Joint Education Committee
Posted on October 28th, 2009
Date & Time: Wednesday, October 28, 2009 at 2:30 PM
Location: Room 171, State Capitol
Committee Information: House Members on Committee Senate Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12286/I7866.pdf
Attachments: none
This committee reviews matters pertaining to public kindergarten, elementary, secondary, and adult education, vocational education, vocational-technical schools, vocational rehabilitation, higher education, private educational institutions, similar legislation, and resolutions germane to the subject matter of the committee.(House Rules 62.1)
2:34 pm – Sen. Jimmy Jeffress called the meeting to order. Minutes were approved.
2:37 pm – Dr. Tom Kimbrell, the new Commissioner of the Arkansas Dept. of Education presented a discussion about the ADE contracts referred to the Committees by the Review Subcommittee of the Arkansas Legislative Council. He is specifically talking about the Scholastic Audit Contracts.
2:41 pm – The concept of the Scholastic Audits was adopted from a Kentucky model under Dr. Ken James. Dr. Kimbrell is defending the usefulness and importance of this activity. He said that ACTAP law probably requires that these audits be performed. Rep. Rainey also passed a law last session that requires a scholastic audit.
2:46 pm – Sen. Jimmy Jeffress pointed out the specific contracts that brought these question up. He is asking if there is a correlation between the audits and if test scores are shown to be improved subsequently. Dr. Kimbrelll said that he doesn’t know, but it will be in the future. He said that they are going to also be monitoring that the audit plans are actually being implemented.
2:50 pm – Sen. Jeffress asked where the money comes from to fund these audits. That is about $600,000 in funds. Apparently it is in the ADE budget.
2:52 pm – Sen. Jeffress is making the point that we were told during a committee meeting that if we did not approved some last minute contracts that we would be breaking the law. This rightly rankled the legislators. Today we find out that it was not true that we would be breaking the law if we refused to approve the contract immediately. Apparently this was a “miscommunication.” How often do you think these situations are really miscommunications?
2:58 pm – Rep . Cheatham is asking about those doing the audits come from schools in academic distress. Rep. Tyler is asking if there could not be full time personnel that are high quality that we do not have to train people over and over.
3:04 pm – Sen. J. Jeffress is asking how these positions are filled. What are the qualifications for the audit positions. Where are the positions advertised. He knows of one person who was highly qualified and was rejected. He wants to know if there was some sort of “good-old-boy” thing going on.
3:06 pm – Rep. Hutchinson is asking if the audits concentrate on the schools on academic distress. They do, but there are schools that are not on academic distress that pay for these audits on academic distress.
3:08 pm – Rep. Saunders is asking about the preformance audits who are in the first years of distress. Apparently this is part of developing the school improvement plans.
3:12 pm – Rep. Rainey is discussing some history of the scholastic audit program and is making the point that the Kentucky programs, from which these audits are modeled, had a form of accountablity. He seems to be saying that we may have not implemented the full measure of accountablity that we should have. I think legislation he passed last session somewhat address this situation.
3:17 pm – Sen. Bryles is asking about what happens once an audit is performed and a report is created. Ms. Estelle Matthis, Director of the Education Renewal Zones/Scholastic Audit at the ADE, is not being responsive, instead is talking about what is involved in performing the audit rather than answer the question that Sen. Bryles asked. Sen. Bryles is politely asking follow-up questions trying to get answers to his question. He finally gave up.
3:24 pm – Sen. Salmon asked if the Kentucky model used retired teachers. The answer is “yes.” She is asking specifically for qualifications for auditors. There are certain published guidelines that were referenced.
3:29 pm – Rep. Abernathy is making the point that we need to establish some accountability so that we know if the audits are effective. He said that we need to be able to evaluate the quality and effectiveness of particular audit teams. The ADE Representative, Estelle Matthis, very much has an adversarial attitude toward the legislators asking her questions. This seems to fuel the legislators to asking even more probing and directed questions.
3:33 pm – Rep. Hutchinson is asking how we can know how effective the plan was and how well the audit team performed if there is no way to follow up on performance. Dr. Diana Julian, Deputy Commissioner of the Arkansas Dept. of Education, took over the microphone to answer these questions. She makes the point that they cannot constantly monitor the school. The school must be responsible to implement the plans.
3:40 pm – Rep. Clemmer noted that “no individual teacher is named” (according to Ms. Matthis) in the scholastic audit but then the point is made that the teachers “know what the need to do” (according to Dr. Julian). Dr. Julian is making point that overall strategies indicate that needs to be done according to patterns. Rep. Clemmer is asking follow-up questions and finds if problematic that the audit indentifies a problem (for instance an individual teacher) but that the problem is applied to the whole school. Dr. Julian makes the point that Arkansas has an evaluation law and that audit teams are prohibited from making teacher evaluations.
3:48 pm – I appears that we need to make changes to some of our teacher evaluation laws. If an independent audit identifies a problem teacher, this would enable the Superintendent to work to remedy the problem. It would also shelter a teacher who with whom the superintendent has a personal issue against. The independent audit would not support the superintendent in that instance.
3:51 pm – Sen. J. Jeffress is making closing comments and praising the committee for a staying through this long and tough discussion.
3:52 pm – Committee adjourned.
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Joint Adequacy Evaluation Oversight Subcommittee
Posted on October 28th, 2009
Date & Time: Wednesday, October 28, 2009 at 1:30 PM
Location: Room 171, State Capitol
Committee Information: Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12275/I7850.pdf
Attachments: none
1:37 pm – Rep. Bill Abernathy called the meeting to order and provided opening remarks. He has asked Mr. Richard Wilson, Assistant Director of Research Services for the Bureau of Legislative Research to review the components of the “Funding Matrix.”
1:47 pm – Here (Adobe Acrobat File) is very brief introduction to the resource utilization report we were provided last biennium. Also attached is the current foundation funding matrix (Excel File) that reflects funding both before and after the recalibration (affecting years after FY07).
