Innovative Reforms Can Take Spending Cuts Deeper
While the governor’s budget proposal is a good starting point for continuing budget adjustments, there are promising ways to bring about even more savings, increase efficiencies and deliver the quality programs and services people need at lower cost
Lawmakers must now take his lead and build on Governor Malloy’s recommendations with initiatives that can put Connecticut back on sound footing, keep our economy competitive and reduce the need for tax increases.
Paramount to achieving these goals is securing the state employee modifications that the governor outlined, along with perhaps other changes, to achieve his goal of $1 billion in union concessions.
In addition, lawmakers can draw from the recommendations of the Connecticut Regional Institute for the 21st Century (Regional Institute) to achieve deeper state retiree pension and healthcare benefit reforms.
On top of the state’s budget gap of $3.2 billion for fiscal year 2012 (recently adjusted downward by the Office of Policy and Management), Connecticut’s unfunded liabilities of $70 billion represent the worst per capita debt load in the nation. Most of it, $42 billion, is the state’s obligation to public sector employees for their retirement benefits.
There is a wide ranges of options to bring costs in line—such as by raising employee benefit contribution rates, modifying the benefit-setting income-averaging period from a three-year average to a five-year average, increasing threshold retirement ages, freezing cost-of-living adjustments and moving from a defined benefit plan (which provides a monthly benefit to participants at retirement) to a defined contribution plan similar to 401(k) plans offered by private-sector employers.
Whatever changes are made in Connecticut, they also must be ongoing. For true fiscal reform, Connecticut needs to make systemic changes that impact not only current costs but the mountain of unfunded state liabilities.
The Governor’s budget also recommends improving long-term healthcare practices and corrections-system reforms. Again, the Regional Institute and others are showing that much can be accomplished in these areas. Possible additional improvements include:
- Consolidating responsibility for long-term healthcare placement into one entity
- Developing a comprehensive strategy for expanding home- and community-based care opportunities
- Expanding use of nonprofits that deliver quality services at significantly less cost
- Adopting innovative models that reduce prison recidivism and provide more targeted help to offenders
- Modifying corrections personnel overtime and work rules as part of a concession plan
Governor Malloy’s proposals to consolidate state agencies is also a positive first step that can be enhanced with more recommendations from the Regional Institute and others.
In addition to agency consolidations, administrative reforms can galvanize resources for better results—such as through the use of Lean processes (Connecticut’s DEP has begun implementing lean practices with positive results in several aspects of its operations). Better fiscal accountability can be gained through results based accountingand other innovative approaches.
It’s also important to realize that combining agencies, and even potentially reducing the number of employees in them, won’t necessarily achieve greater savings or effectiveness. Connecticut should explore broadening the state employee job classification system to avoid outdated practices that discourage cost savings and a more efficient state government.
Last week, the Governor said that he would be asking public employees to “do more with less.” With the right kinds of innovative changes, Connecticut can have a state government that works better at less cost to taxpayers.
For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or firstname.lastname@example.org.
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