As more and more states continue to overspend their budgets and play accounting games to present a false image of fiscal responsibility, it can be hard to look past the harsh realities of the state’s harsh fiscal reality. But in the spirit of Thanksgiving, State Budget Solutions is taking a look back at 2011 and recounting the developments in state budgets for which everyone should be thankful this holiday season.
It’s been a good year for education in many states, and fortunately, governors such as Indiana’s Mitch Daniels, Pennsylvania’s Tom Corbett and Wisconsin’s Scott Walker have moved to expand school choice and increase accountability for teachers and schools.
Gov. Daniels signed several pieces of legislation in May that dramatically increased school choice by creating the largest voucher program in the nation and removing limits from virtual charter school enrollment in Indiana. His education reforms also included a number of accountability measures that include tying teacher pay to student success, providing a statewide performance ranking of schools, placing school control at the local level, and restricting Indiana teachers unions’ collective bargaining power.
Gov. Corbett followed Daniels’ example in October with his four-priority reform plan. His plan focused on providing scholarship grants for low-income students, expanding a tax credit program to businesses that fund those grants, connecting teacher evaluations with student performance and improving charter schools.
Wisconsin also has expanded school choice. Lawmakers opened the Milwaukee Parental Choice Program to more students. Moreover, that model will be implemented in the Racine Unified School District. Unlike Milwaukee’s program, the program in Racine will be open to any income-qualified child who attended Racine Unified Public Schools in the prior year. Hopefully, these reforms are the beginning of a trend that will increase America’s educational freedom and quality while reining in out-of-control budgets.
This year also has brought landmark legislation requiring increased health and pension contributions from public employees, as well as instituting new limits on public sector collective bargaining in Wisconsin. School districts and local governments already are seeing the savings from the reforms. For example, the Appleton Area School District saved $3 million this year and the city of Milwaukee saved $25 million by avoiding costly health care negotiations. The savings achieved through collective bargaining reform mean that school districts are putting fewer levies on the ballot.
One bright moment in the dark cloud of unfunded state pension liabilities has been states moving from defined benefit plans to defined contribution, 401(k) style plans. Utah demonstrated in 2010 how this could be a win-win for the state, which can better protect public liabilities from wide market swings. It also will know the exact debt it owes to its public workers and state employees, to whom it gave ownership of their retirement funds, allowing them to take their pension plans with them as they change jobs or move.
It protects those plans from the threat of the state government dipping into pension funds when it comes time to balance the state budget.
Other states, including Michigan and Rhode Island, have followed Utah’s lead and moved toward a defined contribution plan. Overspending, budget games and the recession have combined to keep many states in the red this year; there is a lot of work that needs to be done to move states toward “reality-based budgeting” and away from the same fiscal practices that have landed them in their situation.
This year’s reforms set good examples for other states to follow, such as Utah’s pension plans and the education progress made by Governors Christie, Corbett and Daniels. Here’s to many more like them in the year to come.
Bob Williams is president of State Budget Solutions, a nonpartisan organization advocating for fundamental reform and real solutions to the state budget crises.