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Inevitable Shifts in Federal Funds

Fiscal year 2010 is drawing near and with it the decennial census. The decennial census is the heart of determining the nations' population. In addition to providing a count of the population every ten years and serving as a basis for population estimates made during the years the between the censuses, the census is also used to allocate billions of dollars to state and local governments.

On October 29, 2007, the Government Accountability Office stated that in 2000 eighty-five percent of federal government obligations in grants to state and local governments were distributed on the basis of formulas that use the census results. As states budgets begins to solidify over the next fiscal year, the need for an accurate population count is imperative since countless federal grant programs (Medicaid, TANF, etc) rely directly or indirectly on population measures.

For example, in fiscal year 2004 the federal government allocated $1.7 billion to states in block grant funds under the Social Services Block Grant program (SSBG). When allocations were recalculated using statistical population estimates from the 2000 Accuracy and Coverage Evaluation, an independent sample survey used to estimate the number of people that were over- and undercounted in the census, $4.2 million in block grant funds for SSGB would have shifted. In other words, twenty-seven states and the District of Columbia would have gained $4.2 million and 23 states would have lost a $4.2 million, based on the simulation of the funding formula for the SSBG. The largest shifts in the simulation were for Washington, D.C., which would have gained $67, 000 in grant funding and Minnesota which would have lost $344,000.

GovWin's Take

  • As the government becomes more visible with the allocation of monies, new methods may be implemented to assure accurate census population counts. This may lead to more IT initiatives and policy changes for the U.S. Census Bureau to aid in precise population counts.

  • As budget crunches are on the horizon in the next few fiscal years, it is crucial that states head discussions and solutions for improvement for the U.S. Census Bureau to ensure they are receiving accurate amounts of money.

  • Formula grants affect a number of major programs (Medicaid, TANF, etc) that are important to vendors. The fluctuation of funds being allocated to these programs determines the amount of money allocated toward future IT purchases for those states.

States Take Lead in "Defining Down" REAL ID

According to DHS is nearing release of the long-delayed REAL ID regulations. Apparently, the guidelines are complete. Now, all that remains is for DHS to calculate the savings for the states and to send the guidelines up to OMB for final sign-off. This could take another two or three months.

However, I've also noticed that several states, including North Carolina, Utah, and (most recently) New York, have taken the lead in redefining how states might comply with REAL ID. (Even some localities are getting in on the act.) The primary trick here is for the jurisdiction to issue two or more types of drivers licenses. Some licenses will serve as identity credentials, including verification of citizenship, with the applicant providing all of the relevant documentation as defined by the state. A "lower" tier of license will serve only as a verification of the holder's permission to drive.

GovWin's Take

Recent actions by the states demonstrate the governors' commitment to upgrading the licensing process to better meet the needs of national security and immigration policy independent of specific guidance (or even funding) from Washington. The governors are certainly working "define down" the stringent DHS-imposed requirements for identity and citizenship verification to a minimum-acceptable level. They never felt that state drivers licensing processes should be more stringent that the process for acquiring a federally-issued passport. Laborious, front-end identity/citizenship verification processes were always at the heart of steep REAL ID-compliance cost estimates. Government IT vendors can rest assured that the basic technology upgrade and integration costs (estimates ranging between $1.5B and $3.0B) will hold relatively steady under any new REAL ID regime.

Agencies are unable to comply with Identity credential issuance deadline

With OMB's October 27 identity card issuance deadline having come and gone, the federal government did not meet its goal of issuing credentials to all employees and contractors with 15-years of experience or less. Just days before the deadline, OMB issued memo M-08-01 reminding agencies that the October 27 deadline was still in effect and if they expected to miss it they were to indicate so and update their plan with a revised schedule.

