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Wisconsin's Growing State Debt is Unsustainable

Posted by Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout of Alma is an educator, business woman, and farmer who is now
User is currently offline
on Monday, 12 May 2014
in Wisconsin

scott-walker-clapsScott Walker's brand of government has always featured tax cuts offset by putting needed purchases on the credit card. This week Senator Vinehout writes about the unsustainable increase in state debt that results.


MADISON - “I was wondering how Wisconsin's state debt has been trending over the last several years,” Dave from Durand wrote me. “I'm also curious to know why there has been no talk of paying off the state's debt.”

The state’s debt is important. Before any other bill gets paid, or any other service delivered, the state must make payments on debt. When money goes to pay off bonds – the way the state incurs debt – that money is not available for roads, schools, health care or public safety.

Too much debt can lead to less money available for everyday operations – as more general revenue is used to pay off debt. Think of the credit card or mortgage payment taking up more of your take home pay.

Over the past twenty years the state’s debt has tripled.

In a paper I recently received from the Legislative Fiscal Bureau (LFB), the state’s total indebtedness went from $4.4 billion in 1996 to a projected $14.6 billion in 2015.

For comparison, in the fiscal year 2014-15, the state is projected to take in a total of $14.7 in tax revenue.

From 2007 through 2010, during recession years, total indebtedness increased by 23%. In 2011 through 2015, projections show an increase of a little less than ten percent.

Part of the reason debt grew at a slower rate in the past four years is that two funds- one to clean up petroleum spills and another to finance clean water projects- are winding down. These bonds will eventually be paid off, lowering the total indebtedness of the state.

But other types of debt are increasing – potentially at an unsustainable rate.

The two main types of bonds, General Obligation and Transportation Revenue, grew by 15% during the recession and 18% since 2011. One reason debt grew at such a high rate in the past 8 years? Both Governors Doyle and Walker restructured debt to avoid making a payment – using the cash saved to cover state operations. This led to extraordinarily high debt payments.

Perhaps the most serious financial problem going forward is that the state cannot support the current level of borrowing for transportation. Borrowing for roads and bridges was nearly $1 billion in the last state budget. Debt payments on this loan is projected to be 20% of all the money coming into the Transportation Fund by the first year of the next state budget according to another paper I recently received from LFB.

Some state officials imply the current problems with money for roads are because of borrowing from this fund for state operations ten years ago. This is utter nonsense.

For the last two state budgets, money was moved from the General Fund (85% of which goes to pay for schools and universities, health care, local government and public safety) to the Transportation Fund. Much of this money was “one time” meaning the gap between spending and revenue only got higher in the next budget.

Instead of cutting spending, the governor and legislative majority increased borrowing for transportation.

This is why interest on the transportation debt has jumped from 11% of the fund in 2009-10 to a projected 20% in 2015-16.

Too much debt can affect the state’s credit rating leading to increased interest costs on future bonds. States are rated based on risk by several bond-rating agencies.

When bond-rating agencies look at the credit worthiness of a state, they look at the state’s overall financial performance compared to other states. With the exception of Illinois, Wisconsin already has the lowest Moody’s bond rating of seven states in the Midwest.

In January, Moody’s mentioned Wisconsin’s “below average balance sheet position” and “sizable negative GAAP balances” in assigning a credit rating. Looking towards the future, Moody’s said, “The state's ability to make progress toward structural budget balance and improve its liquidity and fund balances will be important to future credit analysis.”

There is no free lunch in state budgeting. Spending too much and collecting too little in taxes leads to a budget imbalance and more borrowing.

Dave, you’re asking the right questions. We need to talk about the state debt.

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Complaints Spur Investigation of Unemployment Compensation Claims

Posted by Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout of Alma is an educator, business woman, and farmer who is now
User is currently offline
on Tuesday, 06 May 2014
in Wisconsin

unemploymentHundreds of complaints from people attempting to apply for unemployment compensation poured into legislative offices this winter. Many complained about the State's website. Others said they couldn't even get to a real person on the phone to get answers on claims they filed. The Walker Administration had few answers.


MADISON - “I called the hotline several hundred times. Each time I called I got a message about ‘being busy at this time’,” a Pierce county man I’ll call Ken told me.

Ken lost his job as a mechanic and needed to file an unemployment insurance compensation claim. After more than two weeks of trying to get through the state’s Department of Workforce Development (DWD) application process, Ken heard of someone who received help from my office. He called.

