD here. Can you double check my math on that? Is it three positions that VT buys? It may be more. The total anyway that we've got built in the into the budget is 1,400,000.0. So that so so that's now part of our financial management fund and the internal service fund charges that are that are paid by departments and agencies statewide.

[Unidentified Committee Member]: Why is for?

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: For employees. Thank you. People? I'll pause for a question if there is one.

[Wayne Laroche (Member)]: Yes. So those would be in BGS, for for employees would be under BGS.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: They are.

[Wayne Laroche (Member)]: What's the revenue source for the fund?

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: So it's an internal service fund, and you will see it. We we charge it out to all departments and agencies statewide. When you see if you look on ups and downs, you'll see a line for vision and is usually how it's described. Its official name is the financial management fund. So we have we have that as part of our budget documents here. You'll you'll see increases as well. We're actually the way it's allocated is according to a fairly complex formula. And so out of that 14,000,000, we try to establish how much is roughly attributed to the vision finance system and how much is roughly attributable to the VTHR payroll and HR system. And then in terms of the formula to allocate to agencies and departments, the portion associated with VTHR is allocated more on number of employees. And the portion associated with the financial system, which includes the all the cost of our financial operations, staff salaries and benefits, for instance, that's apportioned out more on on transaction volume and amount, and so how much they're running through the financial system. So so actually, well, the you'll see you'll see, for instance, our our vision fund, well, well, it averages let me see. 14.4. So the so the Vision Fund increase is a double digit increase, but it's sort of like property taxes. There's a there's a statewide average, but each town's mileage may vary. In finance and management, we're actually not at the double digit increase. We even charge ourselves for our own services just to but we're not at that level because we actually don't spend a lot of money, for instance. So the amount of that's a portion based on transaction volume is much smaller. We're also a small headcount department. So so you'll see varying amounts depending on number of employees and transaction volume when you look at each department, but they'll probably all be going up to some degree. And again, the reason for the big jump that you'll see this year is the new VTHR operating costs that are coming online.

[Wayne Laroche (Member)]: So there'll be some because I have BGS' budget, so there'll there'll be an uptick in BGS' budget because of this. They are obviously poor positions.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: That's right.

[Martha Feltus (Vice Chair)]: They'll pay more into the internal service fund, which is reflected in this total.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: Right. Everyone will pay more into the internal service fund to pay for that that function, which is now adding 1,400,000.0 to the state's financial management operating expense. I guess I would just add as as a as a footnote, well, we don't necessarily in finance and management relish the thought of creating new base operating expenses that will now exist going forward, perhaps in perpetuity. When you look at the volume of contracts that were executed in fiscal twenty five, it was $1,400,000,000 of contracts that were awarded by the state of Vermont that would flow through this system. And there this is really the all purchasing and purchase orders are also running through VT buys, but the biggest function and BGS purchasing could would be better purchasing and contracting would be better equipped to really provide testimony on this. But the real advantage of this system is the contract management functions that did not previously exist. And it was you know, it it things were were paper based, and and there just wasn't as much you know, really, there wasn't any system and no control system around the contracting process and, you know, from go you know, our, you know, our RFP to contract negotiations to contracting and all that. And that's really that's really what we're getting for for that money. It's a unique product that was really tailored to meet their needs from a contracting standpoint. And once again, when you look at the volume of contracts that are, you know, that are going out, that's where that $1,400,000 to to someone in budgeted management doesn't seem like as much of a of a a pill. We're we're now maintaining greater control over that huge volume of dollars.

[Wayne Laroche (Member)]: So everything from RFPs right through the contract.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: That's right. It's all in the system. It'll be in there. It's all in the system. And then it's also integrated with the vision financial system. And and in some years, at least a couple years in the future, but pending the workday completion, would it would integrate with the new financial system. But right now, it integrates with vision, and so it goes, going from RFP to contract and then creating an encumbrance in the vision system. And that's all happening with integrations now. Save quite a bit of staff time. Well, it it should hopefully save staff time, at least in field departments. We've had to add staff actually within BGS purchasing because now you've got a system to maintain. Now got all the users, you've now got the help desk function. You might recall there were some bumps in the road when that system first came online in the in the middle of the summer. There were a couple of news articles, but what you need our staff to, you know, to manage and maintain and troubleshoot and make it all work. Actually, I I will note, and I give credit where credit's due to our staff and financial operations. There were many, probably thousands of hours spent by a number of those 20 employees in all the testing and verification of because it's affecting real numbers in our financial system, and that all has to work when in terms of the interface with vision. And it was a it was a huge effort. We're glad to be we're glad to be past it and still doing some. I think there's still some punch list in terms of working out some of the some of the bugs with duplicate POs and whatever that came up with the with the transition and with that initial cut over. But all in all, this is another system. It's great if you can report on a system being implemented and actually being successful and and working. We've got two of those actually.

[Martha Feltus (Vice Chair)]: We

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: can we can mention here. So so that's what's going on with our vision internal service fund budget and and and the explanation for the significant increase there. On the general fund side, the it's only the budget and management division that's funded by a general fund. And that's once again, the majority of the division is funded with general fund except for the expenses directly related to that budget system that I manage. So the general fund budget is up 5.2% from f y twenty six. You may recall, we issued in budget instructions statewide budget targets for a 3% increase. When we did complete our budget submission in October and turn it in to ourselves, kind of a fun process that way. We did meet the 3% target. I just wanted to add that we met the target based on the, the budget instructions, assumptions that were given for things, like assuming the retirement employer contribution rate to be flat, assuming a health by a health employer contribution to the health plan of a 5% increase, and to assume all the other internal service funds at a 3% increase versus FY '26. So the actual experience after we embarked on the budget development journey was that, well, we didn't get retirement right. That was keeping the same employer contribution rate on the retirement side. Our total contribution is going up significantly just because payroll's going, and it's a 29 of payroll approximately rate. So it's gonna it's gonna grow commensurately. So that assumption held, however, instead of being a 5% increase on the health employer contribution, that shook out to be about 15%. So so that accounts for a large part of that increase above the 3%. And then on the other internal service funds, well, as I already mentioned, our own internal service fund didn't stay within a 3% increase and significantly increased due to the due to the VT buys. We also are seeing increases just to recap statewide, the DHR internal service fund is up about 10%. The fee for space internal service fund statewide is up about 5.5%. Now that's another year mileage will vary. You know, we're for instance, if you look at our budget detail, it's 5.1% that we're paying an increase, but some are up, some are down, but that's the fee for space. Work comp is significantly up statewide. That's about for the for the whole internal service fund, about 13%. Your mileage may vary again. In DFM, we're fortunate to not have a lot of accidents and occupational risk. And what we're paying into the fund is actually down a bit because that workers' comp, when that's when that's allocated, it takes experience into into account as well. So for instance, your higher exposure your departments that are paying more in claims pay more in the premium as it were, even though we're self funded, kind of refer to that as a premium collection. But that's another statewide pressure and general liability insurance up about 5% on a statewide basis. So really all the internal service funds, with the exception of the all other insurance component, you know, were up greater than that 3% increase we told people to assume. So I just wanted to walk through the the explanation of why a department could meet the 3% target with the budget they submit. But then when it comes final to the governor's rec, they might come in higher, and you'll probably see the same situation with many of our general fund departments, and and that's that's the I I thought I'd walk through the explanation here so the same situation can be applied to other budgets you're reviewing. I'll take a pause for a moment there. Said a lot of words and see if there are any questions.

[Martha Feltus (Vice Chair)]: Are there any questions on all of these numbers we see here in front of us? The off sales on these first two pages. I think we're fine. So, Ben, talk about some programs, perhaps.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: I thought I would just explain a little bit more of the numbers, actually, things that I think should be highlighted for the committee's knowledge.

[Martha Feltus (Vice Chair)]: Right.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: There is a large decrease in so we've also got an IDT slice of the pie. When you look at the pie chart on on page four, and it's it's sort of a little unusual. You know, when I first started presenting these budgets at DFM, there was not any interdepartmental transfer spending authority at all. We've now got this slice here. That's about a half million dollars in total. And so the way that breaks out is there's actually $250,000 of that approximately, which is an internal, an interdepartmental transfer from the agency of administration secretary's office. It's actually coming from the chief recovery office, and it's coming to finance and management. And I just wanted to explain and the detail you may find if you were to pore through some of the required reports like the IDT report and such. I wanted to give it an explanation for clarity, which is there is a staff position that exists in the recovery office, and that's the Central Vermont recovery Recovery Officer. The position is held by Patricia Moulton. And so that position really works organizationally within the recovery office. However, it's so it's an exempt position. It was actually created within the Department of Finance and Management, but it's funded by the Recovery Office through an IDT. The reason for that is there's actually in statute, there are some restrictions on how many exempt positions can exist by statute, like, within a department. And so we and we don't have a lot of them in finance and management. They had already been allocated in AOA. And when the recovery office was essentially stood up in response to the the flood emergencies, basically, there wasn't room to create an exempt position there within AOA. So the position was created in DFM, but it's funded from from the recovery office. And I would imagine that the position is shown on the org chart at the recovery office when it if if they present to you their budget, and the position is not shown on our org chart, which is towards the end of this package. But I just wanted to disclose the the reason for that sort of it's a it was an administrative reason for creating it in in accordance with statute, but it's funded by the recovery office. So that's about half of the half million dollar IDT. And then the rest of the the balance of that is we still have we have one position that's limited service at financial operations, which is related to grants, statewide grants administration and reporting. So during the ARPA boom, some ARPA administrative dollars were were allocated to support a limited service position required in financial operations to keep up with there were so many more grants, there was so much more tracking tracking there. That position in this budget is only funded through December 2026, because that's the expiration date of the limited service. But that's, I think, about an $84,000 sum. And then the balance of the IDT spending authority, there's another limited service position exists to support the ERP modernization program. However, that position is currently vacant. And if if we do, we plan on remaining having it remain vacant until we're really at such point that we need to that we're going with the with the financials implementation that we really need some more backfill help. And that has not been the case yet. And so we have not filled that position. It's in this budget IDT, it would draw from the ERP modernization appropriation, which is, you know, which is the one time funds. But currently, we're not using it, but it does remain in the budget in case we need to pursue that position in FY twenty seven. The last thing I wanted to comment on the IDT spending authority is there is a significant change on the FinOps side of our budget. In the IDT budget column, there's a decrease of $325,000. And that's driven by two limited service positions that in addition to the one I just described, that were also created to support ERP modernization. And we actually, during this current fiscal year, transferred those positions to DHR, and DHR is hiring. I'm not sure if they have the positions in place now, but currently, the the action as it were in the ERP modernization program is all on the VTHR side. We're not we haven't yet started the financials implementation. So within the agency of administration, we saw that those positions were much more needed over at DHR than at DFM. So we trans we transferred the positions. They came out of the FinOps budget. They were budgeted in f y twenty six. They're no longer budgeted in f y twenty seven, so that's that down. Those are, you know, those are the big those are explanations of all the the the big number changes to the extent that they exist in the budget. So I will pause there before continuing on.

[Martha Feltus (Vice Chair)]: Internal money moving back and forth and up and down to help us administer our responsibilities and we thank you for certainly all the work that you do out of the agency of administration to help keep everything straight. And they're not the policy issues that we work with in other areas, but we got to keep everything running. We appreciate that. Any other comments? Any questions? Folks, okay, seems clear to us.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: And many thanks, Madam Vice Chair. You're much easier on us than Chair Scheu.

[Wayne Laroche (Member)]: Sorry. Hi, careful.

[Martha Feltus (Vice Chair)]: Here it is.

[Unidentified Committee Member]: Yeah, you have made this transition to workday. It's obviously going to be phased in. Is this something you see as a success? And then I know transitioning from one software to, especially an older software, sometimes can be.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: Sure. So I'm happy to talk about that from, at least from the perspective of this one module, the adaptive planning that we use for budget. I mean, it's a success, by the by the objective criteria of on time and on budget, and it it worked to, produce the required reports. What I will say is based on, you know, the time frame that we had and that we were really forced to, you know, on the schedule. You know, we started just last, you know, really March, we were getting going. And we had to have the thing live and operational and people trained and it working like in October for budget entry. And we got that working. It was even later, we got we the Workday Adaptive Planning, really, it's much more of a it's a database product, essentially, right? It's a data base and analytics product. And it's good for things like charts and graphs and dashboards and stuff like that. It's not as much set up out of the box to be like a report delivery system. And actually, we need to use it to deliver a number of report items according to statutory requirements. So it was quite a bit of work and it was kind of right up to the last minute, frankly, in order to get all the reports configured and in order to produce reports, which if you look through this packet, they pretty much duplicate the same format of the reports we handed in previously. It's the same information. It's the budget roll up report, the budget detail report, the position summary, the interdepartmental transfer summary, and the grants report. So we duplicated functionality, right, in sort of a lift and shift. So there's not a lot of in terms of, and the thing did work better. It was more reliable, it's supported, and the users had good feedback on it as a data entry thing. I would just say we didn't take like a big leap forward in terms of any process improvement in terms of like what we're delivering, we anticipate an opportunity to do more with it when we're implementing the financial system and a new financial system and really unlock now an integration between the budget system and the financial system and see real time budget to actual reporting and deliver a lot more new functionality to users. But we haven't really done that yet and that was really due to the compressed timeline, in part driven by, again, our obsolete system that was that was not supported and was not reliable. And the good news about completing it in the compressed timeline successfully as well as we did realize the financial savings as well, a couple $100,000 a year that I pointed out. So it's so I do so in summary, yes, it was successful. But I think we're not realizing as much potential as we eventually will from being on this new platform. And we look forward to continuing to, you know, to continuing to wring more out of this investment as we implement the HR and the financial systems and then really have everything integrated together delivering more new functionality, which is the goal of the whole investment from the start. So I hope that answers your question.

