Water solution in Brown County. Really?

Recently, the Business Journal ran an article highlighting a just-completed 65-mile, $80 million pipeline that delivers fresh Lake Michigan water to the suburbs of Brown County from Manitowoc, WI. In the article, the Business Journal states that "what happened in Brown County could serve as a prototype for southeast Wisconsin," implying that the Milwaukee region could learn something from Brown County in addressing the water demand in its suburban communities.

Based on previous reporting in the Milwaukee Journal Sentinel (JS), this implication is puzzling. The JS article reports that instead of utilizing the existing City of Green Bay pipeline, an entirely separate pipeline had to be constructed because negotiations broke down between the city and its suburbs.

How can the construction of redundant infrastructure - two parallel pipelines stretching from Lake Michigan to Brown County) - be good public policy?

In addition to the apparent fiscal inefficiencies of the Manitowoc/Brown County pipeline, this project may have also cost the Green Bay region a chance at building regional trust, goodwill and cooperation. So state the major players in the pipeline negotiations...

From the suburbs: "Think of the old days, when people fought over water out West. Those days are still here. It just boggles the mind that you can't get people to cooperate on something as basic as water."

From the city: "This was a failure of business, a failure of government, a failure of the media. A failure by everybody. We're taking $20 million to $100 million out of the Brown County economy . . . for no other reason than we can't get along."

From the suburbs: "We all went into this with the idea that we had a regional problem and we were going to come out of this with a regional solution. Unfortunately, it didn't work out that way."

From the city: "It (the pipeline) puts a dollar figure on urban-suburban hate."

These statements from those close to the negotiations question whether this $80 expenditure should be hailed as a prototype for regional cooperation.

It looks as though the Milwaukee Common Council may have been following this debate closely, as they have decided, instead, to negotiate with their thirsty suburban neighbors. Here's hoping these negotiations don't also end up placing a dollar figure on urban-suburban hate. I'll drink to that.

We're gray here at the Forum

Attention policy wonks--here's a new word for you: "Gray literature" is the term of art for publications from sources like the Forum, which produce reports that are not easily found from centralized indices or catalogues. Here's a more official definition:

"Gray or grey literature has long been considered the proverbial needle in the haystack. It is commonly defined as any documentary material that is not commercially published and is typically composed of technical reports, working papers, business documents, and conference proceedings. The greatest challenges involved with these items are the process of identification, since there is limited indexing, and acquisition, since availability is usually marred with uncertainty. Added to this is the absence of editorial control, raising questions about authenticity and reliability."

(Quote from the March 2004 issue of the Association of Research & College Libraries' College & Research Libraries News, via DocuTicker Newsletter.)

For public policy analysts, gray literature is where new, sometimes outlandish, policy ideas can be found; where independent analyses can reveal alternative results; or where partisans can highlight favorable statistical outcomes while ignoring inconvenient ones. The burden is on the reader to decide whether the source is reliable. (Although it should be noted that in today's world this burden is the reader's even if the content is from a mainstream publishing house, newspaper, or peer-reviewed journal.)

Because there's rarely anything black and white about policymaking, the value of gray literature outweighs its limitations for those of us interested in public policy. There are a few online resources where gray literature producers are catalogued. A good place to start is Britain's Grey Literature Network Service. In addition, the New York Academy of Medicine's library website list hundreds of organizations that publish reports. Finally, DocuTicker offers a selection of publications from government agencies, NGOs, think tanks and other public interest organizations.

For our part, until the late 1990's the Forum provided our reports to the Milwaukee Public Library and are catalogued there. Since 1997 we have made most reports available on-line via our website. To ensure you don't miss out on any new findings, become a member; members of the Forum receive copies of our printed reports and are emailed notices when on-line reports are released.

Election Issues '08: Revenue challenges for city and county

On April Fools' Day 2008, Milwaukee citizens will elect people to four-year terms in city and county public offices. Candidates for those offices have an obligation not to fool voters with shallow promises but rather to provide answers to critical questions facing local government. Among those questions, none is more important - and more rarely addressed - than this one: How do you plan to ensure the long-term financial stability of the government with which you will be entrusted?

The Forum releases today the first of a series of reports highlighting government finance issues vital for local voters to understand. A challenging revenue picture for Milwaukee local government lays out the recent trends in municipal and county general purpose revenue and concludes stable long-term financing is in jeopardy for both the City of Milwaukee and Milwaukee County governments.

The key findings:
- Intergovernmental support – mostly in the form of state shared revenue – for both the city and the county has declined sharply in real terms over the past 10 years.
- Both the city and the county have relied most heavily on service fees to fill the gap, although in the county’s case that is primarily due to an accounting change.
- Property tax revenue to support both governments has outpaced inflation even though the taxpayers’ resources to pay have not.
- Spending for city government has kept pace with inflation whereas county spending has exceeded it.

The city and county governments of Milwaukee are the two largest governments in Wisconsin other than the state itself. Their financial viability affects the surrounding region and the state as a whole. Candidates for mayor, county executive and the legislative bodies of county and city governments need to address this fundamental issue. Where are they going to get the revenue to run local government?

Note: Future reports in this series, covering capital expenditures and employees benefits, will be released over the next two months.

The Orwellian world of public opinion

Advocacy groups, no matter what they advocate, often provide survey research that isn't very useful. That rule of thumb is evident in a recent report that Wisconsinites overwhelmingly oppose universal health insurance. This may be the case, but the finding that City of Milwaukee residents are opposed 86% to 8% sent me to seek the source of the survey.

According to the web site of the sponsoring organization, the Wisconsin Policy Research Institute, this was the question posed to survey respondents:

Do you think the best way to reform health care in Wisconsin is by replacing the current private health insurance system with a new universal health insurance system that is run by the Wisconsin state government? ~ or ~ Do you think the best way to reform the current private health care system is to cut costs and provide more choices by increasing competition among private insurance companies and by requiring health care providers to publicly release their actual costs?

Let’s count some of the ways the question begs respondents to choose the second option:

1. Cut costs – The question presumes the second idea would cut costs whereas a universal health insurance system wouldn’t. That’s an opinion.
2. Choices -- Everybody likes choice; that’s why abortion advocates call themselves pro-choice, that’s why the school voucher program is called school choice, and that’s why the survey designers used the word in their preferred response.
3. Competition – It’s the American way. Wouldn’t there be competition in a universal plan? Maybe yes, maybe no, but survey researchers usually let the respondents be the ones offering the opinions.
4. Accountability (“requiring health care providers to publicly release their actual costs") -- Would there be accountability under a universal plan? Maybe there would, maybe not, but if you want my opinion, let me offer it.

To appreciate the bias, imagine the findings with different wording:

Do you think the best way to reform health care in Wisconsin is by replacing the current private health insurance system with a new universal health insurance system that would cut costs, provide more choices, increase competition and hold health care providers accountable? – or -- Do you think the best way to reform the current private health care system is to trust private insurance companies and health care providers to reform themselves?

Neither wording provides true insight into public attitudes, which raises a question: If surveys like this aren’t useful, why do them? If the intent is to mislead policymakers about the views of the electorate, that’s anti-democratic.

So why should we care if an organization wants to spend money on useless surveys? Well, we all pay a price for propaganda posing as research if it sways policymakers. One example: Milwaukee’s school choice program (for which Wisconsinites have spent more than $600 million since the late 1980s) began with public opinion research designed to create the impression that people wanted it. At the time, maybe people did want it. Maybe not. We'll never know.

Would you invest in something with a 14 to 1 return?

