Senate Standing Committee on Rules

The Senate Committee on Rules will come to order. Good afternoon. The Senate continues to welcome the public in-person, and via our teleconference service. We are holding our committee hearing in the O Street Building in Room 2200. For individuals wishing to provide public comment via the teleconference service, the participant toll-free number and access code are, posted on our committee website and will be displayed on the screen. Today's participant number is 877-226-8163, and the access code is 6948930. And on behalf of our court reporter, I would ask all of our speakers, colleagues and witnesses, alike, to speak slowly and clearly. And certainly when we get to the teleconference line, I will give that reminder again. It's sometimes hard to hear folks, and we want to be sure and get the testimony.

So before we begin today's agenda, we need to establish a quorum. Again, let me ask my colleagues to make their way down, so that we can make sure everyone is able to participate in the discussion. Madam Secretary, will you please call the role?

Laird. Here. Ochoa Bogh. Smallwood-Cuevas. Here. Grove. Here. Atkins. Here.

Okay, thank you. Let's see, we have a number of items we can dispense with before we get to governor's appointees who are required to appear. We have governor's appointees not required to appear. And we have items C through G, and that would include a member to the Unemployment Insurance Appeals Board, we have a member on the Commission on the Status of Women, we have two members for the Western Interstate Commission for Higher Education, and we have our Poet Laureate. Motion?

So move.

Thank you, Senator Laird. Madam Secretary, will you please call the roll?

Laird. Aye. Ochoa Bogh. Smallwood-Cuevas. Aye. Grove. Aye. Atkins. Aye.

Four votes that will be on call. I would take a motion on item 3, which is bill referrals.

So move.

Thank you, Senator Laird. Madam Secretary, will you please call the roll?

Laird. Aye. Ochoa Bogh. Smallwood-Cuevas. Aye. Grove. Aye. Atkins. Aye.

On call. We have item number 4, which is a Joint Committee appointment to add Senator Nguyen as a member of the Joint Committee on Fisheries and Aquaculture, to fill a vacancy.

So move.

Senator Laird, thank you. Madam Secretary, will you call the roll?

Laird. Aye. Ochoa Bogh. Smallwood-Cuevas. Aye. Grove. Aye. Atkins. Aye. On call.

On call. The last item we have are a number of floor acknowledgments. We have items 5-9. Okay.

So move.

Senator Laird, thank you. Madam Secretary, will you please call the roll?

Laird. Aye. Ochoa Bogh. Smallwood-Cuevas. Aye. Grove. Not voting. Atkins. Aye. On call.

Thank you. Okay, we're going to go ahead and go back to, let's see, item number 1, which -- 1A -- which is governor's appointee required to appear. And we're going to start with Ms. Jennifer L. Maguire as Director of Financial Information System for California. Please come on up, Ms. Maguire. And as you're coming up, I'm going to offer you the opportunity, as you get situated, to acknowledge, thank anyone you would like, make opening comments, anything you'd like to share with us briefly, and then we'll go right to the committee. And thank you for your patience. Welcome.

Thank you. Good afternoon, President pro Tem and committee members -- we're good?

Our mics were on, so maybe that was the problem. Go right ahead.

I want to thank you for convening this hearing, and for your consideration of my confirmation to the appointment of the Department -- the Director of the Department of Financial Information System for California, also known as Fi$Cal. I'm humbled and I'm honored to be here, and I'm truly grateful for the generous opportunity and support Governor Newsom has provided. While I'm on the subject of gratitude, I'd like to introduce my husband Mickey, who is here today, along with two of my four children, Caitlin and Chase. Austin and Jordan are my other two, who couldn't be here today. So I love and I miss you. Also here today is my beautiful granddaughter, Adeline. I think she took a pause and went outside -- she's that big. She'll be three months tomorrow.

