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Revenue
- Most common source in taxes
- budget shortfall
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Taxes
- "taxes are the price we pay for civilization" Justice Oliver Wendell Holmes
- Half of the money raised by state and local governments come from 6 taxes: Sales, property, income, moter vehicle, estate, and gift taxes
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3 different types of taxes
- progressive- the more you make the more you pay
- proportional- (property tax)
- regressive- less you make the more you pay
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sales taxes
- 36% of state and local tax revenues come from sales taxes
- 81% of sales tax revenue raised go to state governments; 17% of local gov revenues
- advantages: less visible, voters are less likely to get upset
- disadvantages: tend to be regressive, internet/ online shopping (35 billion $ lost in revenue b/c of internet), and can be volital
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property taxes
- second largest source of revenue (31%) for state and local governments (with local gov. being the biggest benificient
- 43% of all property tax go to schools
- 73% of local gove revenue comes from property tax (2% for states)
- worth 279 billion
- andvantage: never change, everyone pays
- disadvantage: alot more visible, bery difficult to increase, battles tend to pick old people v young ppl
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income taxes
- account for 22% of state and local revenues (3rd most significant source)
- Americans pay on average $747 a year on state income taxes
- Several states have no income taxes – AK, FL, NE, SD, TX, WA, WY
- Average 2.6% - $694 a year to state income taxes
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other taxes
- cars ($18 billion)
- oil (severance taxes and mineral rights)
- death ($7.5 billion)
- user fees ($419 billion)
- lottery and gaming (35% goes to edu)
- insurance trust funds
- intergovernmental transfers ($426 billion- most tied to specific areas 44% alone goes to medicade)
- bonds ($356 bill-pay for capital projects)
- rainy-day fund (rules: only allowed certain amount 250 million; if we take it out we ahve to pay it back within given time period)
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Louisiana tax
- 25th amont states in tax revenue (la- $4,020 per capita, ak- 1st $7,268, al- 5th 2,909 per capita
- tax capacity( ability) vs tax effort
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factors explaining tax variations
- geography
- geology
- demographics
- economics
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where does it go? Schools?
- in fiscal year 2004 state and local gov spent $7712 per person
- wages- 19.6 millions of ppl (state 5.2, local 14.4) $611 billion
- education- $645 billion (73% public schools & 27% higher edu
- states spend approx. 22% on K-12; 11% on higher education; Tuition only covers about a third of the costs)
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where does it go? Healthcare? welfare?
- $358 billion (in 1970's states spent 2 billion)
- medicade, schip (59 million ppl and 23% of state budget)
- misconception
24.7 billion on TANF (2%)
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where does it go? Fire, Police, Prisons?
$90 billion; 55 billion
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highways and unfunded mandates?
- $106 billion
- La spend 15% on highways 2nd most in nation
- mandates (rules states must follow that cost money; ex americans with disabilities act)
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Budget process
Fiscal year july 1st-june 30th
–The state budget is the method for financing state services and the primary indicator of the state’s real priorities.
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Proformance based budgeting
Executive branch agencies are told to draw up request(Division of Administration)
-Budget office and chief executive consider requests and create an executive budget
- -Executive budget given to legislature
- (engrossed bill)
- -Legislature reviews, appropriates, allocates
- -Appropriations – refers to giving agencies legal authority to draw money from the treasury
- –Allocation – amount of the treasury reserved for agencies
- –House Appropriations Committee & Senate Finance Committee & Conference Committee
- -Sends to executive to sign into law
- –Enrolled bill
- –Monitored by Louisiana Legislative Auditor
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spending comparisons
- 2008-2009 FY, La spent $25.9 billion
- 2009-2010 FY, La spent $29.7 billion
- -federal stimulus dollars created increase in spending not revenues
- 2010-2011 FY, La projected to spend $25.5 billion
- -47% of revenues come from federal government
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Three parts of budget
- Statutory dedications (special funds)
- -non-discrestionary; constitutional
- -increased from 65% of the budget from 55%
- Federal funds
- -stimulus funds, medicade, medicare, and other social services
- General Fund (discretionary)
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discretionary
- 45% goest to education
- 41% goes to human resources
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Budget Cuts
- $340 million midyear cut in dec. 08
- $700 million cut in june 09
- $285 million midyear cut in dec 09
- $319 million midyear cut in april 10
- $1.6 billion cut in june 10 ($5 billion overall)
- $105 million midyear cut in oct 10
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Higher Education cuts
- $243 million since 2008
- told to prepare for $290 million in june 11
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LA major expenditures
- $8mill health and hospitals
- $5mill public education
- $4.4mill executive dept
- $3mill higher edu
- $1.2mill socal and youth services
- $1.2mill corrections and public safty
- $154mill judicial branch
- $89mill legislative branch
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LA major revenues
$11.5 billion (down from %15.2 billion in 09/10)
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Why do we have a budget crises?
