NCPA - National Center for Policy Analysis


September 22, 2009

Arizona's general revenue spending currently is about $3.3 billion more than its ongoing revenues.  Money-saving strategies are a must.  But reducing spending need not mean cutting core services, says Byron Schlomach, an economist with the Goldwater Institute.

The current economic situation presents a golden opportunity to make Arizona government more efficient, says Schlomach, and suggest five ways efficiency can be achieved.

Privatize public building:

  • The state should fully outsource all maintenance on its 4 million square feet of office space, saving on employee costs as well as providing for efficient building maintenance over time.
  • Currently, state agencies pay $21 per square foot for state buildings while the average cost per square foot paid to rent private buildings is $17.50.
  • If the state sold its buildings and rented space, it could represent a potential total one time savings of $14.4 million.

Expand school choice:

  • Arizona spends more than $4,000 per public school student to fund education.
  • Arizona's corporate income tax credit program for private school tuition costs the state $2,300 in tax revenues per scholarship recipient.
  • By expanding the program to allow 15,000 children to transfer from public schools, the state would save $25.5 million annually.

Convert higher education funding to per-student grants:

  • Arizona already has grant programs for students attending private colleges and universities.
  • These programs should be used as a model to convert the entire university funding system to yearly tuition grants so students can attend any school they choose.
  • By including a requirement to graduate, grants could foster greater competition among universities and the resulting efficiencies could save $750 million annually.

Provide high deductible health plans with health Savings accounts for public employees:

  • Arizona could potentially cut its health benefit premium costs in half with high-deductible health insurance benefits.
  • Half of those savings could be used to help fund employees' health savings accounts.
  • The state would still net $154 million in annual savings.

Develop alternative sentencing for minimum-security criminals;

  • It costs Arizona $18,500 per year to incarcerate minimum-security offenders.
  • In contrast, GPS tracking costs $4,500 per prisoner; even with group therapy and other monitoring costs, the state could save $10,000 per prisoner, per year.
  • With only one-quarter of Arizona's minimum-security prisoners sentenced this way, the state could save $25 million annually.

Source:  Byron Schlomach, "Five Reforms Arizona Should Immediately Adopt to Close the Budget Gap," Goldwater Institute, September 16, 2009.


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