Appendix: Trends and Budget Questionnaire

By Peter Schirmer, Michael T. Childress, and Charles C. Nett

From $5.8 Billion and Change: An Exploration of the Long-Term Budgetary Impact of Trends Affecting the
Commonwealth
pp. 91-101, published 1996

To learn more about long-term budgetary implications of the array of trends affecting Kentucky, we divided the state budget by agency into 82 discrete units (see "Appendix: State Government Expenditures in FY 1994") and sent questionnaires to those responsible for planning and managing the funds for these units.(1) The questionnaire is shown in this appendix. We asked these individuals to examine an array of trends and evaluate their long-term impact on the budget of the agency they represent.

Questionnaire

Table 1: Questionnaire Form for Trend Impact Evaluation

  1.  
  2.  
  3.  

Trends Affecting the Commonwealth: What is Their Long-Term Impact on the State's General Fund?

The People of Kentucky

  1. Demographic trends suggest that Kentucky will experience only moderate population growth in the years to come

    2. , in spite of the high rate of growth it has enjoyed in the early 1990s. The stagnation of Kentucky’s population during the 1980s, which is largely attributable to substantial out migration, particularly among young people, poses questions about the viability of Kentucky’s future labor force.

  2. The homogeneity of Kentucky’s population has also persisted in recent years

    3. , a trend that may not bode well for the almost certain advance of globalization of commerce, which will demand high levels of comfort with diverse peoples and cultures. States that are perceived as economically or socially inhospitable to minorities may risk accelerated decline in their minority populations and, in turn, undermine their competitiveness.

  3. Kentucky is expected to retain its essentially rural character for some time to come

    4.  and, as a consequence, delay or avoid the arrival of some of the problems urbanization brings — congestion, crime and pollution. The beauty and the quality of life this rural strength enables may hold enormous future appeal for those in flight from urban congestion and crime.

Changing Family Structures

  1. More children live in households headed by single parents, who are much more likely to be poor

    2.  as a result of the increased incidence of divorce and a growing number of births to unmarried women.

  2. A combination of factors is influencing our population and the family structures it forms, but none is more pronounced than the state's sharply declining birth rate

    3. . Contrary to stereotypes, Kentucky registered the 49th lowest birth rate in the nation during the 1980s, signaling the strong possibility of continued population decline in the state’s population of young people under age 18.

  3. As more of us choose to live alone and families continue to fragment, the number of households has risen while the number of people living in them has declined

    4. . While household formation continues to outpace population growth, the trend actually peaked in the 1970s. Nevertheless, the rapid expansion of households has triggered widespread, if belated, attention to the implications for families, the environment and a fraying community fabric.

Older and Wiser?

  1. The aging of our population is perhaps the most striking population trend affecting Kentucky

    2. . This trend will persist and deepen over the first half of the 21st Century. It is revealed by an emerging middle-age population bulge, a decrease in the number of Kentucky children and an increase in those in their middle and older years.

  2. Because older Kentuckians are disproportionately poor, the aging of our population may be attended by expanded poverty

    3. . Rural states like Kentucky are often strained to provide much needed support services for older people, for which the demand is certain to expand.

Generations at Odds

  1. Converging economic and demographic trends may exacerbate tensions between the generations in the years to come

    2. . The conflicting economic and social interests of young and old are pushing the issue of generational equity, the distribution of public resources in terms of need rather than age, higher on the public agenda, in spite of the attendant political risk.

Changing Economic Paradigms

  1. Virtually unlimited global competition has placed extraordinary demands on business and industry and, in turn, on workers, who have scrambled to build higher quality products, in less time, at a lower cost

    2. .. This seemingly limitless world marketplace is challenging Kentucky firms and their employees to meet rising product and performance goals.

  2. The long heralded Information Age has arrived and exerted a powerful influence on the way we work and live

    3. . Technology is accelerating the rate of change and creating an explosion of opportunities for highly skilled workers and innovative firms.

A Shifting Economic Floor

  1. While Kentucky’s coal industry has logged record production levels in recent years, employment in this high-wage industry has fallen sharply

    2. , largely as a consequence of technological advancements and the consolidation or closure of mine operations. Over the long term, rising environmentalism and the implementation of current and anticipated regulations complicate the utilization of Kentucky’s coal reserve.