- declining stimulus dollars("the cliff")
- recession (4.7% to 7.6% unemployment in 2 years)
- loss of tax revenues via tax expinditures (Stelly repeal costs the state $358 mill; $7.1 billion in tax expenditures (441)
- negative employment growth (6,000 fewer workers since 2000; 37,000 fewer since aug of 08)
- Increased medical costs
- poverty and Education
- Scholarships (tops)
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Conflict in Policy Direction
48/54 million kids attend public schools (89%)
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Conservative Thought
- tie personal development to an emphasis upon individual initiative and responisbility; thus explaining inequalities
- rewards are acquired through competition
- oppose federal expantioin for family involvment, state involvement, local school board involvement, and private institiutions
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Liberal thought
- government has an obligation to compensate for deprivation that result from inequalities
- create an educational system that promotes equality of opportunity
- favor federal expantion because of ineffectiveness in the past by school boards and state governments
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Restult from conflict in policy directon
- public school policy has two trends:
- free and universal education
- local control of education
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Structure
- state legislature
- department of education
- local education agencies or school districts
- principals
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actors
- parents (PTA)
- teachers' unions (NEA)
- political parties
- buisness groups
- professional groups
- taxpayers
- racial and religious groups
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Jonathon Kozol's "Savage Inequalities"
- landmark study illustrating the disparity between schools that are often no more than two miles apart in St. Louis, Chicago, and New Jersey
- "complsory inequity": education is compulsory until the age of 16, so students are being forced into sociallization experience funded by inequitable tax system
- Blame? traditional source of funding: local property taxes
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Why not raise tax and get more money
many districts have constitutional limits that cap the tax rate, so taxes can only go so high
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San Antonio V Rodriguez (1973)
- the SC declared equal education, as defined by monetary amounts, and education in general is a privilege and not a right automatically guarenteed by the 14th amend
- state issue and not a federal one
- question: if everyone is required to attend school until age of 16, how can this be considered a privilege
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Serrano V Priest (1971)
- california SC determined that unequal funding violated the California state constitution "education is fundamental right that cannnot be a conditon of a childs parent or neighbors"
- CA created charitable tax shelters and redesigned the funding equations to avoid constitutinal crisis
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State violations
- 1990: MT, KY, TN fount violations
- 2000: KS fount violations
- New Hampshire
- -Same thing happened in NH, so they dodged the bullet by amending the Constitution to avoid the problem
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Why are courts ordered reductions in equality in per-pupil spending so politically controversial?
- Poor Districts Have:
- higher student-teacher ratios
- spend more on instructional rather than preparatory courses
- spend less on capital projects
- lower teacher salaries
- *per pupil spending has not been found to predict educational achievement (Coleman Report 1966)
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Reform Suggestions
- different tax
- federal intervention
- school choice "vouchers"
- charter schools
- home schooling
- standards
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Standards movement ?'s
outcome-based education: what should students know and what is the ultimate purpose of education?
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Kentucky Education Reform Act
- passed in response to a ruling the previous year by the Kentucky SC that the commonwealths edu system was unconstitutional
- had most broad sweeping changes of any reform bill in us his.
- resulted in complete reconstruction of how kenntucy schools worked including revampted state testing
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No child left behind-Bush
based on the belief that setting high standards and establishing measurable goals can improve individual outcomes in education
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pro's and cons of no child left behind
- pros: improved test scores, improvement over local standards, increased accountability, attintion to minority pop, quality of education, school choice, funding
- cons: unrealistic goals, gaming the system, problems with standardized tests, insintives agains low proforming students, states refusal to produce non english assesments
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no child left behind: vermont & conneticut
were against this bill-- considered making state bills to prohibit state funds to be used towards this
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How state gov define public health
- has alot to do with the culture
- is gun violence a public health issue?
- aids, hepatitis C, and abstinence or cotraception?
- obesity and physical education classes, soft drink machines?
