The Effects of Budget Shifts - Essay Example

RUNNING HEAD: EFFECTS OF BUDGET SHIFTS TO ANTI-TERROR The Effects of Budget Shifts: From Routine Law Enforcement Functions to Anti-Terrorism Programs Name School The Effects of Budget Shifts: From Routine Law Enforcement Functions to Anti-Terrorism Programs On September 11th, 2001 America lost its innocence. No of us, in our lifetimes, had ever known the insecurity that we collectively felt that day. We had believed until that point in time we were safe and secure. We knew that war and killing was happening in the world, but it was never here on our own shores. None of us will ever forget what we were doing at that precise moment when we heard that the tower had been hit. It will stay etched in our minds forever. As the weeks and months passed, we saw the rubble being removed from where the towers once stood. None of us at that point imagined the far reaching effects of that day. The concrete and twisted metal may be gone now from Ground Zero, but we are still left to clean up the remainder of the rubble that was left in its wake. We are faced with too few dollars and too much to do. 9/11 and its aftermath has forced us to shift from concentrating on routine law enforcement functions to that of developing and sustaining expensive anti-terrorism programs. The already strained California budget needs to address both funding for anti-terrorism and meeting the needs of its citizens. The question becomes how do we balance both and how has this shift impacted the people of California. Background Research/Public Opinion At the onset of researching this topic it was necessary to understand the current climate of the California residents and how they view the impact the increased anti-terrorism initiatives have had on their lives. I have found numerous articles addressing the current budget crisis as it relates to anti-terrorism program expenditures. Following are several examples representing the climate since the initiatives have been launched. September 5, 2004 an article appeared in the San Francisco Chronicle. It stated that "officials have used federal anti-terrorism money to purchase equipment and cover police work not directly related to the war on terror. As a result, nearly half of California's security funding through the last fiscal year, about $128 million, went to areas outside the five counties with the state's top 10 terrorist targets. Almost $8 million flowed to counties with no targets whatsoever." (Newspapers: California, n.p.) The article went on to say that there were no policies in place to direct local agencies on how appropriated money should be spent. Even more frightening the articled continued "Although federal spending for homeland security is expected to climb over the next five years to $27 billion, emergency first responders could require as much as four times that amount, experts say. But Congress may not make that available if it determines that state and local officials have spent the funding on needs other than protecting against terrorism." (Newspapers: California, 2004, n.p.) With spiraling costs and a lack of direction by federal government on what they consider appropriate, expenditures could force California further into financial crisis. It appears that there is a severe lack of coordination in the dispensing of federal aid to states in support of anti-terrorism programs. It was reported in The Daily Californian October 6, 2004 that "The Department of Homeland Security has made more than $175 million in grants available to California in 2004. But some local emergency response officials said red tape attached to the department's grants has needlessly hindered their work." (Wohlsen, n.p.) To make matters worse the article said that often agencies must first pay for the anti-terrorism programs or equiptment out of their own budget and then wait for reimbursement from the federal government. This often creates additional problems as the amount of money needed often exceeds the funds that these agencies have. A December 11, 2002 article appeared in the New York Times regarding California's budget crisis. "Gov. Gray Davis announced a series of steps on Friday intended to save $10.2 billion to plug a deepening hole in the current budget and to serve as a prelude to even deeper cuts in next year's. Mr. Davis proposed freezing pay for state workers and warned of large-scale layoffs. As many as 200,000 people could lose their health coverage under the state Medi-Cal program. Payments to public schools and universities could fall by more than $3 Billion."