By Patrick B. McGuigan

Published 10-Feb-2011

The new budget analyst of the Oklahoma Council of Public Affairs (OCPA), a leading free market “think tank” with offices several blocks from the state Capitol, has given Governor Mary Fallin and her budget team credit for “a good start” in grappling with the Sooner State’s significant budget challenges for Fiscal Year 2012.

In an interview with CapitolBeatOK, Small commented, “First and foremost, it was very positive to see that a hospital provider tax or a ‘Supplemental Hospital Offset Payment Program’ was not included in the Governor’s Budget Book.”

Small described as “very encouraging” the new chief executive’s recommendation of policy changes he described as “crucial reforms,” including these:

• Implementing state employee health insurance reform
• financial and payroll service sharing
• information technology operation reform
• reducing the budgeted vacancy rate
• consolidation of the Human Rights Commission
• making some agencies non-appropriated
• preventive programs to reduce incarceration rates

Several of the ideas sketched above were also among recommendations from OCPA in recent publications, including a recently released policy blueprint and a budget plan that would, if enacted, bring state spending back below $6 billion. Ideas recommended by OCPA included state employee health insurance reform. Small commented, “We hope that can be expanded to include converting to a consumer driven health plan, and setting the employee benefit allowance to the state self-insured plan.”

OCPA had also encouraged, in recent months, consolidation of the Human Rights Commission and making some agencies non-appropriated.

Small pointed to the policy and fiscal benefits, as he viewed them, of Fallin’s new approach to Higher Education. He told CapitolBeatOK, “One of the best reforms recommended by the Governor is bringing higher education institutions on to the state purchasing card system. This is a great first, of many reforms that need to take place regarding higher education in Oklahoma. This is especially true considering that Oklahoma has over 20 public colleges and universities, and the fact that Oklahoma higher-ed and colleges and universities have increased their number of full-time equivalent employees (FTEs) by over 3,000 since Fiscal year 2006, even while most other sectors are reducing administrative  employees.”

Small continued, “According to a study by the Arkansas Department of Education Reform, OU has increased admin FTE per 100 students by 51%, and OSU has increased admin FTE per 100 students by 36.7% from 1993-2007, and Oklahoma higher education and colleges and institutions have continued to receive appropriation increases and raise tuition since 2007. This same study has also found that when adjusted for inflation, over the same period of time, OU increased tuition 101.4% while enrollment only grew 20.2%, and OSU increased tuition 98.1% while enrollment only grew 21.2%. So the Governor should be commended for starting to reform higher education spending.”

He characterized the foregoing list of proposals this way: “Those are all great, ongoing, annual savings that start the process of “right-sizing” the budget and government.”

Small continued, “We do believe there is significant room to more closely look at government functions and priorities and if that is done, spending can be further reduced and more programs eliminated. The Governor’s Budget limits about 90% of state spending to a 3% cut, yet we have about 10% less to spend. So the Governor’s Budget is relying heavily on one-time revenues, which would create problems for the next year. Borrowing from other funds and diverting those funds, and issuing $200 million in bonds will not address the systemic problems of over spending in even critical service areas.”

With that cautionary note, Small concluded, “This is a good start though, and the Governor and the legislature have over three months to thoroughly study, prioritize and review government programs and spending. If this is done, lawmakers will be able to eliminate spending for things like losses on state golf courses, dishwashers and the REAP program, recreational meal programs, festivals, rodeos, TV and radio programs, magazines, non-core education programs, driver’s licenses, and so many other non-core state expenditures.”