1:50 pm – I blogged about this coming review of the funding matrix a couple of months ago here.
1:52 pm – Rep. Blount asked why the “School-Level Resources Per Student” dropped from $742 in FY07 to $535.10 ini FY10. Mr Wilson said that evidence based research demonstrated that we were overfunding this in the matrix and those funds were moved to another part of the matrix.
1:54 pm – Sen. Jimmy Jeffress is making the point that the amounts of funds put in the funding matrix is not a mandate for spending but is a model for adequacy. Individual school districts may spend more or less in a particular category based upon their local needs and requirements.
1:58 pm – Senator Bryles asked what constitutes the “carry forward” items. This category was not broken down in 2007. Now it encompasses “Operation & Maintenance”, “Central Office”, and “Transportation.” This is where we enhanced the funding for transportation when fuel prices went very high in 2008.
2:02 pm – Rep. Saunders is asking for an explanation for how these initial values were created. These numbers come from the research that we contracted the consultants Odden & Picus to accomplish. They were specifically calibrated by the Bureau of Legislative Research to match Arkansas. After all the values were created, they were compared to other SREB schools. We were ranked second, and after cost-of-living indices were included Arkansas was first.
2:07 pm – The maxtrix category for “School Level Salaries Per Student” made a massive jump from $3669.00 in FY07 to $3937.40 in FY08. It is currently $4094.20
2:09 pm – Rep. Abernathy is arguing that there should be enhanced transportation fund for some school districts that have a disproportionately high transportation expense.
2:11 pm – Rep Hutchinson asked about the limitations on matrix funding, for example athletic expenses. Apparently there are no limitations, but the staff attorney asked to research this further. The revenues that come from independent sources, such as boosters, is not regulated. However foundational funding should be used for adequacy.
2:16 pm – Sen. Elliot is asking how we know where schools are shifting money within matrix categories. Apparently we really don’t have that information.
2:21 pm – Rep. Summers is asking if a study has been done on the costs associated with replacing books with technology.
2:27 pm – I was asking if ABSCAN (a computer program that gives the state information about individual school district spending) could give us an average comparision of actual spending to the funding. Apparently the BLR is already working on this.
2:34 pm – Meeting Adjourned.
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Prison Overcrowding – A Conservative Solution
Posted on October 27th, 2009
Back in September I made a blog post about prison overcrowding in Arkansas to give conservatives a heads up that we have a problem to which we ought to propose solutions. Now we find ourselves in a situation where we have cut funding to the Department of Correction and the Department of Community Correction by about $12 million dollars. (A larger percentage than ANY other sector of state government.) If you have been keeping up with the efforts of Rep. Allen Kerr about funding county jails, you may realize that the state government is shifting the cost of incarcerating criminals to already cash strapped county governments. People will soon start referring to this situation as “crisis”. We all know that decisions made in “crisis” are always less than optimum, and that the liberal solution usually means either a tax increase or an emergency release of criminals back onto the street. I would like to draw your attention to two excellent articles by Wisconsin State Senator Mary Lazich (R-New Berlin) who demonstrates why letting prisoners go will not save the state and why we cannot afford to ease up on corrections. Sen. Lazich clearly demonstrates the irresponsibility of the choice to prioritize funding for corrections below other priorities that are not a foundational purpose of government.
Any plan or program to provide a prompt and adequate solution to the overcrowding problem in
state and local detention facilities should address the following issues:
- The detention facility population should be brought down to a level consistent with capacity so that
the most violent offenders can serve out their full sentences. - Juveniles and non-violent misdemeanor offenders should be the focus of rehabilitation and early release.
- Additional economic burdens should not be placed on taxpayers. To the greatest extent possible, the program’s costs should be borne by criminals.
- Supervision of those on parole and probation must be increased.
- Private companies should be utilized, and there should not be a sole reliance on the government run
parole and probation system. The private sector appearance bond system is a well proven workable
model. - Finally, and most importantly, there should be assurances that under the program’s operation there
would be no increase in recidivism. The solution must be capable of demonstrating in the early stages
of implementation that no adverse impact upon community safety occurs.
A Conservative Solution: Conditional Post-Conviction Release
In addition to placing corrections as a priority in state government spending, a solution to lowering costs would be “conditional post-conviction early release” program that would rely on performance bonds and security or indemnity agreements to keep participants from committing new crimes and assure their prompt return to custody should they misbehave. The program would focus on the large number of incarcerated juveniles and misdemeanor non-violent offenders and operate much like the current private bail bonds system,
which has been successfully used to grant pretrial releases to individuals across the country. It would
be a means for providing early release of non-violent offenders from state and local facilities in such a
way as to reduce recidivism with no additional costs to taxpayers. Best of all, the program would rely on
the proven success of the private bail bond industry, rather than the proven dysfunction of the government run parole and probation system, by requiring families and communities to take some responsibility for
future acts of the person who is displaying signs of trouble.
The Conditional Post-Conviction Release would work as follows:
- Legislatively defined participants would be chosen by parole officials at the penitentiary level and
judges at the trial level (hereafter referred to as releasing authorities). - Participants would be released from confinement under the terms and conditions of a performance
bond. The bond would require a surety, (financial guarantor) by a qualified insurance company. The
terms and conditions of the performance bond would have to be fully met at all times in order for
the participant to remain in society. - Failure of the releasee to meet numerous requirements such as house arrest, regular drug
testing, recovery program involvement, mandatory check-in requirements, non-interference with
witnesses or victims, maintenance of gainful employment, payment of restitution, and no
subsequent arrests or any additional requirements would obligate the surety to promptly return the releasee to custody thus safeguarding the community. Failure to so perform would subject the
surety to full financial penalty under the bond. - Persons in the participant’s release environment, such as parents and guardians, would voluntarily
sign “agreements of indemnity” whereby they, along with the individual would have a monetary
incentive, as indemnitors to the surety, to encourage compliance by the participant. If there is a violation
of the bond, the family as well as the offender would be drawn into the circle of responsibility. - Upon the breach of any single condition of release, the bond could be revoked by the court, a warrant issued and the participant re-incarcerated, and the surety required to pay a financial penalty to the state in the alternative.