(Sparkman, n.p.) Additionally, state funding on public schooling would be reduced which would force school districts to create larger class size. California is already in the lower 25% of all states in spending per pupil in public education. The ever increasing expenditure of state funds on anti-terrorism programs will on exacerbate the problem. The Christan Science Monitor reported that "California has borrowed heavily to finance this year's budget, allowing $8 billion in debt to roll over until next year. Borrowing to cover debt is also increasingly expensive, as the state's bond rating deteriorates. That means either cutting spending by that amount - about 8 percent of the state's $100 billion budget - or reducing outlays on education, health, welfare, prisons, and other services." (Wood, 2003, n.p.) There needs to be a balance in programming cuts and also meeting the anti-terrorism programs required by federal mandate. Removing social programs such as funding for medical insurance and public education will only cause future deterioration. The 2003-2004 California State Budget proposal again called for dramatic cuts in social spending and elimination of state jobs. This budget called for the Tourism Division of the state to be eliminated. Along with the other $34.8 billion dollars in cuts it proposed "call for employers to pay the entire $74 million operating budget of the Division of Workers Compensation, through a special assessment on workers' comp policies. Currently, employers pay 20% of the DWC budget." (State Budget, 2003, n.p.) One of the most important issues to California residents appears to be the crisis in public education. "California's enormous K-12 public school system is mired in the worst funding crisis in its history, forcing districts throughout the state to impose cuts so deep that academic achievement likely will suffer." (Fouhy, 2004, n.p.) No area or district in California seems to be immune from the looming school disaster. Rural and urban schools alike are suffering. Sports programs have been eliminated, libraries closed, massive employee layoffs and still districts are struggling against insolvency. The reduction in State funding only increases the crisis. The Public Policy Institute of California (PPIC) released a 2003 poll of California residents regarding the looming budget deficits. Some of the major findings are included here to demonstrate the climate of the residents. The results of the survey are quite pessimistic. Californians by a wide margin say the economy and jobs (28%) are the biggest problems facing the state, followed by the state budget and taxes (15%), education and schools (11%), and war and terrorism (10%). An overwhelming majority (71%) of state residents say they expect bad times financially in the coming year, compared to 47 percent February 2002. More Californians today (60%) than in November 2002 (47%) believe their region of the state is in an economic recession. Economic angst is also taking its toll on residents' overall perceptions of the state: 60 percent say California is headed in the wrong direction, while only 28 percent believe it is headed in the right direction. One year ago, 56 percent said the state was headed in the right direction. (PPIC, 2003, n.p.) With such a bleak outlook, Californians still place a high level of priority on social spending programs and foremost education. The problem lies in how to meet the needs of anti-terrorism programming without hampering social spending programs "Nearly all Californians (95%) say that the state's budget deficit is a big problem (74%) or somewhat of a problem (21%). Most residents (91%) are also very concerned (63%) or somewhat concerned (28%) that the fiscal crisis will cause severe cuts in areas like education, health care, and the environment. Consistent with these priorities, half of Californians (52%) say K-12 education should be the top priority for state spending, followed by health and social services (25%), higher education (7%), roads and infrastructure (6%), and corrections, including prisons (2%)".(PPIC, 2003, n.p.) California Budget Findings In a 2002 California State Association of Counties Legislative Bulletin it was reported that since the September 11th attacks the counties have spent $90 Million in unexpected expenses to fund the war on terror. The bulletin went on to state the crisis is greater as California was already facing a budget deficit, the expected expenses of funding anti-terrorism programs and rising social services caseloads.(Keil, 2002) The 2002 - 2003 California Governor's Budget Summary stated that to date California had received $350 million in federal funds to help offset anti-terrorism costs. Of that amount approximately $129 million has been distributed to the California Highway Patrol, $24 million to Caltrans, almost $10 million to reimburse the military and $20 million to various other state agencies for anti-terrorism efforts. The state spent $1.85 million dollars to launch the California Anti-Terrorism Information Center, a branch of the Department of Justice. "This Administration has provided significant resources to local governments for public safety purposes, including, but not limited to, funding for front-line law enforcement personnel, juvenile crime prevention programs, and high-technology grants for local law enforcement, as well as funding to fight high technology crime and identity theft and to reduce methamphetamine offenses." (Governor Budget, 2003, pg. 7) According to the California Legislative Analyst's Office the California budget crisis seems to be getting better. The