This is the second part of my essays on reforming state government and will focus on budget reforms. The first part of budgeting reforms involves a complete review of every state program, department and agency. I already gone over this some in my previous post, about reviewing program, departments and agencies for need, cost effectiveness, duplication of services or if it would be more efficient to decentralize some of them to the county, municipal or local governments. Second is to bring the states pension system into line, the first step is that the State needs to began full funding the system every year and not put off payments, when the state puts off payments it lose the interest that would be gained for each year that the payment is put off and because of this the state has to pay more money into the system in order to make up for lost interest. For example if the state puts off a billion dollar payment into the pension system for 3 years, the state would have to put 1.2 billion dollars into the system at that point to make for the lost interest. So in the long run, paying off the states pension system obligation as early as possible will save the state money in the long run. The state needs to move from a defined benefits systems to a defined a contribution plan, under the current system which is a defined benefits system the state promises to pay retirees a set amount to a defined contribution system in which the state matches, up to a certain point, each employees contributions to a retirement fund, similar to private retirement funds like 401Ks. This would benefits both the state and the employee; it would lower the cost to the state of the pensions and give the employees more control over their retirement and the certainty that the system would be funded. All new employees would be put into this system, while all existing system would stay in the existing system.
State departments and agencies should be required to list there operations and programs each year, rank them by importance and then reveal the cost of each program. This will give more information to both the voters and the members of the General Assembly about the cost of programs, there importance and will make fund decision easier and more informed.