A (3:22)

So this is something I've been thinking about lately because generative AI has been around for a few years now. To what do you attribute the, you know, there's been interest since ChatGPT opened to the public, but I feel in the last six months the interest has really accelerated. Do you have any insight into why that is in the, at least in state IT offices, the, you know, I

B (3:49)

think a number of kind of interrelated activities, but I think for the most part it's the broader, you know, the broad adoption outside of pilots. So and even broadening the pilot adoption within the agencies. So it's out there, you know, in line of business agencies we've seen a number of states that expanded that to broader constituencies. And then we've also seen the actual production level. So if you look at the data that we put out six months ago, we had 90% of the states reporting that they had, they had pilots and proofs of concept. They've moved quickly into, you know, production. So you've seen meaningful beyond, I would call that beyond chatbots and virtual assistants, which will be predominant utilization. So that's been part of it. Obviously it's embedded in almost every tool now that states are bringing in from their supplier community. So in addition to the collaboration and the document production tools, you now have Gen AI capabilities in whom you hear that phrase powered by AI. Well it's in all those platforms, all those software as a service platforms that stints are using. So I think it's been pretty, like you said, pretty widespread. But also the acceleration comes from that and the fact that 90 plus percent of the states now have adopted some type of acceptable responsible use policy. They've got a framework, they have task forces, they have a lot of activity. So moving, kind of moving this forward so that, you know, we've seen that the kind of discussions that we have had. So you look at kind of this is clearly we've been talking and actually researching and doing surveys about AI since 2015, 2018. We had reports out about artificial intelligence use, but Gen AI has dramatically accelerated and we'll think about it, came in at number 3, 2024 top 10 and it moved immediately. So it wasn't, wasn't even on the top 10 previously to that in the policy and strategy side. So it goes from not even being on the ballot, so to speak, the published top 10. It's been on our ballot that we present the CIOs for a decade. Artificial intelligence has, I think, gen AI, as you pointed out. So go from number three to number two last year, 2025, and then immediately number one. So, and we heard the phrase that's unprecedented. But in the world of state CIO top 10 and Nasio, this is the 20th year we've been doing the top 10. This is unprecedented as many of these topics have been on the list for many years. They stay on the list, but they don't come out of the blue. And all of a sudden we're putting a locker to number one.

A (6:48)

Do you think this is clearly influential and important technology in many ways, as we're recording this, it's the day after President Donald Trump signed an executive order preempting state AI law enforcement. So this is a big topic. It's in the news all the time. It's clearly important. Do you think this level of attention is warranted? For example, is seeing the number two next to the word cybersecurity? Is that potentially a mistake? Or do you think CIOs have no problem keeping all these balls in the air?

B (7:23)

No, because, you know, this is the, this is the collective view, Right? This is the wisdom of the crowds model. So individual state CIOs may in fact still fix cybersecurity or maybe modernization. They may, they, they may not be influenced by the, what, you know, what we would call the hype cycle of AI. Right. But it is clearly transformational in terms of technology that we've seen in the last 20 years. There's no doubt that they see that. Is there some hype around that? Absolutely. Other foundational things need to be addressed, like modernization, cybersecurity, digital services, you know, they're going to have to be addressed. AI is actually supporting all of those. Right. So AI is embedded in those conversations. It's just now getting so much attention. And part of that is the legislative and regulatory attention. You had over a thousand bills introduced, 20, 25 that dealt with AI and state legislative bodies. So they're taking notice of it. They're looking at it from the, you know, oversight, the governance standpoint, they're asking from the executive branch, they're saying, or the CIOs, you know, you need to have a framework, you need to have an enterprise policy. We're going to create a working group or some type of advisory council to Oversee all of this. We want you to meet and convene and provide governance across the state government executive branch for AI adoption and particularly generative AI and agentic AI and whatever comes down the path in the next year. So I think it's getting a lot of policy attention so that I think demands that the CIOs or in the states embrace what's going on and certainly respond to legislative demands and the regulatory requirements that they may, they may take on. So I will not make any comments today about the extent of the world.

A (9:21)

Fair enough. We've, we can leave that to others. Plenty, plenty others have. So does NASIO have a position on the best path forward for states looking to improve what they do with AI? I imagine, I don't know this for a fact. I imagine you have some kind of group where CIOs talk about this. There's also things like the center for Civic Futures has its AI readiness project and they recently announced funding for eight projects including, you know, New Jersey and Maryland, trying to scale up their AI uses. But then there's lots of states that are, that are far behind or you know, maybe not.

