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Legislative Analyst's OfficeAnalysis of the 2001-02 Budget Bill |
The Health and Human Services Agency Data Center (HHSDC) provides information technology services, including computer and communications network services, to the various departments within the Health and Human Services Agency (HHSA). The center also provides services to other state entities and various local jurisdictions. The cost of the center's operations is fully reimbursed by its clients.
The budget proposes $306.1 million for support of the data center in 2001-02, which is an increase of $19.4 million, or 6 percent, above estimated current-year expenditures. The budget includes a number of increases for workload, the largest of which is a request for $7.5 million for additional data processing and storage capability and telecommunications equipment. It also includes a number of decreases for completion of various aspects of certain large information technology (IT) projects.
We recommend that the Legislature reduce the Health and Human Services Agency Data Center (HHSDC) expenditure authority by $524,000 for additional oversight activities by the Department of Information Technology (DOIT) since HHSDC has never used this expenditure authority nor can DOIT identify the activities that will be funded. (Reduce Item 4130-001-0632 by $524,000.)
In 1999, the Department of Information Technology (DOIT) required HHSDC to increase its expenditure authority by $370,000 so that DOIT, through the use of consultants, could provide additional oversight for its county-based projects. The budget proposes to increase HHSDC's expenditure authority by an additional $154,000 to allow DOIT to acquire additional oversight consulting services on its county-based projects.
The DOIT Has Never Used Additional Expenditure Authority. At that time this analysis was prepared, DOIT has never acquired consulting services for the additional oversight activities, and therefore HHSDC has never needed the additional expenditure authority for this purpose. In addition, DOIT is unable to specify exactly what oversight activities the additional consulting services will provide. For these reasons, we recommend that the Legislature reduce HHSDC's expenditure authority by $524,000.
We recommend that the Legislature reduce expenditure authority by $78,000 since the Health and Human Services Agency Data Center's overhead rate provides adequate expenditure authority to fund project management software for county-based projects. (Reduce Item 4130-001-0632 by $78,000.)
The budget proposes to increase HHSDC's expenditure authority by $78,000 to purchase project management software for the Child Welfare System/Case Management System (CWS/CMS) project and the Statewide Automated Welfare System (SAWS) oversight project. In 2000, the HHSDC required that its county-based projects all use the same software product to create project management plans. The HHSDC proposes to charge a portion of the software purchase and maintenance costs to each project.
The HHSDC Overhead Charge Should Cover the Cost of Software. Currently, the HHSDC charges each of its county projects a 20 percent overhead rate to reimburse it for providing overall support to the projects. The HHSDC's total overhead charge for the budget year is $4.6 million. Since HHSDC already receives funds to cover the cost of providing overall support to the projects, we recommend that the Legislature reject the proposal. We further recommend the Legislature direct HHSDC to fund the software and ongoing maintenance within its current 20 percent overhead rate.
We recommend that the Legislature decrease the proposed expenditures for the Child Welfare Services/Case Management System Maintenance and Operations (M&O) by $411,000 and instead authorize three personnel-years for the Health and Human Services Agency Data Center (HHSDC) to provide ongoing support for the local area network. In addition, we recommend that the Legislature adopt budget control language requiring HHSDC to update its five-year M&O plan prior to an increase in its expenditure authority. (Reduce Item 4130-001-0632 by $411,000.)
The budget proposes to increase HHSDC's expenditure authority by $20.4 million for the ongoing maintenance and operation (M&O) of the Child Welfare Services/Case Management (CWS/CMS) system. The CWS/CMS system provides a statewide database, case management tools, and reporting system for the state's Child Welfare Services program. The project has completed development, is operational in all counties, and has now moved into the M&O phase.
The CSW/CMS M&O Plan. The M&O phase of a system consists of activities related to the ongoing performance, availability, and usability of a completed system. A typical M&O activity would be the replacement of obsolete personal computers and printers and annual modifications to the software. The budget proposes an expenditure authority increase of $19.6 million to replace personal computers, printers, telecommunications equipment, and upgrade software. This proposal represents the second year in CWS/CMS' five-year M&O plan.
The CWS/CMS Project Should Support Its Own Local Area Network (LAN). The budget also proposes $625,000 in consulting services to support the CWS/CMS project's LAN. The HHSDC intends to transition the support of the CWS/CMS project LAN from the current M&O contractor to another contractor.
