• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • More Fed Money for Profligate States?

    Many state leaders are lobbying the Senate to extend the Medicaid bailout enacted in the February 2009 stimulus bill. While several attempts by Senate leaders to extend the bailout have failed, it will be brought to the floor again on Monday, this time bundled with additional spending on education.

    Talk about throwing good money after bad.

    For both Medicaid and education funding, a continued bailout would disproportionately benefit the most irresponsible states and would allow them to delay taking the steps they must to live within their means.

    Federal taxpayers fund a large portion of state Medicaid spending, ranging from half the bill for the wealthiest states to 80 percent of the bill for the poorest states. When state leaders complain they need more money, some perspective is in order.

    National Medicaid spending nearly quintupled between 1990 and 2008, which resulted in overly generous programs that couldn’t be maintained when the economy dipped into recession.

    Bailouts relieve states — temporarily — of the need to make difficult budget cuts. Congress has already bailed out state Medicaid programs three times in the last decade, in effect forcing federal taxpayers to rescue irresponsible state politicians. The most recent bailout, in the February 2009 stimulus bill, cost taxpayers an estimated $87 billion. Every state knew that additional federal funding would expire on December 31, 2010, yet many state leaders are clamoring for a bailout extension.

    Perhaps the best way to evaluate state Medicaid programs is to compare state Medicaid spending per person in poverty. Many wealthier states, such as New York, Massachusetts, Vermont, Rhode Island, and Connecticut, have extremely generous Medicaid programs that effectively force federal taxpayers to support many individuals who earn well above the poverty level. For instance, New York spends $18,344 on Medicaid for each person in poverty, with half that amount coming from federal taxpayers. At the other extreme, Nevada spends only $4,568 on Medicaid for each person in poverty.

    States that have excessive programs would unfairly benefit from a continued bailout. New York, with less than 7 percent of the nation’s poor, would receive 15 percent of the bailout. Additional federal funds would have the effect of punishing states such as Texas, Georgia, and Nevada that essentially lived within their means.

    The same overall principal holds true when it comes to education spending. Since 1970, per pupil inflation-adjusted spending has nearly tripled. Government education spending, at all levels, has grown to $580 billion annually, more than 4 percent of GDP. On top of that, the Department of Education got an extra $100 billion through the stimulus bill, effectively doubling the agency’s budget in a year.

    Although per pupil spending now stands at more than $10,000 and education funding is at an all-time high, the administration, certain Members of Congress, and teachers’ unions are pressing for more taxpayer dollars under the guise of avoiding “catastrophic” teacher layoffs.

    But a closer look at historical trends in school staffing paints a different picture.

    Since 1950, student-teacher ratios have declined from 28:1 to 16:1. Moreover, in 1950 there were 2.4 teachers for every non-teaching staff position. Today, that ratio is about 1:1. This means that for every teacher in the classroom in today’s public schools, there is a corresponding non-teaching staff member. This bureaucratic growth is one of the greatest strains on state budgets.

    But there are other strains as well. Researchers Josh Barro and Stuart Buck estimate that state pension plans face a shortfall as large as $900 billion. Yet many states continue to offer retirement benefits far more plush than those in the private sector.

    State budgets are also strained by the exorbitant cost of the public-education sector’s health-care benefits. New Jersey governor Chris Christie put it best in a statement earlier this week:

    [Teachers are] getting 4 and 5 percent salary increases a year. In a 0 percent inflation world. They get free health benefits from the day they’re hired for their entire family until the day they die. They believe they are entitled to this shelter from the recession when the people who are paying for that shelter are the people who have been laid off, who’ve lost their homes, had their hours cut back. And all we ask them to do is freeze their salary for one year and pay 1.5 percent of their salary for their health benefits.

    Governor Christie is correct. It’s always difficult to make budget cuts. It’s difficult for families; it will be difficult for states.

    But another public-education bailout from Washington isn’t the answer. Instead, states and local school districts should downsize their bureaucracies and reform their hiring and firing practices as well as teacher tenure and compensation models.

    Spending on both Medicaid and education has grown irresponsibly over the past several decades. Increasingly, the benefits flow to public employees, not patients or students. Further federal funding would delay states from making the difficult budgetary decisions necessary to effect long-term Medicaid and education reform while disproportionately benefiting states that have behaved the most irresponsibly.

    Co-authored by Brian Blase.

    Cross-posted at Critical Condition.

    Posted in Education [slideshow_deploy]

    24 Responses to More Fed Money for Profligate States?

    1. Brandon Stewart Brandon Stewart says:

      Do not post. This is a test.

    2. Brandon Stewart Brandon Stewart says:

      If this were real, this comment would be substantive.

    3. Brandon Stewart Brandon Stewart says:

      But as you can tell … it's not.

    4. Brandon Stewart Brandon Stewart says:

      See? Isn't this terrible?

    5. Brandon Stewart Brandon Stewart says:

      Maybe not …

    6. John Greene New Jers says:

      This spending simply has to STOP now! The Democrats in Congress and the socialist Marxist regime in the White House are totally incompetent and corrupt.

      The are totally out of control and November can not get here fast enough. What is especially egregious is that they simply DO NOT CARE about the damage this is doing to our economy.

