UPDATE — SEPTEMBER 2025: Since the National Association of State Chief Information Officers (NASCIO) released its “Generating Opportunity: The Risks and Rewards of Generative AI in State Government” report in November 2024, the role of generative AI in state IT has continued to expand, but with measured caution. In January 2025, NASCIO named artificial intelligence—particularly generative AI—as one of its Top Ten Priorities for state CIOs, reflecting the issue’s growing strategic importance. At NASCIO’s Midyear Conference in May, CIOs shared early results from pilot projects, reporting progress in areas like call center support and document automation while emphasizing that most states remain in sandbox or limited pilot phases rather than broad enterprise adoption.
Several states highlighted in the 2024 report have since advanced their initiatives. Utah has expanded its generative AI call center pilots into the Department of Human Services, maintaining strict human-in-the-loop oversight. California has tied its use of GenAI in system modernization to its broader “Digital ID and Legacy Transformation” initiative, signaling a long-term strategy for replacing outdated systems. Vermont and Montana have partnered with regional universities to create AI workforce readiness programs, addressing concerns about preparing employees for shifts in an AI-driven economy. Meanwhile, North Carolina’s CIO office has worked with utility planners to model the energy load implications of AI computing clusters, echoing the infrastructure strain worries raised in NASCIO’s report.
At the federal level, the White House Office of Management and Budget’s draft AI guidance (July 2025) cited state pilots documented by NASCIO as examples of “responsible experimentation,” and federal–state sandboxes supported by NIST and the National Governors Association have launched to promote knowledge sharing.
NASCIO has not yet issued a new report replacing “Generating Opportunity”, but it is preparing a state GenAI toolkit for release in late 2025, expected to provide practical procurement and governance frameworks. In the meantime, state CIOs remain focused on balancing experimentation with strong governance, addressing energy and cost challenges, and aligning state-level efforts with evolving federal guidance.
ORIGINAL NEWS POST:
State CIOs Embrace Generative AI with Caution and Optimism
The National Association of State Chief Information Officers (NASCIO) has released a comprehensive report, “Generating Opportunity: The Risks and Rewards of Generative AI in State Government.” The report, published in November 2024, outlines the evolving role of state chief information officers (CIOs) in harnessing the potential of generative artificial intelligence (GenAI) while addressing associated challenges and risks.
Generative AI has become a pivotal topic in state IT discussions. According to NASCIO’s survey, 53% of state CIO organizations already use GenAI tools in daily operations, with the rest exploring its potential. From automating routine tasks to improving citizen services, GenAI offers a range of applications, including document management, predictive analytics, and modernizing legacy systems.
Utah CIO Alan Fuller highlighted GenAI’s potential for government efficiency, likening its integration to the ubiquity of Google search. Fuller described plans to utilize GenAI in the state’s tax commission call center, creating a “superpower assistant” to aid agents with complex queries.
California CIO Liana Bailey-Crimmins emphasized the technology’s transformative impact on legacy systems, particularly in modernizing outdated programming languages.
Despite its promise, GenAI adoption faces significant hurdles. Concerns about accuracy, data quality, and infrastructure are among the key challenges identified by state CIOs. Vermont’s CIO Denise Reilly-Hughes pointed to the need for robust data governance frameworks to avoid unintended consequences.
High operational costs, trust issues, and the need for specialized computational power also complicate GenAI deployment. North Carolina CIO James Weaver highlighted concerns over the strain on power grids in the report.
Another barrier is workforce adaptation. Montana CIO Kevin Gilbertson stressed the importance of preparing for an AI-driven economy, where jobs will shift rather than disappear. “We must learn how to build an adaptive workforce,” he said.
The report outlines six key recommendations for state CIOs:
- Encourage Exploration: Promote responsible experimentation with GenAI, setting clear policies and providing sandbox environments.
- Strengthen Governance: Establish regulatory frameworks and risk-based maturity models to ensure transparency and mitigate risks.
- Improve Data Quality: Enhance data governance practices to ensure AI systems operate on reliable and secure data.
- Foster Collaboration: Build partnerships across agencies and with external stakeholders, including academia, to align efforts.
- Adopt Incrementally: Begin with small, low-risk pilot projects to gain insights before broader implementation.
- Be Transparent: Maintain openness about AI initiatives to build trust with the public and stakeholders.
The report predicts significant growth in GenAI applications over the next three to five years, likening its impact to the early days of the internet. From call center assistance to environmental monitoring, GenAI is set to transform state operations. However, CIOs agree that success hinges on balancing innovation with robust oversight.
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