Vermont Legislature SmartTranscripts:

[Sen. Wendy Harrison (Chair)]: Okay, welcome again. This is Tuesday, February 17. This is a continuation of the meeting of Senate institutions and we have Commissioner Adam Gresham with us, Department of Finance and Management to discuss IT funding and we'll go around the room and introduce ourselves and then we'll introduce the folks who are in the room. Wendy Harrison, Windham District.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: And Rob, I'll get that district. Joe Major, Windsor District. Russ Ingalls, Essex District. How are you, Thank

[Sen. John Benson (Member)]: you. John Benson, Orange District.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: Lisa Gobin, JFO, IT consultant. Denise Brown, new secretary of the ES, law support. Emma Wheaton with Rising Group.

[Sen. Wendy Harrison (Chair)]: Please welcome, CFO of the media. Okay. Chief Stockings. And Thank you. And thank you for being here. So, commissioner, if you would introduce yourself.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: You will be, Adam Gresham, commissioner of finance and management.

[Sen. Wendy Harrison (Chair)]: Thank you for being here.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Thank you, madam chair, for, asking me here. If it's okay with you, I thought I might share a presentation that was also shared with the house energy and technology.

[Sen. Wendy Harrison (Chair)]: Yes, and if you could just provide some background, that would be great.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: This year we made some changes within the governor's recommended budget to how we budget for the agency of digital services. And as you see on this, there were really two reasons why we did this. And the first reason is that the secretary of digital services to my left spoke to me over a year, a while ago, and mentioned at that point she was reasonably new as secretary, and she said, you know, how we carry out our vision doesn't really match how we budget for our mission. And so could we think of another way to budget for the agency digital services that would more reflect how we deliver these services, and I think as importantly, what services and products we deliver? So that is, you'll see a fair amount of that in the following couple of slides. So that was really the first. And the second reason was that the internal service fund, what's called the CIT fund, Communications and Information Technology Fund, which has a fair amount, in fact, vast majority of the spending authority that is used by the agency in digital services. That had deteriorated in its balance over the past three years from the '2 when it had a small surplus, just under $1,000,000, to the '5 when it had about a $25,000,000 deficit. And so, you know, we really had the two factors. One, to change how we budget for ADS to more reflect how they go about doing their business, and two, to acknowledge and try to reduce the likelihood of further deterioration in internal service. Yes, Thank

[Sen. Wendy Harrison (Chair)]: you, and I apologize for interrupting, but I just wanna make sure, because we've been to the other committee, the House Committee has seen more of this, so I just wanted to reference for this committee, I believe the last time that this committee was dealing with this issue that was the joint meeting that we had with the house. So lots has happened since that joint meeting and so the commissioner is here to explain how the payments are processed and managed, which that was the hanging information that we didn't know at the end of that meeting. I hope that's helpful.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Thank you, proceed. You're welcome. So to provide further context, this in a, I think simplistic but accurate diagram is how prior to this year, in fiscal 'twenty six or 'twenty five or 'twenty four and prior, is kind of how the agency was budgeted. And there are four main cost recovery methods. So, back up a minute. As an internal service fund, internally serviced department or agency, Unlike many other departments, they do not get a direct general fund appropriation. And the reason for that is, well, I guess pretty simple, in that there are many agencies or departments that are meant to serve Vermonters, provide services, human services and public safety and economic development and the like. They're serving Vermonters, providing services to Vermonters. There are other departments and agencies that are providing services to those departments that are providing services to Vermonters. They call it, I would say, just the cost of doing business. You know, they provide the building in which we're sitting. They heat the building in which we're sitting. Terms of technology, they provide the software that we use, and they make sure that the software works, and if we have problems, they help fix it. They make sure it's secure, the network that we use, and the like. So these are internal to state government. They're, again, the cost of doing business. They're necessary for us to function as a state government. Those agencies and departments that are providing internal services, cost of doing business services, they're billed out in internal service funds. They don't receive direct general fund appropriation. And so they are, the concept is they bill their services to other agencies and they recover their costs that way. So they start out with a certain amount of spending authority, and at the end of the year, that spending authority has been used, and the cost of those services have been returned in various methods that you see here. So at the end of the year, they should end up basically at or near zero point zero. They've done x amount of services and provided x amount of equipment, and they receive payment from an act through the internal service funds. So that's the way it works. Think BGS, Speed for Space, same thing. DHR, they provide human resources services, they fill out them, and they receive back in. So the cost recovery methods for the Agency of Digital Services were four major cost recovery methods. The first one you see there is what's known as allocation. And those are services that are, we call it allocation because those costs are allocated basically based on a user account to every agency and department in state government. And that is a line item in their budgets, just like fee for spaces or DHR would be. So those are allocated, you know, more or less on a per user account basis. So call it a pro rata basis. Not exactly that way, but pretty close. That's about, in fiscal twenty sixteen, that was about $13,000,000 The other three you see on here are what might be called based on demand, and that is they are sent The spending authority is given to ABS to provide certain amount of services, call it for SLA, when you when you look at SLA, think kinda digits, software, storage, computers, stuff that some agency use more than others. You know, one example for DPS, they have body cams and video that has to be stored somewhere, so they're going to be a relatively heavy user of storage, of digital storage, so they should have paid for that. That's part of being DPS, right? In my department, we you asked me what we budgeted for BGS in 2006, I'm gonna find that through our vision system that is stored out there in the cloud. So that's something that I pay for. So hosting for various products that we have that are accessed by other people. That's a cost, but those are very specific to agencies and departments. So those are billed based on demand, and they're billed, you know, through the SLA service level agreement, which is kind of an old term. But that's when you think about that, those are that's software services hosting is a part of that, believe it or not, mainframes. There's still a few things around state government. So that's built out by ADS based on need, and the departments and agencies that are using those things, they pay back. When you think of timesheet, think of humans, people. Back in the day, many of these people were actually embedded in the, or part of the payroll of the hosting departments and agencies. They now are ABS people, but they're still embedded in the various agencies and departments, and they're predominantly carrying out the IT needs of those agencies and departments. So those two are billed out monthly based on, you know, the predominantly the cost of payroll, but those are people. Think of humans. And finally, And when you think of bespoke, think of IT projects. Some are large, some are small. But, you know, in human services, the Medicaid Data Warehouse, that's one of the bespoke projects. But these are projects that are launched by agencies and departments, and they fill out what we call an IT ABC Plan about what their needs are. They work with the agency of digital services over their needs and what they can afford, and various incentive things. And then the agency of digital services will go out and talk to different vendors, find the right vendor through the RFP process, and hire a vendor, and the like, and it starts to work. And those costs, ADS, you know, it gets to the point where there's a deliverable, ADS will pay that bill, and then they'll bill back the agency or department that is the sponsoring agency or department. That's called a SPOGER. So those are four cost recovery methods that, in prior terms, that's how it worked.

[Sen. Wendy Harrison (Chair)]: Are you okay with questions? I'm fine, okay.

[Sen. John Benson (Member)]: And this might be premature in where you're getting to, but I thought actually in the joint session we had, rest of your staff explained where you were headed, made a lot of sense to get your systems in line with actually how you provide services, but what I remember the big question was, so now we have this kind of new method of how we are administering our services and tracking our costs, but we have a reconciliation bill in front of us that is based on the old way that pricing and costs were accounted for, and how do we map the two together to know how now, as you're administrating things, fit into that pie, and I suspect you've had some further conversations with the House because that's where it'll come from first, and maybe back to us. But that was kind of what I recall as kind of one of the primary questions is how do we know when we're dealing with reconciliation? This fits with this piece over here because this piece is not how we're doing it anymore.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: I don't know if that

[Sen. John Benson (Member)]: makes sense to you, but that's what I recall as one of

[Comm. Adam Gresham (Commissioner of Finance and Management)]: the big

[Sen. John Benson (Member)]: questions that was kind of out there in that forum. Right.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: I was not at that meeting, maybe I don't have the context for that. But I may, you know, speak to that later, but I think what you're getting at is that the IT projects, the payment for those projects is changing in fiscal twenty seven versus fiscal twenty six. Is that correct?

