An Agenda for Reform 1 Report Summary 5 Elements of Reform 17 Strategies for Change An Agenda for Reform: Competition, Community, Concen- tration proposes fundamental restructuring of Minnesota government to avoid a potential $8 billion financial crisis. At the request of Governor Arne H. Carlson, former state Senator John Brandl and former U.S. Representative Vin Weber, with assistance from many experts, offer major re- forms for meeting government’s responsibilities without raising taxes. John Brandl, founder of and professor at the University of Minnesota’s School of Public Affairs (now the Hubert H. Humphrey Institute of Public Affairs), served 12 years in the Minnesota House of Representatives and Minnesota Senate. He has served in the Office of the Secretary of Defense and as a Deputy Assistant Secretary of the U.S. Department of Health, Education and Welfare. Vin Weber, a former six-term congressman who served on the House Appropriations Committee, is currently a partner in the Washington office of Clark and Weinstock Inc. He is vice chairman of Empower America and co-chair with former Congressman Tim Penny of the University of Minnesota’s Humphrey Institute’s Policy Forum. November 1995 The cover contains an excerpt from The Federalist writ- ten in 1788 by Alexander Hamilton, James Madison and John Jay. For copies of An Agenda for Reform, call (612) 296-3985. Upon request, An Agenda for Reform will be made available in alternate formats, such as Braille, audio tape or large print. Printed on recycled paper with at least 10 percent post- consumer waste. ederal budget cuts, increased demand for services and slower economic growth are converging to Fproduce a cumulative fiscal gap of more than $8 billion in Minnesota by 2001. By that year, state and local governments could face an annual shortfall of over $2.5 billion — a sum that far exceeds the combined current state spending on community colleges, prisons, nursing home care and special education. A gap of this magnitude cannot be addressed merely through better management or belt tightening. It requires fundamental changes in the way Minnesota delivers tax- payers’ services. Report Summary Prepared by former state legislator John Brandl and former Congressman Vin Weber at the request of Gover- nor Arne H. Carlson, An Agenda for Reform offers an overall structure for change, plus specific approaches in each of the major government spending areas. Their cen- tral conclusion is that in the future, government in Minne- sota cannot meet its responsibilities without reforms as sweeping as, and similar to, the “perestroika” that has been necessary in the formerly communist countries. Re- forms are based on achieving results through competition, encouraging communities and concentrating spending on people most in need. Competition in the private sector leads to improved ser- vices and reduced costs. But government responsibilities are usually carried out by monopoly government bureaus. In addition, where communities have been providing ser- vices, the results have usually been superior to govern- ment programs and the costs much lower. Government should institute reforms to offer consumers of government service choices and to carry out more of its work through families, churches and other voluntary organizations. As budgets tighten, concentrating spending on areas and individuals most in need will become more critical. Cur- rently, much government spending is distributed in an al- most random fashion. For example, state spending for higher education lowers tuition for all, including the most wealthy. Focusing aid would permit the state to meet le- gitimate responsibilities fairly and with less money. A new global budget framework is recommended to allow policy-makers and public administrators to set budgets An Agenda for Reform 1 based on realistic projections of available resources. Un- Do not allow school districts to deny use of facilities to der the framework, overall spending targets would be set nonpublic school students. for each of the next four years based on projections of rev- enue growth. Spending estimates would be determined Allow students to enroll in any school district, with no based on spending for each program area assuming cur- restrictions on open enrollment. rent laws. Current policy choices reflected in adopted bud- gets are respected. Across-the-board cuts would be made Do not weaken or limit the post-secondary enrollment in each program area to reach overall spending targets. options program. Debate on priorities for funding among program areas should occur only after Minnesota institutes serious and Remove the cap on the number of the charter schools far-reaching reform and restructuring. and amend legislation to encourage development of char- ter schools. An Agenda for Reform offers 39 specific recommenda- tions. Give credit to students who meet standards regardless of where learning takes place. Allow low-income 11th-graders to establish accounts General Principles for career preparation programs. A target should be set for spending and targets should Allow school sites to make decisions about manage- be established for all major expenditure areas. ment and funding. Eligibility for government benefits should be limited to Allow school boards to convert schools to charter the most needy. schools. Funds should go to citizens, not bureaucracies. Expand authority of school boards to purchase instruc- tional services and authority of teachers to market ser- Expand choices for government officials. vices. Enable families and communities to provide some ser- Establish a comprehensive, user-friendly program to vices. provide information to students and parents about all the schools, programs and options available to them. Establish a mechanism to monitor and report on school Global Budgeting performance. Minnesota should adopt a global approach to budgeting. The state should establish the total spending targets for Post-Secondary Education each of the next four years based on projected revenue growth without tax changes. Radically change the way state funds for higher educa- tion are appropriated by giving more to students and less to institutions. K-12 Education Governing boards should set standards for institutions. Permit low-income parents to receive education vouch- Give college and university presidents more authority. ers that could be used at private and parochial schools. Permit low-income parents to use education vouchers for independent learning or home schooling. 2 An Agenda for Reform Criminal Justice Health Care Keep the courts focused on necessary cases by using di- Pool the state’s buying power and require providers to version, jail screening, an infractions bureau and victim- bid to provide services to elderly people or people with offender mediation. disabilities. Restore the independence of the Sentencing Guidelines Streamline regulations and focus instead on outcomes. Commission. Give consumers incentives to pursue healthy conduct. Incarcerate in county facilities those offenders with short sentences. Take the consumers’ ability to pay into account when providing services to elderly people or people with dis- Authorize the Department of Corrections to contract abilities. with private vendors for incarceration and institutional programming for medium-security male inmates in nonpublic facilities. Authorize the Department of Corrections to contract with private vendors for incarceration and institutional programming for low-security male inmates in public fa- cilities. Create mechanisms to lower prison per diem costs. Property Taxes and Local Government Aid Concentrate the state’s property tax relief on needy people, not local governments. Target aid to local governments at governments in need. Require local governments to pass a referendum before increasing noneducation-related property taxes. Require future property tax increases to be levied on market value. Create a new form of government — the village — to foster local competitive contracting. Establish deadlines for government to submit their ser- vices to competitive bid. An Agenda for Reform 3 he policy challenges facing Minnesota are unprec- edented. Beginning immediately and mounting Tover the next several years, Minnesota must cope with fiscal deficits of massive proportions. To address this pending fiscal crisis, we have prepared an agenda for major reform at the request of Governor Arne H. Carlson. Fundamental changes are proposed in the way Minnesota delivers taxpayers’ services. The key principles for reform are competition, community and concentration. Government spending primarily benefits students, the eld- erly and the disabled. We will continue to see a bulge in Elementsthese populations,of which Reform will put immense stress on our budget. Additionally, the Minnesota corrections budget has dramatically increased as incarceration rates have climbed. Prison construction costs are consuming an in- creasing portion of the state’s capital budget. The demographic problem is aggravated by the slowing growth of the economy. While Minnesota has enjoyed one of the highest rates of growth outside the Sun Belt for many years, spending demands on government are grow- ing faster. Over the next six years expenditure demands ex- ceed prospective state and local tax revenues by $5.1 billion. This prospective shortfall would be sufficient to force a re- thinking of public policy in Minnesota, but the coming cutback in federal aid will make the crisis even more acute. Preliminary