School voucher amendment
Last night, testimony was heard by the Senate Committee on Legislative Operations and Elections on SJR10, a resolution that would amend the Nevada Constitution to allow for public education vouchers. The hearing drew a large crowd, particularly in Las Vegas where a roomful of students and parents showed up to support the resolution. The R-J's Doug McMurdo covered the hearing here.
SJR10 would not immediately institute a public school voucher program. However, it would allow the legislature to create one in the future by eliminating current constitutional barriers, as embodied in the so-called "Blaine Amendment." In addition to drawing the support of lawmakers, the resolution would need to draw majority support from the general electorate in two consecutive elections in order to change the constitution.
While this is an aggressive approach, a constitutional amendment is not necessary to increase school choice options. There are a plethora of alternatives to outright vouchers that would not be inhibited by the Blaine Amendment. One such alternative, a tuition tax credit program similar to Florida's Step Up for Students program, has been modeled by the Nevada Policy Research Institute. The program would save roughly $1 billion over its first 10 years while dramatically increasing school choice and, consequently, student achievement.
Read moreNew this week at npri.org
If you haven't done so already, be sure to check out a couple of new pieces up at npri.org.
We've got a commentary by Victor Joecks on Gov. Sandoval's attempts to adopt many of the education reforms that have made Florida a stunning success story.
And we've got a news story from Kyle Gillis that exposes how stimulus-funded projects have been able to receive preferential regulatory treatment over private-sector projects.
Be sure to check them out.
Senate Legislative Operations and Elections Committee, April 12
Here is my testimony regarding SB 98, a bill that would change Nevada's collective bargaing statutes by granting more flexibility to local government administrators:
Mr. Chair and members of the committee, thank you for hearing my testimony today. My name, for the record, is Geoffrey Lawrence and I am deputy director of policy at the Nevada Policy Research Institute.
I'd like to speak briefly regarding the fiscal impact of unionization at the local government level in Nevada. Public employees in Nevada, by any measure, are highly paid - particularly at the local government level. We really have a caste system in Nevada wherein public employees maintain lifestyles far above the taxpayers who support them. On average, public-sector workers in the Silver State are paid 28.1 percent higher than private-sector workers in a similar job classification.
This disparity is most pronounced at the local government level where administrators are required to negotiated collectively with workers. NPRI has reviewed the most recent annual statistics on public employee pay published by the US Census Bureau. Those figures reveal that state workers in Nevada, on average, are paid 7 percent more than the national median for state workers while local government workers are paid 31 percent more than the national median. This is in spite of the fact that Nevada enjoys a relatively low cost of living. In fact, including benefits, public employees in Nevada are the third highest paid in the nation - behind those of CA and CT and ahead of states with remarkably higher costs of living.
This wage premium adds significantly to the labor costs faced by local governments and constrains their ability to respond in cases of extreme fiscal crisis. Based on the Census figures, NPRI has calculated that, if local government workers in Nevada were compensated merely at the national median, local governments would realize a savings of $2.3 billion over a two-year period. I refuse to believe that there is anything extreme to the notion that workers in Nevada should be compensated at a level approximating what comparable workers are paid in other states.
If Nevada lawmakers do not amend the Silver State's collective bargaining statutes to give more leverage to local government administrators, this trend is likely to be exacerbated even further.
Majority playing hardball on budget
Leaders of the legislative majority announced yesterday that they are changing the rules regarding budget hearings mid-stream.
Their plan is to pull all budget bills out of the Senate Finance and Assembly Ways and Means Committees and move them into "Committee of the Whole" meetings where they will be debated by all lawmakers on the floor of each chamber. Apparently, the majority leadership is unsatisfied with the minority's resolve to support Governor Sandoval's budget proposals and is hoping that this move will exert additional public pressure on minority members to levy new taxes on Nevada families.