Hundreds of complaints from people attempting to apply for unemployment compensation poured into legislative offices this winter. The complaints were consistent: the website dropped me; I got no answer from phone calls; no one ever called me back; I was on hold for hours.

The complaints led Senators to write to the Governor seeking answers. The complaints also led to a review by the Legislative Audit Bureau.

Recently the Legislature’s Joint Committee on Audit approved an evaluation of the unemployment insurance claims process. During a public hearing we learned some reasons behind the dramatically inferior customer service.

When Ken first filed his unemployment claim, like half of all who file a claim, he went to the Department of Workforce Development’s website. But part-way through filling out the web-based forms, the system wouldn’t allow him to complete his application. The website indicated he must call the state office.

Audit committee members learned that half of the people who tried to complete their unemployment claim applications online had the same experience as Ken.

“The current system is not able to sift through complicated initial claims,” DWD Secretary Newson told Audit Committee members. “We have a lot of ‘drop points’.”

That is ‘insiders speak’ for a computer system that can’t handle the complexity of people’s work history. It turned out Ken’s ‘problem’ was he took a job in Minnesota. Reporting the employer across the river caused the website to freeze him out.

The system should be designed to handle the routine variations in a jobless worker’s history. Testimony from state officials gave committee members insight into what is really a poorly designed computer system.

But the poor computer system didn’t explain why people couldn’t get through on the phone. Many lawmakers received complaints from people who experienced very long wait times. They called on different days and at different times of the day. People who contacted me said they couldn’t even get to a real person on the phone. Other people could not get answers on claims they filed.

Lawmakers were puzzled. Didn’t unemployment just drop to a five-year low in Wisconsin? Why can’t the newly jobless get through on the phone when there are fewer people making claims?

There was no clear answer from the administration.

The call center experienced a spike in claims and a loss of staff. State officials explained to lawmakers they were working to correct those problems. They hired new workers and are working on a new computer system.

A backlog of cases plagued the agency. According the Department of Workforce Development’s Annual Report, in the summer of 2012, the department had a backlog of over 10,000 unemployment claims. Officials testified they significantly reduced the backlog of cases not processed.

“I believe we are meeting or exceeding outstanding customer service,” the DWD Secretary told the committee. Lawmakers saw things differently.

Despite the agency’s obvious reticence to comply with the audit, lawmakers voted unanimously to begin an investigation of the unemployment insurance claims process.

Complaints make a difference. If you have knowledge of the failings of the unemployment claims process, let the Legislative Audit Bureau know. Your information will help with the investigation. You can call the Fraud, Waste and Mismanagement Hotline at 877-372-8317 (or 877-FRAUD-17).

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Where's My Ride?

Posted by Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout of Alma is an educator, business woman, and farmer who is now
User is currently offline
on Monday, 28 April 2014
in Wisconsin

medicaid“We waited and the ride never came,” said one disabled man. Audit Committee Approves Full Review of Medicaid Transportation.


MADISON - “We waited and the ride never came,” said one disabled man. “I was so cold” another woman said. “They said the heater in the van didn’t work.”

Some time ago residents in Black River Falls shared with me their complaints about non-emergency medical transportation program. Since then, I’ve heard many other complaints from patients and providers.

The number and seriousness of complaints led the Legislature’s Audit Committee - of which I am ranking minority member - to recently approve a full evaluation of the program now administered by St. Louis-based Medical Transportation Management, Inc. (MTM).

Federal law requires the state to provide rides to Medicaid patients who have no other way to get to doctor’s visits. Some patients rely on the service for trips to life-saving cancer and dialysis treatments.

At the Audit committee hearing a man testified kidney dialysis patients were waiting two and three hours to get picked up post dialysis. “You’re tired. You don’t feel well. You need to go home,” he said. A woman with asthma asked the driver to stop smoking in the van. Instead he rolled down the window.

Others described a broken system. People are transported in vehicles in disrepair; doors don’t open from the inside. Patients and caretakers spend long times on hold trying to schedule rides. Families are told no rides are available even while providers are “screaming for business”. One taxi company manager testified he “could do 1,000 rides a day. Now I’m doing 15 or 20 a day for MTM. People say ‘MTM told me you were all booked up.’ But I never received a call.”

Another man testified the number of van companies dropped by 50%. He said many of the remaining companies are not safe or reputable.

The problems appeared in 2011 when the state shifted from a county-based volunteer system to a privatized system run by atransportation broker. The arrangement was supposed to save the state money. But, according to the Milwaukee Journal Sentinel,the only expected cost savings was in a higher federal Medicaid reimbursement rate.

