California Common Sense in the news.
In 2012, Medi-Cal covered 7.6 million Californians, up from 5 million in 2000; and by 2014, the program is expected to cover 9 million, and will swallow ever-greater shares of the state budget. Continuing to ignore the problem would mean the destruction of funding for other services. To reduce the growth of Medicaid spending, California needs to undertake comprehensive reforms that, according to California Common Sense, a nonprofit research group, would increase the fiscal role of the patient and change the way providers are paid. Those reforms would include proven cost-control measures such as tying pay to performance, allowing bundled payments, injecting price sensitivity, measuring outcomes and rationalizing reimbursement methodologies.
The state’s overall finances are not in particularly good shape, according to Frates. Providing adequate funds for the California State Teachers’ Retirement System (CalSTRS) alone would obliterate most of the surplus – and that’s just one of the state’s problem areas. “The projections rely heavily on economic growth and legislative fiscal restraint,” said Autumn Carter, executive director of the Stanford-based California Common Sense, which analyzes government budgets. “Absent even one of those, and the surplus will shrink. Absent both, and it will likely evaporate entirely. With unfunded liabilities, continued reductions in public services, and a fragile recovery looming, we must be both realistic and thoughtful about how we prepare for the future.” Carter questions some of the Legislative Analyst's assumptions – i.e., a continued rise in property taxes thanks to a rebounding housing market, and a Legislature that keeps a tight lid on spending. “Those are fairly big assumptions,” she added. “The idea that the Legislature won’t spend more than they have is optimistic.”
Chicago just laid off 1,000 current teachers to meet retirement costs and a recent paper by California Common Sense reports that the California teachers' pension trust fund, known as CalSTRS, has asked the California Legislature for an extra $240 billion over the next 30 years to meet pension promises to teachers. Failure to provide that money means nothing less than the defunding of public K-12 education in California.
Obamacare Is Not a Bailout of State and Local Governments
Real Clear Policy/Manhattan Institute on Oct 8, 2013
Real Clear Policy/Manhattan Institute on Oct 8, 2013
Only one quarter of all large (200+ employees) employers now offer health benefits to retirees, down from two-thirds in 1988. But 77 percent of state and local governments still provide what is often referred to as "OPEB," for other post-employment benefits. Costs are soaring. Surveying 20 of California's largest cities, the think tank California Common Sense found that their OPEB costs increased 36 percent on average from 2008 to 2011, with some cities seeing increases of more than 50 percent. Over 60 percent of Detroit's annual health-care bill is for retirees, a sum ($176 million) greater than the size of the fire department's tax-funded budget.
On Monday, The Times' editorial board argued that the state should provide pencil versions of the new Common Core test to districts lacking the necessary technology to administer the test electronically. We at California Common Sense agree. But we disagree with The Times' assertion that "one year without No Child Left Behind data is minor." To the contrary, as the state introduces sweeping changes for K-12, we need more -- not less -- information to track the effectiveness of those untested and expensive changes.
This summer, Moody's downgraded the Windy City's credit rating three notches, noting the unsustainable nature of its pension obligations. Some 37 cities have filed for bankruptcy since 2010, most of them small, and as many as 20 others may be on the verge, including larger places like California cities of Oakland and Fresno, and Providence, R.I. My hometown of Los Angeles may not be far behind. Perhaps the most union-dominated big city in America, the City of Angels' pension obligations have gone from 3% of the city budget a decade ago to 18% last year. They are rising at a phenomenal 25% annual rate, according to a recent report by an independent watchdog, California Common Sense.
By Chuck Reed. The State of California currently spends about $4 billion per year on its generous public employee pension benefits and the costs are even more troubling for local government. For example, a recent report by California Common Sense found that the City of Los Angeles’ annual pension costs grew from $157 million in FY 2002-03 to $1.3 billion in FY 2012-13, and now represent about 18% of city expenditures.
According to a California Common Sense report, "overall annual retirement costs nearly quadrupled from 2000 to present day, growing from $13.1 million to $58.0 million. Retirement benefits grew from 3% of BART’s operating budget in 2000 to 8% of its operating budget last year." Presently, BART's pension fund is only 90% funded using the best-case estimates. Under the assumption that the rate of return on pension investments is 7.5% annually for thirty years, BART currently reports a shortfall of $187 million for the pension fund. However, if you assume rates of return more in line with those used by the private sector, such as a 5.5% rate of return over thirty years, then the unfunded liability rises to $797 million. That is $797 million that the status quo BART pension system does not have; hence, the need for reforms. - See more at: http://reason.org/blog/show/bart-pensions-and-pick-ups-in-progr#sthash.swu8qnJH.dpuf
The nonprofit group California Common Sense released a study last week showing that BART spent 58 percent of its operating budget on employee compensation in 2011 - less than 13 other transit organizations in California, including AC Transit and the Golden Gate Bridge, Highway and Transportation District.