August 2002

Aug. 29, 2002
(Distributed to Kansas newspapers Aug. 26, 2002)

The risk of a long fuse

There's a good chance, Railsters figure, that if you put a long enough fuse on a fire cracker, it will sure enough explode just when you don't want it to.

The Kansas Legislature is better at lighting short fuses and running than being handed a long-fused problem to mull and consider and weigh and assess and appoint one or two blue ribbon task forces to study.

Well, it got handed a long-fused problem last week, lit the fuse and now we're curious just what's going to happen with it.

The problem: the Kansas Public Employees Retirement System's poor earnings the last couple years that make the scheduled small increases in state (that's the employer) contributions insufficient to meet the promises that the system has already made to its members. Remember, KPERS is a defined-benefit system, which means that the first day on the job, KPERS has a defined obligation to employees who stay on the job until they retire and start collecting pension benefits.

Remember, also, that KPERS isn't just a state employee deal; there are almost a quarter million Kansans who contribute to KPERS pensions and who want the retirement checks that they have coming to them. Those quarter-million workers are spread out border to border, including not only workers for the state, but for cities, counties, school districts...just about every government job in Kansas.

So, what's the problem? Well, nothing that about $1.8 billion wouldn't fix.

KPERS had the same couple bad years for earnings that everyone else in the stock market had, and while you neighbor might have seen losses on investments, chances are good that the retirement benefits of a quarter-million Kansans aren't riding on your neighbor's stock-picking prowess.

That's why there is a need to do something with KPERS...maybe in the upcoming legislative session, maybe a session or two down the road, but something is going to have to be done. KPERS officials say it maybe 30 years before the pension fund actually doesn't have enough money to send out checks to retirees, so the short-term outlook is no real problem...but that's an awful long fuse and it is easy to do nothing for, say, a decade or two...

The stock market losses appear to be just straight-up losses. Stocks went down. There doesn't appear to be any of that 1980's stuff, you remember, buying into companies that friends of friends of KPERS board members owned, or financing real estate speculation that was shaky. Nope, it looks like just good old-fashioned losses on investments. When the market went down, nearly everything in the market went down, including KPERS' stuff.

Solutions? There are a couple of plans to boost the KPERS fund balances so that at some time in the future, there is enough money there to pay all the pension benefits that members automatically become entitled to.

One is just to pony up more money from the state...but that money comes from the same tax and fees pot that all other state obligations are paid from, and that means KPERS nosing around in the same trough from which schoolteachers, prison guards, state agencies and social programs all feed.

Anyone think a problem with a 20-year long fuse is going to stand much chance in that trough? We didn't think so.

There are other possibilities, including reformulating the pension for newly hired workers, essentially creating a two-tiered state pension plan which might save some money, but takes the edge off of the state being able to justify somewhat lower than usual salaries in return for a nice pension.

Oh, and the state could just borrow money--sell bonds--and use the proceeds to soup up the retirement fund, hoping that the fund's earnings will outstrip the cost of borrowing money. Chances don't look real good there, unless someone decides to break with tradition and sell the bonds somewhere that interest rates are very low...like Japan. And that's out-of-the-box thinking that Railsters doubt will find a lot of takers among Kansas legislators, who of course don't quiz out for their jobs.

This might be a good one to watch over the next several years. There are lots of possible solutions, lots of time to consider them, but more pressing short-term problems to be dealt with.

That's the problem. Will anyone remember the one firecracker out there with the longest fuse?

Aug. 22, 2002
(Distributed to Kansas newspapers Aug. 19, 2002)

A little perspective...

You'll have to excuse some of us old hands at the Statehouse if we didn't run to the window ledges when Gov. Bill Graves announced last week that he was going to tell state agencies that they can't spend $41 million of the more than $4.6 billion in appropriations they have received from the 2002 Legislature.

The headline type on some newspaper coverage of the announcement might have been from the size reserved for real news: "Pope Elopes with Anna Nicole Smith" or "Hillary Clinton Doesn't Want to be President," while the news underneath it was a little on the slim side.

And, most folks who live in and around the Statehouse were expecting a budget allocation (that's a reduction of whatever amount the governor wants to make without having to check with anyone first) of $100 million or more.

After all, he said he's expecting state revenues to be down by $100 million in the fiscal year which started July 1, so Graves just made a down payment on the bill, sorta like paying your bar tab at the bar before being led to your table in a restaurant.

