Taking an enterprise view of state government

Deloitte LLP is a leading professional service provider to states governments, among many other public and private entities, seeking to make a difference on some of the bigger and tougher challenges facing government. Recently, Bob Campbell, vice chairman and U.S. State Government leader at Deloitte, spoke with CivSource about the stimulus package, budget gaps and the need to take an enterprise view of state government to solve challenges facing state legislatures across the country.

For the last several months, priority number one for many state agencies has been the American Recovery and Reinvestment Act (ARRA) of 2009. The $787 billion dollar stimulus package has been pumping money into state governments, school districts and local municipalities for a little over six months. And although officials at the state and federal level have had problems, many state and federal agencies are on schedule, doling out hundreds of millions of dollars for stimulus projects.

For Deloitte and Mr. Campbell, the Recovery Act not only represents an opportunity to help states with what is arguably the most difficult economic climate they’ve faced in fifty years or more, but it represents a way for them to reassess how it is they perform the business of government.

“We are trying to make a difference more broadly as state and local issue are the biggest issues in these times,” Campbell said in the interview. “The imperative challenges in the economy are a double-edge sword, the quicker one drives funding, implements the change contemplated under the act, the more potential risk and management challenges one is taking on.”

Deloitte bob campbell Particular among the inherent challenges to the Recovery Act, Mr. Campbell says, is the “use it or loose it provision” driving the big-ticket projects, like infrastructure, health IT, and broadband. “It stresses state and local procurement contracting processes; along with new transparency provisions, the financial reporting and public access issues have caught some agencies off guard.”

Despite these requirements, Mr. Campbell felt the federal government was generally being responsive to the states’ reporting and transparency challenges. The Office of Management and Budget (OMB) has released three sets of revised guidance on reporting requirements, as well as held a week-long series of webinars, focused on federal, state, local and vendor reporting procedures. Furthermore, private sector consultancies ranging from Accenture and Booz Allen Hamilton to Deloitte have been facilitating conversations between the federal government and their state and local clients on the particulars of the reporting requirements.

“On ARRA specifically, we are working with a number of states as they build the controls, the award processes, and financial reporting processes,” Mr. Campbell said. “We’ve been retained by several states to provide perspective on some of the more complicated issues facing ARRA.”

July 1 was the beginning of the fiscal year for most state governments, and according to the Center on Budget and Policy Priorities, at least forty-eight states have addressed or still face shortfalls in their budgets for fiscal year 2010 totaling $165 billion. These looming numbers along with other bleak forecasts for 2011 concern Mr. Campbell, not merely because of the enormity of the numbers, but because he feels an opportunity is slipping by most state legislatures.

“The way ARRA funding, in the short term, is backfilling budgets, I don’t foresee the intensity of immediate concern that would otherwise be there,” Campbell said. “Nor do I see a wide-spread focus among state leaders on the more fundamental, systematic tax structure issues that are behind the problems facing state governments.” Specifically, Mr. Campbell mentioned an area of big concern was human services.

“Those in charge of Medicaid, unemployment and health and human services benefits, ought to take advantage of this window,” created by the economic crisis and the Recovery Act, “to drive transformational change and looking at the bigger problems.”

Deloitte hhs reportEarlier this month, Deloitte, the Alliance for Children and Families, and the Hillside Family of Agencies released a report finding the need for human services that addresses issues like child welfare, disability and poverty will soon outstrip conventional resources. The report goes on to say that nearly $1 trillion in federal, state and philanthropic funding is currently allocated to human services programs and projects each year in the U.S., but those funding sources are reaching their breaking point as more families seek assistance benefits. Mr. Campbell said the way human services are paid for has not kept up with the demand of the services.

The report advocates for reform in “balance sheet management” and financing models to encourage integration of services, partnerships among the private and nonprofit sectors, and technology deployment.

“Many state leaders are looking at the problems facing their bottom line,” Mr. Campbell concluded, “but talking about it and doing something are different things.”

To read the human services report, click here.

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