DEPARTMENTS:
Laboratories of Democracy

By Tommy Thompson

Governor Tommy Thompson on block grants; a California school district that excels on a low budget

Table of Contents

Block (Grant) Party by Gov. Tommy Thompson

Humble Clovis Defies The Education Visigoths by Christopher Garcia

Lab Reports

Block (Grant) Party

by Tommy Thompson

What will the states do differently once they have block grants? The short and simple answer: We will put our ideas to work. Once a block-grant system becomes operational, several key areas of public assistance will be set loose from the dead weight of federal oversight.

For the most part, the block-grant system frees states from the shackles of a waiver system that has inhibited innovation and stymied true reform. Prior to recent congressional action, if a state passed an innovative welfare reform initiative, it would have to go to Washington on bended knee and kiss somebody's ring in order to get a waiver to implement the program.

In Wisconsin, we know the waiver system all too well. We have sought and received 227 different waivers to implement our innovative welfare programs. And we know that you never get everything you ask for in a waiver request, either. If your waiver asks for 10 items, you are lucky if Washington grants you three.

In Wisconsin, the block-grant system means we will be able to implement the most ambitious change in the welfare system that this country has ever seen.

The changes we expect to enact are called W-2, or Wisconsin Works. This initiative would end the automatic welfare check. It would end AFDC. And once implemented, W-2 will mark the greatest change in social policy in this country in the past 50 years.

In Wisconsin, we will no longer have a welfare system; we will have a work system. In fact, we have already transferred our welfare division from our Department of Health and Human Services to our Department of Industry, Labor, and Human Relations, and have made it a work division. The reason: We are replacing the automatic welfare check with a comprehensive package of work options, job training, health-care and child-care services, and even financial planning.

And we know W-2 will succeed in moving people off welfare and into the workforce. Wisconsin has been reforming the welfare system longer than any other state by far, having begun when I took office in 1987. Since then, our AFDC caseload has dropped 30 percent, and we're saving our taxpayers $17 million a month.

Imagine what Wisconsin and other states could do with the freedom and flexibility provided by the block-grant system.

In a recent study, Princeton University professor Lawrence Mead concluded that Wisconsin cut its welfare dependency because it tied benefits to work. W-2 is based on the philosophy that for those who can work, only work should pay. We assume that everybody is able to work-or at least is able to contribute to society through some work activity within their abilities. The only way to escape welfare or to escape poverty is to work. There is no other way. Therefore, W-2 helps the traditional welfare recipient make the transition to employment and an independent life as quickly as possible. When people seek economic assistance (or what used to be known as AFDC) from the state, they will be required to sign up for work immediately. And it is only by performing some level of work that they will receive economic assistance.

W-2 consists of a four-rung job ladder designed to help participants climb out of poverty and government dependence and into a life of independence and self-reliance. The top rung is unsubsidized employment. Under this option, participants who are job-ready will be matched up with the best available job. This is the ideal option-the rung on the ladder that all participants should aspire to reach. A W-2 participant directed into unsubsidized work is also eligible for, depending on his income, food stamps, health care, child care, and the earned-income tax credit.

The second rung on the ladder is subsidized employment, or trial jobs. This rung is for people without a work history but with a willing attitude. Employers who hire people on this rung get help in offsetting some of the costs of training and trying out a new employee. The wage subsidy is limited to between three and six months. A person in a trial job can remain on this rung of the ladder for no more than 24 months and is eligible for food stamps, child care, health care, and the earned- income tax credit.

Community-service jobs constitute the third rung and are meant for people who need to practice the work habits and skills necessary to be hired by a private business. These jobs will pay 75 percent of the minimum wage (more than the welfare grant) and may come with food stamps, child care, and health care. A person can remain in a community-service job for up to nine months before being required to move up the ladder, and there is a lifetime limit of 24 months for this rung.

The fourth option, and bottom rung of the ladder, is called W-2 Transitions. This rung is reserved for those who legitimately are unable to perform self-sustaining work, even in a community-service job. To receive cash benefits, participants will work in activities consistent with their abilities. Work at this level pays 70 percent of minimum wage, and the worker is eligible for food stamps, health care, and day care. Although this option has a 24-month participation limit, extensions are permitted on a case-by-case basis.

