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Legislative Analyst Faults FI$Cal over Costs, Scope, Oversight

The Financial Information System for California was designed to integrate state budgeting, accounting and procurement, but the project has again come under scrutiny from an oversight agency.

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The state Legislative Analyst’s Office issued a lengthy report Wednesday faulting the Financial Information System for California (FI$Cal) for cost and schedule overruns and for moving the goalposts on what constitutes project completion.

FI$Cal was initiated in 2005 as a way to integrate the state’s budgeting, cash management, accounting and procurement processes. This is the second time in recent weeks that a state watchdog agency has faulted FI$Cal for these reasons. In mid-December, state Auditor Elaine M. Howle issued a report citing her “urgent concerns” about the project’s budget, its schedule and its timetable.

The Legislative Analyst’s Office report concludes Wednesday's report with three recommendations to the state Legislature:

  • The Legislature should consider adopting statutory language that defines a project’s completion and success. “Current statutory language defines the broad objectives of the FI$Cal system, but does not define what activities must be done for the FI$Cal project to be considered complete or successful,” the LAO report says. “The project’s current definition of completion … is inconsistent with the agile approach (meaning it is unclear whether the project will deliver system functions in a way that allows for feedback from users regarding their continued development), is an incomplete implementation of the Integrated Solution, and sets a poor precedent for future IT projects that use the agile approach.”
  • The Legislature should continue current oversight practices into the next phase of the project, beyond its current end date of July 2020, in light of “the large number of activities and functions” that won’t be completed by then.
  • The Legislature should condition the release of IT project funding on approval by the California Department of Technology (CDT) of FI$Cal’s most recent update, called Special Project Report 8 (SPR), and “30‑day notification being given to the Legislature (Joint Legislative Budget Committee) that includes the total cost and schedule of the project from the project approval document.” The LAO report asserts that these changes are “a way to structurally improve and protect the Legislature’s oversight authority.”
The legislative analyst notes that FI$Cal’s administration “limited the Legislature’s oversight of the project by submitting a 2019‑20 budget request” without the latest SPR having been approved by CDT.  

By way of background, Tuesday’s LAO report says: “Over time, the cost, schedule and scope of the project have all changed significantly. The changes have been documented in (SPRs). The FI$Cal project is currently operating under its eighth SPR.”

FI$Cal is managed by a consortium of “control agencies” — the Department of Finance, the Department of General Services, the State Controller’s Office and the State Treasurer’s Office. CDT is charged with reviewing and approving IT project proposals submitted by state departments. Once it approves a proposal and it becomes a “project,” CDT’s role is to provide project oversight. (Once an IT project is complete, it becomes an operating IT “system” and is maintained by the department operating it.)

The LAO report’s overview contains sections that address analysts’ concerns:

  • The project establishes “another arbitrary end date for completion.”
  • “Scope change,” meaning the project is now to be considered “complete” despite having fewer planned activities and system functions than originally outlined.
  • The cost of FI$Cal continues to increase, but the project cost doesn’t reflect all related costs. Some costs are borne by departments as they work to integrate into the system.
The LAO report echoes the Auditor’s Office finding that the tardiness in state agencies’ filing their year-end financial statements could have an effect on the state’s credit rating.

A FI$Cal spokesperson said a response or comment would be forthcoming.

A CDT spokesperson said: “CDT has voiced its role and viewpoint on the Fi$Cal project previously and has nothing new to add.” 

FI$Cal representatives were featured at a Techwire briefing last fall in Sacramento.

Dennis Noone is Executive Editor of Industry Insider. He is a career journalist, having worked as a reporter and editor at small-town newspapers and major metropolitan dailies in California, Nevada, Texas and Virginia, including as an editor with USA Today in Washington, D.C.