State Legislatures Magazine: January 1999

Editor's Note: These articles appeared in the January 1999 issue of NCSL's magazine, State Legislatures. To order copies or to subscribe, contact the marketing department at (303) 364-7700.

Nine for '99

School of Hard Thoughts
The Smoke Clears
Rainy Days or Refunds
How to Manage Health
Keeping Welfare on Track
Getting Y2K A-OK
Redrawing the Legislative Lines
Managing Growth
TEA Provides DUI Incentives
Preparing for the New Century

Nine for ‘99

The last legislative sessions before the year 2000 find state lawmakers rolling up their sleeves to tackle familiar issues with new twists.

By Gene Rose

What a difference a century makes.

The issues may look familiar to the nation’s 7,424 state lawmakers as they begin the last legislative sessions of the 1900s, but they look at those issues with an ability and confidence to effect change not enjoyed by their colleagues 100 years ago.

The last decade of the 20th century has been marked by state legislatures taking the lead on problems like welfare reform, health care and education. While Congress struggles with those issues, states continue to set the agenda for the next century.

"There are tremendous ideas emerging from state legislatures," says NCSL President and North Carolina Representative Dan Blue. "During the last quarter century, states are taking the lead in finding the best solutions to critical issues."

From the familiar agenda of budgets, the quality of public education, managed health care and drunk driving to emerging issues like welfare tracking, growth management and the to-bacco settlement to the millennium computer bug and redistricting for the year 2000, these nine key issues are likely to be prevailing themes of the 1999 state legislatures.

THE SCHOOL OF HARD THOUGHTS
From the first meetings of the first state legislatures in the 1700s to the last completed session of 1998, education has been and is likely to forever remain a dominant political and social theme. Exit polls from the November 1998 elections tell lawmakers that education is the most important issue for voters in the upcoming year. People are demanding either better quality or more choices on where children attend school.

Much of the legislative focus on education quality is on smaller class sizes, recruiting and retaining good teachers, and school safety.

Approving additional funds to reduce class sizes was a popular initiative last year, and several states may follow suit this year. States will probably target areas where research finds that smaller classes have the most powerful effect: kindergarten, first grade and schools with at-risk populations.

"After all, education is our signature product—like light bulbs to GE," says Florida Senate President Toni Jennings. Last year, Florida lawmakers passed programs to build classrooms, and this session they will work on legislation that "guarantees a first-class education inside those classrooms."

"And we need to start early," Jennings says. "A fifth of Florida students start kindergarten unprepared to learn. That means 31,000 students are at a disadvantage before school even starts." Her goal is to cut that number in half by the year 2000. To do so, she will lead the move to pass a readiness package and continue to work on initiatives that reduce class sizes.

Smaller class sizes, rising enrollments in growth areas and an aging teacher corps have created a strong demand for new teachers. Coupled with this is a move toward serious reforms of state teacher policies. Discussions on teacher training, certification and salary will dominate committee hearings, as will ways to hold schools and teachers accountable for results.

Killings by youngsters at schools in Mississippi, Kentucky, Arkansas, Pennsylvania and Oregon have spurred efforts to avert violence in schools. Thirty-six states considered school safety legislation last year. Lawmakers continue to look at many approaches including prevention and intervention programs, increased access to juvenile information and records, tighter security on school grounds, and tougher penalties.

State legislators also may look at broader solutions. Many experts agree that the most effective policies address youth violence in a broader context that involves the whole community.

"The question we have today is whether or not tough sentencing and accountability are enough," says Missouri House Speaker Steve Gaw. "Do we continue to bandage the wound or can we also attempt to prevent the injury to begin with?"

Education experts expect states to continue to look at school choice options including charter schools, tuition tax credits and vouchers. As always, the debates will be between policymakers who support a competitive environment and flexibility for parents in finding a school that meets their child’s best interest and those who believe state efforts should go toward making public schools better, rather than supporting private schools with tax dollars.

