Tough Choices Remain for Florida

Presentation to the TBRC

November 1, 2007

LeRoy Collins Institute

LeRoy Collins Institute ~ Carol Weissert, Director

FSU Campus ~ 506 W Pensacola Street Tallahassee FL 32306-1601

850-644-1441 ~ 850-644-1442 fax

5010

015

020

0

1980q1 1985q1 1990q1 1995q1 2000q1 2005q1quarter

Alabama FloridaGeorgia North CarolinaSouth Carolina Tennessee

Virginia West Virginia

OFHEO Repeat Sales Index Adjusted for Inflation Using GDP Deflator

House Price Index, 2000Q1=100

01

23

45

Bill

ions

of 2

006

Dol

lars

199219931994199519961997199819992000200120022003200420052006

Florida Documentary Tax Collections

6466

6870

72P

erce

ntag

e o

f Hou

seho

lds

1985 1990 1995 2000 2005year

Homeownership Rate in Florida, 1984 to 2006

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Per

cent

1998 2000 2002 2004 2006year

Florida Real GSP Growth, 1997 to 2006

01

23

45

67

89

10U

nem

ploy

me

nt R

ate

, Flo

rida

1975m1 1980m1 1985m1 1990m1 1995m1 2000m1 2005m1month

Florida Unemployment Rate Jan 1976 to Aug 2007

010

020

030

040

050

060

070

0V

ALU

E

1990m11992m11994m11996m11998m12000m12002m12004m12006m12008m1month

Construction Jobs in Florida, January 1990 to August 2007

-20 0 20 40

SeattlePortland

NashvilleMIA-FTLOrlando

WashingtonRaleigh

LAPhoenixTampa

SFLas VegasOrange CA

St LouisAtlanta

JAXHouston

MinneapolisDetroit

SacramentoChicago

DallasPhiladelphia

San DiegoNew York

DenverBoston

WSJ October 25, 2007 Percentage Change in Past 12 Months

Percentage Change in House-for-Sale Inventory

-10 -5 0 5 10

SeattleCharlottePortland

AtlantaDallas

DenverChicago

MinneapolisBoston

New YorkSFLA

Las VegasMIA-FTL

WashingtonPhoenix

San DiegoTampaDetroit

WSJ October 25, 2007 Percentage Change in Past 12 Months

Percentage Change in House Prices

0 2 4 6

MIA-FTLLas Vegas

OrlandoDetroitTampaAtlantaDallas

HoustonSacramento

JAXNashvilleCharlotte

DenverSan Diego

St LouisBoston

New YorkPhoenix

WashingtonLA

MinneapolisChicago

PhiladelphiaOrange CA

RaleighSF

PortlandSeattle

WSJ October 25, 2007

Percent of Mortgage Payments Overdue

01

23

45

67

89

1011

12P

erce

nt

1985 1990 1995 2000 2005year

Florida Rental Vacancy Rate 1985 to 2006

0 5 10 15Percentage Change 2000H2 to 2007H1

Panama CityFort MyersMiami-FtL

Fort WaltonPensacolaMelbourne

JaxTampa

LakelandNaples

GainesvilleSarasotaOrlando

Tallahassee

BEBR Web Surveys Matching 1,121 Complexes with 3,534 Types of Units

Rent Has Risen Much Less than House Prices

5010

015

020

025

0

1980q1 1985q1 1990q1 1995q1 2000q1 2005q1quarter

Miami Ft LauderdaleWest Palm DaytonaMelbourne St Lucie

Palm Coast JAX

OFHEO Repeat Sales Index Adjusted for Inflation Using GDP Deflator

Atlantic Coast: House Price Index, 2000Q1=100

5010

015

020

025

0

1980q1 1985q1 1990q1 1995q1 2000q1 2005q1quarter

Naples Fort MyersSarasota Tampa

Panama City Pensacola

OFHEO Repeat Sales Index Adjusted for Inflation Using GDP Deflator

Gulf Coast: House Price Indexes, 2000Q1=100

100

150

200

1980q1 1985q1 1990q1 1995q1 2000q1 2005q1quarter

Orlando LakelandOcala Gainesville

Tallahassee

OFHEO Repeat Sales Index Adjusted for Inflation Using GDP Deflator

Interior: House Price Indexes, 2000Q1=100

Percentage Retiring by Age, 50-75

0

2

4

6

8

10

12

14

16

50 52 54 56 58 60 62 64 66 68 70 72 74

Age

0.5

11.

52

2.5

33.