[Sen. John Benson (Member)]: Well, think it's the whole system that is changing. And so you've had an old system that tracked costs in these x y z categories, you have a new system that tracks costs than they in a different group. And so when you have x number of dollars and they're allocated here, how do those dollars, as you look at reconciliation, fit into the new puzzle that everything's accounted for, and that because some costs get shifted to agencies, some stay, as I understand it, under your umbrella, and that we're not double counting things, and that all of those pieces all fit together. If you had made the change on the start, everything would track while we're changing things in the middle of

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Let

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: me take a stab at that. Yeah,

[Sen. Wendy Harrison (Chair)]: me, take, yeah, so,

[Comm. Adam Gresham (Commissioner of Finance and Management)]: I mean, I'm gonna, well you need

[Sen. Wendy Harrison (Chair)]: to No, hear what I I'm really glad that you asked this question because that's what, so this committee had a meeting a couple weeks ago, think, our joint meeting, And so lots of things have happened since then, but my take on the joint meeting was that we were being, educated on the new, categories in ADS. And then so the new categories are not exactly what you're talking about So we have the new categories and the funding structures that are both changing at the same time. And so

[Comm. Adam Gresham (Commissioner of Finance and Management)]: I

[Sen. Wendy Harrison (Chair)]: think that's the challenge. We were concerned about would would the right people know what they needed to know at the right times? And so what you're gonna hear later on, if at least Gavin doesn't mind talking about it for a little bit, is we have a memo saying that the project management

[Sen. John Benson (Member)]: As I said, I meant to jump No,

[Sen. Wendy Harrison (Chair)]: no. Well, sometimes let's get to know the end and then hear the But details in the project management system was what we were concerned with. And the project management system is going to be accurate according to Lisa. So do you want? For the record, I'm

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: Susan Gobin, IT consultant with JFO. I just want to suggest that the committee consider inviting James Duffy in

[Comm. Adam Gresham (Commissioner of Finance and Management)]: to

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: talk from a JFO perspective, third party perspective. And he did a really great job at heady house energy and technology, digital infrastructures, talking about the differences and how they map together over time and just another third party, the expert from a finance perspective assessment of the changes and how they map to each other.

[Sen. Wendy Harrison (Chair)]: Yeah, that's a great idea and just so you know, I am relieved with all of the information that I've received so far. So, we are sharing that now and we'll continue.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: It's what I remember the question.

[Sen. Wendy Harrison (Chair)]: Yes, yes.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Madam Chair, can I just clarify though, so there are the changes you're talking about for what? From '26 to '27. In the core enterprise services?

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: The categories? All of it. All of it.

[Sen. Wendy Harrison (Chair)]: Yeah. And

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: how they all match. And then the impact. Did a a really nice job explaining it in a way that takes the a lot of the confusion out of it.

[Sen. Wendy Harrison (Chair)]: Yes. Yeah. And it's a challenging thing to explain. It is.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: And I think what you'll see is we went from one appropriation and four funds to two appropriations and eight funds. So as far as the ability to drill down at the top level, it creates greater transparency and predictability in this in this shifting model that we're going to. But we put a lot of our intention and focus attention and focus on foreign price services, which is one appropriation. And I don't wanna steal your thunder out it. I love hearing you talk about But what we didn't do is we didn't make any dramatic change in the demand. So the demand still operates in a transactional model. We're gonna come back next year and say this is all that we learned and worked on with finance and management, and you'll see us come back next year with proposed changes in the demand space. But right now, the the critical focus for us is for enterprise services and establishing those foundational costs of enterprise technology for state government.

[Sen. Wendy Harrison (Chair)]: Okay. Thank you. So back to

[Comm. Adam Gresham (Commissioner of Finance and Management)]: you. Zach? That's great. What I would add to that is there was, I think in previous times, a lot of focus on one component that, at least from where I sit in the budget office, was not the most significant component. You know, what you just heard is the most significant component, in that there's a whole revamping of how we deliver the agency of digital services and products. That's major. But there was a lot of focus on kind of project payment and IT projects. Not to say it's unimportant, but that's really not the major show here. The major show is that we're revamping how one major agency that state government is budgeting and delivering services, and that's really the, I think, the key takeaway that if, you know, I was trying to convey. And so which I think we all support the

[Sen. John Benson (Member)]: Yes. Transitions, matching the old and the new at least the issue.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: So on again, this is a simple schematic, but it kinda captures some of the change. Before, there was a very large pool of essentially four cost recovery methods, the allocation and then the three demand SLA, balance sheet, and bespoke. That pool is quite a bit smaller now, which makes it easier to see and to treasure. It just makes it, from a conceptual standpoint, a transparency standpoint, far more easy to track, to see where there may be strains, to see where cost recovery may not be what we expect it to be and the like. So that's kind of a standard concept. If you have a large pool and you've got some deterioration in finances, let's try to break it down into component parts, which is really essentially very simply what you did.

