Policy Area

Coercive regulatory trends have displayed considerable continuity since the late 1960s, including a shift of federal aid from places to persons, increased policy conditions attached to federal aid, rising preemptions, federalization of criminal law, encroachments on state tax systems, hollowed intergovernmental institutions, and reduced cooperation within major intergovernmental programs. Two other trends—unfunded federal mandates and federal court orders—have become less significant. A newer trend has been the state-friendly federalism jurisprudence of the U.S. Supreme Court since 1991, although the Court’s 2002–2003 term did not advance this trend. State activism in forging new policies and bucking federal policies continues as well, and is likely to intensify in response to rising partisan polarization.

Privatization continues to be a controversial management issue in state governments. In the past five years, 1997-2002, the extent of privatization activities in the states has largely remained the same as in the previous five years or slightly increased. The main reasons for privatization are a lack of personnel or expertise and cost savings. In most cases, privatized services account for less than 5 percent of agency services, while reported costs savings range from none to less than 5 percent. But many state agency directors surveyed seem to have no clear ideas as to how much has been actually saved from privatization. Nevertheless, privatization is likely to continue in the states in the next few years as in the past decade.

“After a year of study, and after reviewing research and testimony, the Commission finds that recovery from mental illness is now a real possibility. The promise of the New Freedom Initiative—a life in the community for everyone—can be realized. Yet, for too many Americans with mental illnesses, the mental health services and supports they need remain fragmented, disconnected and often inadequate, frustrating the opportunity for recovery.”1 - President Bush’s New Freedom Commission on Mental Health. July 2003.

Whether attorneys general are viewed as activists, advocates or interpreters of the law, they impact all areas of public policy and all aspects of citizen life. Emerging technologies have changed the methods used by the chief legal officers to investigate crimes, as well as enforce and prosecute all areas of the law.

The development of personal technology and the application of this new power in a mobile environment is a key technological trend in telecommunications. For legislators and other public policymakers, this trend commands attention because of what is being created: a vast social commons. In this environment, state government policymakers will be required as never before to pay attention to the information security and integrity of individuals.

On December 8, 2003, President Bush signed into law the most far-reaching expansion of health care coverage since the Medicare and Medicaid programs were created. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 adds prescription drug coverage for the nation’s 40 million seniors and disabled individuals enrolled in Medicare. The law also contains a host of provisions that will have an enormous impact on state health care programs as well as state budgets.

The year 2003 will be etched in the future news reports and analyses as a year of major change occurring to governors. The most startling event was the recall of Gov. Gray Davis of California. The California gubernatorial recall and replacement votes highlight the fact that some elected governors faced situations in which they could lose their office without being beaten by a challenger at the ballot box, becoming ill or dying. One other unique aspect about the current governors is that there are eight women serving as governor in 2004 – the highest number of women serving at one time in the office. As we move through the first decade of the 21st century, we continue to find new faces in governors’ offices.

In what was once one of the fastest growing areas of state government, legislators now employ stringent criteria to determine when new professions should be regulated. Consequently, many emerging professions opt for credentialing in the private sector, although for some of these, a circular relationship is developing between private and public credentialing. Other trends and issues for professional regulators include new technological tools, shifting economic terrain, increased consumer involvement and international trade agreements.

The states have expanded their role in environmental protection over the past three decades and now implement most of the federal environmental statutes. With this heightened responsibility has come an increase in state financial commitments to pay for these programs and the states have met this responsibility for years. During the past few years, however, the fiscal crisis in the states, coupled with many new federal environmental rules and a lack of new federal money, has left the states with at least a $1 billion annual gap in the amounts they need to implement current federal law. These shortfalls have been documented in several studies. This situation, if not corrected, may lead to greater risks to the public from exposure to environmental hazards. The federal government should consider providing funding or other relief to the states for further implementation of federal rules.

Government accountability, advancing technological progress, and market reforms combine to influence the future direction of our state chief financial officers. Well-managed state financial organizations are not just about managing cost; they are also synonymous with the rigor of control, the delivery of accountability, the execution of technology, and the expectation of well-managed change.