Prior to leaving office State Auditor Brian Sonntag sent a letter to then Governor-elect Inslee encouraging him to focus on reforms to the state's antiquated financial management system. Today State Auditor Troy Kelley released a performance audit which found:
Washington’s financial management system does not efficiently meet agency or state needs because of fragmented, outmoded technology:
- As a result, state agencies have implemented numerous stand-alone components, which are redundant.
- Financial managers, agencies, and legislative staff do not have access to the real time financial information they need to make informed decisions.
- Most of the core and agency-managed systems can be replaced by a single ERP system . . .
Developing an integrated financial management system will pay for itself in time, but upfront costs are high
- Estimated costs: $172 million
- Estimated benefits: $228 million
- Break-even point in year 8
- Most of the costs occur earlier in the project, while the benefits are fully realized later, as shown in the chart
- State agency staff said that costs may be even higher than this estimate due to the large number of systems and decentralized agency culture in Washington.
The House version of the 2013-15 operating budget includes this proviso (Section 148 (8)):
$2,400,000 of the data processing revolving account appropriation is provided solely for the implementation of a pilot program to implement a strategy and action plan to modernize the state's enterprise financial and administrative systems. The department, the office of financial management, and the office of the chief information officer, will lead the planning effort and establish advisory committees composed of key stakeholders.
The plan will include an assessment of the readiness of state government to conduct a business transformation and system replacement project of this scale. The plan shall incorporate the objectives of lean management and should include recommendations on: Project scope, phasing and timeline, expected outcomes and measures of success, product strategy, budget and financing strategy options, risk mitigation, staffing and organization, and strategies to close readiness gaps. The department shall submit the implementation plan to the fiscal committees of the legislature by December 15, 2013.
The amounts provided in this subsection are conditioned on the department satisfying the requirements of the project management oversight standards and policies established by the office of the chief information officer and the provisions of section 944 of this act, information systems projects.
Washington Policy Center has been meeting with OFM, SAO and lawmakers encouraging them to treat the need to improve the state's financial management system as a capital expense versus operating and use the capital budget to move these financial system upgrades forward so that the large price tag doesn't get in the way of this essential reform. Delay is no longer an option.