The goal of this program is to move those with little or no work histories up the work ladder, gaining more work experience, until they are in an unsubsidized job and caring for their families on their own. Participation is limited to five years over a person's lifetime.

The benchmark for W-2's fairness is a comparison with low-income families that work for a living. With this in mind, the program includes a system of copayments for health-care and child-care benefits. Just as low-income families must pay for child care and health care-either in full or in part-W-2 participants will be required to pay what they can afford for these services, on a sliding scale. W-2 also would make health care more accessible to low-income working families by allowing them to buy into the state health-care system.

Finally, Wisconsin Works is designed to address the problem of teen pregnancy. In the past, too many long-time welfare recipients started on welfare as teen parents. We have to break the cycle of dependency earlier. So under our plan, teen parents who are minors and who cannot live at home or with a legal guardian will not be allowed to set up their own household with cash assistance from the state. For those who cannot live at home, three options will be available: Live in a foster home, live in a group home, or, as a last resort for older teens, live in a supervised independent setting.

The Wisconsin Works welfare package has received bipartisan support in our legislature, which is expected to approve the program early next year; we plan to implement it in 1997. Without block grants, however, we would need a series of waivers and probably would be unable to adopt half of the program's initiatives.

Another area that holds tremendous promise for innovation under a block-grant system is Medicaid. No item affects state budgets more profoundly than Medicaid, so states will be looking for the most efficient and effective way to provide high-quality health care at a reasonable cost.

In Wisconsin, we started improving our Medicaid system some time ago, but again had to rely on a waiver system that scuttled some of our plans. Regardless, industry experts have recognized Wisconsin for running the country's most efficient Medicaid system.

We began our reform efforts using a managed-care system, which has allowed us to provide more Medicaid recipients with a higher quality of care at lower cost. Indeed, by enrolling AFDC recipients in health-maintenance organizations, the state became an active player in controlling costs. Instead of serving as a blank check, the state could step in and negotiate the highest quality care at the best price. Instead of serving as a health-care "payor," the state is now a health-care "buyer."

What is most exciting about the program is that HMOs are providing AFDC recipients with better health care. They have a primary doctor, someone they can go to on a regular basis. They also have greater access to important preventive care, such as well-baby visits and immunizations.

While Wisconsin is not alone in utilizing a managed-care system for Medicaid recipients, the block-grant system will make it easier for all states to shift to such a system.

As major buyers of managed care, states will be able to leverage their purchasing power to control costs as well as improve access and quality. With the financial flexibility of block grants, many states also will be able to extend this formidable purchasing power to offer low-cost coverage to uninsured working families. Though managed care, particularly for the elderly and disabled, requires careful planning and vigilant oversight, it will be an essential component of every new Medicaid program.

States throughout this country have been extraordinarily successful in enrolling nearly one-third of all Medicaid recipients in managed-care organizations. But progress has been frustrated by lengthy, time-consuming waivers for arcane federal rules designed to impede managed care. In effect, the current waiver process gives states a Hobson's choice: Either accept the costly and burdensome new strings often attached to federal waivers, or forgo altogether the use of managed care and other modern delivery systems now common in the private sector.

Besides managed care, the Medicaid block-grant system would allow states to pursue integrated solutions in providing health care, particularly long-term care for the elderly.

Comprehensive service networks are being created by the private sector from the inevitable integration of health-care suppliers, particularly health plans, hospitals, and clinics. While the federal government has been oblivious to these historic changes, employers and other buyers of health care are adapting to take full advantage. The block-grant system will allow state Medicaid programs to take advantage as well.

Under the old Medicaid system, states were forced to take a fragmented approach to health-care problems, most notably long-term care. An incomprehensible layer of federal restrictions forced states to create disparate programs in order to work around federal obstacles. In the provision of long-term care, the result was a confusing, overly complex and costly mix of home, community, and institutional care.

The new Medigrant program, however, will permit states to integrate their long-term care programs and promote the purchase of private long-term care insurance. By combining the array of home, community, and institutional programs into more integrated solutions based on managed care, the elderly and disabled will have more options and taxpayers' costs will be better controlled. Integrated solutions also provide states with greater leverage to improve access to health care as well as the quality of care.

