Governor Passes on Preschool Opportunity

GPreschool education has become a top priority for the Indiana Chamber and for countless members throughout the state. The prospects for making significant improvements to our state’s educational levels will remain challenging as long as large numbers of children are entering kindergarten unprepared for school. Moreover, those challenges are compounded and are impacting all Indiana students as schools are forced to deal with wide gaps in achievement levels.

Those are just two of the reasons for the preschool emphasis. It is critically important that Indiana join the vast majority of other states in providing funding that will help low-income parents to access their choice of preschool programs that are educationally based and accountable for outcomes.

During the 2014 legislative session, Indiana took a small step in addressing this challenge by approving a $10 million pilot program in five Indiana counties. To be certain, it was a good step forward – driven in large part by the leadership of Gov. Pence and House Republicans. But it fell far short of Indiana’s needs.

Fortunately, an opportunity arose shortly after the session to greatly expand those funds through a federal grant program that would provide $20 million per year for four years. Indeed, Indiana was identified as one of just two states that would receive “priority status” in the grant. Accordingly, staff from the governor’s office, the Department of Education and other preschool advocates began working on the application, which was due for completion this month.

Gov. Pence, however, announced last minute – just as the proposal was being completed and readied for submission – that Indiana would not apply for the funds. He cited concerns about federal intrusion and the desire to implement a program that is best for Hoosiers. But to the frustration of advocates and commentators across the state, he has not yet offered specifics on those concerns.

To be certain, this is a politically charged issue. Even the pilot program would not have happened if the Governor had not ignored pleas to the contrary and appeared, in person, to advocate for the program in the Senate. What ultimately did pass was the result of hard negotiating by the Governor and House Republicans with the Senate.

Yet, it remains disappointing that Gov. Pence chose to take a pass on this new opportunity. If Senate leaders were concerned about funding – as seemed clear in the legislative debates – then this was a unique opportunity to expand Indiana’s program with outside funds. If federal strings were a genuine problem (not just the prospect of a problem), then the specifics of that challenge were not made apparent.

Meanwhile, Indiana is proceeding with its pilot program. The Indiana Chamber is hopeful that the “pilot” aspect of the program will focus strictly on administration matters and not be used by opponents to revisit, yet again, whether preschool is needed and effective. Those questions have been answered. Preschool is a key strategy in the Chamber-led Indiana Vision 2025 plan to help achieve the goal of eliminating achievement gaps. The state must  move farther and do it faster to accomplish the goals and the vision to make Indiana a “global leader in innovation and economic opportunity where enterprises and citizens prosper.”

Preschool thus again becomes a priority issue in the upcoming legislative session. It’s disappointing that Indiana’s foray into this important issue will not be bolstered by the outside financial support that was made available – and that any additional investment will fall fully on Indiana taxpayers.

Elephant Race: Analyst Ranks ’16 GOP Candidates

AGreg Valliere of the Potomac Research Group recently ranked the likelihood of 10 Republican hopefuls for the 2016 candidacy for President. Business Insider offers a summary for each candidate, but here’s the list. (And you’ll notice our governor made the list — and some in the media speculate he has a much better shot than that.):

10. Mike Pence
9. Scott Walker
8. Rick Santorum
7. Paul Ryan
6. Chris Christie
5. Mitt Romney
4. Ted Cruz
3. Rand Paul
2. Marco Rubio
1. Jeb Bush

Deja Vu for School Accountability

SIt’s only been a couple of years since the uproar over Indiana’s school accountability measures. To be sure, there were a lot of reasons for the pushback from educators and eventual legislation invalidating the current system. But one of the leading reasons was the decision to base “student growth” measures on comparisons of students to other students with similar starting points rather than measuring their progress toward the state’s academic standards.

But a year after legislative leaders, the Governor and the state superintendent convened a panel to construct a new accountability system, nothing has changed and the majority of the panel is set to recommend the same approach that is already in place – the same “growth” measure that has already been forbidden by the state Legislature.

How could this happen? Well, there are lots of factors.

Most importantly, the staff of the Department of Education and the Governor’s Center for Education and Career Innovation have simply worn out the panel. After 11 all-day meetings, committee members have been given none of the data that has been requested (and promised at the first meeting) to help develop alternatives; and the staffs have provided no outside experts other than people who developed Indiana’s current accountability model.

The staffs have also played games with terminology, suggesting most recently that they have accomplished the law’s focus on “criterion standards” because their peer-based growth measures create a new target performance level.