The feds wanted more data on who received rides and for what type of services. The Journal Sentinel reported that volunteer providers could have collected these data. But instead the state chose to move to the private broker model.

In mid-2013, the state changed from one private provider to MTM; however the complaints continued.

Several people who testified complained the structure of the program encouraged skimping on services. One provider testified that the brokerage firm is smoke and mirrors. They are paid to deny services.

Another testified, “They are pocketing the money while thousands of BadgerCare members fail to get to their doctor appointments. This could threaten future levels of funding at the federal level.”

Committee members questioned whether the contract with MTM was properly structured. Representative Peter Barca described what he called a “perverse incentive” - a fixed amount of money for a varying level of service. The company keeps the money it doesn’t use to provide services.

“The way a contract is structured makes a tremendous difference,” Barca said.

Patrick Ryan of the Professional Ambulance Association of Wisconsin told the Milwaukee Journal Sentinel, “The entity that benefits from that is the broker by shedding service, downgrading service, providing obstacles for patients to get to transportation and putting hurdles in the way of transportation providers to get paid for the services they provide."

The state pays more for fewer services.

Testimony clearly indicated a troubled program that isn’t working in the best interest of the people. As Representative Barca said, “When people are in the most sensitive period of their life, we must ensure they receive services and are treated with respect and dignity.”

Citizen complaints drove legislators to seek an audit. Public testimony expanded the audit to a full program evaluation. Citizen input can help auditors get to the bottom of the problem.

Have you or someone you love asked where’s my ride? You should call the Legislative Audit Bureau’s Waste, Fraud and Mismanagement Hotline at 1-877-372-8317.

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Health Advocates Inform and Challenge Lawmakers

Posted by Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout of Alma is an educator, business woman, and farmer who is now
User is currently offline
on Monday, 21 April 2014
in Wisconsin

healthcare-family-drThis week Sen. Kathleen Vinehout writes about the recent advocacy day related to health care providers and hospitals. Nearly 65 western Wisconsin health care advocates travelled to Madison to share their concerns and views with area legislators.


MADISON - "YOU are the reason why we were so successful…” Eric Borgerding of the Wisconsin Hospital Association told the health advocates. "You are extremely effective in communicating with and educating your legislators on local health care issues."

Recently over 800 health advocates traveled to Madison. Some 65 western Wisconsin advocates met with Senator Moulton, staff and I to discuss the challenges facing hospitals. And they shared their passion for caregiving and healing.

Health leaders face new challenges with the passage of the Affordable Care Act (ACA). Leaders from Durand, Black River Falls, and Whitehall shared a frustration with the new health law. “There’s not a good model for rural hospitals,” one administrator told me. “We need a rural model where we all work together - schools, nursing homes, the county, Western Dairyland.”

“We need to get back to primary care: education, nutrition, parenting – including health care of children. We must really get on that side of it.” There’s a real need – and real cost savings - in preventing health problems.

“Think about the mom whose child has an ear infection coming to the Emergency Department at 2:00 am. By law, the hospital must treat the patient. The doctor must do a health assessment. But this isn’t the best place for the mom or the child. She really needs parent education to help her with common childhood illnesses. She may not get that in the ED. For everyone – including those on Medicaid – this is a very expensive way to care for the child.”

“Hospitals are still getting paid for crisis care and a single event,” another administrator said. “Yet we are trying to provide the patient with the right care, at the right time and the right place. The system doesn’t always pay for this.”

Sometimes the hospital finds such value in a different way of providing care, they invest in a new program without reimbursement. An example is the Transitional Nurse Program, which employs a full time nurse who travels to patients’ homes and helps people adjust to living with a chronic condition.

Little things like grocery shopping can be a real challenge for a newly diagnosed diabetic. Getting expensive antibiotics right away to a man just discharged with pneumonia can mean the difference between getting well and another hospital stay.

Ending up back in the hospital is something hospital leaders very much want to avoid. And for good reason: patient readmission within 30 days is often considered a preventable failure. To encourage hospitals to prevent readmissions the ACA set new federal rules. In most circumstances, hospitals will no longer be paid by Medicare for readmission of a patient who was admitted less than 30 days prior.

A Chippewa Valley finance director told me, “There is an important connection between the hospital and the nursing home. If the nursing home doesn’t do its job, the hospital is penalized.” This is the case when a patient is readmitted from a nursing home.

