Getting innovative with funding

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Doing it their way

Tight budgets have forced state and local information technology executives to become creative. These officials have discovered not only innovative ways to use technology but also to fund IT initiatives.

Smaller budgets often produce a greater emphasis on using IT to improve an agency's efficiency. Yet, that does not mean that IT budgets are growing. In fact, like state and local budgets overall, IT funding has been cut.

Therefore, local technology leaders must find alternatives to develop the infrastructure for government services.

"We need to not go through the general fund," said Gerry Wethington, chief information officer for Missouri and president of the National Association of State CIOs.

State officials are experimenting with various solutions, including several that federal agencies use. They include the use of shared contracts and an increase in enterprisewide purchases to maximize an agency's buying power on common products and services.

In addition, several governments have been successful with charging fees to businesses for government services when officials can prove that the businesses are receiving a significant boost in profit or productivity, Wethington said.

Local officials also seek advice from industry on issues such as the private sector's expertise in finding and receiving grants. New Orleans has more than $15 million in federal grants for IT needs, money that city officials won through a combination of city and business applications, said Greg Meffert, New Orleans' CIO.

When the city started to install surveillance cameras on a wireless mesh network, city officials developed the network with almost $3 million in homeland security and law enforcement grants and a much smaller amount from the city's funds. The network also provides a series of wireless hot spots. The private sector is paying for most of the cameras, spending about

$1.5 million for 200 cameras, Meffert said.

Mixing funding sources is how officials implement the majority of technology initiatives in Virginia Beach, said David Sullivan, CIO for the largest city in Virginia. He is frustrated by the number of government leaders who seem determined to wait for federal funding or a brighter economy before moving forward on anything.

"It just doesn't work that way; you've got to scramble for this," Sullivan said.

The good news is that states' fiscal picture is improving, according to the National Association of State Budget Officers (NASBO). Although the economic recovery is uneven and most manufacturing states are healing more slowly, revenues nationwide are picking up again, said Scott Pattison, executive director of NASBO.

States have not, however, been rallying to the levels of the economic boom of the mid-1990s. The factors that contributed to the shortfalls of the past three years — increases in Medicaid and education funding requirements and decreases in discretionary funding — are still in place, Pattison said. Those mandatory items make up more than 70 percent of state budgets, he said, meaning IT officials are already competing more than a small piece of the pie.

With budget concerns in mind, state and local officials need to accept that "there are a lot of catch-up things that need to be done," Pattison said.

During the past three years, states and cities nearly emptied their coffers, and those savings need to be restored. Officials also delayed many basic infrastructure investments, which they need to make as soon as possible, Pattison said. And although IT infrastructure is equally critical, many budget and political leaders are skeptical about whether IT investments will reap substantial savings.

"We can't go back to the old days where you can get a $30 million appropriation out of the general fund," he said. "State budget officers are not IT experts, but they do remember that they have been burned, and everyone remembers that $30 million that they should have just burned in the wastebasket."

This occasional antagonism toward IT projects-gone-bad is one reason that share-in-savings contracts are increasingly attractive to state IT officials, Wethington said.

With share-in-savings contracts, the vendors implement solutions with their funds and share a portion of the savings that result. This acceptance of shared risk — particularly that the promised savings or increased efficiency won't appear — is critical to the future of state and local contracting, Wethington said.

Missouri officials are using a combination of share-in-savings and fee-for-service arrangements, in which contractors do not get paid until they meet a specified performance goal, he said.

Getting the support of top political officials can also smooth the relationship with budget officials.

Colorado's Office of Innovation and Technology focuses not only on the technology infrastructure but also its impact on the state's economy. The office's structure allows the governor to better understand the issues that the CIO deals with every day, said Leroy Williams, the state's technology secretary.

In addition to supporting funding for statewide centralized services, Colorado Gov. Bill Owens has also put about $7.5 million of federal funding directly into e-government projects, Williams said.

In the end, although budget officers are apprehensive about big, one-time IT investments, they may still approve them, Pattison said. There will simply be smaller, more targeted investments with thorough business plans. Officials will also regularly check the status of the projects, and state budget officers are seeking training to better oversee modular and phased-in solutions, he said.





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