Assembly Budget Subcommittee No. 1 on Health and Human Services

Good morning. This is the Assembly Budget Subcommittee number one on Health and Human Services. Today's hearing will cover health and human services proposals in the governor's may revision. As always, given the length of today's agenda, I would like to request that all of our speakers be as brief as possible. I also want to remind everyone that all public comment on all issues in the agenda will be taken at the end of the hearing. After the last issue is presented. We will first take public comment from individuals who are here in the hearing room, followed by public comment from individuals over the phone. The public comment call in number is on the Subcommittee website and it also will be on the live stream screen once public comment has started and I'll share it. Right now that number is 877-692-8957 and the public access code is 131-5126. Of note. We will take a break for lunch today from noon to 01:00 P.m.. With that, let us begin. I'm going to call the first panel up on Health and Human Service agencies proposals. So agencies, Department of Finance and Legislative Analyst Office should come up to the witness table. We ask for the administration for all issues to present in the order in the agenda and to introduce yourselves. Before you begin again, please be succinct in your testimony as we have a lot to go over today. Thank you. And with that CalHHS, please begin when you are ready.

Mr. Chair. Thank you. Adam Dondro, Director of Office of Systems Integration under Cal HHS and because I feel obligated because the agenda mentioned it. Happy early birthday, I believe so. The CARES project you've seen many times. We've been here in a lot of different venues. Today is particularly exciting. We've been waiting a long time for SPR Six special project report where we were finally going to have vendors on board, contracts in place to give us numbers and timelines that we could count on. I'll be relatively brief though. It's a large proposal with a lot of history. Happy to dig into details. Mr. Metzker from LAO did a fantastic job of providing a summary of the key points in history. Obviously, this system is replacing the CWS CMS system, which is the largest child welfare system in the nation with approximately 30,000 users across the state over the decades. Obviously, it's worn down. A lot of functionality has been added outside the system which creates variances in how it's used across the state. And so a lot of that requires us to make these changes. The new system obviously, first and foremost needs to meet the needs of the county welfare workers around the state, counties, tribal, all of those. But additionally, meeting state and federal compliance is a key component as the current system doesn't do that. This BCP aligns with the now approved SPR Six. I will talk a little bit about what the changes in that SPR are just to highlight what we've done since we last talked about this project. For one, the system structured into a delivery of version one and version two. Version one will allow us to stop using the CWS CMS system and retire that moving everyone over to the new system. And then version two will allow us to enhance upon that and build out the remaining components of Seawiss requirements for the federal requirements. The timeline for those are that V1, which started just last June on the build, will be delivered in October of 2026, allowing that retirement of the existing system. And V2 will be delivered in April of 2028, just 18 months later. The new revised total costs are 1.7 billion, excluding the CARES live costs, and there's large buckets that I think are important to understand that number, we've got approximately $250,000,000 in county and tribal participation costs, relatively unique to this project, but absolutely essential to the success of building something that meets the needs of the workers. Additionally, there's $225,000,000 in implementation and stabilization costs. Part of that, I'll talk later about the new implementation model we're using that was changed particularly to focus on child safety. Additionally, there's $150,000,000 for data infrastructure, which is a unique component we built into the system to maintain the authority and autonomy of the state to utilize that data effectively, not just for case management, but for in depth analytics so that we can serve the families that are using our systems. And lastly, there's $200 million for Salesforce licenses, just a component of the model that we're using. So the reason that we made the changes, we now have vendors on board, we have contracts negotiated, so we have actual numbers in place for what that's going to be. An important note here is that we have an independent third-party advisor. So we didn't just ask the vendors, how much do you want us to pay you to build this? We talked to them about what they think it would take from their experience in other states with other systems. And then we had an independent advisor who looked at comparable complexity, looked at the scope of a Seawist required system, and helped us use metrics to determine what's an appropriate timeline and cost for a system of this. And the proposal in SPR Six and in front of you in this BCP was validated by them for those purposes. Additionally, we did a demonstration pilot, a small piece of functionality tested and used by the counties, and we had a lot of lessons learned out of that. And so we've made adjustments to our processes for development, for implementation, along the whole spectrum to align with those lessons that we've learned, which indeed was the point of doing a demonstration pilot so that we didn't spend years learning them. We'd do it quick upfront and make the adjustments in SPR Six. And in this proposal, you see scope clarification and elaboration. Informed by that work, we've adjusted the roles and responsibilities. As you'll recall, this is a multivendor environment. We looked at that and we're seeing gaps inefficiencies in the way that process was working. So we've renegotiated the contracts and included what's called a racy that defines who is responsible for what. Both the vendors, the state, our county