Longbow Partners’ Legislative Highlights 12.11.2015

House lawmakers taken aback by catastrophic failures in upgrading child support system

Earlier this month, the federal government temporarily cut off funding for a high-profile upgrade of the state’s child-support data system (known as the T2 project) that is running far behind and over budget. In their decision, the federal government requests a Corrective Action Plan and other information before restarting the funding. Under the program, the federal government pays two-thirds of the money for the tech upgrade, which was initially estimated to cost $203 million but has ballooned to $310 million.

Catastrophic failure in plans for the state’s child support data system were reported by outside evaluators as far back as 2011 – a fact that left many Texas House lawmakers speechless during a lengthy Appropriations Committee hearing last Thursday, December 10, 2015.

The Attorney General’s five-year-old child support update, T2 Project, is the latest in costly budget and timeline overruns for large-scale IT projects within state agencies. In this case, the price of the mistake was steep, resulting in the U.S. Department of Health and Human Services suspending its contributions.

University of Texas Professor Herbert Krasner, who performed the outside federal evaluations of the T2 Project, told lawmakers flatly that the $46 million roadmap Deloitte drafted for the project wasn’t worth the paper the plan was written on. That comment drew audible gasps from lawmakers on the committee, many of whom had yet to see the specifics of reports.

“So, basically, we were under water, so to speak, since the beginning?” asked Rep. Helen Giddings, D-Dallas, who admitted she was taken aback and was struggling to figure out how to react.

“Absolutely. This project has been off the rails since we got involved with it in 2011, and looking back a number of years,” said Krasner, who is responsible for conducting the federally required biannual independent verification and validation. “It’s been off the rails for this whole time,” Krasner said.

Krasner did say that the project initiated by then-Attorney General Greg Abbott could be put “back on the rails” with some radical changes. Some of those changes are starting to happen under new changes in administration of the division, Krasner said.

Chip Roy, First Assistant in Attorney General Ken Paxton’s office, was quick to shore up that claim, adding that former division chief under Abbott Charles Smith, who is now at HHSC, raised concerns about the project as early as January.

Paxton’s office is working to clean up the mess that began under Gov. Abbott during his time as AG. Paxton’s folks have asked The Legislature to assist with a decision in whether to extend the contract for Accenture, which is deploying the Deloitte plan. The design of the system is complete and 40% of the coding is done, company officials assured lawmakers, adding that executing the Deloitte playbook had resulted in significant harm and costs to the company.

A new contract negotiated with Paxton’s office has put the delivery date at July 2018. Contract terms include penalties for delays, Roy noted. At this juncture, evidence would suggest that choosing a new vendor would add increased cost and extend the project’s timeline.

Early in the hearing, Legislative Budget Board Director Ursula Parks walked through the timeline of the contract, but many of the questions were reserved for Roy and Accenture, including the outsourcing of a portion of the workforce to India. Accenture did not outsource the contract to India, but legal counsel for the company clarified that the Indian workforce was already working for the company. Data provided to the programmers was “dummy data” and no actual Texas data was sent offshore according to Accenture’s testimony.

Krasner, who said he was a bit tongue-tied and sleep deprived because of anticipation ahead of his first appearance before a legislative committee, had no hesitation outlining the problems that spelled failure for the project, including the weight of 20,000 drafted requirements, when most states have 4,500; a playbook on methodology that was inadequate; and technology selections without consideration of software.

He also articulated the 40 shortfalls listed in an initial report, including project charter deficiencies; a field office not adequately involved; a lack of organizational management; a master schedule without risk buffers; a dubious methodology playbook; and, most important, no actual timeline. “It’s never been real,” Krasner remarked.

When asked what the state would have if no federal funding returned, Krasner was forthright. “We’d have a bunch of paper,” he said.

Click the link to view the Legislative Budget Board’s Overview of the Texas Child SupportEnforcement System 2.0 and Project Monitoring & Oversight.

Energy Future Holdings Bankruptcy Case Clears Hurdle

Energy Future Holdings, Texas’ largest power company, has cleared a major hurdle in its effort to emerge from one of the largest corporate bankruptcies in American history.

Last week, U.S. District Judge Christopher Sontchi signed off on the company’s plan to break up key pieces of the company — a major step in the conglomerate’s effort to shed tens of billions of dollars in debt though a plan that could hold major implications for Texas ratepayers and the electric grid.

The ruling wraps up 19 months of wrangling between Wall Street firms and other creditors in the courtroom — proceedings that cost Energy Future some $1 million each day in legal fees.

Still, the company’s march from red ink to black is not over. Sontchi’s ruling shifts the focus to Austin, where state regulators must sign off on the lynchpin of Energy Future’s plan. Those discussions will prove contentious.

