State revenues increase, allow room for small IT increase

State budgets are escaping the pull of the recession and giving state officials more spending flexibility, but that doesn’t mean states have sufficient leeway to invest in new and emerging technology, according to a just-released state budget analysis and forecast for 2015 from Deltek.

A review of state financial figures shows general state revenues collectively increased by 2.3 percent over last year, contributing to five straight years of overall revenue growth for states. The report found that more than half of state budgets are balanced.

The study looked at shifts within state budget categories.

The rate of growth in health care and social services spending, the largest spending category, has slowed to 5.5 percent and is projected to continue growing more slowly than in the past.

Pre-K-through-12 budgets, meanwhile, grew by more than 4.5 percent over the past year while higher education funding grew by less than 1 percent, according to the report. Altogether, education funding accounts for almost 36 percent of an average state budget.

“The rate of growth continues to slow down for health care and social services,” Christopher Cotner, the author of the Deltek report, told StateScoop.

That trend should give states more flexibility to invest in other state services, including in justice and public safety budgets, and create more possibilities to invest in IT to cut future costs and add efficiency, Cotner said.

CIOs “are always looking at mobile and looking to upgrade their LTE and invest in FirstNet,” Cotner said. “As [justice and public safety] budgets increase, it’s going to open up more funding for [CIOs], for some of the projects there.”

Increased attention recently on public safety in the wake of events in Ferguson, Missouri; New York and Los Angeles, could be leading to an increased focus on the public safety budget, especially to allow states to invest in technologies like body cameras.

“Body cameras and personal officer safety technology and the ability to monitor police” could see an increase in the 2015 budget environment, Cotner said. “There’s a little bit of budget growth there, so it may help with some of those technology components to help states manage some of that.”

But just because budgets have a little more room for IT doesn’t mean that states can invest in emerging technologies that won’t increase efficiency and cut costs for states, Cotner said.

“When you talk about trending technology, it makes excellent copy and excellent political points for a CIO, but it doesn’t always bear down into a reality,” Cotner said. “If you take a look at [the Deltek NASCIO priority report], they don’t have a lot of innovative stuff that they can put down as one of their priorities.”

In addition to tight budgets in the past, CIOs could be reluctant to invest limited funding in risky or emerging technologies, Cotner said.

“Usually, states are playing catch up,” Cotner said. “They are behind the curve, they’re not the most innovative. You’re usually going to see the most innovative stuff happening through the higher ed system in the state environment.”

Higher education funding, according to the report, grew by less than 1 percent, while pre-K through 12 funding grew by more than 4.5 percent. Altogether, education funding occupies almost 36 percent of an average state budget, according to the report.

“I think the most innovative education environment is going to be in higher ed,” Cotner said. “The only way to really increase your funding for higher ed is to find ways to be more efficient. What they’re looking for are ways to bring innovative technologies that are going to increase their clout with other institutions, increase their overall rankings and increase the appeal to students who want to come in and have a lot of technology at their fingertips.”