SD18: a brief look at some of Scott Newman's positions on spending

[Update 3/21] On Friday, Ford Peterson provided the document Scott Newman referenced in his answer; one update that reference this material does not appear to have been posted and has been deleted by my software. I apologize to readers for that unintended delay [end update].

  I'll be looking later this week at Scott Newman's legislative and campaign record, but thought it might be worthwhile to check out some of the statements he made on the road to his endorsement by Republican delegates on Saturday.

One of the most readily accessible sources for statements for all four candidates who sought the Republican endorsement is a series of questions posed by conservative activist and GOP delegate Ford Peterson at MNPatriots. 

Here's a sample of Newman's stands:

Do you support the elimination of the “Prevailing Wage” rules designed to inflate the cost of payroll on state projects?

Newman: Yes. Prevailing wage rules hold costs artificially high on state contracts. They are based on a theory that because someone in a different geographical location has a higher wage therefore that wage is due on all government projects. This is something you would not see in the private sector because it is not based on sound business principles. In the past I routinely voted against minimum wage bills for the same reason.

Thus Newman not only opposes prevailing wages for taxpayer funded projects, but opposes the minimum wage as well. For a much different take on prevailing wages, check out the links at the Minnesota Building and Trades Council.

And then there's Newman's really curious statement about Minnesota's spending on education and welfare, that comes in answer to a question about government spending and employment:

5)      Are you prepared to support methods of reducing the overhead at the state level by eliminating services and the jobs related to these services?  An effective cost-cutting approach entails the elimination of tens of thousands of state jobs.  Are you prepared to lead that charge in an environment where the media and liberals in general are calling for the state to greatly expand its payroll?

Newman: Without equivocation, Yes and this question really gets to the heart of our spending problem. MN is the number one employer in this state involving thousands of government employees working for various agencies. As an attorney I have been involved in many cases of the government versus individuals and private businesses. I have been witness to the adverse effect of rules and regulation on our citizens and their ability to succeed in business. First we cut off the revenue because no bureaucracy can survive without taxpayer funding. I believe with the current budget problems, we have the best opportunity in a generation to do just that. Second, we systematically begin a program to repeal the thousands of pages of rules state agencies and departments thrive under. I have attached a budget handout to illustrate this problem. Note, in total dollars we spend more on welfare than we do on educating our kids. Built into that welfare budget are the salaries for the thousands social service employees throughout the state. Rhetorical question: Who’s on welfare?  [emphasis added]

The sentence in bold was especially interesting to me and I wish that Peterson had posted Newman's handout, because I can't find any source online that says that says Minnesota now spends more on "welfare" than on education, even when "welfare" is generously defined.

According to the Minnesota Management and Budget Office, an agency which is part of the Pawlenty administration, 29.3% of the state's budget for 2010-11 goes to health and human services, while 37.1% goes to K-12 education and 9.1% goes to higher education.

[Update: The editor at MNPatriots contacted Scott Newman about his source, and kindly sent along his answer. The document is here: State Expenditures –
All Operating Funds for the 2008-2009 Biennum. The document is available in a longer list found at Money Matters. Reports for State Expenditures--All Operating Funds were published and are available online in 2000 (FY00-01), 2003(FY04-05), 2005(FY06-07), and 2008(FY08-09). The final available online report is the one Newman gave to Peterson.

Apparently, the shift in total spending more from all operating funds on education to spending more on health and human serivces occurred between the 2000-2001 Biennum* ( 2000, page 6) and the 2004-2005 Biennum (2003, page 4).  I'll investigate what caused this change.

For more on the data, see below the fold* [end update]

A trifling goes to agriculture and vets' services, the latter of which might be considered "welfare."

I'm not being snide about the last point, and it's not my own. MPR published an AP report last fall, Minnesota among leaders in welfare spending:

Welfare spending in Minnesota is among the highest in the nation, according to new census figures, and it's been growing steadily for more than 10 years due to the rising cost of providing health care for the needy.

