West of the Rotunda

Session ends Soon (maybe)

The long first floor hallway in the Idaho Capitol

I write to share and reflect on the work of the Idaho legislature this past session. This letter was mailed to many constituents, But I post it here with links, pictures, and graphs.

________________________

We start the session in the dark of January (second Monday) and we ended about 1:30AM Saturday, April 11th, a couple weeks past the spring equinox. Constituents should know what the legislature did as well as some of my own efforts and involvement. While it may not look like we are all working together, indeed we are. This system of government was not designed to maximize performance, instead to maximize representation. Many voices, many desires can make choosing a direction difficult.

There was clear direction on K-12 public education for the session. We have been through seven years of decreased funding and the demoralizing (now repealed) Luna Laws.

Last 10 years of Education Funding in Idaho

But our governor appointed a broad-based task force two years ago, and then he endorsed their recommendations. Top of the list was #1. Raise teacher pay, #2. Change HOW teachers are paid. We were able to accomplish this in the legislature this year with a Career Ladder bill and increased funding. Maintaining this commitment will require sustained effort. I challenge you to hold us to this commitment.

The second big need is road maintenance, but funding can be painful to talk about. Further, we haven’t had as much drama around highway funding, just a slowly building awareness of this need, so I was not surprised when we didn’t fully address this before we quit.  Since the whole legislature runs for election every two years, I doubt we will address this next year either, since it takes a special courage to stand before the voters and call for their taxes to go up. Estimates say we need $270M more a year just to maintain—not improve our roads; and this assumes a continued level of federal support. The bill we passed came in with a third of the needed support. But it will take a long, strong effort by our elected and industry leaders to move a plan forward. I am committed to this investment; let’s not wait for a crisis. Every year the hole gets bigger.

I had some specific efforts, but again, nobody gets anything done alone in this process. I am a member of the Joint Finance and Appropriations Committee (JFAC) and I am proud that we have controlled Medicaid and Health and Welfare spending for three years in a row now. This hasn’t always been the case (see graph below). I believe the efforts of the Department Director, the governor and the legislature all deserve credit. Nobody does this work alone.

Idaho must have a balanced budget; with limited revenue, if we spend more on healthcare, we spend less on schools and roads. JFAC improved funding for WWAMI medical students and of, course, improved K12 school funding. But let’s be honest; even with the increases for schools in the last 2 years, with student growth and inflation we still have not made up for the deep cuts in the previous years(see the graph above). I am worried about our long term commitment to education.

Finally, I tried to get all Idahoans eligible for health insurance coverage, but the majority party wouldn’t budge. Neither would they consider changing the Catastrophic Fund that pays for the uninsured. I sit on the Board that governs this $30M taxpayer funded program, and I believe lots of what we do is wasteful. But I could not get my suggestions heard. I guess the majority party likes things the way they are. I don’t; we need some changes.

Some other “projects” I worked on had to do with reducing prescription drug abuse. I have been working with all the professional boards and we are near an agreement. We also got a suicide prevention work group that will make recommendations to next years legislature. I worked with the funeral home directors to clarify a law. And I was able to successfully remove a law that made the practicing naturopaths in Idaho in violation of this statute. An interstate medical licensure compact was approved, as were the telehealth laws.

One of the greatest disappointments for me came on the last day of the session when a House committee blocked a law that insured reciprocity with other jurisdictions for the enforcement of child support. With this failure, Idaho will not be able to use the Federal system for tracking parents who owe child support, and we will lose money for Temporary Assistance to Needy Families, over all at least a $30M hit to Idaho children, maybe more.

Please email or call. If you want my newsletter,add a comment and request it, with your email address. I can only do this with your help; nobody does this work alone.

Sincerely,

Idaho State Senator Dan J Schmidt, District 5 Latah and Benewah Counties

All Comments are read but not posted.

This is the season for Idaho districts to look at how to balance their budgets. An unprecedented number have turned to supplemental property tax levies. You may face one soon on the ballot in your area. There is often finger-pointing when we have to make difficult choices. I want to make the reasons for this situation clear. Then I want you to talk to your legislator.

