Time:09:06 AM to 12:31 PM
Place:HCR 0107
This Meeting was called to order by
Representative Tyler
This Report was prepared by
Matt Kiszka
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
OSA Presentation
Colorado Technology Association Presentation
COFRS Presentation
Other Business
Discussion of IT Capital Budget Requests
Witness Testimony and/or Committee Discussion Only
Witness Testimony and/or Committee Discussion Only
Witness Testimony and/or Committee Discussion Only
Committee Discussion Only
Committee Discussion Only

09:06 AM -- Presentation from the Office of the State Auditor on the Annual Recommendations Not Fully Implemented Report

Representative Tyler, chair, called the meeting to order.

Matt Devlin, Deputy State Auditor, Sarah Aurich, Audit Manager, and Reed Larsen, IT Auditor, came to the table. A hardcopy version of the Office of the State Auditor's Annual Report of Audit Recommendations Not Fully Implemented was distributed to the committee (Attachment A). Mr. Devlin gave an overview of the report and provided a background on the office, noting that in the past year the office has issued 50 different audit reports across various state agencies. He mentioned that the office only tracks the implementation status of audits that departments have agreed to, which counts for about 99% of the office's audit recommendations.

131119 AttachA.pdf131119 AttachA.pdf

09:11 AM

Sarah Aurich, Audit Manager, gave an overview of the financial, performance, and IT audit recommendations that were made across the different state agencies. She described the purpose of financial audits. According to Ms. Aurich, 35% of all audit recommendations made between 2008 and 2013 were financial, and the overall number of financial audit recommendations has decreased over this time period. Ms. Aurich summarized the classifications of financial audits, in terms of severity. According to the OSA, the Governor's Office of Information Technology (OIT), as of 2013, has 20 outstanding financial audit recommendations. There are no outstanding financial audit recommendations for the State Internet Portal Authority (SIPA) currently. Representative Tyler asked about the SIPA audits, whether SIPA had met with the office earlier in 2013, and if there was a formal process for concluding previously recommended audits. Ms. Aurich answered that the office had recently self-reported that it completed all of the recommended financial audits.

09:17 AM

Representative Tyler noted for the record that Senator Hill was now present.

09:18 AM

Ms. Aurich continued, and started talking about performance and IT audit recommendations. A performance audit assesses whether an agency is operating effectively and efficiently. IT audits review procedures and technology to ensure confidentiality and integrity of data within the state, and whether the state's critical IT systems are going to be available. She then gave an overview of the number of performance and IT audits not fully implemented across the departments, and for OIT and SIPA specifically. Representative Tyler asked Ms. Aurich what happens when an IT system changes and an audit recommendation becomes irrelevant. Ms. Aurich answered that in this situation the agency would come to the Office of the State Auditor to notify them of this, and in addition, the office reviews its recommendations with the agencies each year and adjusts them accordingly.

09:23 AM

Reed Larsen, IT Auditor, guided the committee through the audit recommendations for the Governor's Office. Mr. Larsen said that over the last five years the Governor's Office has received 505 audit recommendations, and that, as of June 30, 2013, 20 of these recommendations were outstanding. Mr. Larsen then summarized the different outstanding recommendations. Senator Hill asked if it was possible to get a summary of the financial recommendations for OIY as he could only see performance and IT recommendations in the Office of the State Auditor's report. Mr. Larsen responded that he would be able to provide this information to the senator but that he did not have it at hand.

09:30 AM

Mr. Larsen proceeded with his summary of the outstanding recommendations and the specific systems they were related to. Representative Tyler touched on the different budget requests the committee will be reviewing, and asked if they were related to some of the recommendations that Mr. Larsen was talking to. Mr. Larsen responded that he could not speak to this specifically. Senator Newell asked about the audit related to the service level contracts between OIT and the executive branch agencies. Mr. Larsen gave an overview of the issues that were identified with service level contracts and stated that these issues were not considered to be a significant deficiency. Mr. Larsen spoke further on the performance and IT audit recommendations implemented by the Governor's Office, and noted that the majority of these recommendations go to OIT. He mentioned that a number of the included recommendations were from a confidential report not published publically, which were included in the table so policy makers would be aware of the existence of these other recommendations.

