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MAY 4, 2012

HOPE for PA Corrections Reform

Launched in 2004, Hawaii's Opportunity Probation with Enforcement (HOPE) is an innovative supervision strategy that provides swift, predictable sanctions on substance-abusing probationers.

Research shows the program has reduced probationers' positive drug tests more than 70 percent and traditional probationers are three times more likely to have probation revoked than HOPE participants, saving taxpayers saving an estimated $4,000 to $8,000 per offender.

Senate Bill 100, which would treat nonviolent offenders with drug and alcohol problems, includes language for counties to establish "HOPE" Courts. This legislation could be improved by providing incentives for counties to establish a "HOPE" program or requiring counties to participate.

Pennsylvania's corrections spending is part of the four-alarm fire that threatens Pennsylvania's fiscal house. Learn more about principled corrections reforms here.

posted by KATRINA CURRIE |  05:30 PM |  0 comment
Related : Budget & Spending, Criminal Justice

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MAY 3, 2012

Reform Bills Would Begin to Reduce Fiscal Fire

While the fiscal fire is raging across Pennsylvania, Rep. Eli Evankovich's pension reform proposal begins to extinguish the flames that threaten to consume the commonwealth. We've been on record for years with a five-step solution to the pension crisis. 

Rep. Evankovich's bill would place all future lawmakers and their staff into a defined contribution plan similar to the 401(k) plans common in the private sector. Currently, state teachers and government employees are under a defined-benefit plan that guarantees benefits based on salary and years of service.

Currently, taxpayer contributions for our two statewide pension plans, PSERS and SERS, are projected to increase from $1.7 billion in 2011-12 to more than $6.1 billion in 2016-17— a 257% increase. Evankovich's bill, along with bills introduced by Rep. Krieger, Rep. Petri and Rep. Boyd are a step in the right direction, as are Gov. Corbett's now numerous statements of concern about pensions.

 

EDITORS NOTE: This post originally implied Rep. Evankovich's bill would require public school teachers and state employees to enroll in a defined contribution plan.

posted by ELIZABETH STELLE |  06:05 PM |  0 comment
Related : Budget & Spending, Public Employee Pensions and Benefits

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MAY 2, 2012

Good April Tax Collections, but State is Spending More Than Revenue

Two new reports show that Pennsylvania's fiscal crunch for the current year is not a dire as previously thought.

Pa. Department of Revenue monthly reports on tax collections shows higher than forecast General Fund revenues in both March and April. For the year to date, the state is still $288 million behind estimates, but the shortfall is much smaller than when Gov. Corbett outlined his budget proposal.

Based on the latest data, the Independent Fiscal Office's revenue estimates for 2011-12 are about $400 million higher than those included in the Governor's budget in February. Many have already used these trends to call for increases in government spending.

Unfortunately, the state is still spending about $800 million more than net revenue collections this year. As the General Fund began the year with more than $1 billion still on hand, and Gov. Corbett froze about $160 million from the enacted budget, the state will be able to pay all its bills and still legally have a balanced budget.

Nonetheless, spending more than revenue is clearly an unsustainable trend.

Pennsylvania FY 2011-12 General Fund Revenues and Spending
	July 2011 projection	Feb 2012 estimates	April 2012 IFO revenue estimate
Beginning Balance	$1,072,863	$1,087,613	$1,087,613
Net Revenue after Refunds	$26,571,000	$25,811,936	$26,201,000
Total Funds Available*	$27,706,863	$27,094,549	$27,511,000
Total Spending**	$27,149,000	$27,001,435	$27,001,435
End Balance	$417,863	$93,114	$482,178
Revenue less Spending	-$578,000	-$1,189,499	-$800,435
*Includes prior year lapses; ** Includes budgetary freezes

More importantly, the current year's fiscal problems are dwarfed by the four-alarm fire facing the state budget. Welfare spending, corrections costs, debt payments and pension obligations threaten to consume even more tax dollars in the future.

Unless we prepare for these future costs with budgetary reforms, including limiting the growth in state spending, taxpayers will be burdened with new and higher taxes, or major cuts will have to occur in other state programs.

posted by NATHAN BENEFIELD |  04:50 PM |  0 comment
Related : Budget & Spending, Pennsylvania State Budget

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MAY 2, 2012

The Patriot Can Do Better Than This...

Our friends at The Patriot-News here in Harrisburg just posted an online poll that asks the following question:

The state Senate has passed a school voucher bill that would allow parents to move their children to better schools at taxpayer expense. Do you support that?

With all due respect to a fine newspaper, that is just not neutral language.

First of all, Senate Bill 1, the piece of legislation in question, is not just about vouchers.  It would also expand the Educational Improvement Tax Credit, which is no minor issue, with this program having awarded more than 284,000 scholarships worth $335 million during its first decade.

Secondly, by alluding to doing something new and different "at taxpayer expense," the question implies that vouchers cost taxpayers extra money, but they don't.  The money students would take with them from violent, failing schools—to remind you, an act of violence occurs every 17 minutes in one of our lowest-performing public schools—would get spent no matter what, as it would come out of the state subsidy to their original schools.  The question is not whether taxpayers have to fork over the cash or not; it is whether students and their parents are forced to use it at a failing, violent school or take it elsewhere.  And, of course, in the long run, school choice saves money.