Before the property tax reform law of 2006, school districts were allowed to collect property tax up to an amount equal to 0.3% of the property valuation in their taxing districts if the district trustees approved. At that time about 25% of school funding came from local property taxes. The state tried to make up for the varied property values in different districts by distributing funds to districts on an “equalized” basis. So if Potlatch School District had half of the property tax base per student as Moscow, Potlatch would receive about twice as much per student as Moscow from the state, since Moscow could raise twice the revenue with the same property tax rate. This was an attempt to satisfy the state’s constitutional obligation for free, common and uniform schools.

In a 2006 one-day special session the legislature eliminated local schools ability to levy local tax with the trustees’ approval at 0.3% and the equalization formula was removed. This meant a $260 million dollar cut to schools from local property tax. Districts could still run supplemental levies, and almost all now do. This meant property tax support for local schools in Idaho dropped from 25% to about 12 % of their budgets.

Idaho’s property tax contribution to schools changed dramatically in 2006.

The promise was made that schools would be made whole with a 1% increase in sales tax distributed from the state general fund (NOT equalized). This swap meant the state paid back to schools $210M in sales tax increase after removing $260M in property tax. This was OK until 2008 when the sales tax revenue took a steep dive. Per student school funding is still not back up to the 2008 level, and per person support for schools in Idaho has dropped by 25% in the last 10 years. Property tax money for schools is now 25% less than before 2006 and there is no equalization formula, so the funding for each district is less but more varied. Poor districts have much less than rich districts. Idaho ranks at the bottom for per pupil spending and ranks at the top for greatest variation in per pupil spending from one district to another. And finally, Idaho has one of the highest rates for state dollar spending on schools from state general fund (sales and income tax).

In short, we have moved school funding from local property taxes that the state worked to equalize so property-poor districts had the same support as land rich ones, to now being based on the unstable state income and sales taxes with little effort toward equalization. Local districts are trying to make up for the failure of the legislature with supplemental levies, but the property wealth disparity cannot be overcome district by district. The difference in tax base is too great. This has made Idaho school funding clearly unconstitutional. It needs to change. Talk to your legislator.

Public education should be the foundation of a fair opportunity for all. All students get a fair chance to make what they can of this “general, uniform and thorough system of public free, common schools.”(Idaho Constitution Article IX, Section 1) The Idaho Legislature is ignoring it’s oath to the Idaho Constitution and to our next generations. We have no excuse.

I hope you are aware of the problem our state faces in the contract for the Idaho Education Network. Idaho signed a contract for a state-wide network that has been found void. This mess will take some sorting out by all the parties involved, their lawyers and ours. But we should not let this current mess keep us from seeing a clear path forward for the good of our state. I propose a short term direction.

First, let me say that I have never heard any reluctance from legislators about supporting broadband for our schools. I know this contract limbo creates some uncertainty for schools reliant on IEN. I believe the legislature sees the value of broadband for schools but the current mess makes sending money the same direction distasteful. The legislature is a blunt instrument, and this surgery is delicate. If we do this short term work, we create space to long term solutions.

Second, we need to become eligible for federal Erate support. Erate is a federal program that helps fund broadband for schools and libraries. It comes from taxes levied on all phones. Here in Idaho, it used to pay for 75% of the cost of the broadband contract, but then the FCC cut off the money in March 2013 due to an Idaho Supreme Court decision and since we have been paying millions directly from Idaho taxes. Long term, this means Idaho must negotiate a whole new contract and possibly design a different network.  This will take at least a year, and we can only get Erate support for the following year if we get the applications and contracts done before the end of March. So delay costs.

But right now, actually, two months ago when Judge Owen in District Court declared the contract void, the Idaho Department of Administration (who runs the IEN) and the Idaho Department of Education should have been teaching and encouraging schools to apply for their own Erate outside of the IEN. The timeline is ticking for this process and the delay has been damaging. There is still time.