The financial penalties of the bond would create strong incentives on the part of the surety and the
indemnitors to see that the participant abides by all the releasing authority’s conditions of release or else
be promptly surrendered back into custody, thereby guaranteeing low recidivism. The program would
require no additional staffing or administrative costs for state and local governments. Prison space would
become available to ensure that violent offenders serve their full sentences. At the trial stage, this
program would be a sentencing alternative. For those who operate prisons and jails, it would be a very
tightly controlled early-release vehicle for selected, non-violent offenders.
The program would relieve overburdened parole and probation officers of many non-violent
and juvenile offenders. Offenders would also perform better in the Conditional Release Program
as compared to the current system because of the financial penalty subject to being imposed.
The current path of under prioritizing funding and failing to proactively address the problem in the conservative manner described above can only lead to the ordered Emergency Release of Prisoners back into society. That is bad policy that, while immediately alleviating overcrowding, will have lasting consequences that far outweigh the “benefits.”
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Joint Health Services Subcommittees – October 26, 2009
Posted on October 26th, 2009
Date & Time: Monday, October 26, 2009 at 1:30 PM
Location: Room 130, State Capitol
Committee Information: Senate Subcommittee House Subcommittee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12196/I7827.pdf
1:33 pm – Meeting called to order by Rep. Eddie Cheatham. The minutes of the last meetings was approved. That meeting had a presentation on the Dept. of Health’s Tobacco Prevention and Cessation Program and the UAPB Minority Health Initiative. They claimed that they have reduced the number fo youth smokers from 35% (2001) to 20.4% (2007), which puts Arkansas at the national rate for youth. They also claim that the adult rate has dropped from 25.1% (2002) to 20.7% (2008), and is attributed mostly to free medicine, the Quitline, the Clean Indoor Air Act and the 2009 tobacco tax. [How the 2009 Tobacco Tax can impact statistics in 2008 is a mystery I will never understand.]
1:35 pm – Dr. Wilson, retiring Chancellor of UAMS is presenting an update on the programs involved in the Tobacco Settlement. Sen. Bill Pritchard has asked that all those who recieve tobacco settlement fund to present 1) a written statement of mission as it relates to Initiated Act 1, 2) details of expenditures and funding sources (personnel hired, job descriptions, and grants), 3) a list of evidence-based results, and 4) specific detailed outcomes of goals. [Senator Pritchard has does a good job of bringing business like oversight to this relatively unsupervised set of government programs. These reports and requests for information have been the results of his efforts.]
1:45 pm – Aaron Black, Executive Director of the Arkansas Tobacco Settlement Commission is presenting a synopsis of the Biennial Progress Reports on the College of Public Health’s (COPH) and the Arkansas Biosciences Institute’s (UAMS) Tobacco Settlement Programs. We recieved a synopsis of the “Rand Report” handed out as Mr. Black was making the presentation.
1:48 pm – The COPH offers degree programs for students to pursue eduction in the field fo public health. The had 4 goals for 2007-2008: 1) Establish doctoral programs in three areas, 2) Establish staffing of a minimum of five faculity for each of the three doctoral programs, 3) Increase distance-accessible education, 4) Increase outside grant funding for research by 20 percent above 2004-2005.
1:51 pm – The independent evaluator key findings: COPH’s number of scholary publications continues to increase. In 2007, both the total number of publications and the number publications in ranked journals increased substantially from previous years. The total number of publications and those in ranked journals increased substantially over prior years. This suggests that the COPH is not only producing more publications but also more high quality publications.
1:52 pm – Rep Gaskill asked if any of the lottery funds can be used for scholarships to the COPH. Apparently the may be, but graduate programs are not funded.
1:54 pm – Senator Pritchard expressed that he is not a fan of the Rand report and he pointed out the nebulous and non-metric based set of goals created by a report that we pay $375,000 to an independent group to write.
1:58 pm – Dr. Jim Raczynski, PhD, FAHA, FSBM, who is a Professor and Founding Dean for the College of Public Health is presenting a report that covers the information requested by Senator Pritchard. [Alot of the material seems rather unresponsive and instead looks more like boiler plate information. I am not sure if the information as it relates SPECIFICALLY to Initiated Act 1 are even included in the inch and a half stack of paper that was made availiable to us at today's committee meeting.]
2:06 pm – Apparently about 23% of the Fiscal Year 2009 Budget for the COPH comes from Tobacco Funding from the Tobacco Settlement. In 2005 this was about 40%.
2:09 pm – There are about 84 employees paid with tobacco funds.
2:19 pm – Senator Pritchard is asking questions to determine if there are duplication of services from tobacco settlement dollars. Dr. Raczynski had previously testified that they were not currently receiving tobacco funds from an outside group that gets tobacco funds. Apparently after Senator Pritchard pointed out a specific instance where that was the case, he then retracted and said he just received a note about another instance. When asked what that person did, he did not know but knew that the person spend that percentage if their time with the group providing the funding.
2:25 pm – I am currently looking at a map of active research projects by the COPH by county. Apparently Northern Arkansas, and Southwest Arkansas are not being included in any additional programs.
2:29 pm – Alot of the legislators are asking questions about the wisdom of alot of the research projects. Some of the seem downright comical, but they are not funded from state funds but rather the Federal government. We can’t use those funds in a discretionary manner for more reasonable projects, but rather must use them for the purpose for which they were funded by the outside funding sources like the National Institutes of Health and the US Dept of Agriculture.
