State IT agency seeks $96.5 million in FY27 to split core and demand services
Loading...
Summary
The Agency of Digital Services asked the Appropriations Committee for about $96.5 million in FY27, proposing two appropriations to separate foundational "core enterprise" services from demand-driven professional services and new internal service funds to improve cost transparency and predictability.
The Agency of Digital Services (ADS) told the Appropriations Committee it is seeking roughly $96.5 million for fiscal 2027, split into two appropriations that would separate core enterprise IT from agency-specific demand services. "This gives us a chance to use general funds to remove that locker and allow working together in that data space," ADS leadership said, describing new funding flows meant to reduce cross-agency friction.
ADS said it has identified four guiding principles for its restructuring: user experience, standards, predictability and reduced complexity. The agency reported roughly $50 million in validated savings since its creation and said it added about $5.5 million in savings in the past year by consolidating licenses and retiring legacy systems.
Under the proposal, the core enterprise appropriation (what ADS calls foundational services such as cybersecurity, networking and a private cloud) would total about $49.2 million, while the demand-side appropriation (service-level agreements, professional services and bespoke agency requests) would total about $47.3 million. ADS staff said the governor's recommended total is an estimate and that projections for SLA-driven demand are less certain than the enterprise baseline.
ADS leaders described a move away from charging on a per-FTE basis and toward charging per domain user, which advisers said will better align charges with actual consumption. "Now people are paying for what they're actually using," one ADS witness said. The change is intended to reduce the number of agency complaints about chargebacks and to make per-user allocation more equitable across departments.
Committee members pressed ADS on specific line items and timing. ADS said the DMV core replacement and unemployment insurance modernization projects are nearing completion and noted the ERP replacement is projected to go live in 2028. Staff also pointed to one-time IT modernization appropriations from prior years (including a $12.1 million appropriation tied to the former Vantage replacement) and said the state has not yet set a long-term funding plan for ongoing modernization projects.
ADS proposed three new internal service funds: a CIT (communication and information technology) fund for core services, a fund for SLA/demand services, and a professional services fund. ADS said core enterprise costs are more confidently estimated than demand-driven SLAs and that the new structure will allow year-over-year performance reporting on capacity, quality and staffing.
If the committee approves the split, ADS said agencies will see reduced per-user costs for baseline services covered by the general fund and clearer, agency-specific billing for additional consumption. ADS asked the committee to direct further data-sharing so finance staff can provide more granular visibility into the sources of payments that agencies currently remit through invoices.
The committee did not take a vote on ADS's request during the hearing; staff agreed to provide additional breakdowns and project-level dashboards if the committee wants deeper detail.