Schools applied for Erate before IEN was established and many (maybe half?) are applying for Erate now for broadband they are getting outside of the IEN, so for many this will not be a difficult process. For some it will, and we as a legislature, but primarily the Department of Administration and Education should be prepared to support those willing to make this effort to help Idaho save tax dollars. Such an effort could mean millions in savings that could be used to support our strapped schools. We should have the folks in place and the word out to support this. Fast, clear action now can still help our schools, our taxpayers.

We need to re-examine the design of the statewide network and then rewrite the contract. But this urgent short term step is no commitment to a future direction; in fact, it buys time to do it right next time. This step can and should (have)be(en) done quickly.

Debate on the floor but long before adjournment

It was late and we all were very tired. I could look around the Senate floor and see the sagging shoulders and the drooping eyelids. The “Ayes” were soft and the rare “Nays” even softer as we were passing the last of the budget bills, expecting to get done that day before 7PM. We all wanted to leave. The old adage of giving the last presentation before lunch or adjournment was never more true, but I had a budget bill to present that was an opportunity to say some things I thought needed to be said. I just didn’t think they would be heard. The opportunity was forsaken. I missed it. And so did the state of Idaho. I have my regrets, so I say it here.

I have served two years now on JFAC, the Joint Finance and Appropriations committee and have become very familiar with the many Health and Welfare budgets. Legislators can hate working these; they can be a morass of matching Federal funding that requires certain state investment to receive the match and metrics to show. One can feel like a teenager who hates school but has to get certain grades to get your allowance. Still, I worked to understand them, push here, pull there, cut this, and add those to best serve our state. I get very little help from other legislators. Since these budgets must pass both House and Senate, last year in 2013 I even had to conscript a House member to work on them so there would be a sponsor on that side to explain them.

There was even worse than reluctance to do the work. Last year (2013) there were legislators who sat in on the working meetings with the analysts and me so they could get ammunition to vote against the budgets. They offered no suggestions, no alternate proposals but sat through it all so they could try to understand the arcane details. Some even volunteered to make the budget motion in committee. I asked them to since I thought everyone was getting tired of my voice; maybe I thought I could enroll some help in this work. Instead some would agree to make the motion in committee, but then would debate against the motion and vote against the motion on the floor. This year I did more work alone.

There are 13 divisions to the Health and Welfare Department, but the biggest budget, over 80% of the whole $2.5 Billion, is in the Medicaid division, and that was the last-day budget I was carrying before the very tired Senate. I wanted to say some things, because there are some things I had learned, and I wanted to help my fellow Senators to learn them, indeed, our state. But I wasn’t sure there would be an audience. Heck, I doubt many will read this. Still, I need to say it. Thank you for reading.

First, let’s understand Medicaid. It is essentially a federally subsidized, state managed health insurance program for the poor and disabled. There are three kinds of Medicaid insurance here in Idaho. The Enhanced Plan covers the aged and disabled. It enrolls about 40,000 ( thus <20% of the total  Medicaid population) Idaho children and adults yet it costs over half the total budget. The dual eligible (Medicaid AND Medicare, think impoverished nursing home population) comprise about 10% of the population but spends about 30% of the budget. The universal 80:20 rule applies to Medicaid spending too; 80% of costs come from 20% of the population. The Medicaid Basic plan covers pregnant women and some children below a certain income level (generally less than about 150% the Federal Poverty Level, FPL). Here we have 75% of the enrollees but about 30% of the costs.

Under the federal Medicaid law, states can set eligibility levels. Idaho makes it tough to qualify for Medicaid. Here is a graphic of which plan has what eligibility in Idaho:

For reference, 100% FPL = Income for a single adult $11,500/ year, for a family of three $19,500