GovWin first highlighted the struggle agencies were facing in complying with the HSPD-12 mandate in its October 17, GovWin/Output report, Vendor Opportunities Emerge Out of HSPD-12 Delays. The report not only highlights the reason why most federal agencies fell short of the HSPD-12 goal, but explains that in by doing so new opportunities for vendors in the identity and access management market will continue to surface.

eHealth Initiative Annual Conference: “Technology is the Vehicle”

The commencement of the eHealth Initiative Annual Conference held Oct. 11 & 12, 2007 in Washington, D.C. began as a celebration over the release of the eHealth Initiative Blueprint: Building Consensus for Common Action, a document which represents a multi-stakeholder agreement for a "[...] shared vision and a set of principles, strategies and actions for improving health and healthcare through information and information technology (IT)." The subsequent agenda for the conference sessions integrated the chief findings from the Blueprint.

The dominant trends and insights emphasized throughout the conference were the patient-centric system, incremental adoption rates thus far, privacy and security as the major barriers, positive outcomes amongst early adopters and the overriding premise that technology is not the problem, networks are. In his opening speech, Edward Wagner, Director of the W.A. MacColl Institute for Health Care Innovation, indicated that IT has the potential to accelerate improvement in health care and went on to discuss the significance of engaged, responsible, and activated patients. Mr. Wagner noted that through an electronic health record (EHR), with web portal access, there is the increased ability to collaborate and provide care in the absence of a conventional doctor room visit.

Robert Kolonder, National Coordinator for Health Information Technology, US Department of Health and Human Services, touched upon the incremental adoption rates thus far. He noted that statistics show that in 2005 there was a 10% fully implemented EHR adoption rate amongst providers and in 2007 11% of hospitals had fully implemented EHR adoption. He believes that the "tipping point" for widespread adoption will likely occur around the 2012-2014 timeframe. Kolonder, along with multiple other speakers and panelists, stressed that privacy and security are the major roadblocks; which once sorted out will enable accelerated adoption. Mr. Wagner mentioned in his speech that findings from a clinical care model study indicate that the greatest impact of electronic medical records (EMR) thus far have been the disease registry and reminder functionality. He noted that EHRs don't have these same capabilities. Finally, the sentiment that has been reiterated amongst industry experts continually was once again cited; technology is not the problem, networks are in their lack of interoperability standards and policies. Nor is technology the solution, it is simply the vehicle.

Wrapping up the conference, Laura Adams, President and CEO of the Rhode Island Quality Institute, a state continually at the forefront of health IT, demonstrated through a passionate speech that RI intends to remain an innovator. Ms. Adams highlighted the ethical basis for sharing patient data and the need to eliminate competition barriers amongst providers.

GovWin's Take:

  • States are making headway in formulating legislation on privacy and security policies, but major resolutions are still beyond the horizon for most. Following health IT-related legislation in each state is a crucial indicator of future intentions, initiatives and funding.
  • Hesitancy towards purchasing EHRs amongst providers does not seem to revolve around cost, as much as the lack of standards, privacy and security. Technology is not the issue, the policies, networks and standards are the leading concerns.

  • Where applicable, providing partnership support and expertise to Regional Health Information Organizations (RHIO) and HIEs in addressing the choppy waters of interoperability standards and policies could help to create standards that are aligned with the technologies.

  • EHR vendors can continue to innovate EHR system capabilities, such as including disease registry and reminder functionality, which were noted as having a major positive impact.

Web 2.0 and the use in Public Sector-Fad Or Fiction?

Recently while attending the National Association of State Chief Information Officers (NASCIO) 2007 Annual Conference, the talk of Web 2.0 was circulating around the ballrooms creating a good amount of buzz. It's hard these days to read a Government IT publication without some mention of the increased use of Web 2.0, or sometimes referred to as Social Media. NASCIO's first session at the 2007 Annual Conference, "eGovernment 2.0: Serving Generation Next", featured speakers from State Government as well as the private sector exploring the use of Web 2.0 in State Governments to provide more information to the constituents in a timely manner. David Fletcher, Chief Technology Officer, from the State of Utah, has been ingrained in Web 2.0 for the last few years. Utah has been using XML and AJAX, Podcasts and Mashups, Blogs and Wiki's to evolve Utah's web portal from a very static HTML user interface to a highly interactive application centric portal.

