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How Fiscal Conservatism Influences the Creation of Georgia’s General Appropriations Budget

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How Fiscal Conservatism Influences the Creation of Georgia’s General Appropriations Budget

Abstract

This research paper will attempt to analyze the overarching theme of fiscal conservatism as it exists and prevails within the state of Georgia’s government in general as well as within the leadership (i.e. Governor, Speaker of the House, etc.).  As the majority party in Georgia remains to be Republican and conservative this writing will attempt to examine the myriad of ways fiscal conservatism affects the creation of the state’s general appropriations budget as well as where, how, and why funds are allocated.  In addition, four budget items: Education, the University System of Georgia, Student Finance, and Community Health all boasting a budget of over $1,000,000,000 (one billion) will be scrutinized in depth through a fiscally conservative lens.  This analysis will also briefly explore the power and influence the Governor wields specifically in regard to budgetary matters.

Introduction

During my internship of the 2019 Georgia General Assembly session, I learned that the only constitutionally mandated piece of legislation that the Georgia State Legislature is required to pass annually is a balanced budget allowing for no deficit spending. The Governor’s Office of Planning and Budget (OPB) is responsible for managing and developing the state budget.  Utilizing a Zero-Based Budgeting (ZBB) analysis of the proposed fiscal budget allows the OPB to examine each program ensuring their compliance with state statutory requirements, intended purpose, costs of services, and expected objectives and goals in order to measure the projected efficiency and effectiveness of each program. The Georgia state budgeting process is a very robust and dynamic progression of ideas, collaboration, legislative review and benefit/cost analysis focusing on many perceived needs and wants by the residents of Georgia.  It is the responsibility of State Senators and House Representatives to speak for their district’s constituents by proposing and/or supporting legislation that will help their districts.  It is within the parameters of these commitments, driven by the political make-up and fiscal values of these districts, that you see the influence of both fiscally conservative and fiscally liberal spending proposals, debated in committee, the House of Representatives and the Senate, that make up the exciting and often vigorous creation of Georgia’s General Appropriations Budget. Taking into account that a majority of both the Georgia House and Senate is Republican I saw a fiscally conservative budget developed, reviewed in committee and ultimately passing votes in both the State House and Senate. Georgia’s 2019 General Assembly passed the state’s $27.5 billion dollar budget for the 2020 fiscal year and sent it to the Governor’s desk for approval April 4, 2019.

 

Literature Review

 It’s no secret that the state of Georgia has long held tight to its Southern roots as it sits in the heart of the Bible belt and continues since the early 1980’s to consistently vote Republican and boast its Conservative values through their leadership and legislation.  Georgia’s leadership have been members of the Republican party since the early 2000’s all of whom held fiscally, socially and politically conservative values.  The Governor’s personal convictions play a significant role within the state legislature and complementary state agencies alike; a relationship that has the potential to greatly impact the state supported funding and public policy for higher education exists between Georgia’s governor and the State Higher Education Executive Officer.  The power dynamic that exists within this relationship is inherently disproportionate due to the governor’s institutional authority.  “Governors have unmatched power to set an agenda for higher education and to mobilize other political and civic leaders in pursuit of that agenda. In most states, governors are the most powerful actor in influencing the allocation of state funds and in shaping tax policy” according to Lingenfelter (2008). The Governor and the State Higher Education Executive Officer: How the Relationship Shapes State Financial Support for Higher Education thoroughly details and reveals the true scope of the Governor’s power and their ever-present ability to influence legislation to conform to their individual values and not only in regard to budgetary matters either.

Healthcare, in general, and especially Medicaid expansion is one of many areas where Liberals and Conservatives disagree; Liberals want to expand Medicaid access to “low-income or underserved populations” while Conservatives, especially fiscal Conservatives don’t believe this to be viable or sustainable and this is especially true in Georgia.  According to the source The Politics and Policy of Health Reform Expanding Medicaid Access without Expanding Medicaid: Why Did Some Nonexpansion States Continue the Primary Care Fee Bump? Georgia was one of only six states to reject the Patient Protection and Affordable Care Act’s (ACA) Medicaid expansion while still extending the primary care “fee bump” in 2013-14. The study that was conducted used an interpretive comparative case study approach comparing Georgia and North Carolina. The goal of the study was to find a better understanding of how, what factors were influential and why the states reached the decisions they did regarding the Medicaid expansion and extension of the fee bump (Kaarbo and Beasley 1999). This source only highlighted further the thinking that prevails in a conservative, Republican state like Georgia in that healthcare is a privilege and not a right and, therefore, should not be provided by the government on the state or federal level; this is a common shared belief amongst conservatives and those who value and practice fiscal conservatism.

 Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education and State Education Finance and Governance Profile: Georgia complement one another in their subject matter as they both detail the state of Education and Student Finance in Georgia.  Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education examines Georgia’s unique lottery-funded programs for education including the HOPE College Scholarships, universal Pre-Kindergarten, and the maintenance and improvement of the state’s education infrastructure.  According to the findings of Rubenstein and Scafidi’s analysis, the answer to the question of ‘Who pays?’ would be “lower income and non-white households” as they tend to spend more on “lottery products” while the answer to ‘Who benefits?’ would be “higher income and white households” who tend to benefit disproportionately from the HOPE College Scholarship, specifically.  This source reveals that wealthy, white, and educated households tend to practice fiscal conservatism more closely than poor, uneducated, non-white households perhaps because the more educated households better understand the odds of the “game” and the likelihood of a winning the jackpot. Poor and uneducated households may view lottery tickets as an investment and the easiest path to gaining wealth in life therefore essentially wasting a disproportionate amount of money playing the lottery.

 State Education Finance and Governance Profile: Georgia closely analyzes the finances of Georgia’s Education system. In regard to Education finance, Georgia’s funding comes from a unique model based around teacher allocation. Over half of the funding allocated for K-12 public education comes from state property taxes.  Georgia is also one of the only states that allocate funding for education staff (i.e. teachers, administrators and support staff); Georgia’s current Governor, Brian Kemp, has long been a champion for educators as one of the cornerstones of his gubernatorial campaign was the promise of a handsome teacher pay raise attempting to improve the state’s teacher retention rate and education quality throughout the state overall.  This source reveals incidentally how income and property value disparities can affect the public K-12 education for students. Because the majority of education funding comes from property taxes those who live in government housing or an impoverished area who can’t afford better housing would also potentially be sacrificing the quality of the education provided for their children.

Analysis

Georgia’s 83rd Governor, Brian P. Kemp, a fiscally conservative Republican, introduced his administration’s policy priorities by beginning with the request of a $3,000 dollar wage increase for Georgia’s 115,000 certified teachers which was initially estimated to cost $483 million dollars.  This was one of Governor Kemp’s primary campaign platforms he ran on during the 2018 election cycle.  Although it was a considerable spending proposal it was argued as a sound fiscally responsible investment in the future of the education of Georgia’s children.  Many conservatives considered this proposal to be an excessive and unwarranted expense while others thought the proposed pay increase was not large enough.  Governor Kemp acknowledged the teacher retention concerns facing the state and took a bipartisan approach to address the issue recognizing the importance and need for experienced qualified staff in our K-12 educational system.  House Bill 31 also allowed for bus drivers, cafeteria staff,  school nurses, school psychologists, media center specialists, etc. to receive a 2 percent increase on their wages. Ultimately the educator pay raise championed by Gov. Kemp would cost the state an additional $530 million in fiscal year 2020.  The Department of Education 2020 budget would also include “$133 million for K-12 enrollment growth, $48 million for charter system grants and State Commission Charter school supplements, and $77 million for charter school equalization.” (https://gbpi.org/)

The increase to educational spending, along with other areas of the budget, was premised on a fiscally conservative estimate of revenue growth based on an increase of 3.2 percent in tax and fee collections revenue of which educational spending will appropriate approximately $659 million, or a 6.6 percent increase in educational spending, as compared with the original fiscal year 2019 budget. In addition to pay increases the Department of Education has also budgeted for the following:

$46,296,216 for the State Commission Charter Schools supplement to implement HB 787.

$78,784,571 for the QBE Equalization program to assist low-wealth school systems. $271,740,000 in bonds for construction and renovation projects for local school systems.

$2,835,000 for facility improvements for state schools.

$20,000,000 in bonds for buses for local school systems.

$5,000,000 in bonds for vocational equipment grants for local school systems.

$250,000 to support 50 additional participants in the Governor’s School Leadership Academy.