A third advantage to the block-grant system is that it would allow states to make Medicaid coverage more sensible. As an entitlement under federal law, the scope of Medicaid coverage is now determined by the courts and rule-making bureaucrats. Neither the medical community nor the taxpayers have any real say in the matter. This has led to such absurdities as the coverage of gourmet cookies, soap, and household appliances. This has long frustrated the states as they've struggled to manage their systems.

Freed from federal oversight, we'll likely see the end to Medicaid as the Cadillac of health plans and the eventual adoption of coverage more akin to that offered to workers in private industry. While coverage for the elderly and disabled will continue to include additional services, particularly long-term care, the end of the legal entitlement will permit states to take into account true medical needs and the cost-effectiveness of alternative services.

Finally, the Medicaid block-grant system will lead to streamlined administration, which will save taxpayer money. As a result of an avalanche of federal mandates, Medicaid has become the most complex social program ever devised. The Medicaid program is now governed by more than 50,000 pages of federal-state agreements, more than 2,000 pages of federal laws, and some 15,000 pages of federal rules and instructions. This extraordinary level of complexity makes the federal tax code look like a nursery rhyme.

Furthermore, states must collectively prepare more than 8,000 federally mandated reports each year. Most of these are never read, much less used, by a living soul. Because of the labyrinth of federal eligibility rules, there are more than 200 different ways to qualify for Medicaid in Wisconsin alone. Making matters worse, federal loopholes force states to cover middle-class individuals and facilitate the hiding of assets and income.

Under the 170-page Medigrant bill, state Medicaid plans could be vastly simplified, thousands of pages of inane federal rules would be rescinded and those 8,000 reports would be reduced to just 50-one for each state. States like Wisconsin will be able to streamline eligibility determinations, close loopholes and tie Medicaid coverage to participation in jobs programs like W-2. And accountability will be enforced where it truly matters-in the establishment of fiscal controls, independent audits and evaluations, and public reporting of program performance.

Medicaid will be an area where states will clearly be able to demonstrate a greater ability to manage an unwieldy program and provide services better than Washington. And it will serve as an example of what can be accomplished once Washington steps back and keeps its overregulating fingers out of the mix.

The block-grant system will provide states with a remarkable opportunity to enact their best ideas and brightest programs. The ultimate winner will be the taxpayer, who will receive a higher quality product at a lower cost. Already, with the limited amount of experimentation the federal government has allowed, states have shown that they can manage complex programs like welfare and Medicaid much better than the federal government. The very concept of federal block grants shows that Congress is recognizing the great work that is already being done by the states.

In Wisconsin, we can't wait to carry on that work and put our best ideas into practice.

Tommy Thompson, the chairman of the National Governors' Association, has been the governor of Wisconsin since 1987.

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Humble Clovis Defies The Education Visigoths

by Christopher Garcia

In 507 a.d., at Vouillé in present-day France, the King of the Franks led a band of warriors against the Visigoths, the marauding barbarians who had sacked Rome a century earlier. The king, named Clovis, defeated the Visigoths and broke their hold on Europe.

Today, a modern namesake-the Clovis Unified School District (CUSD), in Fresno, California-is successfully defying another ominous empire: the education establishment. Despite serving a significant portion of Fresno's urban poor, Clovis is proving that public schools can deliver a good education with a small budget and minimal bureaucracy.

Clovis has long ignored the prevailing cant about the need for high spending and huge bureaucratic machinery to regulate public education. During the 1993-94 school year, CUSD spent $3,892 per pupil; school districts nationwide averaged $5,730. The district's student-to-administrator ratio is 520:1-nearly twice the national average. And although similarly sized districts (like those in Rochester, New York, and Madison, Wisconsin) typically house 300 to 400 employees in their central offices, CUSD employs just 167. With no teachers union or Parent Teachers Association (PTA), CUSD is a rarity among public schools.

