Fiscal estimates suggest quality early childhood education is costly yet beneficial

The annual cost of operating a high-quality child care or early education center in southeast Wisconsin is an estimated $11,000 per child, more than double the cost of a typical program in the region today, according to the Public Policy Forum’s latest report from its three-year research initiative on early childhood care and education.

The report, “The Price of Quality: Estimating the Cost of a Higher-Quality Early Childhood Care and Education System for Southeast Wisconsin" stresses that only high-quality programs reap the long-term benefits our region needs most, such as better student achievement and improved graduation rates.

Noting that many other states have invested in child care quality improvement policies in order to capture those long-term benefits, the report intends to help policymakers cost out their options for improving child care quality in Wisconsin. The report provides fiscal estimates on a status quo scenario, a mid-level option and a high quality scenario for state policymakers to consider. While the report’s estimates include only the seven-county southeast Wisconsin region, the policy decisions likely will be made at the state level.

Main findings include:

· The direct costs of operating the region’s current system of early childhood care and education is an estimated $370.5 million annually to serve over 66,700 children. To operate the same sized system at a high-quality level would cost an estimated $671 million annually;

· Policies aimed at maximizing quality would be the most expensive, while a more modest improvement in quality in the region would result in total direct costs of $506.2 million;

· While taxpayers pay for direct costs only to the extent that they subsidize costs for low-income families, certain indirect costs are paid for by taxpayers, including regulation and monitoring of child care providers. These indirect costs would increase if policies were put in place to improve quality in the region and are estimated to total almost $7.5 million during the initial phases of any quality improvement initiative;

· The long-term economic and social benefits that can result from improved quality care and education are maximized when the care is of the highest quality. In addition, the benefits for at-risk and low-income children are larger than for other children.

The report presents several policy options for policymakers, ranging from low-cost and low-return on investment to high-cost and high-return. The least costly option is to maintain the current regulatory system and the focus on fraud prevention. The most costly option is to reform the system as a whole, requiring smaller caregiver-child ratios and requiring caregivers to have four-year degrees, for example. Other options include incremental improvements in quality over a period of time, focusing on improving quality for the neediest children, or a Quality Rating and Improvement System that gives parents information about the relative quality of programs. The report also analyzes five different models for financing quality improvement initiatives.

The Governor and the Legislature have child care on their radar screens right now in light of the serious fraud problems that have arisen in the Wisconsin Shares program. For the sake of children and our regional economy, stamping out fraud in Wisconsin Shares must also involve consideration of how to improve quality. This report’s overview of costs and policy options aim to provide context for upcoming legislative deliberations.

The cost of Milwaukee's drop-outs, and what to do about it

A new report by the Alliance for Excellent Education estimates the economic costs to cities of having high drop-out rates. In the four-county Milwaukee metro area, it is estimated that cutting the drop-out rate in half, or having an additional 3,200 high school graduates annually, would result in an additional $7 million in annual state and local property, income, and sales tax revenue, due to the higher salaries and increased spending associated with being a high school graduate. The graduates themselves "would together earn nearly $41 million in additional wages over the course of an average year compared to their likely earnings without a diploma." The report also notes that in the Milwaukee area, of the 98 high schools analyzed, 23 were found to be "drop-out factories" in which fewer than 60% of freshman progress to their senior year on time.


How to remake these "drop-out factories" back into schools is the focus of another new report, this one by the National Governors Association (NGA) Center for Best Practices. The report recommends four actions that state governors can take to tackle high drop-out rates:

1. Promote high school graduation. The NGA suggests that governors increase the age of compulsory school attendance, weight graduation rates heavily in school accountability schemes, and appoint a drop-out czar or other high-level official to be accountable for statewide improvements.


2. Target youth at risk of dropping out. State data systems can be designed to help identify at risk students as early as possible, making them eligible for intervention and support programs prior to high school.


3. Re-engage youth who have dropped out. Re-entry programs for juvenile offenders can be an important tool for getting drop-outs back into school. States can also create financial incentives or rewards for schools that successfully matriculate and graduate former drop-outs.


4. Provide rigorous, relevant options for earning a high school diploma. This includes offering an array of high school programs focused on job readiness for those students planning to enter the workforce after high school.

As an NGA report, the recommendations are aimed at state policymakers. But some of these policies could be adopted at the local level. Connections between school and work are an example of an area in which an effective local policy might even be better than a state-wide effort.


Drop-outs are a costly problem for the regional economy and southeast Wisconsin cannot afford to wait for whomever next holds the governor's office to tackle this problem. With support of local political and business leaders, best practices could be implemented at the district level sooner, rather than later.