Factors associated with high-quality early childhood education -- higher earnings, less use of welfare, and lower crime rates -- have been found to contribute to higher government revenues and lower government expenditures. Such are the ingredients of a cost-benefit-analysis predicting nearly 14 times the benefit compared to cost in the long-term for high-quality early childhood education. Economist Robert G. Lynch is the latest researcher to attempt to quantify the costs and benefits of high-quality early childhood education in his new book, Enriching Children, Enriching the Nation, published by the Economic Policy Institute.

Lynch estimates that a high-quality pre-kindergarten program in Wisconsin targeted to at-risk children would begin to pay for itself in 6 years. The annual cost of a fully phased-in program in 2008 would be $126 million. Total benefits in 2050 would be $5.1 billion, and costs in 2050 would be $375 million. The ratio of total benefits to costs in 2050 is 13.6 to 1. This represents savings to Wisconsin individuals from crime reduction in 2050 of $1.2 billion.

Estimates for a high-quality universal program in Wisconsin show higher costs due to being open to all children (i.e., untargeted), but still have significant long-term benefits. Lynch estimates that such a program would start paying for itself in 8 years, with a 2008 annual cost of $527 million. Total benefits in 2050 would be $13.4 billion, and costs in 2050 would be $1.4 billion. The ratio of total benefits to costs in 2050 is 9.5 to 1. This represents savings to Wisconsin individuals from crime reduction in 2050 of $2.5 billion.

Evidence continues to build predicting long-term payoffs for early childhood education investments that exceed the return on most private or public investments. Using the well-known research on the Chicago Child-Parent Center as a foundation, Lynch builds on past studies by producing cost/benefit estimates for the nation as a whole and for each individual state.

Lynch concludes, “Policy makers should consider a national pre-kindergarten initiative a sound investment on the part of government that generates substantial long-term benefits and not simply as a program requiring expenditures.” Results like Lynch’s are pushing many who research on regional levels to gather more local-level data to analyze what a high-quality program would really look like and cost.

The "tax-hell" obsession

"Wisconsin is a tax hell." We've had it drilled into our heads that Wisconsin's tax climate is amongst the worst in the country. Furthermore, we are told by some experts that this burdensome tax environment is responsible for slowing job and population growth in our state.

An opinion piece in this week's Wall Street Journal adds kindling to the tax-hell fires by highlighting a report which links "high-tax" states (New York, Wisconsin, Ohio, etc.) to their comparatively slower rates of population, job and income growth.

Over the past decade, the 10 states with the highest taxes and spending, and the most intrusive regulations, have half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states. In 2006 alone 1,500 people each day moved to the states with the highest economic competitiveness from the states with the lowest competitiveness.

A recent study by the Public Policy Forum confirms the migration of households from Midwestern metro areas (Milwaukee, Minneapolis, Chicago) to warmer climates (Florida, Arizona). In our report, we speculate that the Milwaukee region's sustained losses of households are driven chiefly by retiree's migrating to retirement hot-spots like Phoenix and Palm Beach.

So, who's right? Are households leaving our state to seek shelter from Wisconsin's snow or Wisconsin's taxes?

Unfortunately, we don't know the motivations of those that leave the Midwest for points south. Absent perfect data, we can only infer as to who these people are and why they choose to leave the snowy environs of the upper Midwest and Northeast.

We know people are leaving, we just don't know why.

If we don't exactly know why people are leaving, why the obsession with taxes? The reason is that it fits a particular ideology.

Like it or not, political ideology plays a central role in the crafting of economic development policy. Those on the left push for "investment" while those on the right advocate for "cost reduction" as the proper economic stimulus. Truth is, you need both. Economic development needs investment in land, labor and capital while simultaneously keeping a watchful eye on costs.

In a recent article in the Rocky Mountain News, the Forum suggests that investment into our economic infrastructure as key to our ability to expand and attract employers and their workers. We do not arrive at this conclusion lightly.

A survey of 177 manufacturing employers in the Milwaukee region conducted for the M7 in 2006 had respondents rate the average importance of 14 specific "business climate" elements. The following were the top seven most import factors according to area manufacturers:

1. Workforce quality
   
2. Workforce availability
   
3. Health care expenses
   
4. K-12 education
   
5. Technical education
   
6. State taxes
   
7. Universities/colleges
   

Note that five of the top seven elements concern investment, while two are associated with costs.

Just cutting taxes won't automatically result in a thriving community. Instead, both Wisconsin and Milwaukee need to pull up their collective sleeves and do the hard work to control costs (taxes, fees, health care, regulation) while simultaneously making critical investments in our economy (workforce development, brownfield cleanup, K-12 education, quality early childhood education, the development of a sustainable transportation system, university and corporate R&D, etc.).

*********************************************************************************
See "Doyle bets on innovation: He will push tax, regulation changes to spur economic growth" in today's Journal Sentinel which picks up on the theme of coupling cost reductions measures with specific investments to spur economic growth.

Put your money where your agenda is

Among Milwaukee's claims to fame is our status as "ground zero" for the school choice movement. No other city has as large or as long-standing a school choice program as Milwaukee's, which enables over 20,000 low-income students to attend private school using taxpayer-funded vouchers.

The Forum has had much to say over the years with regards to the intent, design, and function of the voucher program, but we have not weighed in as either pro- or anti-school choice. (Our survey work has shown that it is generally supported by a majority of the public and that parents are satisfied with the program.)

We are just about the only policy organization in our state that can say we have not taken a position on this issue.

A new study by the National Committee for Responsive Philanthropy reveals why the Forum is unique in this respect...advocacy on behalf of school choice is big business. In one year (2005), over $65.5 million in grants to pro-choice groups were made.

While those of us paying attention to education reform have known for a long time that certain foundations are playing an extremely important role in policymaking, this report is the first to delineate and enumerate the power of the foundations and the advocacy groups they support. You shouldn't be surprised to learn Milwaukee's own Bradley Foundation is the second-most generous supporter of pro-choice advocates and researchers, giving 37 grants totaling over $6.3 million in 2005 alone.

The unique coordination and collaboration among the various foundations and the groups they support is the focus of the study. As the author states,

"This report shows how philanthropic capital from small and large foundations
has helped build political support for the school privatization agenda. It can
serve as a case study for other foundation and nonprofit leaders who are
interested in effective, strategic movementbuilding grantmaking."

The children receiving vouchers in Milwaukee do so because a school choice movement was built and strengthened in a strategic and systematic way, with supporters putting their money behind their ideas and ideology. The National Committee for Responsive Philanthropy considers this history a blueprint for future social movements. I expect this model will be tried, with varying degrees of success, across many policy issues. Where does this trend leave an independent, non-advocacy research organization like the Forum? I guess we'll be the ones, ten years down the road, telling those foundations whether they've spent their money wisely.

Transit referendum could have steep hill to climb

As you may have heard, the Wisconsin Alliance of Cities has recently crafted legislation that would allow, by referendum vote only, the creation of regional transit authorities with taxing powers. However, a recent article in the Daily Reporter announces that some transit advocates would rather it be left up to elected leaders in each region to implement taxing authority for transit.

The Milwaukee Journal-Sentinel voices support for the referendum proposal in this morning's paper. In their editorial, they state:

"...it's up to the business community to start pushing for referendums and to get behind a sales tax that can pay off big in economic development."

Naturally, strong business support would be needed to pass any sort of tax increase. Public sector support probably wouldn't hurt either. In fact, support and leadership would have to be garnered from many different constituencies if advocates expect eventual passage.

However, "needing support" is not a very intriguing point. It's a given.

A more compelling analysis is to weigh the actual chances for support in southeastern Wisconsin for funding a transit authority. So, what are the chances?

