Paradigm shifts in state budgeting

In 2003, California could have laid off every one of its state employees and still had a deficit, according to Alan Greenblatt of Governing Magazine. He explains, "Most of what states do, after all, is simply write checks to schools, hospitals and other entities that actually provide services." Which helps explain why, traditionally, attempts to reign in state costs have focused less on state personnel, overhead and administrative costs and more on programmatic and service cuts. Not anymore—with employee pension and health care costs soaring, across the nation states are now engaging in a cost-cutting paradigm shift and are focusing on getting state internal costs down in order to preserve services as much as possible.

Wisconsin appears to be leading the charge, at least so far as personnel cost-cutting goes. The most recent data from the U.S. Bureau of Labor Statistics show the number of state employees declined faster in Wisconsin in the second quarter of 2011 than in any other state. With a 10.1% decrease in the number of state employees compared to the second quarter of 2010, Wisconsin's state job-cutting surpassed every other state's over that year.

In addition, the recent final report from the governor's Commission on Waste, Fraud, and Abuse identifies other, mostly administrative, savings to the state. Suggestions in the report aimed at internal savings include changes to overtime policies, better uses of technology in order to improve efficiency, and greater use of quality assurance systems for infrastructure projects.

Balancing the state budget with significant internal cost-cutting, as opposed merely to passing the cuts along to local governments, is a laudable goal. If it rights the state's financial house, it has the potential to benefit taxpayers today and tomorrow. What remains to be seen, however, is the extent to which a balanced budget will empower state policymakers to invest in service quality and/or access.

What if Wisconsin were to be at the forefront of a new wave of policymaking: one where policy and budget decisions were made based on citizens' needs and desires, programs' efficacy and outcomes, and statewide strategic goals?

Federal revenues and the state budget: What happens when the gravy train goes off the rails?

Wisconsin annually ranks below average when it comes to recouping our share of federal aid. In 2008, for example, the state was 38th in percentage of revenue received from the federal government.

But in 2009, the amount of federal aid available to states increased dramatically due to the passage of the American Recovery and Reinvestment Act (ARRA), and the amount of federal revenue received by Wisconsin increased 26%. Wisconsin did relatively well in garnering our share of the ARRA gravy train--in total, federal aid to the states increased 16%.

While most of the federal aid Wisconsin receives continues to be categorical aid in the form of public welfare assistance, such as Medicaid and Temporary Assistance to Needy Families (TANF), we appear to have gained some ground in terms of discretionary, competitive federal grants. The increase in our public welfare grants from 2008 to 2009 was proportionately less than our overall federal revenue increase, at 20.5%.

Nationally, the total amount of federal categorical and competitive grants to states increased 13% from 2008 to 2009, much of which was attributed to $82 billion in education stimulus aids. The latest issue of Education Week has a great graphic ranking the states by receipt of federal education stimulus funds. Since the passage of the ARRA, $100 billion in federal economic stimulus funds have aided education, including $5.3 billion awarded through six competitive grants, the most noteworthy being the Race to the Top initiative.

Of the 40 states receiving competitive education stimulus funds, Wisconsin ranks 28th in total grants awarded. Our state received $4.1 million in the Investing in Innovation program, to be used to scale-up promising educational programs, and $13.8 million to implement a statewide longitudinal student data system. When our total competitive stimulus winnings are analyzed per-pupil, however, our ranking drops to 30th. The competitive stimulus aid amounts to $20.55 per Wisconsin public school student.


The education stimulus funds are arguably more impactful than the other types of stimulus monies, because over a third of Wisconsin's state budget is spent on education. Our below-average showing in the education stimulus competition means more budget pressure for us than for most other states. On the bright side, when these stimulus funds dry up, Wisconsin will feel the pinch while big winners like Florida and New York may feel a vise grip.

Wisconsin ranks in top ten in child care costs: child care more expensive than college

Wisconsin ranks among the 10 most expensive states for child care in a new report from the National Association of Child Care Resource and Referral Agencies.