THE SMOKE CLEARS
In late November, 46 states agreed to a $206 billion settlement with the tobacco industry. The historic settlement ends a four-year battle with the industry over treatment costs states have incurred for smoking-related illnesses. The 46 states could receive up to $196 billion over a 25-year schedule, ranging from a high of $25 billion to California to a low of $669 million for Alaska. (Florida, Minnesota, Mississippi and Texas had previously reached agreements totaling $40 billion with tobacco companies.)

The decision for states now is how best to use the money, and the debate will occur in the legislative chambers. At least six states involved in the November deal have already approved legislation in anticipation of a settlement. For example, Alabama created the Children First Trust Fund for prevention, treatment, education, rehabilitation and punishment programs for children. Kansas voted to appropriate 50 percent of its tobacco money to a fund for children’s health care, services for young people and prevention and cessation programs. Nebraska’s law is set up so that the interest from the trust will provide grants and loans for various nursing home projects. Legislation approved by Kentucky and North Carolina also addresses the financial impact on tobacco farmers. New Hampshire’s law says that any tobacco funds received are subject to the same department and agency planning requirements as federal block grants.

Several questions remain, including whether the federal government will seek to recoup its share of Medicaid funds from the states, and whether states will enact the model legislation set forth by the settlement. These factors will have a financial impact on the amount of money a state will receive.

Legal issues also could arise in states with revenue limitations. Debate will center on whether the settlement funds are exempt from the spending restrictions. While the settlement is equal only to roughly 1.5 percent of state revenues, the money results in significant increases for state and local programs, or conversely, refunds to taxpayers.

RAINY DAYS OR REFUNDS?
Historically, the most important role of legislatures is the development of the state budget. Few generations of lawmakers have had to deal with the unique situations created by the current level of prosperity.

At current economic projections, state legislators will face the largest accumulated budget reserves ever in 1999. Even though lawmakers cut taxes by more than $16.7 billion over the last four years, the reserves continue to mount, reaching almost $35 billion at the end of 1998. Significant tax cuts in 1998, some coming from large one-time rebates, were approved in Ohio, Massachusetts, Minnesota, Colorado, Connecticut and Missouri. Those cuts alone returned nearly $3 billion to taxpayers.

Pressure will mount to reduce taxes again for FY 2000, particularly in states like Indiana, Minnesota and Colorado where the decision over what to do with large reserves generates heated political debate. While some lawmakers urge permanent tax cuts, others support one-time rebates. Others argue that with the uncertainty in the world economy, it would be prudent to add to rainy day funds or other reserves and provide rebates if money is available.

Many states, like Massachusetts, use a spread-the-wealth strategy that increases appropriations for targeted programs, provides permanent and temporary relief to taxpayers, builds up stabilization reserves and funds necessary capital improvement projects.

Massachusetts Senator Stanley Rosenberg says state lawmakers are careful how they spend surplus revenue.

"Our formula here in Massachusetts is modest incremental increases in targeted areas, such as education, training and economic development programs," he says. "We’ve also approved one-time expenditures on capital improvements to avoid borrowing."

He says states will try to avoid the temptation of building the base budget beyond what they can sustain in times of a cooler economy.

"Every time we build something into the base of the budget, the question is going to be how will we sustain this in the future so we don’t end up cutting services?" he says. "It’s hard enough to tell constituents we can’t fund certain services, but it is even harder to be funding a service and then take it away."

States may take the opportunity in 1999 to continue building stabilization funds. Massachusetts has put about $1.2 million in its fund, above 5 percent of revenues, but still below the approved cap of 7.5 percent.

"If things go as well as last year, we should be able to top it off or come very close," he says.

HOW TO MANAGE HEALTH
Health care legislation in the states has been driven by destructive diseases, technological advancements and, in recent years, structural changes in health care delivery itself.

The 1998 congressional impasse on managed care regulation and patient protections will return the spotlight to states. Thirty-eight have some form of comprehensive consumer laws in place, but recent court rulings that give people the right to appeal health plan decisions or to sue insurers will prompt more state action. Texas’ new law that allows consumers to sue HMOs survived a court challenge and is expected to trigger action in other states.