The majority's plan is to parade tax consumers to the floor where there will be additional media exposure to create sob stories for the press. Their hope appears to be that this will create sufficient pressure on minority members to induce them abandon support of Governor Sandoval's proposed budget. What they hope will go unnoticed are the stories of Nevada businesses that would close their doors as a result of any additional tax hike and the newly unemployed who would be unable to feed their children.
A very small sampling of those stories has been collected by the Nevada Policy Research Institute and published under the title "Nevada's Tax Debate: The Untold Stories." The human destruction that results from high taxes and burdensome regulation, although generally overlooked, is nothing less than overwhelming. (That reminds me...did I mention that ATLAS SHRUGGED DEBUTS IN THEATRES THIS WEEK!!!)
NPRI further looks forward to the opportunity to make the case for reining in state spending in a more public setting, particularly in light of the rampant increase in spending over the past decade. State liabilities today far outstrip available resources and, without substantial reform, runaway costs for Medicaid and other programs in coming years will only exacerbate this problem. The need for reform in every major area of state spending - from K-12, to higher education, to Medicaid, to Public Safety - has never been more clear.
In addition, NPRI will take advantage of the additional floor votes that will result from this new strategy by including them in our Legislative Report Card for 2011.
Testimony to Senate Finance Committee, April 11
Below is my testimony this morning regarding SB 272, which would eliminate the current statutory requirement for baseline budgeting:
My name, for the record, is Geoffrey Lawrence and I am deputy director of policy at the Nevada Policy Research Institute. I'm happy to speak to you today regarding the key policy concepts contained in Senate Bill 272. As you may be aware, NPRI is a 501(c)(3) organization and, as such, does not advocate for or against specific legislation. However, I believe the main policy idea embodied in Senate Bill 272 has merit.
The bill's language does nothing more than to confer greater flexibility to the state budget director to adopt alternative methodologies for constructing the Executive Budget proposal. The budget director is currently compelled by statute to use the "baseline" budgeting method, which continuously carries over spending on all programs while adding in new spending to account for inflation, caseload adjustment and automatic, across-the-board, annual employee pay raises.
These so-called "roll-up" costs are substantial. For the 2011-2013 budget cycle, they would increase General Fund spending by $1.93 billion or 30.1 percent over the $6.42 billion spent in the 2009-2011 budget cycle. In fact, the terms "base" or "baseline" really are misnomers because the line is continually moving upward.
The statutory requirement for baseline budgeting hampers the administration's ability to adapt its budget proposal to the changing needs and resources of the state.
Further, the base budget figure creates a perpetual justification for burdening Nevada families with new or higher taxes. Even when tax revenues are growing, the baseline budgeting process motivates lawmakers to impose new or higher taxes when the growth in revenues does not keep pace with agencies' desired growth in spending. As I said, the base budget figure for the upcoming budget cycle represents a 30.1 percent increase over the current budget cycle. It is rarely the case that revenues grow at an equal rate and so, even if Nevada were in a period of sustained economic growth, it is likely that agencies' base budget requests would still outpace citizens' ability to finance that spending.
Perhaps the most glaring weakness of the baseline budgeting technique, however, is that it fails to impose meaningful accountability over the use of public funds. A baseline budget effectively means that all state programs receive a free ride into the next budget proposal, regardless of performance. In other words, the technique can be used to protect workers who are not doing their job.
While the administration and/or lawmakers can perform ad hoc reviews of the effectiveness of particular programs, a base budget does not systematically require state offices to justify their existence. Yet, every state office should constantly be reviewed to determine whether they are accomplishing the policy objectives outlined for them by lawmakers and, indeed, whether those objectives remain high priorities for the state and its people.
This is why the Nevada Policy Research Institute supports the concept of performance-based budgeting, known alternatively as "Results-Based Budgeting" and "Budgeting for Outcomes." Performance-based budgeting imposes systematic accountability over the use of tax dollars by more closely aligning spending with results.