[Sen. Wendy Harrison (Chair)]: So another pause, thank you. So it was a 133,000,000 in that pool? I Last would say a

[Comm. Adam Gresham (Commissioner of Finance and Management)]: year there was a 133,000,000.

[Sen. Wendy Harrison (Chair)]: And that was more than ADS? That was also VGS?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: No, no, that was just ADS.

[Sen. Wendy Harrison (Chair)]: Oh, okay. So I thought it

[Comm. Adam Gresham (Commissioner of Finance and Management)]: was That was just ADS.

[Sen. Wendy Harrison (Chair)]: Okay, so 133,000,000.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Right. Okay. That was the spending authority for the so called allocation for SLA, for timesheet, and for bespoke.

[Sen. Wendy Harrison (Chair)]: Okay, thank you.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: So that spending authority this year, the actual spending authority for all of ADS, is reduced to 93,400,000.0. I forget exactly what I should have left. 96,000,000. So that has been reduced substantially, and one major reason is if you look at the bottom line, the bottom line here, it says Customized Services Fund. That is a fancier term for what was bespoke. Bespoke, those are the IT projects and services. Last year, that was $47,000,000 this year, it's 5. And so that change represents the fact that the spending authority for the IT projects will remain with the agency's departments that are sponsoring them. Now, keep in mind, they've always had that spending authority. It's just that so has ADS. There's been what we call duplicate spending authority, because ADS is going out and purchasing the software or the service, and then they are billing back to the agency or department. So both ADS and a sponsoring agency department need spending authority to allow that to happen. What we're saying here is, again, this is in the context of trying to simplify and reduce a large pool into a smaller pool. We're leaving that spending authority with the agencies and departments, and they will pay the vendors at the end of the day, and we are removing it from ADS. So that's why you see a substantially smaller total pool. That's one change, it's not the only change.

[Sen. John Benson (Member)]: Understand, that's exactly what I was kind of talking about, it's just about us being able to see, so you went from 45,000,000 to 5, so there's 40,000,000, and somewhere that 40,000,000 shows up in other places that we can be able to see that that money is still there, but it's actually allocated in other places in the budget adjustment. That was kind of what we were trying to understand or say that we were trying

[Comm. Adam Gresham (Commissioner of Finance and Management)]: to make sure we knew how that still happens. Follow that. The money has always been there in agency and department budgets. So you can go through, say, a Giva budget, and you can see Medicaid Data Warehouse and alignment for that. It may not be the whole project, but you'll be able to see what they intend to spend on that, because that would be the spending authority. Now because it's DIVA, and DIVA's complicated, you've a book on the federal funds, and then general fund, and But the agencies and departments always had that in their budgets, and they still will. Similarly, the tracking of those projects, as I think you see in that memo that was written, has been done by the ECMO office, the project management office. That won't change either.

[Sen. Wendy Harrison (Chair)]: So regarding spending authority being in two places, is that typical?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: For internal service funds, yes. And again, to use the example of BGS, BGS has spending authority to, you know, plow the walks and heat the buildings. They need that because they're paying vendors, but Right. My department also has spending authority because I gotta pay BGS. So there's duplicate spending authority for most internal surveys. Okay.

[Sen. Wendy Harrison (Chair)]: Alright. Just wanna make sure.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: So that's one major change, and there are two others that I would emphasize. The other major change is that, you know, and this actually, the secretary can be more articulate than I am. The core enterprise services create is essentially recognition that there are some services that are delivered at every department uses the same you know, a a good example would be the Microsoft software machine. Every state employee uses some suite of Microsoft software for email, for, you know, accessing various stuff we use on a laptop. So it seemed right to provide that as part of our core product that we provide to anyone who is in state government, along with I have a right to know that the network I'm accessing is safe, that when I'm storing data, that is safe. So we provide all kinds of cybersecurity services. Everyone in state government gets that. So those are two examples. There are many more. But the concept was, what is it that we're providing to everybody that is kind of part of being a state employee? And that should be the part of the core enterprise services. And that's why you'll see that the core enterprise services will be a total of $45,000,000 but one of the things that happens is some of the products that were provided through the SLA, which is based on demand, will now be part of the core enterprise services. So the amount of money that we're going to be asking and allocating or billing each department regularly for, that formerly was called allocation, will now be called core enterprise services. And it will include some stuff that we, before, build out separately to departments and agencies. So what we're doing is we're consolidating what our shared services is a good way to put that. And I think that that kind of makes sense, right? I mean, many of our billing practices were legacy. By that, I mean, going back from years, and one of the things that the secretary pointed out was that, you know, that's kind of civil. We should be billing everyone the same way. It's kind of equity in billing. So we've recognized certain products are provided to everyone regardless of where you are. So those will be billed out as part of the core.