"If you deny the care or if you manage the care, you are making a medical treatment decision and should be held accountable," says Texas Senator David Sibley. "It is only right that managed care organizations be treated like any other profit-making business."

Lawmakers will be spending time on children’s health insurance again this session, expanding and refining their initial responses to the new federal Children’s Health Insurance Program (CHIP) that gives states $20 billion over five years to help insure more kids.

"Our CHIP activities to date should be recognized as an important first step, but just that—a first step," says South Carolina Representative Gilda Cobb-Hunter. "Too many children remain uninsured, particularly those in working poor families. We need to explore new options. There’s much work to be done to make sure that all children receive the health care they need."

Some of that work includes finding and enrolling eligible children and ensuring that health plans and services are available to meet their needs. It also includes making sure that the programs adopted are working as intended.

Another huge challenge for state lawmakers this session is the growing number of uninsured Americans. Even with the strong economy and various efforts to expand health insurance coverage, the number continues to climb—to an estimated 43.4 million people in 1997. At the same time, programs that take care of uninsured citizens are facing difficulties. Scheduled federal reductions in Medicaid reimbursements for community health centers will affect their ability to serve uninsured patients. And with more insured people moving into managed care plans, hospitals and other providers have less ability to shift costs to cover uncompensated care.

As in many states with aging populations, Ohio lawmakers will start moving on long-term care insurance this session.

"If we don’t get people encouraged to buy long-term care insurance, I don’t know how we’re going to afford Medicaid 10 years from now," says Senate President Richard Finan. The legislature will start by looking at an unsuccessful program aimed at public employees that was put in place a couple of years ago.

"It’s not working, nobody is buying it," Finan says. "People think they’re going to be healthy until the day they die. And it’s expensive. Unless and until we get a lot of people participating, there’s no cost effectiveness. And insurers need experience—they don’t know how much it’s going to cost them. So we need to get public employees motivated to start buying into it."

KEEPING WELFARE ON TRACK
Welfare reform remains at the top of the workload in legislatures this session as states struggle to make the move from delivering cash assistance checks to training people and helping them find jobs.

Although state lawmakers welcomed the flexibility they won with passage of the Personal Responsibility Act of 1996 to design programs and services targeted at their own populations, they are in unfamiliar territory with development of new or expanded services. Most have not been able to spend the money available to them for training programs and are at risk of losing federal funds.

Arkansas, for example, managed to spend only $1 million of almost $6 million allotted for employment services. This year they have $45 million to spend. Substantial resources available for added services is typical of most states.

The massive declines in caseloads—over 40 percent nationwide—raise another dilemma for lawmakers. What’s happened to those families and how are they faring after leaving welfare? States are working on tracking projects that can help them decide where they need additional job training, mentoring and education for recipients already in jobs so they can stay employed and improve their wages. Tracking also will help caseworkers become aware of hardships and of where children need help.

"We’re trying something new," says Senator Jay Bradford of Arkansas. "It’s important to get recipients into jobs so they can support their families, but we don’t know exactly how to do that. We legislators need to keep track of what’s going on, what is working and what is not."

Tied to welfare reform are federal mandates requiring automated systems for tracking child support payments and a new federal funding structure that rewards states that do it best.

States in trouble with the federal automation requirements include California, Oregon, Nevada, New Mexico, Alaska, Hawaii, North Dakota, Nebraska, Kansas, Michigan, Ohio, Indiana, Illinois, Pennsylvania, South Carolina, Maryland and Washington, D.C.

California has perhaps the most work to do, but a coalition of legislators from both sides of the aisle has pledged to reform the half-billion-dollar bureaucracy. Speaker Pro Tem Sheila Kuehl calls it "one of the significant issues this year."

She says only one out of 10 support orders were enforced in 1998. "That is just inexcusable."

GETTING Y2K A-OK
At the start of this century, states were trying to figure out ways to save records from fires. Now, at the end of the century, it’s pest control on the grandest of scales.

