For-profit colleges face more state scrutiny

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Exclusive articles on state policy, politics and trends from the staff of

Tuesday, April 19, 2011

For-profit colleges face more state scrutiny
By David Harrison, Stateline Staff Writer

University of Phoenix photo

With more than 400,000 undergraduates and more than 200 campuses, the University of Phoenix is the
nation’s largest for-profit institution of higher learning. Last fall, the federal government started drafting new
rules to rein in the recruiting practices of for-profit colleges. That effort followed a report by the U.S.
Government Accountability Office that found the colleges deceived potential students about graduation and job
placement rates in the process of getting them to enroll and sign up for state and federal loans. The colleges
called the report flawed, but that didn’t keep Education Secretary Arne Duncan from vowing to change the way
the schools do business.

Now, however, the Education Department has postponed publishing the new rules after facing heavy pressure
from for-profit education lobbyists and opposition in Congress. That has led several states, tired of waiting for
action from the federal government, to take matters into their own hands. Legislators say they are simply trying
to protect students and consumers in their states. Backers of the for-profit schools say fiscally troubled state
governments are seeking to save money by restricting the amount of public aid that for-profit schools are
entitled to.

Deanne Loonin, an attorney for the National Consumer Law Center who tracks for-profit schools, says that
while the bulk of the lobbying has been at the federal level so far, the action on this issue is shifting to state
capitals. She expects that movement to continue. “There’s definitely been a lot of resources poured into the
states,” she says, “and I expect there will be more.”
Related Stateline stories
Virtual education boom hits the states As enrollments soar and state aid vanishes, community colleges
reconsider their role Are "charter universities" the future of state-funded higher ed?
According to the National Conference of State Legislatures, lawmakers in 17 states have introduced bills on
for-profit colleges this year, many of them designed to tighten regulation of the schools. Earlier this month,
Maryland’s House and Senate enacted measures that would eliminate all state aid to for-profit schools, ban
commissions or bonuses for student recruiting, and make all for-profit schools in the state contribute to a fund
to protect students if any college in their group breaches a contract. Governor Martin O’Malley says he
supports the bills and intends to sign the ultimate version into law.

California lawmakers approved legislation recently that would restrict a for-profit college’s eligibility to receive
state aid in the form of Cal Grants. According to The Sacramento Bee, the state has been sending $20 million
more in Cal Grants to for-profit schools each year than to public community colleges. This is not the first time
California regulators have taken on this issue. Legislation mandating the schools to meet certain graduation
job-placement goals to gain accreditation expired in 2007 when lawmakers and Governor Arnold
Schwarzenegger failed to reach an agreement to extend it. Now that for-profit schools are back in the spotlight,
state officials are once again trying to regulate them.

Enrollment boom

Like many higher education institutions, for-profit schools such as the University of Phoenix and Kaplan and
DeVry universities have seen an enrollment boom since the start of the recession. More than 2.2 million
students enrolled in a private for-profit institution in the fall of 2009, almost 25 percent more than the previous
year, according to a federal study.

Many of those students take their courses online. Slightly more than half of the students at for-profit schools
received Pell Grants, federal aid that helps low-income students attend college. The study found that students
in private for-profit schools were less likely to graduate with a four-year degree than those in other schools,
although they were more likely to earn a two-year degree than their peers in other institutions.

Last year’s GAO study set off a storm of controversy around the schools. Using undercover testing, the agency
found some schools encouraging students to falsify their financial aid applications in order to qualify for federal
grants. Other schools misrepresented their programs’ graduation rates, job-placement rates and costs while
recruiting students.

State consumer protection laws have long given officials authority to regulate the business practices of for-
profit schools to combat fraud. But not many of them looked at the schools very closely until recently, when
they realized that increasingly large numbers of their students were signing up at these institutions.

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Most of this year’s legislation is designed to go further than previous enforcement efforts by making changes
similar to the ones in Maryland: explicitly targeting for-profit schools, giving state education agencies oversight
jurisdiction to monitor their practices and requiring the schools to contribute to student loan guarantee funds.

Nebraska's approach

Some states are using the controversy to re-examine their full range of higher education institutions. In
Nebraska, state senators are poised to approve a measure that would update the state’s regulatory
mechanism dealing with higher education. The bill’s sponsor, state Senator Greg Adams, says it would
streamline the application process that schools, whether for-profit or not, have to follow in order to pass muster
with the Nebraska Commission for Post-Secondary Education. At the same time, the legislation would increase
the accountability to the state that the schools would face once they were approved. Some similar efforts have
been unsuccessful; bills to more tightly control the accreditation of for-profit colleges failed this year in North

Scrutiny is now spreading, however, beyond the legislative branch. Attorneys general in Florida, Illinois, Iowa
and Kentucky have launched investigations of for-profit schools. “It is my job to ensure that businesses — and
these schools are businesses — are following Kentucky’s consumer protection laws,” Kentucky Attorney
General Jack Conway wrote in an op-ed for the Lexington Herald-Leader.

Harris Miller, president of the Association of Private Sector Colleges and Universities, which represents for-
profit schools, says he does not object to states updating a regulatory system that has had trouble keeping up
with the colleges’ growth. But he questioned the motives of some state politicians who, he says, are more
concerned with state budgets than with educational practices.

“Anywhere that there are financial problems, which is virtually everywhere at this point,” Miller says, “people
are running around like chickens with their heads cut off, saying, ‘Can we find some way to cut funding?’ and
coming up with special rules to make it harder for the schools to be eligible for student aid. ”

Miller believes that the controversy over for-profit schools will not go away even if the economy recovers. “I’m
not sure state colleges and community colleges will ever see a major uptick in their revenue, even when state
coffers do better,” he says. “So that’s going to lead some of them to see us as competitors that they’d rather

— Contact David Harrison at

Tuesday, April 19, 2011

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States eye linking public assistance, drug tests
By Pamela M. Prah, Stateline Staff Writer

SOCIAL POLICY BEAT PUBLIC ASSISTANCE STRINGS: South Carolina is among 27 states, including
Arizona, Florida and Massachusetts, to consider legislation this year that would require recipients of various
kinds of public assistance to pass drug tests, USA TODAY reports. Supporters say such a move would make it
easier for companies to hire from the unemployment rolls, but detractors say it's unconstitutional.