2:34 pm – Rep. Wells is asking a follow-up question about a grant for $1,800,000 for “a couple of schools to do school gardens.” It seems that $900,000 per garden has been spent. There is nothing we can do about this as a state legislature since this is from the federal government but those reading this blog should really take notice about the waste and abuse in spending at federal government.
2:40 pm – Rep. Green is asking of the grant is written to get funding that is available or if the grant is orginal and directed at an specific problem in Arkansas. Apparently the cost of administering the grant falls on Arkansas because the federal government does not the allow the grant funds to be used for administration. So, as usual, to get money from the Feds, it will cost the taxpayers of the state money. Usually this works out to be about 3 for 1. Inside information not discussed in the committee: I understand that the director of this program works directly for the USDA and was part of the Bush Administration who reapproved this grant program for Arkansas, Louisiana, and Mississippi right before he left office. This is the kind of stuff that now plagues Republicans from claiming the mantle of “fiscal conservatives”.
2:52 pm – On page 96 of the report from the COPH there is this statement describing what resources were provided from state funds recieved: “COPH faculty/staff actively participated in the 87th AR General Assembly and worked with all concerned for the passage of Act 180 (HB 1240) – cigarettee tax increase” also “Act 308 – primary seat belt law” and “Act 394 – graduated driver’s license”. I wonder how my readers feel about having their tax dollars go to LOBBY for tax increases and restriction and removal of liberty?
2:57 pm – Sen. Pritchard is asking Dr. Raczynski if the Rand Report is really needed and how valuable is it. He wants to know if they agree with the goals are set. Dr. Raczynski says that it is helpful.
3:03 pm – Rep. Andrea Lea is asking about how the COPH compares with others in the US on salary, student/faculty ratio. Salary is “competitive” the student/teacher ratio is lower.
3:05 pm – Rep. Hall is asking if the graduates are staying in Arkansas and where they end up working in Arkansas. Approximately 93% are staying in Arkansas, but almost all are staying in their current jobs. [I would bet that most of them end up working for the State Government at the Health Department. Are we using tax dollars to train healthcare lobbyist to lobby for more tax dollars?]
3:12 pm – Rep. Reep is asking if the Initiated Act 1 require an independent evaluation. It does, and the legislation somewhat limits who may provide this legislation. Okay, apparently there is not consensus on that issue. Rep Reep asked the question about 5 times, to get the same answer five times. It is clear that he is not trying to get information from Dr. Raczynski, but instead trying to emphasize a point to the members of the committee.
3:20 pm – Sen. Pritchard makes the point that the legislation “authorized hiring and independent evaluator” and did not “require” that it be done.
3:24 pm – Aaron Black is providing the summary for the Independent Evaluator Report for the Arkansas Biosciences Institute (ABI). The ABI was created to foster the conduct of research through its member institutions – UAMS, UA-Ag, UAF, ASU, and the Arkansas Childrens Hospital.
3:28 pm – The Initiated Act charged ABI to encourage and foster the conduct of research and pursue the following: 1) Agricultural research with medical implications, bioengineering research focused on the expansion of genetic knowledge and new potential applications in the agricultural-medical fields, tobacco-related research that focuses on the identification and applications of behavioral, diagnostic and therapeutic research addressing the high level of tobacco-related illnesses in the State of Arkansas,
nutritional and other research focusing on prevention or treatment of cancer, congenital or hereditary conditions or other related conditions, and other research identified by the primary education and research institutions involved in ABI.
3:29 pm – Dr. Robert “Bobby” E. McGehee, Jr., PhD, Dean, UAMS Graduate School and Director of the Arkansas Biosciences Institute is presenting the response to the requests for information for this committee. [It seems this guy has come along way since he ditched Janice and stopped thumbing "diesels" down. Just hearing his name has be singing that song in my head.]
3:43 pm – UAMS attained a record high $60 million in total NIH research funding in Federal Fiscal Year 2009.
3:46 pm – Dr. McGehee says that tobacco settlement funding has helped bring about 12 new major research scientist to Arkansas for each year since 2002. Employment from ABI-Related Extramural Funding has gone from about 25 to about 340 from 2002 to 2009.
3:56 pm – We are currently going over the report from the Arkansas Biosciences Institute. It is a good thing that all legislators are experts on the “Effects of Polymorphisms within Folate Metabolism Enzymes on Risk of Limb Reduction Defects; Genes, Micronutrients and Homeeobox Related Malformations. We would have been in trouble if we had to review “Ethanol and Osteoblastogenesis: Roles of IL-1 and TNF”. Oh wait… What? Never mind. Apparently not all references to ethanol have to do with gasohol or whiskey. One of which we legislators are quite knowledgeable.
4:05 pm – In seriousness, I have been impressed by the return on investment of tobacco funds with the Biosciences Institute.
4:07 pm – Sen. Pritchard is asking about research about Medical Marijuana.
4:10 pm – Meeting Ajourned.
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The Arkansas Budget & How The Game Is Played
Posted on October 20th, 2009
In January, 30 states reported 2010 budget projections projecting revenues less than originally anticipated. Governor Beebe and the Arkansas Department of Finance and Adminstration was one of only six states projecting a shortfall less than 5 percent, according to a Center on Budget & Policy Priorities report. In the center’s report the average projected shortfall among reporting states was 16.6 percent; and six states projected shortfalls greater than 20 percent. Six months ago, during the session, Republicans were warning that we were heading into this exact situation. So, given that… just how was Beebe’s budget projections “conservative”?