As it stands, Energy Future, saddled with $42 billion in debt, owns all or part of three crucial pieces of the Texas electric grid.

Luminant is the state’s largest generator, with a fleet of 14 coal, natural gas and nuclear plants that can power nearly 20 percent of the grid. TXU Energy is one of the state’s largest retail electric providers, serving more than 1.7 million Texans.

Energy Future also is the majority owner of Oncor, a monopoly utility whose 119,000 miles of transmission and distribution lines deliver power to more than 3 million homes and businesses in North and West Texas.

The deal Sontchi approved would spin off Energy Future’s electric generation side to its creditors tax-free, allowing them to be paid in full. It would also hand Oncor — the only asset continually making money — to a group led by Ray L. Hunt, the Dallas oilman and real estate mogul. That deal is valued at roughly $18 billion.

The Texas Public Utility Commission must sign off on the Hunt sale after balancing corporate interests with those of Texas ratepayers. The commissioners could also add stipulations of their own.

But Hunt’s plan is complicated, and it’s never been tried for a utility this big. That’s making some observers nervous. To save on federal income taxes, he wants to reorganize Oncor into a “real estate investment trust,” essentially dividing it into two companies: one owning the assets (power lines, trucks and transformers, for instance), while the other rents the equipment, operates it and deals with customers.

The agency has set a hearing for January, which is expected to last two weeks.

TCEQ Accepting TERP Grant Applications

TCEQ has opened the application process for the following two grant programs in the Texas Emissions Reduction Program (TERP):

  • Emissions Reduction Incentive Grant (ERIG) Program (deadline: February 2, 2016). Grant funds are available to upgrade or replace older heavy-duty vehicles, non-road equipment, and stationary equipment. Eligible counties for this grant round include: Bastrop, Bexar, Brazoria, Caldwell, Chambers, Collin, Comal, Dallas, Denton, El Paso, Ellis, Fort Bend, Galveston, Gregg, Guadalupe, Hardin, Harris, Harrison, Hays, Henderson, Hood, Hunt, Jefferson, Johnson, Kaufman, Liberty, Montgomery, Nueces, Orange, Parker, Rockwall, Rusk, San Patricio, Smith, Tarrant, Travis, Upshur, Victoria, Waller, Williamson, Wilson, and Wise.
  • New Technology Implementation Grants (NTIG) Program (deadline: February 16, 2016). This program provides up to $3.5 million in grants for eligible individuals and businesses who build, own, and operate new technologies to reduce emissions from point sources or store electricity related to renewable energy. There are three NTIG project categories:
    • Advanced Clean Energy projects that involve the use of certain hydrocarbons (coal, natural gas, or petcoke), biomass, solid waste, or derived-hydrogen fuel cells, while meeting minimum emissions reductions requirements.
    • New Technology projects that reduce emissions of regulated pollutants (such as criteria pollutants or hazardous air pollutants) from point sources.
    • Electricity Storage projects that store electrical energy related to renewable energy sources.

Environmental Groups Sue TCEQ in State District Court over Pending Title V Permits

On November 24, the Environmental Integrity Project, Sierra Club, Air Alliance Houston and Texas Campaign for the Environment filed a lawsuit against TCEQ in Travis County District Court asking the court to take final action on eight new or renewed Title V operating permit applications. The lawsuit alleges that TCEQ missed its 18-month deadline to take final action on the applications. The environmental groups claim that until the TCEQ processes the applications, the public will not be able to challenge the permits they consider deficient. To view the petition, please click here: http://src.bna.com/biM.

National News

  • A rewrite of President George W. Bush’s signature education policy, “No Child Left Behind” won final passage in Congress this week after winning preliminary approval in the Senate on Tuesday. The rewrite, dubbed the “Every Student Succeeds Act,” was signed into law by President Obama on Thursday. The legislation has been praised for shrinking the federal government’s role — and giving states and local governments more flexibility — in shaping K-12 policy.
    • The new measure does not include a much-maligned No Child Left Behind requirement that states make all their school districts use the same teacher evaluation system — or that those systems be based, in part, on student test scores. In fact, the bill explicitly says the federal government has no role in teacher evaluations. That had been the primary sticking point between Texas and the U.S. Department of Education as the state sought to maintain its waiver from No Child Left Behind or risk sanctions, such as losing flexibility over how school districts spend federal dollars meant to bolster failing schools.
  • As the U.S. Supreme Court heard oral arguments Tuesday over a Texas case that sought to clarify what “one person, one vote” means in American politics, some justices questioned the argument that the state’s current system diminishes the power of some voters. And others considered arguments that would upend how voters are sorted into legislative districts.
    • The question before the high court was “who counts as a person?” when it comes to dividing up Americans in state legislative districts. In Tuesday’s arguments on Evenwel v. Abbott, the state of Texas defended its position that the entire population, including resident noncitizens, felons and children, should be counted — not merely eligible voters, as the plaintiffs argued.