FOOD STAMP FRAUD: Cost-cutting legislators in Illinois want to join a national push to fight fraud by adding
identification photos to food-stamp cards, says The Associated Press. Advocates say photo IDs would prevent
people from selling the cards for cash, but opponents say such a requirement would amplify a negative stigma
about food stamps. Meanwhile, Iowa and Texas are looking at prohibiting people from purchasing “junk food,”
such as hot dogs, with food stamps.

JOB TRAINING CUTS: Federal funding for job training programs was cut by more than $870 million in the
budget compromise President Obama and congressional leaders reached to avert a government shutdown.
Cuts include occupational training grants at community colleges, “green” jobs classes and a program to help
low-income older people acquire work skills, The Washington Post reports.

MORE THAN 900 ABORTION BILLS: Kansas and Idaho joined Nebraska as the only states to ban late-term
abortions because of “fetal pain.” The view that fetuses can feel pain at 20 weeks after conception is not
accepted by all medical professionals. The attorney general in Idaho has said the measure is unconstitutional.
More than 900 abortion measures had been introduced by the end of March and seven states had enacted 15
new abortion-related laws, says the Guttmacher Institute. The new laws include expanding the pre-abortion
waiting period requirement in South Dakota from 24 hours to 72 hours and allowing any hospital employee in
Utah to refuse to “participate in any way.” A more detailed analysis from Guttmacher is available here.

GAY ADOPTION: Legislation to give married couples a tie-breaker preference over singles for state-arranged
adoptions is headed to Arizona Governor Jan Brewer. The preference would apply if all other criteria are equal, explains. Social conservatives support the bill. Gay-rights advocates oppose it.
Meanwhile Virginia’s attorney general has advised a state board that it cannot impose new regulations that
some argue would for the first time allow gay couples to adopt children in Virginia, according to The
Washington Post.

“Social Policy Beat” provides a quick analysis of recent social policy news in state government. Click here to
find Stateline's daily roundup of social policy news.

— Contact Pamela M. Prah at

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Tuesday, April 19, 2011

Vermont is latest to adopt National Popular Vote
By John Gramlich, Stateline Staff Writer


With only three electoral votes and solidly Democratic habits in national politics, Vermont generally isn't
counted among the battlegrounds in a presidential election year. Even so, a bill Governor Peter Shumlin will
sign later this week is a step toward changing the way all future presidents are chosen.

The legislation calls for Vermont to join the National Popular Vote, a movement to give the presidency to the
candidate who wins the most overall votes, rather than the most electoral votes. The proposal comes in
reaction to presidential elections — most recently in 2000, when Republican George W. Bush defeated
Democrat Al Gore — in which the candidate with the most votes did not become chief executive.

Under the bill, all three of Vermont's electoral votes would go to the candidate who wins the national popular
vote, even if Vermont voters themselves did not opt for that candidate. The system would go into effect only
when it has been agreed to by enough states to ensure that 270 electoral votes — the minimum needed to
become president — have been committed to the plan.

Vermont will become the seventh state to agree to the proposal, according to the Burlington Free Press. It joins
other mainly Democratic states that are typically not very competitive during presidential election years:
Hawaii, Illinois, Massachusetts, Maryland, New Jersey and Washington.

Including Vermont, the National Popular Vote plan now has 74 electoral votes behind it.

“Today’s Take” provides a quick analysis of the day’s top news in state government. — Contact John Gramlich

Wednesday, April 20, 2011

Connecticut's Dan Malloy seeks balance in a year of confrontation
By Rob Gurwitt, Special to Stateline

 Office of Governor Dannel P. Malloy

Connecticut Governor Dannel P. Malloy Looking out over the crowd at a recent town-hall gathering in New
Britain, Connecticut, Governor Dannel P. Malloy noticed a woman holding up a sign. It read, “I Love Chris

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Malloy’s better-known New Jersey counterpart, of course, has become a national figure for his budget-cutting,
slams at the leaders of public-employee unions, and pugnacious YouTube clips. And Malloy, a Democrat, has
followed the Republican Christie’s approach in taking his budget plans on the road, holding 17 packed town
halls around the state that allowed residents to question and sometimes berate him eye to eye. But that’s
about where the resemblance ends.

In fact, when it comes to substance rather than style, there isn’t much similarity between Malloy and any of the
other 27 new governors who took office this year. He seems determined to handle things his way, regardless
of what’s being done in other states by either Democrats or Republicans.

“I want everyone to understand that we’re doing this differently,” he told the New Britain crowd that night, after
calling attention to the woman’s sign. “New York balanced its deficit by cutting $4.65 billion in local aid. New
Jersey cut local aid by $3.6 billion over two years. In both states, that will work out largely through higher
property taxes. Here, you’re living in a place that already has relatively high property taxes. How would our
balancing the budget that way help this community, or for that matter any community in Connecticut?”

Like most states, Connecticut is grappling with a massive budget deficit. Its $3.3 billion gap is 18 percent of its
fiscal year 2011 budget; only eight states face deficits that form a larger percentage of their budgets.
Connecticut also carries the highest public debt per capita of all 50 states, according to the state’s Office of
Fiscal Analysis.

Malloy is dealing with all this after his own fashion. In this season of assaults on public employees’ collective
bargaining rights, burden-shifting to local governments, and all-out cuts to education and social-welfare
programs, he is confident he can move the state out of trouble by spreading pain broadly, without inflicting too
much on any single constituency.