partners, tribal partners to make sure there's clarity on who's responsible for what components to deliver them. Additional important point on that is that we have enhanced the authority and requirements on our primary vendor who's building the system. As a system integrator historically that's been with the vendor previously. We had a lot of those responsibilities with the state. It's a difficult skill set to get in the state for something that we don't do on a regular basis. So in the contract, we have enhanced that requirement upon them to make sure that one person is responsible for monitoring across those vendors and things don't fall through the gaps. We've additionally enhanced the user feedback process, co-design with our county and tribal partners, real-time checks where they get to see the system in use, though not delivered, to identify gaps and issues that we can change before delivery. And then obviously, as I mentioned the implementation piece, we were going to do a nine-month waived rollout with groups of counties. That's what we're doing with the ... system. Often with our county-run programs. That's what we do from a technology perspective. That's why we do that. But when we talked to our county partners and the vendors, when we looked at this, a waived rollout with this system would require the county workers to work in two systems at the same time. Data would be in one system, in one county, in a different system, in a different county. County lines mean nothing to families, right? When people cross over, things would get missed, right? There would be things that had been entered in one county or even in the same county that the worker didn't know to check that other system. And we decided in partnership with the counties, that just wasn't acceptable. And so we've switched to an all at once rollout. Obviously, technologically, there's a lot of risk to that. That's a big change. All at once with over 30,000 workers, right? And so you'll see in the timeline, we've built in significant time to reduce that risk. Training, modeling, testing, and a production pilot where a handful of counties will go and work in two systems for a limited time period and test those things out so that before we work into that process, we'll have addressed those things. Those are some of the major changes. We've also worked hard to enhance accountability through some of these measures we've talked out, including what we call earned value management. The key here is we used to have what we call testimonial increments, very technological term defined a time base by which the vendors would deliver an amount of code. It didn't align to value, it didn't align to what workers would be able to use, making tracking difficult, testing difficult. We shifted over to this earned value management that I think when we talk about some of the things that the Lao has highlighted will enable us to give you a much better perspective of what's being delivered, not just in zeros and ones, but in actual value to the county workers that we're prepared to deliver. Those are some key things, obviously a lot more. I'd like to hand it over to my partner from Department of Social Services to talk about a little of our work with the counties.

Good morning, Chair and Members of the Subcommittee. I'm Salena Chow and I am the Chief Operating Officer at Department of Social Services. And I am representing the project sponsor with this CARES project. The project scope includes some really critical updates as Director Dondro was mentioning regarding engagement with the counties and tribes. And a lot of that is to develop an engagement and communication and system user adoption model. We commonly refer to it in the project as the core constituent participation model. And it includes 37 counties and the two Title IV tribes that are serving child welfare services. And they will be directly involved in co-design and providing immediate feedback. They'll have opportunities to really test out the system, have hands on experience to really provide that feedback as to whether or not it's working for them and what functionality is really usable from design to implementation. So it's going to happen throughout the project at various milestones and we'll have an opportunity to iterate and make changes along the way. And this is extremely critical to make sure that the system that we're building is going to work for all 58 counties across the entire system of child welfare services and all the different various support areas that we have. And one other important consideration too is increased communication with the counties in terms of this feedback process. So really tracking and having transparency with regards to the feedback that they're providing, how we're triaging it, and what the status is in terms of whether it gets incorporated into the final product that we're developing. We do have five positions for CDSs that are new, that are in the BCP request, and those positions are focused on supporting engagement with counties and tribes. And the process will include understanding what external systems they currently use, making sure that we're avoiding the duplicate data entry issue, and ensuring that we are able to meet federal compliance and finally, what can be in the scope so that we can finally decommission some of those other legacy systems and external systems that are being used. And one last point here is that the May revision budget does include $23 million, the general fund portion is $11.5 million. And this is an upfront funding allocation to the counties. In recent years we've seen it's been a struggle if there's uncertainty about how much investment is going to be available to support county operations. So we're putting that funding up front. We are tying it to the project milestones, and we'll be working directly with Cwda and counties on the funding distribution methodology. But the goal here is to make sure that the counties are aware of what is the investment that's going to be provided to them so that they can really be a partner in operational planning and getting the necessary approvals in the counties and really preparing them for the readiness of all the activities to come.