Now, many of you might be asking yourself, what exactly is Web 2.0 and what does it entail. Wikipedia defines Web 2.0 as a "second generation of web-based communities and hosted services -- such as social-networking sites, wikis and folksonomies -- which aim to facilitate collaboration and sharing between users. Although the term suggests a new version of the World Wide Web, it does not refer to an update to any technical specifications, but to changes in the ways software developers and end-users use the web."

According to Tim O'Reilly, often credited as the Father of Web 2.0, states "Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform."

Some great examples of Public Sector using Web 2.0 as platform:

  • Rhode Island's "media central" contains pages for blogs, podcasts, calendars, RSS feeds
  • Second Life: CDC, NASA, NOAA, DHS all have a presence in the 3DVirtual Environment know as Second Life. State Libraries have been popping up with Virtual Libraries, such as Nebraska, South Carolina and Kansas. Public Sectors are using this Social Media to get marketing campaigns out to Constituents, help in efforts of recruiting, as well as conducting research and development
  • GovITwiki- A Wiki that aims to answer questions surrounding the Federal Information Technology market

GovWin's take:

  • Web 2.0 is a reflection of the Millennial Generation, born between 1980 and 2000. They think differently; after all they've not known a world without cell phones, laptops, or wireless connectivity. They have different expectations and values, and they are just starting to enter the workforce. They assume a world that will be Web 2.0. For them, the question is: will government adapt to it by design or by default?
  • It is characterized by low entry barriers for communities, communication, and engagement based on shared content and shared tools, generally not framed or controlled by an owner.
  • It isn't a project or just a set of tools. It is a capability, another way to get work done. It is a philosophical shift that demands that government be willing to give up and/or share control over information. As a results, it can be a double-edged sword that allows self-organizing systems outside government control.

VoIP Enhanced 911 Gains House Telecom Approval

The House Telecommunication and Internet Subcommittee recently passed a bill that would improve Enhanced 911 (E911) service for Voice over Internet Protocol (VoIP) subscribers and require a comprehensive census of broadband availability throughout the United States. The 911 Modernization and Public Safety Act of 2007 (H.R. 3403) seeks to facilitate rapid deployment of IP enabled E911 services. By implementing VoIP-based capabilities, 911 service providers can accurately identify the location of a customer who is calling over IP. Currently, E911 calls from VoIP customers are routed to third parties, such as telephone companies, who then connect the VoIP customer with the correct 911 operator.

HR 3403 has won the support of many public safety groups, such as the Association of Public-Safety Communications Officers International and the National Emergency Number Association, along with many stakeholders such as state and local agencies, telecommunication services providers, and IP network providers.

GovWin's Take

It is important for telecommunication providers, as well as Enhanced 911 system integrators and service providers, to follow this legislation as it progresses. HR 3403 now moves to the full Energy and Commerce Committee for further review. This bill would provide a multitude of business opportunities for the vendor community as state and local agencies would need to be VoIP compliant with their E911 systems, should it become law.

Aging State IT Workforce, Crisis or Catalyst for Change?

As the imminent retirement of legions of baby boomers approaches, speculation on what impact this will have on the public sector workforce has grown to a chorus of anxious apprehension. A mass exodus of institutional knowledge and leadership, especially within public sector IT roles, is one of the feared outcomes.


The first baby boomer eligible for Social Security applied for her pension October 15 and Clark Kelso of California last week stated that 75% of the State's executive IT workforce is currently eligible for retirement. A report released by NASCIO earlier this month titled "State IT Workforce: Here Today, Gone Tomorrow?" provided results from a survey NASCIO asked state CIO's or other senior officials of state IT agencies to complete assessing the current status and future concerns regarding the state's IT workforces. Survey results provided an average of 27% of the public sector IT workforce is eligible to retire in the next 5 years. As in any state and local quandary, it is necessary to factor the variance that occurs from state to state. The average of 27% over the next five years includes numbers as low as 10% in one state and as high as 60% in another. Another interesting consideration is exemplified in a survey by the New York State CIO Council's Human Resources Committee presented in December 2006 which stated that over 75% of the State's IT professionals and managers had an interest in working part-time for the state after retirement. Put this all together and we have a baby boomer workforce who are career oriented, perhaps can't "live" on a pension alone, and are in better shape than any previous retirees.