54

Mill

ions

of N

ew R

etire

es

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050year

Esimate of New Retirees per Year, 1950-2050

Estimate of New Retirees per Year, 1950-2050

Social

SSocial Security Trustees Report, 2006, Figure IV B 2

Social Security Retired Beneficiaries per Covered Worker

Mean Family Wealth for Households by Age of Head

0

100

200

300

400

500

600

700

800

900

1989 1992 1995 1998 2001 2005

Ages 35-44 Ages 55-64

Figure 3. Wage Premium over High School Graduates

2

3853

13

77

121

0

20

40

60

80

100

120

140

Some College College Advanced Degree

Perc

enta

ge

1973

2003

AL

AK

AZ

AR

CA

CO

CT

DE

FL

GA

HI

ID

IL

INIA KS

KY

LA

ME

MD

MA

MI

MN

MS

MO

MT

NE

NV

NH

NJ

NM

NY

NC

NDOH

OK

OR

PARI

SC

SDTN

TX

UT

VT

VA

WA

WV

WI

WY

200

002

5000

300

003

5000

400

00

15 20 25 30 35Share College Graduates 2005

Income per Resident 2005 Fitted values

Income and Percent College Graduates

11.

21.

41.

6C

anad

ian

Do

llars

per

U.S

. Dol

lar

1970m1 1980m1 1990m1 2000m1 2010m1month

Since 2002 Dollar Has Plunged vs. Canadian Dollar

.4.5

.6.7

.8.9

Pou

nds

per

Dol

lar

1970m1 1980m1 1990m1 2000m1 2010m1month

Dollar Also Down vs. the Pound

.7.8

.91

1.1

1.2

Eur

os p

er D

olla

r

1998m1 2000m1 2002m1 2004m1 2006m1 2008m1month

The Dollar Has Fallen a Third vs. the Euro

05

1015

20V

ALU

E

1950m1 1960m1 1970m1 1980m1 1990m1 2000m1 2010m1month

Federal Funds Rate

.022

.024

.026

.028

To

tal E

xpe

nd

iture

s / Ju

st V

alu

es

.045

.05

.055

.06

To

tal E

xpe

nd

iture

s / T

ota

l Pers

onal I

nco

me

1985 1990 1995 2000 2005year...

All Local Governments in Florida, except Duval

010

020

030

040

050

060

070

080

090

0100

0110

0120

0G

over

nmen

t Job

s

1990m11992m11994m11996m11998m12000m12002m12004m12006m12008m1month

Government Jobs in Florida, January 1990 to August 2007

02

46

810

1214

1618

shgo

vt

1990m11992m11994m11996m11998m12000m12002m12004m12006m12008m1month

Share Government Jobs in Florida, January 1990 to August 2007

1500

020

000

2500

030

000

1970 1980 1990 2000 2010year

FL Real Income per Resident US Real Income per Resident

Annual Income Growth per Resident 2% for FL and US

.025

.05

.075

.1.1

25

1975 1980 1985 1990 1995 2000 2005Year

(Log Difference CPI)

Annual Inflation: 1976 to 2006

2.5

33.

54

2005 2010 2015 2020 2025 2030Year

TV1.5 TV0

State Total

Ratio of Taxable Value to Personal Income: 2006 to 2030

2.5

33

.54

2005 2010 2015 2020 2025 2030year

Tier Tier, no SOHPortability Base

Taxable Value as a Proportion of Personal Income, Florida, 2006-20

Business Taxes as Share of GSP

5.45.1

4.3

0

1

2

3

4

5

6

FL US SE

Estimated by Ernst and Young

Business Share of S&L Taxes

47.844.9

38.9

0

5

10

15

20

25

30

35

40

45

50

FL US SE

Estimated by Ernst and Young

The New Florida Legislation

• In January 2007, the Florida legislature passed the “Insurance Industry Accountability and Consumer Protection Act”

• This act expands the scope of Citizens Property Insurance Corporation (Citizens) and the Florida Hurricane Catastrophe Fund (FHCF)

• The goal of this act is to lower residential property insurance rates in Florida

Storm Damage ~ 7th Power of Wind Speed

• Force ~ Velocity Squared

• Area

• Duration

• Catastrophic Failure of Structures

Nordhaus NBER Working Paper 2006 (He says 8th power.)

