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General Government 

<h3>Scope Description:</h3><p>Examine the historical budget of the agency for the past five years and present the percentage of operational funding sources, to include: revenue billed to State agencies for services, State appropriations, and one-time funds, such as federal relief funds.</p><h3>Evaluation Objectives:</h3><p>This evaluation will be guided by three key objectives within the scope set forth by the Legislative Oversight Committee:&nbsp;</p><ol><li>Examine the financial operations of the Office of Management and Enterprise Services, to include a review of all funds and assets held by the agency, all sources of revenue, and key expenditure categories.</li><li>Quantify the charges and fees paid by State entities to OMES for services.</li><li>Identify services provided by OMES that are mandatory and those that are optional for agencies.</li><li>Evaluate OMES’ process for establishing rates for services, including whether a service is unbilled or subsidized, and how rates are benchmarked to ensure competitive pricing.</li></ol>

Scoping and Objectives

OMES Budget Review

Executive Summary

Report

<h3>Summary of Policy Considerations</h3><h4><br></h4><p>The Legislature may consider the following policy changes:</p><p><strong><u>For Improved Budgeting:</u></strong></p><ul><li>Require OMES to present a stand-alone operating budget for its agency, in addition to total funds that are passed through the agency unrelated to OMES operations.</li><li>Require OMES to provide a breakout in their budget documents of sources of all non-fee revenue.</li><li>Establish a statutory deadline for the release of the State’s Annual Consolidated Financial Report.</li><li>Require OMES’ annual budget documents include a section dedicated to ongoing appropriation needs based on spending made with Federal dollars.</li><li>Require OMES’ annual budget documents to include a statement of all interest earned during the prior fiscal year on all revolving funds under the agency.</li><li>Require OMES to publish 5 years of budgeted spending compared to actual spending.</li><li>Require OMES’ annual budget documents include the average executive salary and average employee salary for legislative review.</li><li>Require OMES’ annual budget request documents include the last two years of expenses, to include all fees, appropriations, and additional revenue by source.</li><li>Require OMES’ facilities division to provide the legislature on an annual basis a current assessment of deferred maintenance needs across all State-owned buildings.</li></ul><p><strong><u>For Improved Accountability:</u></strong></p><ul><li>Remove divisions from within OMES where an established conflict exists (as with EGID) or where independence would be compromised (as with the Central Purchasing Audit Team).</li><li>Remove Statewide Finance from OMES to ensure an independent check and balance on expenditures that have statewide impact.</li><li>Remove both the OMES Director’s and the CIO/ISD Director’s ability to freeze other agencies’ spending when there is a dispute over billings, if the spending is unrelated to the dispute.</li></ul><p><strong><u>For Improved Billing Practices:</u></strong></p><ul><li>Require OMES to provide Master Service Agreements to agencies a minimum of one year in advance of agencies’ annual budget submittal deadline.</li><li>Require OMES to publish an annual Rate Book that lists every service offered along with an objectively defined unit of measure.</li><li>Require OMES publish a line-item explanation of the application maintenance costs charged to all agencies to allow cost containment by agencies receiving services from OMES, published publicly as a rate sheet with units clearly defined for each sub-item.</li><li>Require service level agreements be developed with contracting agencies for OMES IT employees to establish customer service expectations for both urgent situations and routine customer needs, to include a dispute resolution process or enforcement mechanism when agencies do not believe their SLA is being met.</li><li>Fund individual employee services (such as Office365) based on State employee count – either by having OMES bill agencies for each FTE or by appropriating based on current-year State FTE count. Currently these services are funded based on an outdated FTE count.</li><li>Establish a penalty for late payments to vendors.</li><li>Require OMES to annually report the number of invoices that exceeded the 45 day limit for payment, along with name of the affected agency.</li><li>Require OMES to provide written justification for any rate increases.</li></ul><p><strong><u>For Improved Information Technology Spending Strategy:</u></strong></p><ul><li>Require annual updates to the statewide strategic IT plan and institute a review process by which IT investments must be confirmed to be aligned with the plan prior to approving the transaction.</li><li>Repurpose the Governmental Technology Applications Review Board to provide oversight and guidance for IT spending in alignment with the statewide strategic IT plan and to ensure customer (agency) input into service plans, implementation plans, and costs.</li><li>Create a dedicated fund for approved technology investments that align with the State Strategic IT plan, including decommissioning legacy systems and addressing cybersecurity risks.</li><li>Require an itemized list of the State’s legacy systems and cost/benefit analysis of replacement to be included in the budget document presented annually to the Legislature.</li><li>Change statute to require purchases by the CIO to be subject to competitive bid practices.</li></ul>

Recommendations

Presentation 

OMES Budget Review Impact Evaluation

Impact Evaluation

November 2023

Report: 25-640-01
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