Health department outlines $230M IT portfolio, mainframe carryover and governance gaps

Department of Health and Human Services officials told the Appropriations Committee on Oct. 12 that the agency's information-technology budget for the next biennium will be large and that several process and governance issues need legislative and administrative attention.

Donna Ockland, chief financial officer for HHS, walked members through a departmental IT summary that consolidated contracts and maintenance costs previously managed in centralized business operations. "Out of this total, $230,000,000 for the department, $94,000,000 of that cost is for NDIT and about a hundred and 36,700,000 is for our contracted vendors," Ockland said. She added that an estimated $130 million in carryover from current projects will increase next biennium's IT budget to roughly $360 million when combined with base allocations.

Ockland highlighted the mainframe as a near-term budget driver and explained that the department currently pays NDIT for mainframe services. "Our cost for the mainframe will be $378,000 a month. So at 95% for the biennium just for using the mainframe, it will cost us $9,000,000," she said. Department staff said retiring the mainframe would avoid a portion of that recurring charge and noted a separate request to fund mainframe retirement work.

Committee members pressed staff about governance, procurement and who manages project intake since the department transferred many FTEs and responsibilities to the North Dakota Information Technology (NDIT) unification. Ockland acknowledged the department struggled initially after the unification process and said HHS recently hired an experienced program lead — Robert Hovelman — to rebuild internal governance and manage large contracts. She said Sarah Stoltz is the departmental point person overseeing agency IT spending.

What the department asked for: The materials presented two ongoing decision packages: (1) an IT contractual inflation package and NDIT rate increases that together account for a general fund request to cover last-biennium and current contract inflation; and (2) funding to carry forward projects that were not completed in the current biennium. Ockland said the department's approach was to allocate large programmatic contracts (for example MMIS-related contracts) back into individual program budgets so those program managers can control and manage those costs directly.

Why legislators questioned governance: Members asked whether NDIT assigns dedicated staff to HHS systems, whether NDIT contracts the mainframe operation to outside vendors, and if HHS sees contract language before NDIT signs agreements. Ockland said some NDIT staff are dedicated to specific HHS systems, and that NDIT manages vendor contracts that it bills back to the department. "They bill us back whatever the rate is," she said. Committee members asked for follow-up on which contracts and support staff are dedicated to HHS and for documentation of current vendor arrangements.

Next steps: Committee members asked legislative staff and the department to follow up with additional detail on specific contracts, the proposed mainframe retirement plan, and the recently rebuilt internal IT governance process. Ockland offered to introduce the committee to the department's new program lead and to provide contract materials on request.

Ending: The department characterized the IT requests as largely contractual inflation and project carryover rather than new policy expansions; members signaled interest in more oversight of the unification process and clearer delineation of NDIT versus departmental responsibilities before approving additional appropriations.