Investing in core functions: Pennsylvania’s FY 2014 budget spurs economic growth

With an overall increase of just more than 4.5 percent, Pennsylvania Governor Corbett’s $66.7 billion fiscal year (FY) 2014 budget shows signs of increasing economic strength for the commonwealth. Major reform initiatives include selling the state liquor system to invest in education, modernizing Pennsylvania’s transportation infrastructure and overhauling state pension systems. The sale of the state liquor system is anticipated to generate $1 billion and will fund the Passport for Learning Block Grant for school districts that can use the funding to enhance access to science, technology, engineering and mathematics (STEM) programs as well as for other initiatives.

Table 1: Total Fiscal Year Budget 

 

Notable departmental budget increases from FY 2013 were seen by the Public Utility Commission at a whopping 408 percent, Conservation and Natural Resources (30 percent increase), Public School Employees' Retirement System (27 percent increase), higher education (24 percent increase) and the Board of Probation and Parole (21 percent increase). The FY 2014 budget also reintroduces Capital Bond authorizations totaling approximately $1.225 billion. The capital budget funds acquisition, design, construction, and renovation of new or existing commonwealth buildings, facilities or improvements. Departments with decreased budgets from FY 2013 included Executive Offices (20 percent decrease), Labor and Industry (13 percent decrease) and Military and Veterans Affairs (11 percent decrease).

Table 2: Total Fiscal Year IT Line Items Budget

Overall spending on information technology projects increased 15 percent from FY 2013, much of which was designated toward general departmental IT modernization efforts. New funding is provided for shared service delivery under the Office of Enterprise Technology Services, which provides email, help desk operations, the statewide telecommunications network, geographic information systems (GIS), security, and technology support functions to commonwealth agencies. The state is also putting $7.7 million into the Technology Innovation Investment Fund for enterprise and agency-specific innovation initiatives. As part of the Governor’s Innovation Office, specific priority IT projects in FY 2014 include the streamlining of print, imaging and mail operations, and implementation of electronic grants processing, which are expected to save the state $7 million and $50 million, respectively. 

Increased funding for Department of Public Welfare information system projects (42 percent overall increase over FY 2013) is provided for general information systems (25 percent increase) as well as Medical Assistance (208 percent increase), the Supplemental Nutrition Assistance Program (SNAP) (28 percent increase), and child support enforcement information systems (14 percent increase).

The statewide public safety radio system, known as PA-STARNet, received a slight bump in funding from FY 2013 (5 percent increase). From the Executive Budget, page E41.9: “PA-STARNet is one of the largest statewide public safety communications systems in the nation, connected by an extensive microwave network, carrying voice and data communications for public safety and emergency response to over 97 percent of the commonwealth’s land area.”

Table 3: Total Fiscal Year Budgets by Vertical

 

From a vertical standpoint, FY 2014 spending remains relatively consistent with FY 2012 and FY 2013 numbers. The increase in health care (5 percent increase over FY 2013) can be attributed to expansion of services for disabled and older Pennsylvanians and children, and increased funding for state health centers. According to Acting Secretary of Health Michael Wolf, “In Pennsylvania, two million people live in communities that the federal government has designated as medically underserved.”

Primary and secondary education increased by 5.5 percent over FY 2013 and represents the first increase in basic education funding in two years. The budget includes a $90 million, or 2 percent, increase in basic education funding, the first increase in two years. This funding will bring the commonwealth’s investment in basic education funding to nearly $5.5 billion, the highest level of state funding ever provided to school districts.

Justice and public safety funding also increased 5 percent over FY 2012. According to the Budget in Brief, “This budget provides a total of $792,000, including $300,000 to provide Global Positioning System 24/7 monitoring capability for 195 offenders, and 8 positions for case management.”

Analyst’s Take

Pennsylvania’s executive budget shows signs of increasing economic strength for FY 2014 and beyond. The Governor’s Advisory Council on Privatization and Innovation has identified programs that would benefit from deeper exploration and redesign, marking a positive outlook for vendors seeking opportunities in the state. The streamlining and redesign initiatives of many departments indicate upcoming opportunities for vendors to showcase solutions and win business in the state, similar to those previously implemented for enterprise services including print, imaging and mail operations, and electronic grants processing. Pennsylvania’s focus on continued economic recovery will rely on these strategic enterprise technology solutions.

Vendors in the health care space will find opportunities as the state expands long-term care services and the provision of home and community-based services to thousands of individuals on the waiting list. The state will also seek technology solutions to modernize state health centers, improve staff mobility and improve care in underserved areas. Telehealth solutions, both hardware and software, that improve connectivity between caregivers and patients will be required to achieve this goal.

The education sector will increasingly look to innovative technology solutions that transform the delivery of information to today’s students and help them prepare for life beyond the classroom. Similarly, the governor will increasingly fund technology initiatives that improve law enforcement efforts as the state reaps the benefits from past technology investments in the justice and public safety space, such as the Commonwealth Law Enforcement Assistance Network (CLEAN) upgrade implemented in 2012.

Furthermore, departments and program areas with historically minimal or lower investments in technology, such as environment/natural resources and economic development and regulation, may begin to increasingly seek technology solutions to improve efficiencies and streamline operations to more closely align with the governor’s initiatives. Vendors may find niche opportunities in these areas and will likely see continued increases in the IT budgets of these verticals.

With technology investments spanning all vertical areas, vendors will not be hard pressed to find business in Pennsylvania. With the recognized benefits of past technology investments paired with the turning economy, these investments should continue to grow in the coming years. Building solid business relationships now will only benefit vendors who wish to conduct business in Pennsylvania in the future.