Yesterday, I wrote about the coming hikes to property taxes in Minnesota. What is causing this?
Today I’ll look at the pressures coming from the federal government and what we could do to mitigate them short of hiking property taxes. Tomorrow, I’ll look at the pressures coming from state government.
Problems
Previously, the federal government covered the cost of benefits paid out under the Supplemental Nutrition Assistance Program (SNAP). Under the One Big Beautiful Bill (OBBB), signed into law in July, state governments would be required to cover 15% of that. The bill also cut the federal reimbursement that states receive to administer the program from 50% to 25%.
Minnesota is particularly vulnerable to some other OBBB provisions. We are one of less than ten states where counties administer Medicaid and the SNAP. The OBBB added a work requirement for Medicaid, which workers will have to verify, and counties will also have to review eligibility twice a year instead of once. “That’s pretty simple math,” Julie Ring, the executive director of the Association of Minnesota Counties, told KSTP in July. “[T]hat’s double the workload…”
Writing for the Minnesota Reformer, Chuck Johnson notes that:
The Minnesota Department of Human Services is estimating that administering the new Medicaid work requirements will cost the state, county and tribes $165 million annually. The new Medicaid eligibility checks will cost another $5 million.
The Minnesota Department of Children, Youth, and Families estimates that the state and counties will lose $39 million a year in SNAP federal administrative funding, and increased workloads will push that number higher.
Solutions
There are measures besides tax hikes which can be taken to mitigate this.
Ideally, we would deal with a doubling of the workload by increasing the amount of work done with a given set of resources. There are ways to do this in Minnesota.
First, we can look to improve labor productivity of welfare workers.
Minnesota’s welfare is administered using very old computer systems. “SSIS, which stands for Social Services Information System, has been employed in case management more than 26 years,” Jill Burcum reported for the Star Tribune in September:
MAXIS, an eligibility and public benefits system, clocks in at 36 years. METS, which has a key role in determining eligibility for Affordable Care Act subsidies, is the youngest program, having been in use for over 12 years.
The result is unsurprising: Staffers who are there to help Minnesotans instead spend their days battling systemic slowness, endless workarounds, the need to enter duplicate information, or the inability to add personal information that could change benefit eligibility, such as a family adding another child.
MAXIS requires fluency in cryptic keyboard commands because it’s so old it doesn’t allow for a computer mouse to move the cursor around.
…
I asked Dakota County officials for a rough estimate of inefficiencies’ costs. They said “it’s not possible to measure them all.” But they gave me four examples of inefficiencies occurring in programs using MAXIS and METS and put the cost at $1.6 million a year.
Modernizing these systems will require investment, but in the genuine sense of the word, not as a disguise for “spending.” A Minnesotan would be forgiven for shuddering at the prospect of another vast, government IT project, but to shy away from that in this instance might be a case of being penny wise and pound foolish, as my grandma used to put it.
Second, Minnesota could reap economies of scale by centralizing the administration of welfare in the state.
At a recent conference hosted by the Minnesota Center for Fiscal Excellence, Evan Ramstad reports for the Star Tribune:
Former Minnesota Revenue Commissioner John James asked the panel whether counties might turn some costly human-services work over to the state, an efficiency idea that has been batted around for decades but has been mostly dormant since the early 2010s.
“Short answer, yes,” said Matt Hilgart, government relations chief for the Association of Minnesota Counties.
Specifically, he said leaders in the state’s 87 counties have warmed to letting the state take on the work of vetting the eligibility of Minnesotans for public assistance, health care and cash and food support.
In an interview later, Hilgart told me, “That is the sentiment I’m feeling from our membership, and it is a change.”
“The idea to reform human services last got a big push in the early 2010s,” Ramstad continues:
…when the Bush Foundation and Accenture, working with 12 Minnesota counties of various sizes, researched delivering them via regional districts rather than counties.
The analysis showed there would be enormous cost savings, said Peter Hutchinson, a former state budget director who led Bush Foundation at the time. Ultimately the counties, he said, “could not imagine how they would give up that much individual authority and there were all these tensions.”
Economies of scale arise in a situation when, as one of my old textbooks puts it, “long-run average total costs decrease as output increases.” In this case, fixed costs, like office space, are spread over more clients, and the government can negotiate better prices for bulk purchases, like computer systems.
Conservatives generally want smaller government, but they should prize efficient government just as highly. In the face of new pressures, these two measures offer a conservative path forward.
