Progressive Thinking

At a Town Hall in rural Northwestern Wisconsin, people are concerned about the amount of their state tax dollars being siphoned away from their local public schools to cover the cost of private school students elsewhere. They value their schools and feel the heavy burden of less state aid through higher property taxes.

PEPIN, WI - “I am paying for private schools with my taxes?” the women from Pepin asked following my presentation at a recent Town Hall meeting. “Yes, you are,” I told her.

Residents were surprised at the sharp increase in the state spending on private schools – nearly a doubling in seven years. At the same time, Pepin School District lost nearly half of its state support. With less state money, property taxes made up a larger share of school support.

Wisconsin has funded private schools in Milwaukee by taking money from local public schools for a long time.

With passage of the last state budget, private and independent charter schools in southeast Wisconsin cost state tax coffers $645 million.

As I explained at the Town Hall Meeting, this is only the beginning of putting a price tag on private school spending buried in the state budget. Much of the cost of private school students bore by public schools is not transparent.

For example, public schools must pay to transport private school students. One Pepin resident asked why her neighbor was paid by the state to take her child to a private school. The cost, bore by the Pepin School District, was less expensive than sending a school bus to transport the child.

Public schools districts pick up other private school costs. The cost of special education services come out of the local public school budgets for some private school students.

Over the past few years, payments for private schools directly from local public school districts rose as the statewide “voucher” or private school subsidies grew.

The most recent state budget removed limits on how many students from a school district can go to a private school at the expense of the public school district – and local taxpayers.

Consequently, some districts – like Eau Claire – experienced a quadrupling of students leaving public school and going to private school on the taxpayer’s dime.

State law sets the amount of money coming from a public school district at about $7,800 for high school students and about $7,200 for elementary students. Some public school districts may receive much less aid per public student from the state. For example, the Eau Claire school district received about $5,100 per student in state aid but paid out about $7,800 per private high school student leaving local property taxpayers to pick up the difference between those amounts.

Wisconsin property taxpayers already pick up 41 cents of every school dollar spent compared to Minnesota property taxpayers’ 25 cents of every school dollar. These numbers are from a recent United States Census Bureau report using data from the 2014 school year.

Costs of private school subsidies will continue to grow even if more students do not opt for a private school education at the public’s expense. Buried in details of the most recent state budget is an automatic increase in the amount sent to private schools for each student regardless of whether or not the public school receives any increase in state support.

One of the Pepin Town Hall attendees reminded me that I made no mention of the tax credit for private school tuition also passed in a recent budget. The nonpartisan Legislative Fiscal Bureau pegs the cost of this credit at $11.5 million in tax year 2014.

Recent news from Madison described another new scheme for private schools – a type of tax-free private school savings account. Rep. Dale Kooyenga (R-Brookfield) described the proposal as an account that could be used to pay for private school tuition and other costs. Parents either could use a debit card to access the money or by reimbursed for their expenses.

Wisconsin does not need any more plans to siphon public school money away from local schools. In a recent press release, statewide education leader and Eau Claire schoolteacher, Ron Martin said it best “Education savings accounts literally take money out of our neighborhood public schools and hands it over to subsidize private tuition, with zero accountability.”

While making decisions that negatively impact the very infrastructure important to growing Wisconsin’s economy, the governor and legislative leaders use statistics that do not reflect anything more than the state’s historical relationship to national statistics.

MADISON - “Wisconsin lowered taxes and reduced regulation and that increased jobs in the state, right?” A journalist from a national newspaper asked about the state of our economy for a story he was writing.

“The assumption you are making is that the only thing holding back growth is taxes paid by business,” I told the reporter. “And regulation,” he added.

I explained to the reporter that economic growth depended on many factors. Business needs a skilled workforce. Companies need a functioning infrastructure, including broadband, an efficient transportation system, good schools, a university system on the edge of tomorrow, safe streets, and vibrant communities where people want to live, work, start a business and raise a family.

Cutting taxes has set Wisconsin back on all these essential ingredients.

For two years, we heard about many job openings in the state but no skilled workers to fill them. At a recent Eau Claire Chamber of Commerce meeting, business leaders talked about the lack of skilled workers holding back their companies’ expansion. There is a strong connection between historic budget cuts to schools, technical colleges and the University of Wisconsin system and the lack of skilled workers.

Our transportation system suffers as the Governor refuses to raise fees to cover deteriorating roads and bridges. Instead, he talks about stopping transportation projects already in progress and borrowing more money with a transportation budget already paying one of every four dollars on debt.

