Leaders in Louisville, Ky., are justifiably concerned about the way overtime is eating up the city's budget. According to Mayor Greg Fischer, as quoted by local news station WHAS11, "More than one in five city employees increased their base pay each year by at least 15 percent with overtime." That sure sounds like a lot of overtime, and we think it's an excellent issue for city managers to tackle.
But there's another wrinkle, about which we'd like to hear from you, B&G readers. The mayor complained that, "When you look at the data, about 25 percent of unscheduled overtime was worked by employees who also used sick time in the same pay period in which they earned overtime." So if an employee is sick on a Monday and works four extra hours on Friday, he or she gets overtime for those four hours. Is this fair? Is it unfair? We're withholding our own opinions until we hear from you.
Get on the cycle. The capacity of too many state and local governments to virtually ignore the existence of future expenses exceeds credulity. Of course, many states are now confronting the issues presented by delaying payments into state employee pension funds. But there are more time bombs out there.
Consider the bills coming due on loans from the federal government that were made to help states with inadequate unemployment insurance funding. The Center on Budget and Policy Priorities (CBPP) has just come out with an excellent short piece explaining that "[b]usinesses in 20 states must make the first payment tomorrow on about $35 billion that these states have borrowed from the federal government in recent years to help pay unemployment insurance (UI) benefits."
States needed to borrow that cash because they kept unemployment taxes, which were intended to keep those funds flush, too low. And so, when the recession hit, they were unprepared. New York, for example, had only nine percent of the Labor Department's standard for unemployment insurance funding back in 2007, according to the CBPP.
Writes the CBPP, "States whose UI reserves proved inadequate in the last recession need to revisit their UI tax policies to ensure that they are better prepared for the next one. UI has played an important role in creating jobs and reducing poverty in the last few years; diminishing its power in future recessions would be a step in the wrong direction."
There's a bill going before the Florida Legislature that was reportedly spurred by legislators eager to privatize prisons. The proposed legislation says that important information about privatization efforts should not "be included in the agency's legislative budget request until after the contract for such a function is executed."
Sounds a lot like a car dealer requiring that you sign the contract on a new vehicle before he'd let you look under the hood.
We recently returned from the National Association of State Personnel Executives mid-year meeting, and we emerged with a renewed enthusiasm for the work its members are doing in trying to cope with unusually tough economic times. It's not easy, to be sure, managing workforces in states where the word "raise" is a punch line, not a budgetary line.
One interesting presentation we sat in on came from Sara Wilson, director of the Virginia Department of Human Resource Management. The state had an emergency grant program to help employees suddenly confronted with unanticipated catastrophes. But leaders became aware that a number of employees needed quick, short-term financial help for reasons that weren't true emergencies. What to do?
The Commonwealth decided to institute its own small lending program in July 2009, which would avoid gouging employees, as often happens with so-called "payday lending." The program is only available to non-probationary salaried full-time employees, and no credit check is required. There's a $500 cap to the loans and a two-per-year limit, with a six-month period for repayment and a 24.99 annual percentage rate.
Sound high? Maybe, but no higher than many credit cards — and far lower than the alternatives. Interest on a $500 loan over a six-month period, for example, is $40, compared to $112 for a 14-day loan from other vendors. Meanwhile, it doesn't cost the state a penny. Apparently, it's working extremely well, with 7,471 bite-size loans funded with a little more than $7 million in revolving funds. Less than one out of a hundred loans turn bad. And here's our favorite part: Borrowers are also required to take an online financial literacy class.
You can read more about Virginia's micro-lending program here.
"I've searched all the parks in all the cities and found no statues of committees."
— Gilbert K. Chesterton
"Management consultants sometimes distinguish among I-companies, we-companies, and they-companies," writes James Pennebaker in his book, The Secret Life of Pronouns: What Our Words Say About Us. It's fundamentally about the private sector, but it applies to the public sector equally well.
One intriguing excerpt: "To get a rough idea of an organization's climate, they ask employees to talk about their typical workday. If employees refer to 'my office' or 'my company,' the atmosphere of the workplace is usually fine. People working in these I-companies are reasonably happy but not particularly wedded to the company itself. However, if they refer to 'our office' or 'our company,' pay special attention. Those in we-companies have embraced their workplace as part of their own identities. This sense of we-ness may explain why they work harder, have lower employee turnover, and have a greater sense of fulfillment about their work lives. And be very concerned if an organization's employees start calling it 'the company' or, worse, 'that company' and referring to their co-workers as 'they.' They-companies can be nightmares because workers are proclaiming that their work identity has nothing to do with them. No wonder consultants report that they-companies have unhappy workers and high turnover."
Technology may not be a panacea. But it sure can make a difference when used properly. That's certainly one lesson to be learned from a recent report by the Kaiser Commission on Medicaid and the Uninsured. The paper (available here, scroll down) indicated that most states are using high-tech solutions to add efficiency to the enrollment and renewal processes in Medicaid. In fact, seven states "made improvements to their online enrollment and renewal services during 2011 [alone]."
This seems like common sense to us. States don't have to take people off the rolls, or decrease the quality of their care, if they save money on work that's essentially clerical.
Kentucky has had a flood of bad economic news. As a result, Gov. Steve Beshear's proposed 2012-2013 budget called for some $286 million in cuts, including 6.4 percent from an already beleaguered higher ed system. The governor proclaimed that the budget was "inadequate for the needs" of Kentuckians and bemoaned the fact that the state wasn't "making substantial investments in our physical and intellectual infrastructure to bring transformational change to our state."
With that in mind, it's hard for us to understand the state's $43 million tax break for a Biblically-oriented amusement park, which includes a 500-foot-by-75-foot reproduction of Noah's Ark, plus $11 million for improvements to a nearby highway interchange. The idea, of course, is that the park will increase tourism, which will mean new jobs. But doesn't this fall short of the kind of "transformational change" to which the governor alludes?
Nevada is the only state to have legal online gambling. But we want to predict that this is going to be a big upcoming trend as managers search for new means of raising revenues. (In 2010, Washington, D.C., became the first jurisdiction in the U.S. to allow Internet gaming. But the City Council has already voted to repeal the law before it's been implemented, over concerns that the measure had originally been passed without enough input from the public.)
Connecticut Gov. Dannel P. Malloy is apparently "taking a hard look at Internet gaming and so are other states," according to the Hartford Courant. Some critics believe that online gambling will just make it easier for problem gamblers to wind up in hock. We don't really know. Our concern is more fiscal in nature. We've long believed that gambling revenues will eventually be a diminishing resource for states that rely on them. Online gambling will most likely bring in more cash at the outset. But mightn't they eventually drain money away from the bricks-and-mortar gambling opportunities many states already offer? We'd bet on it.