By any measure, the gubernatorial race of 2002 is shaping up as a watershed election. It could mark the end of the Weld-Cellucci-Swift era, a remarkable 12-year reign for the over-achieving standard-bearers of the state’s minority party. This would mean a return to the one-party rule of the 1980s, altering the dynamics of Beacon Hill from a Republican executive doing battle with a Democratic Legislature to internecine warfare among Democrats, who have divisions of their own. Should the Republicans hold onto the corner office, on the other hand, thanks to the efforts of a candidate who has not simply inherited the post, the GOP will have established itself as that rarest of political animals, a gubernatorial party–able to win the state’s highest office no matter how small the party shrinks in voter registration or legislative representation.
The parallels between this year’s watershed election and the last one, in 1990, are legion. The governor’s seat is open, the incumbent–in this case, acting–governor deciding not to try to hold onto it. That has drawn a wide range of contenders into the campaign fray, making for a vigorous debate on the state’s future. The other, less happy parallel to 1990 is the condition of the state, and of state government in particular. The public has not been as harsh in its judgment of the fiscal crisis this time around, but the state faces a similar challenge going forward: addressing the state’s many needs and problems with fewer resources.
Where the comparison between 1990 and 2002 falls apart, unfortunately, is in intellectual ferment in the public arena. This is important because, with all due respect to our gubernatorial hopefuls, candidates don’t invent public-policy ideas, they adopt them. For any candidate to take a breakthrough concept and run with it–or on it–it first has to bubble up from the primordial swamp of advocates and experts, ideologues and technocrats, interested parties and disinterested observers.
In the late 1980s and early ’90s, there was a lot of bubbling going on, here and around the country. Deregulation was one idea that took hold at that time, finding applications ranging from hospital payment to utilities. Competition in government services, including privatization, was another (though the notion didn’t get very far here). Welfare reform, specifically of the work-first variety, won a following among Republicans and Democrats (except for die-hard liberals) alike in Massachusetts and in Washington, DC. Standards-based education reform became all the rage in state houses across the land. In the mid-’90s, however, by which time these brainstorms had either taken hold or been thrown in the dustbin, some of the energy seemed to seep out of state government and idea factories alike.
For more than six years now, we at MassINC–the think tank’s research team and the journalists of CommonWealth–have labored to pick up the slack, focusing on the mission of a growing and vital middle class. Along the way, we’ve knocked a few reigning ideas off their pedestals, often delivering the toppling blow by simply presenting, or uncovering, key facts. Take the dirty little secret of our highly educated work force: One in three Massachusetts workers lacks the skills for success in the New Economy. Only if adult basic education and job training agencies join forces with the state’s community colleges to form a true–and accountable–work force development system can we create the middle class of the future. There’s an idea.
At other times, we have illuminated an issue by moving the spotlight off its traditional focus. Take affordable housing, which has long been treated as exclusively a poor-people’s issue. In The Road Ahead (1998), MassINC and our frequent collaborator, Northeastern University’s Center for Labor Market Studies, revealed that the price of housing had become a threat to the middle class and to the state’s economy, driving out the educated young people Massachusetts needs for growth. Then, out of our year-long American Dream Project came this news: Massachusetts ranks 45th in the country in homeownership and third in housing burden, as measured by the ratio of house prices to household income. Finally, in “Anti-Family Values,” last issue, CommonWealth explored all the ways that families are getting shut out of the suburban housing market. Thus we have shown, in research and journalism, that the housing crisis is now a middle-class issue, one that can be solved only by making it easier to produce modestly priced homes and easier for municipalities to absorb the families that move into them.
Then there’s crime, a threat to neighborhoods all over the state that are struggling for stability and revival. There, the reigning idea has been locking up criminal offenders –one we don’t disagree with, but see as only taking us so far. Specifically, we’re concerned about what happens when those who get locked up come out again. Two years ago, CommonWealth reported that nearly half of released state inmates are back behind bars again within three years–a shocking failure of the state’s correctional system to do any correcting. Then, earlier this year, in MassINC’s From Cell to Street, Kennedy School crime expert Anne Piehl proposed a plan for supervising all ex-offenders as they return to the community and holding all criminal-justice agencies accountable for reducing recidivism. There’s another idea worth running with.