Many state offices do not have clearly articulated goals and, as such, it is impossible to measure performance toward those goals. Others have performance metrics ill-suited to measure progress toward the supposed policy objective. For instance, the performance indicators currently used to evaluate Nevada Check-Up include:
1. Average monthly enrollment.
2. Average eligibility processing time in days.
3. Customer service phone call abandonment rate.
These metrics do nothing more than trumpet how many people have signed up for the program; they say nothing about whether or not its participants have benefitted. More befitting metrics might detail how the program has impacted the health insurance coverage rates of children or, even more significantly, how the program has impacted health outcomes for children.
Research nationwide shows that the majority of new enrollees in State Children's Health Insurance Programs, like Nevada Check-Up, held private health insurance policies prior to enrollment - indicating that most SCHIP programs have done a poor job at targeting families that really needed help. As such, it makes little sense to use performance metrics that trumpet high enrollment numbers and fail to measure progress toward the program's more fundamental purpose.
I don't mean to pick on Nevada Check-Up specifically. The performance indicators used for Nevada's Medicaid programs also focus on the number of enrollees and say nothing regarding health outcomes. Likewise, the performance indicators used for most K-12 educational programs focus on enrollment and not test scores or graduation rates. If the focus were shifted to providing the greatest benefit to program beneficiaries, then tax dollars would likely be used much more effectively.
The performance-based budgeting technique allows policymakers to outline their highest-priority policy goals while ensuring that limited state resources are used for the cost-effective realization of those goals. Programs that are not justified within the framework of policymakers' highest-priority goals - meaning those that have become irrelevant to the state's needs - are systematically eliminated as every dollar spent must be justified in terms of how it helps to meet one or more of those goals.
In its highest form, performance-based budgeting means that lawmakers grant greater autonomy to agency directors regarding the means with which they accomplish the policy objectives outlined by lawmakers. The expertise of state personnel often extends far beyond lawmakers' understanding of highly technical fields. As such, an efficient model of governance would see lawmakers establishing clear policy objectives and relying on the expertise of state personnel to determine how best to realize those objectives instead of debating highly specific budget line items. SAGE Commission Executive Director Frank Partlow has called this "the proper business of legislators."
Of course, with greater autonomy should come greater accountability. In Iowa, where performance-based budgeting has been pursued aggressively, the governor signs performance contracts with agency directors who agree to deliver quantifiable progress toward lawmakers' highest policy objectives. Failure to achieve the performance goals can result in disciplinary action, including dismissal. However, performance contracts are also structured to reward excellence. State agencies in Iowa that meet or exceed performance metrics and do so under budget are able to keep half of the savings, which can be used to provide bonuses to highly effective employees or to invest in capital equipment. The remaining half reverts to the state general fund, benefitting taxpayers.
Performance-based budgeting is simply about achieving the maximum return on tax dollars. As such, the approach has received bipartisan support in states where it has been instituted. In Nevada, former assembly speaker Barbara Buckley introduced a performance-based budgeting bill in 2009, which has been re-introduced by Assemblywoman Debbie Smith this session. Governor Sandoval has also indicated his support for a performance-based budgeting technique and has assembled a performance-based budget document.
NPRI has produced a blueprint for adopting performance-based budgeting in Nevada called "Better Budgeting for Better Results," and I believe a copy has been supplied to every lawmaker. I can make additional copies available to anyone who is interested.
Senate Bill 272 would remove the most prominent obstacle to an effective performance-based budgeting approach by eliminating the requirement to adhere to the baseline approach. It should be noted, that Senate Bill 272 would not preclude the state budget director from creating a base budget, or from adopting any other budgeting methodology; it simply allows the budget director to choose whatever method is deemed most appropriate.
Interest groups trying to block Medicaid reform
Steve Tetreault reports today that interest groups in Washington, DC are bemoaning proposals for reform of state Medicaid programs on the basis that fewer people might receive free health benefits in the future.