[Unidentified Committee Member]: Yeah, it's just one of the things that I'm aware of, is that a lot of times you have to run two programs, two things in parallel. And you have to have the people who are working on the old one, and then you have to have the new people who are training, and you have to often bring in training, like from Workday to go and bring them up. And then eventually they all transfer And over to

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: there will be more of that. It's a much bigger lift on the HR and financial system sides. We were able to completely just turn off and throw away the server for the old system and and beyond and beyond the new with this. But again, it's a it's a it's a simpler business process in the terms budget entry and preparation. I do want to make one comment actually, as we're talking about the adaptive planning and the reports and the format and how we essentially duplicated the reports that we previously provided. There is one issue that we found, which is the budget detail report, which I think page 20, I could give an example. So there's an issue that that we still need that we need to that we need to to fix, essentially. If you look on page 20 of 33, just as an example, in the previous reports that we provided, you used to see the exact where it says fund name and then the amounts of spending authority by fund. The the the prior system would produce each each discrete fund and fund number. And here, they're kind of combining, for instance, IDT funds here. We don't have a lot of different funds, so it's as not good an example to look at DFM. But for instance, if if you look at state police and they have, like, a dozen different special funds, they instead of seeing each special fund and how much spending authority and change, right now, the reports that are being delivered to you have them all rolling up into one line that says special funds. So I just wanted to disclose, especially if this comes up with other presentations, unless unless departments are sort of producing their own, which is pretty easy to do, you can use this system in conjunction with Excel and show things in more detail and different ways. But this is an issue that basically I don't believe we're providing all the required detail, of course, according to, the statutory requirements for the governor's budget recommendation in terms of not showing the exact detail by fund. And we are we need to this is one thing we have not been able to fix ourselves with our two people, and we need to work with the vendor. We also didn't wanna risk breaking this thing as we were producing, as we were producing the governor's, budget, and we we discovered this just as we were producing it, really. So we are going to be I just wanted to disclose providing these reports exist, you know, on on a DFM website, and and they're also published by the JFO. We're gonna be updating them also, online reports that are available. Will have the fund detail. We're gonna work with the vendor and get that done as soon as as soon as possible. But I wanted to provide that disclosure, for instance, in case anyone comes in front of you and says, oh, well, you can't actually see the fund detail anymore with this new system. Well, that's something we're aware of, and it's, you know, one of these down to the wire go live and get it going things. And and so I wanted to disclose that and and just advise that that's that that's gonna be that's gonna be an an improvement.

[Martha Feltus (Vice Chair)]: Representative Laroche, had a question?

[Wayne Laroche (Member)]: Yeah. Just, you know, the program and all this thing, you didn't buy obviously, you couldn't have bought a package, a pre canned package, they're actually coating this for you, right? I assume it's SQL and eventually

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: It's actually not. So what this is, is an example of a prominent trend in information technology systems now, which is you are actually you're using a cloud based sort of generic hand thing, but then what you what you do specific to your application is adjust configuration settings. The way they describe it is it's actually configuration, not customization. We're using the same adaptive planning thing that application that's running on a on the cloud in some server or servers wherever they're located in the world, and they're maintained by Workday. But everyone actually has the identical application. The thing that is different from site to site are configuration changes. It's really done instead of coding in SQL or the stuff I used to do, it's like you've got menus and you set radio buttons to be switches on and off and different functions like that. To have all that configuration set up and to make the thing work is what we paid a vendor to do, to do the implementation for us. That's the majority of that implementation cost of a million dollars I described.

[Wayne Laroche (Member)]: But you're to be able to talk across your different applications there eventually so that, you know, like for contracts.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: Yes.

