State IT leaders defend chargeback model, propose hybrid pilot to reduce agency IT rates

Corey Mach, chief information officer for the state of North Dakota, and Greg Hoffman, deputy chief information officer and chief financial officer for NDIT, gave the House Appropriations Committee a high‑level overview of the agency’s budget, its chargeback rate model and options for moving to a hybrid funding approach.

NDIT provides applications development, data services, infrastructure and desktop support, and cybersecurity for state agencies. Mach explained the agency is financed primarily by chargebacks: agencies are appropriated money and NDIT invoices them monthly for services. “We are funded as part of a chargeback,” Mach said, adding the process requires agencies to know IT costs years before the biennium begins.

Hoffman told the committee how the chargeback is built. NDIT combines vendor costs, staffing, infrastructure and overhead into service fees and publishes rates in April of even‑numbered years; those rates take effect the following July and govern the two‑year biennium. Fees are billed on agreed metrics — per user, per device or per connection — and agencies can drill into invoices electronically. “We have to charge,…