    7. Jeff, Wisconsin says:

      There are some good points here but how can one jump from the conclusion that Medicaid has been overly profligate without examining the reasons? Is it possible that say demographic reasons (more elderly) or perhaps a large increase in unemployment swelled the ranks of those covered?

      It is dangerous to jump to conclusions as the author seems to do without analyzing the underlying reasons.

    8. Sean, NYC says:

      Although not one to take the side of the big-spending states, the problem is the U.S. Department of Education.

      The DoE comes up with scheme after scheme to justify it's existence. Each new DoE program/initiative burdends school districts with new reporting requirements, unfunded mandates and a whole host of other expenses for which local taxpayers must pick up the tab.

      The 2.4:1 teacher-to-staff ratio went to 1:1 because of DoE burdens placed on local school districts. The Department of Education does significantly more harm than good and is the 800 pound gorilla in the room.

    9. Gunga, Columbus OH says:

      Not to sound like a fan of profligate spending, but couldn't some of the differences between the cost of Medicaid in Nevada vs NY be associated with the relative costs of living in those two places? …not to mention the relative cost of medical care? As for the teachers, it's time they changed the name of their profession to something that better reflects what they really do…maybe they could go with, "baby-sitters."

    10. Ray Elliott South Da says:

      If we don't correct the problem now, the problem will soon correct itself. We know what "self correction" means. It means the issuance of I.O.U.'s instead of dollars in paychecks, wholesale layoffs of civil servants and bankruptcy of the public employee pension systems. Depending on social security may be as foolish as thinking the system does not have to change. It could mean unemployment for the rest of our lives.

      The public employees that have become the privileged class of America now face the choice of accepting large reductions in pay and benefits, or destroying the system. The old adage that it will have to be paid by our grandchildren is no longer true. It will be paid now by every one of us.

    11. Julia says:

      Why don't conservatives start using the word "unjust"? Use where appropriate and in those situations use it always and often.

    12. Daniel says:

      jeff, the elderly are in medicare not medicaid.

    13. Pingback: Instapundit » Blog Archive » MORE FEDERAL MONEY to bail out profligate states? “Spend all you want — we’ll print more!”…

    14. Paddy says:

      It is unconscionable for our central government to bail out states, whose financial woes are self-inflicted by mismanagement and incompetence.

      This collectivization of temporary aid is outrageous. It undermines federalism and shifts the costs to taxpayers of other states without out justification.

      I don't want to spend a dime to relieve CA, NY, or any of the other spendthrifts. Nor, do I want any out of state taxpayers to bear any of the burden for fixing my state's mess.

      This type of relief is designed to undermine federalism. When our nation was organized, each colony was more like a separate sovereign nation than a subdivision of a republic. Each had a militia, navy, collected taxes and duties, a legislature and citizen government. The Founders feared strong central governance. The Constitution was designed to limit the central government to authority specifically granted.

      It is time to return to return to our roots before Obama and his minders finish their work to destroy our republic and its economic system.

    15. Pingback: Costs for a maid service?

    16. Pingback: Tips to Help You Download Movies | Best Movie Download

    17. Jeff says:

      Daniel, no big deal but much of the financing for long-term care of the elderly is done via Medicaid rather than Medicare.

    18. Punkindrublic says:

      STOP this insantity now! States that have promised the moon to their teachers and state employees: I WILL NOT allow my tax dollars to rescue the morons your bought voters (moochers) have elected to continue this thievery.

      Every last politician that has participated in this hideous shell game should be taken to the steps of their ivory tower and hung from the nearest lamp-post to allow the vultures to clean up your final mess.

      November is a light at the end of the tunnel; that light will be an express train back towards sanity once it flattens the scoundrels in office.

    19. Pingback: Steppin' On Egg Shells

    20. Pingback: Today in Washington - August 4, 2010 | RedState

    21. Pingback: Dropout Nation on Twitter for 2010-08-05 | Dropout Nation: Coverage of the Reform of American Public Education Edited by RiShawn Biddle

    22. Paul Placitas NM. says:

      Medicaid is WELFARE. The Feds took our money and mismanaged it for Medicare and SS. Medicaid should be done away with along with the EPA, HUD and the Department of Education. People have to be responsible. Take care of your families and DO NOT keep asking your fellow citizens to keep paying YOUR bills. Then when we find the people who actually need help, ( about 15% of those now on the dole) we can get back to being America instead of the Balkans and class warfare.

    23. which used the station’s offices in the Docklands as a set. Other features were the weather,

    24. We don’t know exactly what message Snyder is trying to communicate by placing Superman along with US army along at the apparent edges of desert, but one thing’s clear: these soldiers aren’t trying to arrest him. Their bent knees imply that Superman may now have their trust, which places this scene near the end in the film, since it’s hard to believe anything but ‘saving humanity from destruction’ would assuage their fears.If that’s the case, then Lois Lane’s presence as well setting are all up for debate. Amy Adams has explained that she is absolutely not yet confirming a return inside inevitable Superman sequel, or Justice League for that matter. As this scene reminds us, Snyder and Goyer are keeping tight-lipped on how Lois and Kal-El will likely be developed over the course within the film.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.