State governments increasingly understand the importance of developing policy based on reliable evidence. They also recognize that much of the data needed to improve policy development, programmatic effectiveness, operational efficiency and public transparency is already on state computer servers. And while harnessing this information will be a challenge for state leaders over the coming decade, the potential to achieve cost savings and improve outcomes for citizens is enormous.
Unfortunately, unnecessary obstacles -- including rules that often restrict agencies from sharing data with each other -- can prevent states from using data to resolve some of their major policy challenges. And states have found it difficult sharing economic development data effectively with local governments. But there are steps that states can take to overcome barriers to sharing and linking datasets and to use data they already own rather than asking residents and businesses to provide the same information multiple times.
Economic-development incentive policies offer a prime example of the benefits of data-sharing. These programs can be difficult to administer and evaluate because multiple agencies are sometimes responsible for the same project without being permitted to share data with one another, leading them to overlook key evidence or collect unnecessarily duplicative information from taxpayers.
In states that share data across agencies, the increased access to information has helped policymakers make informed decisions about where to invest taxpayer dollars. For example, businesses that receive tax incentives by participating in Oklahoma's flagship program, Quality Jobs, don't receive their quarterly checks until state agencies -- using shared data from tax returns and employment records -- verify that their job creation and salary commitments have been met.
The potential for additional progress is strong, largely because technological advances make data collection, management, access and protection easier. For example, Michigan has implemented a cloud-based system that allows state and local officials to input and access information in real time, enabling greater coordination and cooperation when recruiting new businesses.
But while technological advances are making data sharing and analytics easier, they don't -- on their own -- overcome legal barriers or differences in agency mission. That's where a collaborative interagency approach is needed.
Pew, along with the Center for Regional Economic Competitiveness, is working closely with interagency teams in Indiana, Maryland, Michigan, Oklahoma, Tennessee and Virginia to identify opportunities to improve economic- development policy, including through sharing data. Because issues are frequently similar from state to state, the six states have been able to share innovations, helping to resolve challenges previously thought to be intractable.
In some states, bringing together key players from economic-development and tax agencies has led to increased information-sharing and more informed decision-making. Other states have identified a need for legislation or memoranda of understanding that will permit data-sharing while protecting the integrity and confidentiality of the information.
After hearing about Oklahoma's success in sharing data across agencies, officials at Michigan's tax and economic development agencies began experimenting with ways to collaborate more closely. While a legislative change would be required in Michigan to allow full access to tax data, the agencies have made significant progress in exchanging information. Michigan's economic development agency now has a better understanding of what it is getting for its money, and the tax agency is better able to plan for the future fiscal impact of incentives.
In recognition of the fact that states can learn from one another, the National Association of State Chief Information Officers is now documenting and publishing best practices in data-sharing and analytics.
Removing barriers that keep datasets in their own silos is not easy. But we're beginning to see exciting opportunities for state and local policymakers to fully leverage existing data to make smarter decisions about allocating resources and delivering key services to taxpayers.
This column was also published by Governing.com.