Taxes and negotiation

The most noticeable feature of his deficit-cutting plan calls for $1.5 billion in tax increases. He is negotiating for
$1 billion in givebacks from public employees, and has made it clear that massive layoffs may be necessary if
no agreement is reached, but he is determined to avoid that scenario. And while he plans $758 million in wide-
ranging budget cuts, he has refused to take them from state aid to municipalities or from the state’s education
cost-sharing formula, as has happened in many other places.

Malloy has also proposed fully funding the state’s pension obligations, to the tune of $877 million, the first time
in years the state has stepped up to that particular responsibility. And he is shifting Connecticut to Generally
Accepted Accounting Principles, thereby ending decades of playing fast and loose with yearly accounting,
even though this involves a net annual impact of roughly $100 million in extra cost.

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About the only way the 55-year old Malloy looks like a standard-issue 2011 governor is in his willingness to
play to voters’ hunger for change in how state government operates. He has announced a plan to shrink 81
agencies — or “separately funded state silos,” as he calls them — down to 57. “There’s no justification for
having so many,” he says; “it just encourages behaviors that aren’t cooperative and don’t seek cost-savings,
and it leads to an excess of management.”

Malloy is taking his idiosyncratic message not only to town meetings all over the state but to local chambers of
commerce and union gatherings, marking a sharp contrast with recent Connecticut governors. Members of the
statehouse press corps, unused to this, joke that Malloy needs to start handing out t-shirts listing dates and
venues, like a rock-concert souvenir.

Even Republicans grudgingly give him credit for his straightforward, accessible approach. “The good part
about his budget is it’s not fake, it’s not full of gimmicks,” says GOP state Senator Tony Guglielmo, a veteran
member of his chamber’s finance committee. “The bad part is it’s full of taxes.”

Hitting everyone

In fact, it’s full of all sorts of things to which Connecticut residents take exception. Malloy’s plan would raise
most of the taxes the state relies on. It adds new income tax brackets and raises the top rate from 6.5 percent
to 6.7 percent — just below the top rate in neighboring New York State. It increases the sales tax from 6
percent to 6.35 percent and extends it to cover such items as haircuts and inexpensive clothes. It adds a luxury
tax on boats, jewelry, cars and high-end clothing, but also hits lower- and middle-income residents by raising
taxes on cigarettes, gasoline and alcohol.

A March Quinnipiac University poll found that barely one-third of respondents liked his handling of the budget,
with the tax increases coming in for particular disapproval. It doesn’t seem to faze the governor very much.

The proposed spending cuts have been less controversial, but have still riled various constituencies. While
Malloy, who was mayor of Stamford for 14 years, has kept state aid to municipalities and school districts
largely untouched, his plan still eliminates state reimbursements to municipalities for a tax exemption on
manufacturing; the administration has conceded that this falls especially heavily on hard-hit blue-collar towns
and may be reworked by the Democratic-controlled legislature.

Malloy's plans for agency cuts should he not get the labor givebacks he’s been seeking also worry social-
service advocates. “He has for the most part protected the safety net,” says Terry Edelstein, president of the
Connecticut Community Providers Association, an umbrella group for social-service providers. “But we’re
concerned that because human services are the largest part of state services, more cuts will hurt.”

Quiet bargaining

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A great deal is riding on the negotiations between Malloy’s administration and the coalition of state employee
unions. The two men leading the talks, Mark Ojakian of the state’s Office of Policy and Management and labor
lawyer Dan Livingston for the unions, have known each other for years and been occasional allies on civil
rights issues. In marked contrast to similar meetings in other states, their discussions have been extraordinarily
closely held.

“It is impressive just how quiet it has been outside that room,” says State Representative Andy Fleischmann, a
Democrat who chairs the House Education Committee. “They’re doing their best to just quietly work it out
between themselves.”

“I believe in labor and the right to organize,” says Malloy. “That doesn’t mean we’re going to get an agreement,
but I’m certainly not going to demonize them.” For Malloy, layoffs may be a last resort, but they’re clearly on
the table. On the other hand, ramping up the tax increases should negotiations fail doesn’t even make it into
the realm of possibility. The increases he has proposed are as far as he will go. To summarize his program in
one sentence, it is a careful attempt to achieve balance. Where other governors are choosing to tilt in an
ideological direction, Malloy is determined to pursue a centrist course.

This is politically risky. One thing that became clear during the governor’s town-hall tour is that his plan has
something in it to annoy just about everyone. He heard — in usually polite but occasionally combative tones —
from people who believe he’s being too hard on the wealthy and from others who think he’s being too easy on
the wealthy; from union members who insist he’s asking for too little from corporations and from business
people who say he’s doing too little to encourage job growth; from government employees worried that he’s
asking them for too much sacrifice and from conservatives who believe he’s coddling state employees. All the
interest groups know that their adversaries are complaining just as loudly as they are.

That highly visible divergence of opinion around the state may actually prove to be the governor’s best ally in
convincing the legislature that the only reasonable course lies in satisfying no one. “You have people
concerned about the cuts, you have people concerned about the tax increases, and you have people
concerned about the agency consolidations,” says Don Williams, the state Senate president pro tem, who is
optimistic that Malloy’s plans will prevail. “People know it’s the worst recession of our lifetime and we have to
take action. So I’m finding that while folks don’t agree with everything, they do agree that we have to step up
and take action. On the whole, folks realize we need to take the bitter medicine.”

— Contact Rob Gurwitt at

Wednesday, April 20, 2011

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Arizona's Brewer vetoes school bill
By David Harrison, Stateline Staff Writer


SCHOOL VETO: Arizona Governor Jan Brewer has been wielding a heavy veto pen over the past few days.
Last week the Republican governor stymied her Republican legislature, the East Valley Tribune reports, by
refusing to sign a bill that would have expanded state tax credits to people and corporations donating money
for private or parochial school tuition. Such legislation has been popular among supporters of voucher
programs as a roundabout way for state governments to subsidize private schools, but Brewer says that
Arizona’s continuing budget crisis drove her opposition to expanded tax credits.

