This time of year it’s perhaps appropriate to paraphrase Lord Tennyson, “In December, a state CIO’s fancy lightly turns to thoughts of new IT funding.”
However, the annual state IT budget development process – especially when I was California CIO – always seemed to involve a cauldron for conjuring worthy of the Bard. Consequently, for California and many other states, the size of their annual IT budget often remains a puzzle that is difficult to explain.
The ‘Federated’ Problem
Some 46 states’ annual fiscal years end on June 30 – with New York (March 31) and Texas (August 31) being notable exceptions. As a result, for these 46 states the perennial passion play usually begins in late summer and concludes in December in time for each governor to roll out the newly crafted budget with appropriate pomp and circumstance during state of the state speeches in early January.
Most of the time this process is not a pretty picture particularly for those so-called “federated” state IT models. Federated is a euphemism for unconsolidated CIO governance models, where in the absence of a strong, centrally funded CIO agency, each individual state agency has its own IT budget and resources. Unfortunately, more than half the states fall under this category.
The term “herding cats” is often used to portray this arrangement and the resulting fiscal pantomime as the cast of characters from sometimes hundreds of state agencies scratch their way to crafting their IT budgets. Once completed, these agency IT budgets must then pass through the often jaundiced eyes of the state CIO and state finance director – who is the state CFO and the final arbiter – to make their projects into the state budget for next fiscal year.
California’s process, which I have no reason to think has changed much since my time there in the mid to late 1990s, was so convoluted that the farce theme above may continue to be accurate. Based on my many discussions with other state IT leaders at National Association of State Chief Information Officers events and other venues over the years, unfortunately, California’s process is not an outlier.
In Sacramento each year, 150 or so agencies would submit 150 or so IT project plan proposals for the next fiscal year which my state CIO department was required to review. I tried to convince the state CFO that this was a waste of time, asking, “What if I approved them all, would you fund them all?”
“Of course not,” he replied. “So why do I have to review them all,” I followed. Never receiving an adequate explanation, I told my staff to throw back all the ones with inadequate business cases, then we would review the remainder based on the governor’s priorities, approved legislation and Federal requirements with Federal matching funds.
However, perhaps the most critical criteria for final approval was the financial one. The CFO could not have cared less about the efficacy of a particular IT project, and was long wary of IT’s perennial budget saving claims. To the skeptical CFO, what mattered was where the funding for the new IT project came from. If the proposing agency was requesting additional budget monies from the state’s general fund, CFO approval was a challenge. That was far different than if the new IT project would not require an agency budget augmentation.
Consequently, I had my team review the agencies’ current IT budgets in order to get an idea of agency capacity, and most importantly, projects anticipated to be completed during the current fiscal year. The latter would reveal freed up dollars, so to speak, which were already in the agency’s base line budget, and thus “re-available” for new IT projects.
Unfortunately, this step was a bridge too far in most cases. There was no way to determine re-availability because the statewide financial system, CalSTARS – the brainchild of Gov. Ronald Reagan’s CFO, Cap Weinberger – three decades earlier did not track either IT budgets or spending. However, that first year we muddled through crafting a state CIO-approved enterprise IT budget totaling well over $2 billion.
This budget went next to the finance department where they would get their knives out. Worse, since the IT budgets I approved were often for projects spanning several or more years, the finance department would arbitrarily split up the project budgets for each subsequent fiscal year. And worst, finance would not inform my department about the final IT budgets for the next fiscal year; it was a black hole. So when the final budget came out in early January, there was no way of knowing what the state’s total IT portfolio for the upcoming fiscal year looked like.
Though perhaps apocryphal, the 19th century Prussian politician Otto von Bismarck was said to have remarked, “Laws are like sausages. It is best not to see them being made.” The same may be said about many state IT budgets.
I used to lament the fact that each year the Feds could put out a government-wide IT budget, as revealed by the IT Dashboard with a $97 billion portfolio this year, by agency, by department, by project, and even with agency CIO photos and contact information. Most state CIOs would drool for that level of budgeting.
But Will the New System Work?
Back to my original question about the size of California’s annual IT budget. According to the finance department, each February they did a survey and asked each agency to identify their IT spending for the previous fiscal year. That was the answer in 1995.
Fast forward to 2022. After funding a new $1 billion Financial Information System for California (FI$Cal) project – the most expensive statewide financial system in the U.S., now in its tenth year of implementation, and claimed to be complete – the state will once again be documenting its annual IT spending.
The question is will the state finally be able to use FI$Cal to easily produce an automated statement? Or will they require another agency survey?