The Governor Lays Out The Details For Rebuilding Oregon’s House...
By Oregon's Next Governor Dr. John Kitzhaber.
Like all states Oregon is facing a serious fiscal crisis, in our case a projected budget deficit of $3.5 billion, or about 20% of the general fund. But if we look beyond this number we find that our fiscal crisis is being driven by some very disturbing trends. Today the percentage of Oregon tax dollars spent on prisons and the human cost of things like addiction, neglect and abuse is increasing. But the percentage we spend on educating our children and building a better economy is decreasing. And these trends are accelerating.
To understand the problem this creates we need to understand the two ways in which Oregon spends money. The first way we spend money is by investing in people in children and families, in education and in workforce development investments which make people’s lives better; which give them a pathway to a family wage job; which give them a secure future; and which lift up our whole state. Educated citizens are more likely to succeed in the workplace and less likely
to need social support services or to become involved in the criminal justice system.
The other way we spend money is by taking care of problems after they have developed, in foster care, in public assistance, in the criminal justice system. Locking people up in our jail and prisons; and much of what we spend in our health care system and social support systems are expenditures, important in the sense that they deal with immediate problems, but problems that could be prevented if we increased the size and effectiveness of our investment in people.
Today we are spending more on problems than we are investing in people and it is taking us in the wrong direction. We have our priorities backwards and the central challenge facing Oregon today is to reverse this trend. This is not the first time Oregon’s pattern of economic “boom and bust” has put us in this position. Historically, state government’s response has been to cut from the current structure in lean times, and add back those cuts in good times -- leaving the structure of how services are provided basically intact. It is a cycle that has repeated itself over and over again, leaving us where we are today.
The time has come to break decisively with that past. That is why I ran for governor, and that is how I intend to lead during this legislative session. Think of the state government as a house that was built many years ago, and Oregonians as the family that has been living in it for generations. Its design may have made sense when it was built, but the family, its needs and the way it lives are different now. The rooms are the wrong size and there are too many of them. There is no insulation and the windows are drafty, so it costs more than the family can afford to keep it up. The foundation is cracked and the roof needs a complete replacement.
There comes a point when patching things up just won’t work anymore: we need to build a new house that is affordable and is built for the way we live. This is the legislative session when we stop kicking the can down the road and start reshaping Oregon’s state government. Instead of creating a budget that does less of the same in the hopes that we will later be able to do more of the same, I will be proposing a budget and structural reforms that will do things differently. To do so requires three steps.
First we must set clear priorities; a clear vision of where we want our state to be in the future. Second, we must overhaul state government to deliver on those priorities. That starts with balancing the next budget by focusing the resources we have on the goals we need to achieve. Third, we must stay the course by developing a ten year reinvestment plan, a clear strategy to guide how we will invest new revenues that become available in the future in a way that will continue to move us toward our goal.
Education: Specific Charge: Primary and Secondary Education.
The state school fund is the single largest part of the general fund (40%) and pays for approximately 7o% of the cost of primary and secondary education. However, the decisions about how those resources are spent (and to some extent how fast the cost of K-12 grows) are made in 197 individual school districts by independently elected school boards and in negotiations with local collective bargaining units. Within this governance structure and with the reality of the current financial environment I have appointed a transition team to address the following questions:
1. How can we ensure that funding is stable and predictable (even if not “adequate”) going forward?
2. How can we maximize the maintenance of academic progress?
3. How can we maintain a functional school year?
4. What outside resources (private sector, not-for-profit, community) are available to help school districts over the short term?
5. How can we develop a rational and consistent strategy for managing through the budget crisis given the independent spending and collective bargaining decisions made by 197 different school districts?
6. What changes in state statutes, rules, and other processes would better enable the decisions needed to manage through this crisis?
The primary and secondary transition team will be co-chaired by Nancy Golden, Superintendant of the Springfield School District; and Ron Saxton, executive Vice President of Jeld-Wen. Specific Charge: Post-Secondary Education Post-secondary education which accounts for another 8% of the general fund must be a necessary extension of high school if Oregon’s social and economic well-being is to be sustained. Enrollment in our public colleges and universities is high; there is a perception that the needs of postsecondary education are a lower priority than the needs of K-12 education; community college budget and collective bargaining decisions are made locally across 17 institutions; while the budget for the Oregon University System is micromanaged by the state legislature.
