Beyond compliance: Emerging lessons from H.R 1’s impact on benefits delivery

State agencies are grappling with significant changes to how the federal government approaches benefits administration. H.R. 1 has presented new challenges for state and local agencies, placing them under enormous pressure to rapidly increase the efficiency of public benefits programs, both to reduce errors and to reduce overall costs. Agencies are being asked to do much more administratively with less resources than ever. Many challenges in the benefits delivery space are either a direct result of or worsened by agencies’ patchwork of legacy technologies that fail to interoperate or scale to meet evolving policy priorities.

Despite these challenges, it has never been a better time to undertake a legacy modernization effort. New and emerging toolsets in generative AI and machine learning have made it easier, faster, cheaper, and less risky for states to take on a legacy modernization effort. 

Google Public Sector helps agencies not only meet these compliance mandates but modernize through them by offering first-party solutions across the AI stack. In the first months of H.R. 1’s impact, our work with public sector agencies across the US has given us a unique vantage point on these transformations. From these experiences, we have distilled three critical lessons for state leaders navigating this new landscape.

Lesson 1: Advancements in AI are reshaping the vendor landscape

AI-powered tools can now automate some of the most complex and labor-intensive parts of legacy transformation, from understanding legacy code to migrating data to streamlining manual workflows with human-in-the-loop automations. Using tools like Gemini, agencies can architect the future of public benefits in alignment with their policy goals and priorities. This new paradigm allows public sector agencies, for the first time in many decades, to take the driver’s seat, setting a clear vision for their systems and using intelligent tools to get there faster and more affordably.

This new reality is reshaping the ecosystem. Services partners must evolve to meet this shift - the goal is no longer to outsource entire programs, but rather, to empower states with intelligent tools, enabling both state agencies and services partners to focus on higher-value strategic work. This means states can, and should, spend less on foundational services and more on initiatives that directly improve outcomes for constituents and caseworkers.

A growing number of states are making strategic decisions to authentically own their own technology. Driven by years of strong technical leadership and a clear vision, these states are moving away from monolithic contracts and vendor-controlled systems towards self-architecting modular, flexible platforms, enabling them to build internal enterprise, control costs, and adapt more quickly to changing priorities and needs. States may rely on fewer vendors, or a diversity of specialized vendors. 

Lesson 2: Modernization doesn’t have to mean ‘rip and replace’

For some states, modernization can be an evolution rather than a revolution. Savvy state leaders across the country are leveraging state contracts and existing partnerships to integrate advanced technologies like generative AI and predictive analytics to drive agency efficiency and efficacy, even in concert with legacy technologies like mainframes. State leaders are improving the accuracy of program delivery by deploying tools like Document AI (AI-enabled document verification) without disrupting their entire technical ecosystem.

For many states doing more with less in an increasingly resource constrained environment, even productivity enhancements that seem small scale from an external perspective can have significant impact - the kind of impact that keeps overburdened staff from burning out, and gives caseworkers more time to spend with their clients. States are increasingly adopting these tools to gain the day one value of productivity gains without a major technical undertaking. 

Lesson 3: A ‘quick win’ is an opportunity to build trust, partnership, and momentum

Legacy systems exacerbate many of the problems agencies face, but faced with immediate compliance pressures, pragmatic leaders across the US are achieving success by launching focused, surgical strikes on their most acute problem. For some states, that might be increasing the rate at which documentation is processed; for others, it might be providing a single pane of glass to caseworkers to make it easier for them to review and decide benefits applications; some may need to rethink their voice experience to stop caseworkers from answering questions better served by an AI assistant (like those pesky “what time is the office open?” questions).

By targeting the single-most costly and error-prone part of a potentially complex process with a high-impact technical solution, agency leaders can demonstrate a return on investment in months, not years or decades. This initial success is critical in building the business case for modernization, and for building trust and engagement from diverse teams across the agency that may have valid anxieties about shifting technology. These successes provide a “we can do it!” moment, and build organizational momentum for continued innovation.

H.R. 1: A catalyst for change?

The lessons from the front lines are clear: the playbook for legacy modernization has been fundamentally rewritten. The era of waiting for a less risky or more affordable time to act is over. Whether by taking full ownership of your technology, evolving your vendor partnerships toward efficiency, or launching a technology-driven response to a single, urgent problem, the tools to build a more responsive and cost-effective government are now at your disposal. The power to deliver better outcomes for your constituents is firmly in your hands—the only question left is where you will begin.

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