B (10:04)

Colin we put that out actually in early 2023. We put out our blueprint, so to speak, which we basically said here are 12 elements, here's 12 dimensions of AI that that states should consider. So we did that kind of as a, I think that was in December. We put, kind of put that out. But we had the working group, you know, we still have now we have an emerging AI working group. So we've got a. That's been rechartered after a couple of three years and then renamed to get it beyond simply it was a generative AI to begin with. But no, we've already in multiple reports and publications included recommendations for states utilizing Gen AI. In terms of our recommendations on the facultation, again have had, you know, encourage experimentation and exploration, but also set enterprise policies and have strong governance. That's probably the, if you look at the major barriers, governance is probably top of the list along with data quality and remediating data along with workforce readiness. So you kind of look at what states are doing, they're looking at all those targets. But we have said from day one that states should establish strong governance around AI adoption and they should have a regulatory framework around that, around that widespread adoption because it sets up guardrails and protects privacy and ensures that there will be responsible use by, by state employees. So you have to have, you know, you have to manage those risks and have again, that Overarching governance is, is examples in a lot of states in Ohio and Michigan and Massachusetts and, and others that Washington State, they've all set up those frameworks data quality. So there's a lot of areas that we've already applied in our research and our, you know, our studies that they should be working on in terms of look at Massachusetts and what they've done with collaboration and partnerships with the vendor community, what Mississippi has done with the vendor community and with community colleges and setting up a center. So there's lots of examples across the states that they are you know, kind of articulating their approach. But they are I guess fostering collaboration with both the vendor community but also with higher education. But they're bringing in academic institutions and they're working with them or working with other nonprofits. So we promote all of that in terms of a good path forward. Be transparent, have disclosure about what's going on with your approach. Have meaningful dialogue where you have states that are having open meetings every month with their AI advisory group and their talking about what their path forward is going to be because it's moving very, very quickly. We have new opportunities but they also represent new challenges and new risks. We have genai generated cyber threats that are extremely difficult for states to be a lawyer. So that's got to be at the top of the list. So a lot of conversation about AI obviously so and it will be this. That's because it's in the number one slot. So we'll have those conversations. But that doesn't mean that cyber doesn't demand the same type of attention. Cyber security is the only topic on that has been on the top 10 list for all 20 years. The only one. There's some that are close but we can go back to 2007. So security was on that list and remains on the list. So that's a persistent opportunity and challenge for the state CIO's budget and cost control. But on there as well, that's another story I think for 2026 is the fact that it has moved up and after being off the list for fear because for fiscal know conditions. But now you see the CIOs are also seeing that.

A (14:16)

Well this was, this was the next thing I wanted to ask about is this, is this a bad sign that budget is at number three. I, I imagine in, in, in better times it, it wouldn't be on the list at all.

B (14:27)

Let's say it's a realistic solid. Right. It's a, it's the reality of what the states are seeing. And the state CIOs, they realize that. So we're seeing, you know, the, the, the, the, the warning flags are up in terms of revenue shortfalls or the consensus revenue forecasts are not being met in a number of states. We've got some states that have serious major, you know, billions and billions of dollars deficit already that they're reporting. Where legislative bodies are going to convene. Budget offices are already telling state agencies we've got the last six months of the fiscal year, revenue projections are behind. We're going to be very conservative. So yeah, it's the fiscal survey of the states from nasb, you know, in great detail, points that out that it's going to be basically a flat next six months and they're not going to have that the rainy day funds are going to be tapped in a number of states. So CIOs are hearing that, they're hearing that for agency customers that we're going to be cut, you know, all we've been told, cut, you know, cut our budget 5% for the last six months of the fiscal year. So I think it's just the reality of, yeah, early, early warning of what could certainly take place over the next six months. And that includes things that the states, the devolution of some of these areas like cybersecurity funding and Medicaid and snap, all those things that from one big beautiful bill, all those things impact the states in 2026. And even more importantly, it's 127. So the stakes are going to have to find the dollars to backfill those policy decisions. And it may, it may come out of technology spend.

A (16:13)

Yeah, yeah. Well, these things are all interrelated. The workforce is a topic related to AI that continually comes up. If states want to do good things with AI, it certainly helps to have people who, who are trained in that and know how to do it. And I think I learned at the last NASIO conference that Washington State implemented a statewide pay reduction, something I forget that this percentage might not be right, but it was like 2% or 4% or something like that. And I'd have to imagine that that can't be helpful for attracting top tier AI talent. So yeah, when you see and you

B (16:56)

understand, I think that also the financial and business model of state sales predominantly overwhelmingly they're in a chargeback, right? They are, they're, they're in a cost recovery mode. So they deliver services to state agencies and the state agencies are in paying debt, right. They're being billed and they're being Paid. That's their business model for almost all the CIOs. Well we've always called this. The CIOs end up in the double dip because the agency is told to cut 2 to 4%, 5% whatever the budget office says. The CIOs are told the same thing. So they're being hit by reductions in their, in their cost recovery because the agencies are. But then the CIO is also being told you need to reduce that. And so they get hit from kind of both ends, the internal, own internal activities as well as their cost recovery. So it's often challenging for them to, to meet those kind of fiscal pressures. Because of that they are not the direct recipients of federal funds like the agency.

