State of Texas
Department of Information Resources
Leadership for Texas Government Technology

TexasOnline 2006 Status Report Progress and Efficiencies Gained Department of Information Resources September 1, 2006 Letter from the State CIO | Contents

This report addresses Section 2054.260 of the Texas Government Code, which requires the Department of Information Resources (DIR) to report on the status, progress, benefits, and efficiency gains of TexasOnline. Section 2054.260 also requires DIR to report on financial matters, project costs and revenues, and on significant issues regarding contract performance on the TexasOnline project. That information is also included in this report.

Background

The 76th Texas Legislature in Senate Bill 974 called for a common Internet-based system through which state and local governments can send documents, receive applications, and receive required payments. TexasOnline is the result of that legislation.

TexasOnline does not rely on General Revenue to fund operations; it operates via a self-supporting, public/private partnership. The project is developed and operated with funding from the state’s private partner, BearingPoint, Inc. (BearingPoint). BearingPoint was awarded the master contract through a competitive procurement process in May 2000. The first online service launched in August 2000.

BearingPoint recovers its investments, which include development and ongoing operational costs, through service, subscription, and online convenience fees.

Highlights of Fiscal 2005 and 2006

Created and operated without reliance on General Revenue, TexasOnline continued its success over the past two fiscal years.

In its annual study on state and federal e-government, Brown University ranked TexasOnline as the top state Web site in the nation,[1] stating:

The TexasOnline portal site has a simple, effective navigation system and an exhaustive list of over 500 online services contained within the state’s websites—the most of all sites assessed in this study. The e-services are divided into 15 categories and organized alphabetically, allowing for quick access to desired services, including online sales tax payment, vehicle registration renewals, and searchable license records databases. In addition, Texas features audio and video clips on the majority of its websites, as well as a Spanish version of nearly every page. Overall, Texas has made a strong effort to deliver convenient access to a vast number of online services, thus topping our rankings.

Among the highlights since the 2004 Status Report are:

• The TexasOnline project achieved financial “breakeven” in April 2006, which favorably positions the project for re-bid.
• DIR renegotiated the TexasOnline master contract (Texas Electronic Framework Agreement) in September 2005 with improved revenue share and terms for the state.
• As a result of the renegotiated contract, TexasOnline will deposit a projected $36 million into the State Treasury by December 31, 2009.
• TexasOnline developed 484 new services, including:
  • A Business Portal for starting new businesses,
  • An Emergency Preparedness Portal to help citizens find the resources they need to prepare for an emergency or receive assistance after an emergency,
  • An Online Vital Records application that allows citizens to order birth, death, marriage, and divorce records online, and
  • Authentication services that agencies may utilize to verify customers’ identities.
• TexasOnline passed the $3 billion mark in cumulative state and local government revenue collected since inception.
• TexasOnline continues to be a leader in developing reusable code, thus minimizing development costs; TexasOnline used only four configurable and reusable templates to launch nearly 500 services for over 40 agencies.
• TexasOnline won these prestigious awards:
  • TASSCC Excellence Award for the Innovative Use of Technology in State Agencies,
  • The Center for Digital Government’s Best of Texas “Demonstrated Excellence in Project Collaboration” Award for the Licenses, Permits, and Registrations System, and
  • The Center for Digital Government’s Digital Achievement Award in the Government-to-Government category for the Online Vital Records application.

For more information on new services and performance metric highlights, refer to the Status and Progress since Last Report section.

