December 1, 2006 By Shane Peterson
State CIOs spend considerable time and energy preparing for their annual trip to the statehouse to seek funding for IT programs and upgrades to hardware and software.
Lawmakers spend an equal amount of time and energy making difficult decisions about how to spend the state's money, especially with a finite budget and infinite funding requests.
Minnesota legislators and the state's Office of Enterprise Technology (OET) found a way around the yearly budget tension by building a better piggy bank. State leaders say recently enacted changes give Minnesota a way to capture savings from IT-related efficiency gains and reinvest some of those savings into new technology projects.
During the 2005-2006 legislative session, Minnesota lawmakers passed a budget bill that created an "information and telecommunications technology systems and services account" in the state's special revenue fund. The account went live July 1, 2006, the start of the current fiscal year.
The bill also authorizes the OET to charge state agencies for purchases of IT systems and services, and credits that money to the account.
The bill's author, state Sen. Sheila Kiscaden, said the bill's easy passage through the Legislature reflects already-existing arrangements in Minnesota government operations.
"This was a very easy thing because we have already two systems in place in state government where we do charge-backs from one agency to another," Kiscaden explained.
State agencies pay a charge-back fee to use the state government's telephone system, and agencies also lease office space from the Department of Administration on a charge-back basis. That income is then invested into improvements and maintenance for state buildings.
"We're not really collecting the full cost that a normal lease would do," she said. "We can't do all the repairs and betterments so we still have to do some capital bonding. But it's a way that we've set up these systems to have some consistency of funding and to take care of ordinary maintenance without having to do special appropriations."
In part, said Gopal Khanna, CIO of Minnesota, the goal of the savings account was to help re-create IT management in the state to emphasize sharing and consolidating resources through an enterprise model to make better use of technology resources, increase productivity and improve security.
Khanna said he met with business leaders and commissioners of state agencies to discuss IT management in the state, as well as the idea of the savings account.
"We discussed the challenge of having a central organization leading change that would result in savings at the agency level," he recalled. "Where would the central organization get the fuel to drive those changes? And how could we invest at least some of those savings in a manner that allowed us to continue innovation for the benefit of all?
"That's when -- with the help of some agency leaders -- we came up with the idea for the information and telecommunications account," he continued. "After discussions with our commissioner of finance, Peggy Ingison, we drafted the language that was passed by the Legislature."
Khanna said the OET does not purchase hardware or license applications for agencies directly, though the OET's IT Standards and Resource Management group, in conjunction with the Department of Administration, manages collaborative cross-agency teams to negotiate state IT contracts, which dictate the cost of hardware and common software licenses and applications.
It's the OET's job, in collaboration with state agencies, to deliver enterprise programs that fit the purpose of the account so the agencies can save and improve, he said, adding that the OET has built consensus among state agencies that sharing resources, in this case the cost savings, will help the state further its mission of continuously improving the underlying
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