LANSING – Cost overruns on information technology in the Michigan Department of Health and Human Services prompted the Senate to include several provisions in the DHHS budget bill for the 2019-20 fiscal year changing how IT is handled in the department.

There is a shortfall in what DHHS has to spend on technology. How much, the department has not yet said, but the Legislature has appropriated or transferred almost $70 million in the last year to fill the hole (See Gongwer Michigan Report, May 2, 2019). So severe is the problem that DHHS Director Robert Gordon has called for a review of all departmental IT contracts and notified one of its contractors of a work stoppage for several subcontractor staff members.

The Senate’s proposed budget for DHHS in the upcoming fiscal year (SB 139), now sitting on the Senate floor, calls for the creation of an information technology investment board consisting of top leadership in the department. That board would then create a charter to direct departmental IT investment management practices and implement procedures recommended by the U.S. Government Accountability Office.

This board and the department would develop policies on the responsibilities of department staff in making IT investment decisions; set criteria, policies and best practices for selecting and controlling IT investment; and set policies to manage high-cost or high-risk IT projects to avoid cost overruns.

The budget bill also sets forth several new reporting requirements for DHHS to the Legislature on IT projects and requires the department to contract with an independent verification validation program to address increasing IT costs and ensure IT contracts are meeting the policies the department and board set.

DHHS is under heavy scrutiny after an independent monitor castigated the performance of the Michigan Statewide Automated Child Welfare Information System, on which the state has spent $231 million but which remains unreliable and rife with glitches (See Gongwer Michigan Report, March 13, 2019).

“There’s obviously a fundamental problem that seems to be ongoing for at least the past few years,” Sen. Peter MacGregor (R-Rockford), chair of the Senate Appropriations DHHS Subcommittee, said of the cost overruns on technology. “There’s something faulty with the foundation of how they’re working their IT, the accounting part of their IT.”

MacGregor said he has spoken with Mr. Gordon, whom he described as focused on finding and resolving the problem. It is unclear whether this is an accounting issue or some other problem.

Then there’s the problems with SACWIS itself, MacGregor said.

“The other side of that is the quality and what is actually produced is another problem with IT,” he said. “It’s a multifaceted problem, not just a spending issue, it’s a quality issue as well.”

Mr. MacGregor said the goal of the language in the DHHS budget is to help because the one thing no one in the Legislature wants to do is spend more money on addressing the deficit after all that has been spent so far.

“No one wants to invest anymore into IT when it comes to DHHS because of the lack of trust,” he said.

MacGregor said he has been told the current shortfall is between $35 million and $45 million. Other sources have put the shortfall at $46 million.

“They have to make some critical changes. Not the IT system itself, the way they do business must change,” he said. “In the private sector, this is where companies go out of business and people would lose their jobs.”

The collaborative effort between the IT investment board, which would be staffed by top departmental leaders, and the department sounds similar to the Strategic Integration Administration, an entity created a few years ago under a different name to serve as a go-between for DHHS; the Department of Technology, Management and Budget; and vendors on DHHS IT projects. The SIA, while a state entity, is heavily staffed by contracted employees.

Asked about the SIA’s role in the situation, MacGregor said, “We still have problems, so I don’t know how effective they are or are going to be until we get through this crisis.”

Asked about the proposals the Senate has placed in the DHHS budget, DHHS spokesperson Bob Wheaton said the department is “still reviewing the language and we will discuss it further during the legislative process.”

This story was published by Gongwer News Service.