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How States, Localities Are Looking to Spend Federal IT Funds

Federal grants are giving states and localities a big opportunity to invest in their IT systems. But the money is temporary, and they need to choose their acquisitions, and vendor partners, carefully.

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Federal grants are giving states and localities a “once-in-a-lifetime opportunity” to invest in IT, Cook County, Ill., CIO Tom Lynch said during Mar. 3 ’s Beyond the Beltway* event.

Thanks to boosts from the American Rescue Plan Act (ARPA) and Coronavirus Aid, Relief and Economic Security (CARES) Act, and with Infrastructure Investment and Jobs Act (IIJA) disbursements coming this year, states and localities may be feeling confident about spending.

But they also know the funding is a one-time deal, even if some of it will be doled out over several years. Many states have also cut taxes while increasing some expenditures, meaning slimmer budgets in the future, said Governing* writer Alan Greenblatt, during one of the Beyond the Beltway panels.

“They’re flush with money right now, but it won’t last forever,” Greenblatt said. “And states are cutting taxes — which may be a great idea — but it’s going to leave them with less revenue.”

Agencies have financial power to make significant procurements now but must be sure they invest wisely and don’t get bit by maintenance and replacement costs down the road.

That’s one concern for Ed Winfield, CIO for Maricopa County, Ariz. He said his county used CARES Act funding to improve its cybersecurity and equip more advanced tools.

“It was fun to spend that money, but now you’ve got to pay your maintenance and your licenses fees and all that on an ongoing basis — so that price tag is come due,” Winfield said.

State and local governments are expected to spend a combined $130.5 billion on IT in 2022, a bit higher than the $118.7 billion they spent in 2021, said e.Republic Deputy Chief Innovation Officer Joe Morris*.

MAKING THE MONEY WORK


States and localities have their wish lists but can’t just plunge into big spending sprees.

For one, new technology acquisitions change the way staff work, and employees need time to adjust to new processes, said Chris Rein, chief technology officer for the state of New Jersey. That adjustment hits both personnel who will be using the technology and the IT staff who need to support it.

“Sometimes the limitations aren’t just the dollars,” Rein said. Instead, the question may be, “How much change can a group of 600 or 700 people accommodate?”

As much as the pandemic has forced governments to up their technology deployments to support residents and remote staff, the crisis has also produced stiff resistance to adopting some more advanced technologies. Rein said New Jersey officials already dealing with the public health emergency haven’t been interested in undergoing other major changes to their processes — like those that would come from adopting more machine learning and robotic process automation (RPA).

Responsible purchasing also may mean getting the most out of existing investments, with minimal disruptions. Ohio CIO Katrina Flory said she prefers vendors who explain how they can improve what the government is already doing to those who pitch replacing the entire setup.

And public officials want tools that will work for them long term, which means they have to pay attention to how the solutions will be maintained. Rein said government staff may be hard pressed to keep up with the ins and outs of rapidly changing technologies, and CIOs can reduce their risks by having vendors take up the responsibility for maintaining the products they sell. Negotiating good contracts is essential to securing that partner support.

Winfield’s county has been burned in the past by vendors of “critical platforms” who make the sale, but then fail to provide technical assistance or qualified people to answer governments’ questions, he said. Company acquisitions, staff turnovers and other corporate changes can disrupt product support processes, even from companies that intended to provide them. That makes it key that officials negotiate not only about purchases but also about the deployment assistance and maintenance support plans.

VETTING THE VENDORS


Government officials have plenty of traps to look out for when selecting vendors.

Companies tend to come out of the woodwork to try to sell — even when they don’t have the relevant expertise, New York CIO Tony Riddick noted.

In the auto sector, it’d be as if “they specialize in hub caps, but they want to sell us motor oil, because they hear we’re buying motor oil right now,” Riddick said.

Lynch said he wants real evidence that the solutions are effective, including having prospective sellers explain how their offerings have worked for other communities previously.

And keeping tight cyber defenses also means vetting the security of all vendors, no matter how “innocuous” their services seem, Rein said.

TECHNOLOGY WISH LISTS


Governors will be elected in 36 states this year, with winners liable to bring their own particular spending priorities, Morris said. But at present, several technology goals are drawing attention.

Governments are struggling to state their tech talent needs as employees retire and higher-paying private companies lure staff away. Automation tools can help remaining personnel stretch their efforts further, however, and Winfield said that automated software patching has saved employees considerable time.

Dustin Haisler, chief innovation officer for e.Republic*, said the workforce shortage could also drive demand for low-code and no-code solutions that governments can use without filling the tech skills gap.

A significant amount of federal money is also designated for broadband funding, and counties like Maricopa are working to upgrade networks to meet new needs introduced by the pandemic — such as much greater use of virtual court sessions.

Identity access and management solutions are also rising high on some states and counties’ priority lists. Rein said that getting a single, standard identity platform that could be used across agencies is a “glaring need” for New Jersey.

*Beyond the Beltway is hosted by the Center for Digital Government, which is owned by Government Technology's parent company, e.Republic.

*Governing is a sister publication to Government Technology.
Jule Pattison-Gordon is a staff writer for Government Technology. She previously wrote for PYMNTS and The Bay State Banner, and holds a B.A. in creative writing from Carnegie Mellon. She’s based outside Boston.