Q&A: An Exploration of States in the 21st Century September 2010

An Exploration of States in the 21st Century

An Interview with Thomas L. Gais
Director, Rockefeller Institute of Government

Courtney Burke

Q: What do you consider the Institute’s greatest strengths to build on?

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Thomas L. Gais has been director of the Rockefeller Institute since July, following 16 years at the Institute, including nearly a decade as director of the Federalism Research Group and four years as Institute co-director. In this interview, he shares his thoughts on the Institute’s work — past, present and future.

A: The Institute’s best work has been our careful descriptions of fiscal, policy and administrative changes in the states and in states’ relations to the federal government. We’ve tried to give citizens and government leaders a clear picture of how states are meeting — or not meeting — their enormous responsibilities in our multilayered governmental system.

We’ve done that through fiscal reports and analyses. We’ve also completed several field research studies since the early 1990s on how states have implemented national policies, including Medicaid, welfare reform, workforce development, the Faith-Based and Community Initiative, enterprise zones, and voluntary programs like VISTA and AmeriCorps. The field studies basically attempt to see whether and how states implement policies that reflect national goals while also innovating, adapting to local circumstances and learning from their experiences.

We do these things as objectively and evenhandedly as we can. People who use the Institute’s research know we’re giving them the facts, and that we try to present a full picture, with no sifting to serve a political agenda. No one elected us to promote our policy views. We believe that when policymakers, citizens and interest groups formulate policies, they should have access to credible, pertinent, understandable information about the states and their policies, fiscal conditions, and administrative strengths and weaknesses.

Staff at the Institute have many different policy views. But we all agree that states should have the fiscal and management capacity to meet their statutory and constitutional responsibilities — that is, to do what they’ve promised the public they’d do.

Q: How important is a focus on the condition of the states now, in 2010, and moving forward?

A: It’s awfully important now. Not only are states in bad fiscal shape, there are enormous changes going on that affect most domestic policies and may even threaten states’ capacity for self-governance in the future.

States are pressed, of course, by short-term declines in revenues and increased demands. Most states are still seeing very high levels of unemployment, including long-term unemployment that strains entire communities, and that burdens state service programs. Despite the growth in demands, as Institute Senior Fellow Don Boyd pointed out in a recent report, state and local governments are cutting back their workforce, more than in previous recessions, and that may make it even harder for states to meet growing needs.

But the short-run strains aren’t the whole picture. States are also seeing growing volatility and unpredictability in their revenues. State revenues have dropped greatly out of proportion to declines in the overall economy in the last two recessions. Since state and local functions are fairly stable over time, this volatility makes it very hard to manage state finances.

At the same time, the nation depends on states more than ever. Public functions with big economic payoffs — such as K-12 education, higher education and infrastructure — are mostly paid for and overwhelmingly administered by state and local governments. And now states have been assigned big and demanding responsibilities under federal health care reform.

A lot of people don’t realize that state and local governments carry out the great bulk of domestic policies in the United States. The federal government administers some big domestic programs, such as Social Security, Medicare, SSI and a few others. For the most part, however, when you’re talking about the domestic programs, state and local governments make them happen. Out of eight people working for governments in the United States, seven of them are on the state and local payrolls.

My guess is that states will continue to acquire more and more responsibilities. When you get political division in the federal government — and we may see divided-party control in the federal government after the November elections — problems get devolved to the states. That happened in the 1990s. When you don’t have national agreement on certain policies, we let the states work out the details. Yet, unlike in the 1990s, the states will see new responsibilities while they face a weak economy, and they’ll have to manage those responsibilities with an increasingly volatile revenue system. It’s essential for the public and political leaders at all levels of government to know the challenges states face and what solid research shows about the pros and cons of ways of dealing with these challenges.

Q: What research at the Institute is addressing some of these challenges and pressures?

A: We continue to monitor the fiscal problems of states. We’re doing that more frequently, with special “data alerts,” and in greater depth. We’re not just talking about quarterly shifts, but we’re also doing analyses of where we are in terms of this recession, and how this recession is different from or similar to prior recessions, so we know whether and how we’re seeing a “new normal.”

We’re expanding on this fiscal work in several ways. We’ve been working with the U.S. Bureau of Economic Analysis to find ways of monitoring state expenditures as well as revenues. It’s amazing that well into the 21st century, we still don’t have timely, precise, comparative budget information on states. Thus, we don’t know how states, much less local governments, shift their spending priorities in response to recent events, even though most domestic policy expenditures are in fact spent by state and local governments.

We’re also providing information about how states might reconcile their fiscal resources and responsibilities. For instance, we’ve been helping the Lieutenant Governor of New York, Richard Ravitch, prepare proposals for dealing with New York’s structural deficit. The lieutenant governor has chosen the particular proposals for reform and taken the political heat for his positions, while the Institute has been doing what we can to give him solid advice and analysis. We are also figuring out ways in which our work on New York State’s fiscal problems can be used in other states or coordinated with similar efforts around the country.

