Category Archives: State government

For the rest of us, there’s non-teacher retirement

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

Could Arkansas’ efforts to strengthen a program serving 43,000 offer an example for Congress to fix programs serving 60 million?

During this past legislative session, Arkansas lawmakers took steps – baby steps for sure, but steps – that might shore up the state’s Teacher Retirement System. Actuaries had determined it would take the system 29 years to catch up with the payments it will make to current and future retirees, and that’s too much. In the past, 30 years was considered acceptable, but the Government Accounting Standards Board has lowered that number to 18. Anything longer risks hurting the state’s bond rating and increasing the borrowing costs for schools and roads.

Because big fixes are hard, the system’s managers requested the flexibility to implement numerous little ones. Laws passed this session let the system’s board of trustees increase the rates paid by school districts and by current teachers if the projected payoff exceeds 18 years. Various retirement benefits could be reduced, and the system will be funded by school districts employing contracted employees working for private providers.

In other words, the Teacher Retirement System is not meeting professional standards meant to assure long-term survivability. So in response, the Legislature gave a governing entity the flexibility to make changes, rather than doing it in the politically charged halls of the State Capitol, where laws can be hard to pass and harder to change.

It remains to be seen if the changes will work. It could be that the state’s retirement systems need bigger fixes. The point is, fixes are being attempted for a popular retirement system serving 43,000 current beneficiaries, and those fixes involve less debt, not more. Solving the problem will require some people to pay more or get less, and these people vote.

Let’s compare that to the federal government’s programs that serve 60 million people. Social Security and Medicare both face long-term funding issues far more serious than the state’s Teacher Retirement System. According to the nonpartisan Committee for a Responsible Federal Budget, the trust fund for Medicare Part A, which covers hospital payments, runs out of money in 2025, and then it will have to rely solely on the taxes being paid at the time. At that point, doctors and hospitals under the law will face a 13 percent pay cut, leading some to simply stop seeing Medicare patients. Social Security’s trust fund runs out of money in 2034, at which point all recipients under current law will receive an automatic 21 percent cut. The trust fund has been borrowed from to pay for the government’s other programs, but the government has promised to pay it back, so we’ll just have to take its word for it.

The numbers don’t work and will grow worse as the baby boomers age and retire. By 2027, the costs of mandatory spending programs, of which Social Security and Medicare are the major parts, plus interest on the national debt will equal 99 percent of all federal revenues. That means, 10 years from now, 1 percent will be left for everything else the government does, including the military, which means even more borrowing. In the following decades, the unfunded liabilities for Social Security and Medicare reach incomprehensibly high numbers in the trillions of dollars.

Unlike the Teacher Retirement System, there is no mechanism for boards of trustees to tweak the systems, because the financials are locked into law. In fact, because the programs are considered to be “mandatory,” Congress doesn’t even take a hard look at them. Moreover, the spending is not governed by anything like that 18-year provision. The government just pays more year after year until the programs hit the wall in 2025 and 2034, and then benefits suddenly will be cut.

Whether it’s the Teacher Retirement System, Social Security or Medicare, when revenues doesn’t meet expenses, policymakers have three choices: more revenues, less expenses, or some combination of both. Congress has chosen the easier fourth option: Do nothing because the consequences happen long after the next election.

Could Congress, which long ago decreed the changes would happen suddenly in the future, instead somehow make them happen gradually and less painfully – using some of the same principles adopted by the Legislature? The pain could be lessened by addressing the problem now, even though it would involve some people paying more or getting less, and those people vote.

Hopefully, Congress will do something. Most of us aren’t teachers, but most of us hope to retire, eventually.

Related: $23.33 less debt

What matters: Voters’ view of the world

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

The news is about what’s new, but people’s worldviews are about what’s permanent, and that’s one of the things that makes it difficult to run for office as an Arkansas Democrat right now.

I write that sentence after a lot of news lately coming from the White House, where President Trump fired the FBI director investigating his campaign regarding the Russians, threatened that director by implying their conversations were secretly taped, and, according to press reports relying on anonymous sources, supposedly revealed to those Russians highly classified information.

News like that typically would spell trouble for a president, and indeed, the latest Gallup poll, conducted before the report about the classified information, showed Trump’s approval rating at 38 percent, down from 45 percent at the beginning of his term. By comparison, President Obama’s approval rating was 65 percent at this point.

Arkansas Democrats next November will point to these past couple of weeks as they try to reverse their electoral losses of the past eight years. But they’ll still fight a losing battle because all of this is merely news, which is temporary.