The NACCRRA found that full-time care for an infant in the average Wisconsin child care center, at $10,520 per year, exceeds 13% of the annual median family income for a two-parent family, placing Wisconsin among 36 states for which the cost of infant care exceeds 10% of the median family income. For a family earning at the poverty line, full-time infant care would exceed 57% of annual income.

In addition, Wisconsin is 4th most expensive when the cost of center-based care for a 4-year-old is considered ($9,039 per year, or over 11% of the median family income) and 3rd most expensive for afterschool care for school-aged children ($8,223 per year, or over 10% of the median family income).

As someone who no longer needs full-time child care with last week's start of the school year, I was well aware of the cost. But I was quite surprised by the report's finding that child care has become one of the largest monthly outlays for Wisconsin families, costing more than the average monthly rent payment, grocery bill, utility bill, and even health care. In fact, average child care costs for two children exceed the average mortgage cost for Wisconsin families.


The good news, if you choose to see it that way, is that these Wisconsin families should have no problem affording college tuition when the time comes--they are already paying more for child care than they would for most of our state's public four-year universities.

Gasbag or effective legislator?

Some people accuse the U.S. Congress of being all talk and little action. Now there's a website that's tracking that talk in a fun, interactive way, allowing you to pit any two Senators or members of Congress against one another in a war of words.

For example, when Wisconsin's two Senators are compared, it's clear that Sen. Russ Feingold spends much more time in front of the mike than Sen. Herb Kohl. In the 110th Congress (2007-2008), Feingold spoke nearly five times more words from the Senate floor than Kohl, with 113,965 to Kohl's 23,107, ranking Feingold 13th most loquacious. Of all the words uttered by Wisconsin's 10 legislators, Feingold spoke 42% and Kohl spoke 8%.

And what were they speaking about? The most commonly uttered word by Feingold was Iraq, with Americans and security also ranking highly. Kohl said care most often, and help and health frequently as well.

The stats for the rest of the state's delegation (in alphabetical order):
Rep. Tammy Baldwin (D)--13,672 words, health, insurance, and care are most common
Rep. Steve Kagen (D)--18,875, health, care, children
Rep. Ron Kind (D)--18,243, country, farm, tax
Rep. Gwen Moore (D)--12,457, Milwaukee, school, health
Rep. Dave Obey (D)--34,643, billion, earmarks, percent
Rep. Tom Petri (R)--9,710, loan, students, FAA
Rep. Paul Ryan (R)--25,177, budget, tax, spending
Rep. Jim Sensenbrenner (R)--3,395, rights, property, research

It's probably fair to say, based on the stats above, that Feingold is most responsible for Wisconsin's rank of 18th among states in terms of verbosity.

Unfortunately, the site can't tell you whether the legislators were speaking for or against any of these ideas. But now you can judge whether you think you're getting too much talk or not enough out of your representatives in D.C., and whether the talk is on the issues that matter most to you.

Who's responsible for the achievement gap?

A new federal study of standardized test scores finds Wisconsin has the most persistent achievement gap in the nation between African-American and white students. This story received prominent play in the New York Times on Tuesday, but was covered with a just short article inside the local section of the Milwaukee Journal Sentinel on Wednesday.

The Times coverage quotes the head of the Education Trust, a national education advocacy group, as saying principals in Wisconsin were "stunned" to find out the results.

It sounds incredulous that Wisconsin principals weren't truly aware of the extent of the problem. But it is important to note that the findings are based on a national standardized test, the National Assessment of Educational Progress (NAEP) and not on the state standardized test, the Wisconsin Knowledge and Concepts Exam (WKCE). NAEP scores are always presented at the state level because the test is actually taken by a sample of students across the state, and not by every student in every district, as is the WKCE. So principals are probably less likely to feel the statewide NAEP results truly reflect the status of their school or district. In addition, some studies have shown that the NAEP is more rigorous than the WKCE; a score earning a grade of "proficient" on the WKCE is much lower than a proficient score on the NAEP. So principals whose students do well as defined by the WKCE might be "stunned" by lower performance on the NAEP.