Based on what I've seen in other regions, referendum passage could pivot on the following three issues:

• What transit referendum? Oh, you mean the "livability" referendum. The saying goes, "he who frames the issue determines the outcome of the debate." And, so it is with transit. Framing an improved transit system beyond just "moving people" - but, instead, connecting transit to land-use, economic development, quality of life and other livability issues.
  
• Has the train already left the station? Many regions find that having a system component already in place makes it easier to gain voter approval. The reasoning is that voters generally abhor change and that envisioning a "system expansion" is much easier to swallow than voting for "a whole new system."
  
• Is this your first time? Transit referendum typically don't pass the first time out of the gate. The reasoning is that it takes time to build coalitions and conduct adequate public engagement in the lead-up to the vote.
  

Based on these observations, southeastern Wisconsin could have an uphill climb in persuading the public to support passage of a regional transit authority with taxing powers.

Public Policy Forum names new president

The executive committee of the Public Policy Forum’s board of trustees has selected Rob Henken, the top administrative official in Milwaukee County government, as its next president. He will succeed Jeff Browne at the Forum’s annual meeting in early March.

Henken has served in several high-level research and administrative positions in Milwaukee County government and has extensive experience in policy research. Since early 2007, he has been director of the Milwaukee County Department of Administrative Services. Before that, he was director of the county’s Health and Human Services Department for almost three years. He also has been research director and budget analyst for the county board.

“Rob’s background, experience, and standing in the community will serve the Forum well,” says F. William Haberman, Forum chairman and a member of the search committee that selected Henken. “His work in the public policy and nonprofit sectors will enhance the Forum’s almost 100-year tradition of solid, nonpartisan research on issues affecting all of southeastern Wisconsin.”

Before joining the county in 1998, Henken was executive director of the Milwaukee Jobs Initiative and the Alliance for Future Transit, both nonprofits. Prior to that, he worked in Washington, D.C., as staff director for the House of Representatives Subcommittee on Western Hemisphere Affairs, and as a legislative aide for two U.S. Congressmen. Henken has a bachelor’s degree in history from Brown University (Providence, R.I.) and a master’s in journalism and public affairs from The American University (Washington, D.C.).

How green is my alley?

This summer the City of Milwaukee Comptroller's office found that the replacement cycle for the city's streets and alleys was several years longer than their predicted useful life. For alleys, the replacement cycle was found to be 272 years, or 4.5 times the useful life of an alley. The response from the Mayor was to hasten the replacement cycle, which garnered general agreement and support.

Interestingly, the New York Times reported this week that the City of Chicago is also focused on replacing alleys:

Chicago has decided to retrofit its alleys with environmentally sustainable road-building materials under its Green Alley initiative, something experts say is among the most ambitious public street makeover plans in the country. In a larger sense, the city is rethinking the way it paves things.

This initiative was prompted by the fact that its hundreds of miles of aging alleys needed replacement. Says Janet Attarian, the project's director, “The question is, if you have to resurface an alley anyway, can you make it do more for you?”

Chicago has found that the answer is yes. They will now pave all alleys in such a way as to filter rainwater, reduce run-off, and recharge groundwater, while reducing heat retention in the summer and reflecting heat in the winter. The cost? About the same as traditional paving, divided between materials (porous concrete) and labor (creating a stone filtration layer).

Milwaukee would be smart to consider making a similar investment in its alley infrastructure. Things to investigate: Would the cost of porous paving be more than traditional paving? Would the maintenance costs differ significantly? Would the useful life spans differ significantly? If the answers to all these questions are "no," green alleys could be a feasible option for our city, as well.

Holding the presidential candidates accountable

The Brookings Institution is on an election-year push to hold the presidential candidates accountable for a more competitive metropolitan America. In a recent op-ed article in The Plain Dealer, Bruce Katz and Alan Berube of Brookings wrote:

The United States has yet to recognize and leverage the ever-intensifying primacy of metropolitan regions as the building blocks of global competition, productivity and competitive advantage. And it has yet to take the necessary steps to ensure that metros grow in inclusive and sustainable ways that enhance national prosperity.

In the same article, Katz and Berube outline specific policy areas where they would like to see more assertiveness from the federal government:

1. Clean up of the Great Lakes - there is a cleanup plan, but no federal funding thus far
   
2. Clean up land - accelerate brownfield remediation to fuel economic development
3. Increase federal funding for sustainable transportation improvements
   
4. Expand the EITC for workers
   
5. Encourage interstate partnerships between metro areas (Chicago/Milwaukee, Cleveland/Pittsburgh)

Earlier this year, the Public Policy Forum hosted a presentation by John Austin of Brookings on The Great Lakes Economic Initiative (GLEI), which is a multi-year campaign to leverage the voting power of the Great Lakes into federal and state support of the region's powerful, yet struggling metro economies. There is particular interest in bolstering the profile of the Great Lakes region in the eyes of the presidential candidates.

Although federal government's leadership on metro issues has waned in recent decades with the devolution of power from Washington to the states, a more assertive federal government could have a profound impact on Milwaukee's revitalization efforts.

Whether or not you agree with The Brookings Institution's many recommendations is up to you, but, in this election year, placing each presidential candidate on the proverbial "hot-seat" when it comes to articulating a vision for strengthening the Great Lakes region does seem to make a great deal of strategic sense.

PPF Pearl: Growth in school choice program not what it seems

Alan Borsuk's article in today's Journal Sentinel could lead one to believe that growth in the voucher program necessarily comes at the expense of MPS enrollment. However, our research shows the recent growth in voucher use comes mostly from existing private school students, not public school students switching to private schools. The lifting of the program's enrollment cap was accompanied by some changes in eligibility, which made more private school students able to take advantage of the publicly-funded voucher program.

When we analyzed the voucher use and enrollment data last year as part of our annual census of choice schools, we found that while voucher use in private schools had grown by 2,516 students, enrollment had grown by only 620 students. For example, the Lutheran schools as a whole had 467 more voucher users, but total enrollment grew by only 1 student. The only Jewish school in the program actually had 2 fewer students, but 31 more voucher users.

These findings help explain why, as Borsuk's article states, "[MPS] test scores and other indicators continue to lag behind the state and have not changed dramatically." The program is not exerting competitive pressure on MPS. In 2006, 80% of voucher users were enrolled in religious schools. Are these schools truly competitors with MPS? The data indicate that parents are making choices based on religion, not on the availability of a voucher. From our report:

How can MPS be expected to compete with a program consisting mainly of religious schools that attract students who most likely would never have been public school students?

Growth in voucher use is certainly growth in publicly-funded education, as the article explains. Unfortunately, simply making the public education pie bigger doesn't seem to be encouraging MPS to get better.

Baby steps in L.A. lead to big leaps toward better child care

Quality rating systems for child care are all the rage in the states. Hailed as systemic approaches to improving the quality of care, 14 states have some version of a rating program. Wisconsin is one of the states that does not have a rating system, as both attempts to initiate one via our state's budgeting process have failed. Unlike in California, which also lacks a statewide system, no local governments in Wisconsin have decided to address the problem on their own.

Last year Los Angeles County decided not to wait for California to act and established a Policy Roundtable for Child Care, which developed a local quality rating system. The Steps to Excellence Project, or STEP, was launched on July 1, 2007, funded by $200,000 per year from the county, plus tobacco tax revenue and revenue from child-care related state contracts. The county decided that because the state was not moving fast enough and because California's child care licensing system reduced the frequency of on-site reviews from annually to every five years, something had to be done locally to provide an incentive for quality improvements.

STEP is being characterized as taking baby steps toward higher quality by providing small incentives for incremental improvements to close the gap between minimum licensing standards and accreditation. Less than 10% of the 3,000 licensed child care centers in L.A. County are accredited.