SEEKING TUITION: California universities are opening their doors wider to out-of-state students as they chase
the higher tuition revenue that such students can bring in, the San Francisco Chronicle reports. The University
of California, Berkeley, offered admission to 9,303 undergraduates this year, down from 11,184 in 2009. This
year, 2,920 of those admitted were non-Californians, up from 1,026 in 2009. Meanwhile, students currently
enrolled in the California State University system held a day of rallies at all 23 campuses last week protesting
tuition increases and budget cuts, according to the Los Angeles Times. Governor Jerry Brown proposes to cut
$1.4 billion from higher education, of which about $500 million would come from the California State University

TEACHER LAYOFFS: Robert Bobb, the emergency financial manager for Detroit’s schools, has taken
advantage of a new Michigan law granting vast new powers to financial managers, the Detroit Free Press
reports. Bobb sent layoff notices to all 5,466 unionized teachers in Detroit’s public schools, and to 248
administrators. Most of those employees will be hired back, but the city teachers’ union complained that the
layoffs were an attempt to circumvent seniority rules that give preference to veteran teachers. Bobb says the
notices were necessary to cut costs at a time when enrollment in Detroit schools is rapidly declining. Bobb tried
to get rid of the seniority provision in teachers’ contracts in 2009, but the Detroit Federation of Teachers
insisted that they be maintained and other cost-saving measures implemented instead.

SHORT-YEAR STAYING POWER: State officials in Hawaii faced heavy criticism two years ago when they cut
the school year by 17 days in order to save money. To make up for that, state legislators passed a bill in 2010
to gradually extend the school year by 10 days. The measure was supposed to take effect this fall, but
lawmakers now are considering postponing its enactment until 2014, according to the Honolulu Star
Advertiser. The reason? Hawaii can’t afford it. Extending the school year would cost about $55 million a year.

"Education Beat" provides a quick analysis of recent education news in state government. Click here for
Stateline's daily roundup of education news.

                                                    Page 9
-- Contact David Harrison at

Wednesday, April 20, 2011

Unemployment rate dips in 34 states
By John Gramlich, Stateline Staff Writer


The Sun Belt remains a tough place to find work, but the unemployment picture is brightening across other
parts of the nation, according to a new report released by the U.S. Labor Department on Tuesday (April 19).

Nevada, California and Florida posted the nation's highest unemployment rates in March, the Labor report
shows. All three states were above 11.1 percent, with Nevada worst off at 13.2 percent.

Nationally, however, unemployment declined to 8.8 percent, with an encouraging 34 states posting month-
over-month declines. In February, 27 states reported lower levels than in January.

The Plains States continue to do well. North Dakota, Nebraska and South Dakota had the lowest jobless rates
— all of them below 5 percent — with North Dakota registering a best-in-the-nation 3.6 percent.

“Today’s Take” provides a quick analysis of the day’s top news in state government. — Contact John Gramlich

Thursday, April 21, 2011

Georgia shows the pitfalls of modernizing a state tax code
By Melissa Maynard, Stateline Staff Writer


Georgia's tax reform panel wanted to remove the exemption on groceries, among other changes. The idea
didn't get far. Last year, the Georgia legislature created a brand-new special council on tax reform. One of the
most prominent members was Roy Fickling, a Macon real estate man, appointed by House Speaker David
Ralston. Not long after his appointment, Fickling stopped by Ralston’s office to see if there were any marching
orders. To his surprise, there was only one: Forget about politics and give the state the tax code it needs.
Ralston told Fickling and the rest of the council not to worry about what sorts of changes might attract a
majority in the legislature.

The council, which included then-Governor Sonny Perdue, did exactly what Ralston recommended. Its

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members, mostly business leaders and academics, ignored politics.

They ultimately came forward with a sweeping proposal that would have eliminated sales tax exemptions on
groceries and extended the sales tax to a whole raft of additional products and services, from shoe repair and
dry cleaning to haircuts, home improvement, golf club memberships and online dating services. In exchange,
there would have been a cut in personal income tax rates. Altogether, the plan was designed to be revenue-

The members spent six months working independently, traveling the state in pursuit of citizen and stakeholder
input with no legislative involvement. It delivered its report to the legislature in January, just as Perdue was
leaving office and fellow-Republican Nathan Deal was replacing him.

That was when Fickling got his second surprise. The legislature refused to act on a single one of the
recommendations. Governor Deal didn’t lift a finger to help move them through. And the whole experience left
some close observers wondering whether ignoring politics is the best way to get major tax changes enacted.

Related Stateline stories
A tax reform test in Maine
Do you want a tax with that?
In Rhode Island, Chafee follows through on taxes
"You can't take politics out of tax policy,” argues Sarah Beth Gehl, deputy director of the Georgia Budget and
Policy Institute. “One of the hardest votes you can take is to move your state to a 21st century revenue system.
Part of the problem is that there are always going to be winners and losers.”

In this case, it was the losers who did the most to make their presence felt. The recommendations received
criticism from seemingly all corners — advocates for low-income families, Southern Baptists, tea partiers. They
latched onto particular pieces of the proposal they considered unfair and aired their grievances in the media.
“We got it from everywhere,” says Christine Ries, an economist at Georgia Tech who served on the council.
“Every deduction is a special interest, and everyone thinks, ‘well, mine is virtuous.’” Georgia State University
economist David Sjoquist, a member of the panel, laments that “there was never a chance to talk about the
logic behind the package as a whole.”

Frequent frustration

Tax reformers in other states who have tried similar efforts could have told the Georgia council just how hard
its job would be. A proposal very similar to Georgia’s was voted down by popular referendum in Maine in 2010.
Former Michigan Governor Jennifer Granholm succeeded in pushing through an expansion of the state sales
tax to many services in 2007, but opposition to the move prompted the legislature and the governor to change
course only a few weeks later by replacing the tax with an additional levy on businesses—which turned out to

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be a more politically palatable option. This year, Rhode Island Governor Lincoln Chafee has faced an
onslaught of opposition to his ideas for broadening the sales tax base even though he would lower some
income tax rates at the same time.

