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Data-Driven Ways to Maximize City Budgets Post-Pandemic

For our country to get back on track, it’s time to roll up our sleeves and prioritize essential public services with restricted budgets. Even with federal stimulus funds to state and local government, budgets will be stretched — mayors and their key staff have told us they need to cut their budgets by anywhere from 15 to 40 percent next year. How can public officials bridge these gaps? The best strategy is to use data as a tool — to identify what works, find operational efficiencies and identify the areas with the greatest need.

Government’s responses to COVID-19 have been significantly enhanced where there were prior investments in data. For example, in Boston a multi-year citywide data warehouse project meant Chief Data Officer Stefanie Costa Leabo was able to provide her mayor with a real-time integrated COVID-19 dashboard in a matter of days. And yet, unfortunately, data is not typically front and center for public officials, because, as one data leader said, “there’s no ribbon cutting for a data warehouse.”

Recently, we surveyed chief data officers in 20 U.S. cities and asked what big trends they noticed in 2020. Their answers presented a contradiction: 1) massive increases in uses for data; and 2) less funding for the infrastructure that creates value from that data.

As Mike Sarasti, chief innovation officer for Miami, said, “The appetite for data has tremendously increased and data insights are becoming the norm. This presents both opportunities and challenges to city staff. We have the support and enthusiasm to evolve our data hub and expose the data through internal and external user-friendly interfaces.” Yet Philadelphia CIO Mark Wheeler worries that “budget reductions will eliminate new initiatives and impact some ongoing operations.”

For a public official or budget officer to lead through the cost-cutting years looming years ahead, they should elevate and expand data operations, not diminish them. This ethos is well described by Denver CDO Paul Kresser: “I’m anticipating an even greater demand for data services in 2021 as our agencies look to leverage data to help compensate for reductions to their operating budget.”

City budget officials who consider all expenses the same, without adjusting for those expenditures that produce value, miss the big opportunity. In fact, because of budget, data offices need to expand and become central players in the recovery effort. The consulting firm McKinsey estimates that, globally, government could capture $1 trillion of value by using data analytics both to identify revenue not collected and to recoup payments made in error, and estimates that using data analytics to eliminate waste, fraud and abuse in government can have returns as high as 10 to 15 times their cost. We have seen in our own network of data leaders that the return on investment can be as high as five to one when data teams solve public problems.

To make data the center of pandemic recovery efforts, states, cities and counties need to consistently invest in data capacity — the talent and resources internal to government — and, just as important, foster a culture that respects the power of data to unlock insight. In planning for next year’s budgets, public officials should be able to answer the following five questions in the affirmative:

  1. Is there a public scorecard for each project that shows expense and return both measured in terms of customer service and dollars saved?

  2. Does the city have a predictive analytics component in its statistics program?

  3. Does the city make widespread use of layered data and spatial analytics in order to identify trends, causal relationships and different results across the city?

  4. Does the city use data to identify revenue opportunities either by a service area or other important variable? Or does the city use pattern recognition to identify areas in need of revenue audits, like examining trends in unpaid fees?

  5. Does the city have an internal data literacy initiative with its employees that increases the daily use of data and applications such as GIS that will produce a broad flow of regular savings?

These questions can help governments increase their commitment to data-informed and results-oriented service delivery, and can prioritize department projects and requests for additional funding that will produce better service delivery. This can improve government both in the recovery from the pandemic and for years to come.

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