projected 2006 - 2007 Budget's projections are better now than they were several months ago. Originally with a projected shortfall in 2006 - 2007 of approximately $10 billion dollars, the outlook now has improved substantially due to increased revenues and savings from last year's budget spending. Due to the facts, the office has made the following projections concerning the 2006 -2007 budget: The current year will end with a reserve of about $5.2billion, up by nearly $4billion from the 2005-06 Budget Act estimate. This large carryover reserve will be more than sufficient to keep the state's budget in balance in 2006-07 without any new program reductions or added revenues-even though current-law projected expenditures exceed projected revenues by $4billion during that year.(Fiscal Outlook, 2005, n.p.) The report continues to show areas of social spending in the proposed budget as follows: K-14 Proposition98 (General Fund) spending is projected to increase steadily at an average annual rate of 5.7percent throughout the forecast period. For the latter three years of our forecast, slowing K-12 school enrollments and healthy growth in local property taxes trigger a Proposition98 formula ("Test 1") that requires a fixed percentage of General Fund revenues be spent on K-14 education. This leads to average annual increases of 6.4percent in General Fund K-14 spending levels in those years. University of California (UC) and California State University (CSU) are forecast to grow at an average annual rate of 3.7percent (combined), reflecting full funding of projected enrollment and inflation. Medi-Cal local assistance is are projected to grow at an average annual rate of 5.8percent. This reflects continued increases in caseload costs and utilization of medical services, as well as various one-time changes in program costs. Our estimates also take into account the fiscal effects of the new Medicare prescription drug benefit, which initially results in significant net savings but generates net costs later in the forecast period. California Work Opportunity and Responsibility to Kids (CalWORKs) spending is projected to increase by an average of 7.5percent over the forecast period. This significant increase reflects the combined effects of COLA costs (including retroactive payments for the October 2003 cost-of-living adjustment (COLA) stemming from the Guillen court case), inflationary adjustments for county administrative allocations, and the exhaustion of federal carry-over funds to support program spending. Supplemental Security Income/State Supplementary Program (SSI/SSP) spending is projected to increase at an average annual rate of 6.1percent, reflecting statutory COLAs and moderate growth in caseloads during the forecast period. In-Home Supportive Services (IHSS) spending is projected to increase at an average annual rate of 8.1percent. This rapid growth reflects both increases in caseloads and service hours, as well as wage increases for IHSS workers. Department of Developmental Services (DDS) is projected to increase at an average annual rate of 9.1percent over the period, reflecting continued increases in caseloads and the cost-per-client served by the state's 21 Regional Centers. Department of Corrections spending is forecast to increase at an average annual rate of 3.7percent over the forecast period. The growth during this period takes into account the final year of pay increases related to the Unit 6 bargaining agreement approved in 2001, health care costs, as well as modest growth in the prison inmate population. Debt-service expenses for general obligation and lease-revenue bonds are projected to increase at an average annual rate of 9.1percent, primarily reflecting annual sales of somewhat over $6billion in currently authorized General Fund-supported debt for capital outlay purposes. (Fiscal Outlook, 2005, n.p.) From examining the information it appears that social spending while showing most gains is not necessarily keeping up with inflationary rates in all cases, but it does appear that with increased revenues and savings from the previous year's budget, the forecast is not as bleak as expected. Future spending on public education continues to be a problem. The proposed spending on Medi-Cal for 2006-2007 is expected to remain steady with the funding amount of this year's budget, approximately $13 billion. "General Fund spending for the Cal Works program is estimated to be $2billion in 2005-06, a $110million decrease from the prior year. We project spending to increase by $636million in 2006-07. Following a modest decrease ($160million) in 2007-08, we project that spending will increase by an average of about 5percent each year, reaching a total of nearly $2.9billion in 2010-11." (Fiscal Outlook, 2005, n.p) .Figure1 ((Fiscal Outlook, 2005, n.p) Solutions in 2005-06 Budget (In Millions) Program Savings Proposition98a $2,994 Social services 455 State operations 100 Property tax administration 60 Employee compensation 40 Other 496 Subtotal, Program Savings ($4,145) Funding Shifts Retain Public Transportation Account spillover $380 