Now Beebe says that “There are still positive signs in the revenue numbers, and we maintain hope that the recovery will accelerate.” Hope is indeed a good thing and I hope that a recovery will happen as well, but we don’t create our budgets based upon hope. In February of 2008, Metroplan Executive Director Jim McKenzie said, “If there is going to be a recession, Arkansas typically lags going in and lags coming out.” That is true. From the budget histories that I have seen and what has been communicated to me from old-time legislators, that lag is approximately 18 months. This held true for Arkansas going into this economic downturn, and so far the Beebe administration has not given a solid reason why that a recovery will not lag as well. Whatever positive signs that the Beebe administration sees, for some reason most of the other states are not forecasting those same positive signs… most states are predicting 2011 budget shortfalls to be worse than 2010. See graph at left. So, given that… just how are Beebe’s budget projections “conservative”?
On September 3, 2009 (just last month), Rep. Andrea Lea asked Richard Wiess why after being below projections 7 of 8 months that he made the statement that they do not intend revise the forecast. He answered that this administration believes that although monthly numbers are low that the forecast will be fine on an annual basis. So, given that… just how was Beebe’s budget projections “conservative”?
Often modern politicians in Arkansas claim the mantle of “conservative” when talking about what “they” did to balance the budget in Arkansas. There are two problems with this claim. First, the person making the claim did nothing to merit the claim beyond obey the law, and even then often in letter but not spirit. Second, the Arkansas budgeting system, while less liberal than most, can at best be described as “moderate.”
I will tell you why I think it is “moderate” rather than “conservative”. But first, let’s take a look at this nifty little powerpoint presentation simply describing the budget and appropriation process.
On the conservative side of things, our State Constitution requires a balanced budget. Who gets credit for that? Certainly none of the elected officals alive today.
The Revenue Stabilization Act, passed in 1945 under Gov. Ben Laney, provides for a systematic simple model for funding Arkansas’ programs within the Constitutional confines that require a balanced state budget. The model sets up basic funding priorities determined by the legislature which guide the governor to cut funding should the state generate less revenue than expected. Just reading that you would think it sounds conservative right? You would be wrong. In actuality, it enables the legislature to do an end around on balancing a budget based upon forecasts by passing appropriations (permission to spend) far in excess of expected revenues based upon the outside chance that excess money would come in. This leads legislators to vote for any and all appropriations because “it isn’t real money” as the saying at the Capitol goes. I have been as guilty of this as anyone, I won’t make excuses for my failure to stand up against the cultural momentum at the State Capitol. However, the failure to limit appropriations to revenue forecasts cause every ounce of surplus to be sucked into an ever increasing size of state government. It virtually insures that tax cuts are rare. It almost always means that the state government will grow at a rate equal to the fastest rate of growth of the economy during the good times and forces tax increases to maintain the current rate of spending during the bad times. This fact leads me back to the current budget situation.
What if I am wrong and the Arkansas economy does turn around like Governor Beebe predicts? Instead of appropriating pie-in-the-sky-if-dreams-come-true amounts, what if we simply appropriated amounts according to independently created and dynamically scored forecasts? My mom always said, “If a frog had wings, it wouldn’t go around bumping it’s rump all the time,” so lets assume for a moment that frogs have wings. If we did things as described above, then the state would often generate surpluses that could be used to create a rainy day fund that would cover periods of genuine need. (In the current appropriation style, any rainy day fund would be raided to simply grow government and voters are rightly suspect of creating one.) Even better, the surpluses could be used to eliminate the grocery tax as Governer Beebe so ardently promised a mere 3 years ago. Best of all, we could eliminate capital gains on new capital investment in the state, launching Arkansas out of the gate at the first economic uptick and putting us on target to gain significantly on the rest of the United States in economic development. Wouldn’t that be great? But alas, I guess frogs will never have wings and the Arkansas press will never provide in depth critical analysis of the Beebe Administration.
Here is a line to a summary of the fiscal legislation during the 2009 session. Here is a link to the 2009 to 2011 Biennial Budget Manuals
The Arkansas Times Blog has posted links to the Governor’s:
- memo to state agencies about the cut.
- memo to legislators with a discussion on economic forecasts.
- the agency-by-agency spreadsheet on the dollar amount of the cuts.
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John Stossel Coming To Arkansas
Posted on October 19th, 2009
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Arkansas Legislative Council – October 16, 2009
Posted on October 16th, 2009
Date & Time: Wednesday, October 16, 2009 at 9:00 AM
Location: Room 171, State Capitol
Committee Information: Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/11855/I7854.pdf
Attachments
9:00 am – Meeting called to order. Minutes approved. We quickly moved into the September Revenue Report.
9:07 am – Sen. Kim Hendren asked what we are doing to make cuts so that we do not have to come back and ask for a tax increase. Richard Wiess points out that we operate under revenue stablization. However, even after all of B Funds are cut, that only makes up 13 million worth of cuts. We are still operating with a $89 million deficit.
9:10 am – We are currently 3.3% under adjusted net available for distribution. The Allotment Reserve Fund (sort of like a Governor’s rainy day fund) has spent $61 million to shore up the budget, there are only about $39 million dollars left.
9:14 am – Rep. Hutchinson is asking which areas that we can cut since we cannot cut K-12 Education and we cannot cut Higher Ed because we recieved Federal Stimulus Funds. For the first time ever, I heard Richard Wiess say that there may be a way to cut K-12 given that the the Commissioner of Education still maintains that he can certify adequecy. I wonder if this is an area that they are thinking about cutting.
9:18 am – In July we were $13.712 million below forecast, in August $33.216 million below forecast, in September we were $88.973 million below forecast.
9:20 am – Rep. Glidewell asked how much are we in debt to the Federal Government for the Unemployment Insurance. Mr. Wiess said that he currently does not have the numbers.
9:22 am – Rep. Flowers is asking for the sources of certain funds. In particular the Tobacco Taxes has grown by 71% resulting in a monthly increase in about $9 million dollars.
