State, local, and education (SLED) organizations operate within unique financial and operational constraints. Tight budgets, the demand for uninterrupted public services, and increasingly complex cloud infrastructures all contribute to pressure on IT departments to forecast and manage spend with greater precision.
To keep essential services running and budgets on track, IT teams need to manage cloud costs wisely, which is why cloud workload optimization and waste reduction, full allocation of cloud spending, and accurate forecasting are the top three priorities for practitioners, according to the State of FinOps 2025.
In this blog, we’ll explore three proven best practices for cloud budgeting and forecasting for SLED and provide actionable strategies you can implement with current resources to benefit from adopting a more structured FinOps practice that aligns with SLED industry requirements.
1. Implement granular cost allocation and tagging
Granular cost allocation allows SLED organizations to track cloud spend by department, project, or application, providing the transparency required for responsible budgeting and reporting. And consistent metadata tagging makes it possible at scale, especially in highly matrixed government institutions.
To implement granular cost allocation and tagging effectively:
- Establish and document a clear, organization-wide tagging policy that reflects your budgeting structure
- Use native tagging capabilities from your cloud provider to label resources during provisioning
- Integrate cost allocation tools that break down spend in near real time and highlight cost drivers
The need for detailed tagging and cost allocation is only growing. Recent research from the FinOps Foundation shows that 65% of organizations are now including SaaS spend in their FinOps programs, which expands the scope and complexity of what needs to be tracked.
Done well, granular tagging improves cost visibility, supports audit readiness, and enables more accurate forecasting. Organizations using FinOps platforms like Ternary have reported savings of up to 30% by optimizing based on these insights, a significant savings for public entities managing tight and often shifting budgets.
2. Leverage forecasting tools and scenario planning
Forecasting tools powered by historical usage data and machine learning can help SLED organizations project future cloud costs more accurately, reducing guesswork, improving budget accuracy, and supporting more strategic planning. Once a reliable forecast is in place, scenario planning helps turn it into action by showing how changes in usage or budget could impact future spend.
To put these techniques into practice:
- Integrate cloud provider forecasting tools with your financial planning systems
- Develop multiple budget scenarios (baseline, growth, and constrained) to reflect operational variability
- Regularly compare forecasts to actual spend and adjust based on trends or policy shifts
Forecasting models help teams stay ahead of usage shifts, particularly as new technologies are adopted across the public sector. In 2024, only 31% of organizations tracked AI-related cloud spend. Today, that number has jumped to 63%.
Organizations benefit from forecasting, because teams can better anticipate cost fluctuations, align with funding timelines, and act decisively before budgets are at risk. When every dollar must be accounted for, it helps SLED teams maintain both financial control and uninterrupted service delivery.
3. Establish a centralized FinOps practice
Centralizing FinOps practices brings consistency and accountability to cloud cost management. Instead of leaving budgeting and optimization to individual departments, a dedicated FinOps team can take ownership of policies, tools, and processes, helping align spending decisions with organizational priorities and available funding.
To implement centralization effectively:
- Define clear roles and responsibilities within the FinOps team, including how it interfaces with Engineering, Finance, and leadership
- Use a FinOps platform to consolidate data, automate reporting, and standardize workflows
- Establish regular check-ins and reporting cadences to keep stakeholders informed and aligned
With FinOps practices centralized, organizations gain more than just oversight. They benefit from stronger collaboration, financial consistency, and clearer communication between technical and financial stakeholders. The result is a more efficient, transparent approach to managing cloud spend that supports both operational continuity and public trust.
Building a sustainable FinOps strategy in the public sector
Cloud cost management is a growing priority for IT departments, and it’s only becoming more complex. Whether you’re managing tight budgets, scaling services, or responding to shifting funding cycles, having the right FinOps strategy in place makes all the difference.
By adopting granular cost allocation, leveraging forecasting tools, and establishing a centralized FinOps practice, organizations can build a more transparent, accountable, and sustainable approach to cloud financial management. Following these best practices will support internal alignment and help demonstrate responsible stewardship of public resources.
Strengthen your cloud cost strategy with Ternary
Ternary’s FinOps platform is purpose-built to support the public sector in managing and forecasting cloud costs with confidence. Our solution is designed with the challenges of SLED organizations in mind, including budget constraints, compliance requirements, and the need for defined departments.
Ternary equips IT leaders with the tools they need to:
- Improve visibility across departments and service areas
- Optimize cloud spend while maintaining essential services
- Strengthen accountability to stakeholders and constituents
Frequently asked questions
Given the cyclical nature of public sector funding and potential budget cuts, how frequently should we reassess our cloud budget to ensure alignment with allocated resources?
With funding subject to change, it’s important to reassess your cloud budget regularly. A monthly review cadence is ideal, with quarterly reviews as a minimum, allowing teams to adjust quickly in response to shifting budgets and ensuring cloud spend stays aligned with both fiscal constraints and service delivery goals.
What specific cloud cost metrics are most critical for SLED IT departments to track when optimizing cloud spend, especially considering the need to demonstrate responsible use of taxpayer funds?
Beyond standard cost metrics, SLED IT leaders should focus on those that connect spend to service outcomes and accountability:
- Cost per constituent served measures value and operational efficiency
- Cost per service delivery unit tracks how efficiently specific services are rendered
These metrics help justify cloud spend, improve transparency, and reinforce trust with stakeholders.
How can we implement and enforce tagging policies across diverse teams, including those with varying levels of technical expertise, to maintain accurate cost allocation and reporting for audits?
Start with clear, accessible guidelines that are written in plain language and aligned with your organization’s structure; then provide training tailored to different roles and levels of technical expertise. Finally, conduct regular audits with reporting that clearly connects tagging practices to budget accountability and compliance requirements.