While Minnesota debated making a hundred million dollar investment in rural broadband, our state leaders put just a little over 3 million in the current budget – not enough to cover my home county, one of the smallest in the state.

The Governor’s approach to cutting taxes has not worked to create jobs. Wisconsin lagged the national economy in recovering from the 2008-09 recession. Our state took six years to gain back all the jobs lost in the Great Recession – a whole year after the nation recovered and two years after Minnesota recovered.

The numbers indicate that Wisconsin’s economy has done little on its own and can only boast of being the beneficiary of spillover effects from the national economic recovery.

In recent months, Governor Walker took credit for things that were historically true of Wisconsin. For example, the state unemployment rate is lower than the national unemployment rate. Wisconsin’s unemployment rate has been lower than the national average in 28 of the last 36 years.

The Governor bragged about our labor participation rate. However, Wisconsin’s labor participation rate was higher than the national average for at least 30 years, possibly more.

Taking credit for Wisconsin being better than the nation in those two measures is like taking credit for the sun coming up in the morning. These numbers are little more than a reflection of the historical differences between Wisconsin and the nation.

Likewise, the increase in manufacturing jobs, which supposedly justifies the half a billion in tax credits over the next biennium, is little more than a reflection of the national increase in manufacturing jobs.

The most discouraging measure of our lagging economy is the recent Ewing Marion Kauffman Foundation report, which for the second year in a row, ranks Wisconsin last in the nation in start-up business activity.

New businesses are the source of over 25% of new jobs in Wisconsin according to a report released earlier this year by the Center for Community and Economic Development at UW-Madison. In its report, the Center provides insight on how to create a vibrant economy; “developing generally attractive communities where people want to live may be the key to business location.”

The state needs to invest in good schools, safe streets, clean parks and the arts. We need partnerships between business and the public sector. We can encourage those who would take risks, experiment and cooperate with new business ventures. We must focus on growing many businesses at home instead of spending hundreds of millions to lure a few companies from other states.

Our economy is complicated, dynamic, interrelated and requires a balanced comprehensive approach. Taking credit for the sun coming up does not move us forward.

Over the years, problems with the facilities and quality of care at the King Veterans Home have raised concerns across the state. This week, we approved a nonpartisan Legislative Audit Bureau investigation to consider both financial and quality of care issues at King.

MADISON - “There used to be a real nice coffee shop. But they turned it into vending machines,” David Wedde told the Joint Committee on Audit.

To many it might seem like an insignificant thing but it was not just a coffee shop. It was a symbol of comradely at the Veterans Home in King. Everyday veterans gathered in the shop to trade stories. Now impersonal machines have replaced the shop – a victim of budget cuts.

Tim Michael added, “Shouldn’t be so hard to get treatment for PTSD. Why do we have a surplus when we need these things?”

A few moments after the two Navy veterans from Waupaca County testified, the entire committee voted to approve a comprehensive performance audit of the King Veterans Home.

A Capital Times investigative report recently highlighted problems at the state-run facility. Stories of difficulties at King trickled out of Waupaca County for many years. Over the years, Senator Julie Lassa (D-Stevens Point) whose district is near King, made inquiries related to problems at King. A year ago, Sen. Lassa requested the Joint Audit Committee co-chairs move forward with an audit.

Later, Senator Luther Olsen (R-Ripon) requested an audit and detailed what an investigation should include. The nonpartisan Legislative Audit Bureau (LAB) included many of his suggestions in its scope for the proposed audit.

During the hearing, committee members (of which I serve as ranking minority member) heard conflicting testimony. State officials were quick to remind members the state administered Veterans Homes received four and five star quality ratings from state and federal inspections.

Yet allegations from residents, family members, and employees (both current and former), as reported in the media, paint a different picture. Employees and residents struggled with shortages but were afraid of retribution if they complained.

Committee members heard about administrative and financial problems. Staff shortages, forced overtime and inadequate wages led to high staff turnover and poor quality of care.

Budget cuts resulted in buildings without air conditioning, dilapidated equipment, and lost opportunities for residents like day trips to ball games. Volunteers testified that no doctor was on staff for the veterans, which meant anyone with medical needs was transported for care. Often veterans were not properly clothed for winter trips.

Administrators eliminated services that symbolized a high quality environment – like the coffee shop and pontoon boat rides on the lake – that gave King its home-like atmosphere.

Legislators, residents and advocates all asked how “surplus” money could be transferred away from the Veterans Home at a time when routine maintenance was delayed and staff were poorly paid.