Nine communities in the county are piloting the project for the next three years and the hopes are it will become county-wide after that. It is a voluntary program for child care providers, aimed at both child care centers and family providers. It focuses on research-based standards and best practices and is aligned with state regulations and national accrediting bodies' requirements. Most importantly, training, technical assistance, and fiscal support are available.

The child care providers are rated on various standards, which are grouped into the following categories: regulatory compliance, teacher-child relationships, the learning environment, identification and inclusion of children with special needs, staff qualifications and working conditions, and family and community connections. There are five steps within each standard, ranging from step 1--meeting state licensing requirements, to step 3--meeting state educational codes, to step 5--meeting national accreditation standards.

During the first year the county will provide grants up to $5,000 to fund quality improvements directly related to STEP standards. The nine participating local municipalities have the option of supplementing this effort and the City of Santa Monica has taken up the challenge.

In 1980 the City of Santa Monica established an independent child care task force and in 1991 they issued a child care master plan. Since then the city has annually funded $700,000 in child care subsidies for low and moderate income families, plus some additional subsidies to colleges and non-profits who operate child care facilities. This subsidy program had been paying the full costs of tuition for eligible families, but rising child care costs meant fewer families could partake. Once STEP was created, the city saw an opportunity to tie reimbursement rates to quality, with families choosing higher quality care eligible for larger subsidies. In addition, the city makes small grants directly to centers to help them make improvements to meet STEP standards.

These quality rating systems are not inexpensive; even if they are voluntary and the incentive merely a mini-grant, performing the reviews is costly and time-intensive. It is a difficult balance to perform the reviews as affordably as possible while still being effective. Achieving this balance is what delays many states that are pondering a quality rating system. The experience of L.A. County tells us that taking local baby steps is one way to get beyond the inertia preventing a new statewide program. In the case of Santa Monica, those small steps allowed the municipality to leap beyond their current practices and expand their impact.

More immigration, less crime

Could Milwaukee's relatively low immigration rate (7.7% foreign-born) be partially responsible for its stubbornly high crime rate? That is a new theory being tested by scholars and criminologists throughout the U.S.

One study, was conducted by Harvard University sociology professor Robert J. Sampson, and followed 3,000 youths (aged 18-25) in 180 Chicago neighborhoods from 1995 to 2002. The findings revealed that Latinos perpetrated violence 10% less than their white counterparts. The researcher also found the odds of perpetrating violence were 85% higher for blacks compared with whites. Surprisingly, the reasons behind these disparities were largely not economic.

"That's not to say that the socioeconomic context you grow up in doesn't help explain the gap," says Sampson, "but in terms of family structure and characteristics, what matters instead of poverty are a family's years of residence in the neighborhood, having married parents, and living in an immigrant neighborhood, all of which reduce a youth's risk of engaging in violence." For instance, the study attributes the low rate of violence among Mexican Americans to a combination of factors: that group's high proportion of married-couple families, residence in neighborhoods with high concentrations of immigrants, and individual's first- or second-generation immigrant status. PRB

The relationship of high-immigration and relatively low violent crime rates seems to explain trends in cities including New York, Miami, Chicago and Los Angeles. Conversely, "low-immigration" cities with relatively high crime rates include Milwaukee, Detroit, Baltimore and Philadelphia.

Of course, some cities don't fit this model at all - Boston has seen an up-tick in crime since 1999 despite high levels of immigration. Some skeptics also point to the fact that many of these immigrant neighborhoods have benefited from "community policing" tactics, which could also be the reason why these neighborhoods are showing reductions in crime.

Successfully reducing violent crime rates is a complex and multi-faceted proposition, no doubt. But experts seem to be suggesting that one such tool to reduce crime rates would be to encourage more immigration, not less.

Just released - Income migration report

Income drain highlights Chicago’s value to M7
Milwaukee region loses $1.3 billion

A new Public Policy Forum study has found that households moving out of the Milwaukee region from 2001-2006 took with them $1.3 billion more in personal income than newcomers to the region brought in.

The report estimates the income drain has resulted in $105 million in lost tax revenue and thus a greater tax burden on those who remain in the region. But it also shows that the region is a big beneficiary of income moving from the Chicago area. In fact, southeastern Wisconsin’s only income gain comes from northern Illinois. Plus, Chicagoans brought with them higher average annual incomes ($47,880) than Wisconsinites who moved into southeastern Wisconsin ($34,124).

Sources of net personal income gain to the region include Lake, Cook, McHenry, DuPage, Will, and Kane counties in northern Illinois. Those six counties represented almost $400 million in income coming to the region during the period, 2001-2006.

Only Kenosha and Walworth counties in southeastern Wisconsin experienced net personal income gains last year. Kenosha attracted more than $30 million and Walworth was far behind at a little more than $3.2 million.

The primary beneficiary of the region’s income loss has been the rest of Wisconsin ($491 million), particularly the counties immediately ringing southeastern Wisconsin ($211 million), including Rock, Jefferson, Dodge, Fond du Lac, and Sheboygan counties. Other top beneficiaries of the region’s income drain include Florida ($328 million), Arizona ($132 million), and Minnesota ($62 million).

Of the regions studied for the report, only the Phoenix area had a net income gain, of 1.6%, last year. Arizona’s Maricopa County (in which Phoenix is located) was the biggest recipient of southeastern Wisconsin income, at $107 million.

The Chicago and Minneapolis-St. Paul areas lost 1.0% ($2 billion) and 0.7% ($518 million), respectively, of their total personal incomes. The Madison area almost broke even, but still lost 0.1% in personal income. Southeastern Wisconsin’s loss was 0.9%.

Income data for the study came from the Internal Revenue Service and the U.S. Census Bureau.

Charitable Giving Increases in Milwaukee

For the 11th annual Report Card on Charitable Giving, the Forum provides greater detail on contributions to Greater Milwaukee bellwether nonprofits over a longer period than in the past. Instead of looking at changes in six sectors from year to year, the printed report focuses on three sectors - education, health, and arts & culture - since 2001. We believe this comprehensive look offers donors and organizations more helpful information.

(The other three sectors - environment, funding organizations, and human services - still are covered, but in the Web version only, which can be accessed through the link above.)

Contributions to the 59 bellwethers in 2006 totaled $284.9 million, an increase of 8% over 2005. Since 1992, the first year of Forum data, total contributions increased 143%. Contributions grew by about $65 million since 2001.

Other key findings:

• Corporate giving has been a major factor in the growth, increasing over 68% since 2001.


• Individual giving has increased more than 27% since 2001.


• Foundation contributions totaled $41.6 million in 2006, a slight decrease from 2005. Since 2001, foundation giving has decreased 18.7%.


• The education sector had the largest one-year increase in total giving among all sectors,
  increasing $15.5 million, or 42.3%, to $52.1 million in 2006.


• Contributions to bellwether organizations in the environment sector continue to decline. From 2005 to 2006, gifts were down almost 11%, to $1.4 million. Since 2001, contributions have fallen 65.5%.


• Thirty-five of the 59 bellwether organizations saw an increase in contributions from 2005 to 2006. Since 2001, 37 organizations saw increases.

The 11th Annual Report Card on Charitable Giving is published by the Greater Milwaukee Foundation, with sponsorships by Donors Forum of Wisconsin, The Faye McBeath Foundation, and United Way of Greater Milwaukee. Research for the report is completed by the Public Policy Forum.

Shotgun regionalism

Revenue-sharing agreements among local counties are usually developed to benefit both jurisdictions and are usually true agreements, one would hope.

Not in Ohio. Weighted representation on Northeast Ohio's metropolitan planning organization (the Ohio version of SEWRPC), has led to Cleveland being able to throw it's weight around, perhaps a bit too much.