9:31 am – Rep Flowers is still asking questions. In the mean time I have notices that the special dedicated revenue for Breast Cancer Research, Breast Cancer Control, Aging and Adult Services (Meals on Wheels), UAMS, and DHS Grants (Senior and Prescription Drugs) has fallen by about 15%. These revenues come from a special tobacco tax. What happened was that our increase in the tobacco tax for funds that go to the general revenue caused sales in Arkansas to fall. Which cause the special taxes for dedicated projects (which did not increase) to fall. In essence, what we did was rob 15% from those causes above to put it in the general revenue. This is a clear case for dynamic scoring of proposed taxes.
9:38 am – Percy Malone is trying to make a case for continuing to spend. He makes a strike at former Governor Huckabee for being the one to increase the last tax. What he failed to mention was that it was he and Mike Beebe who shoved it down his throat when they controlled the Senate.
9:40 am – The next forecast adjustment will likely be made on December 1. Sen. Broadway is asking if there is an indication that this may be the worst month and things will get better. He said that last month is so far off normal, that future predictions lack confidence than typically would be the case. Sen. Broadway is also trying to make the case that we should continue to keep funding at current levels. He seem to lose some confidence in that position as Richard Wilson responded to his questions.
9:48 am – Rep. Dismang is asking if we have an indication of the impact on sales taxes and income taxes from the lottery. Apparently the impact on the budget from income taxes will be small. There is no immediate answers on the impact on the sales taxes.
9:51 am – Sen. Jimmy Jeffress is asking where the lottery loan repayment will go to. It will go back into the states revolving loan fund.
9:59 am – There is alot of discussion and questions where we can ask questions about expenditures as well as revenues. We technically cannot ask about stuff outside the revenue report.
10:00 am – We are currently reviewing reports from Standing Committees. Rep. Davy Carter asked about the $750,000 claim. Rep. Flowers provided details, arguably somewhat inaccurately.
10:05 am – Rep. Davenport presented the Game and Fish / State Police report. Highlight is probably the new iPod/iPhone application by the Fish and Game Commission. Report was reviewed without question or comment.
10:07 am – Rep. Roebuck presented the Higher Education report. Rep. Flowers is asking for additional information and ask that a greater effort to get the information about scholarship out to certain student groups. Report was accepted.
10:09 am – Litigation and Reports Oversight reviewed, only informational questions were asked.
10:14 am – Rep. Dismang provided the Performance Evaluation and Expenditure Review. He makes the points that we are allowing for expenditures before the appropriations are made, and it will lead to reverse bidding for the projects. Rep. Dismang was diligent in getting the Arkansas ENERGY STAR Appliance Rebate Plan established in a way that was much more efficient than in other areas.
10:20 am – Rep. Wells provided the Uniform Personnel Classification and Compensation Plan report. The report was adopted without question or comment.
10:23 am – Butch Calhoun is reporting on the Rural Services Grants. Most were awarded this last time, but I fear that may not be the case due to a lack of funds next year.
10:25 am – The Student Loan authority is requesting permission to restructure its existing bonded indebtedness by issuing refunding bonds and transferring student loans to Straight-A Funding, a federally sponsored conduit.
10:39 am – Committee adjourned.
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Five Principles of Responsible Transportation Policy
Posted on October 14th, 2009
In the last session (2009), the Arkansas Legislature formed the Arkansas Blue Ribbon Committee on Highway Finance. The full committee membership may be found here. The committee is also broken into two subcommittees: the New Revenue Subcommittee and the Revenue Transfer Subcommittee
One of the stated purposes of the Blue Ribbon Committee on Highway Finance in the enabling legislation is to define an equitable and adequate system to properly finance improvements to the systems of state highways, county roads, and city streets within the state. This was a key provision in the bill that influenced me to vote for it. Unfortunately, this purpose has received little attention, if not outright ignored. Instead the majority of the emphasis to date has been on what tax could be “sold” to the Arkansas voters. I can foresee the day coming when Republican legislators are going to be asked why they are voting against highways, when in reality, they will be voting against an ill considered tax for even more ill considered plans of irresponsible transportation policy. I, and most other Republican legislators, believe that transportation infrastructure is a legitimate and important use of Arkansas taxpayer’s dollars… if it is raised, distributed, and utilized in a responsible way.
Therefore, I would like to encourage five principles of responsible transportation policy to help guide policymakers in returning to a system that provides people’s freedom of movement.
1. Tie spending to specific and objective performance measures, like traffic relief and economic development
Congestion relief is the most basic tenet in transportation policy, yet most people are surprised to learn it is not a priority in Arkansas. Even though Governor Beebe continues to state the same promises he made in his campaign that “money should follow the cars”, he also continues to fail to take any leadership responsibility in making it happen. He goes as far as even denying that one clearly stated purpose in the enabling legislation of the committee is to define an equitable and adequate system to properly finance improvements to the systems of state highways, county roads, and city streets within the state.
Recent press articles:
- Highway Panel Eyes Funding
- Highway Funding Divisive
- Highway Funding Stirs Lawmakers
- Panel to Consider New [and] Existing Sources for Road Funding
Let me be clear, I am NOT claiming that we should be telling the Arkansas Highway Commission which roads to build or even specifics on how the resources are to be allocated. However, I am strongly claiming that we should strengthen the link between spending and traffic relief by adopting strict performance-based measures. We need to develop a comprehensive transportation policy that incorporates preservation, safety, mobility, economic development, environment, and good stewardship of taxpayer dollars.
Strengthening the tie between spending and traffic relief does not sacrifice safety or preservation. These are not competing priorities. Traffic relief and safety/preservation can happen simultaneously, as long as we stop spending money in areas that do not relieve congestion. If economic development is indeed a criteria for infrastructure investment, then objective performance metrics need to be established. Arkansas policymakers should create specific performance measures and create a stronger link between spending and desired outcomes. A good place to start would be the 2009 Urban Mobility Report. Unfortunately, I doubt the Arkansas Blue Ribbon Committee will ever see that report.
