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7/9/2002
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State CIOs Frustrated By Federal Funding Process

States, like many other enterprises, are developing systems in which agencies share IT resources. But a federal rule prevents funding for specific projects if the IT system also is shared with other programs.

The manner in which the federal government funds some state IT projects is at odds with the way states are implementing common IT architectures back home, state CIOs complained to a congressional panel on Tuesday. Specifically, the IT systems bolster state-run social-service programs, including food stamps, child welfare, child-support enforcement, and Medicaid.

States, like many other governmental and nongovernmental enterprises, are developing systems in which different agencies share IT resources. But a three-decade-old federal rule known as the Advance Planning Document or APD process that regulates the distribution of U.S. dollars prevents funding for specific projects if the IT system is shared with other programs.

"It's clear that the ADP process strongly discourages using federal program funds to create common IT infrastructure," Kentucky CIO Aldona Valicenti said in testimony prepared for the House Subcommittee on Technology and Procurement Policy. "Although it frequently costs less to the original program than creating a separate, standalone IT system, it's precisely because it would benefit other programs that it's often termed unallowable."

The state CIOs also complained that the APD process requires them to get approval from more than one agency, which often slows the approval process and, in at least one case, caused a state to seek alternative funding. New Mexico last year sought federal funds to help merge a system to determine eligibility requirements for nine human-services programs. After an initial APD was rejected due to different and often contradictory requirements from the various federal agencies, the state decided to scale back the consolidation project from nine to three programs. The second draft also was rejected. Now, New Mexico is seeking private money for the project.

The New Mexico example seems to be an exception. In nearly 90% of cases, the federal government responded to state requests within 60 days, testified Dave McClure, director of IT management issues at the General Accounting Office, the investigative arm of Congress. And even when it took longer, he said, the delay had "no negative impact on state IT projects."

In her testimony, Sherri Heller, Health and Human Services' commissioner of child support enforcement administration, defended the APD process, saying it assures fiscal accountability for the nearly $2 billion a year the federal government grants states for these IT programs. But, she said, the federal government wants to work with the states to address their concerns. "Any approach to more comprehensive reform should achieve an appropriate balance between federal oversight and state project management including, but not limited to, financial responsibility," Heller said.

Yet one effort by the two departments with primary oversight for awarding money for IT systems that support state welfare services--Agriculture and Health and Human Services--hasn't produced any solutions. In June 2000, the departments established a workgroup to respond to state complaints that the APD process was burdensome. The workgroup quickly determined any changes required approval of federal regulators, but the committee hasn't pursued any regulatory changes.

Why the lack of action? McClure suggested the process slowed, in part, because of changes in the leadership brought on by a new administration. Also, he said, "there's no consensus among the federal partners about the direction to take in improving the federal process."

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