A highway interchange improvement located in a suburban county would not have been approved by Cleveland's Cuyahoga County, which has more votes than any other county due to having the largest population, unless the town housing the interchange agreed to a unique revenue-sharing arrangement. The other suburban counties went along, because their votes did not have enough weight to stop the plan. The result is that the City of Avon must send half of the income tax money collected from a business with an annual payroll of $750, 000 or more that relocates to the area around the interchange back to the community the business moved from for five years. Those terms will remain in effect for 30 years after the interchange’s construction.

The heavy-handed tactics have angered all the suburban counties, including Medina, which is now planning to leave the regional planning organization. “Avon had a gun to its head,” said a Medina county commissioner. "We don't want to be in that boat."

Imagine if Ozaukee or Racine County pulled out of SEWRPC because Milwaukee County forced Oconomowoc to share revenue from the Pabst Farms development. Milwaukee, of course, doesn't have that kind of power within SEWRPC, as votes aren't proportional to population. In fact, many complain that SEWRPC over-represents the suburbs. But it isn't unheard of for a central county to be in a different planning area than its suburbs. Dane County is in just that situation, for example.

Observes an Ohio county commissioner, "This is a dead end to regionalism." The next time we complain about the lack of regional cooperation in southeastern Wisconsin, let's note that we at least have all our counties sitting at the same table when it comes to planning, which is more than they can say in Northeast Ohio or Southwest Wisconsin.

Just released - 2007 public schooling report

Region’s small-city schools showing
weaknesses of big-city schools

Schools in southeastern Wisconsin’s smaller cities, like Delavan, Cudahy, and Whitewater, are beginning to show the same kinds of stress of schools in larger cities like Milwaukee, Racine, and Kenosha, according to the 2007 schooling report by the Milwaukee-based Public Policy Forum. Also, the achievement gap between students in the region and those in the rest of the state continues to widen in all subjects and at all grades.

For example, Delavan-Darien, Lake Geneva-Genoa City, Williams Bay, Cudahy, and Mequon-Thiensville are among those experiencing declines in enrollment. Student engagement – based on attendance, truancy, and dropout rates – appears to be eroding in Burlington, Delavan-Darien, and Cudahy. And Delavan-Darien, Lake Geneva-Genoa City, and Whitewater are showing greater incidence of poverty based on the percentage of student enrollment receiving free or reduced-price lunches.

In addition, student achievement gaps are expanding between southeastern Wisconsin and the rest of the state.

In the subjects tested – reading, math, and science – and at the grades tested – 3rd, 4th, 8th, and 10th – the gap widened – in some cases, dramatically. For example, in 2005-06, southeastern Wisconsin’s 8th graders scored 6.5 percentage points lower than the rest of the state in math; in 2006-07 the gap widened to 14.3 points. In 8th grade science, the gap is now 15.6 percentage points, up from 8.5 points the year before. In other areas, the gap also increased, ranging from 0.3 to 4.8 percentage points.

Included with the report is a poster ranking all 50 school districts on a variety of measurements, including operations spending, student enrollment, free or reduced-price lunch rate, graduation rate, and the test scores of various grades.

The schooling research has been done by the Forum since 1987. This year’s report and poster were sponsored by Cardinal Stritch University, Multiple Listing Service (MLS), Northwestern Mutual Foundation, Stifel Nicolaus, and Waukesha County Technical College.

PPF Analysis of the 2008 Milwaukee County Budget

Each year, the Public Policy Forum releases an analysis of Milwaukee County's proposed budget. This year's brief can be found here.

What follows is the concluding statement from our 2008 budget brief:

The single greatest opportunity for the county's future fiscal solvency is the strategic planning process presented in the 2008 recommended budget. Strategic planning is about prioritizing. In order to be successful, county officials will need to prioritize spending. In other words, they will have to decide what the county can afford and how to pay for it.

The county is significantly hamstrung by unfunded and underfunded state mandates. This is evident throughout the budget, although the county seems to be at a loss as to what to do about it. County officials have been lobbying the state for years to fund its mandates, without results. In fact, the costs to the county of these mandates continue to rise. In response, cuts have been made to administrative spending and to non-mandated services. This cannot continue; in this budget alone, bus hours are cut more than 9%, and parks maintenance continues to be underfunded.

The reality is that the county is an arm of the state and it has to provide the services required by the state. However, the county should not have to go bankrupt to provide these services. Without a substantial increase in revenues, this may require giving up some non-mandated services. This reality needs to be the starting point of the county's strategic planning process.

Fixing the achievement gap may require preventing it

As you've likely heard, Wisconsin has the worst black-white achievement gap in the nation. Black students in our state are further behind their white classmates than in any other state when it comes to reading. The only thing more troubling is that the gap is increasing in our state, not decreasing.

I would argue that the problem persists not for lack of trying: Milwaukee, where the majority of the state's black students live, has been at the forefront of education reform for nearly two decades. School choice, charter schools, decentralization, neighborhood schools, K-8 conversions, alternative teacher credentialing...name a buzzword in school reform and we have it in Milwaukee.

This may lead some to conclude the problem is intractable. It leads me to conclude that the problem should be prevented in the first place. As-yet unpublished research by Steven Levitt (of Freakonomics fame) and Harold Fryer finds no racial differences in mental functioning at age one. However, a racial gap begins to emerge over the next few years of life, which they conclude is "broadly consistent with large racial differences in environmental factors that grow in importance as children age."

In other words, children tested at age 1 perform similarly across races, it is only in later years that an achievement gap develops. The reliability of testing one-year-olds seems questionable, but the authors assert that their measures of one-year-olds’ intelligence are correlated with IQ scores at later ages, as well as with parental IQ scores. Translation for non-economists: differences in babies' intelligence are due to differences in their parents' intelligence, not to differences in their race.

Levitt and Fryer find it's the differences in environmental factors that give rise to the achievement gap. So maybe we should stop asking the schools to make up for those environmental factors and should tackle them head-on ourselves. The first one the Forum will take up is early childhood education. How can our region most cost-effectively improve the quality of early childhood programs? Stay tuned.

Dog bites man and school choice oversells

Sometimes when I read the Journal Sentinel's headlines, I wonder if I'm actually reading The Onion.

Today's headline is an example: Choice may not improve schools, study says

After decades of MPS score stagnation despite school choice, charter schools, open enrollment, Chapter 220, and intradistrict busing, this is now newsworthy?

I have yet to read the new study that makes this finding, but from the paper's coverage it seems that parents are the scapegoats. Allowing them choices didn't improve schools because they failed to make good choices.

But maybe that's not a failure of the parents, maybe that's a failure of the "market theory" of school reform. We all make bad choices when we act as consumers. Despite a general legal theory of caveat emptor ("buyer beware"), there are lemon laws and tort law and product recalls. Why weren't similar consumer protections built into the education marketplace?

If a parent chooses a school that turns out to be a bad school, there's no way for that parent to recoup their "losses." You can't sue a school district for educational malpractice and good luck trying to get any satisfaction from an unregulated private school. Leaving the bad school for a better school was supposed to be enough accountability to improve the bad school...but years of research have shown this isn't the case. And it's because it's not easy to tell the bad from the good. There is no Consumer Reports for schools; parents find a good school through trial and error. What if you had to buy a refrigerator that way?

I guess the newsworthiness of this study is that it was authored by a conservative advocacy group, the Wisconsin Policy Research Institute, that has a long history of supporting school choice. Perhaps they will now support policy changes that provide parents with the information they need to make good choices. I don't think I'll hold my breath for that, though. The study looked only at choice made within the public school system, where academic information is readily available to parents; when asked whether the study shed any light on private school choice, where there is no such information available, the author demurred.