Elections Update

Monday, December 14th marks the final day that candidates can officially file for office in the 2016 elections. Each candidate must file with their respective party in order to be listed on the ballot. To keep up with the current filings, please visit the Republican Party of Texas and the Democratic Party of Texas.

This week a few interesting, and surprising, election announcements were made.

Texas Railroad Commission Chairman David Porter announced that he will cease his campaign for re-election to the Texas Railroad Commission.

In his press release, he stated, “After much thought and consideration, my wife Cheryl and I have decided to withdraw from my race for re-election to the Railroad Commission. This decision was not an easy one, but I feel that all the goals I set out to achieve were accomplished during my tenure. Now is a good time to focus on my family and my return to the private sector. Effectively managing the agency as Chairman, updating Commission rules and regulations, and continuing the diligent work of the Eagle Ford Shale Task Force will be the top priorities for the remainder of my term. It has been an honor to work with an able staff and exceptional colleagues. Finally, let me thank the voters of Texas for an incredible opportunity to serve this great state.”

State Representative Elliott Naishtat also announced that he will not be seeking re-election for District 49, a heavily Democratic seat which stretches from South Austin to North Austin and includes downtown, Zilker, Barton Hills, Old West Austin, Pemberton Heights, Hyde Park, Rosedale and the University of Texas. He stated, “While I was trying to make up my mind, a new, powerful factor emerged: several outstanding Democrats who began preparing for the possibility that I would decide to not seek reelection,” Naishtat said in a news release. “There is a next generation that stands enthusiastically ready and prepared to serve, and that has an energy toward and passion for public service that I cannot in good conscience ignore. Perhaps the best gift I can give to the people I represent is the gift of new leadership, fresh perspectives, and renewed energy.”

Check out the recent elections summaries:

With 4 days remaining, there are several incumbents who have not yet filed for re-election:

  • Statewide: Johnson, Meyers
  • Senate: none
  • House: Martinez Fischer and Sheffield
  • SBOE: Dominguez and Ratliff
  • Federal: none.

Important election dates:

  • Filing Period: Saturday November 14th-Monday December 14th 2015 (ends at 6PM on Monday)
  • Early Voting for Primary Election: February 16th-26th, 2016
  • Primary Election: March 1st, 2016
  • Early Voting for General Election: October 24th-November 4th, 2016
  • Election Day: November 8th, 2016

Public Hearing/Formal Meeting Notices

House Committee on Public Health

Chair: Rep. Raymond                    Time/Date: 9:00 am Tuesday, December 15, 2015

Location: Capitol Extension E2.030

  • The committee will meet to consider Interim Charge 1: Study the ten year anticipated growth, the geographic distribution, and the projected economic impact of aging Texans. Review state services and programs available to seniors, including independent living services, and determine the capacity and effectiveness of the programs. Determine if Texas is prepared for the increased demands of aging Texans. Invited and public testimony will be taken.
  • The committee will also receive an update on Governor Greg Abbott’s directive to Health and Human Services Commission Executive Commissioner Chris Traylor and Texas Department of Public Safety Director Steve McCraw regarding Syrian Refugee resettlement. Invited testimony only.

Joint Committee on Health and Human Services Transition, Oversight

 (Invited Testimony Only)

Chair Sen. Nelson, Rep. Price                     Time/Date: 1:30 pm Monday, January 25, 2016

Location: Capitol Extension, E1.036 

Senate Committee on State Affairs (Invited Testimony Only)

Chair Sen. Huffman                        Time/Date: 9:00 am Tuesday, January 26, 2016

Location: Capitol Extension, E1.016

  • Monitor the implementation of open and campus carry legislation and determine if the current laws regulating the places that handguns can be carried are easily understood or if clarification is needed to ensure the average citizen understands when, where, and under what circumstances it is lawful to carry a weapon, versus when it is a criminal offense for which there may be a defense.

Senate Committee on Finance

Chair Sen. Nelson                            Time/Date: 1:00 pm Tuesday, January 26, 2016

Location: Capitol Extension, E1.036

  • Monitor the state’s progress in coordinating behavioral health services and expenditures across state government, pursuant to Article IX Sec. 10.04. Identify ways state agencies that provide mental health services are collaborating and taking steps to eliminate redundancy, create efficiency, utilize best practices, ensure optimal service delivery, and demonstrate expenditures are coordinated and in furtherance of a behavioral health statewide strategic plan. Identify barriers that prevent the coordination of behavioral health services. Make recommendations to maximize use of state funding for mental health.