But there’s a whole set of other big ideas that have been driving state policy since 1990 that have run their course, if not run into trouble. In most cases, no big idea is waiting in the wings to take their place. It will take the combined efforts of politicos and eggheads–and in Massachusetts, we have plenty of both–to come up with some. Here are just a couple of issues in need of a new big idea:
SCHOOL FINANCE: The Education Reform Act of 1993 has provided the organizing principle of state education policy for nearly a decade. Fiscal policy as well: Annual increases have boosted state aid to public schools from $1.3 billion to $3.3 billion in the fiscal year just ended. But as contentious as the MCAS controversy has been, the standards-and-accountability approach to school improvement has just gotten warmed up. It is the other leg of the Education Reform Act framework–school financing–that has run out of steam.
Under the pressure of the McDuffy v. Robertson ruling, the state committed itself to providing resources sufficient for a constitutionally adequate education to every child in the state, no matter the wealth of the communities they lived in. Thus was born the “foundation budget,” and before the 1993 law’s seven-year ramp-up was done, every school district in the Commonwealth was spending a combination of state and local funds at that level or higher.
The foundation budget, and how much of it the state is on the hook for, was and is the product of baffling calculations of cost (the neediness of a particular school district’s students) and of local taxing ability (property wealth). Still, the outlines of school-finance reform in those first seven years were clear enough: The state distributed funds in a sharply progressive manner, funneling the lion’s share of new money to the poorest communities whose children are the most costly to educate. But by 2000–as Stephen Crosby, then administration-and-finance secretary and now Swift administration chief of staff, argued in these pages (“Wheel of Fortune,” Fall 2001)–the political consensus behind that redistributive approach began to unravel. Middle- to upper-income suburban communities that had gotten precious little out of the state’s funding formula pressed for financial consideration, winning “minimum aid” allocations on a per-pupil basis. And in the most recent state budgets, the formula ap-proach to distributing funds has broken down altogether, the money doled out on an inscrutable basis.
Now, there is no consensus on how to distribute education-reform dollars. While it is clear, from MCAS scores and other indicators, that the greatest educational achievement challenges remain in poor, urban communities, the political appetite for steering additional funds toward the cities is not as sharp as it was. At the same time, the state’s method of financing public education is posing problems in other areas. Despite the $2 billion boost in state school spending, in middle-class and more affluent communities, the schools still rely mostly on local property taxes. This reliance has become a factor in the ever-deepening housing crisis, as municipalities resist development of modestly priced homes for families that might cost the towns more in the schools than the taxes would cover. So there is a case to be made for greater state subsidy of education in the suburbs as well.
In the current fiscal climate, the conundrum of how to spend additional education dollars might seem moot. But now in the courts is the successor to McDuffy, going under the name of its new lead plaintiff, Brockton student Julie Hancock. The case, which will be presented to a single justice of the Supreme Judicial Court initially, is proceeding quietly so far. But ultimately this lawsuit, like McDuffy, will revolve around the question of whether the state is providing the wherewithal for every child to receive an”adequate” education. Unlike McDuffy, however, the benchmark of educational adequacy will now be much clearer, and much higher: the standards set by the state Board of Education under the Education Reform Act and measured by MCAS.
Measuring the adequacy of educational spending by the results expected of students would be a big idea indeed. But it could come with a big price tag, as the state of Maryland recently discovered. In December, a state commission estimated the cost of every school meeting the state’s performance standards, calculated two ways: based on a fictitious “ideal school” designed by educators and experts, and based on actual spending by high-performing school districts. Its conclusion: The state needed to spend nearly twice as much on education–an average of $6,000 per pupil, compared with $3,500 at the time, and up to $6,000 more than that for special-needs and non-English-speaking students. In April, anticipating lawsuits from poor rural counties, the Maryland General Assembly pledged $1.3 billion in additional school aid, funded through a hike in the cigarette tax.