Yet, one thing is remarkably clear: On its current course, Medicaid spending is completely unsustainable. Medicaid is the fastest-growing expenditure item in all state budgets and, in some states, Medicaid spending has already surpassed spending on all other programs to become the largest budget item. Without reform, Medicaid spending will eventually crowd out states' spending on all other programs, including K-12 education...and this is without considering the financial burden the Medicaid imposes on the federal government.
Medicaid programs are jointly funded by states and the federal government according to a formula that promises greater federal support to states with lower levels of median personal income. The federal government promises to pick up at least half the cost of Medicaid in every state, however. Once a state has opted into the Medicaid program, its benefits become an automatic entitlement for thoe who are eligible. Minimum eligibility requirements are also established at the federal level and, while states can go beyond the minimum, in general, they are obligated to provide coverage to the disabled, the indigent elderly and impoverished children.
State participation in Medicaid is further hamstrung by a cadre of inflexible procedural rules set by the federal Department of Health and Human Services. These rules govern how money within the program must be spent. Yet, many of these rules are cost-ineffective from the standpoint of health outcomes. In fact, there is substantial research to suggest that Medicaid beneficiaries would have better health outcomes if they were uninsured.
This has led many thinkers to consider how Medicaid could be reformed and restructured in order to provide greater health outcomes while also containing the program's runaway costs. Republicans in the US House of Representatives are considering changing federal contributions to Medicaid from a match rate into a block grant. As Charles Duarte, Nevada's Medicaid director says, "The idea of a block grant can be a good thing if the flexibility [from restrictive rules] is there and if the methodology for calculating the grant allocation is fair and reasonable."
In a recent NPRI policy study, "Better Budgeting for Better Results," I outlined ideas for Medicaid reform that lawmakers can pursue at the state level. There are a number of federal waivers for which Nevada can and should apply. In addition, Medicaid benefits could conceivably be restructured around a health savings account.
Whatever the case, it is clear that Medicaid is in dire need of reform or it will eventually bankrupt the states. Those who oppose Medicaid reform do so at their own peril.
UNR provost: College is not a job-training activity
And to think "experts" keep telling us that more money for higher education is the key to economic diversification. Maybe those "experts" should talk to the individuals running UNR.
Despite discomfort among students about the prospect of finding employment after graduation, UNR Provost Marc Johnson said alumni employment is not the university's primary concern.
"I guess my attitude toward (the survey) is that college is not a job-training activity," Johnson said. "The university can't be held responsible to get people jobs."
Johnson said the university strives to create well-rounded graduates.
Johnson also said the results of the alumni employment survey are meant to assist individual colleges and not to assess the university's job creation for graduates. Because the university is not concerned with tracking graduate employment, the office of the Provost leaves restructuring in the hands of the deans of the different colleges on campus. [Emphasis added]
When proponents of limited government, like NPRI, talk about why government shouldn't choose the winners and losers in a society, this is a perfect example.
Some people think universities should be about the liberal arts and learning as its own end. Some think they should be a way to grow the economy. Others think a degree should be a person's ticket to a better future. Throw in the waste that inevitably comes from any government action with this multitude of cross purposes, and you've got a complete cluster. (Note: No one's "wrong" here. It's just a question of priorities and recognition that no institution can be all things to all people.)
Despite doubling Nevada's subsidy to higher education over the past 12 years and nearly doubling the amount it gives to UNR and UNLV, Nevada's economy lacks diversification and neither UNR nor UNLV graduates more than 55 percent of its students within eight years.
So is education at UNR a job-training activity? Let UNR, free of taxpayer handouts, decide that for itself.
NTU warns Nevada lawmakers
This morning, the National Taxpayers' Union sent a letter to Nevada lawmakers warning of the potential impact of proposed increases in Nevada's "sin taxes" on tobacco and alcohol. NPRI has also warned lawmakers against these highly regressive tax instruments in the past.