GovWin's Take

  • The eventual retirement of baby boomers from the S&L public sector workforce will drive a multitude of major changes in S&L IT operations and business. These will occur at various rates and in varying ratios from state to state across the country.

  • Policy change to allow for retired staff to come back on to government at part-time and full-time levels

  • Need for efficient information and document management systems to automate the "paper pushing" roles within population sensitive local government units, in addition to state level service-heavy departments

  • Increased reliance on IT professional consulting services contracts to replace gap left by executive level IT staff and other tenured IT staff that posses majority of institutional and legacy knowledge

  • Increased interest in business process outsourcing to allow agencies to focus on serving the constituency rather than supporting processes

  • An opportunity for wholesale modernization of IT organization; replacement of large numbers of staff allow for quicker adoption of new organizational structure and best practices

Republican Bobby Jindal is Governor-Elect in Louisiana

Bobby Jindal (R) won the open primary yesterday with 53 percent of the vote, avoiding a run-off election in November. His platform included 7 major issues -- hurricane recovery, health care, economic reform, education, crime and safety, government spending, and ethics. Jindal's proposed solutions to these issues include several technology components in the area of homeland security:

Hurricane Recovery

  • Work with parish and local officials to conduct semi-annual audits of the state's emergency response plan
  • Ensure that vital records are protected during an evacuation
  • Make explicit the command and control structure during an emergency

Health Care

The United Health Foundation rated Louisiana worst in the nation in overall health outcomes yet the state ranks 11th in Medicaid spending per capita and 24 percent of all adults in the state are not covered by health insurance. Jindal published a comprehensive action plan to improve health care in Louisiana, which includes:

  • Promoting health information technology solutions to improve the efficiency and quality of care by taking advantage of U.S. Department of
  • Health and Human Services (HHS) grants to implement electronic medical records in emergency rooms and consider using bonus Medicaid payments as an incentive to providers to invest in electronic patient records
  • Targeting and eliminating waste, fraud and abuse in the state's Medicaid program
  • Promoting transparency in health costs and treatment by incorporating health data on an understandable web site

Economic Reform

Since 1980, Louisiana has had the third lowest rate of population growth in the country and attracts fewer college-educated workers than any other state in the nation. In order to create an environment attractive to business, Jindal proposes:

  • Strengthening small business by providing a web-based resource center that makes navigating through the various permitting, tax forms and licensing processes easier
  • Creating an online one-stop shop to learn about and apply for all available incentives so the state can better attract employers

  • Encouraging state universities to be leaders in technology transfer and commercialization


More than 20 percent of all Louisianans do not have a high school diploma and almost 8 percent of students drop out each year. To improve educational outcomes, Jindal proposes:

  • Improving online communications between parents and teachers
  • Improving technology utilization in public schools, including virtual classrooms, Internet-connected chalk boards, online courses, and electronic tutoring
  • Improving teacher training by offering online courses that will help them succeed

Crime and Safety

Louisiana is the second most dangerous state in the nation and first in per capita homicides. Jindal's plan for improving the safety of Louisiana's residents includes:

  • Requiring life-time registration of all sex offenders
  • Expanding GPS monitoring of sex offenders

  • Working with local officials to develop local Internet crime task forces across the state to stop online sexual predators

  • Establishing the Governor's Criminal Hot Spot Initiative by partnering with local law enforcement to create interactive, real-time crime maps to identify high crime areas and increase surveillance in those areas
  • Better tracking of information collected by retailers of over-the-counter drugs used to make methamphetamines
  • Improving coordination between prosecutors and federal, state and local law enforcement to better share intelligence
  • Developing an accessible state-of-the-art criminal database that will allow all levels of local law enforcement to better track criminals, arrests, prosecutions and convictions
  • Ensuring a secure and reliable communications network for first responders to use in times of emergency

Controlling State Spending

Louisiana state government spending has tripled in the last 12 years according to the National Association of State Budget Officers (NASBO) and employs over 100,000 people or 1 out of every 42 people living in the state. In order to rein in state spending, Jindal proposes:

  • Issuing annual public reports online of all state grants by funding source, agency, parish, and type of service provided
  • Improving public access to current grant databases to make it a state-of-the-art, easy to navigate resource that provides full disclosure of grants, contracts and bond allocations
  • Requiring each state department to conduct regular customer service surveys and post the results on the department's web site
  • Pursuing and expanding usage of new technologies and best practices to provide improved services at reduced cost Requirin disclosure of all state contracts with vendors so the public know who is providing services to public entities and at what cost to
  • the taxpayer
  • Requiring all Legislative floor proceedings and committee hearings to be broadcast free of charge over the Internet

The Center for Public Integrity gave Louisiana failing grades in legislator personal financial disclosure and lobbyist spending disclosure. Forbes magazine ranks the state next to last as a place to do business. Jindal's plan for ethics reform includes:

  • Requiring lobbyist filings to be electronic and online
  • Providing citizens easy, online access to state government by upgrading Louisiana's sunshine laws and expanding Internet-based access to filings, reports, and announcements in all departments
  • Making all ethics filings immediately available on the Internet

GovWin's Take

Bobby Jindal; Mitch Landrieu (D), Lt. Governor; Jay Dardenne (R), Secretary of State; Jim Donelon (R), Commissioner of Insurance; and several candidates for the Board of Elementary and Secondary Education (BESE) have avoided a run-off election. However there will be run-off elections for Attorney General, the Commissioner of Agriculture and Forestry, and BESE District 5. Like many other Southern states, the large number of statewide elected officials is intended to weaken the power of the governor. Six of the 20 executive branch departments are headed by elected officials other than the governor and the Superintendent of Education is appointed by the BESE, whose members are elected.

While Jindal has an aggressive platform for reforming state government and improving many of the services it provides, it will take a lot of time and effort before Louisiana is considered an easy place in which to do business. Vendors should look for ways to outreach to Jindal's campaign staff and later his transition team to get a jump start on possible new technology projects.

Transparency Websites - Be your own best watchdog

Limited access and hard to digest data of government spending records on state websites has created frustration among citizens and a growing concern over how wisely their tax dollars are spent. Citizen demands for greater accountability and transparency have inspired taxpayer rights organizations to support and fund state transparency initiatives, which now serve as models for federal and state databases that digitally track government spending.

On October 1, 2007 the Texas Comptroller Office launched a $310,000 transparency website, "Where the Money Goes", tracking detailed state spending patterns. The website provides spending information by agency, payee/recipient and category for current and past fiscal years. In FY2007, Texas spent about $125 million in data processing, computer, programming and software services. Expenditures in computer hardware, software and peripherals accounted for over $30 million and expenditures in radio communication and telecommunication equipment amounted to $13 million. Moreover, IT vendor purchasing patterns can be tracked by searching IT related categories for a specific agency or for all agencies. The website lists thousands of searchable vendors and contracting expenses. The detail of state spending on this website educates citizens to be their own watchdog over their taxpayer dollars but it also helps state agencies identify ways to combine budgetary resources and ultimately implement more effective purchasing practices.

The idea of transparency websites was originally created by organizations committed to use technology to improve access of government spending to the average citizen. OMB Watch, a nonprofit website tracking federal spending, was the inspiration behind federal mandate S. 2590, which directs the federal government to implement a database with capabilities to search all federal contracts and grants by end of 2007. The federal legislation encouraged fifteen state Governors and legislatures to introduce transparency bills during their 2007 legislative sessions. States delaying transparency projects are mainly concern with the work involved developing and enhancing databases, funding requirements and the ambiguity over the public's right to access public records.

A report by the American for Tax Reform, an anti-tax group, presents legislative attempts of those states supporting transparency projects. https://internal1/_linh/%22, the first state to enact legislation creating a website detailing state expenditures, plans to invest $40 million over a three year period in technology upgrades. Minnesota, Oklahoma, Texas and Hawaii have all enacted similar transparency laws. Kentucky, New Mexico, Maryland, Florida and others plan to revisit transparency efforts during their 2008 legislative sessions. By Executive Orders, Missouri created the Missouri Accountability Portal (MAP) to search state expenditures and Florida created The Office of Open Government and Commission on Open Government to review the public's right to access government records. Transparency legislation also gained traction in local governments. Texas and North Dakota introduced legislation that would mandate school districts to detail expenditures online. King County, WA and Alexandria, VA, respectively, have approved legislation disclosing a breakdown of property taxes and detailing city grants and contract information online.