After raising school funding here by more than that amount since 1993, it’s hard to imagine such a pre-emptive strike by the Massachusetts Legislature. That means the next big idea in school finance might come not from lawmakers but from the courts.
HEALTH CARE: In 1990, the problem was health-care costs that were out of control, driving up insurance premiums for employers and busting the state budget with Medicaid overruns. In 2002, the problem is health-care costs that are out of control, driving up insurance premiums for employers and busting the state budget with Medicaid overruns.
The difference, of course, is that in 1990 there was a proposed solution on the table, one that was approaching consensus among interest groups and policy makers. The remedy was free-market competition, exercised through the instrument of managed care. On New Year’s Eve 1991, then-Gov. Weld signed the law dismantling the regulatory system that, in one form or another, had set hospital payment schedules for a quarter century. What followed, described in these pages by former insurance regulator Nancy Turnbull (“Romancing the market,” Winter 2002), was an intense effort by insurers–increasingly, health maintenance organizations–to squeeze lower prices out of hospitals and a vigorous, if not manic, scramble of hospitals to merge themselves into entities (ultimately including physician groups as well) that insurers could not say no to. It wasn’t pretty, and it didn’t steer patients toward low-cost providers as anticipated, but the competition/managed care revolution did squeeze excess capacity out of the hospital system and limit the growth of health-care costs for most of the 1990s.
But now, medical inflation is back with a vengeance, as insurance premiums rise an average of 13 percent this year and an estimated 15 percent in 2003. Against this new wave of cost increases, the 1990s prescription seems like a placebo. “Managed care has probably outlived its usefulness,” the benefits manager for Staples told The Boston Globe in June. And in the present fiscal crisis, uncontrollable health-care costs–starting with the Medicaid budget, which has grown from 20 percent of the state budget in 1999 to 25 percent projected for 2003–are once again the main culprit on the spending side of the ledger. It’s not the relative generosity of MassHealth, as Medicaid is now called, nor even the major expansions of coverage undertaken in the flush 1990s, which are mostly paid for by a 25-cent tobacco tax increase dedicated to it, that are to blame. Rather, according to a Massachusetts Health Policy Forum briefing paper (written by Turnbull and two other health-care experts), three-quarters of MassHealth’s spending increases over the past three years came in three traditional areas of expense: pharmaceuticals (34 percent), acute-care hospitals (21 percent), and long-term care (18 percent). With the exception of nursing-home care, which Medicaid has all to itself, these are the same costs driving up private health insurance.
Add to this crisis of rising costs yet another wrinkle: instability in the health-care industry. The receivership of Harvard Pilgrim Health Care in 2000, the deteriorating financial condition of some community hospitals, and a high rate of nursing home bankruptcy have become as much cause for alarm as the cost increases.
Against this backdrop, a task force comprising the major interests and advocates in this area conducted a year-long examination of health care in Massachusetts. Among the few unequivocal conclusions they could reach: “More revenue flowing into the system will be needed,” including Medicaid paying higher rates to hospitals and nursing homes. That’s a big idea no one wanted to hear.
School finance and health care are just two corners of state policy where the reigning big idea has just about played itself out. Transportation is another. The Big Dig has not only eaten up the bulk of federal highway dollars for a decade (and half this road money for some time to come), it has also dictated, through environmental mediation agreements, all the expansion of public transit in that time. The state is going to need some way other than what’s-good-for-the-Dig to set priorities for costly road and rail projects.
State government is in serious need of some big ideas. We at MassINC and CommonWealth will do our part. But addressing some of these issues is going to take all of the expertise and brainpower at the state’s disposal–in government, on campus, and in the community. If more big ideas don’t start bubbling up, the watershed election of 2002 could be a public policy washout.