The problem, commonly referred to as the Y2K bug, "is not an idle threat," says Wisconsin Senator Robert Jauch. "It’s going to disrupt our lives, our homes, our businesses and our communities. It will take millions of dollars to fix and countless hours to coordinate contingency plans in the event that power is lost, health care systems don’t work or sewage treatment plants don’t function. The greatest danger is not taking this seriously."

The fear is that computers and programs will be unable to make the switch from the 1900s to the 2000s since, in order to keep processing to a minimum, early computers and programs did not include the year’s first two digits. Now experts, particularly those in state government that depend on computers to process information, are trying to fix the problem before the year 2000 hits.

In 1998, some states increased appropriations for Y2K fixes of government computers, and a handful passed legislation to limit government liability for Year 2000 failures. This session, legislative committees will continue to monitor remediation efforts by all branches and levels of government and will focus increasing attention on Y2K compliance efforts by utilities.

Jauch says too many people aren’t aware of the kinds of problems that will occur. "Legislators must take an active role in promoting public awareness, encouraging local government preparedness and emphasizing public-private sector cooperation. Public and private dollars must be invested now in testing and reprogramming failed systems. "

REDRAWING THE LEGISLATIVE LINES
The nation’s population has grown by roughly 195 million since 1900. That, coupled with important Supreme Court decisions over the years, has made drawing legislative and congressional district lines more complex for state lawmakers.

Legislatures and political parties will begin in earnest this year to build their knowledge, capacity and political strength prior to the decennial redrawing of congressional and legislative voting districts. In 38 states, legislatures take the lead role in this process, so the political parties will work hard to keep and gain majorities wherever possible. Watch for some hardball politics in legislatures with slim majorities and for policymaking that keeps a keen eye on the potential electoral impact of legislative actions.

Redistricting and the desire to control key policy outcomes will continue to fuel the escalating fight for party control of legislatures, which will heighten attention to campaign finance. Count on seeing public financing of legislative campaigns debated in state legislatures and on the ballots of some states as citizen initiatives.

As the use of the initiative gains momentum in states that have it, look for reform movements to put limits on the process. Curbs on signature gatherers, increasing signature requirements and financial contribution limits could be proposed. Some efforts in this area have begun. Montana’s ban on corporate contributions to initiative campaigns approved by voters in 1996 was ruled unconstitutional by a U.S. district judge in October 1998.

MANAGING GROWTH
Growth management continues to compete for space on legislative agendas in 1999. Incentives are replacing regulations as states leverage financial aid to reinforce local controls and purchase development rights to preserve open space.

Maryland passed growth management legislation in 1997 that is becoming a model for other states. It gives funds to local governments that are willing to stick to their own planning requirements and are best equipped to handle growth.

Delegate Jim Hubbard says the keys to Maryland’s plan are first, the acknowledgment that planning is done best at the local level and second, the state incentives that help locals stick to their plans.

"We don’t tell cities they can’t grow, but if they choose to grow into areas not covered in their own local plans, they can’t count on state aid," he says. "There are no new regulations; we’re merely reinforcing local planning."

TEA PROVIDES DUI INCENTIVES
With $500 million in incentive grants written into TEA-21, the federal Transportation Equity Act for the 21st Century, criminal justice and transportation committees in some states will be looking at stronger drunk driving legislation. States can qualify for the funds by lowering their BAC standard to .08. Currently only 16 states have such laws.

TEA-21 also will be a motivator for states to enact open container laws and minimum mandatory penalties for repeat drunk driving offenders because it penalizes those states without them.

PREPARING FOR THE NEW CENTURY
The role of state legislatures has changed dramatically in the last 99 years. Devolution, the transfer of power from the federal government to the states, now gives state legislatures more direct control over the important issues of our time. With more professional staff and research tools, legislatures can now address problems more efficiently and effectively.

"During the last part of this century, the people’s branch of government has demonstrated its ability to find solutions to national problems," says NCSL President Dan Blue. "I expect that trend to continue into the new millennium."

State legislators hope to end the 1900s by building on their track record of finding innovative ways to address both old and emerging issues. For 42 of the 49 states that have regular legislative sessions planned for 1999, that work begins in January.

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