Pandemic Recovery Calls for Reassessment of Cost Optimization and Efficiency for State Government, According to Report from NASCA and KPMG

Thursday, May 5, 2022

Despite gains in the recovery from the economic impacts of COVID-19, state governments still face uncertainty, disruption, and a volatile labor market. They continue to  proactively allocate unprecedented federal and state stimulus funds to bolster the recovery and invest in the future. What strategies can state governments use to respond to these challenges, while having to adapt to a new model of public service as a result of the pandemic? The National Association of State Chief Administrators (NASCA) and partner, KPMG, found that the digitalization of business, cybersecurity and building a modern workforce are all areas for improvement.  

The new report, “Driving Cost Optimization and Efficiency: Recommendations for State Chief Administrators,” highlights the five key priorities that state Chief Administrators should consider when addressing a turbulent labor market. 

Government is clearly moving toward a more citizen-centered, digitally enabled, data-driven, agile, and digitally connected future. In order for governments to achieve this vision, their operational approaches should be designed to enable and support it. According to the NASCA’s analysis of state Chief Administrative Officers (CAOs) in 2021, budget savings and cost efficiency ranked among the top ten priorities of state CAOs, with a specific focus on determining where spending is most effective, budgeting and cost control, and allocating funding to deferred maintenance.

As a result, NASCA and KPMG developed the State Collaborative, aiming to identify practical, tested solutions that state executives can use to address budget constraints, drive efficiencies, and optimize costs, based on strategies that advance modern government goals. 

The reader will learn how NASCA-member states have applied many cost optimization and efficiency strategies, including leading practices and overall efficiency and cost optimization outcomes.

In due course, future-focused CAOs embrace the technologies, work models, processes, and innovations necessary to create responsive, citizen-centered, and cost-effective state government operations.  

The State Collaborative identified five key priorities:

  • Build a modern workforce – Prior to making an informed decision on a new job opportunity, skilled individuals look closely at a potential employer's brand and culture, choosing modern, digitally-enabled, and socially conscious environments that reflect their values, aspirations, and expectations.
  • Accelerate digitalization – Although there are obstacles, there is an opportunity to use the impact of the pandemic to drive government reform by leveraging digitalization for savings and value.
  • Enable more efficient operating models – Processes and organizational functions can be streamlined, realigned, and enabled to meet the evolving expectations and value propositions of the modern government, thereby supporting strategic objectives and reducing costs and avoiding unnecessary expenditures.
  • Enhance trust – Ransomware attacks have hit payroll systems in the past, causing many agencies to come up with contingency plans to pay their workers, including switching to paper timesheets and checks. Thus, chief operating officers need to collaborate with cybersecurity leaders and incorporate cyber risk scenarios throughout their organization.
  • Extract greater value from state assets – In order to achieve maximum employee productivity and efficiency while minimizing costs, governments are answering five strategic questions: 1) do they need to reduce their real estate footprint; 2) what assets should be prioritized to achieve this; and 3) where are the opportunities to achieve these?

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