- oregon and physician assisted suicide
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who should pay for public health issues
- in colonial am. communities created almshouses for poor and sick
- cities began to create hospitals
- churches and social reformers
- demand began to exceed the capacity
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myth #1 about welfare
- welfare costs are out of control:
- in reality, welfare costs have reamined at roughly 25% over the past 30 years which is lower than most countries who spend 35-55%
- this comment truley refers to social security, medicaid, and medicare (68 cents of the dollar goes to medicaid; however this increase is not due to increased poor ppl but to increased cost in healthcare)
- $529 billion social security (increases by $25 B a year)
- $163 B on Medicare and Medicaid
- $36 B on food, $34 B on housing, $28 B on edu, $6.8 B on job training
- $210 B on cash aid, food, housing, edu, job training, services, and energy
- $4.7 million on TANF
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myth #2 about welfare
- many women have children to get welfare benefits:
- you would have to intentionally drop below the poverty line to qualify for benefits varying form $123 in ms to $743 in AL
- from 1970-1990 the avg number of children in welfare households dropped from 3 to 2
- birth rate for welfare was 4.58 per 1000--non welfare BR was 7.11 per 1000 in 1990's
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myth # 3 about welfare
- welfare families are large:
- 43.8% of thoes on welfare are single individuals
- 47.6% of thoes on welfare are 2-3 ppl
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Myth #4 about welfare
- msot ppl on welfare are on it for life:
- 33% are on welfare less than 1 yr
- 66% 3 years or less
- while less than 19% are on welfare for more than 5 years
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Myth # 5 about welfare
- many ppl on welfare cheat:
- only 1-3% of all welfare cases are found to be fraudulent
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Myth #6 about welfare
- Most ppl on welfare are black:
- admittedly 25% of all Af. Am. live below the poverty line; however 28.7% of all single mothers live below the poverty line
- "feminization of poverty"
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what is social welfare?
- group of means-tested
- entitlement programs
- social security & emdicare, welfare
- medicaid
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Poverty?
- incomes: median HH income for fam of 4 whites is $50,700; M HH in for fam of 4 blacks is 30,800; M HH in for fam of 4 his is 35,900
- a families monetary income based upon a formula in 1955 that showed ppl spend 1/3 of their income on basic necessities such as food
- Problems: the guidlines have never been updated to account for changing HH consumption patterns. Fam no longer spend 1/3 of their inc on food and 2/3 on other basic needs
- today am spend only 1/6 of their income on food
- housing, transportation and utilities are much larger components of fam spending
- dependents: clothing and childcare
- rising costs of medical treatment and drugs
- the guidlines do not recognize geogreaphic diff
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Statistics
- pverty line: 10,400 for a single individual; 21,200 for a family of four
- poverty percentage: 13%- 40 million ppl; 25% for blacks; 22% for hispanics; 17% for under 18; 10% for elderly; 28.7% for single mother HH
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Social Security Act of 1935
- pres roosevelt-part of New Deal
- attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children
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Great Society: medicade and medicare
- LBJ's reform program
- two main goals to elimanate poverty and racial injustice
- medicare: social security act of 1965- authorized Medicare and provided federal funding for many of the medical costs of older Americans
- medicade: welfare recipients of all ages received medical care through the Medicaid program
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Medicaid
- states set their own criteria: AL earnings less than 21% below poverty level; 3,000 a year--MN 275% above the poverty level; 3,300 a month
- median 66% or 9,672
- LA- 13% & 20%; 2,200 & 3,300
- $4.8 B-$303 B
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Earned Income Tax Credit (EITC)
- $36 B program serving 21 million fam
- avg to about $1800 per fam
- sadly, 15-25% qualified individuals do not even file (3.5-7 mill ppl)
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Devolution
- reagan
- gradual return of power to states
- introduced block grants
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1996 personal responsibility and work reconciliation act
- 5 major parts:
- ended AFDC, replaced with TANF
- ended federal cash assistance in favor of block grants for states (state determines eligibilty and criteria; front heavy)
- Mandatory welfare-to-work programs: must place 50% of thoes on welfare by teh end of 2002
- 5 yr limit
- legal immigrants cannot receive for 5 yrs
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Results of 1996 welfare reform act
- positive: there has been an 53% reduction in the welfare rolls, fewer ppl are on welfare now than ever before
- 12.2 mill to 5.3 mill
- 28% of thoes on the rolls found some work realated activity
- negitive:
- median income for thoes finding work is $6.61 an hour (below living wage estimates)
- number of uninsured increased
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healthcare state-managed care
managed care: an arrangement provision of healthcare whereby an agency acts as an intermediary between consumers and healthcare providers (heath maintenance org HMO's)
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tenncare
for the first five years the state saved money however, in the late 90's enrollment peaked at 1.5 mill, costs drifted to 5 bill (1/3 fo the state budget), MCO's dropped out, state refused new participants, and had to revise the program
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1997 congress created SCHIP
- congress would pay 80%; states would be allowed to design and admister
- LA has LACHIP-covers 250% above poverty line
- state spends $32 mill (feds $119 mill)
- 107,828 (up to 30,000 over the last 5 yrs)
- many eligible kids are still unsigned
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return of rising costs
- prescription drugs
- decline of managed care
- long-term care
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big issues today
- HIV/AIDS/ hepatitis c (needle-exchanges, contraception, abstinence)
- Obesity-diabetes, heart ddisease, arthritis (costs states $117 billion)
- Privatization
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