California’s $1 billion accounting program delayed again, could affect state’s credit

A $1 billion effort to unify California’s state government accounting systems will miss another deadline this summer, likely taking the project into its 18th year, according to a California State Auditor’s report published Tuesday.

The unified accounting program, called Fi$Cal, was supposed to deliver a critical new function to the State Controller’s Office by June 2022, according to Tuesday’s report. But that won’t happen on time, and the Department of Fi$Cal hasn’t provided a new timeline, according to the report.

The update would have helped the Controller’s Office compare FI$Cal data to data in its legacy system to help ensure accuracy as the office prepares the state’s annual comprehensive financial statements, according to the report. The delay likely will continue to hamper the State Controller’s ability to complete annual financial reports on time, which could eventually harm California’s credit rating and increase borrowing costs, the audit says.

Started in 2005, the project has been repeatedly delayed and costs have increased. As part of the latest delay, the Fi$Cal department will pay contractors an extra $6 million for work through December 2022, according to the report.

The delays have come even as the scope of the project and the number of departments slated to use it have been reduced.

“Even when the project office officially declares the project done, it will not have implemented all promised functionality, and doing so will likely incur significant expense,” Acting California State Auditor Michael Tilden said in a letter to Gov. Gavin Newsom and state legislators.

The report said a vacancy rate of 15% at the Department of Fi$Cal has contributed to the delays, along with the continued challenges of training employees across departments in using the program.

The department has taken steps on those fronts, with new efforts to recruit employees and the January 2021 launch of the Fi$Cal Learning Center, which created a one-stop shop for training materials, according to the audit report.