Governor Kemp’s willingness to address the salary inequalities of Georgia’s certified teachers and staff employee pay increases was well overdue for a segment of Georgia’s state workforce that ranks in the bottom twenty percent of states for wage competitiveness. Although, in recent years, property values in many areas of Georgia have increased providing additional funding to school districts subsequently increasing QBE funding. To compensate for funding shortages for this equalization program, which provides additional funding to school districts with lower property wealth, the education budget will distribute an additional “$483 million dollars for the Quality Basic Education (QBE) Program and an additional $6 million for programs outside of QBE, including Georgia Network for Educational and Therapeutic Supports (GNETS), Preschool Disabilities Services, Residential Treatment Facilities, and State Schools.” (http://janjonesforgeorgia.com/)

When House Bill 31 was finally passed by the Georgia General Assembly, and sent to the Governor for approval, it mandated a “$2,775 pay raise for certified teachers and certified personnel, including counselors, social workers, psychologists, special education specialists, speech and language pathologists, media specialists and technology specialists.” (http://janjonesforgeorgia.com/)

The budgeting process and allocation of funds for the Department of Education is thorough, comprehensive and well thought out.  The funding of education is typically a bipartisan budget agenda item with the only real disagreements premised on the amount of money being allocated. Considering the number of state workers, approximately 135,000, impacted in such a positive way it was virtually guaranteed that no Senator or Representative was going to obstruct this important legislation that impacted not only teachers and staff but also all of the young students in our state.  From a political perspective Governor Kemp and the state Senators and Representatives won political favor with their constituents, both Republican and Democrat, for focusing on the children and teachers of our state providing the necessary funding to move Georgia education forward.

 The second budget I had a personal interest in seeing develop was the budget for the University System of Georgia. Being a college student I considered this budget to be an indirect investment in my future so I followed it’s development closely. Funding for the University System’s operating budget increased by $147 million dollars. The Georgia General Assembly allocated approximately $2.6 billion dollars for higher education throughout the state. Additional allocations of funds included $86,230,751 for resident student instruction, graduate medical education, and square footage at University System institutions. $312,302 to adjust the state base salary schedule to increase salaries for certified teachers and certified employees by $3,000 for the preparatory school at Georgia Military College. $1,275,000 in bonds for equipment at Georgia Military College.

The intent of the University System of Georgia budget is to maintain a generous contribution towards controlling higher education costs so that colleges and universities can more easily manage and maintain their tuition and fees. Even with this state funding college tuition continues to rise across the state with Kennesaw State University tuition costs increasing 2.5 percent for calendar year 2019-2020. However, this state funding has allowed the university system to keep tuition increases minimal for last couple of years. The university system budget also serves a growing population of academically eager high school students taking advantage of the dual enrollment program. In 2018 approximately 12,000 high school students participated in dual enrollment. The Dual Enrollment Program also had approximately 26,000 students in technical and trade school colleges last year. My takeaway of the University System of Georgia funding is that it directly helps high school students who enroll in the Dual Enrollment program but only benefited me indirectly through the supplemental funding for campus improvements to infrastructure and the support structure designed to help college students be successful in the pursuit of their educational goals. I also found this spending to be fiscally conservative as this investment in the future of the workforce of Georgia is imperative to stay competitive in a global market where advanced skill sets are required to compete for the dynamic employment positions employers need filled today.

In conjunction with the University System of Georgia budget I also followed the development of the Georgia Student Finance Commission budget with interest. The Georgia Student Finance Commission is responsible for administering state funds for the REACH Georgia Scholarship and Dual Enrollment Program. Governor Brian Kemp’s 2020 budget allocated $1.02 billion dollars for Georgia’s lottery-funded pre-Kindergarten and HOPE (Helping Outstanding Pupils Educationally) financial aid programs. The funding breaks down to approximately $760 million for the HOPE scholarship program and $260 million for Georgia’s pre-K program. The HOPE (Helping Outstanding Pupils Educationally) scholarship program is comprised of six separate programs: HOPE and Zell Miller Scholarships, HOPE and Zell Miller Grants, HOPE Career Grants and HOPE GED Grants. The HOPE Scholarship is for students pursuing associates or bachelor’s degrees covering partial tuition for high school students graduating with a 3.0 high school GPA. The Zell Miller Scholarship covers full tuition for graduating high school students with a 3.7 GPA, score at least 1200 on the SAT or 26 on the ACT. College enrolled students must maintain a 3.0 and a 3.3 college GPA respectively to keep their award. HOPE and Zell Miller Grants are for technical college students in certificate or diploma programs. The HOPE Grant covers partial tuition and the Zell Miller Grant covers full tuition for students with a 3.5 GPA. The HOPE Career Grant is the newest HOPE program. The career grant is coupled with the HOPE or Zell Miller Grant for students enrolled in certain certificate and diploma program areas identified as strategically important to the state’s economic growth. The most popular HOPE Career Grant programs are practical nursing, health science, early childhood education and welding.

