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Short-Term SCHIP Resolution

After a prolonged dead-lock between a bipartisan Congressional cohort and the White House over legislation on the popular State Children's Health Insurance Program (SCHIP), an agreement appears to have been reached. On December 18, 2007 the Senate passed revised legislation (S.2499) seeking to temporarily extend the program until March 2009 without raising taxes or extending services to additional populations beyond the original scope. On December 19, 2007 the House of Representatives passed the bill with a 411-3 vote. The White House has issued statements indicating that President Bush approves of the measure and intends to sign the bill.

Two prior bills were vetoed by President Bush. The first, H.R. 976 was vetoed on October 3, 2007 by the President, who cited discontent with the bill's costs and intentions (GovWin Blog: President Bush Keeps Promise to Veto SCHIP Bill). The second bill, H.R. 3963 was vetoed by President Bush on December 12, 2007, who cited the same concerns with the bill's tenants as with H.R. 976. The second bill passed through the House with a 265-142 vote, short of the two-thirds margin necessary to override the veto by President Bush. Minor changes were made to the original bill in order to win over hesitant Republicans. H.R. 3963 maintained increasing spending by $35 million for a total of $60 million over the next 5 years. In addition, the bill intended to fund the program via an excise tax on cigarettes would increase by 61 cents per pack. Both of these provisions were strongly opposed by President Bush. Modifications to the original bill, H.R. 976, were in regards to tightening eligibility, generally barring the use of the funds to provide services to illegal immigrants, childless adults and children of families exceeding three times the federal poverty level. The change in eligibility was to prevent concerns over a "crowd-out" effect in which families who could afford to use private insurance coverage would drop their plans in favor of federally funded coverage. The "crowd-out" effect was an additional concern of the White House. The revised Bill passed in the Senate, 64 yeas to 30 nays, and was subsequently vetoed by the president.

The lack of increased funding is disconcerting to states proposing expansion efforts; these efforts must now be carefully reassessed and potentially abandoned for the time being. In the past couple of years several states have begun to request financial bailouts after overextending the program beyond the federal statue's original intent. The Heritage Foundation reported that fourteen states experienced SCHIP funding shortfalls totaling $720 million in 2007. The Congressional Budget Office previously estimated that 43 states will experience shortfalls totaling $8.9 billion in 2017. SCHIP, along with Medicare, will likely be revisited as a crucial talking point for the 2008 presidential election.

2007 State Homeland Security Directors Survey

The National Governor's Association Center for Best Practices (NGA Center) released the 2007 State Homeland Security Directors Survey on December 18, 2007. The report outlines the Homeland Security priorities for states over the past year and also points out the continuing relationship strain states have with coordinating plans implemented by the federal government. The report provides a good summary of 2007 intents and expectations for next year.

The top five Homeland Security priorities for states in 2007 are the development of interoperable communications, coordinating state and local efforts, protecting critical infrastructure, developing state fusion centers, and strengthening citizen preparedness. These priorities have been a trend for the past several years and will likely be focal points well into the future.

The survey also makes it apparent that states require better communications and relationships with federal government planning. It is evident that states feel homeland security grant programs are not adequately funded and aren't thoroughly planned. They also feel that the Department of Homeland Security does a below satisfactory job coordinating policies. The report highlights a focus from not just the states but also the majority of local Law Enforcement agencies which illustrates the continued struggle for first responders to obtain adequate support and direction from the feds for needed technologies to better protect citizens effectively.

GovWin's Take:

The focus of GovWin's State & Local Homeland Security analysts has been to maintain this federal/state/local communication contrast while bringing to light the consistent priorities and needs of State/Local first responders. As the federal government continues to reward the appropriate efforts of states furthering their interoperability plans, they should also heed the needs of those State Homeland Security advisors who are still struggling. It is important to keep in mind that states which have justified appropriate funding with their plans will set a model for other states to follow. GovWin's analysts have established strong footholds in the Homeland Security marketplace while further focusing on the individual State & Local "grassroots" implementations that maintain high-priority Public Safety securities and technologies. Vendors would be wise to continue the considerations on both sides of these market contrasts as well as Information Technology will continue to play a pivotal role in sustaining safety and security throughout the country.