To my colleagues, peers, friends, and family who are here, as well as watching, I thank you for your unwavering support throughout my career. And last, but certainly not least, today is extra special for me, because my mother, Tijuana, is here as well. And although she is sitting behind me, she likely has the biggest smile in the room, for there is no doubt of how proud she is of her daughter today. And there is no articulation of how that makes my heart feel. I'm a woman who grew up knowing what it meant to serve the state of California, and how important public service is. Both of my parents are retired state workers, my father retiring from the Attorney General's office, and my mother retiring after 40 years with the Department of Education -- both entering state- and entry-level positions, both making every dollar count.

Both dedicated and hardworking, my journey has very much replicated that of my parents. After graduating college, I too, have entered the state in an entry-level position, working my way up the ranks to where I sit before you today. I've dedicated 27 years to public service, and more than 10 of those years have been spent at the Department of FI$Cal. For the majority of my tenure, I was the Deputy Director of Administration, and in that capacity, I was primarily serving our internal clients, our employees. My short stint as Chief Deputy Director only further enhanced my involvement with FI$Cal's employees and expanded my role with our customer departments.

As Chief Deputy, I went from providing administrative direction to the role of providing operational direction. And I feel that has helped me, and has made me well-equipped to handle the role of director because of this. Customer service is my purpose and it is my passion. I have spent my career in customer service, and it is my goal to ensure that FI$Cal employees, and the departments we serve, have the tools and training they need to effectively do their jobs and that they feel heard and supported along the way. As such, customer support will be at the forefront of everything that we do at FI$Cal.

I'm coming into this role at a great time. I'm surrounded by a leadership team that is effective and collaborative, whose collective intelligence strengthens our department and sets us up for success. This includes our four partner agencies: the Department of Finance, the Department of General Services, the State-Treasurer's Office and the State Controllers. As you know, there is still more work ahead for FI$Cal to become the official accounting book of record.

Our relationship with the new State Controller has started off very positive. And I believe with their commitment, we are closer than we have ever been before. Being the fourth largest economy, implementing FI$Cal has been a monumental achievement. The FI$Cal system is enormously complex by its very nature. There are 152 departments using the system, approximately 14,000 End-Users, and we processed over $421,000,000,000 in expenditures alone in fiscal year 21-22. We are proud to say that departments are paying their bills, balancing their budgets, using the FI$Cal system every day. And I want to note that there's over 170,000 vendors registered to do business with the State of California using the FI$Cal system.

With the passage of AB 156 last year, the legislature recognized FI$Cal's project objectives as being met and formally deemed the project complete as of July 1, 2022. AB 156 also set forth a roadmap for the department, laying out a plan over the coming decade. So what's ahead for us? Protecting FI$Cal's data and application is my top priority. We are continuously improving our cybersecurity posture and have been acknowledged by the Department of Technology for our continual efforts in cybersecurity. Over the course of 2022, FI$Cal, in collaboration with our partner agencies, have prioritized a list of enhancements that we intend to make to the system.

Many of these enhancements were a direct result of interactive engagements with our customer departments and represent the ongoing maintenance and modernization of the system, ensuring efficient and relevant alignment with the state's financial management processes. Additionally, we have begun the process of onboarding the remaining deferred departments. These departments were deferred from the initial releases as most of them had their own modern financial systems in place at that time. FI$Cal has improved, and continues to improve the onboarding process based on prior experiences and lessons learned.

These priorities represent a piece of a larger picture for the department going forward and are aligned with our roadmap outlined in AB 156. FI$Cal will continue to report on the status of these priorities in our annual report to the legislature. With that, I'm happy to answer any questions the committee may have.

Thank you very much for those opening comments. And let me welcome your family. We are always thrilled to see when family members are able to join. We know it's a big deal and very important. And so it's great to see everybody here. Welcome. Senator Laird, let me go ahead and start with you and we'll come down this way and get started.

Thank you, Madam Chair. And good to see you, your mother was smiling rather broadly when that happened. Just -- you couldn't see it. And I appreciate our meeting, and I think I would like to just sort of have the conversation briefly, here, that we had in the meeting because I have this experience where I was budget chair when we first talked about FI$Cal in 2005. I was in the administration when it started to be implemented in 2012. We're in 2023 and we still have ten departments, and it's not scheduled to be completed for a few more years. And my initial question was, why would it not be obsolete with that long a process by the time everybody's on? How would you respond to that?

Sure. Thank you, Senator. You're correct. So the initial discussions did start taking place in 2005. The intent and the scope of those initial discussions changed dramatically over the years. And in 2012, we hired our contractor, our system integrator, who came on, that would help design and build the system. We didn't actually start deploying any functionality or have any departments onboard until 2014, and that was a very small subset of departments. Our largest release was in 2018, where we had several of our larger departments come on board. So essentially, throughout the past eight years, technology has modernized. And we've upgraded and we've deployed the latest technology to our system, and we'll continue to do so.

I want to mention that the platform that the FI$Cal system is on is supported for at least another ten years. And we are confident that, in partnership with the Department of Technology, that we will continue to modernize the system in a cost-effective manner and putting security at the forefront of that.

So another way of saying it is: is this is a living system, not one that sort of has a fixed start date or fixed end date. And if it's a living system, you could get to ten years from now and feel like it's working fine and needs little tweaks and it can keep going, generally -- because that was a revelation to me when you told me that.

Yes, yes.

Okay. And then, there are, if I have it right, roughly ten departments that still haven't come on. How long will it take for them to sort of adopt it and come online so that everybody in the state system is online?

So the initial ten departments that were deferred, as I mentioned -- they were deferred at the time because their financial system was modern. We are onboarding three of those ten departments right now: California Department of Rehab, California Department of Technology, and we have started the onboard process for Caltrans, one of the larger departments. So we essentially have seven departments remaining. AB 156 has a date, 2032, for those remaining deferred departments to onboard to FI$Cal.

So what we are currently doing with the seven, is -- I personally have met with each of the departments -- and we are talking about where they are at with their current financial systems, having discussions about the end of life of their current financial systems, and we are encouraging them to complete what we call a fit gap analysis. Basically a comparison of FI$Cal and their system, and any gaps that are between those two.

And FI$Cal isn't necessarily vanilla, it can be tapered to the individual needs of each department.

We do weigh -- there is an enhancement process, that is correct, and we look at it from multiple factors. The FI$Cal works in conjunction with our partner agencies to take a look at any gaps that remain between how a department is currently doing business and how FI$Cal operates, and assess those from multiple perspectives, including financial.

And then my last question is about the training side. Because initially you train everybody, and then the system morphs or the system is developed uniquely -- let's just say Caltrans has some unique road budget feature or something -- you have to do special training for everybody that's in it. And if it is a living system to where it changes with the times, do you have to redo training for people? Do they have to refresh themselves to operate the system as it changes?

Well, I see training as ongoing because you have folks that leave departments, you have new employees that come on and onboard, you have new users to the system. In the sense you're referring to, the basic fundamentals of the FI$Cal system do not change. If there is a large enhancement that may change a business process, then yes, that training is available for all of our End-Users and our departments.

Thank you. This was actually real education to me because I was around for some of the first departments, and they're real bumps -- and it seems like that's not what's happening. And I had an impression that this was a very structured system that wouldn't morph. And I have a whole new idea from this, that this is a living system and one that could go well past the ten years, if it's adjusted or kept up with technology. So I sort of came away thinking you're the right person for the job. So thank you for meeting and thanks for bearing with these questions.

Thank you, Senator.

Senator Laird, thank you so much. Madam Vice Chair.

Thank you, Madam Chair, what a pleasure to be able to ask you a few questions and what a wonderful Mother's Day gift you have for this Sunday to have your daughter be in this position. So congratulations. In January, the former State Controller's Office sent a note to the legislature -- a letter to the legislature -- on the ongoing challenges that the department of -- the departments are facing in achieving functionality through FI$Cal. And she listed a couple of things in that letter. What are some of the things that you're going to do to address those concerns that the former auditor had?

Sure. Thank you, Senator. I want to start by saying that, as I mentioned in my opening remarks, I'm coming into this position at a great time because the project portion of this work has been completed, right. It's been deemed complete. There's still a lot of work to do and I recognize that transitioning the accounting book of record from SCO to FI$Cal still remains. That partnership with the State Controller's Office, we are in our initial steps of planning that transition. We look forward to very much working with the Controller and her team to ensure that that happens. And when it does, it will create a lot of efficiencies for departments and we will continue-

My job is to make sure that the End-Users of that system are trained on how to use the system, and provide those opportunities for the departments, as well as to listen -- what current pin points are. So this past fall, we did an End-User survey, a departmental financial survey to all 152 departments that are in the system. And we're currently in the process of analyzing the results of that survey.

And we can brainstorm and come up with recommendations, work very closely with Department of Finance and State Controller's Office, and we'll include any of those findings and any of our efforts to address what remains to be challenges for departments, in our report to the legislature in October.

Thank you. That's all I have. Because in your opening remarks, you answered my second question that I had. So thank you ma'am, very much. I look forward to your confirmation.

Thank you.

Thank you, Madam Vice Chair. Senator Smallwood-Cuevas. Why don't we go next to you and we'll round it out with Ms. Ochoa Bogh.

Thank you so much, Madam Chair. And thank you so much for being here. We didn't have the pleasure of meeting beforehand, but I think you said that FI$Cal is responsible for processing 40 billion -- can you repeat that?

$421,000,000,000 in transactions last year.

-last year. That is tremendous to oversee, and at the same time, transition the system. My questions -- because my colleagues asked a number of the questions I was going to ask, so I am satisfied with the responses -- but my question has to do about the vacancy rates. It's something that we're hearing across a number of departments.

And you have currently a 20 percent vacancy rate due to an increase in positions from last year's budget. Often, we are just trying to get a sense of how are you approaching that 20%? What are the steps that you're taking to increase your workforce? This is a highly trained, highly skilled, experienced workforce that is also inheriting this very complex transition process. Can you just share some of your internal steps that you're taking to fill that vacancy rate and to, I think, ensure the successful transition of the other pieces of the FI$Cal system?

Thank you, Senator. I absolutely will. And I -- thank you for acknowledging our vacancy rate is as high as it is because we did receive those positions. Because, prior to receiving those positions this past July, our vacancy rate was right in line, roughly between 10 and 12 percent. So our goal is to get those positions filled and that vacancy rate down. In doing so, I am working very closely with our staff to challenge ourselves to diversify how we are recruiting, starting with our talent strategists themselves, right, making sure that they're trained, ensuring that diversity and inclusion is at the forefront of how we're going about our recruitment efforts.

I would like to say that we are proud, and we are fortunate, at FI$Cal to have a workforce that provides a good representation of California. And it starts with those frontline recruitment strategists that work on this. They are trained in diversity inclusion and we ensure that they're given the tools to get out there and do creative and inclusive recruitment processes. We have virtual and in-person recruitment events to attract talent. And we are committed to allocating training resources once we get those employees onboarded. As you mentioned, it is a very unique skill set.

We are a IT solution for a business problem, right? And so, finding folks that have that combination of IT and business skills is -- I'm sure not just challenging for us -- but statewide. So we continue to leverage what other departments are doing: do engagement sessions with them, work closely with our control agencies, to ensure that we are doing the most innovative way of recruiting employees to the department.

Thank you for that. And if there's any way that our district can be a support, we think we have a great pool of potential workers in our district with a growing IT, and certainly a thriving business and technological base. So we look forward to working with you on that in the future.

Thank you.

Thank you, Senator. Senator Ochoa Bogh.