Contract Renegotiated

In response to Rider 11 of the General Appropriations Act (SB 1, 79th Regular Session, Article I, I-68), DIR renegotiated the master contract for the TexasOnline portal in September 2005, with the advice of the Legislative Budget Board (LBB) and the State Auditor’s Office (SAO). The discussions with LBB and SAO staff involved all aspects of the contract, not just the financial details. In its November 1, 2005, audit of TexasOnline, the State Auditor’s Office said that DIR “significantly strengthened” the provisions of the TexasOnline contract.[2]

The key contract changes made by DIR, in consultation with the SAO and LBB, are:

• Established a firm contractual deadline for project breakeven of no later than December 31, 2006 (breakeven actually occurred in April 2006)
• Required, at DIR’s discretion, transfer of all TexasOnline assets to the state at breakeven or December 31, 2006, whichever event occurred first
• Increased the state’s share to 20% of total revenue less credit card costs, beginning in fiscal 2007
• Required that net revenue be divided 50/50 between the state and the contractor
• Capped annual capital asset costs
• Required an annual audit of TexasOnline at the contractor’s expense
• Eliminated the contractor’s right to terminate for convenience
• Strengthened terms for transition to the vendor awarded the contract at re-bid

Breakeven Achieved

A significant milestone was achieved in April 2006 when the project reached “breakeven.” Breakeven is defined in the contract as the point at which BearingPoint fully recovers its investment costs on all projects begun before September 1, 2005. At breakeven, the portal infrastructure assets are transferable to the State of Texas, at DIR’s discretion. All operations, maintenance, and refresh costs will continue to be funded by convenience, subscription, and service fees.

In other states where a third party originally financed the portal’s hardware and software infrastructure, the state will be entitled to none of the infrastructure at the end of the contract. Texas owns the infrastructure of TexasOnline. No other state enjoys this kind of contractual arrangement.

Because TexasOnline has achieved breakeven, the project will be debt-free when the contract is re-bid. This will broaden the pool of potential bidders, increase competition, and facilitate the transition. The projected timeline for the re-bid of the TexasOnline contract follows.

TexasOnline continues to enjoy substantial growth in services provided and citizen usage. As adoption and use of the Internet increase, Texas citizens, businesses, and government reap the benefits. These include the convenience of doing business 24/7 with quicker turnaround time of citizen transactions, decreased administrative costs for agencies to provide services, and more rapid deposits of revenue into the State Treasury. Today, TexasOnline offers more online services and enjoys a much higher revenue share than any other self-supporting state portal in the nation.

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Status and Progress since Last Report

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Since its creation six years ago, TexasOnline has changed the way the public transacts business with the state. As of May 31, 2006, TexasOnline provides 778 online services, receives more than two million visits each month, and has collected more than $3 billion in state and local government revenue through online transactions.

This section discusses

• the increasing number of visits to the state portal,
• the growth of revenue collected via financial transactions,
• the growth in the number of services offered,
• the new services added since the last report, and
• online adoption rates.

Note: The metrics provided in this section are current as of May 31, 2006 (end of third quarter, fiscal 2006). The previous status report included activity through May 31, 2004.[3] Graphs and charts providing fiscal 2006 figures are straight-line projections based on third-quarter actual figures.

Visits to TexasOnline

TexasOnline continues to experience steady growth in customer visits. The portal continually adds new services and improves the current ones to better suit the needs of Texas citizens and businesses. The increase in visits, coupled with the addition of new online services, drives the phenomenal growth in state and local government revenue collected through the portal.

The number of visits is one measure of the public’s use of the site. When TexasOnline launched its first application in August 2000, it received fewer than 25,000 visits monthly. Today, TexasOnline receives more than two million visits each month.

Note: Because individual visitors coming to TexasOnline via Internet Service Providers cannot be identified, the actual number of visits to TexasOnline may be much higher than indicated.

Transactions Conducted and Revenue Collected

Another traditional measure of a portal’s success is the number of transactions conducted online. By definition, these transactions involve payments. TexasOnline now averages more than 1.2 million financial transactions per month.

The increase in the number of transactions completed and the number of services offered on TexasOnline results in increased total revenue collected electronically. In April 2004, TexasOnline reached the landmark of $1 billion in state and local government revenues collected cumulatively on the portal. In the past two years, that number has tripled. As the number of services offered grows and the adoption of online services increases, the revenues collected will continue to grow significantly.