Georgia State economist Sjoquist reviewed the work of 19 state tax reform councils around the country that
have put forth recommendations in the last decade. He noticed nearly identical recommendations in many
cases, all focused on broadening bases while lowering rates. One of the reasons why such proposals are
difficult to enact, Sjoquist says, is that states tend to turn their attention to them only when their revenues are
dropping. That makes it harder to “buy off the losers” with offsetting tax cuts, which was part of the problem in
Georgia this year.

One gamble the Georgia council took was modeling its approach on the BRAC process the federal government
uses for closing defense bases that are no longer needed. Under the rules of BRAC, a commission submits a
list of proposals to the president, and if he approves, sends it on to Congress. There it must be voted on as a
package—no amendments. The legislation creating the tax reform council in Georgia had a similar provision.
But there was one crucial difference. If Congress does nothing at all, the bases get closed. If the Georgia
legislature chose to do nothing, which is what it did, the rules left the tax code just as it was. “The unfortunate
issue for us,” says House Minority Leader Stacey Abrams, “is that we had the ability to undue our own

Despite this year’s disappointing result, some Georgia tax reformers think the effort will still yield results.
Bradford Dickson, an Atlanta accountant who served on the council, says that fundamental changes in the way
the state collects revenue may be possible in the near future because of the groundwork that has been laid.
“The majority of lawmakers want to make this happen, but I think it was a little too much too fast,” he says,
noting that the state’s legislative session was only 40 days long.

Some are hopeful that Governor Deal will include tax reform as part of a special session that is planned this
summer to enact redistricting, or that the council’s recommendations might be acted on next year. Others
worry, however, that the legislature missed its shot because of the toxic politics that dominates the redistricting
process and the election season that will be in full swing when the legislature convenes for a regular session in

Council member Fickling, for his part, is open about his disenchantment with the political process. "In the end,
it kind of defeated the entire purpose," he says. “I would rather see nothing done than bits and pieces."

--Contact Melissa Maynard at

Thursday, April 21, 2011

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Road funding a big issue in contest for governor of West Virginia
By Daniel C. Vock, Stateline Staff Writer


RUNNING ON ROADS: With a special election primary less than a month away, Democratic candidates for
governor of West Virginia are sparring over how to pay for road improvements. Secretary of State Natalie
Tennant calls the state’s roads a “disgrace,” and the other leading candidates also decry the poor shape of
highways, reports the Charleston Daily Mail. Most agree that the state should tax natural gas from Marcellus
Shale deposits to fix up the roads, and Acting Governor Earl Ray Tomblin, who is seeking a full term, has
come under fire for vetoing a measure to boost road funding with higher motorist fees. “Yes, I did veto the $47
million rate increase,” the governor says. “There’s a lot of families still hurting from the recession out there.”
The primary is May 14.

ROAD TAX OVERRIDE: Even with states straining to keep their highways in good shape, gas tax increases
have remained politically unpopular, writes Sean Slone of the Council of State Governments. But in South
Dakota, he notes, lawmakers overrode a gubernatorial veto to increase license plate fees for the purpose of
maintaining local roads. State Senator Mike Vehle told Slone that support for the increase was overwhelming.
“When I asked for opponents (at a hearing), only the governor’s representative stepped forward,” Vehle
recalled. The governor’s lobbyist “looked back at the crowded room of supporters, and before testifying said, ‘I
think I now know how Custer felt!’”

SPEED LIMITS: Kansas Governor Sam Brownback approved a new law boosting the top speed limit in the
state from 70 to 75 miles an hour on divided highways, reports the Lawrence Journal-World. The measure also
allows motorcyclists and bicyclists to go through red lights if the signal fails to change. Texas lawmakers, too,
are clearing the way for faster travel. The Texas House voted to eliminate the 5 mph difference in speed limits
between night and day driving and to allow trucks to go as fast as cars, the Austin American Statesman writes.
Earlier, the House approved setting automobile speed limits on new highways at 85 mph—the fastest in the
nation; that measure is pending in the Senate.

ATLANTA WISH LIST: Before Georgia voters decide next year whether to approve a sales tax hike for
transportation, Atlanta officials are compiling a list of what, exactly, the new tax money would pay for. The list,
reports the Atlanta Journal Constitution, includes 436 projects costing $29 billion, even though the tax increase
would create only $8 billion in additional money. In a separate analysis, the paper noted that the proposals
tended to favor mass transit. Projects for trains and buses made up at least $13 billion of the total requested.

FLORIDA TRADEOFF? A key congressman from Florida hinted that he may pressure Governor Rick Scott to
let the Orlando area go ahead and build a commuter rail system, notes Transportation Nation. U.S.
Representative John Mica, a Republican who heads the House Transportation Committee, was reacting to

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Scott’s request for $75 million in federal funding to dredge the Miami harbor to accommodate larger ships.
“Mica didn’t directly say he was linking that decision to the governor’s approval of the SunRail commuter train,”
Transportation Nation writes, “but he did bring up the similar timings for the two decisions.”

“Transportation Beat” provides a quick analysis of recent transportation news in state government. Click here
to find Stateline's daily roundup of transportation news.

— Contact Daniel C. Vock at

Thursday, April 21, 2011

Connecticut governor, lawmakers agree to package of tax hikes
By John Gramlich, Stateline Staff Writer


More insistently than any other governor this year, Connecticut's Dannel Malloy has pushed tax increases as
the tough medicine necessary to help close a multi-billion dollar budget shortfall. On Wednesday (April 20),
Malloy took a big step forward in his controversial plan, announcing a deal with legislative leaders that would
help erase the state's deficit but make life more expensive for almost all Connecticut residents.

