A lot has been said about the just completed legislative session. As CABL noted in our previous commentary, there was a lot of work and a lot of activity that went on for the two months of the session, but in the end it wasn’t a session of major change. But some of those areas of activity are worth noting, because they do indicate where lawmakers focused their attention and they also point to areas that we could see targeted again in the future.
By far the biggest battle of the session was over the budget and the biggest sticking point has been a growing effort by House members known as “fiscal hawks” to purge the state’s spending plan of “non-recurring” revenues that might not be available for spending next year. By the count of lawmakers the governor’s original budget contained about $500 million in non-recurring funds. They say they reduced that to somewhere around $80-$100 million.
But because some of those non-recurring dollars are contingent on things that haven’t happened yet and other parts of the budget are based on revenue projections from a new tax amnesty program that many concede are probably overly optimistic, next year’s budget still looks somewhat tenuous at best.
So why was the passage of this year’s budget hailed by so many as such a major development? First, because it was passed in the first place. The stalemate between the House and Senate over their two very different approaches to state spending threatened to send lawmakers home without a budget deal and force a special session. At least that didn’t happen.
But the other factor is that many House members saw the final budget deal as a victory for the House in a process that usually leaves that chamber with the short end of the stick. In their view they accomplished two things: 1) influenced the spending plan to make it more fiscally conservative than the proposals of either the governor or the Senate, and 2) passed legislation that they believe will reform the budget process in the future.
They point to three such bills:
– This bill makes a number of changes to the budget process, but at its heart it requires the state’s Revenue Estimating Conference to certify whether revenues from various sources are recurring or non-recurring. If the REC determines they are non-recurring, state laws require the non-recurring revenues to be used for only a limited number of specified purposes. Concerns have been raised about the REC’s ability to determine whether certain revenues are recurring or not and there’s the distinct possibility that doing so could further limit the flexibility of lawmakers to manage the budget during budget shortfalls. But this legislation was a cornerstone of the hawks’ fiscal package.
– This bill requires that that the budget be introduced with separate recommendations for areas of discretionary spending and nondiscretionary spending if funding from higher education or health care is reduced from the prior year. The fiscal hawks believe this change would require lawmakers to look more closely at what they are being asked to fund in the budget with an eye toward setting the state’s real priorities. There are various aspects that seem to make this approach problematic and lawmakers could essentially do this now if they wanted to, but this process does seem to create a structure to force the type of budget consideration the fiscal hawks want.
– Currently, the state has a spending limit that is based on a variety of fiscal factors. This resolution reduced that limit by more than $2 billion. Though it would have no immediate impact on spending, supporters believe it can serve to hold the line on the growth of spending in the future.
The fiscal hawks had hoped to pass some of their proposals as constitutional amendments to make the reforms they were seeking harder to bypass. They couldn’t muster those votes, so instead these are statutory changes that could be overridden by the Legislature, probably with some simple language in the appropriations bill if it came to that. Either way though, the passage of these bills will certainly have an impact on budget negotiations beginning next year, and the debate over budget reform will continue.
As far as the bottom line on the budget, the final version of the state’s spending plan for 2013-14 is better than when it started a few months ago. Lawmakers are clearly setting stricter boundaries for themselves that will complicate matters in times of future budget shortfalls, but will perhaps also lead to greater budget scrutiny and the development of true state priorities.
Fundamentally, though, for this coming year lawmakers were unable to come to terms with the fact that the state has been experiencing a structural deficit that continues to create annual headaches that lead to the use of nonrecurring dollars, mid-year cuts and other creative techniques to hobble through the next year. Legislators continue to hope that the recovery in the economy coupled with steps the state has taken to reduce costs and create efficiencies will eventually kick in and help mitigate that issue. Unfortunately, that remains to be seen.
K-12 Public Education
The big news for public schools this year turned out to be the $69 million in added spending that was approved in the budget on the last day of the session. It’s not a lot in the scheme of $3.4 billion in spending on public schools in Louisiana, but it’s the first real increase in spending they’ve seen in a few years. The money is supposed to be split between pay raises for teachers and support for local school districts.
As for education reform, this year turned out to be almost the reverse of what happened last year in public education – at least if you look at the actual legislation that was pursued by lawmakers during the session. In 2012 it was all about reform as three major bills were passed and became law. In 2013, it was all about defending those and other recent reforms from attack.
The good news is that none of the anti-reform measures ended up passing, but it wasn’t always an easy fight and some of the battles, especially behind the scenes, lasted nearly the entire session. Though none of these bills ultimately passed, the types of attacks that were launched are worth noting:
– Delayed implementation of parts of the state’s new teacher evaluation program.
HB 346 & 466
– Required legislative approval of any changes in the way school performance scores are calculated. This is the responsibility of BESE, which is made up of mostly elected members, not a role for the Legislature.
