Is Mississippi in Its Best Financial Shape Ever?

State revenue collections are running ahead of target. The state rainy day fund and other reserves are full of cash. Agency budget cuts appear to be behind us. Pointing to all this, Lt. Gov. Tate Reeves said “Mississippi is in our best financial and fiscal shape in our history.” Speaker of the House Philip Gunn chimed in saying, “This is the result of conservative practices over the last seven years.” That seven years covers the tenure of Reeves, Gunn and Gov. Phil Bryant in their current leadership positions.

So, all is good, right?

Well, not so fast, according to a column Bobby Harrison wrote last week in Mississippi Today. The state’s financial condition, he said, is debatable. And debated it will be during this year’s election bombast.

Here are some tidbits that will add to that debate.

Two key indicators of financial health are debt levels and debt trends. Reeves, Gunn, and Bryant took their current leadership positions in January 2012. They inherited the state’s existing level of total bonded indebtedness, which was $3.8 billion on June 30, 2011, and the existing unfunded pension liability at PERS, which was $12.3 billion. During their tenure total bonded indebtedness increased to over $4.2 billion and PERS unfunded pension liability surged to $16.6 billion.

That’s over 10% growth in bonded indebtedness and nearly 35% growth in PERS unfunded pension liabilities. Credit rating agencies Moody’s and Fitch took notice, additionally PERS had to jack up the rate employers contribute. Debt and unfunded liability levels and trends surely don’t qualify as the best ever.

Another key indicator of financial health is revenue growth in comparison to expenditure growth. State revenues, as reported in the State Auditor’s Comprehensive Annual Financial Report, grew from $15.0 billion in FY 2012 to $16.1 billion in FY 2017. Over the same period expenditures grew from $15.5 billion to $16.9 billion. (The 2018 CAFR is not yet published.)

So, revenue grew 7.3% while expenditures grew 9.0% during our current leaders’ tenure. That seems upside down.

One more indicator of financial health is the condition of essential infrastructure as measured by deferred maintenance estimates. (Deferred maintenance refers to needed repairs to facilities and equipment that are not made when they should be.) The state does not provide any overall data on deferred maintenance related to essential infrastructure. However, we do know there is a huge shortfall in funding available for critical road and bridge repairs, estimated at over $6 billion. The American Society of Civil Engineers estimates Mississippi’s drinking water and wastewater infrastructure needs top $10 billion. And more millions are needed for school building repairs. All this is noticeably less than optimum.

So, while some things are looking up others are not, so let the debate begin over the condition of state finances.

P.S. The State Auditor publishes an annual report entitled “Expenses and Appropriations of the Mississippi Legislature.” Reeves and Gunn control legislative expenses. The 2011 report showed the total cost for operating the Legislature, which included a special session, was $18.5 million. For 2018, without special session expense, the cost was $24.1 million, a jump of 30%. Key increases for legislators were out-of-session per diem, mileage rates, and travel expenses – far too much is spent on out-of-state travel according to one long-time state official.

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Prerequisite for Brain Power Is Brain Development

“Area’s with brain power have a competitive advantage over other areas,” I researched and wrote in a column 16 years ago. “Brain power is the gold of the 21st Century in America.”

I recalled this column after reading a recent opinion column by Dr. Cathy Grace, the co-director of the Graduate Center for the Study of Early Learning at Ole Miss. Her piece highlighted Mississippi’s continued, stubborn reluctance to invest in early childhood education.

“Currently Mississippi invests $6.5 million dollars in pre-kindergarten,” she noted, adding that the Education Commission of the States report for 2016-2017 showed neighboring states Arkansas, Alabama, and Tennessee invested $105 million, $64.4 million, and $86.6 million respectively. All experienced higher average annual economic growth over the past decade than Mississippi, with Mississippi one of the lowest three states in the nation.

“The numbers speak for themselves,” Grace concluded.

So, back to my 2003 column on brain power (excerpts shown in quotations).