IT Investment Driven by Population Growth and Boomer Retirement Pressures

This week, the U.S Census Bureau released the Nation's annual state population estimates for the period between July 1, 2006 and July 1, 2007. This data suggests that we may see a shift in several states' number of seats in the House of Representatives. In addition, those states seeing the most significant growth will be those first feeling the pressure of increased demands for population sensitive services. Although the data is primarily used to anticipate an increase or decrease of state representation in congress and electoral votes, it also serves as a major technology market driver used to forecast state investments in "population-sensitive" government services. Consequently, higher state population growth in combination with the increased retirements of baby boomers will force state governments to leverage IT investments with the goal of reducing costs, improving efficiencies and ensuring service delivery.

The top ten fastest growing states are Nevada, Arizona, Utah, Idaho, Georgia, North Carolina, Texas, Colorado, Wyoming and South Carolina, respectively. For the 19th year in a row Nevada remains the fastest growing state. Michigan and Rhode Island are the only two states to lose population and Ohio's remains flat. California continues to be the Nation's most populous state with 37 million residents despite Texas' lead in population increase with 500,000 new residents in comparison to California's 300,000 new residents.

State population growth will influence state IT spending, especially in areas that provide "population-sensitive" services. Some of these services include school records, tax collections, criminal records and Medicaid payments. States will find they need to either hire new workers, automate manual processes, or outsource non-essential IT infrastructure and business operations.

Georgia, the fifth fastest growing state, provides an example of population growth, services delivery and IT operations colliding towards change. The state recently partnered with a vendor to evaluate its IT infrastructure. The state's aging technology created serious risks to critical services provided to its fast growing population. Consequently, Georgia announced last month its decision to begin the process of updating and securing its IT functions by consolidating and outsourcing its IT services to public-sector vendors.

GovWin's Take

  • Vendors should note that spending on "population-sensitive" government services with associated technology requirements that also compensate for aging technologies will continue to grow as population grows.
  • Although, higher population growth and boomer retirements will drive increased use of outsourcing, consolidation, automation and staff augmentation, states remain willing to rely on new hires and heavier workloads in areas where vendors do not provide the best solution for the least cost. Nevertheless, in an effort to cut costs and increase efficiencies, GovWin anticipates high-growth states to partner with vendors to restructure their IT infrastructure

Kansas Governor Establishes Statewide Interoperability Executive Committee by Executive Order

Today, Kansas Governor Kathleen Sebelius, issued Executive Order 07-27, which establishes a Statewide Interoperability Executive Committee (SIEC). The committee will be responsible for the following activities:

  1. Conduct an assessment to better understand the current baseline of communications interoperability in the state.
  2. Identify and recommend future technologies that will enhance communications interoperability.
  3. Create a statewide interoperability plan.
  4. Manage implementation of the interoperability plan.
  5. Create statewide best practices, policies, procedures, and protocols for communications interoperability.
  6. Provide training opportunities for all necessary public safety practitioners.
Kent Koehler, Sedgwick County Division of Information and Operations will serve as chairman of the committee and Richard Old, Lyon County Undersheriff, will serve as vice chair. Jason Moses was hired on July 16 to act as the interoperable communications coordinator for the state. Other members of the committee include:

  • Tod Bunting, Adjutant General
  • Deb Miller, Secretary, Department of Transportation
  • Colonel William Seck, Kansas Highway Patrol
  • Tyler Brewer, Augusta Director of Public Safety
  • Bob McLemore, Chief, Colby Fire Department
  • Kerry McCue, Ellis County EMS
  • James Reed, Sumner County EMS

The Adjutant General Department will provide staff support to the committee.

