The Stimulus Scare

Plus: Health Care Misconceptions, Performance Management Uncertainties, And More
July 22, 2010 AT 3:00 AM
Barrett and Greene
By Katherine Barrett & Richard Greene  |  Columnists
Government management experts. Their website is

The stimulus dollars are gone! Head for the hills! We can understand why you'd believe that. We've come across dozens of articles indicating that the federal stimulus money is nearly gone. It's not really true, and we wanted to clarify the issue.

Truth is, the funds that appear to be running out are the Medicaid enhancement and stabilization dollars, which are geared toward cushioning state and school budgets. That's certainly a problem, but it doesn't mean there aren't a whole lot of dollars still flowing through the states and localities. Here are the facts:

A major U.S. Government Accountability Office report published in May showed that federal outlays of state and local Recovery Act funding were $52.9 billion in fiscal year 2009, $103.7 billion in 2010 and will be $63.4 billion in 2011, with another $61.9 billion coming in 2012 and beyond.

It's true that the spending will dramatically shift. According to a GAO presentation by Acting Comptroller General Gene L. Dodaro in mid-June, the portion of stimulus money spent on health and education drops from 88 percent in fiscal year 2009 to 20 percent in fiscal year 2012. The dominant category going forward is transportation, which will receive 30 percent of the $23.3 billion in stimulus dollars pegged for 2012. (The rest of the money is spread almost equally between education/training, energy/environment, income security and community development).

It's also important to understand that there are a number of steps between when money is allocated and when it's actually spent. So, for example, the Federal Highway Administration has obligated $25.9 billion. But as of May 3, the FHWA had only reimbursed state and local governments $7.6 billion — about 29 percent of the money obligated.

For more about this topic, see "If the Check is in the Mail, Has the Money Been Spent?"

Here are two big obstacles to cutting health-care expenses for cities, states and the federal government: According to a recent study that appeared in Health Affairs, "Most [people] believed that more care meant higher-quality, better care." The article adds that participants "also believed that any new treatment is improved treatment."

We fear, sometimes, that our reportorial objectivity suffers a bit when it comes to the area of performance measurement. We've become so thoroughly convinced that results-based information can be hugely useful to government — if used well — that we may sometimes lack sufficient skepticism.

A wake-up call was delivered to us, by a recent article in Education Week that examined yearly special education reviews. Ever since 2006, the U.S. Department of Education has looked at the performance of special ed programs in states and territories and rated them based on those measures.

But, according to Ed Week, "when you ask state and federal officials if the effort has led to better education for students with disabilities, the answer that comes back is: We're not sure."

One of the problems with the performance measures used is that they've been heavily focused on outputs, not actual outcomes or results. That doesn't mean there's an easy fix. Determining the best results to measure — and figuring out a way to measure them — is always a tricky business.

The lesson we take away from all this: When thinking about performance measures, government officials should always ask, "Do they lead to better services?" If the answer is, "We're not sure," there's bound to be room for improvement.

The latest candidate for most incisive title comes from a GAO report that came out in June. It read: "A Common Vocabulary Could Help Agencies Collaborate and Collect More Consistent Data." As Stan Lee, creator of Spider-Man, is inclined to comment, "'Nuff said."

A tale of two states. There's a common tendency to explain the fiscal woes of states as ramifications of an unpredictably off-the-wheels economy. But that doesn't explain why some states have fared better than others. The Federal Reserve Bank of San Francisco brought some bright light to this issue, in a recent comparison of state actions, looking at management and policy in Oregon and California. Ordinarily, we'd paraphrase, but the details are important. So here's a lengthy, direct quote from the Bank's work. We've added new paragraphing for ease in reading.

"Variations in the severity of the economic shock and differences in institutional factors affecting fiscal policy help explain why some states are in much deeper budgetary holes than others. Consider the cases of California and Oregon. Leading up to fiscal year 2009, which began on July 1, 2009, California had a budget gap of 37 percent, while Oregon's gap was just 7 percent, according to the Center on Budget and Policy Priorities.

