CARSON CITY — Gov. Brian Sandoval said Wednesday he favors switching how Nevada government spends money to a "performance-based" budgeting system in which state agencies must meet pre-set goals and requirements.
He would not give details, but the governor hinted that he might discuss how he wants to launch performance-based budgeting during his televised State of the State message Monday.
"You are going to see a different approach, performance indicators, that I think will be refreshing," said Sandoval during a news conference. "We can’t continue to just automatically (increase spending). This is part of the reason for this budget deficit."
Models of performance-based budgeting have been adopted by a handful of states as a way to curb spending during bad economic times.
The Nevada government’s spending increases automatically. Under performance-based budgeting, the governor and Legislature would set spending at a lower figure, set goals, and allow spending increases later only if the goals are met. Administrators and employers would be rewarded with bonuses if their spending comes in lower than the pre-set spending figure.
Sandoval has said he will unveil a proposed two-year budget of about $5.4 billion that will be $1 billion less than current spending and include no tax increases. He has said he is proposing 5 percent cuts in state employee wages and in the allocation the state makes to public schools and higher education.
The governor made his comments about changing the budgeting in response to questions from reporters about a new Nevada Policy Research Institute study that is being released today .
The conservative Las Vegas-based think tank said that until now, state budgets have been determined largely by taking existing spending and adding "roll-ups" such as salary increases, inflation and caseload growth.
"Instead budgets should be based on performance," said Geoffery Lawrence, the institute’s deputy director of policy.
The think tank identifies how the Legislature could cut spending by $3.5 billion: $305 million could be saved by eliminating the class-size reduction program, $52 million by ending full-day kindergarten programs, $402 million by requiring tuition at the state’s universities to be set at the national average, $102 million by stopping enforcement of minor drug possession offenses, and as much as $2.74 billion by lowering salaries paid state and local government employees to the national average.
But one labor official said Wednesday that cutting public employee pay is wrong, considering Nevada has the lowest number of public employees per capita in the nation.
"We are already working harder and doing the best we can with limited resources," said Vishnu Subramaniam, chief of staff for the American Federation of State, County and Municipal Employees Local 4041.
The research institute is refusing to look at reasonable ideas that would increase revenue by changing the state tax structure, he said.
"They are just looking at cuts," Subramaniam said. "When you cut, there are long-term consequences to the state’s most vulnerable population. Asking us to take more cuts is not being responsible."
State employee pay is about 7 percent above the national average, and local government employees receive about 31 percent above the national average, according to a Las Vegas Chamber of Commerce study.
The institute also proposes ending collective bargaining. Sandoval has indicated he wants to make collective bargaining changes but not eliminate it.
Cutting employee pay "will be a hard pill to swallow for public employees," but Lawrence said pay should be aligned with what is paid around the country.
The institute proposes making Medicaid and Nevada Check Up patients pay a $5 co-pay that might cause them to think twice before going to a doctor for minor ailments. Medicaid is the free health care program for the poor, blind, disabled and some elderly. Nevada Check Up is a Medicaid program for children.
In the study, Lawrence said the governor and legislators should set performance goals they expect education, the Department of Motor Vehicles, the Welfare Division and other agencies to meet. If administrators don’t meet them, then they should be disciplined or fired, he said.
Performance goals for education should include increasing the state’s low high school graduation rate and demanding the student performance on standardized tests reach the national average, he said.
The institute proposes dumping the class-size reduction and full-day kindergarten programs because they have not been shown to bring long-lasting gains for students, he said.
Nevada should look to Florida where student performance has jumped by two grade levels since changes were made, including offering tax credits and vouchers that allow low-income students to attend private schools, he said.
Sandoval has advocated grading schools, offering vouchers, ending social promotion of students, ending teacher tenure and asking parents to read to their children.
Performance-based budgeting in Washington state has saved $2 billion, Lawrence said. In Iowa, he added, if state agencies meet performance indicators, they are allowed to keep half of any savings and can give bonuses to employees.
Sandoval said he has not yet reviewed the research institute’s study, "Better Budgeting for Better Results," but would soon.
Lawrence acknowledged that moves toward performance-based budgeting have been undertaken by the Democratic leaders of the state Legislature. They created an interim legislative committee to review spending by several state agencies over the summer and fall.
But their efforts were hampered by an order from then-Gov. Jim Gibbons that agency directors could not attend the committee’s meetings or respond to requests for information. Gibbons contended the committee was unconstitutional .
Contact Capital Bureau Chief Ed Vogel at email@example.com or 775-687-3901.The "Better Budgeting for Better Results" study