Meanwhile, humans construct permanent worldviews to try to make sense of everything, and we will fight to the death to protect them, particularly when presented with challenging information.

Anyone can discount these events by pointing to FBI Director James Comey’s shortcomings or questioning the news reports’ unidentified sources. The temporary news doesn’t change the fact that Trump affirms the permanent worldviews of many Arkansans, much more so than Democrats at the national level. That’s why he won Arkansas with 60 percent of the vote against a Democratic nominee who was the state’s first lady for 12 years. And that’s why the last poll I saw, by Talk Business & Politics and Hendrix College, showed him maintaining that support, albeit before the events of the past week.

Research is showing that Americans increasingly are voting along party lines (while increasingly claiming to be independent), starting with the presidential race and then moving down the ticket. So it will not be enough for Arkansas Democrats to merely point to Trump, or try to distinguish themselves from the national party, or proclaim their support for issues such as expanding pre-kindergarten classes. Democrats will have to speak to Arkansans’ worldviews while hoping that national candidates do the same.

And that’s the problem, because national Democratic candidates’ worldviews will reflect their own states and the states the party needs more than Arkansas. Americans see the world very differently on issues like guns, which for many Chicagoans are a way to murder people and for many rural Arkansans a way of life. When the chairman of the Democratic National Committee, Tom Perez, recently said all Democrats must support abortion rights, or when Hillary Clinton said the fetus has no rights at all, they reflected their own worldviews and the worldviews of people they know best. But such statements make it a lot harder for Democrats to win the votes of pro-life Arkansans.

For Democrats to make major gains in Arkansas any time soon, they’ll need more than just missteps by Trump. They’ll need the national party’s tone to shift. On economic issues, Democrats must reclaim their status as the party of the common man that the billionaire Trump so effectively stole from them last year running against a candidate painted as corporatist, globalist and elitist. Meanwhile, on social issues, Democratic candidates must better straddle the middle between left and right. Not banishing pro-lifers from the party would be a start.

Affirming the worldviews of social liberals and cultural conservatives is extremely difficult, and many Democrats have no desire to do so. Some in the party believe states like Arkansas should just be written off. But the party has built bridges in the past, including with a candidate whose last name was Clinton. Just not the one whose first name was Hillary.

In this highly divided society, it’s becoming increasingly difficult to speak to more than half of Americans. But for Democrats, Republicans and others, an American majority can be found along the path that the free market is good but hardworking people shouldn’t be left behind; that society needs a safety net but not a hammock; that the military must be strong; and that individual rights must be protected but traditional values not forgotten.

Vocally embracing that worldview opens a lot of doors, while still leaving room for differing views on the temporary news of the day.

This family’s really super

Jeremy, Elizabeth, Kenneth and Miles Spann are ready to take flight at the Walk for the Waiting.

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

Superman was adopted. So were Batman, Spiderman, and Kenneth and Miles Spann.

You probably haven’t heard of Kenneth, 8, and Miles, 7, yet. But someday you might. They might seem like the ordinary children of Little Rock parents Jeremy and Elizabeth Spann, but they’re already developing their superpowers.

“We’ve had a lot of first birthday parties, first bike riding, first vacations, just seeing them grow into individual people, and they’re just amazing,” Elizabeth Spann said. “They’re the most resilient kids ever. They’re so bright, so funny.”

Spann made those comments on the football field at War Memorial Stadium in Little Rock May 6 shortly before the family participated in the Walk for the Waiting.

That’s the annual event that raises funding for three faith-based organizations that serve children in the foster care system: The CALL in Arkansas, which recruits and trains foster and adoptive parents; Project Zero, which links prospective adoptive parents and children; and Immerse Arkansas, which serves young people who are aging out of the system without finding a permanent home.

This year’s Walk for the Waiting drew a couple of thousand participants and so far has raised most of its $300,000 goal. Its other purpose was to raise awareness and recruit people to serve the state’s foster care population, which ballooned from 3,806 in 2015 to 5,209 by last September but has leveled off and stood at 5,155 as of May 5.

Foster children are those whom the state’s Division of Children and Family Services (http://www.fosterarkansas.org) temporarily has removed from their biological families because of abuse, drug abuse and other issues. The goal is to return the children home as soon as their parents are ready to take care of them. When the courts determine they cannot be returned, parental rights are terminated and the children become eligible for adoption. About 500 foster children are eligible, 200 of whom are already in pre-adoptive homes.

Superman’s human dad, Jonathan Kent, brought him home after he discovered the spacecraft that had carried the young boy from the planet Krypton.

