Topic: Public Finance
June 29, 2017

TWO STATES, Rhode Island and Indiana, have been able to make major changes to the traditional Medicaid programs, which allowed them to curb costs and enhance their recipients' quality of care. Patient satisfaction went up sharply. In 2009 Rhode Island sought and won an unprecedented waiver from Washington. . . As Alexander noted, "These reforms, in turn, gave patients greater independence and better outcomes, and their satisfaction soared. . . . The imaginative remedies we implemented were so responsive and customized to our patients' needs that their experiences and health improved even as we spent less." . . . Indiana instituted even better Medicaid reform. The Hoosier State has long pushed the idea of health savings accounts (HSAs) coupled with high-deductible health insurance that covers catastrophic medical expenses. As the state has observed: "About 96% of [the state's] employees have voluntarily elected to enroll in a consumer-driven health plan option. In its first four years of offering [such options] to state employees, the state saved 10.7% annually, as employees used hospital emergency departments at lower rates, had fewer physician office visits, lower prescription costs and a higher generic-medication dispensing rate." . . .Now the Hoosier State is expanding this state-employees concept and applying it to its Medicaid recipients.

June 28, 2017

In a big victory for labor, the Los Angeles City Council on Wednesday approved a contract giving six raises in five years to members of the Department of Water and Power’s biggest union. The vote came despite objections from some council members over what they considered a rushed process that didn’t give them time to scrutinize the deal. It also is expected to open the door for other labor groups at City Hall to demand generous salary packages at a time when the city is struggling with tight budgets and financial woes

June 27, 2017

In Santa Barbara County, the 2017-2018 budget calls for laying off nearly 70 employees while dipping into reserve funds. The biggest cuts are to the Department of Social Services, which works to aid low-income families and senior citizens. Meanwhile, $546 million of needed infrastructure improvements go unfunded as Santa Barbara County struggles to pay off $700 million in unfunded pension liabilities. County officials estimate that increasing pension costs may cause hundreds of future layoffs. Unfortunately, Santa Barbara County is far from alone. Tuolumne County is issuing layoffs in the face of rising labor and pension costs from previous agreements. In Kern County, a budget shortfall spurred by increased pension costs has led to public safety layoffs, teacher shortages, budget cuts, and the elimination of the Parks and Recreation department, even as Kern County’s unfunded pension liability surpasses $2 billion. In the Santa Ana Unified School District, nearly 300 teachers have been laid off after years of receiving pay raises that made them unaffordable, including a 10% raise in 2015.

June 26, 2017

But despite the upbeat rhetoric, a crisis is looming in the nation’s second-largest school district as enrollment falls from a projected 514,000 in 2017 to 480,000 in 2020. Since the state’s main education funding formula is based on average daily attendance, this could force mass layoffs of teachers or even drastic measures like shortening the school year. A $422 million deficit is anticipated in 2019-20, with red ink after that for as far as the eye can see. None of this comes as any surprise. A blue-ribbon commission’s report issued in November 2015 said L.A. Unified was facing fiscal disaster because of the enrollment declines, which are primarily due to falling birth rates, and because of the cost of pensions and retiree health care benefits. Employee retirement benefits will claim 8 percent of the school budget in 2017-18 and more than double that sum in coming years as the state’s 2014 bailout of the California State Teachers’ Retirement System ratchets up required payments from districts and as more of the district’s aging workforce retires.

June 23, 2017

California’s new system for funding public education has pumped tens of billions of extra dollars into struggling schools, but there’s little evidence yet that the investment is helping the most disadvantaged students.

A CALmatters analysis of the biggest districts with the greatest clusters of needy children found limited success with the policy’s goal: to close the achievement gap between these students and their more privileged peers. Instead, results in most of those places show the gap is growing.

The test scores echo a broader and growing concern about the four-year-old Local Control Funding Formula from civil rights groups, researchers and legislators. They also raise concerns about whether the $31 billion invested so far in foster youth, kids learning English and students from low-income families has been well spent.

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