Scaling Generative AI in US State and Local Governments: Opportunities, Challenges, and Strategies for Large-Scale Success

Scaling Generative AI in US State and Local Governments: Opportunities, Challenges, and the Path to Large-Scale Value

Generative AI is making its way into government operations, offering tools to improve efficiency and service delivery. Many state CIOs report that employees are already using generative AI in daily tasks. As budgets tighten, these technologies can help governments meet their goals more effectively.

Generative AI in Government

Generative AI is impacting various government functions, from back-office processes to public services. Here are some examples:

• Internal Back-office Operations: Indiana uses generative AI to simplify access to state archives. The AI understands everyday language queries, allowing staff to quickly search through millions of documents, improving transparency and operational efficiency.
• Internal Service Operations: The New Jersey Office of Innovation applies generative AI to rewrite emails in plain language, boosting customer response speed by 35%.
• Public-facing Uses: New York City launched a public-facing AI chatbot to help citizens with common questions, such as driver’s license applications and available services, improving access and clarity.

Challenges in Scaling Generative AI

Many organizations struggle to move beyond pilot projects. Common obstacles include lack of preparation for scaling, risk concerns, limited technical skills, and insufficient funding. Governments face the dual challenge of leveraging AI’s benefits while managing risks in critical public services.

The Big Challenge

How can state and local governments adopt generative AI at scale while minimizing risks? Scaling is about embedding AI into core processes, not just increasing user numbers.

• Benefits of AI at Scale: Large-scale AI use can deliver significant results. For example, the US Department of Treasury’s AI tools helped recover or prevent $4 billion in improper payments in 2024, a $3.3 billion improvement from the prior year.
• What At-Scale AI Looks Like: Readiness involves four dimensions: strategy, governance, people, and technology. Many governments have some capabilities but face gaps moving from pilots to full-scale adoption.

Barriers to Scaling Generative AI

• Risk Wariness: Governments handle sensitive data and public trust, making them cautious about AI risks. Yet not adopting AI also carries risks, such as falling behind in efficiency and service quality.
• Constrained Budgets: AI adoption requires upfront investment in technology and subscriptions. Budget limitations can delay these necessary expenditures despite potential long-term savings.
• Limited Technical Expertise: Many government leaders lack deep AI knowledge. Only 17% report high levels of AI expertise internally, compared to 40% in other industries. This gap complicates informed decision-making.

Getting Started on the Path to Scale

There is no one-size-fits-all approach, but certain steps can help governments move forward effectively:

• Build Technology Foundations: Align AI strategy with the right technology platforms. This ensures that AI capabilities are embedded in workflows and systems from the start.
• Engage the Workforce Early: Involve employees in identifying AI use cases and building tools. Empowering staff creates a culture that supports responsible AI use and better outcomes.
• Transparency: Being open with the public and employees about AI use fosters trust. Clear communication about how AI supports government missions can ease concerns.

Generative AI offers promising opportunities for state and local governments to improve mission results. By focusing on solid infrastructure, workforce involvement, and governance, governments can expand AI use beyond pilots and deliver real value.

For government professionals looking to enhance their AI skills, exploring targeted training can be a practical next step. Check out Complete AI Training’s courses by job role to find relevant programs for public sector operations.