Wave of challenges will continue to break on states’ shores in 2011

With 2011 upon us, it is time to look back on some of the highlights of what was a very significant and impactful year for the states. The past year was certainly one of the more active years for the states when it comes to major changes and challenges that I have seen during my career.

As expected, the states continued to experience the daunting fiscal challenges that were first encountered a couple of years ago with the economic downturn. Just as the states lagged the national economy going into the recession, they lagged the national economy coming back out of it. Although a number of states acted to address budget shortfalls, the availability of American Recovery and Reinvestment Act (ARRA) funding provided many states with an opportunity to defer the tough decisions addressing fundamental structural issues until a later date. I would expect those issues that some states elected to put off for the time being will be front and center in the 2011-12 state legislative sessions.

In 2010, we also saw the most significant policy change of our generation, which came from the federal government to the states: the Patient Protection and Affordable Care Act of 2010. Health care reform will have a significant impact on the role of the states in healthcare, as they take on the role of payer, provider and regulator. Although certain aspects of the legislation are being challenged, and one court ruling has already raised a constitutional issue, it is clear that the states will need to act on health care reform. During my travels in 2010, state leaders raised several themes repeatedly: (1) this is much more complex than we realize; (2) it is going to take much longer to fully implement than we thought; and (3) it is simply going to cost more than Congress contemplated. This will certainly create further intrigue with the 2011-12 state legislative sessions.

And if those issues are not enough, the 2010 elections produced a level of change that has not been witnessed in the states since 1936. Out of the 37 gubernatorial races across the country, we have 26 new governors taking office this month. Imagine a portfolio of corporate entities that were turning over more than half of their CEOs, CIOs, CFOs, division heads and budget and policy staffs all at once! It is a staggering level of change, and the new state leadership teams immediately face considerable challenges.

In the interest of assisting the new state leadership teams, I was pleased to have the opportunity to co-author a new book addressing the management issues and challenges facing new governors, legislators and their administrators. Along with William D. Eggers and Tiffany Dovey Fishman, we have authored Letting Go of the Status Quo: A Playbook for Transforming State Government. Our goal in writing this book was to develop an authoritative guide to the momentous challenges facing state governments today and address issues such as:

  • Putting states on a path to longer term fiscal sustainability
  • Improving educational performance for global competitiveness
  • How to approach and implement health care reform
  • Closing the complex infrastructure gaps facing states
  • Enhancing states’ prospects for competitiveness
  • Overhauling state business operations in the interest of enhanced economy and efficiency and customer service

We also share lessons from leaders who have innovated and redesigned state government while closing their budget gaps. We feature a number of perspectives from prominent leaders including:

  • Jennifer Granholm, Governor of Michigan
  • Mitch Daniels, Governor of Indiana
  • Shawn Connaughton, Virginia Secretary of Transportation
  • BJ Walker, Georgia Department of Human Services Commissioner
  • Dave Fletcher, Utah Chief Technology Officer and NASCIO President
  • Dr. Alice Rivlin, senior advisor to the Brookings Institute, former head of the Congressional Budget Office and President Clinton’s head of the Office of Management and Budget (OMB)

I would encourage you to take a look at www.deloitte.com/us/stategovplaybook

I hope that 2011 is a prosperous and successful year for you, your family and the states as they face many difficult challenges.

Mr. Robert N. Campbell III is Vice Chairman, Principal, Deloitte LLP and is the U.S. State Government Leader, based in Austin.

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