Americans pay almost twice as much of their income for health care as those in other industrialized democracies, despite our ranking lower on health measures. Progress in Minnesota can be achieved through: continued efforts to educate the public about healthy lifestyles; forcing down reimbursement costs and unnecessary treatments; and reducing costs through shared administrative and record-keeping services.
Dramatic higher-education cost increases in recent years pose a direct threat to both the quality of our workforce and to long-term prosperity. Among the most cited price inflators are “cost disease” in which tuition serves too easily to offset increases in expenses, excessive pay to faculty and administrators to attract and retain the best talent, poor management, and cost increases from compliance with time- and staff-intensive government regulations. Efforts to do a better job of measuring performance on key indicators are underway on several fronts: Minnesota State Colleges and Universities system’s “accountability dashboard” model, the Minnesota Office of Higher Education’s Minnesota Measures and the University of Minnesota’s “Accountable to U” web page.
The K-12 public education system provides nearly year-round, weekday instruction and services to almost one-fifth of our population. It is by far the largest slice on the state and local budget pie charts, accounting for more than 35 percent of all government spending. Accountability efforts in recent years have consisted primarily of dramatic increases in the frequency and variety of mandatory federal and state testing of students. The Minnesota Department of Education’s accountability function consists largely of coordinating the reporting on this plethora of annual student testing requirements and maintaining oversight of legal compliance issues.
Oversight of public pensions is provided in Minnesota by the Legislative Commission on Pensions and Retirement, which keeps a detailed analysis of trends and the health of the funds. The Office of the Legislative Auditor found Minnesota ranks low among the states in public employees per capita and relatively high in the compensation and benefits level, suggesting that our employees are more productive.
Minnesota has long been a progressive state that focused on rehabilitation rather than retribution in its penal systems. But our overall costs have risen considerably over the last two decades, driven in part by longer sentences plus harsher penalties for drug-related offenses. Both corrections and fiscal experts think it’s time to consider alternatives to the costly throw-away-the-key mentality of the last 20 years, including investing in earlier interventions that reduce the need for incarceration.
Significant productivity gains have been realized in Minnesota by our state and local governments through applied technology and on-line provision of information and services. A growing body of experts is pointing to online learning as offering potential cost-savings salvation, particularly in higher education. So far, these initiatives are largely untested for effectiveness and there is little cost-benefit analysis to accompany the limited studies of online learning. Nevertheless, Gov. Pawlenty has set a goal for higher education systems to provide 25 percent of their classes online, and more research is needed. Education Evolving is a state-based advocate for intriguing ideas about the redesign of schooling, including new models featuring customized digital learning.
For a variety of historical and geopolitical reasons, Minnesota has an unusually large number of governmental entities, from watershed districts to mosquito control districts to township governments. Experts agree that it’s advisable to redouble creative and technology-based efforts to combine and coordinate agencies and governmental units, reduce duplication and improve the quality of services at every level. The Association of Minnesota Counties has recently launched an impressive fundamental redesign effort that includes streamlining among county governments and coordinating with other local governments.
Closing “loopholes” and stepping up compliance enforcement on tax delinquencies and evaders can yield big money. A 2005 Minnesota Department of Revenue report found that the state tax gap – the difference between what is owed the state and what is actually paid – is nearly $1.3 billion. The income tax gap is estimated at $604 million, and the sales tax gap was estimated to hit $693 million in 2007.
Impressive as those figures are, they pale next to the foregone revenue represented by so-called “tax expenditures.” These are special tax exemptions, deductions, credits and lower rates that have been enacted over many years to achieve various policy goals or sometimes simply in response to temporary emergencies or political pressure. These expenditures range from JOBZ tax breaks for businesses that locate in designated areas, to ethanol subsidies, to interest on student loans, to sales tax breaks on legal services, food and clothing, to more sacred exemptions such as tax benefits for veterans, retirees and home owners.
Many tax expenditures are of questionable public benefit and are seldom subject to a regular accountability analysis of effectiveness in achieving their intended purpose. Full or partial removal of some of the exemptions could have a sizable positive impact on the state’s fiscal health.
Laudable multi-partisan efforts are in progress in Minnesota to depoliticize the judicial selection and retention process. A campaign also is being mounted to transfer the bitterly partisan redistricting process to a neutral and non-partisan entity. Non-partisan election reform efforts include instant runoff voting and cleaning up the glitches that became apparent during the recent U.S. Senate election recount. Minnesota has lost its place as a leading state in campaign finance reform. Efforts in recent years – aimed generally at increased public financing to remove the disproportionate influence of large donors and moneyed interests – have stalled. Groups such as the Midwest Democracy Network, Common Cause Minnesota and Heartland Democracy are working to revive those efforts.