Walters: California’s High-Tech FI$Cal Debacle

In 1966, as the United States was wallowing in the quagmire of the Vietnam War, U.S. Sen. George Aiken of Vermont famously suggested that the United States simply “declare victory and get out.”

For more than a decade, California’s politicians and bureaucrats have been promising a high-technology system that would allow them and the taxpaying public to track the many billions of dollars — over $300 billion currently — that the state spends each year. It has a catchy title, FI$Cal, but after spending more than a billion dollars to design and build it, those in charge seem to be adopting Sen. Aikens’ advice.

In a new “project plan,” they’ve set a date to declare FI$Cal complete even though it’s only marginally functional in a few agencies; lacks the features that would make it a truly functional, one-stop-shop of financial information and would continue California’s shameful practice of producing incomplete or even misleading financial reports.

This week, state Auditor Elaine Howle once again, for the umpteenth time, laid out FI$Cal’s shortcomings and had harsh words for the decision to officially end the project on June 30, 2020, without fixing its problems.

“The project will not have fully achieved one of its central purposes — modernizing the state’s accounting functionality — by the time the governing entities have declared the project complete,” Howle says in her latest critique. “The Legislature intended FI$Cal to replace the state’s aging financial systems, implement standardization across all departments, and maintain a central source for financial data. Instead, the state — with the fifth-largest economy in the world — will continue to rely on aging technology to ensure accountability and develop key financial statements.”

‘California Spends an Enormous Sum of Money’

Howle’s report is also sharply critical of the California Department of Technology, which was created to oversee and fix the state’s many sub-par information technology projects.

By happenstance, Howle released her report a few days after Forbes magazine published an article complaining that California is an outlier in producing real-time financial information.

It was written by Adam Andrzejewski, who runs OpenTheBooks.com, a Chicago-based organization that presses federal, state and local governments to make financial data available.

“Out of the 50 states, California is the only one that refuses to produce its state checkbook to our auditors at OpenTheBooks.com,” Andrzejewski wrote. “Even though it’s home to Silicon Valley, the state government isn’t letting tech drive transparency when it comes to its own records.”

“California spends an enormous sum of money,” he concludes. “The state spends more than $320 billion per year with federal taxpayers funding $106 billion of it. If we can’t follow the money, then it’s tough to stop the schemes and other public swindles.”

FI$Cal Was Meant to Fix California’s Lack of Easily Accessible Financial Information

State Controller Betty Yee’s rejection letter to Andrzejewski says it’s impossible to produce the data he seeks and cites the lack of a central database, as well as the fact that many agencies issue payments directly without going through the controller’s office.

FI$Cal was meant to fix California’s obvious lack of easily accessible financial information, but without its being operational, and lacking many promised features, the project’s managers want to, in effect, declare victory and call it quits.

The question, therefore, is whether Gov. Gavin Newsom, who describes himself as a technology buff, and the Legislature will tolerate such a self-serving, face-saving gesture.

Howle wants them to intervene, recommending that they should order up another project plan that includes the additional costs and time needed to complete a functional FI$Cal, rather than settling for a costly, half-baked system that fails to deliver what was promised.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.