Kenneth and Miles were discovered a little less dramatically. The Spanns, unsuccessful at having children even after infertility treatments, had decided to adopt and were looking through photos on Project Zero’s online “Heart Gallery” when they found their two future sons, whom they adopted at ages 5 and 4.

What drew them to those two?

“They have the prettiest smiles, and they look so happy, and their eyes, their eyes sparkle,” Elizabeth Spann said. “Still do.”

The parents have their own secret identities: Jeremy is a science teacher, while Elizabeth is a school psychologist. Creating a new family can tax the powers of any such mortal man or woman, but it hasn’t been too difficult for the Spanns. Among the challenges: They are white, and Kenneth and Miles are African-American. A few people stare at them in stores, but most are very supportive, and African-American friends have taught Elizabeth about hair and skin care. Meanwhile, the sons are not troubled by the cosmetic differences.

“It’s surprisingly not as big a challenge as we expected it to be,” she said. “They’re super understanding. They notice right away that they’re brown and we’re not. They’re super fascinated by it, especially like in the summer when they notice that I get browner. They love that. They’re like, ‘You’re almost as brown as we are now!’”

Unlike Superman, the sons know from the beginning who they are, where they come from, and what makes them special. Still, part of their parents’ job will be helping them make sense of it all. They’ve decorated their sons’ room with superhero references, including signs with messages such as “Superman was adopted.” Every member of the family wore a cape or another superhero-related article of clothing at the Walk for the Waiting.

“We do a lot of things with superheroes,” she said. “We always tell them, you know, Batman was adopted, Superman was adopted, Spiderman was adopted, so we always kind of talk about that. So talking to them about their origin story as a superhero is important. And they’re little, so we try to figure out how much to tell them at a time.”

Sounds like there are four heroes in that home.

Related:
He has an iPod. He wants a family.
Trading an empty nest for a full house.

$23.33 less debt

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

The past couple of weeks showed two different ways to react when you don’t have enough money coming in: the Arkansas state government reaction, which is relatively effective, and the federal reaction, which isn’t at all.

Why the difference? One big reason is that Arkansas has a structure for responding to budget shortfalls and, more important, a culture that respects that structure. The federal government has neither nor the structure nor the culture.

Let’s start with Arkansas. The state’s budgetary decisions are governed by the Revenue Stabilization Act, a law passed in 1945 that is amended by the Legislature each budget cycle and sets the parameters for a balanced budget. Under the act, state spending is divided into categories: an essential Category A and a much smaller, spend-it-if-we’ve-got-it Category B.

State revenues this year have been a little lower than was budgeted because sales and corporate income tax revenues are lower than expected while income tax refunds have been higher.

Faced with a deficit, on Friday Gov. Asa Hutchinson announced that various state agencies would see total cuts of $70 million in Category B (out of a $5.33 billion general revenue budget) to make up the difference. The announcement took up part of a half-hour news conference that also covered the death penalty and the health care-related legislative session occurring this week. And that was that.

Contrast that with what happened in Washington, D.C., where members of Congress, faced with a looming government shutdown, managed last week to pass a continuing resolution to fund the government for another week – a process that happens so often these days that Americans hardly even notice anymore. Then on Monday it was announced that the Trump administration and Congress had agreed to a $1.1 trillion spending bill that increases money for defense and other areas while not cutting much elsewhere. The bill does not affect Social Security and Medicare, the government’s biggest programs, which Trump has vowed not to cut.

This is happening within the context of a federal government that is expected this fiscal year to spend $4 trillion but only collect $3.4 trillion, leaving a $559 billion deficit ($1,731 per American) that is being added to the $20 trillion national debt ($62,000 per American).

Meanwhile, President Trump released the bare outlines for tax cuts that the nonpartisan Committee for a Responsible Federal Budget guesstimates will reduce federal revenues by $5.5 trillion over the next decade. His administration promises the tax cuts will spur enough economic growth to pay for themselves, but history has shown that rosy scenario simply won’t happen. History has shown, however, that when a president calls for tax cuts, there’s a good chance taxes will be cut.

For comparison, the federal government’s deficit for 2017 is 14 percent of expected expenses, and nothing is being done to close the gap. In Arkansas, the $70 million shortfall – $23.33 per Arkansan – was 1.3 percent of the state budget, and Hutchinson filled it with nary a peep from the Legislature or the affected agencies.

So why can’t Uncle Sam do what Gov. Asa did? There are many reasons, but one of the biggest is the fact that the federal government doesn’t have effective structural controls like the Revenue Stabilization Act.

