Some Agencies Fund Discretionary or Shared Services
The second source of funding for the state IT portfolio is through service models. Michigan DTMB funds much of the state’s technology backbone, including networks, data centers, servers, hosting and shared services, through service model funding, Clark said.
Shared services include discretionary IT services, IT services that are not necessarily used by every agency, such as geospatial information services.
With this funding model, Michigan DTMB occasionally faces challenges smoothing over the use of specific services, as a customer may want to go outside of the state environment for a service. To head off any confrontations, Michigan DTMB is building more transparency into its shared services environment, Clark said.
As part of that process, the department invites IT business partners to assess and rate state services to identify areas for improvement.
Application Development Team Charges for Time and Materials
The third primary funding model for Michigan’s IT portfolio, which Clark suspects is unique among states, is a basic time and materials costs charge.
This funding mechanism is used by business units such as application development teams and customer service centers for agency services, Clark said. They primarily exist in an “interdepartmental branch,” where they receive a percentage of funding from each state agency budget.
READ: StateTech's exclusive interview with Michigan CIO Laura Clark, who discusses zero trust.
Each agency is required to place a minimum percentage of its budget into funding these services for IT and application development and support. “This is an interesting model, because there are checks and balances here,” Clark said.
Agencies may choose to add extra funding to achieve their goals. “They may choose to prioritize IT work over some of their own business to reap the benefits of innovation or efficiencies from IT services,” Clark said.
Again, the model offers its own set of challenges. “It can be a challenge to work with individual agencies to ensure we set aside enough money for their operations and maintenance each year,” Clark said. “We need to keep the lights on and apply patches to the applications. But they may want to spend more on innovation.”
IT Investment Fund Awards Money to Special Projects
In addition to those there regular funding sources, Michigan state IT projects also receive a boost from a special IT investment fund.
The fund generally receives about $35 million each year to help innovate and modernize the state government application portfolio or infrastructure. The special fund can bring life to projects outside the regular scope of appropriations.
“We do a call for projects where each department can make a recommendation on either legacy modernization or transformational projects,” Clark said.
Agencies pitch their projects to a Michigan IT investment board, chaired by Clark. The multiagency board evaluates and scores the pitches and prioritizes them based on urgency. The IT investment board forwards proposals to the Michigan governor’s office, which examines them according to the governor’s IT goals and the legislature’s priorities.
Based on demand and availability, the IT investment fund may receive additional money. For the upcoming 2024 fiscal year, for example, it received its base $35 million and an additional $42 million to fulfill the administration’s goals, Clark said.
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