Under the agreement, announced at the Capitol just after 5 p.m., the General Assembly would raise taxes on
income, corporations, inheritance, alcohol, cigarettes and gasoline, The Hartford Courant reports. According to
the Courant, the sales tax on retail items also would increase from 6 to 6.35 percent, though the deal does not
include some other sales-tax changes — such as applying the tax to haircuts — that Malloy had sought.

In all, the agreement between the Democratic governor and Democratic legislative leaders raises taxes by
nearly $1.5 billion to help close a shortfall estimated at $3.3 billion, or about 18 percent of the current overall
budget. Malloy and lawmakers want to resolve the remaining shortfall by reducing spending and negotiating
concessions from state workers, though it is still unclear whether public employees will go along with cuts of
the magnitude being sought.

Republicans wasted little time in criticizing what they see as a one-party power grab that ignores the will of
Connecticut residents, many of whom protested against the governor in recent weeks as he went on a
statewide tour to discuss his budget proposal.

"Governor Malloy and the Democratic majority have let down the people of Connecticut," Senate Republican
leader John McKinney told the Courant. "This massive and unnecessary tax hike flies in the face of the
unanimous public outcry against unsustainable government spending and higher taxes.''

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But Malloy has not backed down from his unconventional approach toward balancing the budget, as Stateline
noted in a profile of the new governor on Wednesday. Beyond pushing tax increases — which most governors
are loathe to do — Malloy also has refused to slash funding for localities, arguing that a shift in the tax-increase
burden to municipalities will do nothing to improve life for residents.

The budget deal announced Wednesday now must gain the support of rank-and-file lawmakers in the
Connecticut General Assembly.

“Today’s Take” provides a quick analysis of the day’s top news in state government. — Contact John Gramlich

Friday, April 22, 2011

California Republicans riled by Brown's union deals
By Melissa Maynard, Stateline Staff Writer


BANKED LEAVE: Republicans are poised to block the contract proposals that California Governor Jerry Brown
has negotiated with unions representing state workers, reports the Sacramento Bee. Unions point to significant
concessions in the contracts, including requirements that workers contribute more toward their pensions. But
many Republicans in the legislature say the contracts don’t go far enough to cut labor costs. The most
controversial contract is for prison workers, who would receive an average of 8 weeks of paid time off each
year. The contract also would end the current 80-day cap on vacation time that can be banked and cashed out
when a state prison worker retires, reports the Los Angeles Times. Even the current 80-day policy is
expensive: Retiring state workers cashed out nearly a half billion dollars in unused vacation time from 2006 to
2009, according to California Watch.

MAGAZINE SUBSCRIPTIONS: Efforts to limit the way that union dues can be collected from public workers —
and the extent to which they can be used for political purposes — are moving through a number of legislatures
this session. But a measure under consideration in Minnesota goes further than prohibiting unions from using
dues for political purposes without the members’ consent. Minnesota unions also would be prohibited from
using dues to purchase magazine subscriptions and make donations to foundations without the explicit written
consent of members, reports the Associated Press. The sponsor of the bill, state Senator Pam Wolf, is herself
a member of a teachers’ union and says that about $60 of the $400 she pays in dues each year goes to
magazines, foundations and political action committees.

MEGA-AUDIT: The Missouri state Senate passed legislation requesting an audit of almost the entire state
government. State Auditor Tom Schweich would be tasked with comparing and analyzing spending in five to

                                                     Page 15
ten of the state’s largest departments to search for potential cost savings, reports the Associated Press. He
would then submit a report about best practices and opportunities to reduce spending to the legislature by
August 2013.

HEALTH INSURANCE: Michigan Governor Rick Snyder’s budget cuts aid to local governments across the
board, but offers incentives to local governments that comply with certain “best practices,” including requiring
employees to pay at least 20 percent of their health insurance costs. The Michigan Senate is considering a
non-negotiable approach, a bill that would make the 80-20 split in health insurance costs mandatory for all
state and local governments, public schools, community colleges and universities, reports Michigan Live. This
tactic is favored by school officials, who no longer want health insurance to fall under the realm of topics that
are collectively bargained.

RECALL: The political fight over labor rights in Wisconsin isn't over. Eight Republicans in the state Senate are
being targeted in legislative recall petition efforts for their support of Governor Scott Walker’s law severely
limiting collective bargaining rights for public employees. Meanwhile, eight Democrats are being targeted
because of their decision to flee the state in order to delay a vote on the measure. According to the Milwaukee
Journal Sentinel, the organizers seeking to oust the Democrats now say they have gathered more than the
required 15,960 signatures needed to force them into a recall election. On the other side, the required number
of signatures have been filed for four of the GOP senators targeted for recall.

“Government Management Beat" provides a quick analysis of recent management news in state government.

—Contact Melissa Maynard at

Friday, April 22, 2011

Immigrant students win DREAM Act in Maryland but face
opposition elsewhere
By Daniel C. Vock, Stateline Staff Writer


Undocumented college students in Atlanta join hands during a protest for higher education rights at state
universities. Maryland Governor Martin O’Malley has a controversial bill on his desk right now very similar to
one vetoed by his predecessor eight years ago. When he signs it, as he has promised to do, he will thrust
Maryland into the center of the national debate over immigration.

The legislation, which supporters call the Maryland DREAM Act, offers in-state college tuition to students who
were brought into the country illegally as minors but who have since graduated from state high schools.

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Maryland would become the 11th state to offer tuition assistance to undocumented students.

States have been legislating on the immigrant student question all over the country this year, but they have
been going in different directions. It has been “active and in flux with no clear trend,” says Dan Hurley, the
director of state relations for the American Association of State Colleges and Universities. The rush of state
activity, he says, “affirms the need and benefit for federal policy clarification or congressional action on this

For years, the question of unauthorized immigrants in higher education has been on the back burner in most
state capitols. Advocates for the immigrants generally have set their sights on Washington, where they hoped
Congress would pass the federal DREAM Act, granting citizenship to undocumented students who went to
college or served in the military.