[Wayne Laroche (Member)]: So your contract form. Well, that's if the contracts need to go into the budget, it should be seamlessly go over there. Somebody shouldn't have to manually install it.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: And we should be able to And that is a big part of the implementation work was configuring the system to integrate with our existing data sources. So the way not to go too far in the weeds, but it sounds like you want to get there a little bit. The our whole budget preparation process works is the first thing we need to do is import data from the VTHR system from the prior year. That's where all the position data that's part of the data that's required to be reported as part of the governor's budget recommendation comes from. All the position data comes over from VTHR. And then we also have to import all the prior year financial and appropriations data from the vision system. And then our departments type in their own data, and then it combines it all together, and we crank out reports, hopefully by January 20.

[Wayne Laroche (Member)]: Sounds like you're thinking about all that stuff. This is my experience over the years. It's been a lot of time. Get into new programs or something. Wasn't able to be customized, didn't integrate with the other systems you had. You're always in a mess, always having new IT traders because you have to keep buying new program or other programmers in stock, right?

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: It's a good business model for these technology companies, isn't it?

[Martha Feltus (Vice Chair)]: We're all going to the future. Okay, wasn't there a page here about some new programs you were working with? Know, we Comments, majors.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: You've included the statute, know, one of the statutory requirements for the governor's budget recommendation is for each department and agency to identify the program and and performance budgeting. And, we endeavor to comply with that requirement. I offer the caveat that the nature of our operation doesn't lend itself as well to a lot of metric reporting in terms of, you know and and and the things that that statute is primarily concerned with, like population level outcomes and things like that. Finance and management isn't it doesn't have as much outward facing interaction there. I would what I would highlight is on page on page eight, you know, change we one change we did make in the past year is in our internal controls function, which is in financial operations. We've got a new internal controls director and the the self assessment of internal controls is a process we go through in terms of receiving information from all agencies and departments statewide in term and gauging their compliance with all the administrative policies related to to internal controls. And we did change that process and actually started seeking more rather than all the communication coming top down from finance and management to agencies and departments. We were seeking feedback from departments and additional comments. And we did add a new measure for that based on our restructuring of the self assessment internal control. And we'll gather more data ongoing. This is the first year we've got a measure there. But that's a place we've identified for growth in terms of a program that could see some improvement in terms of and might lend itself well to metrics. Some of these other, program some of the performance measures that we have, you know, we actually have a couple that we track in budget and management, which is, you've probably noticed our five analysts are usually sitting either lurking on screen or sitting in the room and taking notes on all the appropriations committee meetings. Then we provide notes to the executive office. And so we measure getting the notes within twenty four hours, and that's one of our measures. And also bill reviews, our analysts, we bill reviews on every bill presented to the governor for his signature and we're tracking there. And in financial operations, we've got some performance measures that we track related to ratings from the from the Government Finance Officers Association Award for achievement and excellence in financial reporting and also the timeliness of our completion of the annual comprehensive financial report. So, we've got on page nine, you know, there's one of the new additions that your committee asked for in terms of reporting was to report on carryforward and whether carryforward was present from a previous year and what plans might be for using any carryforward going forward. So we did have a fairly significant amount actually in budget and management, 277,000 is being carried forward in our base debt ID for general fund for budget and management. We've also got a small amount 26,000 left in a budget development system, one time appropriation, and we're carrying those amounts forward. We plan to just we plan that this ERP modernization process is certain to require additional resources and whether that's more staff backfill, testing, integration issues, some of the issues you've talked about, like running two systems at the same time and so on and so forth. So that's our purpose designated for carry forward funds going forward. And that's the I would say, other than going into the real detail, you know, by account and position detail reports, we've got our org chart on on page 29, if you'd like to see how we lay out visually in terms of the department and our 30 staff. But I've already discussed our internal departmental transfers and the sources there. And I've covered most of what I thought you needed to hear.

[Martha Feltus (Vice Chair)]: I think you've done a very thorough job. Thank you. I don't see any other questions, are there? I think we understand how it all works together and appreciate your affirmation where the changes are.

[Hardy Merrill (Deputy Commissioner, Vermont Department of Finance & Management)]: Okay. Well, many thanks for your patience and your support. And I'm sure I'll see you back again soon. I think I'm also going to be presenting governor's office budget to this committee as well sometime next week. Thank you. Okay. Thanks.

[Martha Feltus (Vice Chair)]: Thank you very much. We are meeting with the doctor at 03:30.

[Wayne Laroche (Member)]: 03:30. 03:30. Yep. He's Turkish.