Welcome to another week at the State Policy Network blog. State Policy Network, often known simply as SPN, is the professional service organization for America’s state-based, free market think tank community.

These blog entries will highlight some of the policy innovations being offered by SPN organizations.

Your tax dollars are going to your local school district. Do you know how they are being spent? The Yankee Institute for Public Policy, of Hartford, Connecticut, offers ten questions that citizens and school board members should ask. Asking the questions in the short manual Stopping School Corruption: A Manual for Taxpayers (PDF), can promote more honest governance at schools.

According to Armand A. Fesco, a former district superintendent, too many school boards do not live up to obligations to the public to prevent corruption. Schools, Fesco writes, can practice corruption in three different ways: cheating and deceit; waste and mismanagement; and fraud and stealing.

Among the questions that board members and citizens should ask: Is there a comprehensive list of assets? Who has school credits cards, and are their purchases evaluated? Are income and disbursement funds for student activity funds regularly monitored? How many students does each teacher have throughout the day?

For each question, Fesco gives background information, which explains how the question can reveal corruption. He also offers proposed solutions that school employees and board members can undertake.

Though some of the particulars are unique to Connecticut, the questions are easily transferred to other states.

Since governments, unlike businesses, cannot face the ultimate discipline imposed on a private business—being sent OUT of business—independent oversight is crucial.

In recent years, more attention has been paid to measuring the effectiveness of government programs. Financial audits are important, but performance audits are vital. There’s little since in pouring taxpayer funds into a squeaky-clean but ineffective program.

John Barnes, a research analyst for the Seattle-based Washington Policy Center, says that thanks to a ballot initiative enacted last year, state taxpayers local and state agencies will be receiving some much-needed scrutiny. In a commentary on the measure, he admits that audits are “the stuff yawns are made of.”

And yet, “the potential for savings and streamlining is great.” Who knows? The taxpayer will save money from government cutting out needlessly costly ways of running things. The audits may also show some programs so ineffective that they ought to be abolished outright.

The initiative, called I-900, dictates that the largest agencies get audited first. Brian Sonntag, the state auditor, calls the effort “the most ambitious program of its type in the nation.”

If you’d like to mine the auditing effort for insights that might be applied in your own state, the Washington Policy offers Reviewing Government through Performance Audits: A Guide to Initiative 900. 

Water is essential to human life. How then should government respond to environmental threats to that valuable resource?

The Thomas Jefferson Institute reminds us that lawmakers must take care to take steps that are both good for the environment and fiscally sound.

In a 26-page PDF report Policy Alternatives for Clean-Up of Virginia Waters, David Schnare, Ph.D., reviews the ideas proposed in state government to clean up Chesapeake Bay.

Policy makers, he says, must ask several questions. “What happens if we don’t do anything?” Even with the federal Clean Water Act, state government has plenty of discretion, which it should use to the benefit of the commonwealth. But it must resist the temptation to take the easy way out, which would be to focus on the pollution sources that are easily identifiable.

Schnare then offers a proposal to mitigate the effects of non-point source pollution (largely speaking, agriculture) that will work just as well as a plan considered by officials at the time of publication (April 2006), but at two-thirds the cost.

While the specific waterways that need cleanup will vary from state to state, policy makers everywhere would benefit from considering the principles endorsed in this report.

Even baby boomers age, and that’s setting up for some tremendous fiscal problems for public programs and taxpayers. Will governments make the right adjustments, or will they keep on the same path, like a boat that keeps taking on water?

Most of the expenses in long-term care are paid for by governments: 42 percent for Medicaid; 20 percent for Medicare, according to this (PDF) fact sheet from the Kaiser Family Foundation. For nursing home—one element of long-term care—Medicaid pays slightly higher, 43 percent, while Medicare (strictly a federal program) pays 14 percent. Currently, Medicaid pays $93 billion per year in long-term care, two-thirds of which is spent on institutional care.

For the most part, states determine who qualifies for taxpayer-funded long-term care. Some are more lenient than others.

One of the problems with Medicaid funding of long-term care is moral hazard. Middle and upper-class families can and sometimes do make no arrangement for financing LTC, arguing “I paid my taxes, why should my kid’s inheritance be wiped out because I need to enter a nursing home?” That’s understandable from an individual standpoint, and any one person’s refusal to take Medicaid won’t benefit the rest of us as a whole anyway. So a small industry of Medicaid planners is available to help people game the system, and qualify for payment. Steven Moses provides a quick overview of the problem.