The viability of individual institutions often diverts the focus from the larger needs of Oregon. Within this governance structure and within the reality of our current economic and public finance environment I have appointed a transition team to address the following questions:
1. How can we ensure that state funding is stable and predictable (even if not adequate) going forward?
2. How can we maximize academic progress toward certificates and degrees even under these budget constraints going forward?
3. How can we respond to enrollment demand, what role will tuition play and how can affordability be addressed?
4. How can we sustain a continuing commitment through education and training to Oregon’s middle and high skill jobs?
5. What leverage can postsecondary education opportunity provide to increase achievement of the Oregon Diploma and other elements of the 0 thru 20 pathway?
6. What outside resources (private sector, not-for-profit, community) are available to help over the short term?
7. How can our answers to these questions lead to a rational and consistent strategy for managing through the budget crisis given the difference in spending and collective bargaining decision processes between community colleges and the Oregon University System?
8. What changes in state statutes, rules, and other processes would better enable the decisions needed to manage through this crisis?
To accomplish this we must control the cost of corrections. The key drivers of cost for incarceration and rehabilitation are: 1) who enters the state prison system; (2) the length of stay in the system; (3) the cost of employee supervision and services. Therefore, the work to design effective systems to protect public safety at affordable cost necessarily involves both judicial system policy and corrections management practices.
Draft Charge: Public Safety
The budget strategy for addressing public safety in this financial environment must be built around four key questions:
1. What is the relative incarceration rate and cost per inmate in Oregon as compared to other states?
2. How can incarceration rates and the cost per inmate be reduced without compromising the public safety?
3. How can we reduce the rate of recidivism?
4. How can we begin to shift our spending priorities from incarceration to preventing people from becoming involved in the criminal justice system in the first place?
II. Personnel Costs (collective bargaining)
While wages paid to public employees are currently comparable (and in some cases below) the wages paid to private employees doing similar work in large labor markets, the projected increase in total compensation costs for public employees exceeds that of their private sector counterparts. This is due, in large part, to the increase in health care costs and to the increased employer contribution to PERS. These increases account for approximately 15% of the entire projected $3.5 billion budget deficit.
It is important to emphasize this point. The growth in personnel costs account for about 15% of the $3.5 billion deficit. That means that 85% is due to other factors: like the loss of the stimulus money; general inflation in the cost of goods and services; increased caseloads; etc.
The point here is that we cannot solve the budget crisis simply by addressing personnel costs: they are an important cost driver and must be addressed, but most of the problem is due to other factors. My overall policy in regard to public employee compensation is to eventually erase the artificial distinction between public employees and private employees, as well as the divisive politics which have grown up around this issue, by ensuring that the total compensation for public employees and private employees doing similar work in large labor markets be comparable. Furthermore, I am committed, overtime, to moving total compensation for all Oregonians upward until it exceeds the national average in every part of our state.
There are two components to addressing the increase in public employee personnel costs. The first component will involve tough collective bargaining negotiations with the state employees represented by SEIU, AFSCME and other public employee unions. The issues which must be on the bargaining table include:
. PERS system reductions from changes to the 6% pick-up;
. Step increases and cost of living adjustments for existing workers;
. Value-based cost sharing for employee health care benefits.
I will seek to reduce the projected increase in total compensation for public employees through the collective bargaining process. I will seek additional savings by ensuring that total compensation reductions for state management employees, including the Governor, are comparable to those of represented employees. I will also seek to reduce the ratio of management to front lines orkers and minimize the impact on our lowest paid workers.
K-12 personnel costs:
The second component of managing the increase in public employee personnel costs involves the State School Fund which pays for primary and secondary education. Although the state provides most of the revenue for our K-12 system, teacher contracts are negotiated by individual bargaining units in 197 local school districts. My policy objective for the 2011-2013 biennium will be to place some conditions on how state resources will be spent at the district level. In other words, while agreements will continue to be negotiated at the local level, the state will predicate its funding for K-12 on the compensation and benefit agreements with state workers. This will require that the results of local school district contract negotiations be reported to the state in a timely manner. The combination of these actions will not replace the local negotiation process but will set reasonable parameters since the state is ultimately responsible for funding over 70%of the agreements reached. This will restore an important degree of local fiscal accountability which
was lost under Ballot Measure 5.
III. Developing a Ten-Year budget:
Developing a ten year budget is the third key element to change our pattern of investment within the general fund. Shifting from a two-year to a ten-year budget frame – and shifting from the “current service level’ approach to outcomes-based budgeting – will give Oregon the tools it needs to shape its own future. I will be appointing a transition team to address this challenge.