Benefits of collecting revenues electronically through TexasOnline include:

• TexasOnline is tied into the State Treasury’s Uniform Statewide Accounting System (USAS) and deposits payments within 24 to 48 hours. This process requires little or no intervention by agency staff.
• Revenues are deposited into the State Treasury more quickly than manually collected funds. Thus, funds are invested earlier and generate more interest earnings for the state.
• Funds are automatically recorded into agency accounting systems. This eliminates the need for staff to verify account payments, as they must with manual systems.

These improvements, from manual to online processes, translate into cost savings for the agency in terms of staff time—time that can be reallocated to agency core functions.

TexasOnline Services

TexasOnline offers a wide range of services to citizens, businesses, state agencies, and local governments, including

• vehicle registration renewal,
• occupational license renewals,
• driver license renewals,
• electronic filing of court documents, and
• professional license profiles.

As of May 31, 2006, TexasOnline offered 778 online services and had more under development. TexasOnline continues its efforts to be the “one-stop shop” for government services in the State of Texas. One way in which TexasOnline achieves this is through new projects that integrate different levels of local government and state agencies. This makes it easier for the public to find services.

Services Added since Last Report

TexasOnline has added 484 online services in fiscal 2005 and 2006. The following table illustrates the growth of services on TexasOnline since inception.

Highlights of major service initiatives that TexasOnline has completed since the last report include:

• Business Portal – Developed in concert with the Governor’s Office and a number of participating agencies, the Business Portal provides a one-stop site for citizens who want to start a business in Texas. With a few simple clicks, people can find all of the pertinent information needed to start a business. The state is currently working on enhancements to further streamline this process.
• Emergency Preparedness Portal – TexasOnline played a crucial role during Hurricanes Katrina and Rita. In response to the overwhelming need for timely and accurate information from these disasters, the Governor’s Office led the initiative to build a new Emergency Preparedness Portal. In concert with the Governor’s Office and other government entities, such as the Texas Department of Transportation, Health and Human Services, and the Department of Emergency Management, TexasOnline will host the portal, providing up-to-the-minute information online. Emergency information includes evacuation routes, safe routes home, as well as links on how to find shelter and contact missing loved ones. Efforts continue to further enhance the services provided by this portal.

• Online Vital Records – The Online Vital Records application allows authorized citizens to request copies of vital record documents, such as birth/death certificates and marriage/divorce records, via a user-friendly Internet site. The Vital Records application has improved convenience for citizens and saved substantial staff time and money for the Department of State Health Services.
  
  Additionally, the Vital Records project includes implementation of a document repository system, which will improve the safety of important state documents. Over the next five years, the document repository project will convert and preserve nearly 46 million official documents into electronic format.
  
  Early metrics indicate that this service has actually increased the number of records requested by the public – and early adoption rates have far exceeded estimates.
• Authentication – The authentication service offered by TexasOnline verifies the identity of the customer who is using the Internet application. State agencies and local government may use authentication as an alternative to requiring a notarized document, a document signed by a third party, or an original signature on a document (Texas Government Code, Section 2054.271). Any online application can “call” the authentication service for a match against the Department of Public Safety’s Identification Card and Driver License databases. This service became available for local and state government entities on June 1, 2005.
  
  The authentication service is currently used by the Vital Records application and other agencies are evaluating use of the service.
• Bulk Processing – In October 2005, TexasOnline launched a bulk renewal feature within the Common Occupational Licensing System in response to a need voiced by companies such as major pest control and pharmacy chains. This feature allows a company to pay for multiple licenses with one payment. Agencies have confirmed that this feature has increased online usage (See Adoption Rates).
• Enhanced Search Engine – A project to enhance the search features of TexasOnline was launched in fiscal 2006. Once complete, the new features will make the search engine more useful in locating government information and services. Among the improvements is a feature that allows the public to use acronyms when searching for state agencies. This will allow searches on terms such as “DPS” or “CPA” to yield successful results. Synonyms are also included, so people moving to Texas can enter “DMV” and find the appropriate agencies to transfer their vehicle registration or obtain a Texas driver license.
• New Common Occupational Licensing System Services – TexasOnline added 347 new occupational licensing services during fiscal 2005 and 2006, bringing the total to 475. Much of this rapid growth is due to TexasOnline’s development of component libraries and reusable templates.