Several members of the State Policy Network have come up with ideas for addressing the Medicaid challenge. One thing that states need to do a better job of is “estate recovery,” which is simply making sure that people who have the means to pay for their care do so, rather than hide their assets.

The Flint Hills Center for Public Policy’s Estate Recovery Primer (warning: large PDF) is one place to start for a look at this issue.

According to the Kaiser Family Foundation, Medicaid pays for health care treatment of 55 million people.

Not surprisingly, Medicaid is a large challenge for state budgets. There are actually two challenges: long-term care (nursing homes) and acute care (everything else). We’re going to focus on acute care first.

People who receive health care through Medicaid are not terribly satisfied. Neither are taxpayers, who face the prospect of out-of-control budgets. And of course, health care providers don’t care for the deeply discounted payments they receive from the bureaucracy.

One of the latest reform proposals for acute care comes from the Wichita, Kansas-based Flint Hills Center for Public Policy. Reforming Medicaid in Kansas: A Market-Based Approach (available in PDF) offers policy makers in Kansas (and elsewhere) ideas for bringing this program under control.

In reforming acute care, one key is to give people financial incentives to be active consumers.

Michael Bond recommends that states use actuarial science to convert government spending into individually tailored credits that people can use to purchase the care they need from competing providers.

It’s part of a broader movement towards consumer-directed care, which is already underway. When people have some skin in the game, they’re going to be more involved, which will lead to better outcomes in both finances and in personal health. In both the private and public sector, health care will be improved if people move from being passive dependents to active consumers.

You have probably heard of the financial and demographic troubles facing Social Security. But do you know that Social Security’s problems are rivaled, if not exceeded, by government-financed health care?

Medicare is a federal program to fund health care for senior citizens. Sometimes confused with Medicare is another program called Medicaid.

Actually, Medicaid is over 50 programs, since each state and territory is free, within federal guidelines, to devise its own approach. Both federal and state taxpayers fund a bureaucracy for long-term care and acute care.

Acute care is what we think of as regular medicine, while long-term care deals with (most typically) nursing homes. Over the next few weeks, we’ll introduce you to the problems facing these programs, as well as what state-focused think tanks are doing to promote policy alternatives that advance markets and solve pressing problems.

Spending on Medicaid varies from state to state, but it often exceeds the budget for education. Given the aging of the baby boomers, this trend will only continue if the program is left unchanged.

Medicaid has been one project area of the Flint Hills Center for Public Policy, a Wichita-based organization. Its report “What’s Wrong with Medicaid in Kansas?” (available in PDF) offers a brief overview of the program’s flaws. Though the specifics of Medicaid vary from state to state, the fundamental problems are nationwide. This 8-page document is an easy-to-read introduction to what’s wrong with Medicaid in Kansas—and elsewhere.

In a move that’s good for property rights and trouble for some government managers and ambitious politicians, the Iowa legislature has overrode a governor’s veto for the first time in 40 years.

The issue: eminent domain. By a lopsided votes (91 percent in the House, 83 percent in the Senate), legislators enacted HF 2351 over the objections of Governor Tom Vilsack. The law makes it more difficult for governments to seize private land in the name of the public good.

Vilsack had claimed that he had the future on his side. “We cannot afford to turn back the clock on the progress we have made in keeping Iowa’s communities vibrant.” But legislators weren’t buying it. The law is expected to have an effect on urban renewal projects, airport expansions, and the creation of water storage areas for industrial purposes.

The state’s most influential newspaper, the Des Moines Register, agreed with the governor, saying there was no need for changes.

Earlier this year, the Public Interest Institute, an SPN member organization in Mt. Pleasant, Iowa, issued a report (PDF) Does Iowa Need Stricter Eminent Domain Laws? Jonathan M. Miltimore argued to the contrary, saying that additional safeguards were needed.

Looks like the legislature agreed.

It’s summertime, which means that many Americans are heading for a day—or weekend of camping—in the park. All too often, however, state parks suffer from poor maintenance and serve as a cost on taxpayer dollars.

According to the Bluegrass Institute, Kentucky’s government has made strides in park services by outsourcing. Its Kentucky State Parks Update points out that by using outsourcing, the commonwealth was able to create a reservation system for the park’s campgrounds. Not only did campers benefit from moving away from the first-come, last-out-of-luck system, but over $500,000 was generated in one month alone. That money will help with upkeep.