A (17:59)

Right. Accessibility at number six. States are trying to comply with Department of Justice deadline for next April. What are you hearing about that?

B (18:12)

A long way to go in terms of meeting those requirements. But again that's I think another indicator of this of the CIO focus is accessibility has been, you know on the ballot for sneak CIOs to select for many years. It appeared for the first time in 2025 in the number 10 slots that just barely made it on the list. But it moved up quickly again to number six because of that immediacy. So I think that you know they are feeling the sense of urgency there. It is not their responsibility directly, it's responsibility of the agencies. But obviously they have overarching enterprise responsibility to make that move forward. But this agencies are going to be held accountable. What we saw from our data a few months ago that only about 50% of the states were felt like they had things under, under control in terms of meeting that demand. So there has not been a lot of funding provided. We've heard that from our accessibility coordinators that there hasn't been a lot of funding provided for this and that hasn't been a burning platform that got a sense of urgency but now it is. So they've been kicking the can down the road for a long time but now they've got a federal compliance mandate. No one really knows. We don't try to predict the future around NASA. We're kind of prognosticating based on our member rankings here. But clearly they see that there's something they're going to have to address in the next six months. No one knows for sure what the actual compliance action of any there's going to be from the Department of Justice. And then we got a lot of large locals on their mix too. You think about that improves hundreds of cities and counties in that mix, but are also compliant by April. But I suspect there's going to be a lot of work that needs to be done between now and the spring.

A (20:19)

Consolidation optimization is at number nine and cloud services is at number 10. I can remember a time when these were right up there with cybersecurity. If my, if my memory is serving me right, what do you make of the fact that these have sort of slid down the list?

B (20:38)

Maturity of just, you know, look at that. They were particularly consolidation and infrastructure consolidation and programmatic and services. They were always high priority for CIOs because again, they were in some cases given their marching orders by a legislative fiat. We had a number of states where legislation said you will consolidate. We've seen that even in the last few years with demanding that they consolidate the executive branch infrastructure as well as their service portfolio, their kind of catalog of services. And I think this just represents the fact that it's still part of the mission, so to speak. But we're just seeing a lot of maturity of adoption. So we've seen where cloud services 15 years ago was relatively new on the scene, was now mature and readily available across all the agencies, whatever. For the most part states have taken kind of a hybrid cloud model or it's a mix of private cloud services from CIO as well as then public cloud from all the different providers. But yeah, I just see this as a representation of what we've seen before where they just, it's become part of the standard operating model and it's just become more mature. So it is not as high a priority again across the board. Some states that aren't consolidated that had that, it still is, but across the board, yeah, it's something that just, they're working on, you know, all the time. And there's some states that are not, they'll, they'll remain federated in that model simply because of their, their financial model, their cultural model, the way they operate and they're not going to move. But I, I still think that's a spectrum. We've even seen the last two years where we've had executive orders on consolidation in the last a year that states have said Governor, said you are. The CIO has been directed consolidate the executive branch infrastructure. We will have one data center, we will move virtualize this environment, we'll reduce the numbers of servers, we'll optimize our spend and we want that done in this manner. In some cases we will then, you know, I call the unification model. We will put all of the IT professionals Underneath the purview of the state cio, they will not be individual, individual agencies in those lines of business. So we're still seeing that, but again that a lot of states have already made them. That's just the sense of having me down the list. I think consolidation Cloud services came in at number 10 this year. It was right above enterprise architecture. So enterprise architecture almost made the top 10 list this year. Was on the cusp of. I was rooting for enterprise architecture to make the top 10, but it did not. Missed it just by a vote, I think. So it's very. When you get down to like the bottom four or five, some of these are literally one vote apart because it's, you know, so it really gets, that kind of collapses down there at the, at the bottom. So very tight, tight voting in the bottom four or five every year. Yeah, so I don't make. I. That's what I'm saying. It's. I don't know, you know, it sends a message. But it's, it's so close. There's also close. They're clustered down there at the bottom and so they're, they're all a priority for some states. Right. And for others, enterprise architecture is high on the list about what they're preparing that or they think the resurrection of architecture as a business discipline that's coming around. So we hope to see it.

A (24:41)

Yep. Still very important. I know it as a. Enterprise architecture as a special place in your heart. And as for the trend of things kind of sliding down the list with maturity, in a decade we could see AI at number 10 and, you know, who knows, quantum computing or whatever at the top of the list.

