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2014 Outlook on State Government

Interview with Jessica Blume, Vice Chairman, U.S. Public Sector Leader, Deloitte LLP

States have shown their ability to overcome seemingly insurmountable challenges. Innovation is not new to government, but it is something that needs to constantly be fostered, according to Jessica Blume, principal and Public Sector Industry Leader, Deloitte LLP. Read on for her perspective on the opportunities 2014 brings for state government leaders.

What are the biggest challenges facing state governments in the coming year?

The main challenges facing state leaders are related to health-economic health and health care for citizens. The last several years have been particularly difficult on the fiscal front for states. With the slower than expected recovery, states experienced decreasing tax revenues and increasing demands for health and social services. With the federal sequestration and ambiguous information on federal program priorities, states are dealing with uncertainty of federal funding. This impact will likely be felt by the states in several areas, specifically with Medicaid expansion. Furthermore, pension and retirement funding are competing for state dollars which compounds the fiscal challenges of the states.

And of course, there is health care. Some states embraced the Affordable Care Act, with several states implementing their own state exchange, while others opted to follow the Federal marketplace. Regardless of which path they chose, states have complex work ahead that involves redefining their role in the health care system. They will need to collaborate with the federal government, the private sector and the non-profit sector in unprecedented ways.

Last but not least, there is government talent. Complex program expertise is disappearing as seasoned workers retire without successors in place. Now is the time to rethink recruitment and retention. Concentration on providing mission-driven opportunities, accommodating schedules and flexibility in assignments could go a long way in attracting the high-quality, innovative, skilled next generation of workers.

What do you see disrupting “business as usual” in 2014?

Gubernatorial elections will impact states in 2014. There will be 36 elections in November with 32 governors eligible for re-election. Current governors looking to keep their jobs will be aggressively pushing agendas and driving initiatives to completion. Hopeful candidates will be shining a spotlight on current administrations, looking for opportunities to differentiate themselves. Regardless of election outcomes, the end of a governor’s term brings a wave of cabinet level transitions which impact state agencies, agendas and employees at all levels.

We can expect that the evolution of technology and social media will continue to impact government. For years we have been talking about using mobile technologies and self-service tools to improve government efficiency and citizen access. It’s a great idea, no question, with long term potential benefits. We are starting to see citizens become an extension of government — an augmentation of the workforce — and another group that needs to be appropriately trained to use systems and who need to understand more complicated processes.

The exponential growth of mobile device use and government data collection presents an important opportunity for government to improve customer service and decision-making. It can also present a serious security risk as increasingly sophisticated hackers target government-held information. A breach is disruptive on several fronts. They pull resources, energy and focus from mission-critical programs and projects, often compromising timelines and initiative success. Preventative measures are essential. But clear, actionable response and recovery strategies are just as important to stemming the impact of a breach and not losing focus on other priorities.

Health care will continue to challenge business as usual as the role of government shifts dramatically and the impacts of the Affordable Care Act come to light. Forward-looking leaders will look at the large amount of data that is being collected and transform it into information to predict and improve health outcomes, increase accountability of stakeholders (both providers and clients) and manage costs.

What are some of the steps state government organizations can take to foster innovation?

States have shown their ability to overcome seemingly insurmountable challenges. They have operated under extreme financial strain and managed to balance their budgets. They have led stakeholders through the largest health care transformation in decades, dealing with changing rules and aggressive timelines along the way. They have developed creative strategies to bring more economic development opportunities to their states. Innovation is not new to government, but it is also something that needs to constantly be fostered.

Looking ahead, states should continue to access federal funds — while they are still available — to develop sustainable technical infrastructures for their health and human services programs. Technology can help states and their stakeholders share information across programs, deliver better outcomes and help people move toward self-sufficiency. States should also look at creative job training and re-tooling programs through public-private partnerships that are designed to help people become employable and meet the needs of the private sector.

An opportunity exists to examine streamlining operations for efficiency and effectiveness. With the ongoing struggle of meeting demands with shrinking budgets, states must do more with less. Shared services operations are often a helpful solution for organizations looking for innovative ways to reduce costs and maintain operations.

Mobile technology, social media and program analytics are powerful tools — especially when applied together. They can be used to connect government to citizens, but also they can also be used to cultivate innovation, enhance efficiency and deliver better results.

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

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