States’ IT modernization dreams run into budget realities

DENVER — The Texas Department of Information Resources announced last week that its Texas by Texas digital assistant, known as TxT, now has more than 10 million users and offers more services, including the ability to upgrade a driver’s license and renew a boat registration.

It’s part of a massive movement across all 50 states to digitize and modernize their services as residents look to engage with their governments online and obtain licenses and permits and carry out other functions that were traditionally in-person and paper-based.

But the tightening of state budgets and ongoing uncertainty on the state of future federal funding has some worried that those modernization efforts may have to slow down considerably, or be shelved altogether. The National Association of State Chief Information Officers’ annual State CIO Survey indicated that times might get tight.

While half of those surveyed said their CIO organization had seen an increased budget and received money in some form to modernize, they said they expect to feel the effects of federal cutbacks soon. NASCIO Executive Director Doug Robinson said during a panel discussion at the group’s annual conference last week in Denver that states are already seeing revenue shortfalls and so may be asked to “pare back” their tech spending, or “hold the line.”

It makes for an uncertain time, and leaves state technology leaders with tough choices as they try to balance modernization with being good stewards of public dollars.

“People were getting used to some of the federal funding and some of the alternate funding sources that were coming into their operation to clean up some of the tech debt,” Shawn Rodriguez, vice president for state and local government and education at World Wide Technology, said in an interview on the sidelines of the conference. “But that has come to an abrupt halt, or at least many think it has.”

States have tried to put some money behind their efforts through supplemental technology modernization or innovation funds. More than 80% of those surveyed said they had received money for one of those two uses, while just 22% said they had requested such funding but been denied. Forty-eight percent said they received funding for modernization or innovation through general fund dollars, while 26% said it was through one-time funding.

But those funds are very limited, and could go away altogether. Mississippi CIO Craig Orgeron warned that efforts to find money to modernize have already resembled the “Hunger Games” given how tight those resources are and given the sheer amount of technical debt and legacy systems states have. Orgeron said Mississippi has legacy systems that were set up decades ago, and retiring mainframes from state data centers are massive projects in themselves that take millions of dollars.

Other states have had some success by letting an agency take the lead on a modernization project that they can then provide to other agencies. North Dakota CIO Corey Mock said it is a different approach and cannot be a replacement for dedicated modernization or innovation funding, but can help in the short term.

“A lot of our modernization efforts, we're relying on some sugar daddy, a large agency that has a lot of funds available to be the sponsor,” he said on stage at the conference. “[Then we] say, ‘This is important to you, but it's also going to be important to a lot of other agencies, so if you take the lead on funding this, you'll be first in and then this will create an enterprise foundation that's going to benefit all of the other agencies.’”

Shawnzia Thomas, Georgia CIO and executive director of the Georgia Technology Authority, noted the state established a Technology Empowerment Fund a couple of years ago, with $156 million allocated to it over three years. That money, and the interest it has earned in the bank, has helped it be effective in funding various agency-specific projects, with oversight from GTA throughout the entire process. “We’re in it from the beginning to the end,” she said.

Thomas said agencies submitted nine business cases this year, and GTA approved six, with the other three deemed duplicative of efforts elsewhere in state government. Experts noted that avoiding duplication must be a key way for states to evolve their technology offerings and help modernize while saving money at the same time.

“What they can look to do is consolidate existing tool sets that can be consolidated and achieve some capital from doing that,” said Lou Karu, SLED leader at software company Rubrik, in an interview at the NASCIO conference.

It won’t be easy, however. Robinson said one-time, special funding for modernization and innovation is “not sustainable.” State leaders face difficult decisions about what to modernize and how to spend their limited funds to do so.

“With tight budgets, [states] still want to modernize,” said Michelle Egan, U.S. SLED leader at managed services company Ensono, in an interview at NASCIO. “They still want to be able to do [artificial intelligence], but if their data is sitting in a legacy environment, it's hard to be able to do those modern, more technical advances. Legislators want them to do AI, they expect them to do things the way the market is moving, but they're limited on budgets and what they have available to them.”