“The 2000 Census shows that just one out of eight adults in our region has a university degree of any kind.  Conversely, we have and continue to produce citizens without the brain power needed to compete for top 21st Century jobs.  School data shows too many of our 3rd graders cannot read at ‘proficient’ levels…too many of our 7th graders are not ‘proficient’ in basic math…and too many of our students drop out.”

(While we have made some progress in these areas, particularly in third grade reading and graduation rates, we still have a long, long way to go to be a state known for its collective brain power.)

“A prerequisite for brain power is brain development. Research shows that many of our students who cannot read at grade level in the 3rd grade, who cannot do basic math, and who drop out, suffer from inadequate brain development.

“The critical years for brain development are from birth to age four. Children in poverty, unhealthy, and/or abusive environments have a high risk of poor brain development.

“Too many of our most at-risk children have little access to early childhood programs and enter kindergarten unready and unable to learn.”

(Dr. Grace brought noted researcher Dr. Craig Ramey to Jackson last year. He cited 40 years of research confirming the above but also showing that “cognitive disabilities can be prevented in early childhood.”)

(Next Dr. Grace brought Nobel Prize winning economist Dr. James Heckman to Jackson. He made it clear to Gov. Phil Bryant and others attending his briefing that investing in comprehensive, high quality, early childhood education would yield a 13% return on investment.)

“Regions determined to compete in the new economy will make sure brain development programs are in place. As more children read with comprehension, the quality of school programs will increase, the quality of high school graduates will increase, and the quality and quantity of our college and university graduates will increase, providing us significant homegrown brain power.”

(On the other hand, regions that do little to spur homegrown brain power will find themselves at a competitive dis-advantage.)

Kudos to Dr. Grace for continuing her decades-long efforts to educate our leaders on facts and opportunities most other states, including our neighbors, have understood and acted upon for years…to the benefit of their economies.

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2019 Will Be a Big Year for Mississippi Politics

It’s upon us, the new year, the much anticipated big political year for Mississippi. Yep, 2019 is the year when most state, regional, and local officials will be up for re-election and/or replacement. But, the really big thing will be the gubernatorial showdown between Lt. Gov. Tate Reeves and Attorney General Jim Hood.

Oh, that November confrontation is not a sure thing just yet. Both will have August primary challengers, though none so far with much money or name recognition.

Meanwhile, the big time jockeying for the Reeves vs. Hood battle has begun.

It started with Hood’s November proclamation that state retirees can serve as legislators and keep getting retirement benefits. PERS regulations require retirees to put benefits on hold should they become a state elected official.

While this has been a contested issue for years, Hood suddenly weighed in against PERS, arguing legislators are part-time employees so thousands of retirees, mostly retired teachers, can serve without giving up benefits. (There is one big flaw in Hood’s reasoning. PERS credits legislative service as full-time. Hood’s action would reduce that retirement credit to part-time. Otherwise legislative service would somehow be full-time and part-time at the same time).

PERS said it had not been consulted by Hood and has his ruling under advisement. It will be interesting to see if PERS revises its regulations, but more interesting to see if the Republican controlled legislature acts to undo Hood’s ruling.

You see, it’s pretty clear from the reaction of pro-education advocates that their hope is for many retired teachers of the Democrat persuasion to challenge Republican incumbents in next year’s elections. This would benefit Hood by increasing Democrat turnout next November. It could also undo the GOP super majorities in the house and senate and boost chances for increased school funding.

The jockeying continued in December with the revelation that Gov. Phil Bryant has been quietly looking into expanding Medicaid in Mississippi, a la the conservative approach then Governor, now Vice President, Mike Pence put in place in Indiana.

Expanding Medicaid has gained somewhat in popularity in Mississippi and is seen as one of Hood’s major campaign issues, as well as a potential financial rescue for many rural hospitals and clinics. Sliding a conservative version through the upcoming legislative session could boost Reeves.

So far, Bryant has not commented on the story published in Mississippi Today. If this moves forward it will be interesting to see if the GOP legislative majority will go along. There is also the possibility Bryant could expand Medicaid by executive order.

All this supports rumors that Bryant and Reeves have mended fences in order to hold off a Democrat surge in November.