Denver or Milwaukee for MillerCoors?

Milwaukee, and its fledging regional economic development group, M7, have gotten themselves into one heck of a fight. The battle over attracting the newly merged MillerCoors headquarters will pit the upstart M7 against a colossus in the world of regional economic development - the Metro Denver Economic Development Corporation (MDEDC). Led by the highly regarded Tom Clark, the MDEDC was the first group of its kind in the nation and can trace its roots back a full 20 years.

This is a true David vs. Goliath story.

Based on what we know about both organizations, how will each group play their cards to capture the MillerCoors prize?

Quality of life and workforce
Right out of the gate, both sides will predictably advertise their superior quality of life and educated workforce. To be sure, there is plenty to support both Milwaukee and Denver's claim of "most educated" and "most livable." Denver has mountains and modern transit. Milwaukee has beautiful lakes and little traffic. Denver is located in a state that has 35.5 percent of its residents with a bachelor's degree or higher - third highest in the nation. Milwaukee is located in a state that hosts one of the world's best research universities and a superior K-12 system.

At this stage, both regions will have similar approaches - bombard the subject with favorable data on educated workers and livability. However, from this point forward, the strategies of Milwaukee's M7 and Denver's MDEDC could diverge in rather dramatic fashion.

Taxes
The M7, along with others in the community, will stoically downplay Milwaukee's "reputation for high taxes" while highlighting Milwaukee's lower cost of living.

Conversely, the MDEDC may actually downplay Colorado's low taxes. Such a contrarian strategy would instead highlight the Denver region's recent history of large public investments. Such a move by the MDEDC would draw from an experience the organization had in November of 2005 when their phone rang off the hook after a $3.7 billion "tax increase" passed in Colorado by referendum vote, 52%-48%. Who was calling? It was prospective businesses and, no, they were not mad at the tax increase. They were interested in moving to Colorado because of the anticipated greater dollars that would flow to higher education and infrastructure.

In short, Milwaukee talks costs, Denver talks investment.

Incentives
The M7, along with Governor Doyle's office, will follow through with a substantial incentives package aimed at "sealing the deal" with MillerCoors. Wisconsin plays the incentives game with gusto.

Conversely, the MDEDC will offer only a modest incentives package for MillerCoors because Colorado has little in the way of incentives to offer. Instead, recruiters will play up the Denver region's recent history of public infrastructure investments. Investment examples that the MDEDC touts:

• FasTracks - $4.7 billion commuter and light rail build out
  
• T-Rex - $1.7 billion freeway replacement project
  
• DIA - $5 billion international airport
• New baseball, football and hockey stadiums in downtown Denver
  

Again, Milwaukee talks subsidies, Denver talks investment.

End game
All else being equal, what would you take? Milwaukee, which downplays its high taxes but offers an attractive incentives package. Or, Denver, which plays up its recent investments but offers only a small incentives package?

On D-Day (Decision-Day), the MDEDC will presumably lay it on thick to MillerCoors by saying exactly what an MDEDC representative told the crowd at a recent conference in Denver, "incentives don't make a bad deal good." Denver will claim that despite Milwaukee's large incentives package, Milwaukee is actually the quintessential "bad deal" because of its inability (whether true or not) to make strategic investments that are important to the business community. MDEDC will predictably hit on the same theme over and over and over: Investment, not incentives.

If we lose MillerCoors, many will blame Wisconsin's high taxes. However, defeat could just as easily be blamed on an approach that views economic development as simply cutting checks (incentives) and cutting costs (taxes). Economic development is also about investment. Just ask Denver.

PPF Pearl: The Oil of the 21st Century

Southeastern Wisconsin’s water is in the news this fall – as a commodity coveted in the west, as a weapon in the regional conflicts over development, as a potential asset to improve our economic competitiveness, and today again as a diminishing resource in Lake Michigan. All of this makes it worthwhile to revisit the findings of the Forum’s water study that concluded last year.

Our research drew some important conclusions about water resource management. We reported the following:

“Unlike counties and villages, water knows no boundaries, making management of this asset extremely complex…We face urgent problems, such as dropping water tables and deteriorating quality. Jurisdictional overlaps, policy gaps, and lack of information hamper solutions. Leaders must think strategically and regionally about managing water resources.”

Our advisory panel called for an integrated water strategy that recognizes the relationship between surface waters and groundwater, one that addresses quality and quantity, links to other types of planning and is grounded in scientific data that might ultimately lead to a “no-net loss” concept of replenishing the water we use.

The attention our water draws will increase dramatically as we get deeper into the 21st century, and the news will continue to underscore the importance of our behaving regionally and strategically. The urgency of cooperation in Southeastern Wisconsin – and within the larger Great Lakes region -- seems to be accelerating.

PPF Analysis of the City of Milwaukee's 2008 Budget

Each year, the Public Policy Forum releases an analysis of the City of Milwaukee's proposed budget. This year's budget brief can be found here.

What follows is the concluding statement from our 2008 budget brief:

"In our analysis of the 2006 proposed budget, we praised the city for its three-year fiscal sustainability plan. The existence of such a plan showed the city's commitment to thinking strategically, planning for the future, and moving away from a focus on yearly budget balancing and toward long-term fiscal solvency. The city has made good progress toward all of its goals; some it has achieved. Throughout the budget, there are signs of the city's attempt to be more strategic in its thinking. A strategic plan toward capital budgeting is being crafted. The city is spending some money in the short term that will save money in the long run in the area of energy efficiency. Changes in the library system are being made as a result of a strategic plan. The fire department is planning on making cuts that may be unpopular but have been extensively studied and shown not to result in less safety. The police department is in the process of doing a number of studies to use its force more efficiently, and has shown progress toward evidence-based policing.

Nevertheless, the budget lacks a comprehensive plan for fiscal stability in the future. The budget is not only a ledger of expenditures and revenues; it is a policy document. As such, it would be stronger if the administration included a more detailed analysis of the successes and failures of its three-year fiscal sustainability plan, as well as a new plan for moving forward. Although the city did identify some issues that need to be addressed in the future to improve fiscal sustainability, a continuation of the original three-year plan would be preferable. This is particularly important because, even though the city has made substantial progress toward the goals set out in 2006, this year's budget makes it abundantly clear that even complete achievement of those goals is not enough to rid the city of its structural deficit."

The Department of Public Schools?

This summer Mayor Tom Barrett seized control of Milwaukee’s workforce development efforts from the Milwaukee County Private Industry Council. Could – or should – Milwaukee Public Schools be his next acquisition? The authors of a new study would argue that might not be a bad idea. Their research suggests mayoral control can make a difference.

The idea has been around for a long time. The Boston mayor took over the public schools in 1992. Since then, it happened in New York, Chicago, Cleveland and scores of smaller cites where mayors wanted to integrate the management of public education with the overall governing of the city.

Now Brown University education professor Kenneth Wong and his co-authors have taken a comprehensive and balanced look at mayoral control of urban school districts. Their study outlines what school governance looks like under mayoral leadership, how mayoral control affects outcomes, and how mayoral control effects practical changes in classrooms. The research findings indicate that mayoral control of schools can successfully emphasize accountability across the education system, providing more leverage for each school district to strengthen its educational infrastructure and improve student performance.

The authors emphasize a takeover by city hall may not be appropriate for every district. Is it a good idea for Milwaukee? I don’t know, but this study merits consideration by policymakers, civic leaders and politicians in Milwaukee and elsewhere in Wisconsin.

New research on school choice: Winning isn't everything

How many times have you heard of a lucky duck who wins the lottery, just to squander it all and return to his old work-a-day self? I'm sure those guys thought winning the lottery would turn their luck around forever.