The 2020 HOPE scholarship funding budget allows for a three percent award increase and a $42 million dollar reallocation of funds from HOPE Grants, for technical college certificates or diplomas, to HOPE scholarships for bachelors and associate degrees. Although HOPE grant funding has had no budget increases for the past few years total award expenditures fell so an increase was not necessary. But with the 2020 fiscal year award increases that should cover additional student expenses to cover inflation or tuition increases. The Georgia Student Finance Commission also manages the lottery-funded low-interest student loan program allocating a $26 million dollar annual budget. This is a very fiscally conservative budget taking into account there are currently total lottery reserves of approximately $1.1 billion with $78 million in lottery dollars going unspent at the end of the 2017-2018 school year. Georgia law requires that half of these funds, approximately $550 million, be available in the event of a shortfall. The remaining $550 million could have been spent to increase HOPE scholarship disbursement amounts to students but the commission opted to retain those funds for future use.

The last Georgia state appropriations budget item I wanted to discuss was the Department of Community Health or healthcare budget. Governor Brian Kemp’s fiscal year 2020 budget requested $2.96 billion in state general funds for the Department of Community Health and ultimately ended up with a $3.58 billion dollar budget. This increase offset a reduction in the Federal Medical Assistance Percentage (FMAP) and growth in Medicaid expenses. Governor Kemp and Georgia’s legislator’s negotiated an increase in state appropriations for Medicare of a “combined $171 million in state and federal funding for FY 2020 for Georgia’s Aged, Blind, and Disabled and low-income Medicaid programs.” (https://gbpi.org/)  Approximately 95 percent of state funds and 92 percent of federal funds are allocated to Medicaid and PeachCare, which is Georgia’s Children’s Health Insurance Program.
Georgia is one of fourteen states that has not expanded Medicaid eligibility in participation with the Affordable Care Act to receive additional federal funding for health care coverage of low-income residents. The Department of Community Health also oversees the State Health Benefit Plan which provides health insurance to approximately “665,000 of Georgia’s active and retired state employees, teachers and other public school employees.” (https://gbpi.org/) 
I was actually surprised to find that approximately fifteen percent of the total annual state budget funded Community Health and although some would argue that this was not a large enough percentage of the total budget I considered $3.58 billion dollars to be fiscally conservative responsible funding for this segment of the overall state budget. Once you understand all that goes into the allocation of funding for all the state agencies you have a much greater appreciation for the complexity and dynamic nature of the work the Legislative Counsel, General Assembly and both the House and Senate Appropriations Committees need to review and approve in a ten week legislative session. 

My review and evaluation of the General Assembly’s approved fiscal year 2020 state budget has concluded that the allocation of state funds for numerous programs and projects was well thought out, balanced, fiscally conservative and will have a positive impact on the people of the state of Georgia. On a personal note, during my internship at our states capital I had the honor and pleasure of working directly with the House Appropriations Committee, and Chairman England, attending several meetings and handling many direct requests from Chairman England experiencing first hand the intricacies and urgency of the budgeting and appropriations decision making process. A thoroughly educational, exciting and enjoyable experience!

 

 

Summary of Appropriations

Departments/Agencies

FY 2019Original Budget          

FY 2019 Amended

FY 2020

Department of Community Health 

$3,390,259,111  

$3,461,475,554 

$3,582,184,258

Department of Education

$9,937,438,469  

$10,123,347,324 

$10,595,998,888

Board of Regents of the

University System of Georgia

$2,428,245,232  

$2,441,831,486 

$2,575,165,733

Georgia Student Finance Commission

$   976,554,824  

$984,977,933 

$1,022,663,855

TOTAL STATE GENERAL

FUNDS APPROPRIATIONS

$22,765,680,686  

$23,201,428,697 

$23,724,026,710


 

 

 

 

 

 