Growth in Existing Services since Last Report

In addition to the new services mentioned above:

• 46 additional counties now provide online vehicle registration renewals, for a total of 126.
• 21 additional county, district, and probate courts began offering electronic filing of court documents, bringing the total to 25.
• 21 additional state and local government services adopted the use of ePay, TexasOnline’s electronic payment system, for the collection of funds, to total 183 users.

TexasOnline will continue to integrate across levels of government to further improve citizens’ experience and ease of interaction with government. The Business Portal and Emergency Preparedness Portal are prime examples of this type of integration. As the scope of TexasOnline continues to expand, government entities at all levels will realize substantial financial and qualitative benefits from integrating their services online.

Adoption Rates

TexasOnline continually monitors the adoption rates of its online services to gauge how well the targeted population is embracing the service. It is imperative that TexasOnline examine the factors that influence adoption of online services to determine if changes could increase usage. Since higher adoption rates bring efficiencies to the state and to individual agencies, TexasOnline works with participating entities to determine cost-effective marketing strategies and to improve internal processes to foster increased usage.

As one of TexasOnline’s most successful projects, the Common Occupational Licensing System‘s adoption rates continue to increase. Some of the highlights from the last biennium include:

• The Texas State Board of Medical Examiners continues to experience high adoption rates, 81% of physicians renewed online in fiscal 2004 and 88% in fiscal 2005.
• The Texas State Board of Pharmacy has seen a significant increase in the renewal rate for pharmacists online, with 48% renewing in fiscal 2004 and 78% renewing in fiscal 2005.
• The Texas State Board of Examiners of Psychologists experienced a significant increase in overall online renewal rates, from 31% in fiscal 2004 to 69% in fiscal 2005.
• The Structural Pest Control Board more than doubled its adoption rate; they reported a 9.1% online renewal rate in fiscal 2004 for all license types combined and a 22.8% online renewal rate in fiscal 2005. This significant increase is largely attributable to the bulk processing feature that allows multiple licenses to be renewed at one time with just one payment.

Additionally, the Executive Council of Physical Therapy and Occupational Therapy Examiners consistently sees high adoption rates for renewals. Each of their major license types had adoption rates between 80–89% for fiscal 2004 and fiscal 2005.

TexasOnline Authority Duties Transferred to DIR

As TexasOnline continued to grow and stabilize, the need for a separate governing body lessened. After four years of operation, TexasOnline was a mature program. Subsequently, the 79th Texas Legislature in House Bill 2048 abolished the TexasOnline Authority and transferred its duties to DIR.

The TexasOnline Authority did a commendable job overseeing the development of new online services. They took a pilot project, initially overseen by the Electronic Government Task Force, and brought it to the forefront of state portals. The Authority not only approved hundreds of online services for citizens and businesses, they also researched many emerging issues, such as the Digital Divide, seamless government, and information privacy and security.

Because DIR now has the authority to approve new services and the approval process is no longer contingent on a bi-monthly Authority meeting, the approval process has been streamlined. The change in governance structure also helps ensure consistency between TexasOnline policy and DIR’s strategic vision for technology statewide.

Efficiency Gains and Benefits

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Fiscal 2006 was a milestone year for TexasOnline. In April 2006, the project broke even, which under the contract terms will provide more revenue to the state and a variety of other benefits.

Efficiency Gains

Traditionally, Texas agencies develop their services in somewhat autonomous environments with little or no communication among them. When agencies began placing transaction-based services online, it was often done in a piecemeal, stand-alone manner. A citizen still had to visit several state agency Web sites and complete several agency applications in order to receive the desired government services. Governments were simply providing their online services in the same isolated manner as their manual services.