Elementary and secondary education, of course, was the focus of news stories. The State General Fund will pay school districts about $17.5 million less than the $2,328 million they were expecting when the Legislature went home in May.

Now, let's remember to factor in the roughly $12 million--the $20 on the base that we heard about all session--that school districts are going to receive from another fund, not the State General Fund from which Graves made his cut, and school districts are going to be down about $7 to $10 per head of pupil from where they were a year ago. All of this is serious, of course, but very few school superintendents or school board members across the state thought they were ever going to see the $20 on the base in the first place.

They knew the economy was bad, that the state was in financial trouble, and that funding for K-12 education is the biggest chunk of state spending.

So, figure that school districts, instead of getting $20 more per pupil, get $10 less per pupil than last year. This is not the sort of stuff that should send people to the window ledges or result in rending of garments, though gnashing of teeth is probably appropriate.

With the cut in money to elementary and secondary schools, who looks the smartest? Kansas-National Education Association, which for the past couple weeks had been urging its local teacher unions to get contracts ratified with their local school boards. All but maybe 50 did, and the small raises that those teacher unions locked up are now part of each school district's budget.

Districts which have contracts with teachers will have to find somewhere else to cut their budgets...somewhere besides teacher salaries.

That's smart. Maybe some teacher unions settled for a few bucks less than they'd have liked, but at least theirs is secured. The remaining 50 or so districts? Well, administrators bring the allocation cut to the bargaining table with them and will probably be able to freeze, or maybe increase only a dab, schoolteacher pay.

There is much to be said for getting while the getting is good. The getting by schoolteacher unions got worse after the allotment announcement.

So while K-12 got hit, maybe for a .25 percent budget cut, most of the rest of state agencies who feed from the State General Fund are going to see 2 percent reductions. That's actually quite a bit in already-lean budgets, but survivable.

Key to the whole allotment procedure is that Graves didn't cut enough spending to give the incoming governor any real breathing room. If Graves figured that the state is going to be $100 million light in the current fiscal year, it would have been nice if he'd found ways to cut that $100 million, so the incoming governor could concentrate on a budget for the first full fiscal year of his or her term, not have to figure out how to pay the last half-year's rent on the office.

Graves said he presumes the incoming governor will have his or her own priorities for the remainder of the current year, so he's just left it up to either Democrat Insurance Commissioner Kathleen Sebelius or Republican State Treasurer Tim Shallenburger to put the finishing touches on the current fiscal year budget after one of them takes office.

Railsters are sure that whoever is the next governor will appreciate that.

Sort of like buying a house with only three walls...but letting the new occupant choose the color of the paint...

Aug. 15, 2002
(Distributed to Kansas newspapers Aug. 12, 2002)

Targets...

There are two candidates on the statewide ballot who, for very different reasons, have become targets for the opposite party, and may figure heavily in who winds up as Kansas' brand new governor next Jan. 13 at about noon.

One, of course, is GOP attorney general candidate Phill Kline, Shawnee, who soundly defeated State Sen. David Adkins, R-Leawood, for the GOP nomination for the state's top legal post.

The other? Surprisingly, it's Sen. David Haley, D-Kansas City, who ran unopposed for the Democratic nomination for secretary of state. He's smaller fry, but represents an interesting case of a guy running for an office who either doesn't know what the office does, or just wants a job where you can pull into your parking spot at 10 a.m. and, if the mail is light, be gone by noon.

Kline, of course, emerged from the nastiest of TV advertisement wars and won the small-turnout primary election. Very conservative Republicans often emerge victorious from such battles, and Kline did. Nothing wrong with that, except that in a general election when everyone gets to vote, he brings ultra-conservative baggage with him that makes him and his friends suspect to less conservative Kansans...including Democrats, unaffiliated voters and Republicans trying to assemble behind their party's general election slate.

And that brings us to the gubernatorial race between Democrat Insurance Commissioner Kathleen Sebelius and Republican State Treasurer Tim Shallenburger. Sebelius is a pretty conservative Democrat, which is one reason she's in public office. She's also canny and has a good feel for the state's psyche.

Subliminally, Sebelius is already linking Shallenburger and Kline together with her television ads, and the blur between her race against Shallenburger and her race against Shallenburger and Kline will work to her advantage.

