Tuesday, June 16, 2009
State Budget Reality Check
Like me, you have probably been getting lots of news about the budget crisis, and hearing all kinds of lamentations about cuts that will allow crime to run rampant, leave disabled people alone to die, and double classroom sizes.
You may have also shared my frustration with the complete lack of financial perspective accompanying these terrifying prophecies of disaster.
Recently, I attended a panel discussion where several policy wonks shared new revenue ideas. During the Q&A, I expressed my feelings about the total lack of perspective offered by anyone. Another attendee referred me to the State Controller, and indeed I found on their website the unsung foundation of the discussion. A few calculations allowed me to finally feel like I have my conceptual feed on the ground.
For starters, actual state operations are only a little more than 1/4 of the budget, and CDCR is the biggest portion, over 1/3 of 1/4, or 1/11 of the total state spending in the 2008-9 fiscal year to date. Debt service is just under 4% of total spending, and UC+CSU are just over 6% of total spending. Are we spending more on prisons than higher education? The community college portion is accounted in the local assistance part of the operating results, and is just over 4% of total expenditures, so that looks like the state spends just 1% more on higher education. (Of course, counties spend a chunk on jails and courts.)
But state spending to assist local operations is almost 3/4, dwarfing spending on state operations. And spending on K-12 operations is 1/3 of the total budget and 4/9 of local assistance. State spending on "medical assistance" is 1/8 of the total budget. Social services are between 1/8 and 1/9 of total spending, over 4/5 of which is local assistance.
Newsflash! State worker salaries are not the place to go for serious savings. Combining agencies is like moving the deck chairs around on the Titanic. $24 billion is 1/4 of annual state spending. And if there is fat and wasteful spending to cut, 3/4 of it will be local assistance.
To recap, the big expense categories are, in order:
33% local assistance for K-12
12.5% local assistance for health care
5% SSI etc.
4% community colleges
3.9% interest on state debts
3% each UC & CSU
3% on CalWORKs
The immediate question is how to deflate state spending to match state revenues. Perhaps we can keep K-12 class sizes manageable by cutting middle management positions and drafting laid-off Californians who are collecting unemployment and CalPERS retirees as volunteer replacements.
Perhaps we can reduce health care needs by switching to a 20-hour work week, which will double the number of jobs and give everyone time to live in a healthy way, with healthy family dinners, plenty of sleep, and plenty of exercise in the garden and on sidewalks and bicycles.
And we could even start paying attention to academia's evidence-based solutions to prison spending which is probably growing faster than any other category.