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Budget and Policy Post
March 22, 2019

The 2019-20 Budget

The Governor’s Proposal for a New Office of Digital Innovation

In this post, we describe the Governor’s 2019‑20 budget proposal to create a new office within California’s Government Operations Agency (GovOps)—the Office of Digital Innovation (ODI). We then provide issues for legislative consideration, including key questions about the office’s implementation and legislative oversight of its activities. The administration recently released proposed statutory changes to implement ODI. We will review the proposed legislation in the coming days and, if needed, update our analysis.


Role of GovOps. GovOps oversees ten state departments, boards, and programs with broad operational responsibilities including the state’s two largest pension systems; two major tax departments; and departments that provide critical administrative functions such as the California Department of Human Resources (CalHR), the California Department of Technology (CDT), and the Department of General Services. The mission of the agency is to improve the accountability and management of government programs, increase their efficiency, and promote more coordinated operational decisions. GovOps is also tasked with a number of targeted initiatives such as the Civil Service Improvement initiative, the Department of Motor Vehicles Strike Team, and the upcoming federal 2020 Census.

Role of CDT. CDT, a department within GovOps, is the state’s central information technology (IT) organization and has broad authority over all aspects of technology in state government. As shown in Figure 1, this authority includes (1) the delivery of technology-related services to departments (through CDT’s Office of Technology Services); (2) providing IT project approval and oversight, including CDT’s project approval process (through the Office of Statewide Project Delivery); (3) the development and delivery of state IT leadership and workforce training (through the Office of Professional Development); and (4) the initiation of new innovation efforts such as the creation of a new website that makes government data more accessible to the public (through CDT’s Office of Digital Innovation).

Figure 1 - CDT's Organizational Chart


Administration Identifies Challenges Californians Face When Interacting With Government. As part of the Governor’s 2019‑20 budget proposal, the administration indicated a need to make a change in the way California government interacts and delivers services to residents. Specifically, the budget identifies that when residents interact with government services today, “outdated tools and complex systems make these interactions cumbersome and frustrating.” The budget also provides that “manual processes and the lack of digital services often require citizens to take time off work and go to a physical office to interact directly with government staff.” (“Digital services” use technology to improve how government services are delivered.)

Governor’s Budget Proposes New ODI Within GovOps. The Governor’s 2019‑20 budget proposes $36.2 million total funds ($33.7 million General Fund) and 50 positions to create a new office, ODI, as a separate office within GovOps. (The Governor also requests $148,000 General Fund in a separate budget proposal for CalHR to provide human resources support to ODI.) The office would be broadly focused on improving how state departments deliver services to residents and invest in technology. Based on our discussions with the administration and on information from the proposal, ODI’s mission would be to:

  • Select and work with departments to “reengineer” their business processes—that is, evaluating their business processes from start to finish to make them more cost-effective and efficient—and develop and implement digital services.

  • Establish a new Innovation Academy that trains all state government executives, managers, and supervisors on key skill sets, including change management (approaches to prepare a department for organizational change) and continuous improvement (ongoing efforts to improve processes, programs, and services). The Academy would also provide optional training to state IT staff on various topics.

  • Develop guidance, policies, and procedures on the delivery of digital services statewide.

Figure 2 provides a breakdown of the estimated 2019‑20 and ongoing expenditures associated with the Governor’s 2019‑20 budget proposal.

Figure 2

ODI’s Preliminary 2019‑20 and Ongoing Expenditures



2020‑21 and Ongoing

Innovation Fund


Project staff:









Contract servicesa


Training (anticipated reimbursements from departments)



Administrative, fiscal, human resources, and information technology servicesb






Main office



Training facility









aContract services include, for example, subject‑matter experts from organizations similar to ODI.

bServices provided by other departments such as the California Department of Human Resources (human resources) and the Department of General Services (fiscal services), on behalf of ODI though interagency agreements.

ODI = Office of Digital Innovation.

Largest Expenditure is One-Time Appropriation for “Innovation Fund” in 2019‑20. The proposal includes a one-time appropriation of $20 million General Fund to create an Innovation Fund that would primarily fund various efforts that ODI identifies as necessary to improve departmental business processes and service delivery models. The administration indicates that the fund could also be used for business process reengineering (defined above) and as a contingency fund for unforeseen challenges in the development and implementation of departments’ various efforts.

