California Discontinues Half of AI Projects Aimed at Government Efficiency
California has shuttered three of eight generative AI projects launched under Gov. Gavin Newsom's 2023 executive order to streamline state government operations. Four projects remain under contract, while one was terminated because the time savings didn't justify the cost. The state has spent at least $5.8 million on these initiatives so far.
The mixed results reflect a pragmatic shift in how government approaches technology, according to Government Operations Secretary Nick Maduros. Departments are treating these projects as low-risk experiments rather than long-term commitments.
What Worked and What Didn't
The California Department of Tax and Fee Administration discontinued its $445,000 contract with SymSoft Solutions after one year. The tool transcribed employee calls with taxpayers and suggested answers by searching the state's tax policy database, but it didn't save as much time as expected.
"Even though the solutions worked in practice, they didn't quite save as much time as we had hoped," Maduros said. CDTFA switched to a cheaper tool from Amazon Web Services instead.
Three other projects never advanced beyond the pilot phase. The Department of Housing and Community Development shelved a housing tracking tool. The Department of Public Health delayed a healthcare facility inspection project due to funding constraints. The Employment Development Department abandoned a recession forecasting tool, saying internal development offered better value.
The Four Continuing Projects
Four departments maintain active contracts with outside vendors:
- Finance Department: $565,000 over two years with Authorium, Inc., to analyze legislation and estimate costs
- Health and Human Services Agency: $1.3 million over two years with Smartling
- Department of Transportation: At least $3.5 million across two contracts with Deloitte Consulting and Accenture
- Tax and Fee Administration: $445,000 one-year contract with SymSoft Solutions (since replaced with AWS tool)
The Finance Department's bill analysis tool received mixed feedback during testing with 40 users. One tester called it "a very promising step towards reducing bill analysis workload." Another wrote: "At this point it misses a lot of things or has inaccuracies, so it still needs to be double-checked."
Finance plans a second year of testing to improve the tool.
Worker Concerns
SEIU Local 1000, which represents state workers including call center employees, said members report AI tools have added to their workload rather than reducing it. Union president Anica Walls said workers should have a voice in how these tools are developed and deployed.
"These AI programs can't handle the complexity of the public's needs and don't bring the flexibility and care that state workers provide every day," Walls said.
The Administration's View
Maduros defended the approach as necessary experimentation. "The idea of this is to actually start working and trying things and see what works in a way that's cost-effective, rather than spending years and millions and millions of dollars planning," he said.
The administration has also launched an AI advisory council, deployed an AI-powered digital assistant for employees to find policy information, and rolled out AI training for state workers.
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