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Other Budget Issues

Last Updated: 5/23/2011
Budget Issue: Proposed Los Angeles Welfare Automation Suspension
Program: County Welfare Automation
Finding or Recommendation: Pause, rather than suspend indefinitely, the LEADER Replacement System (LRS). This is one of three county-led consortia that make up the statewide automated welfare system (SAWS) and is nearing the end of its useful life. Given federal concerns, we believe the Legislature should pause this project pending the development of a longer-term comprehensive strategy for SAWS.
Further Detail


There are currently three county-led consortia that make up the statewide automated welfare system (SAWS). These consortia support eligibility and benefit determination, case management, and statistical reporting, among other functions, for various health and social services programs.

The Los Angeles Eligibility, Automated Determination, Evaluation and Reporting (LEADER) system is one of the three consortia. It is nearing the end of its useful life and must be replaced as its dated technology is becoming obsolete and its current vendor is the only one that is able to maintain it. The administration has been in the planning and procurement phases of the replacement project for several years and recently selected the vendor to build the LEADER replacement system (LRS) through a competitive procurement process. The new system is estimated to take about 4 years to build at roughly $485 million total funds.

Federal Concerns

The Federal government has communicated its concerns over California’s lack of long-term plans for its three eligibility systems. According to recent communication, the federal government will only participate in LEADER’s maintenance contract through April 2013.  After that, financial participation would be contingent on federal approval of a long-term plan for California’s consortia systems.  Additionally, the federal government states it will not fund LRS development before the long-term plan is approved.

Governor’s Proposal

The May Revision proposes the indefinite suspension of LRS with associated savings of $26.2 million, General Fund, in 2011-12. Additionally, there is a request for limited funding in the budget year to plan for alternative solutions when the current LEADER maintenance and operations contract ends and for closeout costs for the LRS project. By delaying LRS indefinitely, the proposal would achieve significant savings over the next several years.

Issues for Legislative Consideration

We believe it is appropriate for the Legislature to pause in the development of the LRS.  However, given the lack of federal participation in maintenance costs beginning in May 2013, an indefinite suspension of LRS may not be prudent. During this pause, the Legislature and administration should work toward at least three goals. First, it should develop a plan for the state’s overall strategy for its eligibility systems. Second, it should look at the current LRS plan to see if and how it may meet the larger plan for the state. Third, based on this  the analysis, the administration should present a plan for LRS development to the Legislature.   In moving forward on these automation issues, key questions  include:

Process for Developing the Long-Term SAWS Plan.  What is the time horizon for developing and submitting the long-term SAWS plan to the federal government?  Will the process include legislative involvement in the stakeholders process?  Is the planning process properly resourced?

Health Care Reform.  Federal health care reform will require to set up exchanges.  These exchanges will likely require automation.  A key question going forward is where development of the exchanges fits in the long-term plan for SAWS.

Evaluating LRS in Light of Long-Term Plan.  A lot of effort has gone into defining the requirements for the LRS.  It will save time and money if some or all of the work on this project can be retained going forward.  Once the long-term SAWS plan is approved, the proposed LRS needs to be reevaluated.  In other words, would the proposed LRS have enough business and technical flexibility to meet the objectives of the state’s long-term SAWS plan?  


As the administration moves forward in developing plans for Los Angeles County automation, the broader SAWS consortia, and addressing federal concerns, it is critical for the Legislature to stay informed on these issues.  We recommend pausing the LRS project pending the development of the long-term SAWS plan but we are skeptical of an indefinite suspension given federal funding concerns.  Once the Legislature has developed its priorities for SAWS and LRS, it could communicate these goals through either legislation or a statement of intent as part of  the Supplemental Report of the 2011-12 Budget.

For more extensive discussion of automation issues please see the LEADER discussion in Health and Social Services: A Restricted Environment,  Analysis of the 2008-09 Budget Bill, and/or Moving Forward With Eligibility and Enrollment Process Improvements.