State and Local Government
Top business challenge: Provide an increasing level of service to more constituents within the confines of tight budgets
Solution: Operate more efficiently and allow residents to receive information and services unassisted
How IT can help: By consolidating systems or creating a shared-services environment; by implementing Web-based applications that enable resident self-help
As Bob Hendricks, CIO of the city of Fresno, Calif., says, government "is all about doing more with less."
Unlike private-sector organizations, state and local governments don't have to worry about attracting customers or introducing new services in the marketplace. A growing total population means that demand for myriad government services -- education, health care and law enforcement as well as recreation, public safety and transportation -- will increase too. But like many businesses, governments are beset by rising costs and legislative requirements that constantly put pressure on operations.
That's only going to get tougher. While fiscal conditions vary widely among state and local governments, revenue (generated predominately through property taxes) isn't keeping pace with the cost of government health care programs like Medicaid, which require state and local contributions. Nationwide, state tax revenue in 2005 grew at an estimated 4.9%, while Medicaid spending increased 7.5%, according to the Kaiser Commission on Medicaid and the Uninsured.
The Toll of Rising Costs
Alan Ehrenhalt, editor in chief of Governing Magazine, sees funding Medicaid -- the federal health care program for low-income residents -- as one of the most significant challenges that these governments will face. Another top concern is rising pension and health care costs for employees. As baby boomers retire and the population ages, retirement and long-term care will hit state and local governments hard. "It's a challenge that's only going to get worse," Ehrenhalt says.
There are also legislative mandates to comply with, such as the Real ID Act, which takes effect in 2008 and requires that driver's licenses adhere to federally mandated standards, including machine-readable driver information and tamper-resistant physical security features. Even states whose licenses already satisfy the act must create driver information databases and link them to the databases of the 49 other states. The implementation cost is expected to far exceed the $40 million in federal funds appropriated for the effort.
These challenges mean that at a minimum, state and local government IT executives must use technology to make operations more efficient. Wisconsin CIO Matt Miszewski recently saved America's Dairyland more than $90 million by putting out for rebid the contract for the Medicaid Management Information System -- something that hadn't been done in 15 years. He saved the state another $40 million by building an enterprise architecture and consolidating thousands of servers. In Westchester County, N.Y., CIO Norman Jacknis is also targeting Medicaid for cost savings, but in the area of fraud detection. Data collection is now automated; the next step is data analysis. "By doing an analysis on the outliers in Medicaid transactions, we can find fraud," Jacknis says.
This was first published in July 2006