Category Archives: State & Local Finance

The Effect of Public Insurance Expansions on Substance Use Disorder Treatment: Evidence from the Affordable Care Act

Source: Johanna Catherine Maclean, Brendan Saloner, Journal of Policy Analysis and Management, Volume 38, Issue 2, Spring 2019
(subscription required)

From the abstract:
We examine the effect of Medicaid expansion under the Affordable Care Act (ACA) on substance use disorder (SUD) treatment utilization and financing. We combine data on admissions to specialty facilities and Medicaid‐reimbursed prescriptions for medications commonly used to treat SUDs in nonspecialty outpatient settings with an event‐study design. Several findings emerge from our study. First, among patients receiving specialty care, Medicaid coverage and payments increased. Second, the share of patients who were uninsured and who had treatment paid for by state and local government payments declined. Third, private insurance coverage and payments increased. Fourth, expansion also increased prescriptions for SUD medications reimbursed by Medicaid. Fifth, we find suggestive evidence that admissions to specialty treatment may have increased one or more years post‐expansion. However, this finding is sensitive to specification and we observe differential pretrends between the treatment and comparison groups. Thus, our finding for admissions should be interpreted with caution.

State Higher Education Finance (SHEF) – 2018

Source: State Higher Education Executive Officers Association (SHEEO), April 2018

From the executive summary:
…Although the price of college has been rising for students and families, so has the potential economic benefit of earning a postsecondary credential or degree. Greater attention to both the costs and benefits of higher education influences the environment in which political leaders, policymakers, and educators make decisions.

No single report can provide definitive answers to the broad and fundamental questions of state higher education finance policy, but the SHEF report supplies important context and trend analysis to help inform policy decisions. SHEF provides the earliest possible review of state and local support, tuition revenue, and enrollment trends for the most recently completed fiscal year. This year’s report focuses on FY 2018, which for most states ran from July 1, 2017, through June 30, 2018.

The report includes:
• An explanation of the measures and methods used in the SHEF metrics for analysis;
• A description of the revenue sources and uses for higher education;
• An analysis of national trends in enrollment and revenue;
• Comparisons of the SHEF metrics across states and over time;
• Indicators of state tax capacity, tax effort, and relative allocations for higher education; and
• A series of case studies that add important context and interpretation of the data presented in the report

State Options for Making Wise Investments in the Direct Care Workforce

Source: Madeline Twomey, Center for American Progress, April 10, 2019

From the introduction:
Policymakers must invest in strengthening the direct care workforce in order to improve the quality of care delivered to patients and to achieve better value for every dollar spent on long-term services and supports.

This report outlines a number of actions that lawmakers can take to support the existing direct care workforce while increasing the number of available workers. Several states have already taken innovative approaches to addressing workforce shortages, including implementing payment reform to incentivize workforce initiatives. Additionally, states have increased wages and invested in workforce development and training in order to attract and retain direct care workers. In order to meet the growing demand for LTSS, state lawmakers should prioritize policy changes addressing workforce challenges, and the federal government should make investments to support states implementing meaningful reform.

Cities make slow progress in addressing retiree healthcare liabilities

Source: Sunny Zhu, Thomas Aaron, Eric Hoffmann, Leonard Jones, Moody’s, Sector In-Depth, Local government – California, March 18, 2019
(subscription required)

Similar to pensions, other post-employment benefits (OPEB) — principally retiree healthcare — are liabilities that pose credit risks for some local governments. With rising healthcare costs, longer life spans and aging workforces, OPEB costs are escalating rapidly in some casesand unfunded liabilities are becoming a material source of balance sheet leverage. Positively,numerous California (Aa3 positive) cities, including San Jose (Aa1 stable), San Francisco (Aaa stable) and San Diego (Aa2 stable), have taken proactive steps to curb OPEB costs. Few cities have meaningfully reduced these liabilities to date because most cost-containment strategies will take years to provide substantial savings. If unaddressed, rising OPEB expenses threaten to curtail other local government spending priorities.