Just like education reform proponents who are fond of calling school choice a "panacea" think that winning a voucher or attending a private school automatically results in a better student.

Well, there is new evidence that offering a choice isn't, by itself, going to effect education reform. A newly released study by the National Bureau of Economic Research (authored by Julie Berry Cullen of UC-San Diego and Brian Jacob of the University of Michigan) attempts to focus on the "lottery" effect of school choice by tracking, over time, students who won the ability to choose their Chicago public schools in Kindergarten or first grade. By also following students who did not win, they are able to avoid what is the biggest hurdle to good research on the effect of school choice...non-random selection.

Here in Milwaukee vouchers are not awarded randomly to families. In our city, parents first must find a school, then apply for a voucher seat at that school. Only if there are more applicants than seats will random selection kick in, and even then, the student is only competing against the other students who have chosen that school...they are not in a pool with students choosing other schools. Not a random situation at all. (Which is not to say it isn't in the students' and schools' best interests to operate the program that way, just that it is difficult to research rigorously due to this.)

In Chicago, however, the lottery operates first, randomly selecting from the entire pool of interested students those that will be able to "open enroll" in a public school of their choice. The winners then choose their schools. Cullen and Jacob find that the winning students "attend higher quality schools as measured by both the average achievement level of peers in the school as well as by value-added indicators of the school's contribution to student learning." Meaning the winners ended up in schools that had highly performing students and that improved students' scores over time. Sounds pretty good.

Unfortunately, many of these students turned out like those unlucky lotto winners of lore. The authors found no systematic educational benefits accruing to the winners:

We do not find that winning a lottery systematically confers any evident academic benefits. We explore several possible explanations for our findings, including the possibility that the typical student may be choosing schools for non-academic reasons (e.g., safety, proximity) and/or may experience benefits along dimensions we are unable to measure, but find little evidence in favor of such explanations. Moreover, we separately examine effects for a variety of demographic subgroups, and for students whose application behavior suggests a strong preference for academics, but again find no significant effects.

Because of the random selection, Cullen and Jacob can focus on the difference between schools to try to explain their results and not the difference between winners and losers. Why aren't the "good" schools improving outcomes for the lottery winners? Why isn't attending a good school enough to change your luck forever?

Obviously, because it's more complicated than that. Education reform must go beyond waving a magic wand and granting a parent's wish for a better school. Ask any principal in Milwaukee how easy it is to bring a poorly performing student up to grade level...it's hard work that isn't any easier just because the school has a good reputation or the word "private" in its name.

Now, private schools do have some ability to work with students' families in ways public schools do not. Usually this ability is what leads people to predict that private schools outperform public schools: if the parents or student aren't cooperating, the student doesn't get to stay and the school climate stays focused on high achievement.

However, another new report, this one from the Center on Education Policy, found that, controlling for family background and prior achievement, students attending private high schools performed no better than students in traditional public high schools on math, reading, science, and history achievement tests and were no more likely to attend college than public school students.

If accurate, this finding is truly disheartening. If the schools that are able to "choose" their students aren't achieving at a higher rate, and if winning the ability to choose a better school doesn't improve achievement, then how can school choice possibly be expected to be the tide that lifts all boats?

Again, it is complicated. There is too much variation in the school universe to paint all private schools, or all public schools, with the same brush. Some will be very good, some will disappoint, and some might even be damaging. The same is true for voucher winners. Some will maximize the opportunity, some will squander it, and some will try their best to no avail. It's time to acknowledge that there is no "gold standard" for education reform because schools and students cannot be standardized. Improvement will come classroom by classroom from the sweat of the brows of teachers and students working together. Reformers, and policymakers, must return focus to the work of the classroom.

PPF Viewpoint luncheon: Workforce Development

Workforce for the 21st Century
The force behind economic development

Southeastern Wisconsin’s economy will come to a standstill without trained and capable workers. How will the new Milwaukee Area Workforce Investment Board grow a workforce in the hope of attracting jobs to our region? And what role will our technical colleges play?

Speakers:
Donald Sykes, president,
Milwaukee Area Workforce Investment Board
Dr. Darnell Cole, president,
Milwaukee Area Technical College

Wednesday, October 31, 2007
11:45 – 1:30
Hilton Milwaukee City Center
Monarch Ballroom
509 West Wisconsin Avenue

Forum members: $40
Non-members: $50

Reserve your place now by clicking here

Changes or cancellations will be accepted until Monday, October 29.
No refunds will be given after that date.

Try balancing the budget yourself

If I were a Wisconsin legislator, tired from the lack of progress in passing the 2007-2009 state budget, it might be fun to direct my angry constituents to a website that would allow them to try balancing the budget themselves.

This is exactly the option for Californians. By going here, you, too, can try to balance California's state budget by making a series of key decisions on both the revenue and expenditure side of the budget equation. In their own word's...

Next Ten is inviting all Californians to take the Budget Challenge, a nonpartisan Internet tool that lets you roll up your sleeves and create your own state budget. You call the shots on how much to spend on schools, the environment, healthcare, prisons and other state programs – and how to pay for them.

I tried to balance California's state budget and...I failed.

I ended up raising taxes across the board while cutting into health care for retired workers, capping the rate of growth at state universities, and reducing parole supervision. All that got me was a projected $1.2 billion dollar deficit and, presumably, a one-way ticket out of office.

Folks, it ain't easy.

Thus far, over 40,000 people have tried to balance the State of California's budget through this unique web-based tool. I would imagine that while many have failed, all have garnered a new appreciation for how hard it is to do just the minimum - maintain services and keep taxes under control. In an era when the public and the media are blamed for lack of engagement in the budget process, it makes me think that this type of educational tool could be a beneficial exercise for everyone in Wisconsin.

The Infrastructure-Police Tug of War

Sunday’s expose in the Milwaukee Journal Sentinel on city police overtime raised questions about management choices over the past couple of years. But a bigger picture of shifting priorities emerges when the analysis spans the longer term. Over the past several decades, the police department has gobbled an ever-increasing piece of the city’s financial pie.

Mayor Barrett’s proposed 2008 budget calls for $575 million in spending on general city purposes. Most of the money will go to the police ($217 million) and fire ($97 million) departments. Compare that to 60 years ago, when police accounted for less than 20% of city spending and nearly half went to public works, largely to develop and maintain the city’s infrastructure. Put another way, public works spending was well over double police spending in 1947; today we spend twice as much on police as on public works.

Obviously many factors help explain this dramatic change. What’s constant over the years is that about three-quarters of city tax money supports just three functions of municipal government: police, fire and public works. In the long run, the police department has dominated, infrastructure gets a smaller piece of the pie, and the relentless trend raises a red flag about the city’s long-term capacity to provide for the infrastructure that underlies economic growth.

Market forces and preschool

One of the paradoxes of early childhood education (ECE) policy is that ECE doesn't seem to obey the normal economic rules of supply and demand. If high quality ECE is so valuable, why is there a proliferation of poor quality providers? Isn't high quality ECE in demand?

The answer is that high quality ECE is expensive. This is a labor-intensive industry and to attract and retain highly qualified teachers, wages and benefits must be higher than in competing industries. In addition, developmentally appropriate, safe, and sturdy equipment and supplies are expensive as well. Developmentally appropriate facilities are also costly. (My example is usually the child-sized toilets and sinks you'll find in well-designed child care centers.) And, of course, one cannot overlook the importance of fresh and nutritious food, adequate outdoor play space, or enrichment activities such as field trips.

It's no wonder that many local child care providers and preschools cannot afford to offer all these elements. And while there are some that do, most parents cannot afford to pay the resulting tuition.