At any rate, the federal study shows that Wisconsin schools are losing ground in comparison with schools in other states when it comes to narrowing the racial achievement gap. The study doesn't note which states have open enrollment programs, which allow students to choose to attend schools outside their resident districts. Might the presence of this program in Wisconsin help explain our "stunning" results?

Most of the state's African-American students attend school in districts in southeast Wisconsin, which is also where most of the students participating in open enrollment (and the smaller Chapter 220 interdistrict integration program) attend school. Consequently, in many of the region's school districts, non-resident students make up a significant portion, if not nearly all, of their minority student population. In addition, the region's scores on the WKCE, on the whole, lag behind the rest of the state's.

Open enrollment and Chapter 220 may thus have a relationship to the achievement gap if the performance of the students opting for these programs differs from that of other students. This kind of gap might not get addressed if there is a perception within a district that performance should be measured mostly by the test scores of the district's "own" students, meaning resident students, because these students are more likely to stay in the school or district throughout their schooling career and are truly products of that district. While non-resident students may in fact be less likely to spend their entire schooling career in one district, if much of a district's diversity comes from its non-resident students, how can this attitude result in anything but a racial achievement gap?

If a district is only responsible for resident students, then no one should be stunned by the pursuant gap. But it's harder to sustain this argument when it is a statewide result being analyzed. These children are all Wisconsinites. They all count when it comes time to measure up to the rest of the country.

If the scores of resident students could be compared to those of non-resident students, we could analyze the extent to which the achievement gap may or may not be due to a lack of concern about non-resident performance. But state law does not instruct districts to disaggregate the scores of open enrollment or Chapter 220 students. Some districts, of course, likely do so anyway, at least internally, which may be the basis for the perception of success with their "own" students. But there is no way of knowing, on a statewide basis, whether the children who have exercised a choice to attend a school outside their resident district are being left behind, causing Wisconsin's achievement gap to grow ever larger.

Free to be you, Milwaukee

Free-market oriented Reason magazine has compiled a ranking of the top cities for personal freedom. Says the article, "From New York to Los Angeles, from the People’s Republic of Cambridge to the west Texas town of El Paso, city governments are using and abusing their authority to tell the rest of us how to live. Two decades of healthy economies and dropping crime rates have given many city councils the luxury of worrying about less urgent issues, from the last wisps of secondhand smoke to the discomfort of fatted geese."

Milwaukee ranks 6th in order of most personal freedom, behind Las Vegas, Miami, Denver, Louisville, and Kansas City. The bottom five cities include Chicago, Seattle, New York, San Diego, Boston.

Brew City would have ranked higher, but, ironically, our alcohol regulations kept us down. Luckily our laidback attitudes about regulating food consumption (no ban on trans fat here!) and tobacco kept our position in the top ten. Apparently the state's lack of a helmet law for motorcyclists helped, too.

Who would have thought that Milwaukee's mores are more "wild west" than Midwest? Or maybe, as the intro states, Milwaukee's city government has been too busy dealing with a troubled economy and persistent crime to become a nanny state. Are taxes on freedoms a luxury we just can't afford, unlike those booming cities at the bottom of the rankings?

Perhaps we should utilize our free status as a recruitment ploy to encourage new businesses and entrepreneurs to flock here: Milwaukee...the only city where you can enjoy some fried cheese while riding with the wind in your hair. But now that Chicago has repealed its ban on foie gras, we've probably lost any hope of absorbing that city's gastronomic refugees. Maybe we can still attract New York's smokers tired of lighting up outside in the cold.

Wisconsin leads in great places to work

The 2008 list of the 50 best small and medium companies to work for in America, released this week by the Great Place to Work Institute and the Society for Human Resource Management, has more companies in Wisconsin (7) than in any other state. The rankings are the result of employee surveys and a company culture audit.

Does having happy employees make a difference to the economy? According to the Great Place to Work Institute, the firms on the list of 100 Best Places to Work have outperformed the S&P 500 every year since 1998, with some years seeing double the return of the S&P.

One explanation may be that employees seem to value training and professional development opportunities, which are frequently cited by employees in "good" companies. An atmosphere in which risk-taking is encouraged is another aspect that makes employees happy and may help the bottom line.

