Category Archives: State & Local Finance

Justice Expenditure and Employment Extracts, 2010 – Final

Source: Tracey Kyckelhahn, U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Statistics, NCJ 247019, July 1, 2014

Presents data from the Census Bureau’s Annual Government Finance Survey and Annual Survey of Public Employment. This series includes national, federal, and state-level estimates of government expenditures and employment for the following justice categories: police protection, all judicial and legal functions (including prosecution, courts, and public defense), and corrections. Data for large local governments (counties with populations of 500,000 or more and cities with populations of 300,000 or more) are also included.
Comma-delimited format (CSV)
Historical Overview
Definitions of Terms and Concepts
Comparability issues

Justice Expenditure and Employment Extracts, 2009 – Final

Source: Tracey Kyckelhahn, U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Statistics, NCJ 247018, July 1, 2014

State Cuts to Jobless Benefits Did Not Help Workers or Taxpayers

Source: Josh Bivens, Joshua Smith, and Valerie Wilson, Economic Policy Institute, Briefing Paper #380, July 28, 2014

From the summary:
The first section of this brief provides an overview of the U.S. UI system, explaining the interaction between federal and state financing flows and detailing the workings of the federal Unemployment Trust Fund. The next section reviews the academic and research literature on the impact of UI benefits on the U.S. labor market. The last section looks at those states that decided to shorten the duration of jobless benefits, reviewing possible reasons why state policymakers made this decision, and examining the (admittedly thin) data record of pre- and post-duration changes to see if the shortened durations had measurable impact on state labor markets. Following are key findings of the brief:
∙ Most state accounts in the federal Unemployment Trust Fund became insolvent in the wake of the Great Recession. The accounts of only 15 states (Alaska, Iowa, Louisiana, Maine, Mississippi, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, Oregon, Utah, Washington, West Virginia, and Wyoming) plus Washington, D.C., and Puerto Rico, remained solvent.
∙ It was largely trust fund adequacy before the Great Recession—not significantly less-severe state-level recessions—that differentiated the states with solvent UTF accounts from other states: Fourteen of the 15 states that retained solvency in their UTF accounts ranked in the top half of states on a key measure of trust fund adequacy (a ratio of fund balance to future payouts) going into the Great Recession.
∙ The adequacy of state UTF accounts before the Great Recession was largely driven by whether the states collected enough revenue during the economic recovery and expansion between 2001 and 2007: State accounts that remained solvent following the Great Recession had not cut UI-dedicated state taxes (also known as State Unemployment Tax Acts or SUTA taxes) nearly as deeply as did other states during the 2001–2007 period.
∙ Failure to adequately fund state UTF accounts does not just lead to fiscal problems. It can weaken the function of UI as an automatic stabilizer and make the UI system as a whole less countercyclical than it should be by requiring tax hikes or benefit cuts during periods of depressed aggregate demand.
∙ Trust fund imbalances largely cannot explain why some states shortened UI durations while others did not. Only eight of the 35 states whose UTF accounts became insolvent following the Great Recession tried to address the situation by cutting the duration of their benefits. These states’ UTF accounts as a whole were not appreciably worse off than those of states that chose to either increase revenues by raising the SUTA tax rate or enlarging the tax base, or to simply wait for labor market improvements to shrink their UTF accounts’ debt burden naturally. What most of the eight states do share is a recent history of not supporting safety-net programs.
∙ Despite the widespread accounting distress in state UTF accounts following the Great Recession, the cuts that eight states made to the duration of unemployment benefits did very little to change their fiscal condition. Compared with a tax hike that would have achieved the same boost to the state UTF account’s balance, the savings per covered worker in the six of these eight states for which data are available ranged from $0.06 to $0.14 per week. In short, unemployed workers lost an average $252 per week of curtailed benefits just so states could save roughly nine cents per covered worker per week in SUTA taxes, holding trust fund account balances equal…..
Press Release

Block Grants: Perspectives and Controversies

Source: Robert Jay Dilger, Eugene Boyd, Congressional Research Service, CRS Report, R40486, July 15, 2014

Block grants are a form of grant-in-aid that the federal government uses to provide state and local governments a specified amount of funding to assist them in addressing broad purposes, such as community development, social services, public health, or law enforcement… This report provides an overview of the six grant types, provides criteria for defining a block grant and uses those criteria to provide a list of current block grants, examines competing perspectives concerning the use of block grants versus other grant mechanisms to achieve national goals, provides an historical overview of the role of block grants in American federalism, and examines recent changes to existing block grants and proposals to create new ones….

