Management Prognostications

Plus: Our own predictions for the year, government's "big pencil," and more
by | September 22, 2008

Take out the crystal ball. The new year is still just getting started, and we're interested in predictions about state and local governments in the coming year. What kinds of things do you think Governing will be reporting in the next 12 months? You can be very specific or very general.

And here's the best part. We're going to hang on to all your contributions for a year. In 2010, we're going to pick a winner, judged entirely by us with the following criteria: originality, accuracy and degree of difficulty to predict. The winner will receive a small library of books selected from our Managers Reading List.

E-mail us with your predictions!


And as long as we're challenging you, here's a handful of predictions we'd make:

o At least nine states will raise taxes, and admit to it.

o At least three states, cities or counties will offer early retirement -- and then regret it.

o Decaying water systems will lead, directly or indirectly, to the loss of life in at least one community.


In retail, they call it a "big pencil." The idea is that the more you spend, the better price you'll probably get. This notion has hardly gone unnoticed among governments, which sometimes have the opportunity to join forces in order to increase the size of a purchase and cut the costs. For obvious reasons, there has rarely been a better time for this kind of clear-headed cost-cutting.

Here's a great example from Minnesota. Very recently, more than a couple dozen counties, cities, school districts and state agencies in that state joined together in making long-term contracts for future fuel purchases. According to the Minneapolis Star Tribune , "The new metro-area contract, completed Dec. 17, guarantees that participating local governments will spend about $4.2 million for gasoline and about $5.5 million for all diesel blends. Without the contract, local governments would pay substantially more if fuel prices shoot upward again."

In fact, according to the Star Tribune, even the small community of Cottage Grove -- population around 33,000 -- expects to save "about $250,000 of the $600,000 it budgeted for fuel in the coming year."


Remarkable fact: California, a state known for Silicon Valley and leadership in electronic wizardry, is the only state that doesn't provide its expenditures data to the Census Bureau in electronic form. The state is working on a new system that will bring it up to speed, but we thought it was noteworthy that California has been the lone laggard in this area.


Take a look at STATS.org's "Dubious Data Awards for 2008." It's great fun. Here's a sample:

"In July, the Commonwealth Fund published its second evaluation of U.S. health care, Why Not the Best?: Results from the National Scorecard on U.S. Health System Performance, 2008. The results were dismal, the U.S. was outscored on a range of different measures by other countries, leading the New York Times to write that "The findings are likely to provide supporting evidence for the political notion that the nation's health care system needs to be fixed." What the media failed to report was that many of the scorecard's conclusions were not drawn from patient outcomes (they got better or worse) but from surveys of patient satisfaction (they thought they got better or worse). In other words, patients with no medical training decided whether the treatment they received was mistaken or unnecessarily repetitious. Add this to the fact the scorecard mashed together studies without adjusting for different methodologies, sample sizes, and collection techniques, and you arrive, ironically, at a diagnosis that simply looks like it's scientific but isn't."


It seems like everybody loves rankings and ratings and gradings and lists. We sure do, and we've spent a good chunk of our professional lives in the list-making business.

But if you're not absolutely clear about the criteria behind any 50-state comparison, you might as well ignore it. Consider this: A study titled "Ranking America's Mental Health," by Mental Health America, recently found that Utah has the highest reported incidence of depression in the United States. Meanwhile, the United Health Foundation's "America's Health Rankings" report says the state is the eighth-best for mental health. Assuming that both studies were based on good data, the difference clearly lies in what they were actually measuring. (And a tip of the hat to the Salt Lake Tribune for pointing us to this anomaly.)


Manager's Reading List: Our ongoing feature about books to read, recommended by B&G readers

Rebecca L. Morse, chief financial officer of the Village of Palm Springs in Florida, wrote: "Jim Huling of The Jim Huling Group writes a column for Smart Business magazine and just published his first book, Choose the Life. I love his columns and I am enjoying his book."

Read the full archive of Managers Reading List suggestions.


As the economy staggers on, where are the states going to cut back? Iowa State Auditor David Vaudt has some uncomfortably straightforward thoughts on the subject, as reported in the Des Moines Register . As Vaudt told the Register's editors and reporters, "You can't take education and Medicaid -- which are probably 75 percent of the budget -- and say, 'I'm not going to touch those,' because if you only have 25 percent left, you're going to have to essentially wipe out a lot of other things.... It's just not going to work."


Not long ago, we asked about the frequency with which bosses feared firing employees because the workers might use information they had gathered on the job to the detriment of the government. We got some interesting answers.

Now, we've come across a piece in the Business Journal of Milwaukee that indicates that -- at least in the private sector -- managers have reason to be a bit nervous. The article says, "A new study finds that 58 percent of office workers who face being laid off admit they will take valuable data with them -- if they could get away with it.... A survey of 226 office workers on Wall Street, conducted by IT security experts Cyber-Ark, found many are downloading sensitive company secrets, just in case they lose their job."


About 18 years ago, we were invited to an intimate gathering of journalists and policy makers to hear about a great new idea in city finance. Bret Schundler, then the mayor of Jersey City, N.J., was advancing the idea of bundling the city's delinquent tax liens and then selling them to investors. The Bond Buyer reported at the time that "with Jersey City's tax collection rate now up to 94 percent, and the local property tax cut by $7 million, other cities, including New York City and Waterbury, Conn., have taken notice and done their own tax lien securitizations."

We thought this was very cool. (And the hors d'oeuvres at Schundler's gathering were delicious.)

We hadn't given this much thought in a long time. But on Christmas Day, we came across an interesting story in the Toledo Blade that pointed out a potentially painful side effect of this practice. It turns out that Ohio's Lucas County began selling these tax liens in 2004 -- earning about $11.3 million so far -- to a New Jersey-based national debt collector. As the Blade reported, "In the past week, Plymouth Park Tax Services LLC, doing business as Xspand, has flooded the courts with foreclosures, filing more than 100 in two days -- threatening residents during the Christmas season with the possible loss of their homes.... In a two-day period, the clerk of court's office was inundated with about 120 new foreclosure filings...all by the company that purchased thousands of area residents' tax liens through the treasurer's sale."

Was the investor within its rights? Sure seems that way. But Christmas week? This just can't go well for Lucas County leaders, we think, even though the decision was made by an outside party.

Research Assistant: Heather Kleba

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