Conclusion

As I stated in my opening remarks, taking into account that a majority of both the Georgia House and Senate is Republican I saw a fiscally conservative budget developed, reviewed in committee and bills ultimately passing votes in both the State House and Senate allowing appropriations to begin allocating funds. I took particular interest in the budget allocations for the Department of Education, receiving $10.6 billion dollars, the University System of Georgia, receiving $2.6 billion dollars, the Georgia Student Finance Commission, receiving $1 billion dollars and the Department of Community Health which received $3.6 billion dollars.  As I became more familiar with the way in which the Georgia General Assembly operates I developed a much greater appreciation for the dynamic and complex nature of the state budgeting process.  Projected state revenue, based on a conservative 3.2 percent projected growth rate, for the 2020 fiscal year exceeds $27.5 billion, with 99.9 percent of those funds being generated by state general funds receipts and the state lottery. Every dollar is put to work with the executive branch garnering all but $52 million, which is utilized by the judiciary and legislative branches of government, of all available state funding hence the importance of the position of Governor and the philosophical viewpoint of the administration in power. Areas of priority to the sitting Governor, and his or her administration, will have considerable influence regarding the allocation of funding throughout the state. In this fiscally conservative administration we saw an increase of $472.6 million in the Department of Education Budget, $133.3 million increase in the University System of Georgia budget, $37.7 million increase in the Georgia Student Finance Commission budget and a $120.7 million increase in the Department of Community Health budget. I considered these funding increases to be fiscally conservative by being spent either directly on the citizens of the state or investments in the educational future of the citizens of the state of Georgia. To further validate my argument that Governor Kemp’s administration is fiscally conservative is the budget adjustment for fiscal year 2020 that the Office of the Governor made decreasing their budget by $72.4 million, or 55 percent, from their 2019 budget.

Works Cited

Carl Vinson Institute of Government, University of Georgia. How a Law is Passed in the Georgia

General Assembly. Georgia Info.

https://georgiainfo.galileo.usg.edu/topics/government/article/general-assembly/how-a-law-is-passed-in-the-georgia-general-assembly

Kanso, D. (2019). Overview of Georgia’s 2020 Fiscal Year Budget. Georgia Budget and Policy

Institute. https://gbpi.org/2019/overview-of-georgia-2020-fiscal-year-budget/

Kanso, D. (2019). Georgia’s FY 2020 Budget: Majority of New Spending Dedicated to

$530 Million Teacher Pay Raise. Georgia Budget and Policy Institute.

https://gbpi.org/2019/georgias-fy-2020-budget/

Kemp, B. (2019). Putting Georgians First; The Governor’s Budget Report. 5-392.

https://opb.georgia.gov/sites/opb.georgia.gov/files/related_files/site_page/FY%202020%20Budget%20Report%20-%20%20FINAL.pdf

Legislation. Tracking a Bill Through The General Assembly. Georgia General Assembly.

http://www.legis.ga.gov/Legislation/en-US/default.aspx

Lela Iosava (2010)State Education Finance and Governance Profile: Georgia, Peabody Journal of Education, 85:1, 66-69, DOI: 10.1080/01619560903523805

Nadler, B. (2019). Georgia state legislature to consider Gov. Kemp’s budget proposals.

Associated Press. https://newschannel9.com/news/local/georgia-state-legislature-to-consider-gov-kemps-budget-proposals

Rubenstein, R., Scafidi, B., (June, 2002). Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education. National Tax Journal, Vol. 55, No. 2. Retrieved from https://www-jstor-org.proxy.kennesaw.edu/stable/pdf/

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Tandberg, D., Fowles, J., McLendon, M., (2017). The Governor and the State Higher Education Executive Officer: How the Relationship Shapes State Financial Support for Higher Education.  The Journal of Higher vol. 88, no. 1, 110–134.doi: 10.1080/00221546.2016.1243945.

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statute. Retrieved from http://www.law.uga.edu/researching-legislative-history-enacted-

Georgia-statute

Wilk, A., Evans, L., Jones, D., (2018). Expanding Medicaid Access without Expanding

Medicaid: Why Did Some Nonexpansion States Continue the Primary Care Fee Bump?.

Journal of Health Politics, Policy and Law, Vol. 43. No. 1. doi: 10.1215/03616878-4249861

ZERO BASED BUDGET REPORTS Fiscal Year 2020. Governor’s Office of Planning and Budget. 3-177. https://opb.georgia.gov/sites/opb.georgia.gov/files/related_files/site_page/FY%202020%20ZBB%20Report%20FINAL.pdf

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