Through TexasOnline, agencies have worked together and across levels of government to provide a seamless approach to providing government services. Providing services in this coordinated manner helps citizens find the services they need faster and easier, without having to know which agency provides the needed service. Through these coordinated projects, agencies and local governments avoid replicating technology infrastructure and can share in the common services available through TexasOnline.

The following are a few examples of how TexasOnline has created efficiencies for the state and contributed to seamless access to government services for citizens.

Portals

TexasOnline provides several portals that citizens and businesses can use to find government services they need—in one place. Examples include:

• Business Portal – a one-stop site for people who want to start a business in Texas. With a few simple clicks, a citizen can find all of the pertinent information needed to start a business. The state is currently working on enhancements to further streamline this process.
• Emergency Preparedness Portal – an enhanced site provides citizens and businesses with up-to-date information on pending emergencies and disasters. This site provides information on emergency preparedness, evacuation routes, donation information and more. When a pending emergency such as a hurricane is identified, the site will provide details on what to do before, during, and after the event. Led by the Governor’s Office, several state agencies will play a role to keep this site current and informative. The technology behind the Emergency Preparedness Portal significantly reduces the amount of time and manual effort required to update the content contained in the portal, providing a timely information resource.
• Veterans Portal – combines veterans’ benefits and assistance information in one convenient location. TexasOnline collected veterans’ benefit information from federal and state agencies to bring together a comprehensive collection of links. Military personnel and their families can locate a host of benefits, including information on VA-financed mortgages or assistance with college tuition.
• Natural Resources Portal – presents a variety of natural resources information, including animal health, air quality, oil and gas, and water resources.

Common Occupational Licensing System Templates

The 77th Legislature enacted both Senate Bills 645 and 187 to establish a common occupational licensing system by which people and businesses can renew their required occupational licenses. Senate Bill 1152, passed unanimously by the 78th Legislature, expanded this service to include facility licenses and permits/applications for all new licenses. As a result, TexasOnline utilizes a template approach to the computer code needed for licensing services bringing efficiencies and benefits to state agencies and to the public. TexasOnline developed a common “renewal” template and a common “original application” template to keep costs down and to provide a common approach to licensing. Both templates reuse code and combine a series of commonly asked questions from all participating agencies’ licensing forms. The templates also accommodate unique questions that an agency must ask to meet their licensing statutes. These reusable templates have been used to launch hundreds of occupational licensing services on TexasOnline.

The process of developing the common templates included all agencies named in the legislation. During the process, these agencies reviewed the need for the information they collected and agreed to standardize their data formats in order to use the template. As an example, one agency asked for “First Name” and then “Last Name,” while another agency collected both in one “Name” field. The agencies then all agreed on one standard format to collect this information.

This project has been highly successful for the agencies and has saved them time in processing licensing applications and renewals. Additionally, this project has afforded them opportunities to re-examine their business processes for additional efficiencies. To date, TexasOnline provides 475 occupational licenses online—both renewals and originals.

Agency Process Improvement

For agencies to completely experience the benefits of e-government, the streamlining of agency processes is also necessary. Agencies cannot expect to reap the full benefits of e-government by merely placing their offline services online. To maximize cost savings and efficiencies of e-government, agencies must be willing to streamline and consolidate their processes and change the way they conduct business to integrate with implementation of new online services.

Several agencies participating on TexasOnline are already re-thinking the way they conduct business. The Texas Real Estate Commission eliminated duplicative paperwork associated with certain license renewals. Other agencies, such as the Board of Nurse Examiners, eliminated manual processes altogether and require the use of the online channel. Streamlined agency processes result in cost savings to the agency and to the state. Moreover, by transforming the way that they provide services to constituents, these agencies are bringing the state closer to providing citizens with a seamless experience when they interact with government.

Customer Satisfaction

TexasOnline continually strives to meet the needs of its government customers and of Texas citizens and businesses by providing online surveys directly from the portal. Additionally, TexasOnline informally surveys its government customers.