A national Revenue Stabilization Act is not the answer. Letting the president unilaterally make cuts would give him or her too much power and would be unconstitutional. One potential solution is an amendment to the Constitution requiring a balanced budget, an idea that goes back to the Founding Fathers. Sometimes that idea gains some traction, but there always have been too many opponents who’ve stopped it without offering a better idea.

Even if it were to pass, the culture of Washington still would have to be changed. A balanced budget amendment could be bypassed like other parts of the Constitution are bypassed now.

On the other hand, a structure helps create a culture. Gov. Hutchinson acted so decisively and uncontroversially in 2017 in large part because the Revenue Stabilization Act, passed in 1945, has become ingrained in the way we do things here over the past 72 years.

Regardless, future generations of Arkansans can be thankful they someday won’t have to pay back that $23.33.

They can apply it to the $20 trillion.

Can work be added to Arkansas Works?

Cindy Gillespie is director of the Department of Human Services.

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

Next week, legislators will meet in special session to change the Arkansas Works program to encourage its recipients to work for their benefits and, eventually, no longer need them.

Changing the program will be reasonably easy. Changing the recipients will be much harder.

Arkansas Works, formerly known as the private option, uses federal Medicaid dollars to buy private insurance for 311,000 Arkansans with incomes up to 138 percent of the federal poverty level, or about $17,000 for an individual. The state pays 5 percent of the program’s cost this year and 10 percent by 2020. The federal government pays the rest.

It was created through the Affordable Care Act, otherwise known as Obamacare, which expanded Medicaid. Many Republican-leaning states declined to participate. Arkansas instead obtained a waiver from the Obama administration allowing it to buy private insurance rather than simply enroll recipients in Medicaid.

It has allowed Arkansas to be a national leader in reducing its uninsured population. But it is a government program that has grown bigger than expected, which happens a lot.

Gov. Asa Hutchinson, who wasn’t governor when it was created, wants to keep it but shrink it, so he is asking the Trump administration to change the waiver to reduce the maximum income from 138 percent of the federal poverty level to 100 percent, or about $12,000. That will reduce the rolls by 62,000 to about 249,000. Meanwhile, his administration wants to require some beneficiaries to work at least 20 hours a week, train for a job or volunteer. Those changes require legislators to amend some state laws, which they’ll do next week.

Creating those policies is the easy part. The Legislature is expected to approve the changes quickly. The state has been talking to the Trump administration and expects to be approved. The 62,000 Arkansans bumped from Arkansas Works can buy the same insurance they have now with a federal government subsidy. Their contribution will be $13 to $19 a month, about what they are supposed to pay now, though 75 percent of them don’t because the state can’t enforce the rule. Department of Human Services (DHS) officials think most will pay next year when insurance companies can remove their coverage.

The work requirement? Let’s keep our expectations reasonable.

In a briefing with reporters Wednesday, DHS Director Cindy Gillespie said it won’t affect 161,000 of the remaining 249,000 Arkansas Works recipients. They won’t have to work because they are age 50 or above, are “medically frail,” have a minor living at home, etc. Those exemptions mirror the Supplemental Nutrition Assistance Program, formerly known as food stamps, which also serves many Arkansas Works recipients. Some of the remaining 88,000 won’t have to work either if they are students, pregnant or caring for an incapacitated person.

Most of the 88,000 are not working now. More than three-fourths have zero income. Moreover, less than two-thirds of the 62,000 with incomes between 100-138 percent, the ones who will move into private insurance, have jobs. The rest subsist on government benefits and other means.

Most recipients have not taken advantage of a big opportunity they have now. Under Arkansas Works’ current waiver granted by the Obama administration, recipients are referred to the Department of Workforce Services, which can help them get jobs. But of the more than 37,000 individuals referred to DWS in January, only 628 accessed the services or reported a new job after the referral while 703 had done so beforehand.

Changing Arkansas Works will help some people. Given access to health care and an incentive to work, they’ll begin pulling themselves up by their bootstraps.

But some will not. Regardless of whatever liberal or conservative social engineering the state attempts, some people will not be self-sufficient because of lack of skill or will, addictions or very difficult personal circumstances. And then some people will simply choose to work the system and get by.

When they arrive sick and injured at the hospital doors, society must figure out what to do with them. One option: If they can’t pay, turn them away. Another option is the pre-Affordable Care Act method of letting them use the emergency room for free and then hospitals eating the costs or shifting them to the rest of us invisibly so we can pretend they don’t exist.

The state is opting for door number three: Try to provide enough but not too much, and try to get as many off the program as possible, for their own good and the taxpayers’.

Got a better idea? Call your legislators. They meet next week.