Reliance on top earners exposes states and downstream entities to revenue volatility

Source: Matthew Butler, Emily Raimes, Nicholas Samuels, Timothy Blake, Moody’s, Sector In Depth, State and local government – US, March 20, 2019
(subscription required)

The high-income states of California (Aa3 positive), Connecticut (A1 stable), New Jersey(A3 stable) and New York (Aa1 stable) rely heavily on tax revenue from their biggest earners to fund services. Such earners make up between 1% and 3% of these states’ taxpayers but account for more than 40% of personal income taxes. This dependence exposes the states to the volatility in high earners’ income, particularly as tax increases enacted since the 2007-09 recession have fallen predominantly on the top earners.

Opioid settlement to benefit Oklahoma State University, local governments

Source: Adebola Kushimo, Susan I Fitzgerald, Leonard Jones, Moody’s, Sector Comment, April 5, 2019
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The agreement will bolster research funding in a growing area and position the university to enhance its brand and boost philanthropic support. In addition, it will benefit Oklahoma cities and counties, which will split $12.5 million as they grapple with a growing social risk.

U.S. Fiscal Multipliers and the Next Recession

Source: Bernard Yaros, Sarah Crane, Regional Financial Review, Vol. 29 no. 6, February 2019
(subscription required)

The purpose of this article is to serve as a primer on U.S. fiscal multipliers in times of recession. We discuss the economic policies that Congress typically authorizes during a downturn and size them up against one another based on their multipliers. We analyze the impact on the economy of more government aid to states and localities, unemployment insurance benefits, food stamps, infrastructure, and various tax cuts.

Tracking Federal Funding to Combat the Opioid Crisis

Source: Bipartisan Policy Center, March 2019

From the summary:
In 2017, more than 70,000 people in the United States died from a drug overdose, with almost 50,000 of these deaths involving an opioid. The United States is facing a devastating opioid epidemic, and the federal government has responded by investing billions of dollars into prevention, treatment, and recovery efforts over the past two years. This includes efforts to curb the supply of both illicit opioids and unnecessary prescription opioids and to improve access to evidence-based treatment for opioid use disorder. Despite these actions, addiction policy experts believe that the end of the epidemic is not yet in sight.

Considerable attention has focused on the drivers of the opioid epidemic. However, less attention has been paid to whether the federal investments to address the issue are being effectively targeted to the communities most affected and to those with the highest overdose deaths. An effective response requires policymakers to know how resources are allocated and to use that information to minimize duplication and maximize the efficiency of limited resources. The federal government has not previously produced or made available a document that provides this information to the public or policymakers.

Openings for State Jobs Are Up, So Why Are Applications Down?

Source: Katherine Barrett & Richard Greene, Governing, March 25, 2019

A new study shows the depth — and the root causes — of the public sector’s workforce problem.

– A National Association of State Chief Administrators survey shows that state government job postings rose 11 percent from 2013 to 2017.
– Meanwhile, the number of people applying to state jobs dropped by 24 percent.
– CAOs cited noncompetitive salaries, negative perceptions about public service and insufficient recruitment as reasons.

Related:
Job One: Reimagine Today’s State Government Workforce
Source: Kayla Leslie, National Association of State Chief Administrators, March 2019

From the press release:
U.S. state governments face growing challenges attracting, building and retaining critically important talent and workforce skills, according to new research from the National Association of State Chief Administrators (NASCA) in collaboration with Accenture (NYSE: ACN) and NEOGOV.

Based on surveys of chief administrators and human resource (HR) directors in 33 states, a survey of nearly 3,000 state-government job seekers, and analyses of over 14,000,000 public sector job postings, the research — published today in a report titled Job One: Reimagine Today’s State Government Workforce — shows a widening gap between the number of open jobs and the number of applicants but also highlights strategies to help reverse the trend…..

Governors’ Top Education Priorities in 2019 State of the State Addresses

Source: Heidi Macdonald, Sarah Pompelia, Policy Report, March 2019

From the abstract:
A signature product, this special report is the result of tracking, analyzing and identifying trends in education policy proposals featured in governors’ State of the State addresses. Check out the six education priorities – school finance, workforce development, teaching quality, early learning, postsecondary financial aid and school safety – identified by governors across the states in 2019, as well as state highlights for each priority area.

Click here to access a more in-depth resource — searchable by year, state or issue — of State of the State addresses, starting at 2005.