In business, measuring performance is a way of life. It is viewed as an indispensable tool that shapes decisions on resource distribution. In the public sector, however, performance measures are treated more like an inconvenience. This is especially true in transportation policy.
Across the country, transportation spending decisions are too often tied to political agendas and the wishes of influential constituencies, not objective measures of public need, such as safety, traffic relief, and economic development.
Unfortunately, as usual, we are going about things backwards. First we start off by trying to create a marketing strategy to market an unspecific and undiscussed tax increase. But even determining the specific tax increase is premature if you have not established a rigorous and performance based transportation policy. The Arkansas Blue Ribbon Commission has the cart before the horse and the horse before the carrot.
2. Respect people’s freedom of mobility
Government serves society, not the other way around. Policies that force citizens to behave differently than they normally would disregards the natural marketplace of society and ultimately threatens to take away political freedom from its citizens.
Likewise, government policies in transportation should be responsive to the market and improve the freedom of citizens to live and work where they choose.
Manipulating transportation policies to force a particular behavior coerces people to abandon their individual liberties in favor of a socialistic benefit where supposedly, a greater collective good is created.
These measures always fail because of what Milton Friedman called, “one of the strongest and most creative forces known to man,” rational self interest; or people’s desire to do what they believe is best for their own lives.
Instead, proponents of social change should work in the marketplace of ideas to persuade others to share their vision and work towards it. They should not use the power of government to force through their own ideas, but should seek to change policy, if that is needed, once reform is broadly supported by the public. Policymakers should respect people’s choices and allow for a greater freedom of their mobility by actively working to reduce traffic congestion.
3. Deploy resources based on market demand
Transportation resources should be distributed based on natural market demand rather than the current system of building infrastructure that is somehow meant to attract demand.
In economics, supply is a function of demand. This means a willingness to use a service must exist before a supply of that service is created. Boeing executives do not make 300 airplanes knowing they will only sell 100. Likewise, governments should not spend a disproportionate amount of taxes in low demand sectors, where the public’s willingness to use the service does not justify the investment.
European and U.S. transit systems provide good contrasting examples of how these economic concepts apply.
European countries are often believed to have highly successful public transportation networks and one of the more familiar systems is Switzerland. Switzerland lies in the center of Europe and is an important transportation hub for both freight and passenger traffic throughout the continent. The Swiss system is primarily successful, not because of the amount of service or infrastructure, but because they have certain demographic and economic characteristics that induce demand.
In other words, there is an existing market with a natural customer base and Swiss policymakers responded with proportional infrastructure investments. As a result, mode share, ridership and fare box recovery are high.
In the United States, transit resources are distributed in just the opposite way.
Under the “build it, and they will come” theory, many policymakers think that increasing the supply of transit will somehow create more public demand. This speculative model fails because most U.S. cities do not posses the economic or demographic characteristics that create enough voluntary consumers for public transit.
Using the economic principles of supply and demand shows that building excess transit capacity before there is an equal amount of willingness to use it leads to an under-performing system. As a result, mode share, ridership and fare box recovery are low.
In any market, increasing the supply of a service or product before demand is available creates a large space between costs and benefits.
In the private sector, where benefits are measured by consumer choices, this type of behavior is unsustainable. A business will simply cease to exist once costs exceed benefits to consumers.
But in the public sector economic laws are not as strict. There is a higher tolerance for fiscal inefficiency because benefits are not always measured by consumer choices. There is also an element of public value.
In transportation policy, public value should be measured by freedom of mobility and traffic relief for the public. Therefore, policymakers can keep the space between costs and benefits small by separating projects that provide these values from projects that do not.
When prioritizing transportation projects, policymakers should use consumer demand to drive investments, not the other way around. Applying these time-tested economic principles in transportationpolicy will improve people’s mobility and reduce traffic congestion.
4. Improve freight mobility
Freight mobility possesses a significant economic role in transportation policy but ironically, the state’s investment strategy is an obstacle for improving the efficiency of moving goods.
The freight industry pays a large amount of the revenues the state receives from fuel taxes and vehicle registration and weight fees in Arkansas. Yet, very little goes to pay for freight-specific infrastructure. The industry is forced to rely on projects that prioritize other transportation areas. The theory is, “what’s good for one mode is good for all modes.”
The problem is that transportation spending is based on other agendas, rather than congestion relief, and not surprisingly, freight mobility suffers.
According to the Federal Highway Administration, it costs the freight industry $32 for every hour of traffic delay. In 2004, that amounted to about $7.8 billion nationally. That means the cost of getting goods to market includes nearly $8 billion directly attributed to traffic congestion.
Policymakers must acknowledge that congestion relief is possible and look for cost-effective solutions that measurably reduce delay. While applying these principles to transportation policy that will improve freight mobility, policymakers should also consider:
- Creating a freight investment account for freight specific projects, by rededicating existing revenues
- Increasing heavy rail capacity to allow medium and long range freight more choice to shift from roads to rail
- Creating freight-only lanes/corridors to support local freight distribution
5. Utilize Public/Private Partnerships
Using the Public/Private Partnership (PPP) concept, policymakers can find effective ways to fund new projects, and to maintain the current transportation infrastructure. But relative to the rest of the United States, Arkansas has been slow to fully embrace the PPP strategy.
These partnerships can take many forms and, according to the National Council for Public-Private Partnerships, there are generally about a dozen types. They can range between mostly private to mostly public and several types incorporate a balance of both characteristics.
There are many benefits associated with a PPP. They include leveraging private dollars for public use, shifting risk from taxpayers to the private sector, and lowering overall project costs.
Other factors like public oversight, asset ownership, long-term maintenance, liability and labor, will dictate which PPP is a better fit. In Arkansas, these issues have been treated as obstacles and prevented partnerships from forming. Yet, these questions have been addressed by other states by adapting the various types of partnerships. Undoubtedly, these concerns are important but they should not deter the benefits of a Public/Private Partnership.