Now think about the Affordable Healthcare Act, basically a reluctant deal between the federal government and the private health insurance industry. The goal of this program was to get everybody covered by insurance, so that the cost shifting hospitals and doctors do when they provide uncompensated care can be limited. This is the first step needed to control healthcare costs in this country. The exchange was a tool to get individual and small group insurance affordable and to bring market forces to bear on the cost of these products. But private insurance didn’t want to deal with the people they hadn’t dealt with before, the working poor whose income was below the federal poverty level. So, the decision was to get these folks enrolled in Medicaid. The federal government would pay for it, 100% of the cost for the first 3 years, then at a reduced rate down to 90% in 2024. But states could buy into this plan or not according to the Supreme Court in June 2012. Idaho convened a workgroup to study whether this made sense. After much work we recommended the governor support it. We could get rid of the Catastrophic fund and county indigent programs that cost the state $70 Million a year. Prisoners released to parole could receive some level of support in the community. But the governor and the legislature flinched from embracing anything to do with ObamaCare after a painful exchange confrontation the year before. So we tired Senators were wanting to go home and I needed to present a Medicaid budget for 2015 that was not everything I thought it should be.

SB1424 was on the schedule for a long time. It got held up for a day or two because the House killed a bill the Senate had passed, so Senate leadership needed a hostage to force some negotiations. The deal was made but I got an extra day to contemplate my debate on the Medicaid budget presentation. Should I beat the Republicans about the head and shoulders for their unwillingness to consider the change in eligibility? Should I hammer on the fact that a change in eligibility would have not cost the Idaho taxpayer one thin dime, yet brought coverage to 70,000 low wage, working Idahoans? Should I rail about political courage? Should I pound my chest about the millions I had saved over the governors recommended budget as I had studied the details? Should I wax on about how health is a measure of productivity and pursued happiness, not dependency and poverty? I chose not to. I stuck to the budget, the numbers, the 20,000 foot view of a complicated subject. We were too tired to deal with the devilish details. But here’s what I could have said:

Mr. President, I bring to the Senate for your consideration the fiscal year 2015 Medicaid budget. It includes$1.3 billion for approximately 70,000 disabled adults and children who meet eligibility, and $500M for approximately 175,000 eligible pregnant women, children and adults. It is a lot of money. In other budgets we have already approved the money for the processes, the people and the functions to determine who is eligible. This appropriation bill does not address where we have set those limits for who might be eligible. Such would be a policy decision that we have not considered this year. I would like to point out to this body that if we had changed those limits to those recommended by the governors work group, this budget would be bigger, but it would not have cost the Idaho taxpayer another dime; in fact we could have skipped a previous budget for $35 million dollars. We have also passed a bill in this body to improve prison policies, Justice Reinvestment, and a policy decision to reform eligibility would have provided services for parolees in the community, to support their success. And an eligibility change might have gotten 70,000 Idaho working folks access to primary and preventative care, to keep them productive and strong. I remind you that businesses asked us to do this. We did not.But I must speak to the bill before us.

So, fellow Senators, such is not in this budget. But it is a good budget. I have worked for weeks to limit any waste, to trim what I could to meet the needs of those currently eligible. What is more, the Senator from 24 and I worked all summer with a large group of interested stakeholders to reform all aspects of health care delivery and payment in Idaho, to ensure that we provide the right care, at the right place, at the right time for the right price. Idaho is poised to do the right thing.

But today all I ask is that you support this small step to take us in a direction I’m not sure we should be headed. You see, 95% of this budget goes directly to payments to doctors and hospitals for the care they provide. Therefore, about 3% is going to managing these payments. Almost nothing goes to managing the care that is provided, or incentivizing patients or providers to give appropriate care. That is the work we must do.

For those opposed to any consideration for expanded eligibility I say, this one small step to enrolling people into a manageable, transparent payment system is a step we must have the courage to take. There is no other way to manage our county’s runaway healthcare costs than to get everyone involved in a manageable system. Markets cannot be effective when costs are constantly shifting and when price and value are hidden from the consumer. The vital work to change this system cannot be delayed. It will take more than a late session vote, more than political courage, more than the politics of getting reelected. It will take another summer or two, maybe even some fall and spring work to get this state on the road to prosperity. Because our ability to manage healthcare costs is the golden ring on this merry go round of public policy. This problem defines our national debt, not just our states future prosperity. We all should be reaching for the golden ring as we spin. But that is not what is in this bill. For now, at the end of this long and tiresome day, at the end of this compressed session, all I can do is ask for your “Aye” vote. Mr. President, debate is open.