The High Cost of Big Labor

Source: Competitive Enterprise Institute, 2014

The Competitive Enterprise Institute’s new three-part series, The High Cost of Big Labor, looks at the economic impact of labor policies on U.S. states.

Articles include:
An Interstate Analysis of Right to Work Laws
Source: Richard Vedder, Jonathan Robe, Competitive Enterprise Institute, July 16, 2014

From the summary:
The compelling preponderance of evidence suggests there is a substantial, significant, and positive relationship between economic growth in a state and the presence of a right to work (RTW) law. This paper presents a labor economics analysis of the effect of right to work laws on state economies, and ranks states’ per capita income loss from not having an RTW law. People have been migrating in large numbers from non- RTW states to RTW ones. The evidence suggests that economic growth is greater in RTW states….
Understanding Public Pension Debt
Source: Robert Sarvis, Competitive Enterprise Institute, 2014

From the summary:
State government pension debt burdens labor markets and worsens the business climate. To get a clear picture of the extent of this effect around the nation, this paper amalgamates several estimates of states’ pension debts and ranks them from best to worst. Today, many states face budget crunches due to massive pension debts that have accumulated over the past two decades, often in the billions of dollars. There are several reasons for this. …

The Effect of Rising Income Inequality on Taxation and Public Expenditures: Evidence From U.S. Municipalities and School Districts, 1970–2000

Source: Leah Boustan, Fernando Ferreira, Hernan Winkler, and Eric M. Zolt, Review of Economics and Statistics, Vol. 95, No. 4, October 2013

From the abstract:
The income distribution in many developed countries widened dramatically from 1970 to 2000. Some scholars argue that income inequality contributes to a host of social ills by undermining voters’ willingness to support public expenditures. In contrast, we find that growing income inequality is associated with an expansion in government revenues and expenditures on a wide range of services in U.S. municipalities and school districts. Results are robust to a number of model specifications, including instrumental variables that address the endogeneity of the local income distribution. Our results are inconsistent with models predicting that heterogeneous societies provide lower levels of public goods….

Missed Opportunities: The Consequences of State Decisions Not to Expand Medicaid

Source: Council of Economic Advisers, July 2014

…To date, 26 States and the District of Columbia have seized this opportunity, and since the beginning of the Affordable Care Act’s first open enrollment period, 5.2 million people have gained Medicaid or Children’s Health Insurance Program (CHIP) coverage in these States, a tally that will grow in the months and years ahead as Medicaid enrollment continues. In contrast, 24 States have not yet expanded Medicaid—including many of the States that would benefit most and sometimes because State legislatures have defied even their own governors—and denied health insurance coverage to millions of their citizens. Researchers at the Urban Institute estimate that, if these States do not change course, 5.7 million people will be deprived of health insurance coverage in 2016. Meanwhile, these States will forgo billions in Federal dollars that could boost their economies. This analysis uses the best evidence from the economics and health policy literatures to quantify several important consequences of States’ decisions not to expand Medicaid.That evidence, which is based primarily on careful analysis of the effects of past policy decisions, is necessarily an imperfect guide to the future, and the actual effects of Medicaid expansion under the Affordable Care Act could be larger or smaller than the estimates presented below. However, this evidence is clear that the consequences of States’ decisions are far-reaching, with implications for the health and well-being of their citizens, their economies, and the economy of the Nation as a whole….

Parallel Lives, Different Outcomes – A Twin Study of Academic Productivity in U.S. School Districts

Source: Robert Hanna and Bo Morris III, Center for American Progress, July 2014

From the summary:
…This paper applies a similar type of research methodology to explore what happens to similar groups of children educated in different school districts. In this case, our “twins” are groups of students who live in the same state in similar geographies and who share certain demographic characteristics. For this report, “twin districts” have very similar sizes and they have the following in common:

• The proportion of students who are from low-income families
• The proportion of students who have limited English proficiency or are English language learners
• The proportion of students who receive instruction through individualized educational programs

Our twin districts, however, differ in terms of student achievement and per-pupil spending.

The goal of this paper was to study twin districts and use the data culled to provide recommendations for how districts can best leverage their school funding investments—in other words, achieve a bigger bang for their educational buck….