  2. The future of burley tobacco, which is being influenced by declining use and increased imports of leaf, presents the most significant threat to farming and farmers in the state

    3. . In decline by several measures, including employment, farm population and cultivated land, Kentucky’s farm economy nevertheless enjoys record output, as farming methods and equipment advance productivity. However, the vulnerability of its key crop — tobacco — has created significant uncertainty.

  3. Predicted to decline nationally in coming years,

    4.  manufacturing nevertheless is making dramatic gains in Kentucky’s economy, outpacing the nation in terms of jobs and gross product    . Kentucky produces a diverse range of manufacturing products; however, the predominance of small, often insufficiently capitalized firms, an inadequate base of intellectual capital, skilled workers, and technological know-how may inhibit our ability to compete in the global marketplace.

  4. Kentucky hardwoods are prominent in the U.S. marketplace, but the virtual absence of an important second tier of value-added wood products industries prevents the state from capturing the full benefit of this abundant resource

    5. . Approximately 70 to 75 percent of the 700 million board feet of grade lumber cut here annually is shipped out of state in an unprocessed state. Development of the enormous potential the secondary wood industry holds for Kentucky’s long-term economic prospects will require investment in expertise, entrepreneurial initiatives, and careful attention to the cultivation of an ethic of stewardship that will help sustain this abundant resource.

  5. As our population ages, the store of historical sites in Kentucky and the state’s ready accessibility are expected to increase its appeal to tourists, magnifying the economic benefit of tourism to Kentucky

    6. . While it is viewed as a viable, sustainable option for the development of rural communities, tourism is not an antidote to poverty for those holding seasonal or marginal quality jobs.

  6. Small enterprises are expected to be the engine of our future economy, fueled by expertise, capital and a broad-based commitment to their development

    7. . As the small-business sector of the economy continues to create the lion’s share of new opportunities, the importance of enabling entrepreneurs rises. Much of the state’s future success in cultivating small enterprises and the opportunities they will yield hinges on the availability of expertise — managerial and technical — and capital.

Chasing the Dream

  1. Increasingly, the notion of lifetime employment is now widely viewed as an anachronism, and hard work is no longer an assurance of anything

    2. . For many workers, the American Dream has become more elusive and the pursuit of it a frantic chase. The employer-employee contract is becoming more tenuous, as firms meet global competition with fewer, less costly employees, many of whom work part-time or on a contingency basis. Wages have stagnated and, at the same time, employee benefit packages are shrinking or disappearing.

  2. The percentage of poor working families in Kentucky grew during the 1980s and continued to exceed that of the nation as whole

    3. . Rising levels of contingency employment, the ascendance of low-wage industries, a reciprocal decline of high-wage industries, low labor force participation, and the types and the mix of jobs industry is bringing to the state are influencing wage levels.

  3. In Kentucky, income inequality became more pronounced over the most recent decade

    4. .     Increasingly, economists view deepening disadvantage as a problem with broad-based implications. Falling U.S. wages have been accompanied by the rise of income inequality and what many analysts believe is a shrinking middle class. The impoverishment and decline that inequality fosters is believed to discourage investment and, in turn, adversely affect productivity.

  4. The importance of forging joint worker-manager efforts to address emerging problems is rising on the policymaking landscape

    5. . As more workers face growing uncertainty fueled by stagnant wages, diminishing benefits, continued layoffs, and the prospect of rising workloads and work hours, the critical relationship between worker and employer is being undermined.

Fiscal Health

  1. Kentucky’s fiscal structure is characterized by a heavy concentration of taxing and spending at the state level, more so than in other states

    2. . Consequently, the people of Kentucky rely heavily on state government to provide services, financing, infrastructure and leadership on matters that are traditionally the obligations or prerogatives of local governments in other states.

  2. A burden on city and county budgets which has received particular scrutiny in recent years is unfunded federal mandates, which are exerting increasing fiscal pressure on local governments

    3. .     Despite the concentration of fiscal responsibilities at the state level, the finances of counties, cities and special districts are extremely important. Indeed, local governments are responsible for a quarter of total state and local expenditures in Kentucky.

Transportation

  1. A number of forces now at work will expand the role of other modes of transportation and dramatically alter the transportation planning process

    2. .
A quality transportation system will be critical to Kentucky's future prosperity. Highways, the quality of which is improving even as use expands, are the traditional backbone of this system, and they will continue to be so in coming years. Federal legislation, environmental considerations, competition for business and technological advances will affect the modes chosen to deliver needed services in the future.

