The Office of Information Technology (ITS) is required to recover all non-General Fund costs via a Statewide Cost Recovery Plan (SWCAP) process. The plan is a two-year cycle for each fiscal year with a one-year look back and a one-year look forward. Per the SWCAP, ITS does not make a profit from any customers.
ITS first started using a SWCAP for fiscal year 2024. ITS made significant changes for the second year, FY 2025, to address customer concerns. ITS continues to work within government to improve the stability of annual charges to customers whilst pursuing the Governor’s goals of his IT modernization plan.
The SWCAP for ITS has two main parts:
- ITS Operations – cost-recovery of annual operating expenditures to support customers.
- Passthrough – cost-recovery of customer charges where ITS acts as a buyer and/or contract manager for enterprise software licensing agreements or equipment maintenance agreements.
These costs are recovered with a model that allocates equitable portions of ITS total expenditures among customers. The amount recovered through this component is net of all other operating revenues (see “other cost-recovery” below).
The allocation model has two primary parts:
- Expenditures by ITS cost centers (the costs that will be allocated)
- Determination of which customers use the services of each cost center
The primary method of determining the relative size of each customer is using the counts of Microsoft Office 365 licenses. The provides a consistent proxy of an agency’s size for the personnel using IT services.
The results are from the proportion of customers using services of a cost center times that cost.
Provides agency appropriations for enterprise licensing and equipment maintenance costs that are administered by ITS.
- These are customer costs—not those of ITS. Including these costs in SWCAP has multiple benefits:
- Provides purchasing power with vendors and reduces overall costs
- Provides appropriations to state agencies
- Provides cost projections for non-state agencies
- Consolidates the budgeting process into one agency rather than multiple agencies that would otherwise need to present the same items in their budget requests
- This portion includes enterprise licenses such as Microsoft Office and Adobe products
ITS completes projections for the next fiscal year and submits the results to the Division of Financial Management (DFM) for review and compliance with the SWCAP. DFM publishes the approved amounts for each customer on its website around mid-October each year.
At the end of the year, ITS calculates actual variances (plus or minus) from projections and includes those adjustments in the next year amounts. ITS strives to minimize those variances, as well as overall cost increases. That is derived from efficient operations, stability of capital replacement, and negotiating favorable rates for all agreements.
A primary goal of ITS is to allocate funds as equitably as possible among customers while minimizing the costs to achieve equity. ITS bills separately for the following items that are directly attributable to a specific customer:
- A la Carte – Services and items available at a set rate, such as housing customer equipment. ITS will publish a price list of available options. [forthcoming and could be a link]
- Utilization – ITS is developing systems to track customer utilization of systems such as disk storage and network bandwidth. Once complete and tested, ITS will bill customers monthly for their use.
- Contractual Agreements – Projects where customers engage with ITS for specific work, such as software development.
- Telecommunications – Costs associated with telephone, cellular, satellite and related delivery systems. These costs are billed monthly to each customer.