Anyone see a Shallenburger yard sign in any corner of the state without a Kline sign nearby? Railsters didn't, either.

Now, Shallenburger is a pretty conservative guy, of course, and who knows what the mood of the state's voters is going to be in November. Maybe the economy will still be struggling, maybe mid-year budget cuts will have been made, maybe people will actually be feeling a cash crunch in their homes and be ready to vote for a guy who says he won't raise taxes. That could happen.

But Shallenburger isn't as conservative on social issues as is Kline, and if the economy gets even a little breather, attention will turn to those social issues such as abortion, of course, and Kline vows to make them harder to get in Kansas.

Shallenburger already is conservative enough on abortion for many Kansans, seeing a loophole or two that he says might be fixed, but realizes that the U.S. Supreme Court is in charge of that issue, and he isn't going to spend a lot of time on it. But the tie-in between the guys whose yard signs are just inches apart in most yards paints them both with Kline's more conservative view.

Campaign against one, campaign against both, campaign against the top of the GOP ticket and hope that fear of Kline rubs off on Shallenburger--that's a practical way for Sebelius to go. Watch to see if Shallenburger opens some distance between his race and Kline's race...

Oh, Secretary of State? Now, that's not a race that has the crowd buzzing, but it is worth noting that at some point, Secretary of State Ron Thornburgh, who was unchallenged for the GOP nomination for the job, is going to mention that Haley hasn't bothered to conform to the most basic of campaign rules in Kansas. Haley still hasn't named a treasurer for his race for the job. This is months after the date on which he should have by state law.

Is this a big deal? Actually, it is. You see, the Secretary of State's office is where candidates file the name of their campaign treasurer, and the campaign treasurer files the reports that show how much money the candidate has received, from whom, and what it was spent on. It's the ground-leveler among candidates. It is where the public finds out whether a candidate is a wholly owned subsidiary of some company or another, or whether the candidate actually has some support from the general public.

And if the Secretary of State who is in charge of receiving campaign finance reports doesn't file his own--and Haley hasn't yet, also past a deadline--why would any candidate file 'em? It turns out to be an intelligence test that we probably don't want to see played out.

Now, can top-of-the-ticket Republicans make much of Haley's inattention?

Only broadly, but it provides just a little taint that Republicans can wash over the entire Democratic ticket. At some point in this campaign, Democrats are either going to have to get Haley to follow the state law, or start saying, "David Who?" when asked.

Aug. 8, 2002
(Distributed to Kansas newspapers Aug. 5, 2002)

Puzzling...

OK, you want an example of how the state is trying to save money? It's just approved a rule and regulation based on a state law passed by the Legislature and signed by the governor to release as many as 100 of the state's prisoners from prison.

Now, that might not sound like a great idea in this election cycle, but actually, it represents some hard thought given to a dusty corner of the budget for the Kansas Department of Corrections.

What's the saving grace of this plan to release people from prison?

The potential release candidates are too old, sick or deranged to present any danger to the public.

The Secretary of Corrections, after reading results from health care professionals and those with daily contact with the convicts, may forward their names to the Kansas Parole Board, which after more study may release the convicts to hospice groups, to nursing homes, to facilities which are designed to care for those with debilitating mental conditions such as Alzheimer's Disease.

And the upside for making those releases is to get them into hospitals or nursing homes where the federal government will pick up about 60 percent of the cost of their care in what are predicted to be the last few weeks or months of their lives.

The state pays the medical bills of prisoners, but once they are released, they qualify for Medicaid, the federally subsidized health program for the poor.

That's the level of cost-avoidance that the Legislature and the Department of Corrections is looking for in an attempt to use state tax dollars that flow into the Department of Corrections in the most efficient manner.

Parole Board members say that the early release--almost benevolent release--of convicts who are unable to care for themselves, let alone cause a safety risk to others, will save the state money. And, Parole Board members say, there are nursing homes and hospitals throughout the state which will take these prisoners and care for them until they die--at rates that Medicaid will pay.

Railsters, the hardy band of government- and politics-watchers, frankly don't have any idea of whether this is a good thing to do.

It is surely going to be upsetting to some elderly convicts with mental disorders who are suddenly moved from familiar surroundings to new locations, with new people to care for them. And Parole Board members say that the illnesses that some of the convicts suffer from are terminal and that some of the prisoners are so incapacitated that they can't hurt anyone or even care for themselves.

But the Department of Corrections isn't interested in having these convicts die in prison and isn't interested in participating in that statistic that says that the majority of health care expenses run up by convicts--and non-convicts alike--occur in the last few weeks or months of their lives.

If there's a way to move the convicts who are too sick or injured to cause any more problems out of prison and into a setting where the state will wind up paying only about 40 percent of the cost of care during the last weeks or months of the convicts' lives, well, D of C is interested. The remaining 60 percent of those convicts' health care costs? Well, that will be on the public tab, too, but more on the federal government's tab and less on state government's.

That's cost-shifting that benefits the Department of Corrections budget and the state general fund budget which is made up of Kansas taxpayers' dollars.

You are going to have to figure out whether this is a good thing to do.

The plan certainly represents scrounging around through budgets with the goal of reducing costs for state government. And it might even be an example of looking for novel ways to save the state money.

When most Kansans think of stuff that the state spends money on that is probably unnecessary, they think of parking garages or Indians on the Statehouse dome, or maybe keeping Highway Patrol cars on the road a few more months...not moving the sick, the mentally ill or the handicapped people out of prisons and into the nursing homes or hospitals where our families go for care and treatment.

This plan saves money. They're convicts, after all. But they are near death and we're wheeling them around trying to find the best deal we can get on someone to watch them until they die.

This has a funny feeling to it.

Aug. 1, 2002
(Distributed to Kansas newspapers July 29, 2002)

Toss out conventional wisdom

OK, we Railsters like to believe that we have a special touch in predicting election outcomes, a feeling in our bones that is closely attuned to the pulse of Kansas voters.

But this may be the year that all the conventional wisdom about the election outcomes across the state may be off-center because of the state's economic problems.

Take, for example, western Kansas, long the home of farmers and ranchers who are grizzled veterans of the worst that Mother Nature can hand out. This year, with the drought only intensifying, candidates doing their duty door-to-door or at coffee shops and lunch counters report that after two failed crops and a third that doesn't look good, people are getting edgy.

With little in the way of new money coming into many small towns, voters are looking short-term for fixes...for what will bring some money into their pockets and their communities quickly. And, what won't be draining what money is there into Topeka. This could be a conservative year out west, where voters are looking for relief quickly.

In factory and service towns, such as Wichita and the Johnson County area, big layoffs from aircraft plants and their support companies, and in the telecommunications industry in Johnson County, mean that there are families seeing less money flow through their checking accounts than in recent years.

Capital gains? Look at Johnson County, where one would suspect that the majority of the state's profits on stocks and mutual funds and the majority of employer stock-fueled 401 (k)s reside. Things aren't good there.

A local sales tax proposal that would divert millions of dollars of revenues to Johnson County school districts is held up as the way for the county to continue its education-based economic sizzle. But that voter proposition isn't a done deal yet, and voters are pretty fickle in the east...where weather becomes a factor and the advance voting calendar was shortened by a week due to uncertainty over congressional reapportionment.

This may be a year when the results of Tuesday's elections are difficult to predict. The conventional wisdom, of moderate Republicans out west and of progressive, spend-money-to-make-money Republicans in Johnson County, doesn't perform as expected.

What's all that mean? A couple things, most likely. There may be more no-new-taxers elected out west, and some of the enthusiasm for taxes for schools in Johnson County may be waning. Maybe the relative levels of concern will be the same, but more people who don't want any new taxes will make their way to the polls. We may see a different range of voters this election than just two years ago, when the state's financial picture was robust, when all things seemed possible.

Since most of the contested primary elections are between Republicans, we may see that party's choices become more conservative, and that conservatism may hold through the November general elections, or something might turn around in the next three months that will give Democrats a chance to become the moderates that many Republicans were looking for in the primary.

Kansas voters are predictable in good times. In bad economic times, well, we really don't know from recent history.

The excitement for the election seems to be building late in the campaign season and there will likely be enough decisions made in the next couple days to determine the outcome. Just last week, nearly half of voters in the GOP gubernatorial primary hadn't made up their minds yet, and the barrage of television advertising and ads in weekly newspapers across much of the state will turn some voters on or off.

If you're looking for conventional wisdom, bring your lunch. This isn't going to be a conventional primary election.

But, it's nothing that a couple days of steady rain couldn't fix.