I didn’t say this to my fellow state senators. I stuck to “just the facts m ‘am” approach and the debate was weak, including mine. The Medicaid budget passed the Senate 26-9, and then the House 44-26 and we adjourned Sine Die. Maybe another day we can have this discussion. I don’t know about the courage it will take, but it will take a lot of work.

I get hand-written letters from the penitentiary a half dozen times a year or so. I read them and often do not respond since I find the allegations so outlandish or unbelievable I fear my response would be like throwing gasoline on a smoldering fire. I will look into the concerns in my own way.  But my time on the Joint Finance and Appropriations Committee (JFAC) made me sit up and pay attention to a recent letter. It described problems in a parole hearing. It made me reflect on the JFAC presentations I had heard in the last two years from the Commission on Pardons and Parole(CPP). At the annual hearing the agency makes their case for funding. Committee members may ask the presenters questions, but JFAC doesn’t take public testimony at this time. We must rely on the presentations and any information we can glean from our own investigations.

I write this with no names to protect the individuals involved. But my job as a legislator on JFAC is to decide how the taxpayer’s dollar should be spent, not blame someone for mismanagement. We cannot hire and fire; that power lies in the executive branch. The commissioners and the director are appointed by the governor.  So I struggle with my role here. At this point I just want to tell this story. Soon I will have to decide what to do with what power I have. I have my responsibility within my role; others have theirs.

The five member Idaho CPP was established in the 1940’s. The Idaho Constitution says the authority over prisoners on parole lies with the Board of Corrections (BOC), but both websites claim the CPP is an independent body from the Board of Corrections, and in my opinion, the statute isn’t clear.  I cannot find a clear delineation of which entity has what responsibility. I fear we, the legislature, the designers of this system have created a structural problem. There can be multiple reasons why a system isn’t working; inadequate support, improper personnel, or faulty structural design. A bill that is proposed this session tries to address this structural, statutory problem, and I support it, but I fear such remedy may not be enough.

The decision to create the CPP was a policy decision 60 years ago that honestly makes good sense. I can imagine a prisoner and a warden not getting along, some personal conflict, so an independent body to review the application for parole, without such a history might give a semi-judicial distance. Think of the Shawshank Redemption scene. The intent was, I believe, to create an opportunity for a fair and just hearing.

But I have grave concerns about how the Idaho Commission on Pardons and Parole functions. It is hard to be just and be dysfunctional. I first became aware of these issues when I was running for office in 2010 and was made aware of Idaho’s high incarceration rate. I did some online research and ran into two studies with many follow up reports from the Office of Performance Evaluations (OPE) that mentioned long delays from time of eligibility for parole and the actual parole hearing.  This means more time in prison for inmates and more taxpayer cost, as well as delayed justice. Then, I got appointed to JFAC in 2013 and heard my first JFAC presentation for CPP. The director showed a simple bar graph that indicated the average wait time from when prisoners were eligible for parole and when they had actually had a hearing had decreased by 12% from 2010 to 2012. I would imagine the goal would be to reduce this number to as close to zero as possible, indeed the OPE study showed that even with the improvement in 2012,  57% of prisoners had a delayed parole hearing at a cost to the state of $7.2 million. I was even more troubled by this conclusion in the report:

Unless the commission makes substantive changes in the way it manages offender data, we believe a third follow-up review will be of little use and suggest that the Oversight Committee close this report.

After the 2013 budget presentation I asked the committee leadership and was assured there were plans for change at the commission, so I supported the budget request.

Now, in 2014 we have another CPP budget presentation and request. I asked the director if there was any more data on the time from eligibility for parole to the time of the hearing. There was no data available I was told. There was also a budget request to pay an outside contractor to get their minutes reviewed and available for publication. All meeting minutes should be reviewed in a timely fashion by any public agency and approved so they can be available should there be questions about what happened. I asked why the amount was $400,000. That seemed like a lot, how many minutes needed review? The director said they were four years behind in their minutes review.