If the prevailing corporate culture in Wisconsin is different than in other states, that could help bolster our economy during a national recession. It's something to think about when policymakers are faced with decisions that impact employers.

Wisconsin's representatives among small companies (50-250 employees) include:
Badger Mining Corporation, Berlin http://www.badgerminingcorp.com/
Kahler Slater, Milwaukee http://www.kahlerslater.com/
Runzheimer International, Rochester http://www.runzheimer.com/
Cascade Asset Management, Madison http://www.cascade-assets.com/

Among medium companies (251-999 employees):
ACUITY, Sheboygan http://www.acuity.com/
Stark Investments, St. Francis http://www.starkinvestments.com/
4imprint, Inc., Oshkosh http://www.4imprint.com/

In addition, Wisconsin had three companies on the 2008 "100 Best" list of larger firms:
Johnson Financial Group, Racine http://www.johnsonbank.com/
Robert W. Baird, Milwaukee www.rwbaird.com
S.C. Johnson & Son, Racine http://www.scjohnson.com/

Metro Milwaukee among safest cities for teen drivers

A report released by Allstate insurance company this month finds the metro Milwaukee area is among the "least deadly" places for teen drivers.

The study analyzed federal crash statistics, Allstate claims data, and U.S. Census data to score the 50 largest metro areas nationwide on their rates of fatal accidents involving teen drivers. Milwaukee ranked 45th, just behind Boston and ahead of Cleveland.

High speeds most often were the cause of these crashes, but drugs and alcohol can play a part, too. The study finds Milwaukee had the fewest drug-related crashes, at 0%, but relatively high alcohol-related crashes, at 11%. Speed was the contributing factor in over 40% of all fatal crashes involving teen drivers in metro Milwaukee.

In addition to ranking the metro areas, the study highlights the disparities in fatalities between rural and urban areas. Nationally, fatal accidents occur two times more frequently in rural areas than in urban areas, with 51.5 fatal crashes per 100,000 teens outside metro areas versus 25.4 such crashes per 100,000 teens in the metro areas. The pattern held true in Wisconsin, where the metro rate is 23.4 fatal crashes per 100,000 teens but the rural rate is 47 fatal crashes per 100,000 teens.

Despite being mostly rural, states like California, Utah, Oregon, and Washington had fewer than 24 fatal crashes per 100,000 teens, while Wisconsin's mostly rural nature resulted in a rate of 30.1 fatal crashes per 100,000 teens. Thus, certain state policies are thought to play a role in reducing fatalities. For example, while the lack of a seat belt was a contributing factor in a third of all crashes, in California the seat belt non-usage factored into as few as 7% of crashes in San Jose. All six California metro areas ranked at the bottom for unbelted fatalities.

The contributing factor found most often in Milwaukee? Lack of a seat belt, a contributing factor in 45% of fatal crashes.

PPF Pearls: Federal health funds not a shot-in-the-arm for Wisconsin

A report released this week confirms yet again that our state receives far fewer federal dollars than the average state.

This time the Trust for America's Health analyzed funds from three federal health agencies and found Wisconsin ranks 45th in terms of per capita spending by the Center for Disease Control, 48th in spending by the Health Resources and Services Administration, and 31st in spending by the Hospital Preparedness Program.

While most of these federal funds are distributed on a formula basis, according to each state's population, some are competitive grants. As the Forum's past research has shown, these grants are a very important piece of the federal funding pie; compared to formula funding, local policymakers have much more control over their ability to attract competitive funds.

In the area of public health, one reason Wisconsin may not be competitive for these grants is because of the low priority our state places on public health spending. The same report finds Wisconsin spends just $9.16 per person annually on public health, ranking us 50th out of the 50 states and D.C. The national median for annual state public health spending: $33.26 per capita.

State resource management merits average grade

Wisconsin scored a B- in the latest assessment by the Pew Center on the States of state government performance, the same score as in 2005.

While a B- sounds OK, because Pew doesn't grade on a curve, it's actually just average. Of the 50 states, 18 scored B-, 13 scored above that and 19 below. The highest grades were earned by Utah, Virginia, and Washington, which scored A-, and the lowest by New Hampshire, which scored D+.