State officials emphasized they created financial solvency from the deficit they inherited. They described the general fund tax dollars used by the administration to infuse the veterans programs and stated this was the first time since 1988 that state general fund dollars were transferred to bail out the ailing Veterans Trust Fund.

I found it difficult to reconcile the allegations of poor quality care, old equipment, worn out buildings, and untrained staff with administration officials’ repeated reference to four and five star quality ratings.

Reading through documents and letters I received, it appears state officials sacrificed things that made King special to veterans in favor of budget cuts. Mysteriously, these cuts happened at a time when “surplus” monies were transferred to cover deficits in other programs. Getting to the bottom of this problem is exactly why we need a nonpartisan audit that follows both the money and the quality of care for veterans.

Problems at the state’s veteran homes are not new. As a former chair of the audit committee, I joined co-chair Rep. Peter Barca (D-Kenosha) to approve a 2010 investigation that exposed many financial problems and led to recommendations on consistent rate setting; hiring and overtime costs; and resolving lax financial administration.

Senator Olsen reflected the feelings of many lawmakers, including myself, when he eloquently described the audit:

“If there are problems at King, we must shine a light on them and we do not rest until we figure out how to resolve them in a manner benefiting our veterans that demonstrates our utmost respect and gratitude for their selfless service to our great country.”

To the state leaders: we can start with something simple but important like bringing back the coffee shop.

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Senator Vinehout serves as the ranking member of the audit committee which unanimously approved the audit.

Gov. Walker and Secretary Gottlieb introduced their transportation budget proposal last week and funding it will be the biggest issue facing our state in the upcoming budget. Sen Kathleen Vinehout offers some new twists on the Governor’s plan for saving money and providing better support for local governments.

MADISON - Funding roads is an important job for state leaders. Nine cents of every state budget dollar goes towards transportation. In the vagaries of Wisconsin state budgeting, this includes dollars the feds send Wisconsin (about forty cents of every road dollar comes from Uncle Sam).

A prudent fiscal manager must balance several factors to make wise transportation decisions. He or she must maintain our current investments, plan for future growth, pay scrupulous attention to efficiency and quality construction, and reconcile spending with revenue.

In short, a prudent transportation budget is a balancing act.

Recently Governor Walker and Secretary of Transportation Mark Gottlieb released a 2017-19 transportation budget proposal. In this proposal, major interstate construction projects are delayed, causing some to claim harm to Southeast Wisconsin.

This new proposal is a departure from record borrowing levels seen in the last budget. An increase for local government road funding is a welcomed sight too.

For many years, big interstate construction projects in Southeast Wisconsin took a larger slice of the road budget. Past budgets froze funding for local roads while maintenance costs increased.

To make matters worse for local governments, majority lawmakers passed a law forbidding cooperation between counties. Lost efficiencies and rising costs meant locals were left with two choices: borrow or cut back on maintenance. Some did both.

Over the years, prior governors pushed to eliminate state transportation workers. Fewer employees resulted in private firms replacing state workers, often at higher cost.

In budget year 1987-88, spending on private construction engineers was only 8% of all construction-engineering costs. Ten years later, spending jumped to a third of all dollars spent on private construction engineers. By fiscal year 2009-10, three quarters of all spending on construction engineers went to private firms.

Data I analyzed from a 2009 limited-scope review by the nonpartisan Legislative Audit Bureau (LAB) showed a 68% cost increase per project over five years for projects that involved private engineering consultants.

Further, a 2009 report to the State Engineering Association found outside consultants didn’t save the state money; in some cases, private engineering firms cost up to 19% more than in-house state engineers.

I strongly support the move to fund our local roads along with smarter transportation spending. Let’s look for efficiency in-house. An easy first step is passing my bill to repeal the 2011 law forbidding local governments from collaborating on transportation projects.

No one can deny the money funneling into our Transportation Fund, largely gas tax and motor vehicle registration fees, has not kept up with the cost of maintaining our roads and bridges.

Governor Walker is ideologically opposed to raising taxes or fees, yet knows our transportation budget lacks the revenue needed. The prudent executive should not let ideology cloud important financial decisions. Some road delays may be in order, but cutting back on construction already in progress comes with a price tag.

User fees acknowledge the cost to maintain and improve services. For example, the state owns, or is a substantial owner of, over 700 miles of freight rail. In a previous budget, Secretary Gottlieb proposed charging a $10-a-rail-car fee for use of taxpayer-funded rail lines. The Governor failed to take up this modest charge. Taxpayers – you and me – continue to subsidize railroads use of our state-owned lines.

