Missouri's expanding, deficit budgets rooted in early '90s

JEFFERSON CITY, Mo. -- It happened so quietly and so quickly in the state capital that perhaps only a few recognized it. Certainly no one could have predicted its effects on future state budgets and how Missouri's elected officials would be hard-pressed to cope with any unforeseen, approaching economic downturns.

The date was Wednesday, Jan. 15, 1992, and the occasion was the constitutionally mandated State of the State address, delivered by the governor of Missouri to the state legislature.

On this particular date, the final-year budget of the outgoing chief executive whose term would not officially end until the early days of 1993, had been pronounced as a "careful detailing of available state revenue, measured against a moderate increase in state spending, particularly in light of continued court-ordered school desegregation payments to Kansas City and St. Louis."

The words were carefully chosen as Gov. John Ashcroft somberly announced the details of his proposed spending plans to the assembled legislators and scores of solemn-faced appointed officials. The governor's projections were, as almost always, conservative and hardly vulnerable to the dialogue most often used by politicians who populate state capitols.

There was a reason for Ashcroft's level tone of voice, for his administration was still limping through a major national recession that brought about the closing of numerous state institutions and programs that had served the state well in more prosperous times. Missouri was facing not only a momentary pause in a recession that had affected every state in the nation but was also struggling to meet the nation's highest court-ordered bill for past desegregation policies, costing Missourians billions of unanticipated expenses in the state's two largest population centers.

Going virtually unnoticed in Gov. Ashcroft's final budget was the fact that, for the first time in Missouri history, the state would spend more to finance its welfare and public assistance programs that it would spend on providing its constitutionally mandated allocations to local public school districts, excluding what it would also send schools in the two metropolitan areas that were receiving added funds for the state's previous desegregation policies.

There was not a murmur from the floor of the chamber or from the galleries above as the governor read his recommended spending for an expanding Department of Social Services: $2,509,083,569. And no one seemed to noticed that when the recommended appropriations for local schools were announced -- $2,215,221,767 -- that the state was for the first time in history obligating itself for more money for welfare assistance than it would distribute to local school districts throughout 114 counties and the city of St. Louis.

Funding, staffing increase

Also telling: the chief executive was calling for 8,122 employees in the Social Services agency and 2,104 for the Department of Elementary and Secondary Education, which since its formation in 1838 has been charged with overseeing school programs throughout more than 400 districts.

Perhaps another reason for any absence of recognition of the state's shifting fiscal patterns can be found in Ashcroft's recommendation for local education spending, which more than met the 1945 Missouri Constitution requirement that at least 25 percent of all state revenue must be allocated to local school districts. In the past this had not been a major problem since the state previously had no court-ordered desegregation bills and its allocation for social services and welfare were primarily funded by Washington and were not a heavy drain on the state's General Revenue collections. At first.

Gov. Ashcroft's recommendations on that 1992 morning called for 30.08 percent of state revenue collections to be distributed to local school districts, with 27.9 percent of all state spending distributed to the various federal and state programs carried out by the Department of Social Services. Another 6.5 percent would go for desegregation payments to urban school districts, with another 5.29 percent to be allocated to the state's growing prison and parole systems.

Since Ashcroft had anguished throughout a major recessionary period, he was freed from a problem that would begin to impact his successors: Hancock Amendment refunds. It would take several years before this budget nemesis would have to be faced.

When it came time for Gov. Mel Carnahan to introduce his first budget, the pattern of expanding social services emerged as a major factor in meeting the constitutional requirement for balancing outgo and income, and in fiscal year 1994, the new chief executive recommended spending $3,143,095,223 for welfare assistance while allocating $2,565,740,113 to local school districts. This allocation was remarkably close to that of his predecessor, proposing that 30.6 percent of state revenue go to local schools, with an additional 8.97 percent set aside for desegregation.

By the end of Gov. Carnahan's second term, his revenue recommendations for local education dropped to 23.7 percent for FY 2000 and inched upward to 25.8 percent in FY 2001, as he continued to find enough cash to meet first-time-ever Hancock Amendment refunds totalling millions of dollars. The Ashcroft challenge of funding during a persistent recession was exchanged for Carnahan's need to pay for growing medical assistance and welfare programs inaugurated in Washington and retain enough cash to pay Amendment X's refunding requirements.

By the time Bob Holden moved into the spacious executive office suites, he faced still different dilemmas than his two predecessors: locked-in welfare programs that were no longer optional, a slight downturn in tax collection totals, and increasing demands for more money to expand local school district programs that would overcome worrisome educational test scores.

In Gov. Holden's current budget plan, the advantage of welfare allocations over public school appropriations increased by nearly $1 billion, with $5.6 billion earmarked for public assistance and $4.7 billion recommended for elementary and secondary education. His budget also meets the one-fourth distribution required for local schools in the state's 1945 Constitution.

Each of the state's last three chief executives has faced major, yet different, fiscal challenges that ranged all the way from federal court desegregation injunctions to ever-expanding and increasingly expensive welfare assistance programs to constitutional requirements to refund citizens' taxes despite a growing list of state government liabilities.

It is hardly a scenario to resemble the dreams of aspiring public servants.