We’ve also been working with the State University of New York, particularly the chancellor’s office, to help the university system and its campuses expand their economic roles in the revitalization of New York State. We’ve done that by researching what other higher-ed institutions have done to promote growth and economic development, and I’m happy our reports have been widely disseminated and used. We’re deeply involved with the strategic planning process at SUNY, and we’re working with other research institutes in the SUNY system to make an even bigger contribution to SUNY’s capacity to serve middle-class and working-class families, meet the state’s needs for talent, help revive struggling communities and grow jobs in the future.

Several of us have been making presentations and providing testimony on how states fit into the larger federal system. Federalism is changing rapidly. Deputy Director Bob Ward testified before the Congress in the summer about the state fiscal crisis and implications for federal tax policy. Don Boyd has given many presentations around the country on the effects of various national actions, including the stimulus and health care reform, on state fiscal conditions. And I’ve talked about how the Obama administration is continuing and in some cases strengthening trends in which the federal government is imposing more detailed guidance on how states should carry out their responsibilities. The Obama administration has been particularly creative in that regard, relying more than in the past on demonstration and project grants — such as the Race to the Top education-reform program — in which the feds offer money to states in exchange for meeting new policy, budgetary and administrative requirements.

The effort to spur competition among state and local governments for federal money reminds me in some ways of the approach taken by federal officials in the Great Society years in the 1960s. They also relied on competitive grants, typically to big cities. Some of the same challenges remain, such as striking a balance between meeting widespread needs and promoting planning, experimentation and improved performance. How the federal government can reconcile its effort to shape and reform state policymaking with the need to help all states maintain adequate funding for basic programs will be one of the most difficult federalism issues we face in coming years. The Institute will track these developments, assess alternative approaches, and understand and explain their significance.

Q: What would you like the Institute to achieve, or what position would you like it to hold among public policy organizations, in the future?

A: We are unique in that, as I said, we’re not only nonpartisan, we are an educational institution and we’re not ideological. We will continue to have that role. We will continue also to have a focus on states. Both of those are important.

I would like the Institute to find ways of doing more on-demand analyses — for example, focused syntheses and plain-language translations of studies relevant to the current needs of state executives, agencies and legislators. There are areas where there are many policy-relevant studies, but it’s hard for nonacademics to weigh their pertinence and credibility for the specific tasks they face, such as estimating the comparative costs and benefits of alternative programs in their particular states. We’d like to improve our processes for responding to such analytical needs. This would also be a good opportunity for us to draw on the expertise of scholars outside the Institute’s permanent staff, including SUNY faculty and other university researchers and research organizations around the country.

In the fiscal area, we’ve been good at understanding what’s happening in terms of revenues; and as I’ve mentioned, we’d like to expand our work on expenditures. But I also hope we can improve our understanding of factors underlying the shifting fiscal conditions of the states and communities. It would be important for us to understand not just that public revenues are increasing or decreasing in some places, but why. More fine-grained analyses of the economic conditions, as well as policy and institutional factors, underlying state fiscal changes are really important, because that would tell us not only what kind of challenges our communities and states are facing, but also what kinds of communities — cities or rural areas or even some parts of suburban areas — are likely to face chronic problems in supporting public responsibilities.

I want to continue our work on state administrative capacity. It’s not easy for states to sustain their capacity when governments are unpopular, agencies are downsized and the public-service workforce approaches a “retirement tsunami” of departing baby boomers. But it’s an important value, and one that few other research institutes emphasize. It was the core concern of our work with the Winter Commission on state and local public service, the State Capacity Study, Medicaid managed care and many other projects over the years.

We may want to identify emerging challenges for state management by looking at how important problems are being dealt with in communities. We’ve recently been talking about examining the residential housing crisis and the prevention and management of foreclosures. States may have to play the critical role of orchestrating and filling in the gaps left by a welter of public and private programs. We want to call attention to these and other management challenges while we also identify and disseminate the most promising responses of different states.

Finally, as part of a public university and university system, we want to educate the public about states, New York government and the federal system. For example, most citizens know little about how states spend their money. Nor do many citizens know about the varied roles of federal, state and local governments in different policy areas. But these and other points are important if we’re going to have reasonable debates over budgets or policies. We’ve done many public education projects in the past, such as our forums and Bob Ward’s book, New York State Government. But I hope to do more, and to find ways to directly serve the needs of teachers, professors and students.

Q: Thank you for sharing your thoughts with us.


The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, conducts fiscal and programmatic research on American state and local governments. It works closely with federal, state, and local government agencies nationally and in New York, and draws on the State University’s rich intellectual resources and on networks of public policy academic experts throughout the country.