States Urge Congress to Help with Skyrocketing Tech Costs

An employee at the Indiana Department of Revenue moves her computer equipment from her office at the State office complex in Indianapolis on March 24, 2020, to allow her to work from home.

An employee at the Indiana Department of Revenue moves her computer equipment from her office at the State office complex in Indianapolis on March 24, 2020, to allow her to work from home. AP Photo


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As the coronavirus pandemic escalated, states spent big on information technology as employees started working from home and antiquated systems like unemployment websites needed fast upgrades.

Thousands of employees suddenly working from home. Unprecedented numbers of people logging onto ancient unemployment websites to file for unemployment.

Confronted by the unexpected challenges of the coronavirus pandemic, states are spending more than they ever anticipated on information technology as they buy up equipment and try to rapidly upgrade websites. While some of the $139 billion in aid flowing to state and local governments from the recent economic stimulus package can likely be used on technology costs, groups like the National Association of State Chief Information Officers are asking Congress to include dedicated funding for IT and cybersecurity infrastructure in the next Covid-19 response package.

The money is needed, they say, to help cover the expense of buying thousands of new laptops, adding server capacity for in-demand services, and the increased labor costs for IT departments now working around the clock.

“We’re spending a lot of money that we hadn’t planned to spend on this,” said Denis Goulet, commissioner of New Hampshire’s Department of Information Technology. “My finance director’s not happy, but we have to do it.”

Before the pandemic, Washington state was relatively encouraging of more remote work, averaging between 3,000 and 5,000 virtual private network, or VPN, users per day. As of earlier this month, that number was more than 28,000 and growing, Washington state Chief Information Officer Jim Weaver said.

Other states had only “nominal” remote workforces before stay-at-home orders forced states to allow remote work and have had to scale up virtually overnight, said Doug Robinson, the executive director of NASCIO.

Each VPN connection comes with basic requirements, a software license, for example. They also create vulnerabilities to cyberattacks, and state technology offices are also using extra resources to guard against those.

In requests to Congress, including in an April 28 letter from NASCIO, the National Governors Association, National Conference of State Legislatures and other state and local government organizations, advocates seeking funding for state IT systems have emphasized the cybersecurity component.

Federal lawmakers have begun negotiations on a possible next package, with Democrats embracing hundreds of billions in more aid for state and local governments. But many Republicans have expressed reservations about directing more federal money to states to help with their growing budget concerns. 

As states work to modernize their technology infrastructure, they’re seeing explosive demand for some services, most visibly unemployment insurance. And this has tested arguably one of the most neglected online infrastructures in many states, with reports of crashed state websites continuing as each week more and more laid off workers file to receive financial assistance.     

The latest jobs figures released by the federal government on Friday showed that more than 20 million people lost their jobs in April, with states processing record numbers of unemployment claims.

New Hampshire built its unemployment system to handle up to 6,000 transactions per week, representing the peak of the 2008-2009 recession, Goulet said. That capacity has been adequate until this year, but over the May 2-3 weekend, Goulet said he expected to see 70,000 transactions in a day. That requires more processing power, memory and all the other technology tools the system needs, he said.

“It might be analogous to saying ‘I’ve got a small Toyota Corolla and I can easily drive that on the highway at 70 miles per hour, but I can’t drive that in a Grand Prix race,’” he said.

The unemployment numbers alone would strain state systems that were built for much less capacity. But the $2 trillion stimulus law Congress passed in late March also expanded eligibility for who can qualify for unemployment, such as allowing “gig workers” to apply. This has created another challenge for states to collect added information from applicants, said Todd Schroeder, the director of public sector digital strategy for Google Cloud.

A handful of states have contracted Google for help building a cloud-based system to collect and manage new data fields required under the new law, he said.

The federal law also provides recipients with $600 extra each week, which many states initially struggled to pay out. State technology officers say they’ve mostly met the needs for now, although the COVID-19 emergency is not the easiest time to undertake a largescale transition.

“If we were able to surgically remove bits and pieces and re-platform, we could’ve probably done things a little easier and smoother, but we didn’t have the opportunity,” said Weaver in Washington state. “The last thing you want to do is be in there while you’re trying to respond to the state’s needs.”

But they’re not yet seeing where the money will come from to pay for these increased services.

Many states don’t set an appropriation for chief information officers, Robinson said. Instead, their agencies operate as businesses within their state government bureaucracies, billing different agencies that use their services. As those agencies increase their VPN capacity, for example, there will be an associated cost that information officers aren’t yet billing their states for, Robinson said.

New Hampshire’s IT department has spent an extra $1 million, about 1% of its entire annual budget, on the infrastructure to upgrade internet capacity. Other major line items include a staff of hourly workers that’s now on-duty seven days a week, sending overtime costs “through the roof,” Goulet said.

Weaver said in a letter to the state’s congressional delegation the cost of additional technology resources “is sure to be in the several millions of dollars.”

“The CIOs are essentially eating that cost,” Robinson said. “But at some point, the bill’s going to come due.”

Jacob Fischler is a state policy reporter based in Portland, Oregon.

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