In this case, less means more-more students performing above average across a broad range of measures. The district's average score on the Scholastic Aptitude Test (SAT) is 52 points higher than the state average and 42 points higher than the national average. CUSD's mean composite score on the American College Test (ACT) stands respectably at the 65th percentile. In 1995, with a senior cohort of 1,606, CUSD students passed 720 Advanced Placement (AP) exams.

Perhaps one reason Clovis kids outperform their peers is that they show up for class more often: The district's high-school attendance rate is nearly 95 percent, and its drop-out rate is only 4 percent. The district doesn't skimp on its extracurricular offerings, either. More than 80 percent of Clovis students participate in one of the most successful programs in California. Last year, the district earned a championship at the National Future Farmers of America Convention and sent its state-champion Odyssey of the Mind team to compete in the world finals.

Many Clovis children are among the most disadvantaged in the region. Nearly 40 percent of the district's students live in Fresno City. Six of CUSD's elementary schools enroll enough AFDC children to qualify for direct financial assistance from the federal government. And five schools have student bodies with more than 50 percent minorities. In 1989, the median household income of the community surrounding Pinedale Elementary School was $10,000 below the national median of $28,906. And yet Mexican-Americans, who make up the district's largest minority (about 18 percent of all students), outperform their state and national counterparts on the ACT by significant margins.

Created in 1960 from the merger of seven rural, low-income school districts, CUSD presented its first superintendent, Floyd V. Buchanan, with a significant challenge: Barely more than one in three of the district's 1,843 students performed at grade level. Buchanan wanted to push this figure to 90 percent-but how?

Put simply: competition, control, and consequences. Buchanan reasoned that schools would not be spurred to meet the goals that he and the central administration set for them unless they competed against one another in academic and extracurricular achievement. He established goals for each of the system's 11 schools at the start of the year, ranked them according to their performance at year's end, and established a system of carrots and sticks (mostly carrots).

Most importantly, administrators and teachers were allowed to choose the teaching methods and curricula they felt suited their objectives. This formula, in place for decades, has allowed the district-now with 30 schools and 28,000 students-to place between 70 and 90 percent of its students at grade level.

Competition in the district exists at several levels. Earning a rating as a top school is its own reward, but the district recognizes high achievement in other ways. The top schools on the elementary, intermediate, and high-school levels are recognized at an annual, districtwide award ceremony. The district's best teachers and administrators are honored at a dinner. And the school's achievements are reported to parents and the community in the pages of the district's publications.

The friendly, competitive culture at Clovis clearly has helped drive achievement. Because a school's performance at a districtwide choral competition or drama fair influences its ratings, teachers, students, and administrators work hard to give their routines the extra edge needed to push ahead of their colleagues. Schools borrow the winning strategies used elsewhere. Students at Clovis West High School, for example, often score better on SATs and AP exams than those at Clovis High School, so Clovis High has borrowed test-preparation tips from Clovis West. Clovis High is also trying to improve discipline by looking at successful techniques employed at Buchanan High.

Competition, however, would produce little without local decision-making. Anticipating trends that would revolutionize America's Fortune 500 companies, Buchanan made flexible, decentralized, site-based management a fundamental feature of the school system in 1972. The district office has been responsible for setting goals and establishing guidelines, but schools have worked to meet these goals in their own ways. "They give us the what and we figure out the how," says Kevin Peterson, the principal of Tarpey Elementary School.

When officials at Pinedale Elementary School determined that parent participation there was lower than at other schools, for example, they realized that immigrant parents felt locked out by language barriers. So they created "family nights" to help these parents take part in their children's education. With their children present, the parents are taught games and devices they can use at home to help their children with their homework. The result: Immigrant parents now participate more. Such innovation is easier in the absence of teacher unions. For example, the district deploys teachers weekly to the homes of about 100 recently arrived immigrants to provide them English-language instruction and to help them build a bridge to their rapidly assimilating children. Meredith Ekwall, a first-grade teacher at Weldon Elementary School, teaches English at night to the parents of her ESL students to encourage English use in the home. In districts where collective-bargaining agreements stipulate precisely how much time teachers spend teaching, micromanage the amount of time teachers can devote to activities outside of the classroom, and dictate what a district can and cannot ask its teachers to do, such flexibility and voluntarism is rare.