GovWin's Take

  • GovWin anticipates more state Governors to pass into law transparency related bills expected to be introduced in upcoming legislative sessions. As a result, more online databases tracking where the money is being spent will be developed and available to constituents to view.
  • Increasing demand for more accurate and detailed state and local government spending data will drive demand for more modern and flexible budgeting/financial systems as well as generally accepted accounting practices for government.
  • For IT vendors, these initiatives will provide more data to track in regards to how States are spending money on Information Technology purchases.

More information about transparency websites and legislation nationwide can be found in GovWin's latest Industry Insight report "State 'Transparency' Websites Provide Immediate Insights and Long-Term Opportunities for Vendors" (July 2008).

Colorado to revamp state IT operations (Update on the status of California)

Gov. Bill Ritter (D) announced his plans to overhaul Colorado's IT operations. GovWin has already blogged on similar efforts in New Jersey, Arkansas, Florida, and Wisconsin. All of these states have relatively new governors who are putting their stamps on various state operations. These cases also reinforce the existing trend toward what might be called "rationalization" of state IT processes. The very first step in rationalizing a government process (such as IT procurement) is to capture new efficiencies through centralization, which eliminates duplicative--and, sometimes, conflicting--processes and creates a greater economy of scale and lower procurement costs with higher volume purchasing.

Driven by a desire to avoid the sorts of costly IT boondoggles that plagued the previous administration, Gov. Ritter's plan includes the following components:

  • An executive order elevating the state CIO's position to the cabinet level (May 2007), now filled by Michael Locatis
  • An Innovation Council to advice the governor on IT operations and technology-oriented economic development
  • Introduction of an "IT Consolidation Bill" in the 2008 legislative session

Just over the Rocky Mountains, California's Legislative Analyst's Office (LAO) issued an assessment of the state's Office of the CIO. The LAO pushed back against some of Gov. Arnold Schwarzenegger's (R) proposed changes to the state's IT operations, finding "that (1) the planning and policy development roles are appropriately placed with the Chief Information Officer (CIO), (2) moving IT project oversight to CIO would eliminate objectivity, and (3) a separate security office may create an unnecessary layer of review."

The LAO recommends an IT-oversight structure as follows:

Continued CIO oversight of strategic planning, policies, and standards Project review, approval, and oversight remain with the state's Department of Finance Information security oversight be moved to the state CIO's office rather than the state Department of Consumer Affairs However, Gov. Schwarzenegger's changes were enacted earlier this year as part of Senate Bill 90. The state's CIO, Clark Kelso, has created a brief presentation that summarizes those changes and what they mean going forward. But, the LAO brief provides an interesting insight into the internal debates around these sorts of institutional changes.

GovWin's Take

  • Do not expect a national consensus to emerge over how states can best establish and enforce IT standards. Each approach will have to be tailored to the particulars of the state's political and operational environment at that time. And the approach will evolve over time--sometimes taking steps forward and sometimes back.
  • Rationalization doesn't always mean that the number of opportunities coming out of a given state will decrease. While you might see fewer duplicative procurements of certain solutions, vendors should expect the greater economy of scale to lead bigger buys, reinvestment of savings in upgrades/lifecycle refreshes, and purchasing in new areas where fragmented budgets discouraged most agencies from thinking big in terms of technology-enabled innovation.
  • Colorado's inclusion of technology-oriented economic development into the mission of the Innovation Council certainly adds a bit of glamour to the CIO's role. However, it will be interesting to see how these dual roles are balanced. Colorado has tested this approach for years and, historically, the allure of economic development has distracted the state CIO from the operational side of things. Virginia has the only successful model of this sort, but it has a cabinet-level Secretary of Technology, Aneesh Chopra, who sits over the state's CIO, Lem Stewart.

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