Specific Charge: Ten-Year Budget...
1. Design a new budgeting system with features presented in the table below.
2. Prepare a plan for full implementation for the 2013-15 fiscal years.
3. Identify ways to apply the new tools to inform decisions and actions in the 2011-13 budget years.
IV. Increasing tax collections
Oregon’s taxpayers should have a fair tax collection system that insures the state effectively collects revenue under the existing tax code. Toward that end I will be appointing a transition team to review the policies and management practices guiding the State of Oregon’s tax collections activities to improve compliance and to carry out these vital activities in an efficient manner. This process should result in improved collections of revenue and increase the fairness in the system between the many citizens that fully and diligently pay their tax obligations and those individuals that have avoided their responsibility in paying their fair share in a timely manner.
V. Reviewing tax expenditures:
I will be appointing a transition team to review Oregon’s spending that occurs through the tax code (“tax expenditures”) to find opportunities for savings by eliminating or modifying inefficient, ineffective or unnecessary, unaccountable and low-priority spending. The 2009 Legislative Assembly set sunset dates for all but a few tax credits, some of which will be addressed by the 2011 session. While sunsets do help set the stage for review, there is a plethora of spending through the tax code that is not sunsetted and sunsets do not necessarily mean that they will be reviewed for efficiency, effectiveness, accountability and Oregon’s overall spending priorities. Moreover, measures with sunsets in out years that result in in efficient, ineffective, unaccountable and low-priority spending today demand attention now in this time of a revenue shortfall.
VI. State Audits and Performance Review:
The Secretary of State performs audits of major programs and recommends ways to improve performance and efficiency and reduce costs. Unfortunately, many cases these recommendations are ignored. I have asked Secretary of State Kate Brown to compile a list of the best recommendations from audits over the past ten years and I will work with her and the legislature to ensure that these recommendations are implemented. I will also work with the Secretary Brown to establish a list of priorities for performance audits that will be helpful in managing through our current fiscal environment.
VII. Outcomes-Based Management & Agency
Accountability:
Most state agencies do not have clear performance metrics that allow them to manage to expected program outcomes. In many cases, agencies lack the ability to collect and assess the data necessary to track their performance. Furthermore, the current “current services level” (CSL) approach to budgeting does not lend itself to outcomes-based management and supports the status quo. To address this problem I am appointing a transition team co-chaired by Brett Wilcox, CEO of Summit Power Dispatchable Wind, LLC, and George Brown, CEO of Legacy Health System.
Specific Charge: Outcomes-Based Management:
1. To develop a new set of budget and management tools within the existing authority of the Executive Branch to clarify program outcomes and to increase the transparency, efficiency and accountability by which these outcomes are achieved.
2. To identify cost-savings that can be achieved through reductions in direct and indirect overhead costs (e.g. reducing the ratio of managers to front line workers; reducing transaction costs),
3. To make recommendations on moving to true “zero-based budgeting” in which the entire budget is reviewed each budget cycle, rather than just the portion represented by the CSL “roll up” cost projections.
4. To make recommendations for the reform and restructuring of DAS; to reduce cost and increase the focus and efficiency of this agency; and to make it more effective in driving outcomes-based management across state government. It is my intention to apply these new tools to all state agencies but have asked this transition team to start by focusing on the Department of Corrections (DOC), the Oregon Youth Authority (OYA) and the Department of Human Services (DHS) [excluding health care programs and services which will be addressed separately]. The programs involved account for nearly 25% of the general fund and provide some of the state’s most basic and important services. This transition team will organize its work around seven key questions:
1. What are the specific outcomes each agency and program is seeking to achieve?
2. Are these outcomes being achieved?
3. Who is accountable for achieving the outcomes and what are the lines of accountability?
4. How can these outcomes be achieved in a more efficient and transparent way?
5. What are the direct and overhead costs of the program?
6. Can these outcomes be achieved without an increase in “current service level” cost through increasing productivity and reducing administrative overhead and transaction costs?
7. Can the cost-benefit reports be used to prioritize programs within DOC, OYA and DHS?
Alignment of leadership with transformation of state government It is critical that state government leaders be aligned around our task of transforming Oregon government, with increased efficiency, productivity, transparency and accountability of state agencies and programs through outcomes-based management. To insure that agency leaders and I agree on a new compact, I am requesting letters of resignations fromthe following key agency heads prior to taking office on January 10.
