As the ink was drying on his late-night bill signing, Governor Jack Markell praised "the bipartisan support we got" on the budget bills, on recycling legislation, on the slate of new laws to protect children in the wake of the molestation scandal involving former pediatrician Earl Bradley, and "on pretty much every bill that was passed."
It was a glass-half-full description of a session in which many of the Governor's proposals for getting a grip on state spending were tabled until next year.
The 228-page operating budget passed after midnight Wednesday calls for more than $3.3 billion in spending in fiscal year 2011. Buoyed in part by an additional $157 million in revenue projected by the Delaware Financial Advisory Committee (DEFAC), the Joint Finance Committee said no to several major spending cuts proposed by Governor Jack Markell when he submitted his recommended budget in January.
“It’s a two-party system here. When I say a two-party system, he’s proposing and we’re disposing," said Representative Dennis P. Williams (D–Wilmington North), vice-chair of the Joint Finance Committee. “There’s some things that he put in his proposals that we particularly didn’t care for.”
Cutting school busing funds: not this time
The Governor has asked for a good bit more, particularly in terms of spending reductions. Some of his proposed cuts—such as asking new state employees to pay more for their benefits, eliminating some county row offices, and eliminating the Board of Parole—did not get very far.
Some of Markell's cost-cutting priorities encountered strong bipartisan opposition. Among them was his $24.6 million in proposed cuts to school transportation, which would have shifted 25 percent of the cost to school districts.
House Majority leader Peter Schwartzkopf (D-Rehoboth Beach) called the idea “non-negotiable,” citing the burden he sees it putting on downstate districts and bus operators.
“Downstate you have more contract school bus operators, you have your mom-and-pop school bus operations. Upstate they have a lot more school-owned buses. So if their budget in transportation goes a million dollars in the hole, they just move it over from another line in the school budget," Rep. Schwartzkopf said. “So they can absorb any losses in transportation. When you get down in Sussex County, where 95 percent of the school buses are privately owned, [the school districts] can’t absorb it.”
This was not a cut the Republican caucus was willing to make, either.
“From our perspective, it’s another tax, but they’re putting the burden of implementing that tax on the school districts,” said House Minority Leader Richard Cathcart (R-Middletown).
The state will continue to pick up the tab. The JFC restored $20.9 million of the $24.6 million the Governor wanted to cut, including reimbursement for routes over 30 miles and money for private school busing. The budget reduction that did pass was achieved by requiring school districts to fund hazardous routes and by imposing limitations on new bus routes and the number of new buses.
Markell said he understands the strong aversion to the transportation cuts but stressed the need to get those costs under control. “Bottom line, we’re spending 80 percent more today that we did 10 years ago. We’re spending $80 million a year, and we’ve got to focus in on how to make that more efficient.”
Despite their limited success, the proposed cuts started a conversation and got people to focus on the problem, Markell said. To address the issue, JFC voted to include a provision to create a transportation committee that will examine the cost issues. The group will include the Department of Education, the Controller General’s office, the Office of Management and Budget, two school superintendents, and a representative from each county with knowledge of school transportation issues. The JFC ordered the committee to have recommendations ready by October 15.
Office of Management and Budget director Ann Visalli believes the battle over the proposed cuts will make it possible to have useful recommendations ready by that October deadline.
“That actually brought a lot of stakeholders to the table,” Visalli said. “But the complexities of the way pupil transportation is constructed really is going to require some additional detailed work that we weren’t really able to get done in the last six months.”
Creating accountability in state funding
The budget reflects JFC's work to address $14.5 million in "pass through" programs, non-state programs that receive money through state agencies. In an effort to reshape the pass-through process, Markell sought to set aside $6 million to move some of the pass-throughs from the operating budget to grant-in-aid, thus requiring those organizations to reapply for funding each year. In the end, 20 programs were shifted, at a total cost of about $2.9 million, leaving 47 pass-throughs in the budget. Other pass-throughs were moved to the University of Delaware and Delaware Technical and Community College budgets, where federal stimulus money can foot the bill. Pass-throughs totaling $5.5 million dollars remain in the budget. Many of the programs left in the budget or moved to grant-in-aid sustained a 10 percent funding cut. Some programs, such as private school nurses and the Child Advocacy Center, which is dealing with victims of the Earl Bradley child abuse case, suffered no cuts.
Like school transportation, this effort included epilogue language aimed at changing the process. Programs receiving pass-through funds now will be evaluated by the state agencies that provide the funding. They will be subject to new performance measures, reporting requirements, and program evaluation criteria.
Visalli says the changes should allow cabinet secretaries to make public more information about the budget requests for pass throughs. But that’s not the only benefit.
“That will be a step toward helping us reduce duplication of effort . . . and try to leverage some of the efficiencies in these non-profits and pass throughs,” said Visalli. “It will put the pass-through [funding] through the same scrutiny as the rest of the budget.”
The epilogue language calls for the cabinet secretaries and agency heads to have the new measures ready by October 1.
“For cabinet secretaries who really have a close relationship with their pass throughs, and for the pass throughs that have their act together, it won’t be much of an effort. For others, it may be. It depends on their starting point,” Visalli said. (See New challenge for Delaware nonprofits.)
Opportunities lost, say opponents
The Governor hopes the added scrutiny will yield some savings.
“We may find over time that there are certain things we shouldn’t be doing anymore, certain things we shouldn’t be funding, certain places we can be more efficient,” Markell said.
Some who voted against the budget remain skeptical about the seriousness of the effort to control spending.
"It's window dressing," said Senator Colin Bonini (R-Dover South). "There's no real meaningful effort to make any significant changes in how the budget is done."
"I think there were a lot of lost opportunities this year to look for ways to improve efficiencies and effectiveness in state government," said Senator Michael Katz (D-Centerville), the only Democrat to vote against the budget. "I don't think we took advantage of the opportunities we had to provide more services with less, more efficiently."