Crime and Mismanagement and the Realities of Gambling and Online Education

Plus more public-sector management news you need to know.
January 8, 2015
Barrett and Greene
By Katherine Barrett & Richard Greene  |  Columnists
Government management experts. Their website is greenebarrett.com.

Much of the attention to the states’ management of fiscal matters tends to go to the major expenditures like pensions and health care. But there are all sorts of smaller pockets of cash that add up to big money -- and which are often managed badly.

An excellent example of this is the funds set aside for crime victims. Some $11 billion is currently residing in federal bank accounts, with the intention of distributing it to states to reimburse crime victims for medical expenses, mental health counseling, lost wages and so on. Some states have their own funds as well -- as much as $10 million apiece -- which is brought in through general fund revenues and offender fees.

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The problem is that this money often goes unspent. Part of the reason is a federal annual spending cap of $745 million, despite the large amount of money the program has set aside. Worse yet, many states don’t even ask for the money they could be receiving thanks to sloppy recordkeeping, inadequate technology and lack of follow-through.

This appeared to be the case in the Criminal District Court of the Parish of New Orleans, according to a report released by the Louisiana Auditors Office last November. The audit found 112 defendant deposits that couldn’t be linked to the person who was supposed to get the money. More significantly, the state found that the database included many victims who are entitled to money but who couldn’t be located due to missing or outdated addresses.

This kind of problem is relatively common, according to Douglas Evans, director of research at the Research and Evaluation Center of John Jay College in New York, who wrote a report that looked at crime victimization funds last year; one of the few careful investigations on this topic.

“It’s something that people don’t care about, until you’re a victim of a crime,” said Evans. Even then, in many states, victims may never be made aware that there may be money available for them to help recover from the ramifications of a serious crime. “I think it would be helpful if the police were more of a resource,” said Evans. “And hospitals, too. Because people need to know. There should be a brochure, and then if victims don’t want to pursue it, at least they’ll know it exists.”

It’s possible states aren’t in a hurry to make people aware of victim compensation funds or to make the process of collecting those dollars easier. The more demand for this money, and the better the capacity to make it available, the more pressure to increase the size of the funds.

For some time, we’ve been concerned about the uncertain nature of lottery revenues as well as all other gambling revenues. A new report from the New Mexico Lottery Authority bears out the validity of our concern.

The Powerball lottery program, in which dozens of states participate under the auspices of the non-profit Multi-State Lottery Association, has been remarkably hard hit. The report indicates that most states have brought in at least 30 percent less Powerball revenues over the last year compared to the year before. Many have shrunk by more than 40 percent.

While the reasons for the decline are not entirely clear, many observers indicate that people are simply getting bored with the game. As the Baltimore Sun reported, the director of the state’s lottery and gaming control agency suggested that, “players may be becoming numb to soaring prize numbers.”

“You are not here merely to make a living. You are here in order to enable the world to live more amply, with greater vision, with a finer spirit of hope and achievement. You are here to enrich the world, and you impoverish yourself if you forget the errand.” -- Woodrow Wilson

One route that universities have taken to save cash has been offering online courses. Intuitively, this would seem like a sensible idea, but the reality is more complicated.

When Murray State University in Kentucky looked into the school’s Paducah Regional Campus, it discovered the school’s online programs weren’t really cost-effective. It turned out that purchasing “and maintaining the software and paying the faculty to teach online classes make those classes more expensive than traditional classes,” according to the review.

We don’t know if this is universally true, but university managers ought to do careful cost analysis of online teaching exercises if they’re trying to use such strategies to cut costs.

We’d like to recommend a new product from the U.S. Census Department. It’s called “Young Adults, Then and Now,” and does a terrific job of displaying state-to-state comparisons and comparisons over time for the 18-34 year old population. This mapping tool uses data from the American Community Survey and the decennial census to reveal important information about the group of Americans who are often called “millennials.”

One of the more surprising facts is that 15 percent of Americans in that age group today are foreign-born, compared to 6 percent in 1980. The website allows users to dig even deeper on topics like this. With a little probing, they can find that this increase was particularly high in the West (where 21 percent of millennials are now foreign-born) and lowest in the Midwest (where 9 percent are).

Over the course of the Great Recession, a number of states borrowed money from the federal government to prevent their unemployment insurance (UI) trust funds from running out of money. Over the last few years, many of these states have been paying down their obligations, but most are still in debt.

A recent report by Policy Matters Ohio focused on this issue in the Buckeye State (which has the fourth highest UI debt in the country, after California, New York and North Carolina). True, Ohio has paid back about half of its debt, but it still owes around $1.4 billion. According to the report, “the state has paid $218.2 million in interest on the federal debt so far, and the Ohio Department of Job and Family Services estimates the state will pay another $54.5 million by Sept. 30, 2017.”

Ohio couldn’t possibly have predicted the length and depth of the recession, and so it’s unfair to castigate it for falling into debt. Still, as Policy Matters Ohio points out, Ohio had been chronically underfunding its unemployment fund before the recession.

Apparently, as long ago as the late 1990s, reductions in corporate taxes stymied the growth of Ohio's unemployment fund. In fact, over the course of three years, more than 30,000 Ohio employers didn't pay any unemployment tax at all. As years rolled on, things got worse. According to the report, "benefits spiked with the recent recession, and though they were well below early 1980s levels as a share of wages, they exposed how Ohio had underfinanced its system. ... the state did not adequately prepare for a deep recession and has not faced up to the reality of the need for a stronger tax system.”