Related Stateline stories
Utah on immigration: We aren't Arizona Arizona's next immigration debate: babies born in U.S. Arizona
employer law nets immigrants, not companies But the DREAM Act failed in the U.S. Senate by a handful of
votes last December, and the chances of it coming up again dropped dramatically with the Republican
takeover of the U.S. House this January. Some of the energy previously directed toward the federal
government has now been channeled to the state level.

Already this year:

Eight students — including several in the country illegally — were arrested in Atlanta while protesting a
decision by Georgia’s Board of Regents to bar undocumented immigrants from attending the state’s top five
universities. (Alabama, South Carolina and Virginia already ban them from some or all public colleges.) When
Georgia’s new policy takes effect later in the year, its impact could be small. University officials say that the
affected schools had a total of only 27 undocumented students enrolled last fall.

Wisconsin Governor Scott Walker has proposed rolling back his state’s policy of letting undocumented
students qualify for in-state tuition. Wisconsin added the benefit in 2009. So far, Oklahoma is the only state to
have rescinded a similar benefit.

The Colorado Senate, controlled by Democrats, passed an in-state tuition bill favoring immigrants on a party-
line vote. It faces an iffy future in the Republican-held House.

Attempts to repeal in-state tuition benefits for illegal immigrants have failed in Kansas and Texas.

Lawmakers in California and Illinois are considering making undocumented students eligible for financial aid.

Student efforts

                                                     Page 17
The fight over the federal DREAM Act encouraged dozens of undocumented students to reveal their status
publicly. Many now are becoming vocal on the state level.

That was one of the biggest changes this year in Maryland, says Helen Melton, who pushed for in-state tuition
rights on behalf of the immigrant advocacy group Casa de Maryland. “The students,” she says, “came out to
support the bill just about every time something important was happening.” Many of those who spoke up were
honor students in high school. When they told elected officials about their struggles to afford a college
education, it was “really powerful,” Melton says.

Nationally, an informal network of unauthorized students has helped coordinate such advocacy campaigns.
The spokesman for, an undocumented student in Florida who goes only by his first name
of Juan, explains the immigrants’ state-level advocacy in long-range terms. “Maybe the (federal) DREAM Act
won’t be around the corner for this year or before the elections,” he says, “but it’s bills like these that give
people hope.”

Those who oppose tuition breaks for the undocumented, such as Thomas Fitton, president of the conservative
group Judicial Watch, say that such optimism is unwarranted. Fitton argues that Maryland is an outlier, and
that most states will be moving in the opposite direction, in favor of tightening admissions criteria.

Whatever most states do, there is no escaping the fact that without changes in federal law, college degrees will
not help unauthorized immigrants find jobs in the United States. They will be unable to obtain legal work
permits. Many continue to hold out hope that, despite the current absence of federal momentum, Congress will
eventually change that policy.

In the meantime, Juan says, earning his own degree is part of his larger fight for access to education and
immigrant rights. “It’s just going to be another medal on my chest just to prove that, with hard work and
determination, you are able to accomplish your dreams,” he says. “At least I will be able to inspire others to set
forth on the same path.”

Immigrant advocates such as Melton, the advocate from Casa de Maryland, point to tangible benefits from
legislation of the kind Maryland is about to enact. Some of the benefits, she says, would accrue to the state.
The student’s parents would have to pay income taxes, thus bringing in more public revenue. Universities
would also gain students — and tuition money, too — because some of those admitted under the new law
would otherwise lack the funds for higher education and thus contribute no tuition at all.

The law requires undocumented students to attend community college before going to a four-year institution.
They would get in-state tuition but be counted as out-of-state for the purpose of complying with Maryland law
requiring that 70 percent of all undergraduates be in-state. The University System of Maryland supported the
legislation O'Malley is about to sign.

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Legal maneuvers

The larger issue is already in court. Judicial Watch has sued Montgomery College, a community college in
Maryland, for offering in-state tuition to illegal immigrants in the absence of explicit state authorization. Judicial
Watch also sent a letter to County College of Morris in New Jersey, which had started granting a tuition
subsidy to illegal immigrants but which backed off its two-month-old policy.

Maryland state Delegate Patrick McDonough, a Republican, was involved with the Montgomery College
lawsuit. He is threatening another one to invalidate the soon-to-be-signed state law.

Previous lawsuits challenging in-state tuition benefits have gained little traction. Last November, the California
Supreme Court upheld that state’s benefits for immigrants. McDonough insists, however, that the Maryland law
is particularly vulnerable to arguments that the state is intruding on federal powers.

He also wants to put the law before voters in a referendum, which would appear on the ballot in November
2012. The signature requirements for a referendum in Maryland are tough, McDonough says, but if the drive
qualifies, the law would be put on hold for more than a year before voters decided on it. He is confident that
voters would reject the new law. He says opposition is especially strong among blacks, judging by their
response to his talk radio show in the Baltimore area.

“In my 30 years in public life, as a legislator and a commentator on radio and television,” he says, “I have never
witnessed the level of rage and anger by the general public, both Democrat and Republican, over the passage
of this bill.”

But Dan Hurley, of the universities association, believes the in-state tuition laws will win public acceptance,
especially when citizens consider the fact that most of the students at issue were raised as Americans. “These
young adults are not going back to their homeland, OK?” he says. “They’re not.”

— Contact Daniel C. Vock at

Friday, April 22, 2011

Carl Lewis candidacy? Not so fast
By John Gramlich, Stateline Staff Writer


Carl Lewis — once the fastest man in the world — is off to a slow start in his quest for a seat in the New Jersey

                                                      Page 19

As Stateline noted earlier this month, the nine-time Olympic gold medalist in track and field hopes to run as a
Democrat in the New Jersey Senate district where he grew up. But Lewis has been living in California and
elsewhere for much of his adult life, prompting Republicans to try to knock the well-known track star off the

An administrative law judge sided with Lewis earlier this week. But in an unusual twist, the decision over
Lewis's legal residency now rests with Kim Guadagno, the Republican lieutenant governor who also happens
to be New Jersey's secretary of state, or chief elections official.