According to the report,

"States that received the highest grades are making better management a top priority. Washington state holds governor-led public meetings to monitor program results and improvements; Utah has implemented a financial tracking system that provides real-time data for decision-making; and Virginia provides employee rewards linked to improved service delivery and agency goals."

Pew, in cooperation with Governing magazine, evaluated the states on how well they were or weren't advancing in areas such as recruiting and retaining highly qualified employees; using information and technology to measure performance and communicate more effectively with the public; managing fiscal resources from budgeting to procurement; and planning for, maintaining and improving roads, bridges and buildings.

Wisconsin's big weaknesses came in the areas of structural balance in the budget, capital planning, and managing for performance. That our state has the second highest turnover rate for veteran state employees didn't help, either. One bright spot mentioned was Wisconsin's Legislative Audit Bureau, which is credited with going after hot-button issues and with communicating findings to citizens in user-friendly ways, including podcasts and RSS feeds.

The criteria used to awards the grades are as follows, according to Governing:

Information
• The state actively focuses on making future policy and collecting information to support
that policy direction.
• Elected officials, the state budget office and agency personnel have appropriate data
on the relationship between costs and performance and use these data when making
resource-allocation decisions.
• Agency managers have the appropriate information required to make program
management decisions.
• The governor and agency managers have appropriate data that enable them to assess
the actual performance of policies and programs.
• The public has appropriate access to information about the state, the performance
of state programs and state services and is able to provide input to state policy makers.

People
• The state regularly conducts and updates a thorough analysis of its human-capital needs.
• The state acquires the employees it needs.
• The state retains a skilled workforce.
• The state develops its workforce.
• The state manages its workforce-performance programs effectively.

Money
• The state uses a long-term perspective to make budget decisions.
• The state’s budget process is transparent, easy to follow and inclusive.
• The state’s financial management activities support structural balance
between ongoing revenues and expenditures.
• The state’s procurement activities are conducted efficiently and supported
with effective internal controls.
• The state systematically assesses the effectiveness of its financial operations
and management.

Infrastructure
• The state regularly conducts a thorough analysis of its infrastructure needs and has
a transparent process for selecting infrastructure projects.
• The state has an effective process for monitoring infrastructure projects
throughout their design and construction.
• The state maintains its infrastructure according to generally recognized
engineering practices.
• The state comprehensively manages its infrastructure.
• The state creates effective intergovernmental and interstate infrastructure
coordination networks.

Defense Department cares for children best, Wisconsin is 8th

The National Association of Child Care Resources and Referral Agencies (NACCRRA) has released new state rankings on child care standards and oversight. The report, "We Can Do Better: NACCRRA’s Ranking of State Child Care Center Standards and Oversight," which looked at all 50 states, the District of Columbia, and the U.S. Department of Defense (DoD), found that “the DoD child care system stands alone as a model for the states” and is the only system to be ranked in the top 10 for both standards and oversight.

Wisconsin ranks 8th for standards, scoring 62 out of a possible 100, for things such as student-teacher ratios, teacher certification and training, and teacher background checks. Wisconsin does not satisfy the industry recommended standards for child care center directors' credentials because our state does not require center directors to possess a post-high school degree.

Unfortunately, on the oversight rankings, Wisconsin plummets. Our state ranks 47th, scoring 11 out of a possible 50, mainly because the state does not visit licensed child care centers frequently enough, the state licensing staff is not required to have any degree higher than an associate's degree, and parents cannot access licensing reports or complaints online. What does this mean? According to NACCRRA:

It is not enough to be moving in the right direction with strong child care standards if a state’s oversight system doesn’t measure up. Without adequate oversight, there is no way to evaluate whether state standards are actually being met.

Thus, we have an accountability problem. For a government watchdog group like the Forum, this is an issue...why are we spending taxpayer money to license these child care providers in the first place if we don't follow up and ensure they continue to meet the requirements?

