Solutions 2 015 A Sourcebook for Nevada Policymakers This page intentionally left blank. Foreword uring what is being called Nevada’s economic “recovery,” the Silver State’s economy has Dgrown more slowly than that of any state west of Missouri, with the exception of Alaska. That’s a far cry from what was normal for the state in the decades before the Great Recession. To date, entrenched special interests have led the fight against the types of transformational policy changes that would catapult the state into the forefront of those offering the greatest opportunities to their citizens. To be sure, lawmakers took welcome steps in 2011 toward implementing performance-based budgeting. In 2013, however, politicians made new commitments handily outpacing revenue growth — expanding both Medicaid eligibility and ineffective educational programs. Public liabilities for unsustainable pensions and other benefits continue to accumulate and are pushing major municipalities to the brink of insolvency. On the education front, Nevada parents have limited options, and this lack of options forces most parents to enroll their children in a failing monopoly that allocates money poorly and produces some of the worst graduation rates in the nation. Initial momentum in 2011 to free up charter schools and create a meaningful evaluation system for teachers has stalled as a powerful lobby for the status quo has fought back every subsequent attempt at reform. We Nevadans cannot afford to see our fledgling recovery undone. Lawmakers must create the policy environment that will facilitate educational achievement and economic growth for generations to come. To that end, I am proud to present Solutions 2015, a book of research and policy recommendations that, if enacted, would accomplish those objectives. Building and expanding upon Solutions 2013, NPRI’s director of research and Solutions 2015 author Geoffrey Lawrence has spent hundreds of hours digging through budget documents, academic studies and best practices from other states. His concise summaries of over 50 issue areas provide lawmakers with needed information and recommendations in an easy-to-use reference format. Regardless of where your political sympathies are, I hope you will consider these ideas and this research on their merits. I know this book will be useful to all as a sourcebook of information. We all look forward to a future in which more and more individuals will choose to say, as in the state song, “Home means Nevada to me.” Andy Matthews President Nevada Policy Research Institute Andy Matthews President Nevada Policy Research Institute Contents Budget Spending Trends. 4 Structural Reform: Charter Agencies . 6 Structural Reform: Performance Auditing. 8 Performance-Based Budgeting . 10 Taxation Tax Reform . 12 Business Margin Tax . 14 State Lottery . 16 Film Tax Credit . 18 State Debt PERS: Assessing the Liability. 20 . 22 OPEB Liability. 24 LocalPERS: Government Structure of DebtBenefits . 26 K-12 Education Education Spending Versus Student Performance . 28 School Choice . 30 Charter Schools . 32 Vocational Education . 34 . 36 Teacher Merit Pay . 38 OnlineAlternative Learning Teacher. Certification. 40 Student Incentives . 42 Class-Size Reduction . 44 Full-Day Kindergarten. 46 Early Education . 48 Premium Pay for Advanced Degrees . 50 Teacher Absenteeism. 52 Higher Education NSHE Finance . 54 Millennium Scholarship . 56 2 Contents Health Care Medicaid Spending & the ACA . 58 Medicaid Reform: HOAs . 60 Medicaid Reform: Florida Model. 62 Truly Affordable Health Care . 64 High-Risk Pools . 66 Labor Minimum Wage . 68 Prevailing Wage . 70 Cost of Collective Bargaining. 72 Transparent Collective Bargaining . 74 Employee Earnings . 76 Workers’ Choice of Representation . 78 Heart & Lung. 80 Double Dipping . .82 Industry & Commerce Economic Development . 84 Investment Capital . 86 Construction Defect . 88 Occupational Licensing . 90 Work vs. Welfare . 92 Public Safety Corrections. 94 Impact of Prohibition. 96 Energy Renewable Portfolio Standard . 98 Coal Divestment . 100 Electricity Deregulation . 102 Transportation Highway Quality. 104 Federalism Federal Law Review. 106 Federal Lands. 108 3 per-capita spending remains higher than it was prior to Spending Trends the 2003 tax hikes. Over the past two decades, lawmakers have nearly In fact, since the 2003 tax hikes, lawmakers have spent tripled the size of Nevada’s General Fund, growing state a cumulative $5.0 billion beyond the inflation-adjusted spending from $1.2 billion in FY 1994 to $3.3 billion for per-capita spending levels that existed in the decade FY 2015. beginning in FY 1994 and ending in FY 2003. During these years, Silver State population has grown significantly, creating additional demand for public Recommendations services. Lawmakers, however, increased spending at a rate far greater than population growth and inflation Enact meaningful spending controls to protect combined — meaning that Nevadans face a higher per- taxpayers. In successive legislative sessions, lawmakers capita cost of government today than they did 20 years have debated whether to enact a constitutional ago. limitation on the growth in state spending. The proposed “Tax and Spending Control” (TASC) Key Points amendment would ensure that the real, per-capita cost of government does not increase over time by prohibiting lawmakers from increasing spending faster General Fund spending is only one component of total than the rate of population growth combined with spending. Public attention.