"What explains the difference? To gauge the severity of the economic shock state by state, we ask what would each state's 2009 gap have been if they had kept per capita expenditures constant from 2007 onward as revenue fell. It turns out that Oregon's and California's budget gaps would have been roughly the same, around 20 percent.

"However, Oregon in 2008 curtailed expenditure growth, enacted some notable tax increases, and tapped into its rainy-day fund to reduce its budget gap. On the other hand, California saw expenditure growth barely slow at all, enacted only limited tax increases, and had nothing in its rainy-day fund coming into the recession.

"Much of California's limited policy response reflected institutional constraints on the ability of lawmakers to change fiscal policy. For instance, tax increases in California must be approved by a two-thirds majority of the legislature, and voter propositions approved in the past greatly limit the legislature's ability to curtail spending growth in many areas."

The one-time managing editor of Forbes, Sheldon Zalaznick, gave us some wonderful advice a long time ago. He called it the Aunt Tilly test. The idea was simple: No matter how strongly something could be proven by hard data, if it wouldn't make sense to his Aunt Tilly — based purely on common sense — it should be subjected to careful rethinking.

This comes to mind in light of a recent Johns Hopkins study that looked at the high percentage of biased pediatric studies being churned out. Researchers advised doctors to apply smell tests, common sense and skeptical judgment about whether the conclusion fits the data, especially when a study boasts dramatic effects or drastic improvement.

A note from Aunt Tilly (see previous item). We've been involved in many exercises designed to rate or rank cities or states. We think they can be very useful — at least insofar as they get attention for topics of importance.

But we had to shake our heads when we came across a recent U.S. News "Pain Index" article that looked at spending cuts and tax increases per capita and used that calculation to come up with a measure of the funding crunch, and attendant pain, in state governments.

One of the states judged to be in the greatest pain is Alaska. Although that state is certainly facing difficult times, it still sends checks to its citizens annually instead of collecting income taxes. We'd like to be in that much pain, here in New York.

More peculiarly, Illinois came in as number 43, and Connecticut at number 48. We don't think we need to come up with an alternative methodology to convince anyone who follows state government that both of these states are suffering from about as painful a crunch as you can imagine.

The city council of Williamsburg, Va., decided to buy Apple iPads "so council agendas and other business matters could be handled electronically rather than by paper," according to the Associated Press. Not only is there potential efficiency to the move, the council anticipates that it will save reams and reams of paper, and thus save money over the long term.

Will this work out for Williamsburg? Hard to say, given the tendency we see on the part of many to print everything out, regardless of whether it exists in digital form. But we found the one criticism mentioned in the AP piece particularly interesting. A representative of the Virginia Coalition for Open Government suggested that "the devices can potentially allow council members to communicate with each other electronically during meetings without the public knowing."

Three thoughts there: If this is a real concern, you'd better watch out for cell phones and all sorts of other electronic communications devices. It's a whole lot easier to hide a cell phone under the table and text someone than it is an iPad. Secondly, if you trust your city council to be fair and just in its deliberations, why would you think they'd be passing secret messages back and forth during a meeting, if they understand that's not permissible? Finally, there are only five members in the Williamsburg City Council. We'd bet that people would notice if they were click-click-clicking back and forth during a meeting.

Public Civility Corner. A couple of weeks ago, we made some comments about the men and women who answer the phones in city halls and state houses around the country. We were arguing for freer use of the phrase, "I'm sorry about that." It seems fair now, in the interests of equal time, to provide some comments from a Southern mayor's secretary who wrote to us a few months back:

"I answer the main line for our city. In my experience, so much of the public does not realize how helpful it is to submit a written or e-mailed complaint. Regardless of whether it is rude, the written complaint is still more constructive. Angry or rude callers almost always take up a great deal of time saying the same thing repetitively, usually preventing me from answering several calls during their complaint. When the complaint is in writing, it gives me a chance to pull together the different departments and information that is needed to help the situation and refer it appropriately."

Stay tuned. In two weeks, we'll be bringing you some interesting commentary from B&G Report readers about the ways technology has tied them to their desks days, nights and weekends — along with some advice for loosening the knot.