Here is what NTU had to say on the topic:
While proponents contend that these punitive tax hikes are a "win" for Nevada taxpayers, the reality is that these regressive schemes rarely, if ever, produce the promised revenue and are burdensome to small businesses and the poor.
Senate Bill 386, which will be heard in the Senate Revenue Committee tomorrow, would hike cigarette taxes to $2.00 per pack, an increase of 150 percent from the current rate of $0.80 per pack. The Assembly Taxation Committee will also be taking up Assembly Bill 333, which would raise cigarette taxes to $1.70 per pack and other tobacco products taxes from 30 percent to 55 percent of the wholesale price. AB 333 would also hike levies on beer, wine, and liquor. All told, this bill would constitute a tax increase on Nevada's citizens and businesses of more than $250 million at a time when the state is still struggling to extricate itself from the recent housing and financial crisis.
Despite fanciful claims from their advocates, many tobacco tax hikes elsewhere have failed to yield the desired revenue. New Jersey reported a $52 million shortfall in tobacco tax revenues after it raised its cigarette tax by 17.5 cents. Subsequent to boosting its cigarette tax by 50 cents in 2009, the District of Columbia reported that it collected $15 million less than expected, and $7.6 million less than it collected prior to the tax hike. Other states, including Arkansas, Maryland, Mississippi, and Rhode Island, have also reported gaps in revenue collections following tobacco tax hikes.
While tobacco and alcohol products may seem like politically-convenient targets for tax increases, the reality is that they are a major source of business for convenience stores and other retail outlets. Raising taxes on cigarettes, beer, wine, and liquor would place Nevada businesses at a serious competitive disadvantage to those in neighboring states like Arizona, Utah, and California, which in some cases would levy significantly lower taxes if SB 386 or AB 333 were to pass. Moreover, since moderate income residents are more likely to partake in these products, they will disproportionately feel the impact of an increase in tobacco and alcohol taxes. Raising a tax that threatens to curtail commercial activity (thereby shrinking the revenue base) and heavily burdens the poor makes no economic sense.
NPRI testimony on AB 159
Yesterday, NPRI's Karen Gray, who has a vast amount of experience requesting public records, offered the following testimony on AB 159, which would revise provisions relating to public records and appears to succinctly eliminate the significant obstacles government entities often hurl at members of the public who request public records. Karen previously blogged on AB 159 here.
Good morning Madame Chairwoman and Members of the Committee,No action was taken yesterday by the committee, Assembly Goverment Affairs, which heard the bill.
My name is Karen Gray and I am an education researcher with the Nevada Policy Research Institute. I want to thank you for this opportunity to speak regarding Assembly Bill 159.
Assembly Bill 159, a bill in simple in form, could have tremendous impact on government transparency in Nevada. And, while NPRI remains neutral on AB 159, I would like to take a few minutes to share some of my experiences as a person who frequently makes public records' requests to state and local governments as well as smaller public bodies.
As a researcher, accessing public records can be a weekly, if not a near-daily activity. Nevada law requires public records not otherwise declared confidential by law to be open to inspection at all times during business hours. However, in practical application, it is rarely the case that one can simply walk into an agency, request inspection and then sift through a stack of records.
Sections I and III
While I personally have never had an agency require me to make my own copies of public records, as indicated in Section I of AB 159, I have been denied access to public records because the records contained confidential information or were maintained among other documents with confidential information. I have also been denied inspection of public records simply because the records were housed on a computer system.
However, the more typical response from an government agency is to charge a large fee to create a public viewing file.
In one such instance, the public records I sought were maintained on a computer system--which is becoming more standard in practice. It was the policy of this particular agency to prohibit public access to its proprietary computer system. As such, NPRI was imposed fees of $106 for inspection of the records. Here's how the agency explained the charges: "When documents are stored in electronic format all the documents are lumped together, albeit in different locations..... Therefore we actually have to print files to sift out the confidential records to develop a Public viewing file."