GovWin's Take

On September 30, the National Telecommunications and Information Administration (NTIA) awarded Kansas $10,667,169 under the Public Safety Interoperable Communications (PSIC) grant program, a nearly $1 billion grant program created to improve the nation's public safety communications network. However, the money will not be distributed until awardees submit a statewide communications interoperability plan and investment justifications for each of the projects to be funded by the grant allocation. All grant projects should be completed by September 30, 2010. The statewide plan and investment justifications were due on December 3rd. Developing a statewide communications plan as rapidly as possible should be a priority for the SIEC and vendors should engage the committee at their earliest opportunity.

The Troublesome Top Ten: NCSL’s Forecast for 2008

On December 14, 2007, the National Conference of State Legislatures released their annual forecast regarding the issues state legislatures will encounter in 2008. After reviewing the State legislatures agenda, NCSL is confident that state budget concerns, immigration, driver's license standards, financing Americas roads, insuring the uninsured, transforming education, helping families, environmental protection, environmental health, and pension plans will be the top priorities for 2008.

State Budget Concerns – the economy will greatly influence state actions

The economy will greatly influence state actions Slow revenue growth rates are causing state budgets to weaken Health care, Medicaid, and transportation are major concerns that are causing problems in the state budget. Roughly two thirds of state budgets are dedicated to these areas which have yet to improve The decline in the housing status has also created major problems in revenues


  • Immigration affects most area of public policy – employment, education, health care, identification, public benefits, human trafficking.
  • Due to lack of action by the federal government, states approved a record number of bills in 2007 to improve the immigration situation.

Driver's License Standards (Real ID)

  • Real ID, a federally mandated program, requires states to comply with a number of diver's license standards. (Some of these standards have not been finalized.)
  • States are not receptive to Real ID because of the financial burden.
  • Six states prohibited forms complying with Real ID.
  • States will be going in different directions when it comes to Real ID.

Transportation (Financing America's Roads and Infrastructure)

  • The I-35 bridge collapse over the Mississippi River in St. Paul, Minn., reflects the backlog of maintenance needs.

  • Motor tax revenues are not increasing as fast as cost of highways, bridges, nor road expansion.

  • Potential actions include: bridge safety inspection; alternative funding sources, more public private partnerships, giving local government great taxing authority, greater sharing of information on security among states.

Insuring the Uninsured

  • One in six people are uninsured and millions more are underinsured. States must help citizens to get health insurance and make it affordable.
  • States have underestimated the cost; consequently, if states continue as is there will be significant short falls in 2008 in at least21 states.

Transforming Education

  • There will be more attention to grades K-16 and possibly pre-schools.

  • States have identified the need for more consistent courses.

  • States see that higher education is a necessary tool for economy.

Helping Families

  • High on the legislative agendas is helping families with housing policies, tax policies, welfare, and alternative methods to help families pull themselves up.

  • States have taken a particular interest in home foreclosures. There may be a significant numbers of bills introduced about regulation of closing consultants, emergency mortgage assistance, changing requirements to mortgage, attempts to create housing assistance funds to assist home owners or to create incentives to build wealth.

Environmental Protection

  • State legislature has taken the initiative on improving air and water quality.
  • Bills may be passed in 2008 that regulate water usage.
  • State may issue bonds to provide funding for state and local reservoirs and pipelines to store and move water more efficiently
  • Negotiations or modifications of interstate water compacts may also be initiated in 2008.

Protecting the Consumer

  • Outbreaks/recalls of contaminated spinach, pet food, peanut butter, lead toys have caused uproar for consumers.

  • Legislatures can not predict outbreaks or contamination, but legislature must find a way to respond to them quickly and efficiently to make sure citizens are protected.

  • Legislatures may increase regulations on food and consumer goods to ensure the safety of the public.