Thirdly, while I would certainly advance the argument that the schools voucher recipients would choose to attend are indeed better than those where an act of violence occurs every 17 minutes, that is also a non-neutral term.  "Different" would be more appropriate.

A better way to ask the question would be something like the following:

The state Senate has passed a "school choice" bill that would allow parents to move their children to different schools and have some taxpayer money follow them from the old school to the new. Do you support that?

Thanks to the Patriot for being part of this important discussion.  Let's make it as factual as we can.

posted by CHARLES MITCHELL |  03:30 PM |  1 comment
Related : School Choice, Education Spending, Education

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MAY 2, 2012

Fighting Fraud is the Beginning of True Welfare Reform

Monday the Pennsylvania House continued its efforts to reform the state's welfare system by passing HB 1948 out of committee. The legislation, sponsored by Tim Krieger, would establish the Electronic Benefit Transfer (EBT) Card Management Program to develop controls and procedures to identify EBT card fraud and abuse.

EBT cards are used like ATM cards to distribute monthly benefits, including cash assistance for low-income families (TANF), food stamps (SNAP), and general assistance. EBT cards were the subject of a 2011 report by Auditor General Jack Wagner that found $5.2 million in out-of-state purchases or withdrawals.

Continued efforts to fight fraud and abuse in the welfare system are critical to reining in welfare spending that is outpacing our economy—growing faster than personal income and state tax revenue—and squeezing every other area of the state budget, including education.

There's no question every effort should be made to protect benefits for the truly needy. But we must also work to solve the greater problem underlying welfare spending. The welfare system includes countless rules and guidelines which, in effect, discourage marriage, employment, and accountability. In the video below Milton Friedman explains why this system fails to lift people out of poverty.

Breaking the welfare cycle will take much more than fighting fraud and abuse. It will require changing program incentives to restore the dignity of work. By instilling effective time limits, real work requirements, and opportunities for low-income individuals to control their own health care, we can reward independence and promote a bridge to self-sufficiency rather than a life of dependence.

posted by ELIZABETH STELLE |  02:58 PM |  0 comment
Related : Welfare

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MAY 1, 2012

Philadelphia School District Faces the Budgetary Music

It doesn't take an advanced degree to figure out that something's rotten in the school district of Philadelphia—or that school choice is the antidote. More than half of Philadelphia's 249 schools do not make Adequate Yearly Progress—they are failing. The school district is also notoriously violent: In 2011 alone, it saw nearly 4,000 violent incidents, including 1,437 assaults on students, 1,076 assaults on staff, 116 indecent assaults, 87 robberies, 37 arsons and 642 weapons possessions. Last year saw 10 rapes in Pennsylvania's public schools and all 10 were in Philadelphia.

To cap it all, the school district is almost insolvent, trying to plug a $218 million budget gap that is set to balloon to $1.1 billion by 2017. Faced with such woes, the school district is proposing some serious restructuring:

The plan—subject to public comment and (School Reform Commission) approval—would close 40 schools next year and 64 by 2017, move thousands more students to charters, and dismantle the central office in favor of "achievement networks" that would compete to run groups of 25 schools and would sign performance-based contracts.

As it happens, school choice in the form of Philadelphia charter schools—which have nearly 41,000 students—already saves more than $200 million on public education. That's because charter schools, on average, spend just 83 percent of what traditional public schools spend per student. The School District of Philadelphia retains more than $5,000 in funding for every child that moves to a charter school.

Ultimately, Philadelphia needs more school choice, not less. Opportunity Scholarships or a significant increase to the Educational Improvement Tax Credit would allow parents to use education tax dollars at the school of their choice, and grant an immediate escape to desperate families trapped by their ZIP code in violent, failing schools. It's good that Philadelphia school officials finally see the need to spend more efficiently, but that's a small step toward comprehensive—and necessary— education reform.

posted by PRIYA ABRAHAM |  10:10 AM |  0 comment
Related : School Choice, Education Spending, Education

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APRIL 30, 2012

Big Government and the Higher Education Bubble

This past weekend I participated with some middleschoolers in a 30 hour famine to raise money for starving families. As we discussed poverty and debt the leader motioned to me saying, "After you graduate from college you will have to pay off a lot of student loan debt, like Elizabeth and I." I then, somewhat sheepishly, admitted I didn't have any college debt and the leader exclaimed, "What! How?"

Today, the average Pennsylvania college graduate leaves school with a bachelors degree and $28,599 in debt. So how did I get by without a penny of debt?

I went to Grove City College, a western Pennsylvania school featured in Sunday's Pittsburgh Tribune-Review. The four-year private school, which refuses to participate in government aid programs, charges $13,598 in tuition. This compares to the average posted private school tuition of $28,500, and it's less than the in-state tuition at taxpayer-subsidized Penn State.