In another December jockeying maneuver, Speaker of the House Philip Gunn told reporters that lawmakers will abandon attempts to rewrite the Mississippi Adequate Education Program (MAEP) funding formula in the upcoming session. Changing the formula has been a major Republican goal since the defeat of the school funding referendum in 2015. Taking it off the table will tamp down an inflammatory issue for pro-school advocates and teachers, e.g., likely Hood supporters.

Intriguingly, Reeves, so far, has been quiet on Republican jockeying. No doubt because changing course on Medicaid and school funding won’t play well with part of his base.

Yes, 2019 will be a big year for Mississippi politics.

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U.S. Beacon of Hope Going Dim this Christmas?

Oh the glamour and sizzle of the Christmas season in America – parades and decorations, sales and bargains, parties and special events. Then, comes Christmas morning with presents under the glistening tree with carols playing as the aromas from the pending family feast waft through the house.

Most of us enjoy some, if not all, of the above.

Some, perhaps many, still push back on that a little and find time for praise, prayer, and thankfulness for what Christmas is really about.

This year a Christmas related verse from Isaiah keeps playing a stark visual in my mind – “The people walking in darkness have seen a great light; on those living in the land of deep darkness a light has dawned” (Isaiah 9:2, also Matthew 4:16). Visualize this for a moment.

Isaiah cast the light as hope to escape from darkness, hope to come from a child who would become the Messiah (Isaiah 9:6), a child who would shatter “the yoke that burdens them, the bar across their shoulders, the rod of their oppressor” (Isaiah 9:4).

Visualize that happening today, millions walking in darkness and dwelling in lands of deep darkness without hope. These would be among the 68 million men, women, and children worldwide who have fled homes to escape war, famine, persecution, and pestilence. More than 25 million have crossed borders into other countries to become refugees. Another 43 million are displaced within their home countries.

Last week the United Nations acted to shine some light of hope on them. Almost unanimously, the UN General Assembly adopted the Global Compact on Refugees. The goal of this non-binding compact is to help countries hosting refugees and displaced persons to provide better care and support, particularly for the 33% or so clustered in dismal camps and shelters.

Shaped by the same Providence as Isaiah and founded as a beacon of hope, the United States once championed such initiatives. Derived from our heritage and mores, U.S. policy was to come to the aid of victims of mass displacements.

Our beacon is going dim. Last week the U.S. joined Hungary as one of the two votes against the compact; 181 nations voted for it.

This issue is far larger than the meager 5,000 Central Americans who caravanned through Mexico and others who assail our southern border, or even the million Syrians who have escaped into Europe. The vast majority of refugees and displaced persons huddle in developing countries without the infrastructure or resources to cope with them. Providing infrastructure and resources for these countries is the goal of the compact.

Lebanon, Jordan, Iraq, Turkey, Uganda, Bangladesh, Colombia, Brazil, Ecuador, Chile, Kenya, Ethiopia, Yemen, to name a few, host millions who were able to flee from Syria, Afghanistan, the Sudan, Myanmar, Venezuela, and Somalia. Even more remain clustered in their home countries with little to no support.

“But if anyone has the world’s goods and sees his brother in need, yet closes his heart against him, how does God’s love abide in him?” 1 John 3:17

Enjoy your Christmas, but know that dim light you no longer see was once America’s beacon of hope for many walking and dwelling in darkness, and, but for Providence, we could be among them.

 

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Uplifting Jackson Forum Hints at Rural Gloom

Growing economic trends bode ill for rural America.

“We are witnessing a growing economic and political divide between urban and rural America,” wrote Axios last week, pointing to some significant data. “Roughly half of all U.S. zip codes still have lower total employment than they did in 2007….Rural Americans have far fewer hospitals, workout facilities, and health specialists….Big employers and better technology makes cities magnets for better teachers, schools, and specialized training….Democrats own the fast-growing cities and Republicans rule rural.”

The Economic Innovation Group reported, “Today’s jobs are going almost exclusively to people with education beyond high school, and those jobs are going to thriving communities….Most of today’s distressed communities have seen zero net gains in employment and business establishment since 2000.”