09:39 AM

Representative Rankin asked if the confidential report was available to the committee. Mr. Devlin answered, saying that because the report was released through executive session, the committee would need to motion for them to release it, and the committee would have to go into executive session. Due to the sensitivity of the report in regards to state IT systems, the office did not want to discuss it publically. Mr. Larsen continued, providing an overview of the audit that the office conducted on SIPA and the recommendations that resulted from this audit. Representative Rankin asked what it takes to close out one of the recommendation items. Ms. Aurich responded that for financial audit recommendations, the office goes in and reviews the situation to see if the recommendation has been implemented. She stated that for performance and IT recommendations, however, the office does have the resources to do this. Representative Williams asked about the one recommendation with which SIPA disagreed. Mr. Larsen responded that the office was not able to recall at that time which recommendation the authority disagreed with, but that this information could be provided. He also stated that the office does not track recommendations further once a state agency has disagreed with them. Representative Williams commented that the committee needs to know which items a state agency disagrees with in order to do its job properly. Ms. Aurich stated that the one item that SIPA disagreed with was in fact a recommendation that was no longer applicable to the authority once it was made, rather than an actual disagreement with the recommendation.

09:45 AM

Senator Newell asked Ms. Aurich about closed recommendations that are not followed up on by the office, and which are self-reported by the state agencies. Ms. Aurich summarized the different processes that the office has in place to address the recommendations that have been implemented by the state agencies, and how they are held accountable. Representative Rankin asked what the staff size of the Office of the State Auditor is. Mr. Devlin gave an overview of the office, which typically runs between 60-65 full-time equivalent employees. According to Mr. Devlin, the office also contracts out with local certified public accounting firms due to being somewhat understaffed.

09:50 AM -- Presentation from the Colorado Technology Association

Wendy Nkomo, Chief Operating Officer, Sandra Solin, and Nissa Szabo, Industry Affairs Manager, all representing the Colorado Technology Association (CTA) came to the table. Ms. Nkomo started with a brief overview of the CTA and talked about how they could best support the committee. Ms. Nkomo stated that the association serves 13,000 professionals in Colorado and focuses on professionals, talent, and the growth of technology companies. Ms. Nkomo offered the association up as a subject matter expert for the committee.

09:53 AM

Representative Tyler summarized the technology issues that the committee is concerned with and the aspects of its work that the CTA might be able to help with. Committee discussion and questions on how the CTA could support the committee ensued.

10:05 AM -- Colorado Financial Reporting System Modernization Project Presentation, Department of Personnel and Administration

Robert Jaros, State Controller, came to the table to present, and distributed a hardcopy version of his presentation (Attachment B). He provided background on the Colorado Financial Reporting System (COFRS) and the reason for the move to the new Colorado Operations Resource Engine (CORE) system, known as the COFRS Modernization Project. Mr. Jaros summarized the status of the project, its vision, and its mission.

131119 AttachB.pdf131119 AttachB.pdf

10:10 AM

Representative Tyler asked Mr. Jaros to distinguish, for the benefit of the committee, between customization and configuration in an IT project, which he did. Mr. Jaros proceeded, describing the implications of standardized best practices that will come from the CORE project, as well as other benefits of the system overhaul. Representative Rankin asked what the budget for transition to the new system is, and how much change management factors into this. Mr. Jaros responded that change management does not just occur within the system but also within the processes, and that the department is currently looking to engage a consultant for this aspect of the transition. Representative Rankin also asked if there is additional risk in the transition with the re-training of employees, and what time had been factored into the transition for this. Mr Jaros said that this is a significant change in terms of the requirement of the workforce, with a need for less data entry and more analysis of the data. Senator Schwartz wanted to know how expectations for legislative changes were going to be built into the system. Mr. Jaros said that the department would be able to work with its vendor to incorporate any legislated changes. Senator Schwartz was concerned that this would lead to the need for a fiscal note. Mr Jaros responded that the system is modern and flexible and should be able to handle changes to reporting so this should not require a fiscal note. Committee discussion of this issue ensued.

10:19 AM

Senator Newell asked about the contractor for change management that was brought on board to help, and what employee engagement looks like within the department. Mr. Jaros spoke to present and future change management within the Department of Labor and Employment, and how they hope, long-term, to not have to worry about using outside contractors to help in this area through the build-out of an internal change management team. Mr. Jaros also explained how employee engagement has been functioning within the department. Senator Newell asked for confirmation that there is enough funding in the department's plan to cover the robust training that this transition is going to take. Mr. Jaros responded with an overview of their training plan and how the different aspects of this plan will cover training adequately. Representative Rankin asked how many users there are to train, and whether this was factored into the project budget. Mr. Jaros said that training will initially cover 4,000 employees. He estimated each employee will require 3 training courses on average. He talked about the challenges of training in terms of different employees requiring different training levels. In total, he estimated this will amount to roughly 13,000 people classes of training, which was factored into the project budget as a contingency amount. Mr. Jaros continued his presentation, and summarized the scope, steering committee, functional teams, budget, and current status of the CORE project.

