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Franchise Tax Board updates subcommittee on EDR2 IT modernization and requests $107 million augmentation for Year 5

California State Assembly, Budget Subcommittee No. 5 (State Administration) · February 18, 2025

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Summary

FTB described the Enterprise Data to Revenue 2 (EDR2) project, requested Year-5 augmentation of $107,075,000 (vendor compensation and staff), and noted an SPR-approved cost increase of roughly $418.4 million (about 2.4% of project cost); the project remains within scope and on schedule, FTB said.

Roger Lackey of the Franchise Tax Board updated the subcommittee on EDR2, FTB's multi-year tax-system modernization project that expands enterprise case management, analytics, audit modeling, accounts receivable modernization, and improved taxpayer services. FTB said the first phase (EDR1) modernized personal income processing and that EDR2 entered implementation in July 2021.

FTB requested a Year-5 augmentation of $107,075,000, including funding for solution partners ($90,390,000) and staffing (42 permanent equivalents and 4 limited-term positions). The department requested provisional language to allow one-year carryover of unused vendor compensation and a 5% allowance for unplanned work within the project scope.

FTB reported it submitted and received approval for its second special project report (SPR) in January, which documented a project cost increase of $418.4 million (about 2.4% of total project costs) while keeping schedule and scope intact. The department said project complexity and specialized vendor-managed environments drove the increase and that collaboration between FTB and solution partners continues; the project is at peak activity.

LAO had no major objections but noted the project is subject to special SPR/reporting requirements when costs or schedules change. The subcommittee did not take action; FTB said it will continue to provide reporting as required by statewide IT governance.