Minutes of the First Meeting of the Government Restructuring Task Force Room 307, State Capitol April 21, 2010 The first meeting of the government restructuring task force was called to order by Paula Tackett, director of the legislative council service, on April 21, 2010 at 10:20 a.m. in Room 307, State Capitol. Present Absent Sen. Tim Eichenberg, chairman Dr. Dan Lopez Rep. Patricia A. Lundstrom, vice chairwoman Sen. John Arthur Smith Mr. Patrick Baca Rep. Paul C. Bandy Rep. Keith J. Gardner Mr. John Gasparich Sen. Linda M. Lopez Ms. Michelle Lujan Grisham Rep. Rick Miera Secretary Katherine B. Miller Sen. Steven P. Neville Mr. Jim O'Neill Mr. David Ortiz Sen. William H. Payne Rep. Luciano "Lucky" Varela Advisory Sen. Stuart Ingle Sen. Carlos R. Cisneros Sen. Michael S. Sanchez Sen. Lynda M. Lovejoy Rep. James Roger Madalena Rep. Al Park Rep. Jeannette O. Wallace Guests: The guest list is in the meeting file. Staff Legislative Council Service (LCS) Paula Tackett Raúl Burciaga Jonelle Maison Kim Bannerman Leslie Porter Legislative Education Study Committee (LESC) Dr. David Harrel Legislative Finance Committee (LFC) David Abbey Cathy T. Fernandez Brent Earnest Department of Finance and Administration (DFA) Dannette Burch Stephanie Lenhart Handouts Copies of all handouts and written testimony are in the meeting file. Ms. Tackett served as temporary chairperson and requested that the election of officers be postponed until several more members arrived. Summary of House Bill 237 — Task Force Mandate and Goals — Raul Burciaga, LCS, and David Abbey, LFC Mr. Burciaga explained the provisions of House Bill 237 (Chapter 101), including task force membership, meeting requirements and the legislative charge of the task force. The law outlines the duties as follows: B. The government restructuring task force shall study the current resources of the state's agencies, programs, services, funding and policies and the public needs served by them, including the: (1) recommendations of the governor's committee on government efficiency; (2) need for consolidation of agencies and elimination or reduction of redundant, duplicative or overlapping programs or services; (3) current and projected staffing needs of state agencies for full-time, part-time, term, temporary and contract employment; and (4) current and projected revenue estimates for the next three to five fiscal years. C. The government restructuring task force shall solicit public input. - 2 - D. The government restructuring task force shall study the recommendations, initiatives and statutory changes that occurred between 1975 and 1978 in reorganizing state government. E. The government restructuring task force shall examine the statutes, constitutional provisions, rules and court decisions governing state government and reorganization and recommend legislation or changes. F. The department of finance and administration and the various agencies of the state shall cooperate with the task force and provide the task force with information regarding budget, staffing, organizational structure and other information as requested by the task force. The legislation also allows for the creation of subcommittees by majority vote of the task force. The task force has until December 1 to complete its work and report to the New Mexico legislative council, LFC, LESC and the governor. Its final report and proposed legislation must be available to the governor and all legislators by December 31. Staff for the task force will be provided by LCS, LFC, LESC and DFA. Mr. Burciaga said staff is in the process of compiling basic information, such as statutory and constitutional provisions and financial and other statistical data, for the next meeting of the task force. Mr. Abbey provided copies of the general fund financial summary and discussed the current fiscal crisis faced by New Mexico. He noted that the state is on better financial footing after the March special session, but the economic outlook remains shaky. The LFC is tracking revenue weekly to stay on top of the state's financial situation. After passage of the General Appropriation Act of 2010, general fund reserves are estimated to be at 4.2% for fiscal year 2011, down from 6.5% for fiscal year 2009 and 5.2% for fiscal year 2010; these figures represent an overall decline after more typical reserves of 10% in the 1990s and early 2000s. The state may be required to dip into the reserves if congress does not approve medicaid matching funds at the level the legislature relied on when crafting the budget. As it stands now, congressional action does not look promising. In addition, LFC is assuming there will be revenue shortfalls at least through fiscal year 2013. Mr. Abbey stressed the need for permanent action, not just a temporary movement of money. He asked the task force to think of its task as a complete government review and to look at all issues, not just the easy fixes. He recommended the members read the article provided in their notebooks, "The Big Reset", by the