States on the High-Tech Trail

As information technology becomes more important to government, several

states are developing programs to support in-house efforts that would normally

stretch the budget.

States including Louisiana, Tennessee, Maryland and New York, have created

funds to invest in state agency IT projects. In its 1999-2000 budget, New

York's legislature provided $10 million for a new Technology Entrepreneurial

Fund to support agency IT projects.

Others, such as Minnesota, encourage agency IT work in other ways. In 1989,

the state began to allow agencies to apply for IT project money every two

years, a program reviewed by the state's Technology Policy Bureau then ultimately

approved by legislative committees.

The level of funding varies, but an average total of $50 million is doled

out, said Greg Peterson, the bureau's planning director. In the most recent

two-year cycle, agencies submitted 160 project requests totaling between

$250 million and $300 million. Of those, the state funded about 50 projects

for $80 million.

Unlike Louisiana's technology investment fund, which requires projects to

be innovative, Minnesota focuses more on business and management practices.

Projects must be well defined, have a solid budget and a strategic plan.

"Some of the projects are to re-engineer or redesign the way an agency does

their work," Peterson said. "A lot of the emphasis is electronic government

services. There's typically time savings, but dollar savings are hard to

come by."

Examples of projects that have received funding in the past include a system

to allow one-stop online licensing, a project for state office candidates

to electronically disclose campaign contributions and a plan to redesign

the databases in the state's commerce department.

In Tennessee, agencies for the past 10 years have been able to receive money

from a systems development pool to use for major IT projects that save money.

Agencies must show in a cost-benefit analysis projected savings from a proposed

project system, said Bradley Dugger, the state's chief of information systems.

"If, after a five-year period, there's been enough hard benefit for the

system to pay for itself, then we're willing to fund it for them and let

them pay it back over five years," Dugger said. "Anything that showed a

payback has been funded. Nothing has been turned down. Our approach is to

take the huge spikes out that tend to become budgetary issues. It keeps

[agencies] from being in the competitive market for new dollars."

Dugger said the pool has encouraged agencies to create a strong business

case for new system investment and ensure that investments will result in

true savings. Agencies are held to their commitment of cost reduction, he

said, and officials from the state's quality assurance division monitor

projects to ensure they remain on track.

Projects funded through the pool include one that monitors compliance to

professional licensing requirements and a consolidated tax collection system.

Maryland created its Information Technology Investment Fund in 1996 to energize

agency efforts to use IT, said Preston Dillard, the state's deputy chief

information officer. To be funded, projects must relate to education, public

safety or overall government efficiency, he said. To date, most of the money

has gone to education projects, such as the state's annual Net Weekend,

designed to improve the cable infrastructure in schools.

In the current fiscal year, Maryland gave more than $16 million to agency

projects.

"The fund has been so successful that in the current fiscal year we actually

had members of the General Assembly pushing agencies — not just state agencies — to apply for funds," Dillard said.

— Heather Harreld is a free-lance writer based in Cary, N.C.

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