10:33 AM

Mr. Jaros talked about the project deliverables and benefits. One large benefit to the transition to CORE will be the move away from paper filing to electronic filing. Current practices are very paper-intensive. Mr. Jaros concluded with an overview of the project risks. Representative Rankin asked if the department will be able to calculate the savings from this project. Mr. Jaros responded that the system change was implemented to avoid an event where the state could not pay its vendors, rather than as a project to achieve savings. He stated that there will, however, be ways to calculate any achieved savings, and covered where savings might come from. Senator Newell asked about the schedule risks of the project. She had a large concern that the timeframe of the project was being reduced significantly, if the scheduling was realistic, and what the backup plan was in case the schedule was not met. Mr. Jaros responded that the timeframe is aggressive, but also reasonable. He stated that it was chosen because of the state's fiscal year, and the desire to align with it. According to Mr. Jaros, leaving adequate time for training is also being taken into account. Senator Newell made a suggestion that the department might want to give notice to different legislators and executives of involved departments so that expectations for going live can be managed well. Mr. Jaros responded that he is ensuring in his different activities and conversations with state agencies that everyone is aware of how different the new system is going to be, and is making sure that everyone is on board.

10:44 AM

Representative Rankin asked what will happen if someone doesn't think that this new system is suitable for their needs. Mr. Jaros responded that he is looking for anyone with concerns so that he can address them up front and also illustrate the benefits of the new CORE system. The committee discussed how to proceed in their reporting with the Joint Budget Committee (JBC) on the COFRS Modernization Project, and decided that it would be prudent to schedule a joint meeting with the JBC in the near future.

10:47 AM -- Discussion of IT Capital Budget Requests

Representative Tyler began with a summary of how the committee process for making recommendations on IT capital budget requests might work with the Capital Development Committee (CDC). Committee discussion ensued.

10:49 AM

Kori Donaldson, Principal Research Analyst for the Colorado Legislative Council, provided a handout containing a summary of each of the capital budget requests for committee consideration (Appendix C). She then reviewed the capital budget request creation process. Senator Newell asked Ms. Donaldson to define what a "program plan" is within a capital construction request. Ms. Donaldson said it is a term that better applies to a more traditional capital project, and defined what is meant by a program plan. Ms. Donaldson proceeded with an overview of the information included in each capital construction request form. Representative Tyler made a statement to the committee that, in his understanding, its job is not necessarily to decide whether funding for a project should be in the budget, or if funding should come out of the capital expenditures budget, but rather to review the amounts requested and to decide whether or not they are feasible. Ms. Donaldson continued in her review of the capital construction request form, and what information will be found in each section of the form.

131119 AttachC.pdf131119 AttachC.pdf

11:00 AM

Ms. Donaldson covered the CDC's budget request consideration process and how it recommends projects to the JBC. She stated that the JBC generally takes the recommendations of the CDC. Ms. Donaldson asked the committee to provide comments, recommendations, and feedback on the different capital budget requests that are up for consideration. Senator Schwartz talked about what she hopes the CDC gets from working with the Joint Technology Committee. She mentioned that it would be very helpful for the two committees to have joint hearings. Representative Tyler addressed other items that it would be useful for the committee to receive input on in this process. Senator Newell asked Ms. Donaldson how the different budget requests for consideration will be presented. Ms. Donaldson responded that the different departments involved in the budget requests had been invited to attend the meeting to present their requests, and that she could talk to the requests, but that she was not there to officially present on behalf of the departments.

11:08 AM -- Discussion of IT Capital Budget Requests for FY 2014-15 - Division of Motor Vehicles IT Systems (Driver's License System and Colorado State Titling and Registration System) Replacement

The committee discussed some of its personal and constituent experiences with obtaining license plates and driver's licenses in Colorado. Barbara Brohl, Executive Director of the Department of Revenue, Maren Rubino, Deputy Director of the Division of Motor Vehicles (DMV), both representing the Department of Revenue, and Mike Richey, Chief Customer Officer of OIT, came to the table to present. A copy of the presentation was distributed to the committee (Attachment D). Ms. Brohl commenced the presentation, stating that the Department of Revenue has been working on the DMV modernization plan, alongside OIT, for the past two years. Ms. Brohl then summarized project costs, key elements of the project, and why an upgrade to current DMV systems is needed.

131119 AttachD.pdf131119 AttachD.pdf

11:21 AM

Ms. Brohl talked about the different steps in developing the project budget request, and how the project plan was developed.