Issues for Legislative Consideration

The administration has indicated that some of the information provided as part of the Governor’s proposal to create ODI within GovOps may be subject to change. The administration also only recently released proposed legislative changes that would implement ODI. To assist the Legislature as it reviews the administration’s proposal, we provide our preliminary comments and raise questions for legislative consideration. We will update these issues, if needed, as more information becomes available and as we continue to review the proposed language.

Defining the Roles of CDT and ODI. The administration anticipates that, if the proposal is approved, CDT would retain its broad authority over all aspects of technology in state government. By comparison, ODI would develop and implement statewide guidelines, policies, and procedures on the delivery of digital services statewide. It is the intent of the administration to avoid duplication of efforts between ODI and CDT. However, to avoid duplication, there may be a need to change some of the responsibilities and functions currently at CDT. In doing so, this could potentially free up CDT staffing and budgetary resources for other purposes. The administration is proposing to leave freed up funding and positions with CDT. The Legislature might ask the administration to (1) explain its rationale for creating a new office within GovOps, rather than giving additional funding and positions to CDT for this purpose, and (2) describe how it will ensure that there is no duplication of efforts between CDT and ODI, as well as explain its rationale for allowing CDT to redirect duplicative funding and positions internally rather than reverting savings back to the state.

Imposing New Requirements on State Departments. It is our understanding that departments might be required by ODI to (1) assess their business processes and service delivery models and submit the assessments to ODI and (2) send their executives, managers, and supervisors to mandatory training through ODI’s Innovation Academy. It is also our understanding that neither of these activities is currently mandatory for departments. The Legislature might ask the administration to (1) estimate how much these new activities will cost departments and (2) clarify whether departments would be expected to absorb the cost of the new activities or would submit requests for funding these activities through the budget process.

Selecting Departments for ODI Services. Based on our discussions with the administration, ODI may select departments for business process reengineering and digital services based on criteria such as (1) the policy priorities of the administration; (2) the department’s readiness to participate in these activities; and (3) suggestions from executives, managers, and supervisors that participate in the Innovation Academy. The Legislature might ask the administration to (1) describe the role of the Legislature in selecting departments based on its policy priorities and (2) explain how ODI will evaluate departments once they have completed their activities.

Specifying the Use of the Innovation Fund Monies. The administration states that the Innovation Fund would give ODI more flexibility to help departments with their business process reengineering and to deliver digital services to departments. The proposed one-time General Fund appropriation for ODI to administer broadly for the purpose of innovation would also, however, appear to remove legislative consideration, approval, and oversight of departments’ various efforts from the budget process. The Legislature might ask the administration to (1) describe its intent for the role of the Legislature in considering, approving, and overseeing the use of the Innovation Fund for departments’ various efforts, and (2) explain why this fund is necessary for ODI to achieve its mission.

Identifying ODI’s Ongoing Funding and Positions Needed to Achieve Its Mission. Based on our conversations with the administration, it is our understanding that the amount of funding and number of positions requested in the current budget proposal for ODI could change. Given these potential changes, the Legislature might ask the administration to (1) update the ongoing funding and position needs of ODI, (2) explain the role of departmental reimbursements as an ongoing funding source for ODI, and (3) outline the timeline for hiring and training ODI staff.

Evaluating the Benefits of Centralized Placement of State IT Staff. By proposing to create new business process reengineering and digital services teams within GovOps, the administration appears to support, at least to some degree, the centralized placement of some state IT staff. Past attempts to centralize the placement of state IT staff (such as CDT’s Project Management Office, an evaluation of which is provided in our December 7, 2017 report—Evaluation of the Statewide Project Management Office), however, were subsequently diminished in scope. The Legislature might ask the administration to describe the basis for centralizing this particular group of IT staff to deliver digital services, while at the same time leaving other IT staff (for example, IT project management) largely decentralized.

Proposal Offers Legislature Opportunity to Provide Input

The issues for legislative consideration discussed above can be the basis for legislative questions to better understand the administration’s intent in proposing this new office and for the Legislature to communicate its priorities for the new office to the administration. By discussing the mission, organization, and activities of the proposed office through the budget subcommittee hearing process, the Legislature can provide the administration with valuable input as the administration further develops its budget proposal. As more information about this proposal is finalized and as we review the proposed language implementing ODI, we will provide any necessary updates to our analysis.