(Note, too, that not only are taxpayers on the hook when licensing standards aren't enforced, parents, who pay a pretty sum, are as well. The report finds the average annual cost of child care in Wisconsin is $11,855 for infants and $6,959 for preschoolers.)

Wisconsin ranks 7th for pre-K access

The 2006 State Preschool Yearbook released today by the National Institute for Early Education Research at Rutgers (NIEER) ranks Wisconsin seventh for access to government-funded pre-K programs for 4-year-olds. The state ranks 22nd in access for 3-year-olds.

The report finds that 49% of all 4-year-olds in our state in 2006 were enrolled in either state-funded K4 (32%), state-funded or federally funded Head Start (9%), or a state-funded special education program (8%). For 3-year-olds, the total figure is 15%.

From the report:
Wisconsin’s state constitution has included a commitment to provide free education for 4-year-olds since it was adopted in 1848. The Four-Year-Old Kindergarten (K4) program dates back to 1873. This initiative continues today, though there was a suspension of state funding from 1957 to 1984. The K4 program is currently available in about half of Wisconsin’s school districts, which receive 50 percent of the standard state per-pupil funding amount to provide half-day classes for 4-year-olds, or 60 percent if the school also offers parent support. Public schools may offer prekindergarten directly, or contract with Head Start, private child care centers, or family child care homes to provide services. The state has pushed successfully for program expansion in recent years, serving more children in districts with existing programs and opening programs in districts that did not have K4 previously. The growth continues, with 23 new districts implementing K4 in 2006-2007.

A Washington Post story about the report notes:
...[R]esearch highlighting the importance of early learning is prompting more and more states to add pre-kindergarten programs. "Virtually every state has a very strong movement toward doing a better job with pre-k," said Arthur Rolnick, a senior vice president of the Federal Reserve Bank of Minneapolis and part of a group of business leaders calling for giving low-income kids earlier access to public school.

Nationally, the report finds that states spent a total of $3.3 billion last year on pre-kindergarten, up from $2.8 billion in 2005. The state figures do not include federal and local governments' contributions. Wisconsin state aid totals $62.4 million, or $2,971 per child enrolled, placing us 23 in the resource ranking.

Of the ten quality benchmarks created by the NIEER, Wisconsin programs meet six. Those we don't meet? According to the NIEER, we lack teacher quality and accountability (in the form of state oversight of program sites).

This non-prescriptive approach to program quality is the result of the balance we struck here in Wisconsin between state and local control. Wisconsin allows school districts and Head Start providers to collaborate and contract with private providers. The reasons for doing so vary from keeping costs down, to increasing access, to providing greater choice for parents. We call this community collaboration and the theory is that it will encourage public and private providers to work together to better meet the needs of parents. What we don't know is whether this model is truly meeting Wisconsin parent needs. The Forum is currently drafting a survey designed to help answer that question. We will be asking parents about their experiences with early childhood education, including pre-K, and gathering their opinions about the programs they desire and the programs that are available to them. This survey will be the start of a new three-year project by the Forum to measure the costs and benefits of high quality early childhood education to our regional economy. Stay tuned.

Wisconsin's move to the "new economy"

The Kaufman Foundation's latest ranking of states puts Wisconsin 30th. The 2007 State New Economy Index finds that states in the Midwest, including Wisconsin, are not adapting their economies to compete effectively in regional and global markets. The report uses 26 indicators to rank the states.

Wisconsin's highest rank, 12th, is for package exports; its lowest rank, 47th, for job churning. Our state's rank on most of the other indicators hovers around 30th, although we rank 15th in both online population and technology in schools.

The most interesting and relevant analysis for our region, however, is the report's conclusion that economic success in the future will not be due to old-fashioned, industrial-based versions of economic development, such as big-company relocations. The new model of economic development will include the creation and retention of value-added, high-wage jobs. The states ranking highest show above-average levels of entrepreneurship, and most have a solid infrastructure that fosters and supports technological innovation. Many also boast high levels of domestic and foreign immigration of skilled knowledge workers seeking good employment opportunities coupled with a good quality of life.

Which model of economic development is in use in southeastern Wisconsin?