Analyst's Concerns. We have two concerns with this budget proposal. First, the proposed LAN support activity already is ongoing in nature. As a result, it is more appropriate to use permanent departmental staff assigned to perform these functions on a daily basis than contract consultants. An additional advantage is that permanent staff can perform these functions at a lower cost than a contractor.
Our second concern is that the budget proposal is inconsistent with CWS/CMS' approved five-year M&O plan. It is our understanding that HHSDC has shifted some M&O activities between years. These shifts were made to address incompatibilities between the current and proposed replacement hardware and software. We agree with the need to replace the specified hardware and software; however, we believe that the five-year M&O plan should be updated to appropriately reflect the funding shifts in activities prior to expenditure of funds. Such a process would also be consistent with DOIT's project approval letter which requires HHSDC to update the CWS/CMS plan on an annual basis. The CWS/CMS plan was last updated November 1999.
Analyst's Recommendations. To address these concerns, we recommend that the Legislature take two actions. First, with regards to the ongoing LAN support activities, we recommend that the Legislature authorize three additional personnel-years and decrease HHSDC's expenditure authority by $411,000. This would leave a total of $213,000 from the original proposal which would fully fund these positions.
Second, we recommend that the Legislature adopt the following budget control language requiring HHSDC to update its five-year M&O plan for CWS/CMS prior to an increase in its expenditure authority.
Upon notification by the Department of Information Technology of its approval of the amended Child Welfare Systems/Case Management System Five-Year Maintenance and Operation plan, the Department of Finance may authorize no sooner than 30 days after providing notification to the Chair of the Joint Legislative Budget Committee and the chairs of the fiscal committees of both houses an expenditure authority increase of $19,600,000 to Item 4130-001-0632.
We recommend that the Legislature adopt budget bill language requiring the Health and Human Services Agency Data Center to complete a risk mitigation plan for the child welfare services/case management system prior to an increase in its expenditure authority.
The budget proposes to increase HHSDC's expenditure authority by $7.6 million to replace the servers supporting the CWS/CMS system. The proposal would replace 432 servers and upgrade the server operating systems by July 2002.
Server Replacement Project Does Not Have a Risk Mitigation Plan. State policy requires that every automation project complete a risk mitigation plan that considers (1) the potential business disruptions that could occur while implementing the project and (2) the actions the state will take to reduce or "mitigate" those risks. For example, a server replacement project could cause a business disruption when a server is replaced and, for unknown technical reasons, cause case workers to be unable to access case files. With a risk mitigation plan, the state and the counties would predetermine (1) what to do to prevent such a disruption and (2) what to do should the disruption actually take place. To our knowledge, the HHSDC did not complete a risk mitigation plan for this proposal.
Analyst's Recommendation. For this reason, we recommend that the Legislature direct HHSDC to complete a risk mitigation plan prior to replacing the CWS/CMS servers. The plan should specify (1) the potential business disruptions that could happen while replacing the CWS/CMS servers and (2) the actions that HHSDC, the Department of Social Services, and the counties will take to minimize those disruptions. The plan shall be adopted prior to an increase in HHSDC's expenditure authority for CWS/CMS's server replacement. The following budget bill language is consistent with this recommendation.
Upon notification by the Department of Information Technology of its approval of a risk mitigation plan for Child Welfare Systems/Case Management System Server Replacement Project, the Department of Finance may authorize no sooner than 30 days after providing notification to the Chair of the Joint Legislative Budget Committee and the chairs of the fiscal committees of both houses an expenditure authority increase of $7,600,000 to Item 4130-001-0632.
Statewide Automation Welfare System. The purpose of SAWS is to provide improved and uniform IT capability to county welfare operations. The system is being delivered through a state partnership with the counties, each of which has chosen to be in one of four consortia. Figure 1 shows the four consortia, the participating counties, and the current status of each. The HHSDC provides oversight for the four SAWS consortia by preparing project documents, procuring Independent Verification and Validation services, reviewing consortia deliverables, and approving and tracking expenditures. The actual implementation of the systems is done by private contractors.