Federal funds for certain prenatal care 192 Tideland oil revenues 157 Subtotal, Funding Shifts ($728) Loans and Borrowing Refinance tobacco bonds $525 Loan from Merrill Lynch for Paterno lawsuit settlement 361 Subtotal, Loans and Borrowing ($886) Revenues Increased tax compliance $94 Total $5,853 Detail may not total due to rounding. AConsists of $1.823billion in savings in 2004-05 and $1.171billion in savings in 2005-06. BThis amount is net of 2005-06 General Fund repayments on the $428million loan. In reviewing the 2005 - 2006 Budget it was noted that although budget shortfalls are smaller than previously expected they still exist. The projected budget deficit for the current is now $9 million dollars. The above table details how the projected deficit will be eliminated. In the 2004 - 2005 Budget approximately $4.7 billion of the savings came from reduction in education and social services spending. Nearly of that $2.3 billion was realized in not increasing the funding level for K - 14 education. Other social programs receiving reduced spending included: a 6.5% decrease in Cal WORKS, the elimination of Cal WORKS grant COLA, SSI/SSP COLA suspension, the elimination of the senior citizen's property tax assistance program and reductions in the senior citizens' renters assistance program. Additionally social service programs for specific prenatal care services would be paid for out of federal funding and the allocated state funding would revert to the general account. Recommendations It is difficult to judge at times what is best is best for California residents. On one hand there is the need to adhere to the new regulations regarding anti-terrorism. What I did discover through researching public opinion via newspapers and polls, the citizen's of California are very concerned about retaining quality social service programs. Additionally, funding for schools continues to be a major priority. I did note that with the vast amount of money spent to date on anti-terrorism programs, the majority of the citizens do not feel totally safe with the measures that have been taken. Additionally, there is rising concern that the anti-terrorism programs are becoming to intrusive and have the potential for infringing on personal liberties. If throughout this all if there was one major recommendation I could make it would be to organize the various agencies and departments at all level's in California government. Through completing this research over and over I saw duplication of services in too many instances and, in my opinion, wasteful; spending of funding ear marked for anti-terrorism measures. This coordinated effort would help bridge the gap in reducing the budget deficit issues. This may help reduce the quandary over where to direct the dwindling dollars available. Also, better control over where the federal anti-terrorism dollars are going would alleviate much of the problem. After several years of buy, buy, buy the 'hard' dollars have been spent. If some type of governing body could monitor the federal funding money this federal money could be funneled into the 'soft' issues now including salaries. This could ease some the burden on the state with a pay out of salary for certain employees directly from federal funds. Conclusion Although the California budget appears to be in much better condition now than it has been in recent years. There is still a long way to go. Cuts have been made to social service programs, often involving those who can least afford it. Protecting our shores through a strong anti-terrorism initiative is also necessary. Further study into determining how to achieve both a strong anti-terrorism program and a complete social services program is warranted and meaningful. Works Cited "California's Fiscal Outlook LAO Projections 2005-2006 through 2006-2007". Nov. 2005 Legislative Analyst's Office. State of California, Retrieved 30 Nov. 2005 from . Fouhy, B. "Economic, Political Factors Put California Schools in Crisis." 9 Apr. 2004. North County Times: The Californian. Retrieved 30 Nov. 2005 from . Governor's Budget Summary 2002 - 2003. "Assuring Public Safety" 2003. California Keil, S., "California's Budget Crisis." 2003. Legislative Bulletin. California State Association of Counties (CSAO). "Newspapers: California Governments Misspent Anti-Terrorism Funds." 5 Sep. 2004. The San Francisco Chronicle. Retrieved 1 Dec. 2005 from . "PPIC's New Statewide Poll Shows a Gloomy Californian Populace." 27 Feb. 2003. Capitol Hill Bulletin, 10:4. Retrieved 30 Nov. 2005 from: . Sparkman, J. "Davis's Alarming California Budget Crisis." 22 Dec. 2002. ChronWatch Founder, Retrieved 2 Dec. 2005 from . "State Budget Crisis Hits Lodging Industry." 20 Jan. 2003. California Lodging Industry Association. Retrieved 30 Nov. 2005 from: . Wholsen, M. "Homeland Security Conference Targets Bay Area Anti-Terrorism Debates Anti- Terrorism Strategies." 6 Oct. 2004. The Daily Californian. Retrieved 1 Dec. 2005 From . Wood, D. B., "California-size Budget Mess Faces Governor". 2003. The Christian Science Monitor. Retrieved 30 November 2005 from . Read More