Balanced-Budget Bollocks, The Price Tag of Transparency, and Tracking Government Collaborations
Plus: Questions about pension investments, and more management news
A little more about balanced budgets. We've repeatedly questioned the value — and even the reality — of balanced budgets in cities, counties and states. One of our major thrusts has been the idea that balanced budgets often become unbalanced mere weeks or months after they're passed, leaving the government entity with a shortfall. If you've doubted us, here's some dynamic proof: According to a recent survey done by the National Association of Counties, "Only 35 percent of responding counties (69 counties) report that they adopted balanced budgets this fiscal year with no anticipated shortfalls." That means about two-thirds of the counties passed budgets which they knew were essentially flawed on Day One.
And we'll bet a dollar (that's as much as we ever bet) that the same is true with cities and states.
There may be more to this story than we came to understand from the St. Petersburg Times article in which we found it. But we couldn't resist passing it along. Apparently, a Florida state senator, Mike Fasano, had requested some records about Florida pension fund investments, and received an invoice of nearly $11,000 from the State Board of Administration. The request had originally been made by the St. Petersburg Times, but it was rejected for reasons of confidentiality. But the senator, who has rights to view state documents like this, stepped in, and was told that it would cost a bundle just to cull the information and make sure there was no proprietary information shared.
Feels to us like anytime a state senator — or a newspaper, for that matter — is interested in delving into matters of state investments, that's the time to fly the transparency banner. With all the hoopla about states' pension fund issues, this doesn't feel like the right time to tell the public and its representatives that the details are not particularly any of their business. What's more, we have an open question: If you can't reveal the details of what you're investing in, how is any meaningful oversight possible by legislators?
Interested in stories about how governments that collaborate with one another — and with other entities — can deliver services more effectively and efficiently? Then take a look at the Akron Beacon Journal's online section dedicated to covering government efficiency. It's focusing right now on issues of collaboration.
By the way, Ohio appears to be one of the first states you'd want to look at if you're interested in this topic. John Hoornbeek, director of the Center for Public Administration and Public Policy at Kent State, tells the Beacon Journal that his group has identified about 250 collaborative efforts of some kind, half of which have actually shown results. His study found a great many efforts in areas like vehicle maintenance, policy and fire functions, storm water management and economic initiatives.
Not so long ago, only a small number of people were deeply interested in state and local pension liabilities. Now, that topic has become front-page news from coast to coast, and many authorities have weighed in about how to evaluate these liabilities. But that's only half the important equation. As a recent article in Pensions & Investments points out, there is growing "uncertainty about the value of their assets."
That's true in large part because there has been an increase in allocations to alternative investments, "including hedge funds, private equity, real estate, timberland, mortgage-backed and other asset-backed securities and distressed debt, as well as swaps and other derivatives strategies," says P&I.
"In general," the article goes on to say, "these are all hard-to-value assets — whether physical assets like properties, or equity, or debt securities in non-publicly traded companies, or strategies based on non-exchange-traded derivatives — where prices are not readily and publicly available."
How important is an educated population to the success of a city? Edward Glaeser takes a stab at answering that question in the September issue of Scientific American (which we recommend to you — it's a special issue specifically about cities). Consider some stats he shares: "In the metropolitan areas of the Northeast or Midwest, where fewer than 7.5 percent of adults had college degrees in 1970, the population grew by 8 percent between 1970 and 2000. Where more than 15 percent had college degrees, the population grew by 53 percent."
But wait. Is it possible that fast-growing cities simply attract more educated people? Glaeser persuasively argues that's not the case. It turns out that cities' educational levels don't change much over time. So it's not as though the population growth could be raising the percentage of people with college degrees.
Practically any elected official in the United States posits that education is the crucial key to the future. But the dramatic impact on the vigor of a city came as something of a surprise to us.
After the tragic shootings at Columbine High School over a decade ago, many schools instituted so-called "zero tolerance policies." These policies often remove teachers' and administrators' capacity to judge individual issues on their merits. And the policies frequently lead to huge increases in the number of student suspensions.
Is that good or bad? According to a new report from the Civil Rights Project at UCLA, if academic success is a measure, there are real problems with this policy. According to an Education Week article on the study, "The center's report argues that school discipline records are too often seen as a measure of how safe a school is and not often enough as a gauge of how healthy a school is academically. But [according to the report's author] there is no evidence that banishing some students will improve the education of classmates still in school, while studies have shown that punishing students increases their risk of dropping out."
Not long ago, we had a revealing chat with a former state communications director (whose identity we promised to protect). He told us about the ways he used to work with the press in his old job. Now, however, in his new position as a government manager, "You [reporters] will never get me on the phone again!" His stance is emblematic of the growing tendency we've noticed for government officials to stay away from the press — but to a degree we haven't experienced in our careers.
Don't misunderstand. We know the press can get things wrong, and can be unnecessarily tough on government leaders. But since the press functions as a primary source of information for taxpayers, we think that public servants should be responsive to inquiries. Careful, to be sure. But responsive.
If you didn't think Rutherford B. Hayes had much to contribute, consider this quote from the 19th president of the United States: "Let every man, every corporation, and especially let every village, town, and city, every county and State, get out of debt and keep out of debt. It is the debtor that is ruined by hard times."
Saving lives during natural (or unnatural) disasters is certainly a state mission with which few would disagree. Yet one road to this estimable goal appears to be full of potholes: a nationwide interoperable communications network. That's fancy talk for a system that will ensure that first responders within and across state lines can all talk to each other easily.
Gov. Martin O'Malley of Maryland and Gov. Matt Mead of Wyoming recently wrote a piece for Roll Call in which they stated, "Firefighters, police officers and emergency medical personnel must be able to communicate with one another in real time if they are to preserve life and protect property."
Right now, for example, most first responders on the East Coast use commercial networks, which can instantly become overloaded when there's a crisis, preventing "calls and text messages from getting through," according to the two governors. They add, "Requiring first responders to rely on these systems puts lives at risk and is simply unacceptable."
Massachusetts Gov. Deval Patrick is arguing with a rule he calls "wacky." The rule has to do with federal stimulus dollars. And while we might not use exactly the governor's wording, we think he raises a really interesting issue. Turns out that the guidelines governing the spending of recovery dollars mandate that unspent money intended for transportation construction projects be sent back to Washington.
According to the State House News Service, the governor said that "most of our projects, many of them have come in under budget," which means that cash will be siphoned out of state coffers. Were the stimulus intended to complete a prescribed list of projects, we'd think that Patrick was missing the boat. But it wasn't. It was designed to create jobs. Times being what they are, why would the federal government really want to take stimulus dollars back, dollars that could be used for projects that might serve that goal? "Look, this is about jobs," the governor told the news service. "Let's use it for other projects."