| Figure 1 | ||
| Statewide Automated Welfare System (SAWS) Consortia | ||
| Status | Proposed Budget Change | |
| Interim SAWS (ISAWS) | ||
| 35 counties: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Imperial, Inyo, Kern, Kings, Lake, Lassen, Madera, Marin, Mariposa, Mendocino, Modoc, Mono, Monterey, Napa, Nevada, Plumas, San Benito, San Joaquin, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Tuolumne, Yuba |
Working in all 35 counties. |
$3.2 million |
| Los Angeles Eligibility Automated Determination, Evaluation, and Reporting (LEADER) System | ||
| 1 county: Los Angeles |
Implementation suspended in January 2000 due to technical problems. Implementation resumed in October 2000; completion scheduled for April 2001. |
None |
| Welfare Client Data System (WCDS) | ||
| 18 counties: Alameda, Contra Costa, Fresno, Orange, Placer, Sacramento, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Tulare, Ventura, Yolo |
Software development in progress. Consortium wide implementation to begin 2002. |
None |
| Consortium IV (C-IV) | ||
| 4 counties: Merced, Riverside, San Bernardino, Stanislaus |
Software development in progress. Consortium wide implementation to begin 2003. |
None |
The SAWS Technical Architecture (SAWS-TA) Project Terminated. The final component implementing the overall SAWS project is the exchange of data between all four consortium systems. This final project component was originally named the SAWS-TA Project. This project was intended to (1) exchange data among the four consortia for eligibility, fraud detection, and case management purposes; (2) provide an interface for the consortia with other state automation systems; and (3) connect the consortia and state agencies to meet state and federal reporting requirements. The HHSDC discontinued the project in February 1999 due to difficulties in implementing the proposed technology within a reasonable budget.
Welfare Data Tracking Implementation Project (WDTIP) to Be Completed. The SAWS-TA project was replaced by four separate projects, each designed to share data and provide connections between the consortia. The first of these projects is WDTIP which would allow the four consortia to share client information to determine time-on-aid. In December 2001, the WDTIP project will be complete, and the budget proposes a reduction of $2.2 million to reflect WDTIP's statewide implementation.
We recommend that the Legislature direct the Health and Human Services Agency and the Department of Social Services to complete a Statewide Automated Welfare System (SAWS) strategic plan that (1) describes the program objectives the state will achieve with SAWS implementation and (2) identifies the project "check-points" where the state will reassess its strategy for welfare automation.
Background. During the 2000-01 budget hearings, the Legislature directed the administration to assess the state's strategy for welfare automation and the continued need for four distinct consortium systems. In response, HHSA acquired consulting services and completed this assessment in July 2000. The assessment concluded that the state's welfare automation strategy was still viable and would meet the needs of the state and counties. In addition, the assessment concluded that the state should develop a SAWS strategic plan to ensure that the automation systems were meeting specific program goals and objectives. The assessment also recommended that the state identify "check-points" which would allow the SAWS development efforts to be periodically reassessed. The purpose of the checkpoints is to ensure that the automation goals were still achievable and the program goals and objectives were being met.
Need for SAWS Strategic Plan and Project Check-Points. We agree with the recommendations made to the agency which are consistent with good IT practices. (For a discussion of IT best practices, see our December 1998 report entitled State Should Employ "Best Practices" on Information Technology Projects.) In addition, we understand that the administration is committed to implementing these recommendations. Therefore, we recommend that the Legislature adopt the following supplemental report language directing HHSA and the Department of Social Services (DSS) to complete a SAWS Strategic Plan.
The Health and Human Services Agency and the Department of Social Services shall, by May 1, 2002, provide a report to the chairs of the budget committees in each house and the Chair of the Joint Legislative Budget Committee which describes the state's program objectives in implementing the Statewide Automated Welfare System (SAWS). The report shall identify: (1) measurable program objectives and benefits that the state will achieve through automation and (2) the SAWS milestones at which the state will reassess the automation approach for the state's welfare system.
We recommend that the Health and Human Services Agency Data Center and the Department of Social Services report at budget hearings on (1) the implementation status of the Los Angeles Eligibility Automated Determination, Evaluation and Report (LEADER) project and (2) the actions the state can take to prevent future performance and capacity problems.
The LEADER Has Significant Performance Problems. In the summer of 1999, Los Angeles County began implementation of its welfare automation system, Los Angeles Eligibility Automated Determination, Evaluation and Report (LEADER). By the fall of 1999, Los Angeles County began experiencing severe performance problems when the LEADER mainframe systems were unable to process large volumes of caseload data. In response, Los Angeles County, in consultation with HHSDC, directed the vendor to address the technical problems. The LEADER implementation was suspended for ten months while the vendor implemented and tested various technical fixes. In October 2000, Los Angeles County resumed LEADER implementation and anticipates county-wide implementation by April 2001.