In another situation, ongoing since August 2010, I was informed the records I seek are "not readily available in the public domain." These records are maintained in electronic format, are housed among hundreds of other documents containing confidential information and themselves contain confidential information. As such, NPRI has been assessed $560 for the redaction of confidential information in order to access the otherwise open portions of the documents.
Section II
Since NRS 239.0107, the statute section II of AB 159 seeks to clarify, currently states the statute should not be construed to prohibit oral requests, further clarification of this fact would seem unnecessary.
However, it was just six weeks ago, that a citizen made a public record's request seeking budget and expense records during a public meeting. The public body's president informed that person that she "must" put her request in writing. The woman left the meeting ill-informed.
Later that same evening, I, too, made a public record's request on the record. Like the woman earlier, I, was also informed that I "must" put my request in writing. It was not until several days later that the public body agreed I could make a verbal request for records.
That same week, in another unrelated situation with this same agency, although not the governing body, I was forewarned by top level officials that public records requests made verbally were not subject to the timelines and responses afforded written requests under NRS 239.0107.
Section V
As a researcher, I often review minutes and recordings of public meetings. And while many public bodies are moving to put these records online, not everyone has access to the internet, or a computer for that matter. For those people, accessing minutes and meeting recordings can be costly. I have been charged as much as $1 a page for meeting minutes. I have also been charged anywhere from $5 to $10 a CD for meeting recordings. These charges did not occur years in the past, but rather, just in the past 6-8 months.
Section VII
Lastly, I want to share an experience that may be relevant to section VII.
About one year ago, I was researching several years worth of public meeting agendas and minutes. This research took place in a certain division in the county clerk's office. While I wasn't charged a fee for staff to locate the records, I was advised of fees when I sought to scan some of the documents.
I was informed that I would be charged $1.00 per each page I copied. To clarify the situation: I was sitting alone in a viewing room, searching through stacks of meeting minutes. As I located records pertinent to my research, I scanned them into my laptop with my own equipment. For this, I was to be charged $1.00 for each page I scanned.
This happened on three separate occasions in this office. However, in each instance, after insisting on a written estimate of costs, I was eventually allowed to scan the records without charge.
In closing, I just want to, once again, thank the Committee for allowing me to share a few of my experiences.
Nevada spends $12 million to 'create' five jobs
If you ever need the perfect example of why government shouldn't be involved in economic development, consider this amazing story from Sunday's Las Vegas Sun.
Some statistics about Copper Mountain Solar, a 775,000-panel array outside Boulder City that went online last year as the largest photovoltaic solar plant in the United States, might seem surprising.Sempra Generation also received $42 million from the federal government.
And not in a good way. ...
Permanent jobs created: 5. That's not a typo. State incentives developer Sempra Generation received: $12 million. That's not a typo, either.
Gov. Brian Sandoval says the public money was well spent. "Every job is a great job," Sandoval said when asked if the benefits of the project justify the incentives. "It's the essence of what we are trying to accomplish here ... in terms of diversifying the economy and taking advantage of our renewable energy resources."
This is the problem with government-directed economic-development efforts. Politicians get positive media coverage from "creating jobs" and are long gone by the time reality surfaces and the jobs are few and far between, but taxpayers are left subsidizing politically connected business owners.
Such giveaways also undermine the strong entrepreneurial spirit that Nevadans are showing. In 2010, Nevada and Georgia had the highest entrepreneurial activity rates in the country.
Individuals don't need special tax breaks to create businesses and jobs. They need the freedom that comes with an equal and low tax and regulatory burden. Unfortunately, entrepreneurs in Nevada face numerous tax and regulatory barriers.
If politicians want to create jobs and not photo-ops, they should work to lower taxes for all and reduce the red tape businessmen and women face. It's not as glamorous, but being a public servant, compared to politician, rarely is. It is, however, a whole lot more effective in the long term.
