[A] massive state technology project that would streamline the management of eligibility requirements for Medicaid, heating assistance and a slew of other social benefit programs could be on the rocks.
Gov. Peter Shumlin proposed to put aside $16 million over the next two years for a comprehensive IT system that would manage benefits and eligibility requirements for state human services programs. The state has for years been trying to phase out the 35-year-old ACCESS mainframe system that manages data for all Agency of Human Services programs.
But legislators are chary of new technology investments in the wake of the failed state health care exchange website, Vermont Health Connect, which still does not work properly, a year and a half after it was launched. The state will spend $200 million, mostly federal funds, on the project.
Lawmakers have pitched two bills this year, one in the House and one in the Senate, as well as language in the capital bill, to step up oversight of large IT projects. And now the Agency of Human Services eligibility project has attracted opposition.
The House Corrections and Institutions Committee delayed the project in the two-year capital bill, which funds state infrastructure projects with bonds, by reducing the total appropriation over the next two years to $8 million. Some $2 million is budgeted for FY 2016 to support the request for proposals the agency has already issued. The remainder is reserved for FY 2017.
Now, as the budget heads to the Senate, the eligibility project is meeting fresh resistance.
“If you’re building systems that are going to cost as much as the tax department [budget] … then we have very serious questions about the operational sustainability,” said Sen. Jane Kitchel, D-Caledonia.
Kitchel heads the Senate Appropriations Committee, which takes up the FY 2016 budget bill H.490 this week. In general, she said, the budget for the state’s IT projects requires significant scrutiny by lawmakers.
“This is an area of growing and very large expenditures and the recent track record is very disturbing,” Kitchel said.
Kitchel, who is a former secretary of AHS, said IT projects are central to the agency’s work, but she has reservations about proceeding with building a project that could have operational costs that are significantly higher than the cost of running the current system. The Department of Information and Innovation has said estimated annual operating costs for the eligibility system could be as high as $18 million.
The House Corrections and Institutions Committee, which is responsible for putting together the capital bill, originally zeroed out funding for the Agency of Human Services IT projects in FY 2016 altogether, but, after hearing testimony from Health Commissioner Harry Chen, restored $2 million.
“That means that we pace our projects according to the budget that’s available to us,” Stephanie Beck, program director for Health and Human Services Enterprise, said Tuesday.
The agency is already in the process of reviewing proposals for the systems, and Beck expects to have a contract in place in the fall. If the funding falls through, she said, the proposals would be suspended with no guarantee that the state would be able to pick them up where they left off.
The integrated eligibility project will be funded in part by a federal match. Exactly how much the state will receive under the match depends on an exception that expires at the end of 2018.
“If we don’t get the financial support from the state this year it would impede our ability to draw down that funding and at some point in time this system will have to be replaced,” Beck said.
The capital bill, a $158.6 million two-year budget that uses bonds to fund infrastructure projects, will likely pass the House later this week. The capital bill is sister legislation to the big budget bill, and this year absorbed $18.3 million of costs that would ordinarily land in the appropriations bill.
There is some resistance in the Statehouse and in the administration to funding IT projects with bonds, which typically have a 20-year payback period. Some lawmakers say IT projects are too short-lived to fund with money that takes two decades to pay off.
Finance Commissioner Jim Reardon, who put together the administration’s budget proposal, said he would prefer not to fund IT projects from the capital bill.
However, he defended the use of the capital funds for the eligibility project because of the state’s difficult budget situation this year, he said.
“You’ve got to forge ahead and make improvements to your infrastructure, irrespective of your budget situation,” Reardon said.
Rep. Alice Emmons, D-Springfield, chair of the Corrections and Institutions Committee, said the capital bill and the general fund budget bill are often coordinated when budgets are difficult.
“In these fiscal times, everybody has to work together,” Emmons said.
Establishing oversight for IT projects
In addition to delaying the eligibility system, the capital bill includes language to establish more oversight of large technology projects in general. If the bill passes, the joint fiscal offices will be authorized to use up to $250,000 of the amount appropriated to an IT project to hire a consultant or transfer a position from the executive branch to review technology projects.
Emmons said Tuesday that the AHS eligibility project was delayed in part to ensure there is more oversight.
Rep. Cynthia Browning, D-Arlington, a member of the House Corrections and Institutions Committee, said the oversight is overdue and critical.
“We spend lots of money on IT projects and a number of them have been problematic. We haven’t figured out how to do it right,” Browning said.
She said that independent monitoring of Vermont Health Connect might have revealed some of the flaws with the system earlier on.
Members of the governor’s administrative team were in the committee room last week to discuss the oversight of IT.
Justin Johnson, secretary of administration, agreed to have the costs of the oversight, $250,000, come from the project costs in the bill.
“The position doesn’t bother me that much,” Johnson said. “If it’s one position (for the oversight role) I think we can work that out,” and it would come from a vacancy, not a new position. “… I think it would be good for all of us to feel comfortable about where the money is going.”
A bill before the House, H.371, calls for the creation of a Joint Legislative Information Technology Oversight Committee for investments that the Legislature is asked to fund, but has no expertise in evaluating, said one of the bill’s sponsor, Rep. Sam Young, D-Glover.
“We’re asked to fund these multimillion dollar projects, in some cases hundreds of millions, in order to truly evaluate these projects, and whether we should be doing them or not, we need to be able to hire outside expertise,” Young said last week.
