Noem recommends $70 million to update ‘outdated’ accounting software
The state accounting and software system that Gov. Kristi Noem and the Bureau of Finance and Management argue is due for an update. (Joshua Haiar/South Dakota Serachlight)
PIERRE — Gov. Kristi Noem says state government’s accounting and software system is so out of date that it needs millions of dollars and multiple years to fix.
That revelation came during Noem’s annual budget address Tuesday at the Capitol in Pierre.
Noem’s recommended budget for fiscal year 2024 includes $70 million in one-time funding to implement a new system used by every state government agency for financial operations. She is concerned about the integrity of the state’s 35-year-old system.
“It is vulnerable to hackers and in danger of crashing in the future,” Noem said. “Imagine using the same computer you used 35 years ago. Many of you wouldn’t dream of it, yet our state does.”
The governor said it will take four years to implement a new system.
The current software system is run by the Bureau of Finance and Management (BFM). The BFM has a wide scope of responsibilities. It helps the governor prepare a recommended budget, prepares financial reports, provides administrative support, and manages the state’s financial systems. In addition, the BFM handles the setting of internal service rates, accounting, and budgeting for the state.
Colin Keeler, BFM’s director of financial systems since 1997, said the proposed funding comes on the heels of the completion of a feasibility study.
The feasibility study, finished in January, projected a cost of $64.35 million over three years. It is estimated 93,960 hours of work will need to be devoted to the project.
“It’s going to be a blend of existing staff and new staff,” Keeler said. “We just don’t have those exact details yet.”
An evaluation team will review proposals and make a recommendation for the procurement of a new, cloud-based system.
New staff will be required during the multi-year project implementation, according to the Governor’s Office.
But the move will require approval from lawmakers on the Legislature’s Appropriations Committee, which considers Noem’s proposed budget and prepares an actual budget for lawmakers to vote on.
State Sen. Jean Hunhoff, R-Yankton, co-chairs the committee. She said concerns about the state’s outdated system have been brought to the Legislature since she can remember.
“I’ve been on Appropriations 15 years. This is not a new topic,” Hunhoff said. “We are at a point where we need to do something and we need to do it now.”
Noem said state servers encounter thousands of hacking attempts every hour.
“Think about our agencies and all the personal information they are responsible to keep secure for the people of South Dakota,” Noem said. “For instance, the Department of Health and the health care information they hold for individuals, or Social Services and their casework and child protective programs, to name a few.”
However, those agencies are not part of this specific software update, according to Colin Keeler with the BFM.
The governor’s mention of thousands of hacking attempts was referring to all state systems. Keeler is not aware of any successful hacking of BFM’s 35-year-old system. He said the system does not connect to the internet.
Keeler said finding staff who are knowledgeable of the outdated software is becoming difficult, making operation and maintenance difficult.
“We’re on a 1988 system right now. We need to move to a 2025 system and use that system to stay current so we’re not so far behind,” Keeler said.
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