– Took away a significant amount of the authority that gives charter schools the flexibility to be innovative and place the best teacher in every classroom.
– Legislatively prescribed a new mechanism for BESE to calculate school performance scores.
– Reverted back to the type of system that was in place before last year’s school reforms that made it extremely difficult for school districts to remove ineffective teachers.
HB 643 & 666
– Hurt charter schools by charging them for various costs of the teacher retirement system even if their teachers were not participating in the system.
– Injected more politics in public education by requiring that the state Superintendent of Education be elected rather than hired by BESE.
– Expressed the will of the Legislature that BESE and the Department of Education cease all participation in the “common core” standards initiative which is designed to increase course rigor in the classroom.
Again, none of these measures passed, but they are indicative of the efforts of teacher unions and other groups to try to crack some of our most significant reforms both old and new. CABL strongly believes all of our reform initiatives should be monitored and adjusted when needed, but many of these efforts were attacks meant to disrupt and dismantle the reforms, rather than providing constructive input.
The other major education issue of the session dealt with vouchers. The recent state Supreme Court ruling which ruled last year’s voucher law unconstitutional based on the funding mechanism that was used landed the voucher controversy right back at the Legislature in the middle of the session.
The court didn’t halt vouchers, it just said the state has to pay for them through a mechanism other than the constitutionally restrictive Minimum Foundation Program. While on the one hand that required only a technical change in how the vouchers were funded, in practicality it also created the opportunity for another political fight which went on largely behind the scenes in the shadows of the budget debate. In the end, the vouchers were funded and the state’s education reforms were preserved, but the battles over the direction of public education in Louisiana continue.
It turned out to be a surprisingly good year for higher education after several years of reductions in state spending. The big surprise came right at the end – more than $50 million in extra funding that no one was even talking about until the last week of the session.
The way it finally happened came pretty much from nowhere. In the end, three of the four college management systems received an additional $10 million each. The fourth, the financially-strapped Southern University system, got more. Its total was $17.5 million, with $4.5 million of that split evenly among its three campuses and additional dollars set aside for its Ag Center and law school. LSU’s Ag center also received an extra $5 million to replace money left out of the original budget. While that was all good news for higher education the day the budget passed, there are concerns that some of those items could be on the chopping block of a gubernatorial veto.
On another front, higher education institutions didn’t receive the authority they were seeking to gain flexibility in setting tuition rates, nor did they see any changes that would cap or raise standards in the TOPS scholarship program. But they did receive legislative approval to charge a building use fee of up to $48 per semester and some flexibility in setting tuition rates for certain online degree programs.
On another front, a bill to ensure that state revenues to institutions are allocated according to the Regents’ performance funding formula and another to create a commission to recommend changes to that formula got caught up in political side issues and failed to pass.
But by far the biggest winner was the Louisiana Community & Technical College System. It was a move that created some controversy within the ranks of higher education, but nevertheless, LCTCS passed legislation authorizing the sale of bonds for $250 million in construction projects to pay for expansion and renovation of its campuses. The projects are spread across the entire state, and even though some leaders raised concerns about the state debt limit and circumventing the normal process for funding capital construction projects, there is no doubt this should go along way toward addressing the state’s serious workforce development needs.
There were also some developments on the health care front. Lawmakers spent a considerable amount of time debating Medicaid expansion as part of the federal Affordable Care Act. The discussion ended up going farther than many people thought it would, but at the end of the day the Legislature decided not to participate in the program, though the issue will certainly return to the Capitol in the future.
On what’s almost the flip side of that, the state continued to shift the responsibility for indigent health care away from the charity hospital system and toward public-private partnerships with private hospitals and other health care providers. It really wasn’t so much a legislative matter as it was a continuation of Jindal administration policies, but lawmakers did approve a budget with extra spending to cover the costs of that transition.
Finally, in what might prove to be one of the more significant outcomes of the session, lawmakers passed two separate constitutional amendments that, if approved by voters, would constitutionally protect certain spending to some health care providers while severely limiting legislative authority over nearly $2 billion of the budget. These amendments represent huge changes in the state’s health care funding mechanism that could have major budget implications for the future.
This was not a session where lawmakers didn’t work hard, face controversial issues or have to make tough votes. As a group, they did all of those things. But at the end of the day, it was not a session about major change. In some cases that was good, in others it might have been better if they had pushed the envelope a bit more. In the case of the budget, it was probably the best they could come up with given that we do still follow a democratic process.
But there’s no question there was some change in the dynamics and perhaps the balance of power within the Legislature. Some is part of the natural shift that occurs as a governor begins to turn the corner heading into the close of the second term. Some of the other changes were the result of the determination of the House fiscal hawks to take a stand on the budget.
That last one is drawing a fair amount of attention from a variety of observers, but how long it lasts and if it yields any lasting impact on the Legislature is something a lot of people will be watching with interest.