[Sen. Wendy Harrison (Chair)]: A question?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Thank you, madam. Sure. Will will that, in essence, save some money as well since you're consolidating? It should. Okay. Yes. It should save. It's it's this was not done first and foremost as a cost saving Yeah. Yes, it should over time. Okay.

[Sen. Wendy Harrison (Chair)]: Questions? Unless you haven't answered that. Are you?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Yeah, I'm done.

[Sen. Wendy Harrison (Chair)]: Are you distinguishing between what I would call capital expenses versus operating expenses in these categories? This sounded as if how much should Well, project expenses then. I mean, the $30,000,000 to get to a project, to design and implement a system versus the however much you pay annually until you have to do the next project, right?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Yes, that is distinguished. The cost of implementing a product presumably and buying a product and so on will be part of the slower.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: Okay.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: The cost of annual maintenance service should be part of an SLA bill.

[Sen. Wendy Harrison (Chair)]: Okay, good, I think that's helpful. Okay, thank you.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: So the final comment I'd make is the one kind of appearance on this second slide that was not on the first slide is a general fund allocation, and that, remember I said earlier that internal service funds do not get direct general fund appropriations. Again, to use the example of BGS, BGS receives actually, they do receive a small amount of appropriation for their purchasing office and their engineering office, but the vast majority of their spending authority is through recovering from other departments. They're recovering that from other departments that have the same spending authority. ADS, this year, for the first time, will receive direct general fund appropriation for certain functions that we and they believe should be directly appropriated because they were not being recovered through cost recovery payments. And these were products that didn't lend themselves to a cost recovery method because it wasn't certain that all of the funders for our various agencies, departments would be able to be, would be able to fund it or would be willing to fund it. And the example I always use is within the Agency of Human Services, as you're aware, they have a fairly beefy federal component. And the federal government has various strings attached to money that they provide. And if there are certain services provided to the state government that may or may not be funded by the federal government, Think of artificial intelligence or some of the services involved with data governance. For our Medicaid program, it's questionable whether the incentives for Medicare and Medicaid services would be willing to provide, as part of our cost of doing business, those services. So what the Agency of Human Services would instead do is instead of billing the federal government, they would just page out on funding for because they don't want to be audited and end up with a finding that, Oh, no, it's part of our Medicaid program. It had nothing to do with data governance. This is about health care. What do you need artificial intelligence for in your Medicaid program? This is about health care. So we didn't want to go through that routine and frankly take the risk of it. So we are, for certain functions with ADS, we are directly appropriating general fund. So that's the $9,300,000 here. So in prior years, they got a very small $200,000 or so direct general fund appropriation. So this year, that would go up to $9,000,000. And again, we believe that's the right thing to do. I think that's the right way to do it. And some of these costs were not being or some of these services were not being recovered in prior years, which was in part one of the reasons why there was a growing deficit in the CIT company because it was falling functions that were not truly lending themselves to cost recovery. I'm not saying they weren't necessary, I'm really saying that they weren't lending themselves to billing back to agencies and departments. If my department needs a specific kind of software because we're the budget office and we need this software, that's easy. I get it, and they, they procure it for me and they bill me for it. That's easy. But there are other services that may or may not lend themselves to that direct billing arrangement. That was in part why we think there was deterioration the fund balance and the CMT fund. So these services will henceforth be paid directly to the general fund to remove any inconsistency or any doubt about that. So that's changed.

[Sen. Wendy Harrison (Chair)]: Then do you expect to not have a negative fund balance Our in this

[Comm. Adam Gresham (Commissioner of Finance and Management)]: goal this year is to end up in, you know, being balanced. We will

[Sen. Wendy Harrison (Chair)]: still Which have what your goal is.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: We will still have an outstanding deficit, then we will, you know, talk to you guys about retiring in future years, but, you know, our goal is to to end up in balance. I mean, that's always the goal for all internal circumstance. Right. By definition, they should end up with a zero balance. You know, sometimes they end up with a small surplus, sometimes small deficit, but they should end up in balance.