Partnering with the private sector is one way to increase financial resources and get roads built. Otherwise, funding problems become insurmountable, roads are not built and our system continues to deteriorate. Public/Private Partnerships have a proven track record across the United States and should be embraced by public officials in Arkansas.
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The post is adapted with permission from the Washington Policy Center publication titled Five Principles of Responsible Transportation Policy written by Michael Ennis
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Blue Ribbon Committee on Highway Finance – October 14, 2009
Posted on October 14th, 2009
Date & Time: Wednesday, October 14, 2009 at 1:30 PM
Location: Room 171, State Capitol
Committee Information: Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12251/I7851.pdf
Attachments: none
1:30 pm – Apparently I was mistaken about the start time of this committee. It began at 1:00 pm instead of 1:30 pm. My apologies.
1:32 pm – We are currently covering the option to index revenue. This presentation is by Richard Wilson, the Assistant Director for Research Services, Bureau of Legislative Research. There was also a followup from the Federal Highway Adminstration Presentation at the August Meeting.
1:35 pm – Nominal vs. Adjusted Motor Fuel Tax Revenue graphs show that the MFTR non idexed has flat lined since 2002 at about $400 million dollars.
1:37 pm – There is some discussion about the ability to toll an interstate highway. Apparently this can only be done if additional capacity is being added such as a frieght transport lane.
1:38 pm – Wow, short meeting today. The committee is ajourned.
The graphs showing various index measures show that if the Motor Fuel Tax Revenue (MFTR) had been indexed to the CPI it would have risen to more than $850 million. If indexed to the Construction Cost Index (CCI) it would have increased to over $1.2 billion. Another index the CCI3 shows that it would be at about $1 billion.
We were also presented with a graph showing that General Revenue passed MFTR in 2005 for the first time since 1985.
I missed the presention of the report from the Revenue Transfer Subcommittee and the New Revenue Subcommittees, but the live blog I did earlier today would have covered the New Revenue Subcommittee information. I will have to follow up on what occured in the Revenue Transfer Subcommittee.
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Highway Finance: New Revenue Subcommittee – October 14, 2009
Posted on October 14th, 2009
Date & Time: Wednesday, October 14, 2009 at 10:30 AM
Location: Room 272, State Capitol
Committee Information: Members on Committee
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12249/I7846.pdf
Attachments: none
10:32 am – The meeting was called to order by the chairman, Jim McKenzie.
10:33 am – Mark McBryde gave an update on progress. He has volunteered his staff at Stephens to develop a computer model for alternatives analysis. Bill Lynch and Mark McBryde have also volunteered to develop a Policy Brief on Public Private Partnerships and Tolling.
10:37 am – We are currently reviewing draft policy briefs concerning revenue adjustment factors for the next 10 years. These include vehicle miles traveled predicted and the impact of new CAFE standards.
10:41 am – Based on the Subcommittee’s discussion at its September meeting, Policy Briefs are being developed on the following sources: Gasoline Excise Tax, Diesel Excise Tax, Removal of Sales Tax Exemption on Motor Fuels, Indexing Motor Fuel Taxes, Carbon Tax on Motor Fuels, Vehicle Miles Traveled Tax, Weight Distance Tax, Public Private Partnerships/Tolling, General Sales Tax, and Income Tax. I will try to get these briefs made availiable to you as I can.
10:44 am – In the adjustment factors brief, the AHTD predicts the Vehicle Miles Traveled (VMT) to grow at a rate of 1.7% per year.
10:46 am – We are currently reviewing the Carbon Tax on Motor Fuels Brief. It is listed as an advantage that the carbon tax is a new tax and would only require a simple majority of the General Assembly to adopt or increase. An example of a disadvantage is that the carbon tax, like the fuel excise tax, is inelastic. In order to retain its purchasing power over time, the carbon tax would have to be raised periodically by automatic indexing or periodic rate increases.
10:49 am – Mr. Mark Lamberth is making the point that the revenue potential of the Carbon Tax would be $21 million and hardly makes it worth it. The chairman made the point that this is only a unit measure and the rate could be adjusted up and down to produce the desired amount of revenue. In otherwords, 2 units of this tax would produce $42 million.
10:52 am – Mr. Bill Lynch is asking about how these would apply to an all electric vehicle. The chairman pointed out that these might be handled by the VMT tax.
10:55 am – Mr. Charles Dains makes the point that the carbon tax is not a use tax and has nothing to do with the use of highways and feels that it is a political tax and would prefer to stay completely away from this. [I have to give Mr. Dains the common sense award of the year with that statement.]
10:56 am – There is some discussion about “leaving this on the table” and Mr. Lynch desired that we not take anything off the table.
10:57 am – We are now covering the Sales Tax on Motor Fuels Policy Brief. Unlike the fuel excise tax that we currently put on motor fuels, which is collected on a per gallon basis, a sales tax is collected as a percentage of the price of gasoline. There is some debate on if this tax will require a super majority to pass. This appears to be presented in two forms. One essentially includes a tax on the excise tax. Mr. Bill Fletcher said that we don’t won’t to do that because “they” will beat you up on that. He said that we need look at what other states are doing and that we need to watch out how we do this because there will be resistance from the oil marketers.
11:03 am – [One thing I have noticed about these discussions about what tax to increase is that taxes are often discounted based upon the strength of the opposition coming from a particular group that is opposed to the tax. In some ways, these proceedings appear to a search to find the weakest constituency group to molest.]
10:07 am – Apparently there will be a presentation this afternoon on indexing.
11:08 am – Mr. Dains asked that new sales taxes on new and used vehicles be to those taxes being considered. He said most people do no know what they are paying on that anyway. The chairman pointed out that the Revenue Transfer Committee may be considering this.
11:09 am – The committee is adjourned.
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