Administration Should Report on Implementation of LEADER and Actions to Prevent Future Problems. Because of the recent significant delays, we recommend that HHSDC and DSS report at budget hearings on the current status of LEADER implementation. In addition, we recommend that HHSDC and DSS describe what actions they plan to take should future performance problems be encountered.
We recommend that the Legislature direct the Health and Human Services Agency Data Center and the Interim Statewide Automated Welfare System (ISAWS) Consortium to develop a five-year Maintenance and Operation Plan which describes the activities and funding needs for the ongoing support and operation of the ISAWS system.
The budget proposes a $3.2 million expenditure increase and a decrease of one position for the ongoing support and maintenance of the Interim Statewide Automated Welfare System (ISAWS).
Background. The ISAWS system consortium was completed in 1998 and continues to operate in its 35 counties. The system itself consists of mainframes and midrange servers housed at HHSDC, and personal computers located throughout the 35 counties. The current contract for the software maintenance vendor is set to expire in December 2003.
In addition, the ISAWS consortium also is planning to replace its current ISAWS system with either the Welfare Case Data System (WCDS) or the Consortium IV (C-IV) system; however the new replacement system will be unavailable to the ISAWS consortium until 2004 or 2005 when the WCDS and C-IV implementations are complete.
Direct Administration to Develop a Five-Year Maintenance and Operation (M&O) Plan. Since the ISAWS system will need to operate at least another five years, including the time needed to move all counties from ISAWS to the new system, we recommend that the Legislature direct the administration to develop a five-year M&O Plan similar to the one developed for the CWS/CMS system. The following supplemental report language is consistent with this recommendation.
The Health and Human Services Agency Data Center and the Department of Social Services, in consultation with the Department of Information Technology (DOIT) and the Department of Finance, shall, by January 1, 2002, provide a report to the chairs of the budget committees in each house and the Chair of the Joint Legislative Budget Committee which describes the five-year maintenance and operation plan for the Interim Statewide Automated Welfare System. The plan shall be prepared in accordance with DOIT's policy for maintenance and operation planning.
We recommend that the Legislature not take action on the proposed $104,000 expenditure and instead direct the administration to (1) complete its review of the Electronic Benefit Transfer contract and final funding estimates and (2) submit a revised budget proposal at the time of the May Revision.
The budget proposes a $104,000 increase to HHSDC's expenditure authority to reflect project schedule adjustments on the Electronic Benefit Transfer (EBT) Project.
Background. Federal welfare reform legislation required all states to implement EBT systems for food stamps by October 1, 2002. The system uses debit card technology and retailer terminals to automate benefit authorizations, delivery, redemption, and financial settlement. Chapter 329, Statutes of 1998 (AB 2779, Aroner), required that the state contract with a single vendor for the implementation of California's EBT system and that the HHSDC provide the project management for the EBT project.
Procurement Has Taken Longer Than Expected. In October 1999, HHSDC began the procurement process to acquire contract services for California's EBT system. The procurement process was delayed, and the contract is now expected to be awarded in June 2001.
Our review of the EBT project schedule indicates that HHSDC had intended to submit by January 2001 a negotiated contract and final project cost estimates to DOIT and the Department of Finance (DOF). At the time this analysis was prepared, it had not submitted these documents. The HHSDC estimates that it will receive DOIT and DOF approval of these items in June 2001 at which time it will notify the Legislature of the final cost estimates through Section 11.00 of the 2000-01 Budget Act.
Direct Administration to Complete Cost Reviews Earlier and Submit Revised Budget Proposal. Our review indicates that the EBT Project schedule will allow DOIT and DOF four months to complete their reviews of the contract and revised cost estimates. This time schedule, however, will not permit cost information to be made available to the Legislature until after the budget hearings have been completed and the budget has been enacted. We believe it is feasible for the administration to revise its time frames for reviewing the proposed contract and funding needs and provide this information to the Legislature prior to final budget hearings. For this reason, we recommend that the Legislature direct the administration to provide an updated budget proposal at the time of the May Revision.