[Sen. Wendy Harrison (Chair)]: So it's the 45,000,000, right? Is it 45?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: The deficit is $25,000,000 but not 45,000,000

[Sen. Wendy Harrison (Chair)]: The 45,000,000 will

[Comm. Adam Gresham (Commissioner of Finance and Management)]: be where we are balanced. Yeah, that's the size

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: of the Yes, it will be balanced. Yeah,

[Comm. Adam Gresham (Commissioner of Finance and Management)]: that's the size of core enterprise services, $41,000,000 if that's what you're asking.

[Sen. Wendy Harrison (Chair)]: Yeah. I was looking at the deficit.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: That's 25, and it's not represented up there, but it's $25,000,000.

[Sen. Wendy Harrison (Chair)]: 25.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: You can find that in the annual comprehensive financial report, which I know that this committee reads regularly.

[Sen. Wendy Harrison (Chair)]: We will now. No, so is there any, since this is all happening now, I would expect that you will have some sort of explanation in that document next year. Right? Is that okay? So we'll look, great.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: You can look forward to that. Okay. The final comment I'd make is that, and again, along the theme of trying to compartmentalize and make transparent, instead of segregating the demand cost recovery components, that is the timesheet, the SLA, and we spoke, into a larger pool and mixing the spending authority into one big pool, we're actually creating separate funds for each of those. So next year, or maybe you will be able to track how much we spent on timesheet, although you'd have to remember the timesheet has professional resourcing fund. So you'll be able to see that fund and how much went out and how much it started with, and you'll be able to see the balance. Similarly, the enterprise offerings fund, which is last year and prior years was SLA, you'll be able to see that fund. And finally, the Bespoke is our Customized Services Fund. The body of that fund has been reduced, again, as spending authority rests solely with agencies departments. However, there is a $5,000,000 proposed spending authority there, and that's substantially for hardware and products that are, like this laptop, for example, that are purchased by AES on behalf of agencies and departments. So that will still remain.

[Sen. Wendy Harrison (Chair)]: Okay, so that is also where we do what I was calling capital, but the big projects, the $30,000,000 projects would be in the customized services fund, right?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Until this year, yes. But in the future they will remain with the agencies departments where they were before. It's just that that spending authority will not be duplicated at ADS in the customized

[Sen. Wendy Harrison (Chair)]: Oh, okay. So the entire project will be in the department? I'm sorry, I didn't Each department that has a project will

[Comm. Adam Gresham (Commissioner of Finance and Management)]: have the spending authority for that project.

[Sen. Wendy Harrison (Chair)]: Well, DMV, I mean, they just did a project.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: Right.

[Sen. Wendy Harrison (Chair)]: So that project cost, if we were doing it this way, would be completely in DMV. Correct. All right, and that's appropriate I would say because that's where it should be because then the revenue source that supports DMV should be the revenue source that supports their operations. Would make my correction.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: So the DMV project at IT Mod Fund, Totally different than this. Those are one time appropriations that went into a specific IT modernization fund that JFO reports on regularly.

[Sen. Wendy Harrison (Chair)]: Okay.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: The Medicaid Data Warehouse Project is a better example. That is funded 90% through federal dollars, 10% through state dollars. That wouldn't reflect in our budget appropriation any longer. That would sit solely within AHS. So it would vary by project. If it's state funds, IT Mod Fund would likely be where that would be funded through. If it's federal dollars or non general fund dollars paying for it, it would only be reflected in the agency's individual agency's budgets.

[Sen. Wendy Harrison (Chair)]: Okay, so which category was DMV? IT Mod Fund. Is IT Mod Fund continuing? So that's one of your eight funds?

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: No, it's not a budgeted fund. It's a it's an IT project fund.

[Sen. Wendy Harrison (Chair)]: Okay. It's

[Comm. Adam Gresham (Commissioner of Finance and Management)]: also a special fund.

[Sen. Wendy Harrison (Chair)]: Special fund. Yeah. Special fund. Okay.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: So not a we don't budget for it. It's one time funding, Chris.

[Sen. Wendy Harrison (Chair)]: So Okay. So that's that expense. But those are considerably expensive items. I mean, aren't little miscellaneous.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: But that it's a capital.

[Sen. Wendy Harrison (Chair)]: No, I understand. So I was calling it a capital expense, but they don't call it a capital expense. That's why we're having fun with this.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: They don't track independently.

[Sen. Wendy Harrison (Chair)]: You can see it. It just doesn't live in our base appropriation. Right. And it shouldn't. Correct. Okay.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: We're good. Other questions?