national governors association center for best practices, which discusses the need to reexamine core services of government. Mr. Abbey opined that permanent restructuring is necessary to meet not only the current fiscal crisis but the long-term economic realities of the future. He noted, however, that restructuring state agencies will not be sufficient and urged the task force to take a broader view toward eliminating state funding needs, including looking at the way medicaid funding is structured through the state and counties, the public school and higher education funding formulas, biennial budgeting and re-centralizing agency administrative functions such as human resources. - 3 - Representative Varela asked staff to provide copies of the lieutenant governor's white paper on government consolidation. He concurred with Mr. Abbey about the need to look beyond just state agencies under the control of the governor, noting there are efficiencies and cost-savings to be gained in areas other than reorganization. The secretary of state is interested in election reform, the attorney general is looking into stronger oversight of contracts and the state auditor is concerned about timely audits. He noted both public and legislative concerns about the public regulation commission and thought the task force should consider ways to streamline that agency. Representative Varela also suggested the task force look at how the state's oversight agencies, particularly the local government division of the DFA, might improve their oversight duties. As for the impetus behind House Bill 237, Representative Varela said the bill was the outgrowth of legislative concerns about the size of state government, concerns that were captured by the Carruthers report to the governor on improving government efficiency. He encouraged cabinet secretaries, agency heads and judicial representatives to be involved in the work of the task force over the interim. Representative Park said he hopes everyone on the task force, and in government, understands that difficult choices will have to be made; the state is in the middle of a very ugly time that will require strong political will to make ugly decisions. He agreed with Ms. Tackett that the time for band-aid solutions had passed and the task force must do more than "rearrange the deck chairs on the Titanic". Representative Park pointed out that state government has expanded by 20% in the last eight years, and while some of that growth may be good, the task force must consider everything to meet its goal of having a responsive, efficient, cost-effective government. He mentioned that he had introduced many of the Carruthers task force recommendations during the last session, but none of the bills were heard. He said it appears that no one wants taxes raised and everyone wants smaller government, unless smaller government would affect their interests. However, he said, the task force and the legislature must make unpleasant decisions and there must be real systematic changes to state government. He concluded with a quote by Governor Garrey Carruthers: "Never let an economic crisis go to waste.". Selection of Chair Ms. Tackett asked for nominations for chairperson. Ms. Grisham moved the nomination of Senator Eichenberg as chair and Representative Lundstrom as vice chair, if it was the pleasure of the task force to take both nominations in a single vote. Senator Payne raised concerns about both positions being voted on in a single motion. He said he would second Ms. Grisham's motion for Senator Eichenberg as chair, but wanted to submit a separate motion for John Gasparich as vice chair. Representative Miera suggested that each position be voted on separately, starting with separate motions for chair. Ms. Grisham withdrew her motion and moved the nomination of Senator Eichenberg as chair. Senator Neville moved the nomination be approved by affirmation. On a voice vote, the task force agreed. Senator Eichenberg took the chair and thanked the task force. He opened up the floor for vice chair nominations, and Ms. Grisham nominated Representative Lundstrom as vice chair. Senator Payne nominated Mr. Gasparich as vice chair. Senator Eichenberg asked for a show of hands of those in support of each candidate. By a vote of nine to four, Representative Lundstrom was elected as vice chair. Representative Lundstrom thanked the task force. - 4 - A Historical Perspective of New Mexico Government Structure, Funding and Previous Restructuring Initiatives — Lou Baca, Kay Marr and Chris Krahling Public Schools Mr. Baca, former chief of public school finance in DFA, began the presentation by speaking on the history of public schools in New Mexico. Public schools comprise approximately 43% of the state budget, so it is important to understand the public school system and its funding. He noted there are basically three issues in public education: (1) governance, whether it be local or statewide; (2) statutes mandating certain education requirements; and (3) funding sources.