While the judge dismissed the GOP effort to sideline Lewis, he did not rule on whether Lewis meets the state's
four-year residency requirement to run for Senate, The Star-Ledger reports. Republicans have responded by
taking their objections to Guadagno, who was elected alongside Republican Governor Chris Christie in 2009.

Guadagno says she will not make a decision until next week, The Star-Ledger notes. Even then, however, her
ruling can be appealed, potentially leaving Lewis's eligibility uncertain for some time to come.

New Jersey holds legislative elections later this year.

“Today’s Take” provides a quick analysis of the day’s top news in state government.
— Contact John Gramlich at

Monday, April 25, 2011

When a pension overhaul comes without Social Security
By Pamela M. Prah, Stateline Staff Writer


Like many retirees, Crystal Ward of Lewiston, Maine, worries whether her pension from working as a teacher
for 34 years will be enough for her to live on. But unlike most retirees in the country, Ward, 60, can’t bank on
Social Security.

Ward is among an estimated 6 million public sector workers whose jobs aren’t covered by Social Security. For
many of them, a pension paid by their state or local government employer is all they have to live on.

Ward gets a pension check from the state of about $2,500 per month, although she notes that $300 of that
goes straight to health insurance. “Most people believe we get both a state pension and Social Security,” Ward
says. “But teachers in Maine don’t.”

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In states across the country — most notably Wisconsin, Ohio and Florida — fights are breaking out over how
generous public pension benefits should be and who should pay them. But the debate in Maine is a little
different. The math behind any big change in pension rules doesn’t look the same when state employees and
teachers sit outside the Social Security system.

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Since 2009, Maine has exploring whether and how to get those workers covered. It was one of the ideas
considered by a state task force formed by the Legislature to study different ideas for reforming the state
pension system. Steven Crouse, a member of that task force who heads up government relations at the Maine
Education Association, a teachers’ union, says the Social Security proposal is “a viable option,” although he
has a number of concerns with it.

Not an easy question

When Social Security went into effect in the 1930s, state and local employees were expressly excluded. That’s
because there were constitutional questions about whether the federal government could impose the Social
Security payroll tax on state governments. This changed in the 1950s, when a federal law allowed states to get
coverage for public employees if they wanted to.

To this day, all states have some public sector workers who don’t participate in Social Security. But coverage
varies widely. In Vermont, some 98 percent of state and local public employees are covered by Social Security,
according to a 2010 report from the U.S. Government Accountability Office. Meanwhile, just 3 percent are
covered in Ohio.
 Lacking Social Security coverageAccording to the U.S. Government Accountability Office, 27 percent of state
and local public workers are exempt from Social Security. While all states have some workers who are not
covered, the bulk of uncovered public sector employees reside in these 14 states:


                                                  Page 21

Source: U.S. Government Accountability Office

Overall, 27 percent of state and local public workers are exempt from Social Security, according to GAO. The
bulk of uncovered public sector employees reside in 14 states — including Maine (see sidebar).

In practical terms, this means that a state like Maine does not contribute the usual 6.2 percent of payroll that
constitutes an employer’s share of Social Security taxes. It also means that state workers and teachers in
Maine do not contribute 6.2 percent of their salaries to Social Security. Nor do they earn Social Security credits
used to calculate benefits, at least for as long as they continue in their jobs as state employees or teachers.

The question of whether to extend Social Security coverage to all public sector workers in the future is not new.
For workers, there are pros and cons either way.

On the plus side, unlike many state pension plans, Social Security is portable. That means benefits cannot be
lost be lost because of a job change. Also, Social Security always includes coverage for dependents,
something state and local pension plans often lack.

On the down side, public sector unions often argue that their pension programs are tailored to meet specific
needs that Social Security fails to address. For example, firefighters and police officers tend to retire earlier
than other workers because of the hazardous nature of their jobs. Cops who retire in their early 50s would
have to wait a decade or more to begin collecting Social Security, whereas their current pension packages are
designed to take an earlier retirement age into account.

Incremental costs

From the states’ perspective, providing Social Security coverage is costly. In Maine, the task force studying the
issue concluded that any new plan based on Social Security would cost more because Social Security alone
costs 6.2 percent for every employee — currently, the state contributes 5.5 percent of payroll. Switching to
Social Security, the task force estimated, would cost the state an additional $1.8 million within five years.

And moving new hires to Social Security would do nothing to tackle Maine’s $4.4 billion unfunded pension
liability. Maine has a unique constitutional requirement to fully fund the pension system by 2028. The
requirement was approved by voters in the 1990s.

                                                    Page 22
To meet that requirement, J. Scott Moody, the chief economist at the conservative Maine Heritage Policy
Center, estimates that Maine’s annual pension payments will balloon from $250 million this year to $1 billion
within six years. “A billion dollars is a lot of money in Maine,” he says.

Moody’s group supports a pension proposal put forward by Republican Governor Paul LePage. That plan
would increase the retirement age for state workers and require them to contribute more toward their pensions.
It also would freeze cost of living increases to benefits for three years, after which a cap on that allowance
would drop from 4 percent to 2 percent. The governor’s plan doesn’t address the Social Security issue.

Without action, LePage says one-in-four dollars in the general fund will go toward the pension payment. “If we
do not act, people in this room will be forced to make funding decision so dire that our current state retirement
system will have to be cast aside,” he warned at a budget hearing last month.

Union officials like Crouse call the governor’s pension proposal “offensive,” particularly the changes to cost of
living allowances. “The impact on the long-term purchasing power for seniors and retirees would be
devastating,” Crouse says.

Crystal Ward also is unimpressed. Under LePage’s plan, she says, “My retirement benefits will get smaller the
older I get.”

— Contact Pamela M. Prah at

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