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: Speechless. IT is exciting. Yes.

[Comm. Adam Gresham (Commissioner of Finance and Management)]: So I just wanted to point out, there was interest in, particular, the house where they asked me to come in, they said, Well, let's make sure we know what's changing with customized services funding. And know this has been covered before, but I wanted to be clear that this is a change. Spending authority is no longer with the agency of digital services. But that's really the only change, way we go about filling out projects, the way we go about devising projects and ADS advising on projects and sponsoring departments, paying for private, all of that is going to remain the same. There'll still be very strong ADS oversight. They will work with departments to come up with what they need. They will go out and they will interview vendors, hire vendors, keep track of the project as it's going along. The one change will be that the payment, when it comes time to payment, the payment will be made from the sponsoring agency. That's the only change. And we are, you know, as I mentioned to the House Committee, we are working very diligently to make sure that that works. I'm not here to tell you that everything has been figured out and nailed it down, but we will make sure that you guys have the information you need when it's called for, or if you have questions, we'll get it to So if something, you know, a report is due, it'll be on your desk. We'll make sure that happens, and we're going to spend the next months prior to the beginning of the new fiscal year on figuring out this project process. And we've, you know, already started that flow, and as you know, we're on, but it's going to require collaboration with not just the agency of digital services, finance, and management within the agency administration, but all the departments. You know, the departments that are hosting these projects, we're going out and work with them too to make sure they're set up within safety device to be able to pay vendors and go through contracts to make sure that that's COVID safe. I mean, this, I don't wanna downplay the fact that it's going to require work, but I do wanna tell you that what you guys need, you will have. Thank you. We're intimately aware of that.

[Sen. Wendy Harrison (Chair)]: Thank you. So And I'm glad you're pursuing this work just for the for the viability not viability, but the understandableness, it's not the right word, but of our our financial records just just so that we and the public can understand what's going on. And I just want to highlight a couple of things in Lisa's memo. So the project management standards talks about the payment. We talked a lot about the payment, but I just want to make sure that folks know because it was important to me that the department, there are four, at least four sign offs on the payment. So the department, the say business, I use department, it just works better for me as a government person. But when the IT people say business it means department just so you know. So that would be like human resources or DMV, it's a distinct operation the project manager in this case is a person from ADS or a person that ADS has hired. So the ADS person, the department and then the IT leads which would be the more technical person, which I believe is in the department, but is funded by ADS and sometimes the sponsors and the sponsors are the folks with the funding basically. And that happens in some major operations. So, just think it's important that we know that when we're talking about which department is going to be cutting the check, And I guess probably your department cuts the check, but which, what we're saying is we're transferring spending authority for the project, but both of the entities that we're talking about are going to be signing off on the payment no matter which department it's in. So all of the relevant folks are part of this process and they all need to agree that it's appropriate to make the payment. I think that's important and I'm glad. And I have a completely different question, but does anyone else wanna talk about this change?

[Comm. Adam Gresham (Commissioner of Finance and Management)]: No, I'm thinking about it.

[Sen. Wendy Harrison (Chair)]: Okay, so the project management standards, the FMO that we talk about, which is that the evaluation of the projects essentially.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: The Enterprise Project Management Office. Yes.

[Sen. Wendy Harrison (Chair)]: Thank you. But it's that list that we've been talking about a little bit, IT is new to this committee. And we've still talked about the dashboard and I asked about why this change isn't impacting the dashboard which I do understand now, but I found out through that conversation that the dashboard does not include total expenditures. It just includes other types of Budget.

[Susan Gobin (IT Consultant, Joint Fiscal Office)]: Okay, so budget and then The budgeted. The original budget is when the project concept was being formulated and then the budget that was in place when the implementation began. So they had all the actual contract amounts and that sort of thing to start, though they can change over time. They have changed orders. So next time we're talking about ESMO, I

[Sen. Wendy Harrison (Chair)]: just want you to know that I'm going to advocate for it including total expenditures because I think that's a number that needs to be in that list. It's relevant. So people don't need to comment unless they want to, but just heads up. And and to heads up to you too, I I expect you would want that possibly, but

[Comm. Adam Gresham (Commissioner of Finance and Management)]: That's why we have chartfields, madam chair.

[Sen. Wendy Harrison (Chair)]: Yeah. That's okay, correct? But I wouldn't wanna, you know, have something not relevant, but to me total expenditures are pretty relevant. Okay. I think we're good. So we will adjourn.