Pension and Retirement

  • Most state pension funds are in good or excellent conditions; most states stand at a level of 86% funding and are improving. Long term improvement depends on a regular increasing and good economy.
  • Retiree health care is an urgent matter the states must address in 2008. The states are facing a long term commitment to provide retiree health care without the funding.
  • Retiree health care costs will go up for states with a large number of baby boomers retiring in the next few years.

Unfortunately, there is not a simple solution for any of these issues. The slow growth in the economy will limit the States ability to improve conditions. Therefore, States will be forced to be creative while developing their solutions for these issues.

GovWin's Take

  • The slow growth of the economy and the limited budget will cause States to think outside of the box and consider new ways of conducting business. 2008 presents an opportunity for states to make smart investments in IT and decrease overhead cost. Over 20 states have forecasted revenue shortfalls for fiscal year 2009. This will require cuts to planned spending. Vendors who position their solutions as a way for states to save money over the life cycle of that solution will be well poised to win business.
  • Look for Governor's to address these issues on their platforms with their 2008 State of their State speeches. Proposed solutions to these issues will include several technology components. Remember though, Technology for the sake of technology isn't the reason governors are willing to invest in IT projects. Technology is a tool that can be used to improve service delivery, provide greater transparency to citizens, and make government more efficient.
  • Each policy issue identified above will be further examined and discussed in a 10-part blog series on NCSL's top 10 legislative issues for 2008.

State and Local Intelligence Sharing

The trend toward more localized Fusion Centers is under serious scrutiny, primarily due to issues with collaboration with the Federal Government and the Department of Homeland Security (DHS). As intelligence-sharing is further pursued, there will be states and local governments which will resist, making it more difficult to include antiterrorist objectives. In a recent letter, the DHS Secretary Michael Chertoff and Attorney General Michael Mukasey have asked governors to create a single state fusion center which can interface with the federal government and can act as an information gathering center, combining knowledge of terrorism, law enforcement, and homeland security information.

Despite what the DHS believe, fusion centers will require a substantial amount of additional funding for states that don't have databases and records management systems that can provide the federal government with the information they seek. Other problems include lack of security clearance for localities, which prevent local state police the ability to access the information from other states or from DHS databases. Until there is way to provide an equal flow of information as well as guidelines for the intelligence-sharing, the DHS will be left out in the cold.

GovWins take:

  • When states move toward a single information sharing system, there will be opportunities to provide states software to successfully share a wide range of data, from terrorist activity to local crime trends.
  • Larger opportunities will exist for states that do not currently have up to date database systems for sharing existing information.
  • The DHS must also create a model for states to upgrade to Real ID, another way for states to have the most accurate information on its residents.
  • States will continue to receive funding through HSGP and other grants and it is vital to monitor these funds and how states will strategize in order to provide a comprehensive database to protect its citizens.

Georgia’s IT Infrastructure - Restructured

In August 2007 the Georgia Technology Authority (GTA) partnered with Technology Partners International, Inc (TPI) to conduct an assessment of the state's IT infrastructure. The consulting group closely examined the state's IT infrastructure services and operations such as data center services, desktop services, telecommunications and support functions. Following a comprehensive evaluation of Georgia's IT services, it was concluded that Georgia has an "aging IT infrastructure and faces challenges in meeting industry standards and providing appropriate levels of security and disaster recovery."

Moreover, GTA's annual technology expenditure report provides that Georgia's executive branch spends about $617 million in information technology. Therefore, in an effort to relieve the state from millions of dollars in additional appropriations and to ultimately increase efficiency of the state's IT infrastructure, Governor Perdue recently announced in a press release his strategy to consolidate and outsource the state's information technology services.

The Governor's plan charges Georgia Technology Authority to manage the bidding of multiple technology services contracts, which are expected to be awarded late 2008. The restructuring will begin by consolidating the IT functions of 11 executive branch agencies, which represent over two-thirds of the executive branch information technology spending.

