Budget Reform the Chicago Way: Increase Mandated Spending

In 2010, Governor Quinn signed into law a landmark budget reform law called “Budgeting for Results”. The goal was quite simple, that spending should be tied to measurable goals of the state and that funding should change according to what best achieves those goals. It was designed to promote transparency and accountability in the many agencies and programs of the state forcing them to measure the effectiveness of their programs with an eye of weeding out those programs that achieve little to nothing for the taxpayer.

That was the stated goal at least. Now that the first report has been issued by the Budget for Results Commission, we see that it wasn’t about spending reform at all. It’s about yet another attempt to justify increased mandated and structural spending at a time when Illinois has already passed a 67% income tax hike and is still operating a deficit.

Here is what the commission says about their goal:

Budgeting for Results changes the way the State allocates resources across government agencies. Rather than setting budgets agency by agency based on historic funding levels, BFR allocates resources based on state-wide goals.

…

Measurement is crucial to accountability and transparency. Reliable data and analysis are essential to inform funding decisions and make sure taxpayers see the impact of their tax dollars.

It all sounds good, so far. In fact, it sounds downright reasonable. Government has to do things and spending should be calibrated to do those things as efficiently as possible.

So what was the very first recommendation of this august panel to deal with a state that has a chronic and uncontrolled spending problem?

Recommendation 1:

Establish a seventh Result to acknowledge the importance of ensuring that all Illinois residents have access to quality, affordable health care, and to recognize medical assistance distinct from the human service goals. Separating costs will provide greater transparency to spending on Medicaid and spending on other human service activities. The newest Result area recommended is:

All Illinois residents have access to quality affordable health care.

You read that right.

The first recommendation of this panel is not to adopt any system of measurement of programs. It isn’t to specify where programs could be combined or eliminated. The first recommendation is to establish a permanent spending mandate of what is, in effect, universal health care.

Let’s skip past whether or not this is an appropriate goal for a moment. The state already operates a medical benefit program to ensure access to health care by the poor: Medicaid. The eligibility for this program is quite broad; many programs are available under Medicaid for a family of 4 with a household income of $80,000 a year.

How is the state doing with this program? Well, it’s a case-study in governmental failure. In order to “balance” this year’s budget, the state simply deferred $1 billion in payments to doctors and hospitals to next year. In other words, we can’t pay for the program we have. And Medicaid is also scheduled to grow by another half billion next year.

Illinois also does not require ANY copayments to be made for any services rendered under Medicaid. The net result is overuse of an underfunded system. In fact, quite a few (and there is no study that I’m aware that has an exact number) of participants who also have private insurance but use Medicaid as a way to avoid paying any copays while the insurance picks up the rest.

As a result of this, doctors and hospitals have dramatically reduced their Medicaid patient rolls which has created an access to care problem. No business would deal with a customer who won’t pay and Illinois is the biggest deatbeat state of them all.

Maybe you think this is cherry-picking a report to find some criticism. Well, the entire purpose of this commission (as stated above) was to create spending priorities, measurements and having some intelligent criteria by which to make spending decisions. Here is what the commission has done on that front:

The Commission finds that, until better performance data about state spending and programs is collected and analyzed, it is premature to recommend specific allocations of projected revenue across Result areas. Appropriate allocation across Result areas will require a complete, detailed and metrics-based assessment of all programs’ effectiveness. Additionally, all goals and sub-goals must be fully developed before meaningful allocation recommendations can be made.

In other words, on its primary purpose or its sole function for existing, the Commission comes up with… nothing. Yet they deliver a report suggesting another spending mandate. That’s the Chicago Way of budget reform, throw more money around (and complain you have a revenue problem).

There is one line in the report that illustrates where the Illinois budget problem is found and can be cured.

The Illinois budget process is subject to nearly 1,700 specific spending mandates: 100 federal, 1,460 state, 80 both (state and federal), and 40 court orders.

You read that right, 1,460 state mandates created by the state legislature. That is where budget reform must start its work, not with more mandated spending.