The People Speak: Citizens' views on transportation, education reform, taxation

The second installment of the results of the autumn People Speak poll, conducted in partnership with the University of Wisconsin--Milwaukee's Center for Urban Initiatives and Research and The Business Journal Serving Greater Milwaukee, focuses on public policy issues such as mass transit and mayoral takover of MPS.

The People Speak is a tracking poll that will be conducted at regular intervals throughout the year. Its purpose it to gather information from local citizens about their interests in, preferences for, and concerns about public policy. By gathering and reporting out these citizen perspectives, the partners hope to expand the public voice in policy matters affecting Greater Milwaukee.

Highlights from the most current Research Brief include:

• A majority of residents of southeastern Wisconsin favor high speed rail connecting Chicago, Milwaukee and Madison, as well as commuter rail connecting Racine, Kenosha, and Milwaukee. A downtown streetcar line in the City of Milwaukee is less favorable, but still garners support from half of Milwaukee County residents.


• When it comes to funding transportation improvements, toll roads have the most support, with about half of all residents in favor. Increasing the gasoline tax is not favored by most residents, nor is the creation of a regional transit authority funded by an increased sales tax.


• A mayoral takeover of the Milwaukee Public Schools is favored by 43% of poll participants in the region. The level of support among City of Milwaukee residents is the same--43%. The greatest support comes from Democrats, 50% of whom are in favor of the idea.


• Establishing a regional authority to oversee parks and cultural facilities for all of southeast Wisconsin garners the support of a majority of poll participants across the region. The only county in which a majority of respondents is not in favor is Ozaukee.


• Residents of the region are split on whether they would favor increased user fees in order to lower property taxes. Increased sales taxes for this purpose are slightly less favored.

For full results of the poll, go to the poll website.

Mayoral control isn't magic, but it might be muscle

In 2007, when the New York General Assembly was considering whether to renew the legislation authorizing mayoral control of the New York City public schools, a Commission on School Governance was appointed to study the policy's benefits, drawbacks, and outcomes and to recommend whether renewal was appropriate.

The Commission heard testimony from many stakeholders and collected research from policy analysts and education experts. They met for nearly 11 months and issued a 20-page report of their findings. In the end, they recommended the renewal of mayoral control.

During the first six years of mayoral control, from 2002 to 2007, test scores in New York City schools improved. But the Commission looked over all the evidence, and noting that scores in many other New York districts also improved over that time, decided that test score improvements on state tests could not be attributed solely to mayoral control. In fact, when scores on national tests were considered, they found no clear evidence of a relationship between governance structure and student outcomes.

But they did recommend a continuation of the mayoral control policy, and cited four primary reasons:

1. A single, elected mayor is more accountable than an elected governing body.
2. Mayoral control had resulted in dramatic increases in state and local funding for the schools.
3. Mayoral control had changed the collective bargaining dynamic, "better balancing incentives for fostering school improvement" with controlling costs.
4. Mayoral control creates a governance structure "that allows a mayor or chancellor to exercise leadership when the public demands it."

It is the last point that seems to have tipped the scales for the Commission:

Does governance matter? Of course it does. The amount of change that occurs over a given period of time is a relevant factor to consider when evaluating a governance structure, especially when one purpose of the governance plan under consideration was to foster change. In the past six years, the New York City school system has undergone more change than it has in any similar period in its history. This change must at least in part be attributed to mayoral control.

In other words, mayors can show leadership, which can lead to changes, which in turn can lead to improvement in student outcomes. Wouldn't it be nice to know exactly what those changes were and how they brought about higher achievement?

Recent research sheds some light on these questions. UCLA professor William Ouchi has found that mayoral control in New York resulted in decentralization of decision-making, allowing principals to control their budgeting, staffing, and curricular decisions. The principals used this new power to reduce the numbers of non-teaching staff in their schools, lowering what is called the teacher-student load, or the total number of students for whom a teacher is responsible. They found that high school principals reduced the load to an average of 87.7 students per teacher, much less than the contractual maximum of 170 students per teacher. Teachers with fewer students reported being able to recognize students' weaknesses sooner and intervene more quickly and more intensively. Graduation rates during this time increased from 65.8 percent to 74.5 percent.

If and when the Wisconsin state legislature takes up the issue of mayoral control for MPS, parents, voters, and taxpayers should urge them to take heed of the findings in New York. We must ask whether mayoral control is being sought simply for the sake of change, or is it being designed in a way that will increase accountability, bring more resources into classrooms, put more issues on the bargaining table, and provide leadership to implement school-level reforms that have been proven to result in higher student performance?

As we've said before when it comes to governance reform, "the devil is in the details."

Gasbag or effective legislator?

Some people accuse the U.S. Congress of being all talk and little action. Now there's a website that's tracking that talk in a fun, interactive way, allowing you to pit any two Senators or members of Congress against one another in a war of words.