The Update provides other examples of reforms by adopting best practices of other states, prodded by the Bluegrass Institute. Mowing has been cut back, for example, which returns some land to its natural state. Requiring managers to justify staff hires has reduced payroll costs by $300,000. Broken coffeemakers have been removed from lobbies of park buildings.

One “best practice” that Kentucky ought to follow, but has not, is to implement user fees. Vermont parks, for example, have been self-sufficient since 1993. Further use of contracting out can help, as can getting out of the golf business.

Keeping government on track and in its place requires that citizens tell lawmakers to say “No” to various attempts to overstep its bounds with unneeded regulations, special interest favors, and inappropriate government programs.

It also helps to remind those who spend the public’s money of some key principles of spending that money. The Texas Public Policy Foundation offers some tips in its document (PDF) Principles for Determining Budget Priorities. In this 8-page policy brief, Talmadge Heflin and Bryon Schlomach, Ph.D., discuss steps for determining whether a program should exist, and if so, how to set priorities among various programs.

Observing the principles, which are set forth in a Q&A format, works best with solid information. For example: do the benefits of a program or agency clearly outweigh the costs? Unfortunately, some government efforts are created and sustained as a result of anecdotes or isolated problems.

Government is good at doing the same old thing over and over again. It's no surprise, then, that they don't always get things right when they try new things.

As many observers of K-12 education know the cities of Cleveland, Ohio, and Milwaukee, Wisconsin, are among the few that offer taxpayer-provided vouchers.

The state of Ohio has new program called EdChoice, which expands the idea of vouchers to other cities in the state. The Buckeye Institute for Public Policy Solutions, a fan of school choice, examined the Cleveland and Milwaukee programs.

Greg Forster and Matthew Carr’s report Lessons for Improving Ohio’s EdChoice Voucher Program (PDF), gives Ohio lawmakers credit for learning from the Cleveland program, and thereby making EdChoice better. Still, they say, there is room for improvement:

Unlike the Milwaukee program, EdChoice requires parents to apply during a relatively short period of the year. This burden is compounded by the fact that families’ eligibility for vouchers is based on the changing academic performance of individual public school buildings, so parents will not necessarily know right away whether they are eligible. EdChoice would provide much more access to educational freedom if it were made a city-wide program with rolling admission throughout the year, as is the case in Milwaukee.

In its ruling in the Kelo v. New London case last year, the U.S. Supreme Court invited states to set up their own laws restricting the use of eminent domain.

Under Kelo, the Court ruled that there was no federal bar to cities using eminent domain power for broadly defined “economic development” purposes. As a way of supporting spending increases, some cities had had used its powers of condemnation to transfer property among private parties. Their rationale? The new owners of the property would be able to pay more taxes, serving the public good.

Among the leaders seeking to enact state and local controls on eminent domain has been the Castle Coalition, a project of the Institute for Justice.

The John Locke Foundation interviews a representative of the North Carolina Property Rights Coalition about its plans for a counter-Kelo constitutional amendment in the Tarheel State.

Kieran Shanahan tells the Foundation that the laws governing eminent domain in North Carolina are “worse than Kelo.” What the state needs, in Shanahan’s view, is not just a statute, but a constitutional amendment.

If you're looking for some models to follow, the Castle Coalition has put together a brief description of success stories.

In our post-Enron world, budgetary transparency is increasingly important. As important as this is in the private sector, it’s even more important in the public sector, which by definition uses taxpayer dollars.

Fortunately, states are developing new ways for citizens to track government spending.

Last month, the Minnesota state auditor released a report on school district and charter school finances. Even better than the 45-page report covering the entire state is a new interactive tool. With the online service you can drill down to one particular school district, and find the average teacher salary, class size, and other important numbers. If the district you are living in is asking for more money, compare its numbers with those of a comparable district.

The Kansas Department of Education has an even better online tool. The Comparative Performance & Fiscal System lets you drill down into specific categories of spending or revenue for each district, or group of districts. As a bonus, it also lets you know the percentage of students who have scored proficient on reading, math, and other statewide tests.

How much are they spending, and what results are they getting? Those are two questions that should be asked of every school system.

Welcome to the SPN Blog. This is the blog of the State Policy Network, a service organization for state-based think tanks. In this space, we will discuss free market activities in the states, and how lawmakers can and are addressing public concerns through free-market principles.