In 2013, then-Lieutenant-Governor Gavin Newsom published a book entitled Citizenville in which he argued for a government that kept pace with changes elsewhere in society. Asserting that “we must inject a more innovative, entrepreneurial mind-set into government,” Mr. Newsom wrote that “we simply cannot have a government that relies on bureaucracy and maintaining the status quo.” I hoped his vision would be realized. But a decade later, half of which Mr. Newsom has presided over as governor, California’s bureaucracy is bigger than ever, residents would be hard-pressed to point to a single innovation, and the status quo is still the status quo.
California’s budget deficit presents an opportunity to jumpstart Mr. Newsom’s vision. Even under LAO’s December 7 forecast that drops 2023-24 General Fund Revenues to $189 billion, General Fund Revenues for 2023-24 will still be an enviable 35 percent greater than General Fund Revenues when Mr. Newsom took office. The problem is that General Fund Expenditures grew 60 percent over that period. That presents an opportunity to cut bureaucracy and to innovate to deliver high quality services at lower cost.
Since Mr. Newsom took office, the Executive Branch has added 40,000 employees and increased annual spending on salaries and benefits to $42 billion. Mr. Newsom must know from his own experience in business that wage and staffing increases should be correlated with increases in productivity but all too often, wage and staffing increases in California politics have been correlated not with productivity but rather with political support. Mr. Newsom and legislative leaders can eradicate that craven practice by reducing staffing and salaries to levels actually needed to provide productive services. The same discipline must be applied to contractors hired by the state and any recipient of state dollars, including local and county governments who direct billions of dollars to politically-active non-governmental organizations that aren’t being held accountable.
Another improvement would be to follow the City of Glendale’s lead in eliminating unnecessary spending on health care for retired employees, which currently takes $3.6 billion per year from the General Fund and is unnecessary because of generous subsidies available through the federal government under Medicare and Obamacare and from new employers in the case of retired employees who take new jobs. Requiring all recipients of state funds to do the same would save billions more (eg, UC alone spends $400 million per year on retiree health care) and given the likelihood of a reduced Proposition 98 guarantee next year, schools and colleges must look for savings from the elimination of such unnecessary expenditures (eg, LAUSD alone spends $365 million per year on retiree health care).
The greatest need for innovation is in K-12, which is the largest single expenditure of state and property tax funds and a sadly sclerotic system providing poor service to millions of California kids entering a highly competitive world. No parent in California should have to worry they are short changing their kids’ futures by enrolling them in California public schools, but that’s exactly what millions of California parents do. That’s why so many affluent parents in California choose alternatives to public schools. But most parents aren’t affluent and to add insult to their injury, their classrooms are being starved of billions of dollars being diverted to pension costs that have tripled over the past decade. The governor and legislature should treat K-12 more like Medicare, Obamacare and Medi-Cal, which are government-funded programs that do not limit enrollees to government-run providers, and should make it their priority to find innovative ways to harness an explosion in learning technologies for the benefit of public school kids. Every California public school should be a “Studentville.”
I know this won’t be easy. In 2004, I worked for Governor Arnold Schwarzenegger in addressing a large budget deficit inherited from Governor Gray Davis. Instead of cutting bureaucracy and innovating public services as I propose here, we refinanced the deficit. The difference is that Mr. Schwarzenegger is a Republican who had no chance to convince Democrats in the majority to make changes that would draw the ire of government employee unions. Mr. Newsom is in a different position. Like Nixon to China, he does have that chance. Let’s hope he takes it.