For example, when Wisconsin's two Senators are compared, it's clear that Sen. Russ Feingold spends much more time in front of the mike than Sen. Herb Kohl. In the 110th Congress (2007-2008), Feingold spoke nearly five times more words from the Senate floor than Kohl, with 113,965 to Kohl's 23,107, ranking Feingold 13th most loquacious. Of all the words uttered by Wisconsin's 10 legislators, Feingold spoke 42% and Kohl spoke 8%.

And what were they speaking about? The most commonly uttered word by Feingold was Iraq, with Americans and security also ranking highly. Kohl said care most often, and help and health frequently as well.

The stats for the rest of the state's delegation (in alphabetical order):
Rep. Tammy Baldwin (D)--13,672 words, health, insurance, and care are most common
Rep. Steve Kagen (D)--18,875, health, care, children
Rep. Ron Kind (D)--18,243, country, farm, tax
Rep. Gwen Moore (D)--12,457, Milwaukee, school, health
Rep. Dave Obey (D)--34,643, billion, earmarks, percent
Rep. Tom Petri (R)--9,710, loan, students, FAA
Rep. Paul Ryan (R)--25,177, budget, tax, spending
Rep. Jim Sensenbrenner (R)--3,395, rights, property, research

It's probably fair to say, based on the stats above, that Feingold is most responsible for Wisconsin's rank of 18th among states in terms of verbosity.

Unfortunately, the site can't tell you whether the legislators were speaking for or against any of these ideas. But now you can judge whether you think you're getting too much talk or not enough out of your representatives in D.C., and whether the talk is on the issues that matter most to you.

The People Speak: Greater Milwaukee citizens' views on the economy

The Public Policy Forum is pleased to launch a new research product today in partnership with UWM's Center for Urban Initiatives and Research (CUIR) and The Business Journal Serving Greater Milwaukee: results from our new The People Speak poll.

The People Speak is a tracking poll that will be conducted at regular intervals throughout the year. Its purpose it to gather information from local citizens about their interests in, preferences for, and concerns about public policy. By gathering and reporting out these citizen perspectives, the partners hope to expand the public voice in policy matters affecting Greater Milwaukee.

Each poll will have a set of standard questions on topical public policy issues, the responses to which we can track over the long term. Because some of those questions are identical to those used by the Forum in previous public opinion surveys of southeastern Wisconsin residents, we'll also be able to compare the results to those we obtained several years ago.

In addition, each poll will have a set of questions that centers on a specific public policy theme. The poll results released today (from polling conducted during the last week of September) center on the economy: both how the economic downturn is impacting Greater Milwaukee residents, and how residents view governmental efforts to get the economy back on track.

Accompanying each set of poll results will be a Research Brief that analyzes key results. The Research Brief released today can be accessed here at the new The People Speak web site. The following are some highlights:

• About a third of respondents say they have experienced problems saving or paying for retirement, paying bills, and paying for health care during the past six months. Nevertheless, 64% are optimistic about their financial futures.


• Milwaukee area residents are more supportive of state and local tactics to revive the economy than federal efforts. For example, solid majorities believe that state and local governments should be doing and spending more to promote development and attract new businesses, yet only 45% believe the federal stimulus legislation was a wise use of public funds and 35% believe another stimulus package is warranted.


• While "jobs" ranked only as high as fourth or fifth in citizens' rankings of most important issues facing the four-county Milwaukee region in polls conducted from 1999-2002, it ranked first in the 2009 poll. The issues of crime/violence, schools/education and transportation ranked lower than ever before.

Stay tuned for release next month of results and analysis of the general public policy questions from our September survey.

Milwaukee city and county budgets not for the faint-hearted

The Forum released its analysis of the 2010 proposed City of Milwaukee budget this morning, following up on our similar analysis of the 2010 recommended Milwaukee County Budget released last week. I wish we had better news.

A recurring theme in both analyses is that expenditure needs largely driven by increasing pension and health care costs have far eclipsed stagnant and inflexible revenue streams, necessitating cuts in services that will be noticeable to citizens. Even more depressing, the problems facing both governments are likely to worsen.

While the general nature of the problem is the same, the severity clearly is far greater for Milwaukee County. We have noted previously that the city stands roughly where the county stood six or seven years ago -- on the precipice of major imbalance but still with some tools to ameliorate the situation.

The 2010 budget proposals from the mayor and county executive reflect that perception. The city can ease the pain of its $49 million increased pension contribution and cuts in state aid by tapping into its tax stabilization fund, pension reserve and parking reserve. Furthermore, it still posesses sufficient vacancies to cut hundreds of positions without forcing layoffs, and it still can resort to administrative restructuring and other departmental tinkering to generate savings that do not produce immediate and highly noticeable service-level impacts.