Erin Carson Department of Finance nothing at this time, but happy to answer any questions.

Good morning, chair and members. Brian Metzker with the Legislative Analyst Office. We find that the recently approved project documentation SPR Six does provide a clear project baseline in terms of cost, schedule, and scope that can be used to monitor the project's progress towards completion. That baseline is the delivery of a new federally compliant system by April 2028, at a total cost of $1.7 billion, of which half is state funding. However, this project has been in development and implementation for over a decade, with project expenditures exceeding $300 million. Therefore, we caution against the approval of any additional project funding without more legislative involvement in and oversight of the project. Continued lack of progress on this project could put federal funding at risk and further delay the implementation of legislative and other changes to child welfare programs and services. We recommend the legislature take several actions to ensure progress towards project completion continues on time and within budget. First, we recommend the legislature adopt trailer bill language that clearly defines its goals and planned outcomes for CWS cares, including both definitions of project completion and success, clear direction from the legislature removes any uncertainty about the project baseline and direction going forward, and sets up criteria to help the legislature monitor project progress. Second, we recommend the legislature add on to and modify the provisional budget bill language that is proposed by the administration for this project. The language withholds about 20% of the project funding pending a determination by the Department of Finance that quote verified satisfactory progress towards project completion is made. It does not define satisfactory progress, however, and similar language proposed last year was not used because the percentage of funding withheld was too low. Therefore, we recommend the legislature define satisfactory progress using the proposed trailer bill language so the administration, the legislature, and project staff can measure and verify project progress going forward. Furthermore, we recommend the funding that is withheld be increased to 35% over 20% to ensure the legislature has an opportunity to verify that satisfactory progress is made. Third, we recommend the legislature consider additional oversight tools. Currently, monthly progress reports and quarterly briefings are provided to the legislature, but the history of the project shows that this is not enough. One option is monthly oversight meetings between our office, the project, the Department of Technology and other relevant parties to review project oversight reports from the Department of Technology, as well as independent verification and validation staff that look at the project on a more technical basis. This is an approach that's been used in prior projects that are very large and complex. Another option would be to request the participation of the state auditor to annually evaluate whether the project is making sufficient progress towards completion according to the baseline in the SPR. And lastly, the legislature could direct the project to improve the level of detail in its reporting, such as by including measurements of project cost, quality and schedule from the project's independent advisor. In sum, the administration's revised project plan looks promising, but this project is one of the costliest and most complex in the state's it portfolio. The Governor's May revision proposal presents an opportunity for the legislature to increase its involvement in and oversight of the project and happy to answer any questions, bring.

It up to the dais. We'll begin with Dr. Jackson.

