McLean, VA - March 7, 2003 - - During FSI's 9th Annual State of the States Conference on March 4 in Washington DC, key state government officials discussed the role of federal funding to support homeland security initiatives at the state level. Executives attending the conference learned that despite budget shortfalls, FSI projects that IT spending will continue to grow at a modest 1.8% annual rate in the next two years, mostly supporting existing programs in the pipeline.

FSI forecasts that IT spending will increase from $40 Billion this fiscal year to $40.7 Billion in 2004. Projected spending in 2005 is $41.5 Billion. "This is going to be a tough market," said Jim Kane, President and CEO of FSI. "Most governments will focus on enhancements and modernization efforts for productivity gains."

State and local governments are anxiously awaiting the flow down of federal funds to support homeland security initiatives. With lack of funding, homeland security initiatives are being slowed down and even deterred.

Although homeland security is a top priority for the CIO's, FSI's analysis shows that homeland security IT spending will only represent about 5% of state IT spending by the year 2005. "We want to make IT more relevant to our current challenges: health care, education, and homeland security," said Thom Rubel, Director, State Information Technology Program, National Governors Association.

According to Gerry Wethingon, CIO for Missouri and President of NASCIO "CIO's and homeland security officials must work together to take advantage of enterprise investments and use money wisely to leverage resources coming from the federal government."

FSI's State of the States conference focuses on the latest IT trends and issues facing state and local governments as well as an analysis of their budgets and key programs. To purchase the event proceeding or to find more information, visit http://www.fedsources.com or call Barbara Holland at 1.800.210.6326. Media queries should be directed to Nancy Stebbins, 916-782-8700 or nancy_stebbins@interprosepr.com.

FSI, A Washington Management Group Company, delivers fact-based, government-IT market intelligence to both the largest existing government contractors and new market entrants via online subscription services, tailored consulting, GSA Schedule services and industry-leading events. These programs, underscored by a hands-on approach to client support, enable IT vendors and government organizations to make informed business decisions and experience rapid return on investment. FSI was founded in 1984 and is headquartered in McLean, Virginia; its Web site is www.fedsources.com.