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Rhode Island spends less on higher education, report says

Rhode Island ranks among the nation's top spenders in Medicaid and fire protection, while hovering near the bottom for expenditures on higher education, highways and transportation, and parks and recreation, according to a report released last week by the Rhode Island Public Expenditure Council.

Using the latest U.S. Census Bureau data, the council, an independent public policy organization, generated the 2009 state expenditure report, which shows the Ocean State's long-term spending patterns and compares its expenditures with those of other states.

Medicaid spending was the biggest red flag in this year's report, the council's Executive Director John Simmons said, noting the danger of ballooning health care costs given the state's economic woes and diminishing tax base. This report's findings are in line with those of a recent report from the council that found Rhode Island's tax burden, fueled by high property taxes, to be 15th highest in the nation.

"There has been a continued climb in the rate of Medicaid spending at the same time as a decline in government revenue," Simmons said. "This means that there will be less of a capacity for state and local government to respond to challenges in the future."

Rhode Island's public welfare vendor payments, which include Medicaid, have more than doubled over the past 10 years and have increased at a rate four times faster than the national average, eclipsing the spending of neighboring states such as Connecticut and Massachusetts.

Earlier this year the state was approved for the Medicaid Global Waiver, an agreement that caps federal funding in exchange for greater state authority in shaping health care policy.  
But the waiver still assumes that Medicaid spending will continue to grow as a portion of the state budget. The restructuring of the state health care system needed to curb costs won't be realized for at least another two years, Simmons said.

Besides Medicaid, other high state outlays included fire protection and elementary and secondary school education.

Rhode Island ranks first in the nation in fire department expenditures, a finding that the council's policy analyst, Ashley Denault, attributed to "some level of redundancy" caused by many small municipalities maintaining autonomous stations as well as the fact that Rhode Island is a highly urban state. 

With fire protection spending coming in at almost double the national average, local leaders such as North Providence Mayor Charles Lombardi are looking for ways to cut down costs.

Lombardi has proposed greater "regionalization," which would entail an increased collaboration with neighboring fire departments in Johnston and Pawtucket and a reduction in personnel, said Lombardi's chief of staff, Richard Fossa. 

Elementary and secondary education is the largest portion of the state's expenditure, putting Rhode Island in the same range as its regional peers and above the national average, according to the report. When combined with Medicaid spending, the two categories make up almost half of state expenditures.

Though Rhode Island has traditionally spent at high rates on elementary and secondary education, it is the only state without a formula to allocate funds to schools.

A bill approved in June by the state Senate would establish a funding formula that takes into account student enrollment, the respective abilities of communities to fund their schools and the need to funnel additional resources to the neediest students, said Simmons, one of the bill's authors. House action on the legislation is pending.

But spending on higher education lags in comparison, making up roughly a quarter of all education spending, and is significantly below the national average. Still, it is higher than that of Connecticut and Massachusetts. 

The governor's office is taking the report's numbers in stride. 

All states are struggling to find cost savings and ways to achieve these savings are constantly being monitored, said Amy Kempe, spokesperson for Gov. Donald Carcieri '65. 

"The information contained in (the council's) report is nothing new," Kempe said. "The issues touched on by the report continue to be addressed by the governor."



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