These State IT Projects Have Survived Budget Cuts

As lawmakers wade through a sea of budget cuts and make decisions about which state programs to slim down, several government technology projects have managed to avoid the chopping block. Gov. Gavin Newsom has proposed paring down other initiatives, like Medi-Cal expansion, to plug California’s $12 billion deficit.

Historically, some California IT projects have run over budget and behind schedule. For example, the Financial Information System for California (FI$Cal), the state’s effort to build a comprehensive budget system, has been missing its target completion date for years.

Now, during a tight budget year, lawmakers are reckoning with the need to improve the technology California government uses, which largely involves IT projects developed by contractors, while having to save dollars elsewhere. Some of the additional budget requests for technology projects made in the governor’s May revision include:

• An $8 million investment in a generative AI pilot (GenAI) project at the California Department of Public Health.
• Nearly $20 million to undertake the second phase of improvements to the Department of Industrial Relations' Public Works IT system.
• A reappropriation of more than $160 million to modernize the Employment Development Department (EDD) customer service and business process systems known as EDDNext.

“Even with the deficit, we’re seeing big IT investments move forward,” Assemblymember Christopher Ward, D-San Diego, said in a statement. “These projects support important state services, but that doesn’t mean they should be immune from fiscal review.”

Ward said the challenge with funding IT projects is that many are already underway, such as the DIR’s Public Works system. Stopping projects midway through development could disrupt services or waste money California has already spent. At a budget subcommittee hearing last week, lawmakers questioned department officials about spending on these projects and asked for more oversight of the costs associated with them. Specifically, the nonpartisan Legislative Analyst’s Office urged lawmakers in February to adopt more oversight over the EDDNext project.

Assemblymember Sharon Quirk-Silva, D-La Palma, said in a statement that she and her colleagues are evaluating spending for IT projects. As the chair of a state administration budget subcommittee, Quirk-Silva said negotiations about specific funding decisions are ongoing.

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