Smaller State Budget Amid COVID-19 Reflects Rethinking of Government

California's new 2020-2021 Fiscal Year state budget was crafted as the state's economic fortunes virtually reversed themselves when the COVID-19 pandemic took hold this spring. But, as e.Republic officials said at a recent Techwire Industry Briefing, the budget still offers opportunity to the tech and innovation sectors, and reflects a rethinking on how government could be transformed.

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The COVID-19 pandemic continues to hit California hard, but even a dramatic reversal in the state’s economic fortunes shouldn’t halt all tech and innovation work.

The state has managed to avoid “widespread” cuts to public services and education by leaning on reserve funds, borrowing, limiting corporate tax revenue and delaying future payments to schools, Joe Morris, e.Republic* vice president of Research, said Wednesday during a Techwire Industry Briefing on the “2020 California State Budget Review.” The $202 billion 2020-2021 Fiscal Year budget — about 6 percent smaller than last year’s model — “anticipates a reduction of operations” by about 5 percent over the next few years; and in an immediate response to COVID-19, Gov. Gavin Newsom hit pause on non-essential contracts, purchasing and travel similar to the state response during the Great Recession. But in a time when residents already have been ordered once to stay at home — and could be again — technology and innovation have a true part to play.

“The state itself is saying, ‘Hey, based on what we’ve experienced over these last four to five months or so, we too are beginning to modernize our business processes and rethink government.’ Rethink how government can be transformed,” Morris said. Among the takeaways:

• Telework is likely here to stay across “a number of agencies,” Morris said. That change in stance should also bring a reliance on flexible work schedules, a reconfiguration of office and work spaces and “maybe a reduction of total square footage of leased office spaces.”

“I think there’s going to be a growing percentage of the government workforce in this state that’s not coming back at all into the physical office,” Morris said in a conversation with e.Republic Executive Vice President Alan Cox, publisher of Techwire.

• Mission-critical projects, whether IT or otherwise, “have much more likelihood” to continue — including, naturally, those directly linked to COVID-19. There’s a “major funding effort” around COVID-19 contact tracing and testing, with the federal government providing more than $600 million to the California Department of Public Health in support. This, Morris said, is a “partnership” with the University of California at San Francisco and Los Angeles to launch an online training academy to create a skilled contact tracing workforce. The administration has also debuted California Connected, aimed at enlarging county-level testing programs; and it has stood up, its one-stop COVID-19 resources portal.

Elsewhere in the budget, the state has made a one-time increase of $120.2 million for a COVID-19 Response Block Grant, to help community colleges support student learning and guard against learning loss during the pandemic. It will provide $10 million from the General Fund in FY 2020-2021 and 2021-2022 for the California Health and Human Services Agency to improve IT in caregiver resource centers. And there’s $377,000 for an “electronic health-care data exchange process,” according to a slide presentation, for transferring patient health records of inmates “transitioning to county custody”; and $9.3 million for the California Department of Social Services to stand up an “early learning and care data system.”

• Kindergarten through 12th grade education is a vertical “we right now have trending upwards,” and which spends $13 billion to $14 billion annually on technology, Morris said. The budget funds a number of initiatives to combat learning loss and it’s bolstered by the federal CARES Act, which provides more than $13 billion through different funding streams — all largely targeting distance and remote learning. In the budget, there’s a one-time $5.3 billion investment for local education entities to address learning loss due to COVID-related school closures; $45 million in grants to local education partners including counties to expand community schools and access to health and social services for “high-needs students”; and $6 million for UC Subject Matter Projects educator professional development around distance learning and learning loss. There’s also $750,000 for the Sacramento County Office of Education to develop distance learning and instructional guidance in math and English; and for statewide library broadband services augmentation; and $170,000 ongoing from the General Fund to participate in the Corporation for Education Network Initiatives in California (CENIC).

“You are seeing this collision of trends, right? Online learning, distance learning, contact tracing. Something that wasn’t in our lexicon in January or February,” Morris said.

• Cybersecurity, he said, could be of even “greater concern” now, with government employees working at home on networks their employers can’t control. To that end, the budget offers more than $11 million for state departments to enhance critical cybersecurity infrastructure, including the creation of a full-time Joint Incident Response Team targeting the prevention and mitigation of cyberattacks.

• Disaster preparedness also gets some funding. There’s $2 million in the budget from the General Fund for the California Governor’s Office of Emergency Services (CalOES) to improve the tracking and predicting of fire weather systems and enhance the situational awareness of fire threat conditions in real time; and there’s $4.6 million from the General Fund and $7.6 million ongoing for the California Department of Forestry and Fire Protection (CAL FIRE) to implement its new wildfire prediction and modeling technology designed as part of Newsom’s Request for Innovative Ideas. The budget also provides $17.3 million to CalOES for earthquake early warning.

• Justice systems, too, receive some funding for technology projects. This budget earmarks $25 million from the General Fund in FY 2020-2021 and 2021-2022 for the Judicial Branch to modernize court operations with the goal of boosting efficiency and increasing online access to court services. The California Department of Public Safety will receive $2.9 million to strengthen cybersecurity around patient health records. And the Commission on Peace Officer Standards and Training (POST) will receive $10 million from the General Fund to create a distance learning grant program; enhance the function of its learning portal, a secure website; and move distance learning courses and videos off legacy.

*e.Republic is the parent company of Techwire, Government Technology, Governing and the Center for Digital Government.

Theo Douglas is Assistant Managing Editor of Techwire.