The Kansas Department of Administration informed a legislative committee Monday of budget problems in the executive branch's central IT operation because of a billing dispute with the Legislature, a pending federal penalty for overcharging agencies for technology services and the bungled purchase of computer equipment. 

DeAngela Burns-Wallace, secretary of administration and the state's chief technology officer since August, said financial challenges had been years in the making and jeopardized the state's ability to undertake modernization and security upgrades to systems serving dozens of agencies.

She said there was a simmering dispute with the Legislature related to nonpayment of $3.8 million billed by the Office of Information Technology Services. In addition, she said, overbilling by OITS initially discovered in 2017 would lead to a federal penalty to the state of at least $1.1 million but possibly as much as $5.7 million. The state has been sanctioned previously for charging IT clients too much in fees.

"We are on the federal government's radar," Burns-Wallace said. "There is a potential for a penalty."

The state's decision to give Kansas State University $10 million of unused computer equipment stored for years in the basement of the Docking State Office Building came at an indirect cost. By never installing the equipment for use by the Department of Administration, no fees were generated. Instead of raising money to retire debt related to the IT purchase, $6 million in cash was recently expended to settle that debt.

Burns-Wallace said the 2020 Legislature would be asked to provide $10.4 million to clean up the agency's IT books and to appropriate $4.5 million for creation of a new capital investment account for IT needs.

Sen. Caryn Tyson, a Republican from Parker who serves on the interim House-Senate technology committee, responded by declaring a bill must be adopted next year to mandate real oversight of OITS. She said a 2013 audit of state IT operations showed problems with rates charged to agencies, but IT officials failed to impose meaningful reform. A 2018 law that placed OITS within the Department of Administration isn't sufficient, she said.

"I think we need a major shakeup with how we administer and how we have our IT services in the state of Kansas," Tyson said. "We have to step up and do something."

Rep. Kyle Hoffman, R-Coldwater, chairman of the interim committee, said a "gentleman's agreement" was put in place, possibly two decades ago, to charge the Legislature a lower amount for IT services during months in which lawmakers weren't convened in Topeka.

"I'm not sure it can be said the $3 million is owed," Hoffman said.

There are 54 state agencies, including a dozen Cabinet agencies, that employ 1,400 IT personnel. The top challenges of these agencies, according to a summary of new three-year action plans, were technology obsolescence, budget constraints, security, recruiting employees and limits on resources.