During our vigorous discussion of challenges facing nursing homes, I shared some of the conversation I recently had with several area nursing home administrators. The administrators said homes experienced a 14% cut in Medicare rates. They talked about how the state pays hospitals and nursing homes well below their cost to care for patients. Facilities cost shift by covering Medicaid patient costs with money from other patients. Federal Medicare cuts now make this much more difficult.

The hospital leaders called the underfunding ‘the hidden health care tax’ because private insurance patients pay higher premiums to cover these losses. The advocates challenged lawmakers to better fund Medicaid. This is a big ask of lawmakers who know health care is the largest and fastest growing part of the state budget.

Health leaders were eager to engage lawmakers in new ideas and outside the box solutions. This engagement is vital, especially because few lawmakers can keep up with the complex, fast changing world of health care.

Thank you to all those hospital volunteers, trustees, leaders, doctors, nurses and other professionals for your work. Your continued advocacy is critical as the state struggles to balance budget realities with preserving high quality health care and improving access.

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Our Children’s Future: School Visit and Community Forum Raise Questions

Posted by Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout, State Senator 31st District
Kathleen Vinehout of Alma is an educator, business woman, and farmer who is now
User is currently offline
on Monday, 14 April 2014
in Wisconsin

kidsSen. Vinehout writes about the future of our children in a time when public schools face a serious financial squeeze.  Children are eager to learn but their schools struggle with staff shortages and out-of-date equipment. State aid to public schools has declined as costs rise and more dollars are being siphoned off for private schools. Are we doing the best we can for the future of our children?


ALMA - “Your future awaits,” the Student Council President said as he handed students the schedule for Career Day. He then led me to the computer lab where my first class waited.

I spent the morning sharing my life as state Senator with many intelligent, interested young adults. They were as eager to learn about public service as I was to share. Many of them never thought about a career as an elected official.

More than a few left the classroom wondering why any adult would choose not to vote. In part, this was due to the recent local election of one of their teachers – by one vote.

As I watched students respond, I understood the magic that happens in the classroom. Bringing community members from all of walks of life into the school opened a window for students into a career many had never considered.

I spoke with mostly middle school students: an age I dearly love.

The world of a young person expands every day. I watched students making connections and forming opinions as we shared. My world touched theirs.

And, if for no other reason than their own teacher’s experience of winning by one vote, I experienced how youth embraced their own role as citizens. By embracing the expanding world of knowledge and the youngsters’ role within our world, I saw the foundation of democracy emerge: an educated citizenry.

I saw the magic of opening minds in the bright eyes and eager questions of the students. And looking around the classroom, I saw the possibilities and the challenges.

The computer lab was filled with old cathode ray computer monitors. The best machines were discards from a college in Minnesota. After my three classes concluded, I took the opportunity to speak with several staff members. I learned about the aging school buses - one of which was 36 years old. In the last 12 years, the district cut a 1/3 of its staff. State aid was only a third of what it had been 13 years ago.

One remaining staff member told me, “We have tremendous community support. Volunteers do all sorts of jobs to keep things looking nice…but there are some things they just can’t do” - like buying a badly needed new furnace.

The evening before Career Day I was in Eau Claire participating as a panelist for the forum: Our Schools, Our Community: the state of education in Wisconsin. I joined school experts, the local school board president, an education professor, and private and public school superintendents.

I heard much about the funding problems facing public schools. Eau Claire lost $5 million in state aid just since 2011. Eau Claire is running the same operation in 2014 as in 2006 – with the same amount of money. But we all know costs went up. Special education used to be reimbursed at 72% state funds. Now schools receive 26%. Some districts spend $21,000 a year to educate students with a mil rate of under 3 million; other schools spend $9,000 with a mil rate of about 9.

There was much discussion about the use of public education dollars for private schools. Many participants were surprised to learn for 30 years Eau Claire sent state aid to Milwaukee for private schools. This year the state required cost will be almost $1 million.

Panelists spent time discussing differences between publically funded private schools and public schools. Audience members asked questions about unequal standards and testing. Some were concerned about too much emphasis on testing.

“What country leads the world in innovation and patents?” the superintendent asked the crowd. A woman from the audience shouted back, “the United States”.

He then asked, “What happens when our future leaders only know how to take multiple choices tests?”

Professor Julie Mead summed up the evening’s conversation when she said, “There is a state constitutional right to public education. Its overriding purpose is an educated citizenry. We all benefit from having an educated citizenry.”

I thought of this as I watched the bright, intelligent eyes of the young people in my classroom-for-the-day.

Your future awaits. What have we done today to make your best possible tomorrow?

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