The consolidation, although expected to affect the jobs of 1,100 state employees, is also an opportunity for the state to eliminate vacancies that will become available as state employees retire. According to the Governor's press release, in GTA alone "more than 20 percent of the workforce will be eligible for retirement within the next year."

GovWin's Take

  • Governor Perdue's strategy to restructure the state's IT infrastructure echoes the current and future efforts of all state CIOs to make IT consolidation the number one IT priority issue to tackle in fiscal 2008.

  • As anticipated by the state, multiple contracts will be competitively bid and awarded by end of 2008. GovWin has actively tracked TPI's consulting services and sourcing assessment recommendations to GTA. Vendors are strongly encouraged to monitor GovWin's Information Technology Infrastructure Outsourcing Services opportunity report for the release of potential solicitations for outsourcing services.

Funding Cut for Critical Homeland Security and Law Enforcement Programs?

President Bush has proposed a 50% funding cut for critical homeland security and law enforcement programs. Congress has yet to authorize funding for the 2008 budget which proposed a funding cut of more than $3 billion, and the White House's 2009 budget is only in the preliminary stages. Homeland Security budgeted another $3.2 billion for similar programs in the 2009 federal budget, but according to a preliminary leak out of the White House OMB (Office of Management and Budget) the administration has reduced that figure to $1.4 billion.

Drawing criticism from both Republicans and Democrats, the proposal is at odds with some of the administration's own policies. For example, the White House recently promised continued funding for state and regional intelligence "fusion centers" -- information-sharing centers the administration deems critical to preventing another terrorist attack. Cutting the grants would limit money available for the centers. The White House plan calls for massive cuts in areas where Homeland Security officials had sought increases. The department requested $900 million for grants to U.S. cities at greatest risk of attack. But the White House only wants to provide $400 million for that program, to be divided among no more than 45 urban areas. In 2007, Congress gave New York City $134 million -- about a third of the total amount the White House would give to the highest risk areas in the country in 2009.

In addition, the plan calls for outright elimination of programs for port security, transit security, and local emergency management operations in the next budget year. The White House's plan to eliminate the port, transit and other grants, which are popular with state and local officials, would not go into effect until Sept. 30, 2008. California receives a large share of the counter terrorism money each year, and could lose more than $200 million under the White House plan.

While the White House would eliminate at least seven current Homeland Security grant programs, it would create two new grants:

-- Targeted investment grants, which would fund administration priorities such as the requirement that states create more secure driver's licenses, secure credentials for transportation employees and state and local planning for catastrophic disasters. The White House would provide $450 million for that.

-- A $300 million discretionary grant program for terrorism preparedness, prevention and response, which would fund specific projects instead of sending a set amount to each state.

GovWin's Take

At this stage of the game, decisions on budget requests are theoretically in flux. In theory everything is fungible and nothing is really set in stone until the budget is finally passed by Congress and signed by the president by the end of the fiscal year, which in this case would be Sept. 29, 2008.

New IT Projects Get Governor Palin's Attention

Alaska Governor, Sarah Palin released her budget recommendations for 2009 earlier this week. From 2003 to 2007 general fund spending increased 14 percent per year. Governor Palin vows to slow government growth and recommends reducing general fund growth to just 4 percent in 2009. However, funding for several information technology projects were included in the recommendations Palin sent to the state legislature.

Department of Health and Social Services

$3,724,500 (2008 supplemental)

Electronic Vital Record Registration System Replacement -- This information system is currently supporting registration of births, deaths, marriages, and divorces; is more than 20 years old; and is based on computer technologies no longer supported by modern operating systems.

Department of Labor and Workforce Development

$3,700,000 (2008 supplemental)

Business Services Management Information System Replacement -- This system is required for monitoring Workforce Investment Act job training funds. It should be replaced by a more stable, reliable system that will reduce maintenance and operational costs.

