IT Finance Subcommittee – FY11 Q1 Wrap Up October 4, 2010 DRAFT FOR DISCUSSION PURPOSES ONLY

Phase 3D Goals of the IT Finance Subcommittee 1.Execute and Refine Operating Models 2.Execute and Refine Chargeback Models 3.Communicate Guidance re: Asset Transfers 4.Communicate Guidance re: IT Procurement 5.Identify and Evaluate Alternative Funding Models The primary focus of the IT Finance Subcommittee in the first quarter of FY11 was on goal #2 – Execute and Refine Chargeback Models MassDOT was largely excluded from the IT Finance Subcommittee activities, due to their unique funding model.

Execute and Refine Operating Models The “Operating Model” defines who manages core administrative activities (e.g., payroll, procurement, etc.) Agencies chose either Centralized or Lead Agency Operating Models The majority of the work to implement these models was completed in April – June, 2010 (FY10) As of September 15 th, all Secretariats had fully implemented their operating models Lead Agency (agency other than Executive Office manages administrative functions) Administration and Finance Education Labor and Workforce Development (refined) Housing and Economic Development Centralized Model (Executive Office manages administrative functions) Health and Human Services Energy and Environmental Affairs Public Safety

Execute and Refine Chargeback Models This task proved to be the most difficult for the IT Finance Subcommittee to tackle. The intent of this task was to develop a process by which Secretariats who have the ability to use IT staff previously paid for from non-bugetary sources (trust, federal, capital, assessed, and retained revenue) flexibly. In order to do this, staff could no longer be directly charged to their prior funding sources and instead we needed to use a rate for services. Rates available for chargeback include (rate categories vary by Secretariat): –Helpdesk –Desktop/LAN –Application Development –Web/IA Development –Infrastructure Challenges included: –The same set of rates were not appropriate for all Secretariats, and the method of applying the rates could not be universally applied. –Some Secretariats (LWD and EHS) have complicated, federally approved cost allocation plans to charge off central administration costs. These Secretariats could not layer an additional chargeback into these plans. –Agencies’ pre-consolidation funding model complicated the chargeback because some agencies were funded entirely from non-budgetary sources and should receive a full chargeback bill. On the other hand, some agencies were funded entirely from budgetary sources (and contributed all of their funds during consolidation), and don’t have any additional funds to pay a new chargeback. –Due to the method of applying rates (e.g., per FTE, per device, etc.), some agencies will end up paying more for IT services than they did prior to consolidation. Some agencies will end up paying less. This occurs as we “level the playing field” of IT services.

Execute and Refine Chargeback Models (continued) SecretariatChargeback Rates to be Implemented Target Date for Implementation of Rates Key Issues EHSn/a – will use cost allocation plan for cost recovery Need to review CAP, which is being done as part of a larger initiative LWDn/a – will use cost allocation plan for cost recovery Only DIA staff have been moved centrally. Staffing model is not sustainable in the long- term ANF helpdesk/desktop application services infrastructure 10/15/10 Agencies paying more in consolidated environment (e.g., HRD) EOE application services helpdesk desktop/LAN 4/15/10 (application) 7/1/10 (all other) Indirect cost rate for federal programs already includes helpdesk and desktop functions. Therefore, chargeback cannot be implemented in FY11 Time keeping mechanism for application services in FY11 EEA helpdesk desktop/LAN application 10/19/10 Agencies paying more in consolidated environment (e.g., DCR)

Execute and Refine Chargeback Models (continued) SecretariatChargeback Rates to be Implemented Target Date for Implementation of Rates Key Issues EPS helpdesk desktop/LAN application services 10/15/10 – primarily for CHSB Agencies paying more in consolidated environment (e.g., HRD) HED helpdesk desktop/LAN application services 10/15/10 Overall budget deficit

Communicate Guidance re: Asset Transfers and Communicate Guidance re: IT Procurement Both of these tasks are on hold until at least January, 2011.

Identify and Evaluate Alternative Funding Models Beginning October 13, 2010, a smaller group of SCIOs, SCFOs, Comptroller, and A&F will begin meeting to discuss sustainable funding models for IT consolidation. This group will need to do research in best practices across the country (although we seem to be the first brave state to consolidate finance!) and provide options to the larger group of stakeholders Targeting a recommendation by the first week of November This new model will be included in FY12 House 1.

THANK YOU! To all IT Finance Subcommittee members past and present! Next meeting will be the last week of October!