Now, it's up to Pritzker to find long-term solutions despite short-term costs

After four tumultuous years of dysfunction between Gov. Rauner and the General Assembly, a multitude of difficult challenges await Gov.-elect Pritzker. These challenges include finding a way to: invest adequately in higher education; restore the cuts made to social services and rebuild the social service network; cover the $7 billion plus cost of providing every child the level of education needed for academic success that's been identified under the state's new, evidence-based school funding formula; and resolve Illinois' significant - as in over $131 billion - unfunded pension liability.

Mind you, all that has to be accomplished in the context of a state fiscal system that's projected to end the current fiscal year with an accumulated deficit north of $9.8 billion. For context, that means there won't be enough revenue to cover 38 percent of all expenditures on public services this year.

If you notice, there's a common theme among the aforesaid challenges: fiscal capacity. As it stands now, Illinois, which has the sixth largest population and fifth largest economy of any state in America, lacks the financial where-with-all to maintain its current level of spending on public services - which sees $9 out of every $10 spent go to education, healthcare, social services, and public safety - despite the fact that virtually all of those services are woefully underfunded.

And yes, the amount of money available to spend matters. After all, even if state government was making all expenditures of taxpayer money in accordance with best practices and as efficiently as possible, which of course it should, it ultimately wouldn't result in realization of the underlying policy goals, if aggregate funding levels were insufficient. The bottom line: inadequate capacity on the front-end results in inadequate outcomes on the back-end. Period.

Want proof? Start with higher education, for which state funding has declined by over 51 percent in real, inflation-adjusted terms since FY2000. In response, tuition at public colleges and universities in Illinois over that sequence has increased at a rate that's 62.6 percent greater than the national average. So it should come as no surprise that over the last decade enrollment in public institutions of higher learning has declined by 8.1 percent in Illinois, despite growing by 7.7 percent nationally.

Then there's K-12 education - which is underfunded in Illinois by some $7 billion from what the evidence indicates is needed for every child to receive the type of educational experience that translates to academic success. That shortfall in education funding means the vast majority of Illinois school districts - 83 percent according to the State Board of Education - lack adequate fiscal capacity to educate the children they serve.

Given this significant lack of capacity on the front-end, one would expect inadequate student achievement outcomes on the back-end, which there are. For instance, just 37 percent of Illinois students met or exceeded the state's standard for achievement on the most recent PARCC exams covering English Language Arts, meaning 63 percent didn't.

I could go on, but there really aren't any counter factuals. No matter how you slice it, the lack of an appropriate level of public sector investment in services on the front-end consistently generates less than desirable outcomes on the back-end. Which brings us to the biggest challenge facing Gov.-elect Pritzker: the political process itself. In fact, the primary reason Illinois state finances are so shaky today is that designing sound fiscal policy requires long-term thinking-something political processes are poorly equipped to support.

That's because political processes focus on short-term objectives, be it winning an upcoming election or getting through a current year's budget negotiation. Rewards that are realized in the long-term, particularly if associated with imposition of short-term costs, are anathema to a process designed for generating an immediate advantage. Gov. Rauner never found a way to overcome the myopic focus of the political process. Let's hope Gov.-elect Pritzker does.

Ralph Martire, rmartire@ctbaonline.org, is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank.