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GCN Home > 09/20/04 web stories

States need to budget for outcomes, consultant recommends

By William Welsh, PostNewsweek Tech Media

NEW ORLEANS—The continuing tight federal budget demands that states make fundamental changes in their budget processes and rely more on IT, author and consultant David Osborne says.

States should switch from a cost-based approach to an outcomes-based approach, Osborne said today at the National Association of State Chief Information Officers’ annual meeting. A cost-based budget is built on last year’s spending, an outcomes-based budget is tied to desired results, said Osborne, senior partner with the Public Strategies Group consulting firm of St. Paul, Minn.

State governments “fell off a financial cliff” in 2001, not necessarily because of economic problems but because of outmoded budget processes, he said.

A switch is necessary because the federal government will make more mandates but will not provide the money needed to pay for them, Osborne said.

If states begin to budget for outcomes, greater demand will be created for IT, he said, because IT can be a cost cutter rather than a cost driver when used properly. Washington state recently used an outcomes approach to balance its budget, make more informed buying decisions and improve performance, he said. The upshot, Osborne said, was more trust among taxpayers.

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