Perspectives from Partners: Nat'l Assn of State Budget Officers (NASBO)

By Yejin Jang posted May 16,2016 12:50 PM


In this month’s Perspectives from Partners, we interviewed John Hicks, executive director of the National Association of State Budget Officers (NASBO).

About NASBO: For over 70 years, the National Association of State Budget Officers (NASBO) has been the professional membership organization for state budget and finance officers. As the chief financial advisors to the nation’s governors, NASBO members are influential decision makers in state government. They guide their states in analysis of budget options and formation of sound public policy.

NASBO exists to support its members in their critical job functions by:

  • Providing information and training on critical state fiscal issues and budget processes
  • Responding to member research inquiries on topics impacting states and their budgets
  • Organizing national meetings where members can discuss critical issues and share best practices

Q: What is the role of budget directors?

The role of the budget director in all 50 states is to be the governor’s primary staff that help coordinate the development of the governor’s budget recommendation made to their legislative branch. We have 30 states that budget on an annual basis and the other 20 states have a biennial budget cycle which means they act on the budget every two years. State budget officers are responsible for collecting and compiling all fiscal information from the various parts of state government in terms of their programming and financial needs, requests for additional resources, and plans to use their existing resources.  The state budget office plays the gatekeeper on behalf of the governor in order to synthesize, organize, and display the type of information each executive needs to put together a budget recommendation. They play a central role of communication with the governor on budget issues affecting all state agencies as well as our elementary and secondary schools systems and institutions of higher education.

Q: Could you describe the fiscal state of the states?

The fiscal state of the 50 states in aggregate right now reflects a moderate, slow growth trend. It is positive to say that it is a growth trend as we still vividly recall the effects of the great recession where in two consecutive fiscal years, 2009 and 2010, state revenues actually declined. The recovery of the economy has mirrored the recovery of state budget revenues in that there’s been modest growth over the total of 50 states but it is a bit of a mixed bag.  Currently, energy states are suffering some fiscal difficulties primarily due to the decline in oil and natural gas prices. There are a handful of states that have a fairly heavy reliance upon those resources as part of their state’s general fund – the primary fund of tax revenues collected by each state. So those states are contending with revenue shortfalls in fiscal 2016, and as they put together next fiscal year’s budget for fiscal 2017 they are also dealing with lower revenues or lower revenue growth.

In general, we have had six straight years of increased general fund tax revenues among all 50 states. It is expected in fiscal 2017 that we will have a seventh year of revenue growth.  The rate of growth in the last two years was better than in recent past but we’re returning to a slower revenue growth trend, something on the order of under three percent for the next year.

Q: CIOS can work on long-term projects. What advice can you offer to CIOs as they try to get long-term projects off the ground? How should CIOs work with the budget director?

Long term information technology projects have become a critical element of states’ capital spending. The role of the CIO can be important not only to state budget offices but the departments and agencies for whom these long term projects will benefit.

The CIO and their central government agency can provide great advice and counsel on long-term projects as it relates to the front end design, the type of technology, providing assurance that it is consistent with the strategic technology policy in each state, and that they undergo an appropriate project management structure. The CIO and their agency can be relied upon by other central government agencies to provide the framework through which those departments and agencies implement those long term projects.

Budget officers see CIOs as partners in playing an assurance role. Many states have taken on the policy of an independent verification process as large long term projects are implemented. From a strategic standpoint, by listening to CIOs budget officers understand the relationship that long-term projects have to the larger strategic plans of IT within the government. The functionality that is achieved by long term projects are great but the method by which they are delivered and the total cost of ownership of those projects over the long term are very important to state budget officers and we really rely upon CIOs to give us that advice and counsel.

Q: If there are unanticipated changes or fees to long term projects, what advice would you offer our CIOs?

In the land of capital projects, whether they be IT projects or new buildings, you always have the risk of a project not coming within budget or within schedule. One of the key features of contending with unanticipated changes to either cost or schedule is to have a good executive monitoring process through which the CIO can be the communicator to other portions of the central state government structure. So “no surprises” is my best piece of advice and the means by which that can be communicated should incorporate an ongoing structure. I’ve seen that work best where there is a committee or a group at the central government level that is hearing and receiving the information by both the CIO and the affected agencies and departments.

I would also advise that CIOs keep up with the projects even if they are going well – on budget and on schedule; give assurances that you’re watching and you’re reporting, in an objective way, the status of those projects. That gives decision makers a better foundation to react to other project downsides that may happen, whether cost or schedule, because those decision makers are better prepared to think through the options and the timelines associated with those options when deciding how to react.

Q: How do state budget officers view cybersecurity?

Cybersecurity is fairly a new term to state budget officers. But you read the newspapers and hear the news of cybersecurity attacks and other problems associated with data getting to places it ought not to be; so generally, I think everyone is more acutely aware of the risks associated with the lack of adequate cybersecurity. For that reason alone CIOs should have the ear of the state budget director and other decision makers about what the best approaches are to mitigate against those possible risks and attacks.

While state budget officers may not understand the “how,” they really rely on the CIO to describe for them the kinds of things that need to be done to ensure the protection of our data and defend against cybersecurity attacks. The budget director’s door is open to hearing the justification and the financial basis where additional investment is necessary as recommended by the CIO. State budget officers are not IT experts, they rely on the CIO and its agency to play that role on behalf of state government. The importance of cybersecurity is easily understood simply by looking at what bad things have occurred in other jurisdictions and understanding that state governments are owners and protectors of a wealth of personal information. It’s really about the method of approaching this problem. CIOs play the role of the expert in government in describing what needs to happen so I think everyone is attuned and interested to know what needs to be done. 

And lastly I would recommend, an early rather than later timeline on educating state budget directors on the things that CIOs and CISOs are currently doing on the issue of cybersecurity and what new and additional things may need to be done in the near term to assure the greatest protection possible.

Q: NASBO recently published a report on the methods and tools on performance data. Can you tell us about this and how it came to be?

State budget officers have had an interest in good information on which to base good public policy decisions. So often those public policy decisions are filtered through the state budget. For that reason, performance management and performance information has always been of interest. NASBO has produced a report, “Investing in Results”,  in concert with some partners to focus on the methodologies and tools that are current and in some cases, leading edge that assist the decision making process by results-based, evidence-based, and performance-based information.

The report highlights experiences and lessons with examples that reflect what we consider best or better practices. It reflects how some states are utilizing performance measurements and results not only in their budget resource allocation process but in the implementation and management of state programs and policies. NASBO has put together good examples of our peers that are utilizing various approaches – and there is a whole spectrum of tools and methods – from efficiency methods to effectiveness methods that are coming to the fore. I think it’s a good trend that there is an expectation both within executive and legislative branches that new investment, additional investment, and sometimes even the current investment needs to be founded better in performance results.  These performance measures include not only the things we can count like inputs and outputs but also include policy outcomes that try to reflect a better allocation of resources to achieve better results. 

Q: What are state budget officers talking about these days that might be new or haven’t heard of before?

There are very few new issues but the opioid and heroin epidemic is newer and one in which all levels of government – local, state, and federal – are contending with. This is a problem and states are really talking about that. Governors and general assemblies are trying to figure out how to address it in a very useful way.  The tragedy of opioid and heroin abuse, particularly the number of deaths that have been associated with that substance abuse follows a past of other substance abuse issues. Since then states and localities have done a better job of increasing the capacity of substance abuse treatment, of reforming their corrections and penal code structures to emphasize more treatment over punishment and incarceration. Opioid abuse is a newer chapter in substance abuse but it is benefiting from state and local governments, and nonprofits having a better orientation toward treatment.

Pension liability while not a new issue is more emphasized now because the size of liabilities in some jurisdictions is growing. Some of that is related to what happens with investments and some of that is related to other attributes of the pension system; they continue to be on the forefront of many states’ agendas.

Another area where we’re hearing more about is state government and the education sectors’ labor issues, by that I mean a tighter labor market. The combination of baby boomers retiring and an improved economy is resulting in government workforce issues that are proving more difficult for recruitment and retention. In the area of public safety, particularly in corrections, workers have been difficult to recruit and retain.  We’re hearing from a number of states who are having similar issues with elementary and secondary teachers. Tighter labor markets are something we haven’t talked about in a number of years and we’re hearing more states associate financial solutions as a part of the answer to having sufficient number of correctional officers in our juvenile and adult institutions and being able to sufficiently address our schoolchildren in terms of teacher student ratios.

NASBO Resources Referenced in this Article:

Methods and Tools to Use Performance Data at the State Level: Key Terms, Definitions and How They Connect

Fiscal Survey of States (Fall 2015)

State Expenditure Report (Fiscal 2013-2015 Data)

Summaries of Fiscal Year 2017 Proposed Executive Budgets

Budget Processes in the States