But the law doesn’t call for that. Rather, it is quite a bit simpler – as stated in the 2013 legislation:

“The new standards of assessing school performance: (1) must be based on a measurement of individual student academic performance and growth to proficiency; and (2) may not be based on a measurement of student performance or growth compared with peers.”

The final proposal must still be reviewed by the Legislature and approved by the State Board of Education. But if passed as currently drafted, it’s hard to imagine how a school that’s unhappy with its grade wouldn’t have solid standing for challenging it.

The state superintendent has been an outspoken opponent of school accountability, generally, and Indiana’s accountability system, specifically. But why the Governor’s staff would support this re-adoption of a failed and outlawed accountability system is baffling.

Gov. Pence Convenes Tax Conference

The Pence administration is looking for big and little ideas regarding taxes. The Governor – through the Department of Revenue and Office of Management and Budget – recently conducted an all-day discussion on ways to simplify Indiana’s tax code and tax administration as a means for making Indiana even more competitive in its quest to attract more business activity to the state.

The day began with comments from Indiana’s own Al Hubbard, former director of the National Economic Council and a longtime Indiana Chamber board member. His insights were followed by a panel of nationally recognized tax experts who discussed – at a high level – tax structure and the impact of taxes and tax reforms. Well-known economist Art Laffer (of the Laffer Curve fame) spoke at lunch.The afternoon consisted of breakout panels of various Indiana tax professionals who addressed different aspects of our tax system. Each session and all the talks were captured on video and most of the panelists also submitted papers or written comments on the topics they discussed (see the Indiana Chamber’s remarks, under the Tax Simplification section at www.in.gov/dor/5122.htm). The video link and other conference materials are available for review at www.in.gov/dor/index.htm. You can also submit your own ideas (up to two weeks post conference) at www.in.gov/dor/5120.htm.

The event was generally intended to generate, collect and consider ideas on how to make Indiana’s system simpler and better. Everything from big picture sweeping changes to down-in-the-weeds process tweaks were put on the table. There were many references to “broadening the base and lowering the rates.” The taxation of business personal property came up in a number of times. And a wide range of suggestions and recommendations on tax policy and procedure in the contexts of sales, income and property tax were brought forth. Indiana Chamber staff and numerous members of the Chamber Tax Policy Committee took part in the panel discussions and otherwise participated.

The question now is how this host of ideas will be digested by the Pence administration and the Legislature. Many members of the tax policy committees in the Legislature participated and were in attendance. And many of the attendees will also be participating in some way with the Legislature’s Blue Ribbon Tax Commission that will get under way later this summer. The Governor indicated that he hopes the commission and ultimately the General Assembly will give consideration to some of the things discussed at the conference. It seems likely that the conference will create momentum for some proposals. Many appear very doable and could be realized in the near term, others may take a much longer course or never pan out. Of course, only time will tell which ones fall into which category.

Chamber Analysis of Governor’s Request to Expand Healthy Indiana Plan

The Pence administration last week unveiled plans to request a waiver from the Centers for Medicare & Medicaid Services (CMS) to expand the Healthy Indiana Plan (HIP). This expansion of HIP would be in lieu of a traditional Medicaid expansion. The announcement had been anticipated for several weeks.

The Healthy Indiana Plan, or HIP 2.0 as it is now being referred to, will have three “pathways” to coverage: HIP Basic, HIP Plus and HIP Employer Benefit Link. It is funded through the existing cigarette tax, the hospital assessment fee and federal Medicaid funds.

The Basic HIP plan is for Hoosiers below 100% of the federal poverty level (FPL). Basic members use an entirely state funded power account (similar to a health savings account) to cover a $2,500 annual deductible. The HIP Plus plan is for Hoosiers under 138% of FPL. They will be required to make contributions that range from $3-$25 per month. Members of HIP Plus and the state will jointly fund the power account based on a sliding income scale. This plan also includes dental and vision coverage.The HIP Employer Benefit Link allows HIP eligible individuals to enroll in either HIP Plus or receive a defined contribution power account funded by the state to access an employer-sponsored program. The defined contribution must be used to pay for premiums, co-pays or deductibles.

The Indiana Chamber has supported the expansion of HIP as an alternative to a traditional Medicaid expansion. The HIP plan has encouraged individual responsibility by attempting to mirror consumer driven health plans. HIP also reimburses at 100% of Medicare (higher than Medicaid), which ensures more provider participation and reduces cost shifting to the private sector, a point that is important to employers. The Indiana Chamber believes that the HIP Employer Benefit Link option will be an interesting program to potentially provide coverage to Indiana’s working poor. The Indiana Chamber will be securing more details on how the program will be implemented and will provide our members that information as it is received.