Nearly 23 percent of all state and local government spending in Minnesota during fiscal 2007 went toward services that fall under the Census Bureau's broad definition of welfare, according to the 2007 Census of Government Finances. Among states, that ranked behind only Maine at 24.3 percent and Rhode Island at 23.7 percent. . . .

. . .The bureau's definition of public welfare includes direct payments to people and payments to groups that serve the poor, but it also includes expensive health care programs, including Medicaid and medical assistance.

The bureau counts as welfare state payments for the Medicaid program, prescription drugs under the Medicare Part D program and many other health care programs for the poor. Public nursing homes, veterans homes and other institutions for the needy also are included. . . .

Perhaps Mr. Newman will post his handout on his campaign web site so we can all figure out why he has come up with such a different set of figures than the Pawlenty administration or the census estimate. 

The MN Patriots' site contains a couple more gems, which I'll look at in future posts.

*See below the fold for more information about significance of the federal funds and Minnesota state general fund.

Update March 21

Here's the explanation as best as I can tell: the governor's figures for 2010-11--and apparently those most often used when talking about the state's budget--refer to expenditures of the general fund, whereas the data set Newman used from several years back was from expenditures of all state funds during 2008-2009.

The report  Newman supplied explains the difference on the top of page 4 (emphasis added):

The allocation of all state funds by program areas is different from the more familiar charts that show the general fund only. Health and human service spending at 38.2 percent of the total expenditures is the largest program area. K-12 Education, which is the largest portion of general fund only spending, is the second largest area of the all funds expenditure budget at 27.3 percent for FY 2008-09. Health and human services makes up a larger share of the all funds budget compared to general fund only because of a large amount of federal fund spending in health and human services.

In short, the presence of federal funds for health and human serves, and the relative scarcity of federal funding for education (love those unfunded mandates), has created the difference. Moveover, several sources note that increasing health and human serves budgets are related to soaring health care costs and the rising expense of long-term care for the elderly.

As late as the 2000-01 biennum, the state spent more on education, regardless of whether a reader examined the general fund or all operating funds. From the 2000 report:

The allocation of all state funds by Omnibus Bill is different than when just the general fund is considered. Health Care and Human Services at 30.8 percent is the single largest part of the budget because of the large share of federal funds in that area. K-12 Education at 23.5 percent is the second largest area. If the three education areas are added together, they total 32 percent of the all funds budget.

I have to check with a couple of people I know during the coming week to see how much control the state legislators' and governor have over these funds. Certainly all funds need legislative approval but as the older report says, the nature of that approval varies. The report notes (see

Most discussions of state expenditures focus on the state general fund. This paper includes expenditure data for all the state’s operating funds including the general fund.  The general fund is the single largest operating fund and also the one with the most flexibility. Most expenditures from funds other than the general fund are limited to certain purposes that are usually related to the source of the fund’s revenues. . . .(page 1)

  A 2010 Legislative Review of State Agency Requests to Spend Federal Funds is online; this document explains the process:

A significant portion of the Minnesota state budget is made up of federal funds.
According to state law, those funds are deposited in the state treasury and can not be spent until appropriated. These appropriations are made in legislation and the Legislature has authority to review those funds. This paper outlines the process for legislative review of federal funds.

States are required to allocate funds (Maintenance of Effort or MOE) toward what most people would conventionally consider "welfare," under the Temporary Aid to Needy Family act, according to the U.S. Department of Health and Human Services web site. Minnesota House Research keeps a page which discusses Health and Human Services issues, though the information about Minnesota's MOE match for TANF funds maybe dated.

What has caused the health and human services budget to take a larger percentage of the state expenditures?  The answer is probably found in increased health care costs. In 2009, the Star Tribune reported in Welfare checks haven't increased with cost of living that the size of checks to individuals had not increased for years, and the state Department of Human Services was struggling with the cost of medical assistance and long-tern care for the elderly:

The Department of Human Services has not advocated for an increase, he said, in part because it's struggling to keep pace with funding for the soaring cost of its medical assistance program and long-term care for the elderly.

And hence, we're back to the issue of defining "welfare." What specifically in the health and human services spending is Scott Newman talking about when he says "welfare", a word that carries a great deal of emotional freight? [end update]