the California Franchise Tax Commission (FTB) has been nearly seven years into a 30-year modernization project that has succeeded to date – and, if the process continues as it has, promises to bring new efficiencies to revenue collection state taxes.

In government computing, where public successes can be hard to come by, the “Business Data to RevenueThe (EDR) project, as it is called, is an example of “what went well”. Pegasystems is working on the project with FTB and the contractor, OnCore Consulting of Rancho Cordova, as well as CGI and Deloitte.

The stakes are high, as the numbers illustrate: “In fiscal year 2020-21, FTB received more than 25.9 million tax returns, answered more than 3 million phone calls, serviced more of 60 million Internet contacts and raised approximately $170.2 billion in revenue, representing approximately 82% of California’s general fund revenue,” said Bryan Rau of FTB’s business development office. Techwire.

EDR1, as the first phase is known, was implemented in 2015 and served as a “modular project that was the first phase of FTB’s 30-year tax modernization strategy,” Rau said. He explained that EDR1 highlighted “the infrastructure and data warehouse capabilities, as well as the Pega platform, which we used to manage correspondence flow and validation of tax returns”.

Julie Gabele

Julie GabelePega’s strategic customer manager in California for the public sector, held up the EDR project to date as an example of “one of the most successful projects in the state.”

In an email exchange with TechwireRau provided the details on behalf of FTB:

Techwire: What lessons have been learned in EDR1 for other public agencies with other projects?

Rau: One of the biggest lessons FTB learned from EDR1 is the need to identify and support knowledge transfer from supplier to state agency early on. It must be an ongoing and fully supported effort that ensures state agencies can fully support ongoing operations after the project is completed.

Techwire: Are there any takeaways from EDR1 that will influence the process on EDR2?

Rau: EDR2 will plug into most processes that were developed with EDR1. This was all by design, as we prescribed in our RFP requirements, which already established the processes we had versus what the vendor had the flexibility to offer.

Techwire: How do you use Pega case management in the tax filing process today? What value does this bring to FTB and the state?

Rau: We use Pega case management to validate the accuracy of a tax return. The added value allows FTB to automate some manual work that (have) high confidence in the accuracy of the result, freeing up staff to handle more sensitive or complex assignments. In addition, it allows workloads to be divided into stricter priorities, thus allowing the most important/sensitive jobs to be managed more quickly and efficiently. »

Techwire: In addition to case management, how does Pega technology help FTB?

Rau: In addition to return analysis, FTB uses the Pega workflow to process correspondence. This gives us a window into our correspondence workflow, enables accurate correspondence association (with taxpayers) and eliminates the need to push paper.

Techwire: In addition to taxes, where does FTB benefit from Pega?

Rau: FTB has used Pega in the following non-tax applications: 1. Policy reform audit; this provides case management and workflow capabilities to enable FTB staff to audit political campaigns. 2. eRPA, (electronic request for personal action); it also provides case management and workflow tracking to HR and executive staff involved in any aspect of staff hiring, relocation or job changes.

Techwire: Can you give an overview of EDR2? What abilities will it offer that you currently don’t have? What will be the net effect for FTB?

Rau:EDR2 is the second phase of FTB’s modernization effort, where we will target our aging legacy systems that are nearing end of life. Therefore, with EDR2, we will move our siled compliance systems (collections, audit, non-filers) onto the Pega enterprise platform.

On the horizon of this 30-year modernization plan is EDR3, which is still in progress.

Douglas Averill.jpg

Douglas Averill

Douglas AverillPega’s vice president for global industry and government, said that although technology is changing the nature and scope of case management, the concept will endure for a long time.

“This concept of case management, where things have to be routed to an outcome, is never really going to go away,” Averill said. Techwire in an interview. “It’s really a question of what’s the most efficient way to do it. From Pega’s perspective, it’s our bread and butter. We like to automate results and make things efficient, manage complexity.

“What will it look like in a few years? Who knows?” said Avérill.

As for timing, stakeholders envision 2022 to be “the year of construction,” Averill said, with deployment and implementation expected in 2023 and 2024.

Gabele, account manager at Pega, provided measurements and other details that put the project into context.

EDR “is focused on closing the $10 billion annual tax gap for California, while modernizing and removing legacy systems,” Gabele said. Techwire. While FTB collects $92.3 billion in revenue annually – about 74% of state general fund revenue – “this is vital revenue, important to fund other departments, services and programs on which Californians and our state matter,” she said.

EDR1, she said, has helped the state recover $3.7 billion in revenue and, on average, $1 billion each year after using the modern tax system, which on the management of Pega records at the heart of it”.

When EDR2 is deployed, it will integrate the Audit, Legal, Filing Enforcement and Underpayments divisions into the target of the modern tax system platform, bringing even more revenue recovery for the state, while removing legacy systems used today.

Gabele noted that FTB has had such success with EDR1 that the agency considers Pega to be its case management standard for both tax and non-tax environments.

In addition to working with OnCore, Pega is working with CGI and Deloitte as key contractors for systems integration work on the project.