On a related note, this $25 million budget savings to the state – if the HIP expansion is approved by CMS – could cause some problems for insurance carriers providing health insurance coverage to the individual market in the insurance exchange/marketplace. The state is transitioning from a (209b) state, with its own disability definition, to what is called a “1634” state. Under a 1634 state, the administration will accept disability definitions of the Social Security Administration. As a result of the switch, the state will no longer be required to maintain a spend-down program. This program allowed those with high medical expenses to become eligible for Medicaid after they spent a designated portion of their monthly income on medical expenses. As of December 2013, there were over 134,000 people in this spend-down program.

Of that spend-down population, nearly 7,500 have incomes over 100% of FPL. It is this population that will be transferred to the insurance exchange/marketplace to purchase qualified plans in the commercial market. Medicaid claims for those individuals have been over $1,800 per member per month. Total claims for March 2013 through March of 2014 were $134 million. That amount is significantly higher than under normal individual insurance plans.

Insurance carriers participating in the insurance exchange filed their rates in May of last year. Those rates included calculations for the high risk pool being transitioned into the exchange, but the 7,500 “1634” transition eligibles are not included in those rates. This has serious impacts on those carriers: Significant losses to those participating which will result in considerable increases in current rates to cover the cost; those carriers that waited and will be coming into the exchange in 2015 have an advantage over those current participants in that they are taking on none of this additional risk; and for the smaller carriers there is a concern whether they will be able to participate in the exchange in the future, thus potentially jeopardizing Hoosier choices.

The Indiana Chamber will continue to evaluate and comment on this issue as more information is available.

Indiana’s K-12 Education Standards Debate — Nearly Settled

UPDATE: On Monday, April 28, the State Board of Education approved new academic standards.

Monday is the day the State Board of Education votes on the draft K-12 academic standards. It’s the final hurdle in putting in place new standards for Indiana schools.

The origins of this standards debate were rooted in concerns about federal control. The Common Core academic standards, actually developed by governors and state superintendents, were viewed as a federal intrusion because President Obama and his Secretary of Education supported the standards – and they used federal “Race to the Top” grants to help entice states to adopt the standards.

Indiana selected the Common Core as its standards back in August of 2010  – a full four months after withdrawing from the Race to the Top grant competition. Nonetheless, federal intrusion theories took hold.

So just as the state Legislature mandated and Gov. Pence promised, a process was developed to assure – with absolute certainty – that Indiana had control over its standards. Indeed, no set of standards in Indiana’s history has ever engaged so many Hoosiers and provided for so much public input. They are Hoosier developed, Hoosier adopted and Hoosier controlled.

Ironically, those who pushed the hardest for this review process are now unhappy with the outcome. That’s because, as it turns out, Hoosier educators actually liked the Common Core standards (no surprise to us!) – even when compared to Indiana’s old standards and to other well-respected models.

So, yes, the new standards look a lot like Common Core. But it’s also important to note that Indiana’s old standards were a primary source in the development of Common Core, and Indiana policy leaders were actively involved in that development.  In reality then, the outcome of this review should come as no surprise to anyone.

In the end, Indiana’s new standards are consistent with the process that was demanded by some and promised by others; it has produced a set of standards that Hoosier educators have identified as the best standards for Indiana students. And wasn’t that the original goal of those who opposed Common Core in the first place?

Like it or not, Indiana has identified its own standards; we are adopting them voluntarily; and we have asserted and will maintain complete control over the future of those standards.

 

Indiana Works Council Up and Running

The goal: Building an education system that leads to workforce readiness.

Last Wednesday, state leaders took another step toward achieving that goal. Gov. Pence launched the Indiana Works Council in Vigo County as a result of the new law that creates regional works councils tasked with coordinating between education, job skills and career training.

The Indiana Chamber of Commerce and Ready Indiana were fervent supporters of this legislation that brings together workforce development groups, employers and schools to evaluate and ensure that career and technical education opportunities for high school students address the workforce needs of the region.

"We need to make sure that our schools work just as well for our kids who want to get a job right away instead of getting a degree,” said Gov. Mike Pence.

Read the story from WTHI.

VIDEO: Pres. Brinegar Wraps up the 2013 Legislative Session

Chamber President Kevin Brinegar offers a two-minute wrap-up of the 2013 legislative session. Highlighting his review are thoughts on the new budget, tax relief and critical education and workforce development issues.