Low-lying Areas at Risk of Sea-level Rise and Storm Surges

Estimated 2008 Savings in Premium Plus Assessment

-500

0

500

1000

1500

2000

Monroe Dade Hillsborough Orange Duval Leon

County

Ch

ang

e in

Pre

miu

m P

lus

Ass

essm

ent

Household (Homeow ners + Tw o Auto Policies)

Homeow ners PolicyAuto Policy

Local Share of FEFP Up 8 Points

0

5

10

15

20

25

30

35

40

45

50

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Challenges for K-12 Schools• Class Size Amendment• Backloading of Teacher Pay• Automatic Raises for Advanced Degrees• Higher Pay in Georgia• Higher Pay in Alternative Occupations• Limited Merit Pay• Limited Extra Pay for Math, Science, Special Ed• Unions• Low-SES Students• Large Schools, Large Districts

0 10,000 20,000 30,000 40,000 50,000

MS

AL

WV

LA

AK

KY

FL

TN

SC

VA

NC

GA

Source: National Education Association

Average Teacher Pay 2004-2005

Florida Rest of Southeast

0 5 10 15 20

FL

KY

MS

TN

AL

NC

LA

GA

SC

WV

AK

VA

Source: National Education Association

Students per Teacher 2004-2005

Florida Rest of Southeast

0 10 20 30 40 50

VA

FL

GA

SC

TN

LA

AK

AL

MS

KY

WV

NC

Source: National Education Association

Share of K-12 Funding Local 2004-2005

Florida Rest of Southeast

05

1015

2025

2000 2005 2010 2015Year

FTE Projected FTESchool Age Population Projected School Age Population

Population Projected Population

(Millions)

Population and FTE

Annual Educational and General Funds of the University System of Florida FY 1989-2006 in Billions of Dollars

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

FY1989

FY1990

FY1991

FY1992

FY1993

FY1994

FY1995

FY1996

FY1997

FY1998

FY1999

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

SOURCE: Florida Department of Education Fact Book 2003, Table 40

FTE and Headcount Enrollment: Florida Universities FY 1989-2006

050,000

100,000150,000200,000250,000300,000350,000

1988

-89

1990

-91

1992

-93

1994

-95

1996

-97

1998

-99

2000

-01

2002

-03

2004

-05

FTE

Hdcount

Source: Florida Department of Education Division of Colleges and Universities

Undergraduate Tuition and FeesFY 2006

• Florida $2,648• Texas $4,400• North Carolina $3,551• Georgia $3,377• United States $5,027

Source: National Center for Educational Statistics 2006

Tuition, Constant 2007$, FL & US

0

1000

2000

3000

4000

5000

6000

7000

2005 2006 2007

FL

US

030

0060

0090

00

1985 1990 1995 2000 2005year

UF GaTechUK UNCUSC UVA

In-State Tuition Constant 2007$, 1985-2007

Higher education status:

• Funding remains below average

• Tuition remains extremely low– Bright Futures and Florida Prepaid

• Absence of political will for excellence

• First separation of Bright Futures from tuition

Medicaid Enrollment Growth Fiscal Years 1985-2011

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

FY 198

4

FY 198

6

FY 198

8

FY 199

0

FY 199

2

FY 199

4

FY 199

6

FY 199

8

FY 200

0

FY 200

2

FY 200

4

FY 200

6

FY 200

8

FY 201

0

SOURCE: Social Services Estimating Conference July 17 07, Sept. 26, 03.

Annual Medicaid Expenditure Growth Rate, FY 1985-2008

-5%

0%

5%

10%

15%

20%

25%

30%

35%

FY 85

FY86FY87

FY88FY89

FY90FY91

FY92FY93

FY94FY95

FY96FY97

FY98FY99

FY00FY01

FY02FY03

FY04FY05

FY06FY07

FY 08

SOURCE: A Snapshot of Florida Medicaid. Oct. 4 2006 Updated by Social Services Estimating Conference—

Medicaid Services Expenditures Services Expenditures July 30 2007

Medicaid Status

• Recent drops in Medicaid spending are temporary

• Slowing economy increases demands on program

Florida KidCare Title XXI Enrollment 2002-2007

050,000

100,000150,000200,000250,000300,000350,000400,000

2002

July

2002

Nov

2003

Marc

h

2003

July

2003

Nov

2004

Marc

h

2004

July

2004

Nov

2005

Marc

h

2005

July

2005

Nov

2006

Marc

h

2006

July

2006

Nov

2007

Marc

h

2007

July

Florida KidCare Title XXI Enrollment 2002-2007

050,000

100,000150,000200,000250,000300,000350,000400,000

2002

July

2002

Nov

2003

Marc

h

2003

July

2003

Nov

2004

Marc

h

2004

July

2004

Nov

2005

Marc

h

2005

July

2005

Nov

2006

Marc

h

2006

July

2006

Nov

2007

Marc

h

2007

July

Florida KidCare

• Enrollment has stabilized but program is undersubscribed

• State loses federal dollars when enrollment drops

Bottom Line

• Two years later little change in overall diagnosis

• Florida’s future is compromised by low service levels and a narrow and inequitable tax base

• Demographic trends show richer, older state

• K-16 Education endangered• Long-term thinking is key