How do they do it? Grove City refuses to participate in the government-driven higher education bubble that rewards schools for raising their tuition by increasing the amount of federal student aid.

Some may say it is just a coincidence that higher education costs skyrocketed when the government started handing out more grants and loans, but consider this astute point from Daniel Horowitz:

Since the DOE was created, the cost of college tuition has increased over 439% adjusted for inflation! The rate of increase is almost exactly commensurate with the rate of growth of DOE subsidization.

The higher education bubble is just one more example of how big government distorts the market and turns a good thing into an overwhelming burden. Sadly, it will probably get worse before it gets better. Remember that housing bubble that threw us into the grips of the Great Recession? The higher education bubble pales in comparison:

It is no coincidence; whenever you subsidize something you get more of it. In this case, subsidizing college tuition means more universities have a reason to raise tuition.

So what have colleges done with this extra cash? They've spent it on expansive building projects and additional administrative staff while four year graduation rates decline. In contrast, Grove City undertook one major construction project in the four years I was there, while 78 percent of its students graduate in four years.

posted by ELIZABETH STELLE |  01:44 PM |  0 comment
Related : Higher Education, Education

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APRIL 27, 2012

The Fight for Liquor Liberty Continues

The fight to free Pennsylvanians' drinks from government control is far from over, according to House Majority Leader Mike Turzai.

Rep. Turzai is expected to give a much needed face-lift to his liquor store privatization legislation, House Bill 11, and expects a vote in the House before November. According to The Patriot-News, the proposal increases the number of licenses auctioned off, allows residents to have out-of-state wine shipped to their doorsteps, and reforms beer laws.

The new plan calls for selling 1,600 licenses, up from the original proposal to auction off 1,250 licenses. A projected sale of retail licenses is estimated to generate $500 million to $750 million in revenue.

Beer distributors also would be permitted to sell six-packs of beer; they currently can only sell cases or kegs. Bars, restaurants and supermarkets with restaurant licenses could sell 18-packs of beer or less.

The latest plan calls for giving beer distributors the opportunity to purchase up to 10 retail licenses to sell wine and liquor.

Under the proposal, the remainder of the licenses would be auctioned off on a county-by-county basis. Dauphin County would be allocated about 32 licenses with a projected value of $548,634 apiece, while Cumberland County would be allocated 28 licenses valued at $635,129 apiece.

In December, the Pennsylvania House gutted HB 11 to remove any privatization of the Pennsylvania Liquor Control Board. Rep. Turzai's proposal restores the legislation to its original intent.

Now is the time to get behind our legislators supporting a common sense reform to get government out of operating businesses.

Learn more at www.letfreedomdrink.com.

posted by KATRINA CURRIE |  10:39 AM |  0 comment
Related : Privatization, Liquor Store Privatization

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APRIL 27, 2012

States Tap Public-Private Partnerships in 2011

Public-private partnerships aren't just for roads anymore. Reason's Annual Privatization Report, released this week, is packed with diverse examples of states leveraging the private sector to stretch tax dollars.  In California, officials are looking to the private sector to keep state parks open, Ohio privatized its economic development agency, and Puerto Rico is in the process of leasing the San Juan International Airport.

In fact, many of the government functions successfully privatized in full or in part last year are the same functions under consideration for privatization in Pennsylvania.

Liquor Privatization: Nearly 70 percent of Pennsylvanians want to end the antiquated government wine and liquor monopoly. In late 2011, Washington state moved to fully privatize the sale and distribution of liquor via voter initiative. One-time state revenues from auctioning off distributions centers totaled $28.4 million, and the state will reap an estimated $216 million in additional revenues from the new license fee structure.

Lottery Management: The Corbett administration recently announced it is exploring private management of the Pennsylvania Lottery. Illinois' groundbreaking lottery privatization program got underway in 2011. The intiative is designed to generate an additional $1 billion in revenues to the state over the next five years. The contract also includes incentives for extra profits; however the contractor must pay penalties if the company fails to hit revenue targets. The state will continue to control all significant business decisions and the contractor retained all state employees. In fact, Northstar plans to hire an additional 100 private sector workers.

Highway Maintenance: Pennsylvania's transportation crisis stems from poor management, not a lack of revenue. In New Jersey, Gov. Christie is looking to get the biggest bang for taxpayers' buck by bidding out three-year highway maintenance contracts. The contract is designed to give private companies the same flexibility as NJDOT crews, but unlike public crews, they must meet performance standards or risk losing their contract. These include removing hazardous roadkill and debris immediately upon notification, repair potholes within 48 business hours, and arrive at emergencies within two hours.

While Pennsylvania has largely failed to implement any signifanct privatization initiative, it still gets recognition in the report for contemplating opportunities in a section called Corbett Administration Embracing the "Yellow Pages Test" in Pennsylvania.

Using the best practices and lessons learned from other states, Pennsylvania can utilize private sector practices and reap significant savings while providing better service. Now that's a win-win.

Check out the full report for more examples in health care, welfare services, and corrections.

posted by ELIZABETH STELLE |  10:20 AM |  0 comment
Related : Privatization