11:30 AM

Ms. Brohl addressed the amount of the budget request and covered each line item of the request and why it is necessary or needed. Ms. Brohl concluded her presentation. Senator Newell asked if there was a plan to have customer-facing training for the systems update. Ms. Brohl spoke to the plan for training and the personnel that will be added to the department to address this. Senator Newell asked where change management had been factored into the project budget, and Ms. Brohl spoke to the systems that were implemented within DMV offices to address change management.

11:39 AM

Representative Rankin asked what percent of transactions were currently being conducted online, and any fees that may be involved in processing online transactions. Ms Brohl responded that the overall goal was to move as much of the process online as possible to increase efficiencies and make license and registration transactions as easy as possible. She did not have percentages available on hand, but said that they do track them. Ms. Brohl also spoke to credit card company fees for online transactions. Committee discussion ensued on credit card processing fees. Representative Williams asked if Ms. Brohl could give examples of other states that had implemented similar systems. Ms. Brohl gave several examples of states that had implemented driver's license and vehicle registration and titling systems, and mentioned how they were observing these other states to learn from their experiences. Senator Hill brought up a concern about how Colorado might not be able to learn from these other states, as they are currently in the process of implementing these projects. Ms. Brohl spoke to the states who have already completed their projects, of which there are three. Senator Hill then asked about system security compliance, and if the department will be making the system compliant with credit card system requirements. Ms. Brohl answered in the affirmative for the online systems, where credit cards are currently used. Senator Hill also asked about the OIT and Department of Revenue backfill for the project.

11:50 AM

Dorinda Floyd, Chief Financial Officer for the Department of Revenue, came to the table to address Senator Hill's question and to explain the numbers behind the full-time equivalent employees that were delineated for the OIT and the department in the project. She pointed out that the numbers were for the full three years of the project. Committee discussion with the department surrounding the different contractors and employees involved in the project, and justification for their pay rates, ensued. Senator Schwartz commented about what she is interested in for this project: how there can be early detection of problems in systems, if the department is changing systems in an appropriate way, and what the mechanisms are that can be implemented to avoid getting into trouble in this project? She also stated that she wants benchmarks and ongoing maintenance to be implemented. Senator Schwartz asked the department if they will engage the stakeholders long term on this project. Ms. Brohl spoke to these points. Senator Schwartz followed up by asking how they arrived at their costs for ongoing maintenance. Ms. Brohl responded that it was a negotiated dollar amount with the vendor, based upon an evaluation of expected necessary changes, as well as an estimation of internal employee time that will be dedicated to ongoing maintenance.

12:03 PM

Representative Tyler initiated a quick recess and asked for suggestions from the membership as to how the committee might best move forward in its recommendations of the different capital budget request items.

12:13 PM -- Other Business

Representative Tyler called the committee back to order. He stated that all of the departments that made IT capital budget requests were invited to attend the meeting and that they chose accordingly whether or not to do this. He thought that they did not quite understand the role of the committee yet, and discussed how the committee needs to define its role further and to work with the Capital Development Committee and the Joint Budget Committee more closely. Representative Tyler recognized that the committee needs to produce a report for the legislature, and proposed holding a meeting in January that might include the Capital Development Committee so that the two committees understand each others' purviews. Representative Tyler also stated that Senator Hill and Representative Williams had to leave.

12:16 PM

Representative Tyler asked the committee if it was interested in passing any form of recommendation or making comment on the Division of Motor Vehicles' budget request for the Capital Development Committee. Committee discussion of the project ensued, and the committee agreed that it was impressed with the proposed DMV project. Representative Rankin expressed concerns with all of the IT requests, and did not see indication of cost savings in any of the IT capital budget requests. He also stated that the committee should be cautious about many of these departments trying to fix operational problems with new IT systems. The committee discussed the different items for consideration that it needed to keep in mind when reviewing capital budget requests. The committee proposed developing a list in its next meeting of best practices and questions it could ask for each budget request.

12:22 PM

Committee discussion of its activities, intentions, and best practices ensued.

12:28 PM

Representative Tyler requested that the committee be made aware of CDC meetings through Legislative Council Staff. He also requested coordination on the list of questions the committee could ask of the departments making IT capital budget requests. Jessika Shipley, Legislative Council Staff, asked for clarification on what the committee would like to receive from staff on the different IT capital budget requests. Representative Tyler responded that a form similar to the CDC template would be useful, but that staff did not yet have enough input from the committee to proceed with this project. This item was left for future discussion at the committee's next meeting in January 2014.

12:31 PM

The meeting was adjourned.