Online Customer Survey Comments

TexasOnline customers provide valuable feedback on what is working well and on how to improve the services provided. DIR staff review the TexasOnline surveys quarterly and analyze the responses for trends. As of May 31, 2006, more than 99% of the customers completing online application surveys indicated they either “agreed” or “strongly agreed” that they were satisfied with their online experience with TexasOnline. The following comments demonstrate how TexasOnline benefits citizens:

“Awesome—great improvement! Saves a lot of time, and is so convenient to the citizens of Texas.”

“LOVED it. This is a great example of how government can and should work. It was painless, efficient, friendly and easy. THANKS!”

“Easy to use system—Working out of state temporarily, so this method was convenient to use.”

“I could easily renew my license at my convenience. I also didn't have to worry about the information being delayed or lost in the mail.”

“This is great. I just saved at least 3–4 hours (assuming a short line at the office). I will recommend to my colleagues.”

“Great out-of-state service to military members.”

“This is great. No waiting in line, no driving, saving on gas, it’s awesome.”

“This online address change feature is an unbelievable improvement and saved me so much time and hassle. Without this new service I would have incurred a penalty for not changing my address because I was unable to leave my office at the time to make the necessary change so... thank you!”

“I was done processing my transaction within 5 minutes or less. It was quick and painless!  Better than having to drive out and wait in line for hours at a time.”

“No tengo ningunas sugerencias para mejorar este servicio en linea. Me gusta mucho!!!! ES MUY MEJOR!!!”

State Agency Comments

The following representative quotes demonstrate how TexasOnline has benefited its government customers:

Gone are the frantic calls at the end of each month from licensees who need to renew their license that day. Once we guide them back to the Texas Online system, they become calm and relieved. The high online adoption rate has allowed the Board of Nurse Examiners to add quality assurance processes to our data system that would not have been possible if not for the time saved by our customers using the online system.

— Board of Nurse Examiners

Serving a very computer-savvy licensee base, TBPG processes over ninety percent of its renewals online, resulting in a large reduction in actual paperwork received and processed in-house. This allowed our limited staff to work on other necessary projects and handle day-to-day operations more efficiently. The staff of the TBPG initially worked seven days a week to establish the agency, but after the first year of operating with mail and paper, the necessity of continuing at such a hectic place was eliminated by the implementation of TexasOnline.

— Texas Board of Professional Geoscientists

Benefits of TexasOnline

Features

The TexasOnline portal is a convenient way for government entities to provide online services and information to their customers. TexasOnline provides a variety of features that benefit both government entities and Texas citizens, including businesses. Key features include:

• Strong Web Site Security – Security includes authentication services ranging from passwords to Public Key Infrastructure (PKI) solutions. (PKI establishes a secure transaction using digitally encrypted strings of characters sometimes called “certificates” issued by Certificate Authorities.)
• Common Hardware and Software – This common architecture is scalable and allows for rapid expansion and changes to applications.
• 24/7 Availability – Providing 24/7 availability improves the customer service that government provides to the public. Citizens and businesses can access Texas government information and services anytime, from anywhere in the world. Several military personnel stationed overseas have sent complimentary e-mails to the TexasOnline Webmaster, noting how easy the vehicle registrations and driver license renewals were to use.
• Call Center Services – Because TexasOnline is a 24/7 enterprise, call center representatives are also available around the clock to help citizens with use of the site and to provide technical assistance.
• Common Payment System – TexasOnline accepts both credit cards and electronic funds transfers from bank accounts. In addition, it is easy for agencies to develop interfaces between their in-house, customer-facing systems and TexasOnline’s backend electronic payment system called ePay.
• Bilingual Web Site – A Spanish version of TexasOnline is available to citizens. TexasOnline staff will also work with agencies to make their services available in Spanish. According to Forrester Research, Texas is one of only four state portals in the nation that link to Spanish-language content from their home pages, and Texas is the only state portal that provides full Spanish-language content for its online constituents.[4]
• Web Application Development Services and Code Reuse – TexasOnline develops online applications with an eye toward “economies of scale.” Wherever feasible, TexasOnline develops templates and component libraries in order to reuse code. Many applications require the same field format, such as name and phone number, and component reuse improves consistency between different applications. More importantly, component reuse reduces the time and cost required to develop a new application. A key example of the benefits of code reuse exists with the Common Occupational Licensing System templates. TexasOnline used four configurable and reusable templates to develop 475 services for more than 40 agencies.
• Americans with Disabilities Act (ADA) Compliance – To serve Texans with disabilities, TexasOnline remains ADA-compliant. In addition, TexasOnline continues to improve its services through usability testing and focus groups.
• Outreach Marketing to Customers – TexasOnline staff will work with each government entity to develop a marketing plan to encourage their customers to use TexasOnline services.