Based on our in-depth look at twin districts and our subsequent analysis of the data, we came away with the following findings:
When it comes to education, spending does not always equal results. ….
There are significant funding inequities between demographically similar districts. ….
Districts have limited control over their own expenditures. ….

America’s Most Financially Disadvantaged School Districts and How They Got that Way – How State and Local Governance Causes School Funding Disparities

Source: Bruce D. Baker, Center for American Progress, July 2014

From the summary:
….First, this report lays out a typology of conditions that lead to severe fiscal disadvantage for local public school systems. It then provides examples of states, state policy conditions, and specific local public school districts identified as being severely financially disadvantaged. The causes of fiscal disadvantage are classified as follows:
• Type 1. Savage inequalities: How persistent disparities in local taxable property wealth continue to undermine equity in American education
• Type 2. Stealth inequalities: How dysfunctional, poorly designed, state school finance formulas fail to correct, and sometimes reinforce, disparities
• Type 3. Some politics is still local: How local tax policy and budgeting decisions may undermine state equity objectives
• Type 4. Not-so-blurred lines: How small, segregated enclaves embedded in population-dense metropolitan areas reinforce fiscal disparities
• Type 5. Shift happens: How the changing demography of exurban and smaller city America leads to emerging fiscal disadvantage

The report concludes by providing policy recommendations. Approaches to reforming aid should address the following issues:
• Organizational concerns. ….
• State policy leverage over local fiscal decisions. ….
• More-nuanced measures of local capacity and need in state aid formulas. ….
• Illogical state aid programs. …

While substantively resolving any one of these problems would move the ball forward on equity, definitively resolving all four is required for making consistent progress across all states and local public school districts. Resolving these persistent disparities between districts remains a prerequisite condition for resolving internal disparities in the most fiscally deprived school districts. Doing so also serves as a prerequisite condition to resolve disparities in essential resources, including teaching quality, class sizes, and access to deep and broad curricular opportunities for all children regardless of the school or district they attend.
Is School Funding Fair? A National Report Card
Source: Education Law Center of New Jersey, 2014

Return on Educational Investment: 2014 – A District-by-District Evaluation of U.S. Educational Productivity

Source: Ulrich Boser, Center for American Progress, July 2014

From the summary:
In 2011, the Center of American Progress released the first-ever attempt to evaluate the productivity of almost every major school district in the country. That project developed a set of relatively simple productivity metrics in order to measure the achievement that a school district produces relative to its spending, while controlling for factors outside a district’s control, such the cost of living and students living in poverty.

The findings of that first report were worrisome and underscored the fact that the nation suffers from a productivity crisis. The data suggested that low productivity might cost the nation’s school system billions of dollars a year. What’s more, too few states and districts tracked the bang that they received for their education buck.

In this updated report, CAP uses these same metrics to once again examine the productivity of the nation’s school districts. We embarked on this second evaluation for a number of reasons. In many areas, education leaders continue to face difficult budget choices, and more than 300,000 education-related jobs have been lost since the start of the Great Recession. At the same time, the advent of the new, more rigorous Common Core standards will demand that far more from educators, including better, tougher exams. In short, many educators are being asked to do more with less….

Here is a summary of our most recent findings:
• Low educational productivity remains a deeply pressing problem, with billions of dollars lost in low-capacity districts. …
• Some of the nation’s most affluent school systems show a worrying lack of productivity. …
• In some districts, spending priorities are clearly misplaced. …
• State approaches to improving fiscal effectiveness vary widely. …
• States have failed to make fiscal equity a priority and large funding gaps exist across school districts. …
• State budget practices are often inconsistent and opaque. …

Plus, some state practices are difficult to follow. In Washington state, for instance, school districts are allowed to release two different sets of financial statements. The first set of statements is for the state’s annual financial accounting system. The second set of statements meet a different set of accounting procedures. According to the state, the second set of financial statements are “considered to be ‘special reports’ or ‘supplemental schedules’ and are not basic financial statements.”

This report recommends the following:
• States should build capacity for productivity gains through targeted grants, assistance teams, and performance metrics. …
• Education leaders should improve accounting procedures and create a multistate initiative that will focus on building more robust education budgets. …
• Educators should also improve the quality of fiscal data across states, and the Common Core State Standards Initiative provides an example of how states can work together to create a stronger, more innovative education system. …
• States and districts should encourage smarter, fairer approaches to school funding, such as student-based funding policies. …
Interactive: What’s the Productivity of Your District?