HHSC LAR Includes Nearly $1.9B in Technology-Related Funding

The Texas Health and Human Services Commission’s (HHSC) fiscal year 2028-29 Legislative Appropriations Request (LAR) includes nearly $1.9 billion in technology-related funding across baseline capital-budget categories and exceptional items.

That amount sits within a total agency request of about $112 billion across all programs for the biennium. HHSC’s total request includes about $55.1 billion in FY 2028 and about $57 billion in FY 2029.

The technology-related total includes about $1.4 billion in baseline capital-budget categories and about $491 million in exceptional items marked with an IT component.

The largest baseline capital project is about $432 million for Medicaid Management Information System modernization. HHSC says the project is intended to modernize existing Medicaid Management Information System components that are currently outsourced, use selected elements of existing infrastructure and move forward with an outsourced managed-services model.

The agency says the modernization effort would provide more functionality in a managed care environment and reduce ongoing application maintenance and support costs. The project would also retire legacy mainframe systems approaching end of service life.

In capital funds, HHSC also requests about $223 million for data center consolidation and about $215 million for the Texas Integrated Eligibility Redesign System. The LAR includes about $93 million for the existing Medicaid Management Information System, about $91 million for the Women, Infants and Children electronic benefit transfer online transition and about $62 million for seat management services covering PCs, laptops and servers.

Other baseline technology-related categories include about $26 million for the Centralized Accounting and Payroll/Personnel System (CAPPS) category, including about $21 million in capital costs for CAPPS Financials ongoing operations. Another $18 million would go toward enterprise resource planning. The LAR also includes about $13 million for network performance and capacity, about $6.1 million for cybersecurity compliance and operations monitoring, and about $3 million for cybersecurity advancement.

The exceptional-item side includes several requests marked as having an IT component. The largest is a $167 million Supplemental Nutrition Assistance Program administrative change item. Other larger exceptional items with IT components include about $69 million for Health Care Regulation workload increases, about $51 million for protecting Texans from cyber threats, about $50 million for strengthening critical HHS systems, about $46 million for supporting individuals with intellectual and developmental disabilities who have high behavioral health or medical needs, and about $35 million for maintaining critical agency client service systems and contracts.

The cybersecurity exceptional item would fund salaries, professional fees, operating expenses and capital expenditures. HHSC says the request would address escalating cyber threats driven by advances in AI and computing power and would align with the Texas Cyber Command Strategic Plan.

The cybersecurity request includes work to fortify network defenses, prepare applications for cyber defense, defend against advanced threats and secure digital entry points. HHSC says the proposal would support infrastructure upgrades, proactive application testing, encryption and key management modernization and unified single sign-on.

The item to strengthen critical HHS systems and reduce risk from high-priority legacy technology represents the first phase of a long-term modernization strategy and includes application technology upgrades, replacement of a legacy data integration platform, and migration of systems from the Riata data center to a secure environment hosted through the Department of Information Resources.

The agency is also requesting about $10 million for responsible AI expansion. HHSC says its current AI tools reduce manual effort, improve response times and increase staff effectiveness, but are limited and cannot meet growing demand without additional investment. The request includes intelligent automation for document handling and workflows and knowledge intelligence tools to improve access to policies, procedures and training.

The Office of Inspector General also has technology-related exceptional items. One seeks about $5.1 million to modernize surveillance utilization review technology through a software-as-a-service claims management system. Another seeks about $11 million for intelligent automation, advanced analytics and AI-enabled tools to strengthen program integrity work.

The LAR also includes about $15.7 million for System of Contract Operations and Reporting enhancements and a content management system. HHSC says the funding would continue a multiyear effort to streamline workflows, use automation and improve contract management, monitoring, reporting and oversight.