BIT asks legislature for $5 million IT modernization, new cybersecurity staff and mainframe contractor as statewide tech demands grow

The Bureau of Information and Telecommunications (BIT) presented its FY2026 budget requests and a multi‑year modernization plan to a joint legislative budget work group, asking for a $5 million onetime IT modernization appropriation, three new cybersecurity FTEs, contract support for legacy mainframe systems and several ongoing licensing and infrastructure upgrades.

BIT Commissioner Madhu Gautamukula and finance officer Morgan Greeble told legislators the IT modernization fund (House Bill 1046 was referenced as the vehicle for a prior-year transfer) has funded projects such as the citizen portal and several agency website and service upgrades. The bureau said $5 million would allow BIT to respond to small‑ and medium-sized urgent projects and continue near‑term modernization work; BIT described the amount as useful but insufficient to eliminate the state’s broader estimated legacy‑systems costs.

Why it matters: BIT supports critical statewide services — state radio for first responders, the data center, the citizen portal that hosts about 150 services, and centralized telecom and cybersecurity. BIT argued targeted investments reduce outage and security risks across agencies and help leverage federal and other funds.

Key requests and rationale

- $5 million IT modernization (one‑time general fund). BIT said the fund enabled recent projects including vehicle registration modernization (605 Drive), the BEAST benefits eligibility system for Department of Social Services, a Secretary of State business services platform, and other projects. BIT described total modernizations underway or planned as large (combined multi‑year projects totaling tens of millions) and said replacing all legacy systems could exceed $350 million.

- Three cybersecurity FTEs (ongoing). BIT requested two additional staff for the Security Operations Center (SOC) to handle increased monitoring and detection workload and one FTE for governance, risk and compliance (GRC). Commissioner Gautamukula told the committee that cyber event volumes and analysis workload have grown substantially and that the SOC team has been working overtime; BIT reported a measurable increase in activity over the past two years.

- Outsourcing mainframe support (contract). BIT said hiring in‑house expertise for its aging mainframe is difficult; the request would retain contractor expertise to ensure continuity for agency systems that still run on legacy mainframe technology.

- Server and licensing changes, and cloud/load balancer upgrades. BIT proposed converting server replacement costs to operational expense (OpEx) consistent with industry trends, replacing an aging on‑premise load balancer with a cloud solution to reduce outages, and covering increases in Microsoft licensing and mainframe software costs.

- Citizen portal support and centralized services. BIT asked for resources to support the citizen portal (roughly 6,400 staff hours annually, described as five FTE equivalents), consultants, centralized phone support and software licensing to sustain regular twice‑year upgrades and agency support.

- State radio and public safety items. BIT requested maintenance for a new Sioux Falls dispatch center, an additional state radio tower for Spearfish (approx. $427,000 one‑time) to address coverage gaps near the Wyoming line and support for state radio rent increases at Sioux Falls locations.

Committee exchange and follow up

Legislators pressed BIT on several budget details and on how BIT allocates costs among general fund, federal funds and other funds (fees). BIT staff explained that most of BIT’s revenue is billed back to user agencies and that those agency payments are categorized by the agencies’ fund sources (general, federal, other). Committee members requested more granular breakouts of specific line items (for example, office rent and the staffing plan in Sioux Falls) and asked for follow‑up documentation.

On cybersecurity, BIT reported it blocks or receives very large volumes of malicious traffic and that analysts need more capacity; commissioners pointed to the SOC’s increased workload as justification for the requested positions. BIT described using AI‑enabled tools in security monitoring and said the state is piloting Microsoft Copilot for productivity and using Microsoft Teams voice to reduce long‑distance phone costs.

Ending: BIT framed the $5 million modernization request as a targeted tool to address urgent, smaller projects while noting the state faces substantially larger long‑term IT funding needs. Committee members asked for additional breakdowns of costs and implementation details and scheduled further review as part of the ongoing appropriation process.