The Legislative Fiscal Division told the Section B Subcommittee that the Department of Public Health and Human Services’ Technology Services Division (TSD) has a base budget of “a base budget of $75,500,000 in fiscal year 2025,” and that the governor’s biennial request seeks about a $38.2 million increase over the base, a 25.3% biennial change, split largely between federal special and general fund increases.

The committee was told why the increase is concentrated in operating and maintenance costs: multiple House Bill 10 long-range IT projects are nearing completion, and when capital projects finish the state pays recurring maintenance-and-operations (M&O) costs out of the House Bill 2 operating budget. “By participating in these procurements, we open the door for more business,” Shelly McCann, who leads the EMPATH team, told the subcommittee of multistate procurements used for some contracts. Carrie Albrecht, chief information officer for DPHHS, said the agency has also adopted statewide IT tools and “DPHHS has the lowest risk score of any state agency,” reflecting recent security work.

Why it matters: the TSD budget funds critical statewide technology services for Medicaid and other programs, and the subcommittee’s choices affect whether the department can operate, secure, and integrate systems that handle eligibility, claims, provider payments and health data exchange.

Committee discussion and LFD presentation
Julia Hamilton, the Legislative Fiscal Division analyst for this review, walked members through tables showing the current base and the executive request. LFD stressed that the request’s largest growth items are present-law fixed costs (primarily SITSD fees for enterprise services) and a large DP 9000 request to cover M&O for systems coming online. LFD summarized funding shares: general fund about 37% of the request, federal special about 60%, and state special revenue the remainder.

Hamilton flagged House Bill 10 capital work that flows into the TSD maintenance budget: LFD’s table lists roughly $49.5 million in capital development, $8.6 million in state special and about $80.8 million in federal funds (total roughly $138.9 million) from recent House Bill 10 appropriations; when those systems leave development they create ongoing M&O obligations in TSD’s House Bill 2 budget. LFD also reported a 6.2% vacancy rate in TSD (about 4 vacant FTE of 65 budgeted positions).

Department presentation: strategic focus and project status
DPHHS department leaders described three strategic priorities during the biennium—modernization of legacy systems, enterprise data management, and early adoption of state enterprise IT tools. Carrie Albrecht outlined the department’s shift from legacy MMIS terminology to a Medicaid Enterprise System (MES) approach and described organizational changes: a Data Management Office, an Office of Research and Data Analytics, and a Strategy and Transformation Office to manage data and reporting needs.

Albrecht and other department presenters gave a status update on major House Bill 10 projects: two 2025 long-range IT projects already finished (electronic visit verification and a Medicaid enterprise system integration platform), contract selections or negotiations are underway for the comprehensive child welfare information system (CCWIS, Accenture selected), an electronic benefits transfer system (vendor under contract negotiation, federal approval pending), and a pharmacy benefit management system being procured through a NASPO ValuePoint multistate procurement with anticipated vendor selection in spring 2025. The department also said some legacy systems will run in parallel with replacements during transition periods, which increases near-term M&O costs.

Committee concerns and requested follow-ups
Committee members pressed for more detail on several topics: how LFD and Section F previously evaluated House Bill 10 projects; what “indirect activity” funding is and how it flows across divisions; why SITSD fixed costs are increasing and what catalog items drive that increase (examples cited include Microsoft EA, Tanium, ServiceNow, asset broker costs, and toll‑free call center charges); and how much of the TSD budget is attributable specifically to Medicaid expansion administration versus traditional Medicaid. The director of DPHHS said the department would work with the committee to break down and, where possible, prioritize requests, stressing that much of the M&O package reflects costs “that are nonnegotiable. It’s required, it’s mandatory, and it’s ensuring that investments previously made actually carry forward.”

The committee recorded a set of staff follow-ups: LFD and the department will provide materials Section B reviewed in coordination with Section F, a primer on indirect activity (to be covered in the Business and Financial Services Division presentation), a per-project breakout of M&O funding shares and funding sources, and a status list of the department’s information systems (the department said it operates roughly 185 systems and uses the state SITSD Application Portfolio Management tool as the canonical inventory). Legislative staff summarized the requests at the end of the TSD discussion and put the items on the committee’s follow-up list.

What the department said it can measure and share
DPHHS said it measures customer satisfaction (CSAT) metrics internally and that the TSD support center reports a first-contact resolution rate of 94%—a metric cited as higher than national averages. The department also described technology achievements that produced operational savings, including a reported $400,000 annual savings by migrating an EMPATH workload from IBM Cloud to Amazon Web Services.

Next steps
Committee members asked the department to prepare a deeper briefing—one project selected from DP 9000—to trace a replacement project from procurement through expected M&O need, so members can evaluate costs, integration and expected service improvements. LFD and department staff agreed to provide additional documents and to schedule a TSD work session with pre-circulated materials.

Ending note
No formal votes were taken on the TSD budget during this hearing. The subcommittee deferred final decisions and asked for the additional materials before executive action.