Thank you, Madam Chair. So, as my colleague mentioned, my questions have also been asked by our former members -- our chair members. I'm trying to figure out -- maybe, perhaps -- I'm not sure if -- I wasn't here for Senator Laird's full commentary. So if you've already answered them, I'm sure I'll get the answer later. But I understand that the processes that have been in place to determine whether or not to add an enhancement or future to the system right now. So, talking about fixing the glitches, adding guardrails, adding enhancements, and features of FI$Cal program -- I ask, because I'm sure that some departments might want specific features that may not necessarily be used by others-

That way you're not overloading the system with unnecessary enhancements. So would you like to have an opportunity to kind of express some thoughts on those questions?

Sure. Thank you, Senator. I'll start by saying that we continue to produce and improve reports. Departments love reports. They love them. There's comfort, there's security in the information in front of them. And you're right. We have a very robust enhancement-intake process. So if a department submits a request to have an enhancement to the system, there are many partners that are involved. Stakeholders meet, and we look at it from a technical, a business solution, a financial solution, in order to make the determination and the prioritization of those enhancements. In saying that, we have some high-profile enhancements that we have planned over the next few years, and some of them are in conjunction with our partner agencies.

The California Payroll System will have an interface component to the FI$Cal system. Department of General Services is looking at an E-marketplace system that will also have an interface component. So we continue to engage, we continue to work, and ensure that any enhancement that's brought on will keep the system modern and secure.

Wonderful. I think that's all for now, Madam Chair. Thank you.

Thank you. I appreciate all the questions, and particularly Senator Laird kicking it off with -- kind of, I agree with you, Senator -- I thought it was a fixed system. I'm not very technologically advanced, so I thought it was fixed. And we have been talking about this system for so long. I, too, had great concerns that it was going to be obsolete the minute every department was finally brought on board. So that's really helpful to understand. I appreciate the fact that you also talked about cybersecurity. It is the thing that I think a lot about with technology, because I think the less you know about technology, the more worried you are about what could happen that you don't understand.

When I read a little bit, the description about the cloud-based disaster recovery environment or system, you made reference to cybersecurity, but help me understand a little bit more about that. And as it relates to that, are there other security risks or costs to having a system in the cloud? Is this better? Is this not? Or does it just depend on -- maybe you can spend a few minutes and talk a little bit about that for us?

Sure. So our journey to the cloud will take place over the next several years. We're going to take an approach, do it in three separate phases. I think I slightly address those in my questions, but protecting the security of the system and the integrity of the information that's in the system is top priority. Absolutely. We work very closely with the Department of Technology. We look to them as the technology experts, if you will, and we also measure our effectiveness through third-party assessments. So, the California Department of Technology, the Department of Military, and the California State Auditor comes in and does assessments on the system.

And from there, we can take the information and the feedback that we receive and use that to improve the posture of our security of the system. We have begun to shift our focus to cloud-computing solutions, which are essentially subscriptions to cloud service providers, to store the information. And we will start with the disaster recovery. We're currently in the process of doing that. And by doing that, should there be any disaster, it will enable our employees to have minimal downtime by having that security in the cloud. So we want to take advantage of sophisticated security that's readily available, and we can do that by using the cloud.

And you mentioned in your comments, about having others look at, or the ability to have them weigh in, whether military, state technology -- how does this system differ or, more stringent, -- if you've got others looking at the system, how do you compare between what others do versus what we do, and their reaction? It's just getting underway.

We have those assessments that are done annually.

Okay.

So we defer to them based on the analysis of that assessment, and we work closely with them if there are any concerns.

Do you do the same for other departments? Is this a peer-to-peer review kind of thing? Are they more... ?

They may do it for other departments. We work with them when they come to audit our system.

Okay. I clearly have a lot to learn -- or at least understand, but thank you so much. If no other follow up or questions, we're going to go ahead and go to members of the public. And we're going to start right here in Room 2200.