Uh, Mississippi is pretty much all rural and full of distressed communities, are these trends going to whack us even more?

Here’s a hint.

Last week at a Focus on Jackson gathering hosted by the Wise Carter law firm, three Jackson hospital executives and the head of the state hospital association highlighted the massive economic impact hospitals have on the Jackson economy, e.g. nearly 30% of salaries and 23% of jobs are hospital-related. The gist was that Jacksonians should take pride in their hospitals and the economic and health care benefits they provide, while at the same time understand that sustaining them is crucial to the city’s economy and advanced medical care for state residents.

While regulatory, political, and demographic trends were said to pose financial challenges for Jackson’s hospitals, the outlook presented suggested a more dismal future for Mississippi’s rural hospitals. From financially struggling regional hospitals to cash-strapped small hospitals, the prognosis was for additional hospital closures. As this happens, the need for Jackson hospitals to pick up the slack will only grow.

No solutions emerged during the presentations.

No solutions are likely to emerge from state politicians currently in power either. Their focus is on tax cuts, reducing state spending, and upcoming elections, not on sustaining health care economic engines in rural areas or addressing other trends impacting rural communities. Indeed, there is no state plan to help small towns survive, much less thrive.

The budget recommendations presented by Gov. Phil Bryant and legislative leaders were keep-things-going-like-they-are proposals. Indications were that no controversial or challenging issues will be confronted during next year’s legislative session in order to keep things calm just before statewide elections. Maybe there will be a token pay raise to make teachers happy. Likely there will be some additional goodies given out for favored businesses and communities.

In light of all this you might want to keep the following in the back of your mind through next November. It comes from a just released Pew Trust report on the growth of personal income since the Great Recession.

“The second-longest U.S. economic expansion has played out unevenly across the states,” the report begins. It shows top states, most west of the Mississippi, had average annual income growth of 2.5% to 3.3% since 2007 (the U.S. averaged 1.9%). Bottom states averaged less than 1%. There were three, Connecticut at .8% followed by Illinois and, of course, Mississippi at .9%.

Since you’ll wonder, neighboring states came in like this, Tennessee 2.1%, Arkansas 1.6%, Alabama 1.2%, and Louisiana 1.0%.

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Ramsey Reminds Us of How We Could, No Should, Be

“Civility, service, family,” award-winning cartoonist Marshall Ramsey wrote in the starry sky of his pictorial tribute to the late President George H. W. Bush.

“Today, we remembered a president and what he was capable of being,” Ramsey wrote last week in a discussion of the cartoon. He noted Bush’s overwhelming, and mutual, familial love. He noted his ardent civility. And, he noted Bush’s purposeful commitment to service after two brushes with death, one from Japanese anti-aircraft fire.

At his father’s poignant funeral, former President George W. Bush said, “Dad taught us the public service is noble and necessary, that one can serve with integrity and hold true to the important values like faith and family.”

Bush biographer Jon Meacham said, “George Herbert Walker Bush was America’s last great solider-statesman, a 20th Century founding father.”

A USA Today headline proclaimed, “George H. W. Bush’s funeral services stand as America’s goodbye to the Greatest Generation.”

Author and former news anchor Tom Brokaw, coined the phrase “the greatest generation” in his book of the same name about veterans who served in WWII, an accomplished generation composed of heroes as well ordinary citizens.

“It is a generation that, by and large, made no demands of homage from those who followed and prospered economically, politically, and culturally because of its sacrifices,” wrote Brokaw. “It is a generation of towering achievement and modest demeanor, a legacy of their formative years when they were participants in and witness to sacrifices of the highest order.”

Ramsey’s chosen attributes to highlight — civility, service and family — fit Bush and others I hold dear from that generation. Bush’s great friend, the late Congressman G. V. “Sonny” Montgomery was of similar nature and character. Sonny was a man of strong faith and integrity renowned for his positive patriotism and commitment to stay the course on any major undertaking. He loved people and had an uncanny ability to relate to those from all walks of life. He was particularly committed to serve every veteran and active duty soldier.