So maybe the rules of supply and demand do hold true...but there just aren't enough parents here who can afford to be demanding.

An eye-popping ABC News/Forbes.com story illustrates this: In larger cities like New York and San Francisco, there are enough parents able and willing to pay preschool tuitions rivaling those of Ivy League colleges. These preschools are able to charge over $25,000 per year and have waiting lists for enrollment.

So it seems, when a critical mass of parents able to afford highest quality is present, the market will respond and offer that quality, at the highest price the market will bear.

The challenge for cities like Milwaukee, where that critical mass isn't present, is to find ways to provide high quality more cost effectively and/or to improve parents' ability to pay for higher quality. Neither of these options is easy. The most effective cut is to labor costs, but that will impact quality directly. Improving parents' ability to pay means increasing their wages, a long-term tactic, or subsidizing tuition, a short-term tactic. What we've found here in Wisconsin is that tuition subsidies have not resulted in increased quality because they can be used even at lower quality providers.

While no one wants Milwaukee parents to be put in the position of signing up for preschool while their child is still in utero, and then spending 3/4ths of the median household income on tuition, it would be nice if more parents were able to demand higher quality ECE and/or more providers were able to offer it. Early next year the Forum will release a report analyzing the ways in which other jurisdictions have tried to help their ECE markets develop.

PPF Pearls: Paying for more police is a Milwaukee tradition

Mayor Barrett introduced his proposed budget yesterday and sparked a column by Bruce Murphy of Milwaukee Magazine that asks:

But at what point is some mayor going to put down his or her foot and say that we don’t need more officers, we need to more efficiently use the huge force we already have?

Murphy's question is asked in light of the city comptroller's June audit which found Milwaukee has more police per capita than other cities of similar size, nearly twice as many in some cases.

The Forum has been asking this same question for years. During the last mayoral campaign season we issued a series of briefs on vital issues for the city and its next leader: one was focused on the police department.

From our findings:

The City of Milwaukee has long talked of its ability to create efficiencies and eliminate positions. However, in large measure, the Police Department has not been included in attempts to shrink government by cutting positions. Rather, City budgets over the last several years speak of strengthening the efficiency of the City as a whole by eliminating positions while strengthening public safety by adding police positions. As Figure 6 shows, the Police Department has increased its position authority 2.3% since 1994, while the General City Purposes (GCP) budget’s position authority has decreased 8.7%, and the total budget has cut 14.2% of its positions.

In addition, we found that the budgeted salaries for the police department increased by 31% between 1994 and 2003, compared to an inflation rate of 23% during that time period.

Unfortunately, despite the increases in police department staff, Milwaukee's crime rate decreased less between 1992 and 2002 than other similar cities nationally. Washington DC, Minneapolis, Detroit, Cleveland, Indianapolis...they all reduced crime to a greater extent than Milwaukee over that time period. In addition, our crime clearance rate was lower than in other cities.

Mayor Barrett's proposal isn't novel for Milwaukee and the Forum will continue to monitor the police department's budget. But maybe its time to stop doing the same thing while expecting a different result.

NOTE: The other two briefs in the 2003 vital issues series are also relevant to the current budget deliberations. Brief 1 covered property value trends while Brief 3 analyzed city finances. Updated vital issue briefs will be released this winter.

Finding a new revenue stream without getting sick

Denver, Colorado, unlike many cities, still has a public hospital, Denver Health. The hospital has a $432 million annual budget, serves mostly low income and/or uninsured patients, and operates in the black...how does Denver do it?

They found a profit center.

The Rocky Mountain Poison and Drug Center brings in between $2 and $3 million annually. The center provides poison control services for five states and over 70 manufacturers of potentially dangerous products, such as Clorox. It fields over 220,000 calls a year, preventing doctor visits for about 70% of them. By contracting with other states and companies to provide the service, they make a profit for Denver. By performing the service well, they prevent costly emergency room visits, which benefits just about everyone.

The center has operated for nearly 50 years. Providing contractual services for other jurisdictions, as well as private clients, was not part of the original mission. The evolution of the center was the result of seeing a need, having the foresight to see a part to be played in meeting that need, and creating the internal structure and support necessary to be able to play the part. Without investments in training and state-of-the-art phone and computer systems, the center would not be able to capture the business of the many manufacturers and pharmaceutical companies they serve. Investments have reaped rewards.

In times of budget cuts and property tax levy limits, perhaps a little long-range brainstorming is in order for all local government agencies. What are you doing well now that might meet a need elsewhere or in the private sector? If you had the resources to invest, could you do it even better? Would it then have value to others? If so, could the investment costs be recouped? Could a profit be made?

The city of Denver earns over $2 million a year preventing tragic results for curious kids or confused seniors. Your city might have an untapped mother lode, too.

Feeding the Red Dragon

Governor Doyle's trip to China has highlighted Wisconsin's strong export growth to the world's largest country. A recent article in the Milwaukee Journal-Sentinel points out that the state's growth in exports to China grew at an annual average of 23% over the last decade and jumped 29% just last year. In this time, China has become Wisconsin's third largest trading partner behind Canada and Mexico.

This growth trend shows no sign of abating.

Looking at the most recent export statistics, we see that Wisconsin exports to China accelerated at an even faster clip than usual in 2007. In the first quarter of 2007, $297 million worth of Wisconsin goods were exported to China. This represents an impressive 75% increase in exports over the first quarter of 2006. Although this is just three month's worth of data, Wisconsin moves up from China's 19th largest US state trade partner, to 14th largest. Not bad for a state that ranks 20th in population.

Wisconsin's export increase to China was fueled by a $71 million year-over-year gain in exports from the state's machinery manufacturers - think engines, turbines, mining equipment and other industrial machines.

In other words, if the past decade was good for Wisconsin-China trade, 2007 might be exponential. Maybe Wisconsin manufacturers are beginning to get the picture when it comes to competing with China: stop trying to slay the Red Dragon - feed it exports instead.

So, what does all this mean for the typical Wisconsinite? It means that if you need a job, a good place to look would be to our export related industries. For example, in my neighborhood there is a large manufacturer of mining machines, P&H. I encourage you to take a look at their current job openings on their website. WARNING: It's going to take you awhile to view all of the listed jobs as the list seems to go on forever.

The problem for P&H and other high-end manufacturers has been finding skilled workers to fill current opening. This problem should only worsen as baby-boomers drop out of the workforce over the next twenty years.

With China's continuing hunger for highly-engineered manufactured products showing signs of acceleration, it's logical that we step up efforts to train workers. A strong partnership between local, state and federal government, private foundations and the employer's themselves will be needed to meet our workforce development needs.

Nothing earthshaking ever happens here

Milwaukee got a favorable mention of sorts in the September issue of Governing Magazine, which touted our city’s virtues by picking up this Journal Sentinel quote by Mayor Tom Barrett: “We lack the hour-and-a-half commute, and we lack the hurricanes and earthquakes.”

I don’t know how often people – and, more important, businesses – situate themselves in a city because of something it doesn’t have, and it’s certainly not the mayor’s fault that Governing decided to highlight negatives. But surely we can put a more positive spin on Milwaukee’s virtues than the idea that catastrophe rarely strikes. For example, Milwaukee could sell the claim that it is (or was) America’s most progressive city -- where sewer socialism left a legacy of the three most important assets most businesses consider in location decisions: infrastructure, workforce and quality of life.

Ironically, the mayor of Madison announces on his web site that he wants Wisconsin’s capital to be the most progressive city in America. Actually, Milwaukee’s mayor is much better positioned to make that claim. In national magazines, perhaps we should be touting the positive assets that emerged from a progressive tradition just as boldly as we underscore virtue of being disaster free.