B (24:59)

So I think we're going to see a lot of activity this year around identity and access management for a variety of reasons, but I think because of its intersection with obviously cybersecurity. But from a standpoint of improving the citizen experience, a key aspect of improving digital services is having a robust digital credentials environment for citizens so that they have one digital credential they can do business with across all the agencies. So I think you're going to hear more about that from NASIO this year. We've kind of targeted identity analysis management as a key area. So we're going to have more conversations, more, I guess, more research, more webcasts about what states are doing around identity and access management. Because of the need to have that and the work that Amber's doing around mobile driver's license, we're seeing more and more states now. Those 20 that have NDLS how does that fit in the work of the Better Identity Coalition? The work of, you know, what's going on with verifiable digital credentials and how that fits in. Some states have embraced that approach. So a lot going on, I think in 2026 around identity and access management and digital digital credentials for citizens and how states can promote that kind of residential enterprise and we don't need 20 different flavors of those for citizens. Very confusing. So states are really going to be focused on that.

A (26:33)

Yeah, I would predict that as well. I know Utah recently had a, hosted an event related to that. I don't think it was open to media, but yeah. Several states CIOs I've talked to have talked about how this is an important piece of how they imagine organizing technology in their states. And there's also an interesting intersection with concerns that some lawmakers have to do with online safety and kids safety and things like that. At some point these, these two worlds could kind of collide in an interesting way. Is there anything else? We, we didn't go over every one of these and we don't have to, but is there anything else that you wanted to mention about the list? Either this top 10 or, you know, we didn't talk about the. There's a separate. For those unfamiliar, NASIO always has a, a second top 10 list, which is the technologies, applications and tools. And to some extent it, it mirrors the first list. Number one on that list is AI tools.

B (27:31)

It's essentially what, what the question for the CIOs. They're like, what are you going to invest in? So this is a good piece for the marketplace, for the, you know, for the suppliers and the vendors and every else out there. And you'll see there's, there's alignment. Obviously AI is number one for that, but you'll also see the fact that, you know, some of those are where they're going to invest their money, like in cloud services and cloud solutions, identity and access management. I think the only thing I'll point out is that it was simply a decision which was informed by our CIOs. Many of them said, could we just have modernization as opposed to legacy modernization? Because we have modernization in business processes and modernization in. It's not just about the legacy environment. We're doing modernization as a theme across the board. So that is one thing that most. But you'll notice in 2026 is that we dropped. We've kind of subsumed legacy environment, legacy systems under the broad modernization category. So that was just a decision. We Made. And again, there's no, the thing about the top 10 is we're modernizing it as we need to do all the time. Right. To reflect the environment. So Again, this is 20 years of doing this. We, we have, we have different, you know, different phrases and no inflation we're using to modernize the top 10 to meet the needs of that. So that's one thing I would point out is, is modernization now is, is a broader, broader category but it's still, you know, it's, it's, it's a, it's a very high priority for the state CEOs and every CIO, public or private sector. I would say this is the being a modern environment of being a modern activity. That, that is an aspiration of every cio. We want to, want to be modern, but that, you know, it's just a much heavier lift for the states because of the investments they have in the technical debt. And these massive transactional based systems can take a while to modernize. But we're seeing that and we're seeing a lot of main, we're seeing a mainframe as a service. Growth in the last few years has been pretty substantial. A lot of states, they're running mainframe cycles but the mainframe is no longer in the state capital, in the data center, some other state. So that always surprises legislators, but that's a way to deal with the technical debt, to deal with the investment models, to deal with the lack of the talent that is retired, that no longer understand modern programming languages like Cobol 64. Right. So that's a, that's just the owner. As I talk to legislators, the classic kind of owner operator model of how states have done things for decades is again eroding. Right. The states are no longer owning all of the boxes and Myers are not writing all of the phone. That is the model that has been abandoned or one which is much more agile, flexible or broker model, you know, having towers of services. And that's just the reality of how the environment has changed. Which is, which is good. You know, we're, we're always excited about NASA because change happens all the time. So it keeps us, keeps us having to learn new things and, and have new approaches to the way states are, will be dealing with serving citizens in, in the future. Certainly it's going to be a lot of AI and you know, you know, next in 2026, we're going to see a lot of AI in production. We, we've highlighted a number of those things already in our reports and our awards. But we're excited about. Okay, where does agentic AI go? How do our citizens going to use agentic AI to transact a state business? They're going to have their own agents transact all that and navigate their the vowels of state government through those business processes. You'll see interesting. We'll see that might develop in the next year. We're seeing some interesting production of AI already where you're showing some meaningful savings and kind of removing a lot of friction and some of those things. So that's great for states. I'm always excited to read some of those projects.

A (32:00)

That's it for this episode. The Priorities Podcast is taking a couple weeks off. We'll be back in 2026. You can subscribe to the Priorities Podcast at priorities podcast.com Leave a Comment Leave a Rating Share on Social Media Tell your friends this recording is a production of Scoop News Group in Washington, dc. Thanks to Adam Butler and Carlin Fisher for their production work. I'm Colin Wood. Thanks for listening.