Department of Revenue

$2,620,800 (2008 supplemental)

Oil and Gas Production Tax System Enhancements -- Due to changes in the oil and gas production tax, the old data system is not compatible with the new production tax requirements. A new module or sub-system needs to be designed and built to handle the administration of oil and gas tax collection.

Department of Military and Veterans Affairs

$4,000,000 (2009)

Improved Communications for Emergency Response (ICER) Grant Program -- Ensure implementation of the Statewide Communications Interoperability Plan (SCIP).

Department of Administration

$2,500,000 (2009)

Alaska License and Vehicle Information Network Replacement -- The Division of Motor Vehicles license and vehicle information network will be replaced.

Department of Commerce, Community and Economic Development

$1,200,00 (2009)

Licensing Document Imaging and Archival System Replacement -- Replace all licensing and corporation hardcopy documents, integrate digitized information with numerous internal and online systems, and streamline workflow and document access between the Anchorage and Juneau offices.

The complete list of recommended information technology projects is available in the Alaska State Profile.

GovWin's Take

Even though the budget request for 2009 slows state spending from 14 percent to 4 percent, several new information technology projects received funding in Palin's recommended budget. These projects are all aligned with the governor's policy initiatives to make government more efficient and slow government growth.

State’s Fragile Economic Outlook for 2008

The year-end edition of The Fiscal Survey of States published by The National Governors Association (NGA) and The National Association of State Budget Officers (NASBO) reports that in the past few months, state's economic growth has slowed sharply. In addition, fiscal 2008 enacted budgets show states will face tighter fiscal conditions in comparison to their healthy revenue growth experienced during fiscal 2007. The slowdown is mainly due to the continued recession in the housing market and recent record high oil prices which continue to be a threat to the fiscal health of the states.

Although a number of states reported high balances carried forward from fiscal 2007, several states have since projected significant budget deficits; forecasting general-fund revenue and expenditure growth to slow materially in fiscal 2008. According to the report, in fiscal 2007 state general-fund spending grew 9.3 percent, 3 percentage points above the 30-year average of 6.4 percent, and in fiscal 2008 spending is expected to grow only by 4.7 percent, below the historical average rate, confirming a slowing economy. At the time the survey was done, states reported that in 2008, revenue collections from all sources will be higher than projected for twenty states, on target with projections in sixteen states, and below projections in twelve states.

In order to balance budgets, states either cut funding for programs or find other sources of revenue. The report found that "twenty-four states cut personal income taxes by $1 billion in fiscal 2008, but eight others raised cigarette and tobacco taxes by nearly $762 million. In 2008, overall tax cuts total $115 million as opposed to $2.1 billion in 2007.

To validate the report's findings, over the past month about 20 states have reported budget deficits in 2008. California, New York and Florida estimate budget deficits of $9.8 billion, $4.3 billion, and $2.5 billion, respectively. Arizona, Virginia, Michigan, Rhode Island, Minnesota and Nevada are predicting shortfalls of $800 million, $641 million, $500 million, $450 million, $373 million $285 million, respectively. Tighter budgets in 2008 are also anticipated for Illinois, Maine, Wisconsin, Georgia, Ohio, Pennsylvania, Tennessee, New Hampshire, Oklahoma and Kentucky.

GovWin's Take

  • State CIOs are creatively searching for options "to do more with less" by squeezing the most out of technology solutions and IT budgets. State CIO's ranking of top ten priorities for 2008 indicate consolidation is a number one priority to CIOs. Thus, vendors should expect and take advantage of contracting opportunities in data center consolidation, centralization of services, operations, resources and infrastructure.

  • Building relationships with departmental CIOs is more critical now more than in recent years. CIOs are becoming more creative with less and will be partnering with vendors that do just that. CIOs will look for small quick solution providers that have expertise in technologies that further their priorities for 2008.

  • Vendors should look at partnering with vendors that already have strong contracting relationships with states to get a better knowledge of the states' IT needs and optimizing from brand recognition.

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