Benefits to the State

• Agency Staff Time Savings – Online services place the responsibility for data entry with the citizen, reducing the time agency staff spend manually entering citizen information into agency systems. Because staff no longer have to decipher application forms, transcription errors are eliminated when citizens perform the data entry.
• Lower Cost per Transaction – Savings in agency staff time translate into lower processing costs for agencies. Although government often cannot completely remove all traditional service channels, online services can reduce the overall cost per transaction. In addition to having the citizen enter data, online application forms are designed to automatically check for errors, thus reducing the number of exceptions that need to be corrected by agency staff.
• Increased Interest Earned through Earlier Deposit – Online services provide for the timelier deposit of funds, meaning tax dollars reach the State Treasury and are available to earn interest sooner. Online payments are deposited within 24 to 48 hours, with little or no intervention by agency staff.
• Broader Base of Service Delivery – TexasOnline allows governmental entities to deliver services to citizens across the state and even abroad, without having to staff each location.

Benefits to Citizens

• Increased Customer Convenience – Citizens can transact business 24 hours a day, seven days a week, 365 days a year, from any location. Because many agencies accept checks as the only manual payment method, many citizens prefer paying via TexasOnline to have the option of using a credit card.
• Faster Service – Citizens who access a service online receive information or services faster than if they used the agency’s more traditional service channels. Online error checking eliminates manual turnaround time to correct application errors.
• More Time for License Renewals – Citizens can renew their licenses online on the very last day and still meet the agency deadline.
• Immediate Confirmation – Citizens receive immediate verification and know that their transactions were successfully completed.

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TexasOnline Financial Information

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TexasOnline achieved breakeven in April 2006. This important milestone marked the point at which the contractor fully recovered their investment in TexasOnline. Per the contract, at breakeven the infrastructure assets are transferable to the State of Texas and the net project revenues are split 50/50 between the vendor and the state. In addition, in fiscal 2007, the State of Texas will begin receiving 20% of gross revenues, less credit card expenses.

The following table reflects annual revenues, annual operating expenses/capital outlay, and cumulative unrecovered costs from project inception through fiscal 2006. In fiscal 2006 the project will net an estimated $4.6 million in cumulative (project inception through August 31, 2006) revenues over operating expenses and capital outlay.

The project is operated as a self-funding model that will generate revenues for the State of Texas through revenue share provisions included in the contract. From project inception through August 31, 2006, the contract is estimated to generate $9.196 million for the state’s unappropriated General Revenue Fund. By contract end, the total amount of cumulative revenue deposited to unappropriated General Revenue is estimated to be $36 million.

In September 2005, as required by Rider 11, DIR renegotiated the master contract for the TexasOnline portal, with the advice of the Legislative Budget Board (LBB) and the State Auditor’s Office (SAO). In its November 1, 2005, audit of TexasOnline, The Department of Information Resources’ Administration of the TexasOnline Contract, the SAO stated that DIR “significantly strengthened the provisions of its Framework Agreement” with the TexasOnline contractor during fiscal 2005 contract negotiations.

