Franchise Tax Board seeks final EDR2 funding and mainframe refresh as modernization winds down

Franchise Tax Board officials told the Senate subcommittee they are in the warranty and transition phase of the Enterprise Data to Revenue Phase 2 (EDR2) project and requested final funding to move the program into steady state. Roger Lackey, FTB chief financial officer, said EDR2 has modernized case management and compliance workloads and that the project is about 99% complete; FTB requested roughly $59.9 million in 2026‑27 (with lower follow‑on amounts in subsequent years) to support operational transition and solution partner payments.

FTB also presented a separate request for $13.1 million in 2026‑27 to replace primary and disaster‑recovery mainframe servers that have reached end‑of‑market. Abel Escobar, FTB's director of financial management, said the mainframe servers handle mission‑critical tax return processing, payments and refunds and that delay in replacement could threaten the department's ability to process returns and recover from disruptions.

Senators asked about cost growth on the EDR2 program. FTB said prior schedule‑variance reports increased total project cost by about $49.3 million over the life of the $802 million program — roughly a 2–3% increase — and emphasized that the final SPR covers transition to operations and warranty support. FTB also framed measurable benefits: better analytics, more targeted audits, and a projected compliance revenue improvement over time from improved modeling capabilities.

The subcommittee left both items open, requested further detail on returns on investment and timelines for decommissioning legacy systems, and asked FTB to report on how replacement of mainframe servers aligns with longer‑term EDR3 modernization planning.