. Administrative Services
. Agriculture
. Business Development
. Corrections
. Consumer and Business Services
. Energy
. Environmental Quality
. Fish and Wildlife
. Forestry
. Oregon Health Authority
. Housing and Community Services
. Human Services
. Land Conservation and Development
. Liquor Control Commission
. Lottery
. Oregon University System
. Parks and Recreation
. PERS
. Oregon State Police
. Revenue
. Transportation
. Water Resources
. Watershed Enhancement Board
. Oregon Youth Authority
The request for these resignations does not mean that decisions have been made about which resignations will be accepted. Over the coming weeks, I plan to meet with these managers individually to discuss common priorities. I am not requesting resignations from all agency heads at this time. This list rather represents my near-term priority for agency management review. Over time, my goal is to have in place agreements with all state agency heads, whether they report directly to the Governor or to boards and commissions. These agreements will focus on the outcomes we will work to achieve on behalf of Oregonians, and the tools they will have to achieve those outcomes.
Narcotic Painkillers May Pose Danger to Elderly Patients, Study Shows...
Older patients with arthritis who take narcotic-based drugs to relieve pain face a higher risk of bone fracture, heart attack and death when compared to those taking non-narcotic drugs, according to a government-financed study published Monday.
The study, in The Archives of Internal Medicine, appears to be the first large-scale effort to look at the comparative safety risks for the elderly taking different classes of painkillers. The use of narcotic painkillers has increased in recent years because of a prevailing belief that such drugs were safer for older patients than non-narcotic drugs like Advil and Motrin. The review, financed by the federal Agency for Healthcare Quality and Research, appears to undercut that assumption. The report, which was based on an analysis of patient health care records, was conducted by researchers at Brigham and Womens Hospital in Boston.
“Doctors should not assume that opioids are a safer alternative,” to other painkillers, said Daniel H. Solomon, the study’s researcher, said in a telephone interview on Monday. “They seem to carry profound risks to cardiovascular system as well as increased risk fractures and appear to be associated with increased risk of death.” The study does not raise questions about the use of powerful narcotics like OxyContin to treat severe pain resulting from cancer or other conditions.
To conduct the study, Dr. Solomon reviewed the experience of Medicare recipients in both New Jersey and Pennsylvania who were found during a six-year period to have osteoarthritis or rheumatoid arthritis. Using statistical methods, researchers divided those patients, predominantly women with a mean age of 80 years, into three groups based on their pain medications.
Patients in one group received a narcotic-based painkiller. The second group took a nonsteroidal anti-inflammatory drug like Advil or Aleve. The third group took another class of pain drugs called coxibs,
which include Celebrex and Vioxx, a drug that is no longer on the market. Because the study was based on records, it could not identify all factors that might have contributed to a patient’s problems. But researchers found that the overall risk of death was twice as high for patients taking a narcotic painkiller when compared to those taking a nonsteroidal anti-inflammatory drug. More specifically, patients in the narcotic group were four times more likely to experience a compound bone fracture, apparently as a result of a fall, and they were twice as likely to have a heart attack. The cardiovascular risks posed by narcotics were the same as for drugs like Celebrex and Vioxx, which have come under scrutiny for that hazard.
The review also found that the rate of gastrointestinal bleeding among patients taking narcotics was about the same as those taking drugs like Advil and Aleve. A principal reason that medical experts have advocated narcotics in older patients is the belief that they reduce such problems. In an commentary accompanying the new report, two physicians at Yale University Medical School, Dr. William C. Becker and Dr. Patrick G. O’Connor, wrote that the study’s findings, like those regarding bleeding ulcers, could be skewed by undocumented patient use of over-the-counter painkillers. They added, however, that the high incidence of bone fractures, which often lead to fatal complications in the elderly, were troublesome.
In a related study that was also published Monday in The Archives of Internal Medicine, Dr. Solomon and other researchers looked at the comparative risks posed by different narcotics. Using the same patient records, they reported that cardiovascular risks were highest for codeine and that codeine and oxycodone, the active ingredient in drugs like OxyContin, posed higher mortality-related risks than hydrocodone, the active ingredient in drugs like Vicodin. The Food and Drug Adminstration recently moved to stop sales of one narcotic painkiller, proproxyphene, citing its heart risks. The drug was used in both Darvon and Darvocet.