I was blessed to have a father from that generation with such traits. Oh, he was no hero or noted leader, he was just a humble citizen who served in the war and was civil in the most difficult times to people from all walks of life. He was committed to serving his fellowman and had that overwhelming and mutual love with family and friends. I still remember Pop’s 75th birthday when so many turned out to express that love and affection.

“We’re supposed to be snarky and pick social media fights with people who slight us,” wrote Ramsey. “That’s the way of the 21st century, right?”

“After watching the funeral today, I don’t think so,” he concluded.

“The most decent and honorable person I ever met was my friend, George Bush,” eulogized former Sen. Alan Simpson.

“He had perseverance and strength of character, tempered always with humility and compassion,” eulogized Mack Fleming in 2006, one of Sonny’s former staff members.

These eulogies and Bush’s funeral remind me of my father and many other ordinary citizens of that generation who personified what my music minister calls Jesus’ “others first” message to a “me first” world.

Thanks, Marshall, for the reminder of what we Americans have been and are capable of being… no, what we should be.

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Monopolistic Practices Push Drug Prices Higher

“The high cost of prescriptions are leading many people to ration medicine or skip it altogether,” reads a story in the Clarion-Ledger.

 

An earlier story told about an 87-year-old WWII veteran with Type 2 diabetes. His glucose test strips suddenly jumped up from $25 to $90 a box. “That’s too high,” he said. “And I don’t understand how they can do that.”

 

Skyrocketing drug prices don’t just hurt Mississippians, it’s a national problem. President Donald Trump promised to bring down drug prices, but, beyond talking tough, has accomplished little. Congress has done nothing.

 

You reckon the billions of dollars the drug industry spends on lobbying and political contributions has anything to do with that?

 

According to OpenSecrets.org, lobbying costs over the past 10 years topped $2.4 billion and contributions to candidates topped $538 million. 

 

Over the past five years, drug companies also spent another $28 billion on consumer advertising, according to Statisa.com.

 

Where does all that money come from?

 

Hmmm. Overpriced drugs?

 

Axios.com looked into drug pricing last week. Here are some findings: Spending on prescription drugs, by both hospitals and consumers, was between $450 and $475 billion in 2016. In the third quarter of this year, drug companies accounted for just 23% of the health care industry’s revenue but controlled 63% of its profits.

 

That and the following examples cited by Axios and Politico.com suggest the drug industry is all about profit and little about actual health care – Martin Shkreli bought Daraprim, a drug to treat AIDS, and raised the price by 5,000%; Mylan raised the price of the Epi-Pen by about 500% over 6 years; Kaleo raised the price of its life-saving opioid overdose antidote Evzio by more than 600% at the height of the drug crisis; and insulin prices keep creeping higher, up to 200% more for some products.

 

Axios’ look into insulin pricing reveals why that 87-year-old Veteran saw his insulin strips jump up so much. Drug companies like to blame increasing costs on insurance middlemen, arguing they take bigger cuts of the insulin market (all true). But drug companies have also raised their prices and used the patent system to keep them high. “Insulin is a complex drug to manufacture, and existing manufacturers have created patent thickets to shield their products from competition.”

 

Indeed, the drug companies have done a remarkable job limiting competition. They got Congress and the courts to make changes to patent law that encourage monopolization, higher prices, and less innovation, according to the Open Markets Institute. “These changes have made it easier for drug companies … to suppress competition.”  They also got Congress to restrict importation of cheaper foreign made drugs.

 

A Baron’s article called this a “dangerous monopoly of power.”

 

The Open Markets Institute says the U.S. has “largely abandoned the policies it previously used to foster healthy competition,” causing “a highly dysfunctional pharmaceutical market that produces high prices and less and less innovation.”

 

Axios said divided government probably won’t produce a grand bargain on drug pricing. “The industry is still very powerful, and Congress’ ideological differences are still real.”

 

A 2016 study published by the National Academy for State Health Policy says, “Prescription drugs are an essential good; they are as necessary to quality of life — and life itself — as water and sanitation,” and suggested drug companies might be regulated like utilities.

 

Perhaps it’s time for that. 

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