The release of the transportation budget is only the beginning of a long process. Budget debates in Madison will begin in earnest next spring and likely culminate with the passage of the 2017-19 budget by July.

Earlier this year the Joint Committee on Audit (of which I am ranking minority member) took the important step of directing the resources of the LAB toward a comprehensive audit of the Department of Transportation. I expect the release of this audit to coincide with the spring budget debate. The audit will add important nonpartisan information to our decision making process.

The transportation budget will be the biggest decision we face next year. Take some time to engage in this critical debate. We all have a stake in transportation – and we all must work together to find solutions.

Here’s to safe traveling!

For 50 years, the Legislative Audit Bureau has worked quietly behind the scenes monitoring funds and agencies to ensure state government delivers quality services.

MADISON - “Happy Birthday!” I told eighty auditors and other legislative leaders at a recent Capitol gathering. The nonpartisan Legislative Audit Bureau (LAB) recently celebrated 50 years of service to the people of the State of Wisconsin.

LAB is the agency that works quietly behind the scenes to ensure state government delivers quality services. The agency has earned high marks for its work in national circles and criticism from both sides of the aisle in its detailed depiction of problems and recommended changes to state government.

As described in the words of former State Auditor Janet Mueller, the LAB serves as “the Steward of the People’s Money.”

You might not have heard of the LAB, but they work methodically to ensure your tax dollars are well spent.

Half of the Audit Bureau team focuses on financial auditing. As a highly trained team of certified public accountants, these professionals are skilled in government accounting. They check and recheck records, and in some cases, must reconstruct records to review the accuracy of agencies’ reports.

The financial auditors are responsible for completing many audits required by state and federal law. Their work includes monitoring funds overseen by the State Investment Board; the State Lottery Fund; the State of Wisconsin itself and the Single Audit – a comprehensive accounting of all federal dollars flowing through state government. The details of the Single Audit are truly astounding as, thirty cents of every dollar the state spends is from Uncle Sam - with some programs larger. For example, forty cents of every transportation dollar spent is federal as is fifty cents of every health dollar spent.

Financial auditors answer questions like “How much money was spent?” and “Are adequate safeguards in place to assure money was properly accounted for?”

Program auditors make up the other half of the Audit Bureau team. They answer questions about state programs such as “How well is the program working?” and “How might the state improve service delivery?”

Program auditors often work closely with financial auditors. For example, the troubled Wisconsin Economic Development Corporation’s performance was examined thoroughly by both financial and program auditors in three separate audits.

Early audits of WEDC showed no clear budget or consistent accounting practices in an agency that distributes tens of millions in grants and loans and hundreds of millions in tax credits. Even the most recent audit found WEDC lost track of loans. Millions in other loans were written off when companies failed to deliver promised jobs. WEDC broke federal rules and, as a consequence, Wisconsin paid penalties. Remarkably, WEDC failed to independently verify that companies given tax dollars to create jobs actually did as they promised.

Sometimes the auditors do such a good job, state leaders want to get rid of them. I think of this as “Killing the Messenger.” For example, in the FY 15-17 Governor’s budget, he removed the requirement for LAB to financially audit WEDC. Thankfully the legislature replaced the requirement, and LAB will issue a new WEDC audit this spring.

Following the release of the third disturbing audit of the WEDC, two Assemblymen, Rep. Craig (R-Big Bend) and Rep. Jarchow (R-Balsam Lake) circulated a bill to abolish the nonpartisan Legislative Audit Bureau and replace the agency with partisan “Inspector Generals” to be housed in the very agencies they oversee.

Again, thoughtful lawmakers prevailed and the bill died. Wisconsin needs more nonpartisan oversight, not less. We need LAB’s steadfast efforts in evaluating the effectiveness and efficiency of state government.

Later this month, the Legislative Audit Committee, which I serve as ranking minority member, will meet to take up a new crisis in state government: the care of veterans at the Wisconsin King Veterans Home.

All citizens can contact the Legislative Audit Bureau through a toll free hotline (1-877-FRAUD-17) for citizens to report fraud, waste and mismanagement in state government.

Congratulations to State Auditor Joe Chrisman and his dedicated staff, and to former state auditors Jan Mueller and Dale Cattanach who helped make LAB the award winning team it is today. Wishing the LAB many more years of service as the Steward of the People’s Money!