After the hearing I was again assured by leadership that changes would be made in the commission. But that decision comes from the governor, not the legislature.

Now I come to the letter from the inmate, four pages, both sides, hand printed on lined paper, with the Parole Commission response stapled to the back. He has been sentenced for aggravated battery to a three year fixed sentence, and three years indeterminate and was eligible for parole September 2013. At his parole hearing (August 2013, thus before his due date)  he had an employer show up who had a job for him taking care of pheasants and chukars that were raised for a hunting operation. The employer was given 1 minute to speak. The parole board denied the application, the inmate said because they were concerned he might be close to guns at the hunting operation, a parole restriction. So he can apply for parole again in a year. He has completed his GED in prison, as well as a couple computer classes and Commercial Drivers license training. His “institutional behavior” has classified him as “a minimum”. The employer changed the operation so he would only take care of the birds, never be close to the hunters who come out mostly on weekends. But he must wait another year, August 2014, for another review. And he was so frustrated with the process he said he might just “top out”, meaning finish the full 6 year obligation.

My wife read the letter and commented that the inmate never acknowledged his guilt, said he was sorry for his crime. I remember Morgan Freeman talking about “rehabilitation” in Shawshank Redemption. I appreciated her input, but in my opinion, I am looking for rehabilitation in a government agency. And I don’t hear anyone saying they are sorry.

This week in JFAC we heard from Department of Administration Director Teresa Luna that we need $7 million to keep our schools connected to the internet. She is also asking for another $7 million for 2015. She is asking Idaho taxpayers to pay for something that previously has been paid by a telephone tax. She did her best to explain this situation, but honestly it wasn’t clear at the time to me how we got here, but I really wasn’t too surprised, since when I read a Supreme Court decision last spring I got concerned. It is a complicated story with many acronyms so let’s get started.

Last March Betsy wrote about an Idaho Supreme Court decision. This goes back to before I was even running for office, 2009 when players were vying for a state wide contract to get broadband to schools. The Court said the contract had been awarded incorrectly and should be set aside, “for further proceedings”. I wondered quite a bit about the concurring judges reference to the charges not filed, but I was mainly worried about what this meant to Idaho taxpayers.

How does payment for broadband to the schools work? If you get lost or confused, click on a link for further reading. Here come the acronyms. On your phone bill you will see a small tax. This is collected by the FCC and administered by USAC. Newspaper reporters, even Director Luna called this “federal money” but it actually isn’t, the initials make one think of Uncle Sam, but it is the Universal Services Administration Company. Schools and libraries can apply to USAC for E-Rate payments for approved services. The application is awarded based on the cost of broadband services and the percent of free and reduced lunch students in the district. In Idaho this can range from 50% to 95% eligible, but the state average is about 75%, a measure of our poverty. Schools can receive E-Rate money directly or have it sent to a service provider. Before the legislature made Idaho Education Network (IEN)  a law, many schools were getting the money and paying local service providers, but with IEN, the plan was to develop a statewide network and have the contractor receive the E-Rate payments directly; thus the contract in 2009 between Idaho Department of Administration, Qwest and ENA.  Syringa bid on the contract but got pushed out, even though they had the lowest bid and were an Idaho company; thus the lawsuit that led to the March Supreme Court decision. ENA has been collecting the E-Rate dollars from USAC up until the payments were shut off in May of 2013, after the Idaho Supreme Court decision.

By the way, ENA was also awarded the multi-year wireless contract for grade schools this last summer by Superintendent Tom Luna (brother of Teresa Luna) over competing and lower bidding Idaho companies.

As best I can tell from 2009 to 2012 ENA has received about $7 million from USAC in E-Rate payments. So far this year they have not received about $7M, after the payments were held.  If the Supreme Court decision is upheld and the contract is invalid, I am afraid the state will need to reimburse all the E-Rate payments sent to ENA. I can respect USAC being prudent about payments since they are under scrutiny themselves.

I hope the citizens of Idaho can get some clarity on this mess. I am working on it.