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Converting budget crisis into taxpayer opportunity Print E-mail
by Will Lutz    Wed, Mar 23, 2011, 05:12 PM

Right now, many at the Capitol are in crisis mode, panicking about how to balance the budget. At the Lone Star Foundation, we see the current situation as a wonderful opportunity to get better value for the taxpayers.

The Lone Star Foundation and Americans for Prosperity Foundation released a study today proposing or endorsing $4 billion worth of cuts to the bureaucracy. These smart cuts focus on reducing administrative spending and overhead, not front-line services.

The study was co-written by Lone Star Foundation Chairman David A. Hartman and LSR Managing Editor William Lutz, with help from Steven J. Anderson, CPA, and Peggy Venable with Americans for Prosperity.

Our goal was to identify or propose ideas that cut the budget without damaging front-line services and suggest changes to the functioning of government that provide better services at lower cost.

Perhaps the biggest area of administrative waste in government occurs in education. For public education, we propose focusing tax dollars where they belong – in the classroom. Forty years ago, the ratio of non-teachers to teachers was 0.64. Today, there’s almost one non-teacher on the payroll for every teacher. (.98 to be exact). While we proposed a modest 10 percent reduction in non-teaching staff, school districts could realize further savings with more streamlining.

Our institutions of higher learning are largely run for the benefit of the faculty. We suggest running them for the benefit of students and taxpayers. Cuts should come first to overhead and direct appropriations to institutions, with cuts to student scholarships occurring only as a last resort.

College faculty should teach more. We also admit far too many academically underprepared students to four-year universities, when community colleges would be a more appropriate setting that offers more vocational education opportunities. We also suggest saving money by charging independent school districts for developmental education when they graduate students who flunk community college academic placement tests.

Health care is perhaps the most complicated area for savings because of the maze of federal Medicaid regulations. We highlight several of the cost-reduction measures already underway, including expanded managed care in South Texas, higher co-payments, and payment based on better health outcomes. We also suggest continued improvements in the transparency of the system. Specifically, Medicaid clients should know exactly how much the care they receive cost, and taxpayers deserve better information on how much money was spent.

Some of the ideas proposed or endorsed in the report include the following:

  • Trimming non-teaching personnel in the public schools by 10 percent
  • Limiting salaries of school superintendents to that of the governor
  • Reduce enrollment of under-prepared students at universities, expand community colleges
  • Stop rewarding state universities when they get pork from the federal government
  • Encourage university faculty to teach more students
  • Improve government accounting to allocate fully all costs to the program generating them
  • Pay for improved health care items, instead of per-procedure
  • Let Medicaid clients know exactly how much the government spent on their care

While this study proposes billions in savings, we aimed for quality, not quantity. We also took a long-term rather than a short-term approach. While we do propose $4 billion worth of savings in the current biennium, the study is full of ideas that save money long-term. Examples include making health care more transparent, improving the use of technology in state government, and improving state accounting practices.

When setting a budget, the focus should always be on the taxpayer, not the recipient of government largesse. Education should be run primarily to benefit students, parents, and businesses, not the employees of school districts.

There are two ways to balance a budget – short-term measures that get reversed immediately after the economy turns back up, and long-term changes. While we recognize some of the former may be necessary, we encourage the Legislature to do more of the latter. Look for ways to shrink government and deliver better value for Texans' hard-earned tax dollars.

A full copy of the study is posted to www.lonestarfoundation.org and www.lonestarreport.org.

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