New Mexico's four largest active information-technology projects have blown past their original budget estimates by roughly $456 million combined, according to a new legislative report presented to state lawmakers. The projects, which include an interagency health and human services system and an overhaul of the state's child welfare case management tool, have also taken far longer than planned and in some cases still have not delivered the functions they promised.
Analyst Lays Out the Numbers for Lawmakers
John Valdez, a program evaluator for the Legislative Finance Committee, told lawmakers the state's largest technology investments have consistently run over budget and behind schedule, as reported by the Albuquerque Journal. As of July, New Mexico had 59 active computer system projects underway statewide, with a combined cost of nearly $1.2 billion, the outlet reported. Valdez said there is room for improved efficiency and cost savings across these efforts, according to the same report.
The costliest example is the Medicaid management information system being developed by the New Mexico Health Care Authority, a project that has lasted seven years. The state has already spent more than $379.1 million on it, a 180.4 percent increase over its original cost, after the project was initially expected to cost about $175.8 million; the Journal's report put its estimated final cost at $493 million. Health Care Authority spokesperson Tim Fowler has described the system as designed to improve Medicaid operations, data services, quality assurance, financial services and public interfaces.
Fraud Investigations Hampered by Data Access
Data-access problems tied to one component of the Medicaid system have prevented employees from fully investigating about $75 million in potentially fraudulent claims, per the legislative report cited by the Albuquerque Journal. The U.S. Centers for Medicare & Medicaid Services has certified three modules of the new system, and the Health Care Authority expects the remaining modules to be certified within four months.
CYFD Misses Another Deadline for New Mexico Impact
The Children, Youth and Families Department has spent nearly a decade developing New Mexico Impact, a replacement case management system intended to take the place of an outdated system and help caseworkers manage their cases and reduce workloads. Committee staff have projected the system's cost at more than $90 million. But the agency did not implement New Mexico Impact by its self-imposed Oct. 13 deadline and, as of this reporting, had not established a new rollout timeline, according to the Santa Fe New Mexican.
CYFD spokesperson Matthew Mitchell said technical and operational issues required remediation and validation before New Mexico Impact could safely become the system of record, citing software defects, data validation and system functionality issues as reasons for the postponement. The agency is continuing to rely on the older Family Automated Client Tracking System, known as FACTS, in the meantime. A premature transition to New Mexico Impact, officials have said, could create risks to case management operations, data accuracy and support for vulnerable children and families.
The Albuquerque Journal's report noted the CYFD system was delayed from an October 2022 completion target to October 2027, and that its estimated cost rose from an initial $36 million to more than $90 million. Figures have varied across reporting: the Santa Fe New Mexican has separately reported the state has spent more than $57.6 million on the project, with Legislative Finance Committee analysts estimating its total cost at $95.4 million in August after CYFD requested an additional $5 million, while the project was originally expected to cost $32 million and be completed by October 2022, according to the same outlet. The project has seen repeated setbacks and scope changes since it began in 2017.
A National Pattern, Not Just a New Mexico Problem
Waldo Jaquith of U.S. Digital Response, a group that has studied government technology failures, told the Albuquerque Journal that New Mexico's struggles with large-scale computer systems are not unusual, calling the state's experience “normal.” Valdez told lawmakers that nationwide, roughly 25,000 IT projects are tracked each year, and only about 6 percent of those with budgets over $10 million are completed successfully, while more than 60 percent of projects costing less than $1 million succeed. He said very large projects have low chances of success nationwide and urged lawmakers to be skeptical of commercial off-the-shelf software, which can cost more and take longer to customize than vendors claim.
Recommendations: Shorter Contracts, Faster Sprints
Valdez recommended that New Mexico shift away from the waterfall approach it has often used for state software projects, in which requirements are defined at the outset and a finished product is delivered only at the end. Instead, he recommended developing large software projects through short, incremental sprints lasting two months or less, with user-needs-focused development cycles running between two and eight weeks and regular user feedback built into the process. He also recommended simplifying state requests for proposals, reducing contract risk-mitigation clauses, and adopting a more short-term, task-oriented approach to contracting with vendors — while still maintaining long-term relationships with software-development contractors.
Legislative Finance Committee chair Nathan Small, a Democratic representative from Las Cruces, said a sprint-based model merited consideration given the high costs of these overdue projects. Republican Representative Randall Pettigrew of Lovington questioned whether a sprint approach would actually improve efficiency without compromising the state's vision for the systems, saying he wanted to see what guarantees a sprint-based contract would provide.
For context on the stakes of delay, the state has been paying about $7.8 million per year to operate the existing child welfare system CYFD is trying to replace. The Medicaid overhaul, meanwhile, is part of the Health and Human Services 2020 initiative, which includes the Medicaid Management Information System Replacement project and spans multiple state agencies; the federal government provides 90 percent enhanced funding for that project's Medicaid functions, according to the New Mexico Health Care Authority.