A primary goal of the contract renegotiation and extension was to ensure that the project was debt-free for future contract re-bid. The new contract improved the state’s financial position primarily by increasing the state’s share to 20% of total revenue less credit card costs, beginning in fiscal 2007; requiring a 50/50 split of net revenue between the contractor and the state; and requiring that the portal infrastructure assets are transferable to the state at breakeven, among other financial requirements.

Another provision of the renegotiated contract is that an annual audit of TexasOnline is required at the contractor’s expense. The TexasOnline portal has been routinely audited from project inception, as shown by the following history:

Financial Statements

The following tables show unaudited financial statements for fiscal 2006 as of June 30, 2006. In the Consolidating Balance Sheet:

• Property and Equipment in Service – represents hardware and software that is fully operational and in production.
• Services Under Development – represents hardware and software projects in the development stage.
• BearingPoint Contributions – represents amounts that the contractor has contributed to the project from inception through June 30, 2006.
• Existing Projects – Assets in the Existing Projects column became the property of the state when the project reached breakeven in April 2006.

TexasOnline Consolidating Balance Sheet, June 30, 2006

TexasOnline Consolidating Statement of Operations
for the Ten Months Ended June 30, 2006

TexasOnline derives revenues from convenience fees, such as sale of driver records (Transaction Revenue), and hosting and subscription fees (Service Revenue). Of the $23.1 million in Transaction Revenue for the ten months ending June 30, 2006, sales of driver records accounted for $18.0 million or 77.9%. Service Revenue received from subscription fees is collected from occupational licensing agencies in accordance with legislative requirements.

Project expenses include Operations Cost related to development and maintenance of applications, the State’s Revenue Participation of 50% of net revenues, Variable Cost for credit card and ePay fees, Depreciation on property and equipment, and Loss on Discontinued Projects (Other).

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Conclusion

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TexasOnline continues to enjoy substantial growth in services provided and citizen usage. As adoption and use of the Internet increase, Texas citizens, businesses, and government reap the benefits. These include the convenience of doing business 24/7 with quicker turnaround time of citizen transactions, decreased administrative costs for agencies to provide services, and more rapid deposits of revenue into the State Treasury. Today, TexasOnline offers more online services and enjoys a much higher revenue share than any other self-supporting state portal in the nation.

TexasOnline will continue to push the boundaries of state Web portals, adding more online services and improving the ease with which Texas government interacts with its citizens and businesses. The Department of Information Resources will present legislative recommendations regarding TexasOnline in the Biennial Performance Report, to be published November 1, 2006.

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Acknowledgements

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DEPARTMENT OF INFORMATION RESOURCES

Larry A Olson, Chief Technology Officer, State of Texas
Brian Rawson, Director, Service Delivery Division
Britt Brookshire, Information Resources Manager
Linda Fernandez, Chief Financial Officer
David Duncan, Legislative Liaison
John Miri, Director, Special Projects
Larry Hutchison, Project Manager
Larry Hutchison, Genice Mancini, Lead Authors
Robert Jensen, Al Martin, Financials

Design, Editing, Production
Mary Ann Ellerman, Vivian Badillo, Lisa Nowotny

BEARINGPOINT, INC.

Ryan Coates
Kathy Ikard
Christiane Reinhold
Brent Mears

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Endnotes

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[1] State and Federal E-Government in the United States, 2006, Brown University, August 2006. Retrieved August 21, 2006, from www.insidepolitics.org/egovt06us.pdf.

[2] State of Texas, State Auditor's Office, The Department of Information Resources' Administration of the TexasOnline Contract, November 2005.

[3] TexasOnline 2004 Status Report, TexasOnline Authority, September 1, 2004. Available at www.dir.state.tx.us/pubs/.

[4] Rogowski, Ron. "Texas Online Leads State Government Solutions For Spanish Speakers," Forrester Research, Inc. Retrieved August 3, 2006 from www.forrester.com/Research/Document/Excerpt/0,7211,36023,00.html.

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