IT projects, juvenile corrections and other unpaid-for costs in Wisconsin state govt

This week, the Wisconsin Legislature's Joint Finance Committee got its annual report on overdrafts for state government accounts that are supposed to be self-supporting. This happens every year and frequently involves items that had a lot of up-front costs, and are later recovered over time. But some items saw their deficits grow, and may require further action and/or discussion as to what to do.

The total unsupported amount of these overdrafts grew from $94.6 million in FY 2017-18 to $101.0 million in FY 2018-19. The overwhelming reason for the increase is due to the costs of IT projects that are not getting back the money that has been put in. Most of this is due to the ongoing State Transforming Agency Resources (STAR) program, which was intended to centralize many duties in HR and accounting across several agencies, and has been a general cash drain since the Walker Administration re-started the project several years ago.

The STAR project had overdrafts in a few areas this past fiscal year.

STAR cost overdrafts
DOT Transportation Fund $2.165 million
DOA General Fund $46.25 million (+$1.42 million vs FY 2019).

The report indicates that the DOT items will be paid off in the near future due to new assessments, but the General Fund's STAR deficit keeps rising, despite constant assurances that the project will be paid for. So why is this still happening?

With the deployment of STAR releases 1 and 2 in fiscal year 2015-16, the department began incurring postdeployment maintenance and operations costs for the system. These costs began to be recovered from agencies starting in fiscal year 2015-16 and annually thereafter. As such, the maintenance and operation costs do not contribute to the deficit in this appropriation. The STAR development projects began to be recovered through an assessment to state agencies beginning in fiscal year 2017-18. In fiscal year 2018-19, the department assessed agencies $17,385,548 for STAR operations and maintenance. The department assessed agencies $5,810,527 for STAR development costs, which represented 80 percent of the annual amount necessary to fully recover project and financing costs of the project.

80%? So we're just eating the rest of these costs? Nope, and it'll cost agencies more in taxpayer dollars this year.

The department will continue to annually assess state agencies for ongoing operations and maintenance costs to fully collect project and financing costs over a period of 19 years. In addition, the department plans to begin to assess agencies for the previously unrecovered costs incurred from the IBIS project (the original STAR project, which the Doyle Administration aborted before they got too deep into it).This includes a one-time assessment of $5,547,624 in 2019-20 and $591,212 annually over the subsequent 16 years.

Good thing we got a ton of tax dollars available to blow in 2019-20 so that additional $5.5 million in costs doesn't cause a lot of stress for those agencies.

Let's look at what this overdraft looks like when this report comes out next year, and if the STAR project's deficit has dropped by a few million, then we might be on track to have the project paid off around 2036. So...yay!!??

There also is a separate IT project that led to a new overdraft of nearly $4.15 million from last year. Part of it is for the state spending more for cloud-based services as opposed to buying and owning a license on-site. But much of it is also due to a Walker-era project that never came to be.

...the negative closing balance includes costs associated with the department's project to replace the existing enterprise Automated Call Distribution System, which will not be supported by its proprietary vendor in the future. The department contracted with Genesys for the replacement, but the project ultimately failed due to its lack of functionality represented by the vendor. The project resulted in $6.35 million in costs incurred between fiscal years 2015-16 and 2018-19, plus an additional $3 million in future master lease obligations. No cost recovery has occurred for this project, and the department indicates that it does not plan to pursue a replacement vendor for the system. To recover incurred costs, the department is currently considering implementation of an assessment to agencies that would have participated in this project. The department expects to decide whether to implement this assessment by January 2020.

In other words, we are out $9.35 million or so due to this messed up call system project, and the Evers Administration is now going to charge other agencies to pay back this messed-up project from the Walker Administration.

What's funny (or pathetic) about this situation is that you can bet the GOPs on Joint Finance that signed off on these costly and failing IT projects will now use this report to call a meeting where they demand that the new Evers Administration "do better" and get these costs under control, and come up with a plan to close these multi-million dollar deficits. Cool, cool.

A couple of law enforcement areas also had their overdrafts grow. One involved the state's Penalty Assessment Surcharge, whose deficit went up by nearly another $2 million, making the total overdraft reach $12.6 million. This surcharge is basically the cost of fines for certain infractions, and they are supposed to cover the costs of a variety of programs in 6 different agencies. This isn't happening, and the Department of Corrections notes it hasn't happened for 8 of the last 10 years. But there aren't any solutions coming in this document beyond "hey, we need to find a way to pay for this." Not really assuring.

In addition, the state's Juvenile Correctional Services had its already-sizable overdraft jump significantly in the last fiscal year, up nearly $3.3 million to a total of $7.72 million. These are the costs that the state takes on for taking Juvenile offenders from counties and housing them at their state facilities, but money from the counties and/or state taxpayers aren't making up the difference.

In FY15, the Department retired the deficit and ended the year with a cash surplus. However, juvenile populations declined rapidly in the period between FY16 and FY19, while at the same time the [Juveile Correctional Facilities] also incurred expenses that were unbudgeted or under-budgeted during FY17 and FY18, such as paying for contracted health care staff to handle medication administration. Additionally, a delay in authority to charge the FY18 daily rate led to lost revenue of $1,643,000 during that fiscal year. In FY19, the average daily population at JCFs was 54 youth less than the FY19 budgeted population. A combination of all these factors resulted in a ($7,721,000) PR cash deficit at the end of FY19.

In 2019 Wisconsin Act 9 (the 2019-21 Biennial Budget, a $6/day rate add-on was included in the JCF daily rate to reduce the JCF operational deficit. This additional amount will be included in the JCF daily rate in future biennial budgets until the deficit is eliminated. The Department estimates that the deficit could be retired in FY40 if populations remain at the FY20 budgeted level.

Of course, given that Scott Walker had this philosophy regarding the issues on Juvenile Corrections until it became an electoral problem before 2018, no wonder why we have a deficit and uncertain policy future on this topic.

Lastly, let's talk about an overdraft on a subject that might be close to many of your hearts.

Dog licenses, Rabies Control and related services
Total overdraft $185,400 (all in FY 2019).

This led me down a rabbit hole asking "What are the laws about dog licenses and fees in Wisconsin?" Here you go.

(2) Tax. The minimum dog license tax is $3 for a neutered male dog or spayed female dog, upon presentation of evidence that the dog is neutered or spayed, and $8 for an unneutered male dog or unspayed female dog, or one-half of these amounts if the dog became 5 months of age after July 1 of the license year.

(3)  Additional tax. The governing body of any county may by a majority vote of the members present at any regular meeting raise the minimum dog license tax on dogs within its jurisdiction and the governing body of any town, village or city may by resolution raise the minimum dog license tax on dogs within its jurisdiction. If the governing body of any county, town, village or city increases the minimum tax, it shall provide that the tax for unneutered male dogs and unspayed female dogs is greater than the tax for neutered male dogs and spayed female dogs. The additional tax may not exceed the total cost of all dog licensing, regulating and impounding activities for the previous year, less any refunds which may be received under s. 174.09 (2), and shall be levied and collected in the same manner as other dog license taxes.

But apparently the cost of overseeing the dog licenses and rabies is more than what the state is taking in these days. So there will have to be some kind of raise in the state's dog license fees in the next budget or a reallocation of money from other areas in the near future.

But they're worth it, right?

Most people may find items like this overdraft report to be drudgery. But it's often drudgery that clues us in to what types of changes might be coming in the near future, and whether controversies that legislators choose to make out of them are legit, or if they're trying a pathetic misdirection play filled with fauxtrage.

Let's keep an eye on this one as we go into 2020.