Numbers are in for Crafting the Final Budget

State budget watchers have been talking about the April update of the revenue forecast for months. This is because everyone knew that the numbers that came out this week revising the December projections for state tax receipts over the next two-plus years would be the numbers that control the final form of the FY 2014-FY 2015 biennium budget. While the significance of the April update is not to be diminished, the reality is that many of the “down in the weeds” budget crafters are the same people that generate the forecast. The Revenue Forecast Committee includes fiscal analysts from each of the four caucuses and a representative from the state budget agency – and these people are the ones that the fiscal leaders work with to put the budget together. So this means the folks who have been doing the hands-on budget detail work had a pretty good idea of what the April numbers would be earlier than when they were publically presented on Tuesday. But they couldn’t really generate revised numbers until they had enough indication of what the overall economic forecast would be. It is those trends and indicators that serve as the basis for the group’s revenue projections. The economic forecast (or outlook as they call it) is performed by IHS Global Insights (the largest and most renowned
economics organization in the world).

The revenue forecasters apply economic variables to their formula guided by IHS Global Insight’s economic forecast/outlook for Indiana. The group’s presentation this week indicated continuation of a stable but slow recovery, a slight slowing of consumer spending and higher nonwage income. In response to the economic picture, the revenue forecasters made some modifications to their revenue forecasting model and also made an adjustment to the gaming tax projections to account for more out-of state-competition. The resulting bottom line was an upward revision of $290 million over the previous forecast for the balance of FY 2013 (+$33M), FY 2014(+73M) and FY 2015 (+$184M). Nearly all of the increase is attributable to projected individual income tax receipts in the next biennium. The individual income tax projections were increased by 3% and 4% for FY 2014 and FY 2015 respectively. This translates to $70 million and $151 million more than the December forecast.

The forecast’s show of strength in personal income growth could itself become the subject of debate in the budget negotiations since it can be argued two different ways. Those supporting a tax cut will point to it as evidence that the state is collecting too much in this particular category of revenue, while those cautioning against a cut will suggest that this demonstrates the volatility and uncertainty of a steady income stream. Will the forecasts cause the House budget-makers and the Senate budgetmakers to change their thinking and reconsider the tax cuts? Perhaps, but consider that $290 million is only 1% of the total budget and is really nothing more than an adjustment of a prior estimate.

However you want to view it, it is a positive upswing and that fact alone should help the Governor’s cause for the individual income tax rate reduction.

Ripley Discusses Medicaid Expansion with IBJ

Mike Ripley, the Indiana Chamber's VP of health care policy, was recently interviewed by the Indianapolis Business Journal about Medicaid expansion in Indiana. Here's what he said:

Mike Ripley, a health care lobbyist for the Indiana Chamber of Commerce, talked about the business group’s views on a proposed expansion of coverage by the Indiana Medicaid program. As it stands now, the 2013 Indiana budget bill includes a plan passed by the Senate as Senate Bill 551, which would have OK’d the Pence administration to negotiate a block grant deal with the U.S. Department of Health and Human Services to expand Medicaid coverage via a program like the Healthy Indiana Plan. When that bill was altered in the House to remove the block grant concept, the chamber dropped its support. The altered House bill is now dead, and the original Senate plan has been added to the budget bill. Its ultimate fate is still unknown.

IBJ: Why did the chamber drop its support of SB 551 when the House altered it so it no longer required the state to negotiate a block grant with the government?

A: The inference is that, you’re on the hook for the full expansion, however you do that. And at the end of the day, how do you pay for that? How I’ve interpreted the block grant is, "OK, we’re going to get X amount of dollars and then we expand as much as we can." But without that, it’s pretty much open-ended.

IBJ: Why is an open-ended expansion of Medicaid, which is what President Obama’s health reform law originally called for, a problem—particularly considering that the federal government will pay 100 percent of the expansion costs for three years and then step its support to no less than 90 percent by 2020?

A: Then after 2020, what happens then? Where do you come up with those resources? That’s where we’ve been very concerned from a business perspective. Because who’s going to foot that bill? Employers are.

IBJ: Why do you prefer expanding coverage via the Healthy Indiana Plan, which gives participants a health savings accounts to pay for health care, but also caps enrollment if their use of health care exhausts the state’s allotted revenue for the program?

A: It has better reimbursement [than Medicaid] for doctors and hospitals. And it puts some skin in the game for individuals. I think that’s the best of all worlds. You’re not going to get everybody covered. But it’s something we can cope with financially.