Along with teacher autonomy and greater parent access, Clovis strives for accountability. All the teachers, without exception, are expected to bring 90 percent of their students up to grade level. If they do not, everyone knows about it. The district's research and evaluation division notifies teachers, parents, and administrators of school and student performance. And with curriculum development and teacher hiring and firing in the schools' hands, knowledge is power. The approach has "made every teacher accountable," says Redbank Elementary School Principal Susan VanDoren. "[I]t made me sit down and look at all those kids [needing help] and ask, 'What can we do?'"

Parents seem more likely to ask that question in Clovis than in other school districts. Parents and other community members (including the clergy, senior citizens, and businessmen) sit on advisory boards, where they review individual school performance and formulate policy. Last year, some parents were upset that children were required to read feminist author Maya Angelou's I Know Why the Caged Bird Sings. Parents forged an agreement with the district that allows them to review books assigned to their children and help develop alternatives. Other boards recently voted to institute a voluntary uniform and a fee-based home-to-school transportation program. Teams of parents issue critiques of schools on the basis of data culled from parent surveys; these reviews are posted in every staff room in the district.

These boards function the way PTAs are meant to, but without the stifling hand of teacher-union influence. "The reason for the success of Clovis," says Superintendent Walter Buster, "is that these schools are truly governed by elected lay people."

Ultimately, it seems, success in CUSD is driven by community expectations. "There's a corporate culture that has been established that requires more of people, expects of people more, and gets of people more," says H.P. Spees, executive director of Fresno-Madeira Youth for Christ and member of CUSD's clergy advisory council.

This culture of expectation is impressed upon teachers even before they pick up a piece of chalk. A lengthy, multi-tiered interview process incorporates parents, teachers, community leaders, principals, and administrators and signals to prospective teachers that the Clovis community demands much of its teachers. According to Ginger Thomas, the principal of Temprance-Kutner Elementary School, some teacher candidates quit the interview process, saying "you guys work too hard." Assistant superintendent Jon Sharpe contends that Clovis sustains "a work ethic in the public sector that's almost unsurpassed." He may be right: In 1992, CUSD teachers even voted down their own pay raise to channel the money into books and supplies.

In an education system under assault for its academic failures, Clovis has produced a winning formula. CUSD schools have won recognition by the state of California 15 times and earned national blue ribbons from the U.S. Department of Education 13 times. The prestigious Phi Delta Kappa Center for Evaluation, Development, and Research has featured Clovis in two works, Clovis California Schools: A Measure of Excellence and Total Quality Education. Even outspoken critics of public education recognize the district's accomplishments. "If we are going to limit ourselves to the Prussian system of education, Clovis is the best we are going to get in a tax-financed school," says Marshall Fritz, the founder of the Fresno-based Separation of School and State Alliance and the father of four Clovis students.

Awards aside, the real lesson of Clovis is that good education depends not on bloated budgets but on creative and committed teachers and administrators held accountable by engaged communities. Clovis's success also suggests that quality in public education will not be the norm until resources are channeled to classrooms rather than bureaucrats, and parents wrest control over education from teachers unions.

Christopher Garcia is the assistant editor of Policy Review.

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Lab Reports

Montana earned $13 million from timber harvests on state-owned forest land from 1988 to 1992. During the same period, while cutting down 12 times as many trees, the U.S. Forest Service lost $42 million in its Montana properties. Don Leal of the Political Economy Research Center (PERC) says Montana outperformed the Feds by engaging in better reforestation practices, spacing trees further apart so that each tree receives more water and nutrients, and by using less than one-third the staff to prepare timber sales.

Since Cincinnati, Ohio, deregulated taxi licenses in January 1995, the number of cabs has risen from 348 to 557, a 62 percent increase. Most of the new cab owners are minorities and women.

Jersey City, New Jersey, saves $20,000 a year by offering its management employees the choice of Medical Savings Accounts as an alternative to fee-for-service health insurance. MSAs allow employees to pocket the savings when they reduce their own health care expenditures; of the 174 employees eligible, 97 have chosen them since their introduction last March. Mayor Bret Schundler hopes to extend the MSA option to other city workers.

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