Environmental Integrity

  1. The quality of Kentucky’s water continues to improve, but substantial investment in infrastructure will be required in coming years, to safely treat wastewater and extend public drinking water to more Kentuckians

    2. . New approaches to managing pollution are likely to focus on the source, rather than the outcome, of water pollution.

  2. Kentucky's air quality has improved dramatically since the enactment of the federal Clean Air Act in 1970, the provisions of which have led to significant reductions in levels of harmful pollutants, such as lead and carbon monoxide

    3. . When fully enforced, the federal Clean Air Act Amendments of 1990 are expected to dramatically reduce air pollution, but they will have an as yet undetermined impact on the state’s coal industry.

  3. Programs to promote waste reduction and recycling will likely increase, as landfill disposal costs rise and more markets for recyclables become available

    4. . Timely legislation has checked the influx of out-of-state garbage, but management of Kentucky’s solid waste continues to challenge policymakers at every level.

New Prescriptions for Health Care

  1. Health care emphasis is shifting to health promotion and disease prevention as a means of making health care more accessible and affordable while retaining quality

. A higher level of cooperation among individuals, private service providers and government is expected to emerge as well. Advanced applications of technology and more active involvement of communities will overarch these trends, as we attempt to create a more manageable, useful and equitable health care system.

A Future Imperiled by Poverty

  1. From one-fourth to nearly one-half of Kentucky’s children live in poverty

. Research has consistently confirmed that poverty adversely affects the health and educational attainment of children reared under its mantle, and in turn, the productivity and independence of their adult lives.

Toward Lifelong Learning

  1. By virtually every measure, Kentuckians are undereducated and ill prepared to meet the challenges that the future will bring

. Prominent among the litany of often repeated deficiencies are high dropout rates, a low rate of college attendance and one of the highest percentages of adults in the nation who do not have a high school diploma. While significant and even dramatic progress is being made, Kentucky still has far to go in its drive to close persistent education and training deficits.

  • The Kentucky Education Reform Act has yielded measurable improvements in the performance of students and engaged thousands of parents, teachers and administrators in a new way of thinking about education

    • . In spite of its ranking at or near the bottom of the 50 states in many aspects of educational attainment, Kentucky has ascended to national prominence in educational reform.

  • By the turn of the Century, the majority of U.S. workers will need more than a high school diploma

    • . Increasingly, educational need has extended beyond the basics provided by a high school education. As the demand for highly trained workers who have a solid intellectual foundation continues to expand, the importance of honing the skills of new and current workers is critical.

  • While higher education continues to provide the intellectual capital needed to meet future challenges, cost poses an increasingly formidable obstacle to its benefits

    • . Knowledge and the analytical and creative skills higher education enables are becoming central to our lives. Unfortunately, competing and compelling needs have eroded once generous public funding for higher education, challenging administrators to do more with fewer state dollars and prompting closer scrutiny at every level.

    Responding to Crime

    1. Data on violent crime suggest it may be rising in Kentucky

      2. .
    At the same time, however, Kentucky’s crime rate is quite low and only a fraction of regional (South) and national crime rates.

  • Juvenile arrests for serious offenses have also risen in Kentucky

    • .

  • Predictably, prison populations have risen accordingly

    • .     Over the past 20 years, the rate of incarceration has increased 233 percent in Kentucky. The rising costs associated with increased incarceration are challenging policymakers to discover and implement alternatives to prison. As an important starting point, Kentucky's criminal justice system has begun to explore mediation as an alternative to litigation and to shift nonviolent offenders to less costly facilities or to home incarceration.

    Building Social Capital

    1. While hopeful signs of rising engagement can be detected in the civic life of Kentucky, many community activists observe that, for a variety of reasons, civic engagement is inadequate and, therefore, self-limiting

      2. .
    Despite this, government must, as a matter of routine, turn to citizens for guidance, direction and support, if it hopes to build the social capital on which successful development relies. The effectiveness of government in the future will depend upon the ability of its leaders to overcome cynicism, alienation and even despair among the citizens it serves and build the social capital or citizen participation needed to meet the challenges before us. Research shows that those communities and regions which enjoy high levels of civic engagement are far more prosperous.

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    Footnotes

    1. The Commissioner of Education advised us to send questionnaires to the 39 members of the Commissioner’s Advisory Council to gauge their reaction to the trends as they relate to primary and secondary education. This Council is comprised of school district superintendents from diverse areas of the state. Return to text.