Florida is being forced to stagger payments to schools and health care providers because of limits with its 30-year old computer-based accounting system.
State officials took the drastic actions because the current system can’t pay out $1 billion or more in a single 24-hour period. The state was forced to delay payments twice in June because it had gone over the daily limit.
Last week the Department of Financial Services, the agency that handles the accounting system, asked all state agencies to alert them ahead of time if they want to make a payment of $5 million or more.
Chris Cate, a spokesman for Chief Financial Officer Jeff Atwater, said the problem is that the current system was never designed to process such a large amount in a single day.
“When this program was created there wasn’t the expectation we would be hitting a 1 billion number on a 24 hour basis,” Cate said.
Florida is planning on replacing the accounting system, but that’s still years away since putting in place a new system could cost anywhere from $200 million to $500 million according to a March study prepared for the state. This year legislators set aside $9 million in planning money for the project. The state tried to replace the accounting system a decade ago but the project was scuttled in 2007 after Florida taxpayers had paid roughly $100 million.
The limits of the existing system have become a problem as a result of changes to the Medicaid program. The state-federal health care program is undergoing a massive overhaul in which the state pays insurance companies a set fees to provide care. Cate said that the state used to spread out its payments but is now combining payments into one large sum.
The state’s response so far is to try to let agencies know ahead of time when large payments will be made. In late June, the state delayed payments to the state’s 67 school districts by one day.
A spokesman for the Department of Education maintained the delay was “not a big deal.” Pasco County Schools Superintendent Kurt Browning said that the delay did not cause any problems for his district.
Reprinted with permission of the Associated Press.