Thank you very much, Mr. Chair. And it looks like this is your birthday tomorrow. Wow. It's all over the agenda and stuff. It and this is in our portfolio has been very disappointing and this is not the only project. And obviously, I think, Mr. Chair, we should be adopting as many of the recommendations of the LAO as possible because at this point it's going to be our fault if we allow these things to continue on. And so, at least for this Member, I really hope that we stay on our benchmarks on this because this will be the last time I'm supportive of an additional change and additional money going to this project. We're either going to get this right or we're not because ten years already is just not acceptable. I mean, that's a full term of some of our Members. And so I wish the best of luck to you in getting this done. But without additional measures as the LAO has prescribed, I know I will not be supportive of this additional funding and nor will I be supportive in the future. If we are not sticking to the benchmarks that we do, we got to do it right. If I was a contractor of the state and I did that, the state would get rid of me in a second, right? But we don't have the same accountability for ourselves. And so it is my hope that we get it right this time. Thank you.

I'd like to give the Administration a chance to respond to the LAO's comments. I was particularly drawn to the lack of progress could threaten federal funding and the need for us to ensure that we were doing this on time and on budget. So I'd like to give you a chance to respond before I ask any further questions.

Sure, absolutely. I appreciate it. We fully agree. We look forward to engaging on the recommendations from the LAO. We've raised a few concerns about how we word some of that, some of the numbers, but all in all, it aligns with exactly what we've been doing. I came on board a year ago, the day after tomorrow in my director role, and we've spent that time focusing on this SPR six and making sure that we're building in accountability for ourselves, for our vendors, in a way that can be tracked and measured. So, like Mr. Metzker talks about additional enhanced features to enable you to monitor that we are hitting those benchmarks. We've built those in for ourselves and are happy to be sharing those publicly as well for others to take part in. And in terms of the federal funding, we fully agree the current system does not meet federal requirements. They've been patient with us, but we're in active discussions with them. We have a different document, but the comparative to the SPR with them for review right now with these same comments.

In place, would like to dig into the specific recommendations. Is the administration amenable to dates and success models, goals and planned outcomes that were suggested by the LAO? Can we work with you to also increase the funding percentage from 20% to 35% because we have a need to make sure that we have accountability with these dollars? I agree with my colleague and so intend for us to ask the Administration to put pen to paper and figure out how we can work with each other to ensure that we meet the goals of this project. I'll transition my line of questioning to the third-party independent evaluator. I believe that's Deloitte. And so how do we make sure that we have oversight on those who are watching our programs as well? What's our role? How are we getting input from them to determine whether or not we're successfully making these changes?

Absolutely. So Deloitte is our platform as a service. They're doing the main building. The third party vendor is completely separate from them in monitoring it. And so they have autonomy. And actually what we've done is they report to me and my agency role separate from the project so that the project leadership can't say, I don't like what they're saying and make changes to it or push them on that.

Is there any reason the Legislature is not included in that feedback loop? Wouldn't we be important to have that same type of information? I mean, I understand there may not want to have that level of transparency, but we find it needed with where the project is and So would ask that. Similarly, if this Deloitte is giving you the information, that we would ask that we receive that same level of information.

Sure, yeah. We'd be happy to work through what that language looks like. I'd have to go back to see where we fold that into an existing reports and not like Mr. Metzker said, we also have an independent validation and verification. We have CDT's, IPL, so there's lots of pieces of oversight that get folded together. And I think we can talk through what makes the most sense, where we're not throwing everything at you, but we can put something together that effectively gives you the view that you're looking for.

Thank you. With that, we will look towards that trailer filled language as we negotiate this final budget. But it will be important for many of us, as we appropriate dollars, that we have that level of transparency so we can have confidence in where we're going. I do agree with you with your operational decision to activate all counties at the same time makes logical sense and appreciate the training and work that's gone into this level of transformation. And so understand that it's complex and it costs dollars, but we have the responsibility to make sure those dollars are well spent and look forward to the ongoing discussions with the Administration.

Likewise. Thank you.

With that, we will move to our next item the Health Innovations Initiative.

Hello, Mr. Chair members. Aaron Carruthers, Executive Director of the State Council on Developmental Disabilities. Mr. Chair want to extend my very happiest birthday wishes to you.

Give me a second before we go to SCDD.