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Agency of Digital Services seeks transition funds to simplify state IT billing and reduce arrears
Summary
Agency of Digital Services leaders told the committee they plan to restructure enterprise IT billing, reduce service-level agreement (SLA) invoicing and create a core enterprise-services charge. ADS asked for a transition allocation to avoid double invoicing during the changeover and described $43 million in timesheet billing pressures in FY25.
Denise Riley, secretary of the Agency of Digital Services (ADS), and ADS finance staff outlined a multi-year plan to change how Vermont state government pays for enterprise IT services, telling the Appropriations Committee that the current mix of allocations, SLAs and timesheet billing creates arrears and opaque invoices for agencies.
Riley described a legacy billing model, partially inherited from the Department of Information and Innovation, that she said is producing “deficit spending in, and invoicing a fiscal year arrears.” ADS proposed a transition approach funded in part by a request the administration submitted to reduce arrears and shift costs into a predictable core enterprise-services allocation.
Why it matters: ADS provides statewide IT infrastructure, cybersecurity, licensing and application support. Committee members said they have received complaints about confusing end-of-year SLA bills and asked how ADS will prevent future surprise charges.
What ADS described
- Transition funding ask: ADS said it requested roughly $15,000,000 in transition funding in the administration’s package to avoid double invoicing (charging agencies in arrears and again in the year when services are consumed). ADS officials said that the figure had been reduced in committee deliberations but that a transition allocation is necessary to move from the current model to a new one without burdening agencies with sudden additional charges.
- Core enterprise services and reduced SLAs: ADS proposes defining a set of uniform “core enterprise services” (email/productivity, network access, baseline cybersecurity and basic desktop support) that would be charged as a predictable allocation (a per-employee or per-user fee) rather than invoiced through SLAs in arrears. ADS said it expects to reduce SLA volume dramatically — targeting a reduction to approximately $11–$13 million — and to deincentivize bespoke purchases that bypass enterprise procurement.
- Timesheet billing and rates: ADS officials said timesheet billing (hourly billing for deployed IT professionals) represented roughly $43,000,000 in FY25 and that the hourly rates used to recover those costs were set in 2017 and have not kept pace with salary pressures. ADS said rates for remaining time-and-materials work will need adjustment to reflect current labor costs.
- Billing transparency and cadence: ADS told the committee it aims to provide monthly and quarterly snapshots of consumption and billing for agencies so departments can plan and reduce year-end surprises.
Committee reactions and clarifications
Committee members asked whether the model change would increase overall costs for agencies; ADS said it expects predictable increases in the core allocation but an overall reduction in surprise SLAs and fewer ad-hoc charges. Members raised federal-funding limitations as a constraint: ADS cannot draw federal funds directly in some cases, which complicates how the agency absorbs and recharges costs across grant-funded programs.
Ending
ADS staff said they would follow up with written materials, and the fiscal office provided a companion fiscal note the committee could use to test the transition model. "We're trying to deconfuse it and make it a lot more simple," Riley said. ADS leaders asked for legislative support on a multi-year transition so the agency can move to a more predictable recovery model without worsening current arrears.