In contrast, the county has no reserves worth mentioning, and several successive years of bridging $40 million budget holes have left it with little wiggle room to reduce staff or seek efficiency without significantly impacting both employees and services.

The clear disparity in options is perhaps one factor that led the county executive to take an extreme budget risk by counting on huge cuts in employee compensation that have not yet been negotiated with county labor unions. The mayor, meanwhile, has been able to plug in significant yet much smaller savings from a two-year wage freeze and relatively minor health care and pension concessions already ratified by his largest union, while only gambling that other city unions will accept something similar.

Of course, the difference in tactics also is distinguished by the mayor's decision to propose $19 million in property tax and service charge increases, while the county executive has proposed no property tax increase and roughly $5 million in bus fares, zoo admissions and parking fee increases.

As we stated in both analyses, as well as in previous reports (see here and here), it is difficult to imagine how either government can right its fiscal situation in the long term without a combination of new revenue streams (which could include new local taxing authority and/or revenues from the lease or sale of major assets), deep service cuts and/or substantial wage and benefit concessions.

What is most critical is that leaders of both governments plan for the future (and forcefully engage state officials) as soon as the ink is dry on their 2010 budgets, so that they don't end up in the same place next year, facing huge budget holes with fewer available options.

Pittsburgh's model of school governance reform

In the past few weeks Milwaukee has had numerous town hall meetings, panel discussions, and presentations regarding the idea of school district governance reform. At issue is whether the mayor of Milwaukee should be in charge of the Milwaukee Public Schools, rather than an independent board of directors.

At each of these meetings, accountability has been thrown about as both an argument for and against a mayoral take-over of the district. Perhaps a mayor elected in a higher turn-out citywide election would provide more accountability; or maybe losing the opportunity to elect a school board representative would disenfranchise certain voters, diluting accountability.

In Pittsburgh, civic leaders, parents, and citizens decided to stop talking about accountability and actually implement it. A local nonprofit group, A+ Schools: Pittsburgh’s Community Alliance for Public Education, started an initiative called "Board Watch" last winter. The idea is quite simple: send volunteers to attend every board and committee meeting and have them report to the public whether the board is being effective in meeting the district's strategic goals.

The volunteers are trained to observe meetings and evaluate the performance of the school board on five good-governance practices: maintaining focus on the district's mission, being transparent, conducting meetings in accordance with district rules, having clarity in the role of the board and its members, and competency, including substantive knowledge and preparedness. Board Watch issues quarterly report cards with grades for each of the five practices, as well as overall performance. The reports also include recommendations for improvements.

Board Watch is seen as both a public engagement tool, by creating more interest in board activities and decisions, and as a way to provide the public with a set of expectations for good board governance. Earlier this decade Pittsburgh's board had become so dysfunctional that three large local foundations decided they would no longer donate funds, costing the district millions of dollars in support. Civic leaders decided the community needed to set clear expectations for how the board must function and created the A+ Schools organization to work on reform.

Pittsburgh board members seem to be sanguine about the project, wishing they could also be graded on things like good intentions. But they do acknowledge the merits. Says one board member: “If you watch any school board meeting, whether it’s us or some other board, how often do you hear them actually talk about education? Slowly, I think Board Watch is going to help us focus on why we are there.” Sounds like the kind of focus needed in Milwaukee, as well.

The luxury of mass transit

The city-state of Dubai, United Arab Emirates, opened a new high-speed rail system last month. The Los Angeles Times reports that despite the city's crushing traffic congestion (estimated to cost over $1.4 billion annually in lost productivity), it will be a hard sell to get riders.

The article calls Dubai a "city defined by individualism and gated communities." Indeed, this is the home of the tallest man-made structure on Earth (the Burj Dubai office tower); fantastical artificial islands of high-rise condos, hotels, and villas (the Palm Islands); and a shopping mall containing, among other things, a 22,550-square meter indoor ski area (Ski Dubai at the Mall of the Emirates.)

So, reports the Times, "authorities are highlighting the grandeur of the new rail system over its convenience." Judging by the Dubai Metro station pictured above, the new train system is living up to its billing. The goal is to increase the number of residents using mass transit from 5% to 20%.

If Dubai is successful in getting commuters out of their expensive cars and onto high-speed rail, could luxury be a tactic used here to attract individualistic U.S. riders? Perhaps, but at a cost of over $177 million per mile, the Midwest likely won't be the first to try transit Dubai-style.

How do we compare to our neighbors? Depends on whom you ask

You know the drill: Wisconsin’s economic strategy just isn’t measuring up compared to others.

A July 18th editorial claimed “Wisconsin is struggling.” It said Iowa seems to have a better plan. An August 8th column by John Torinus argued, “We get outgunned by states with much larger budgets for economic development.” He said Michigan seems to be doing better. On October 3rd, Torinus wrote that Wisconsin was falling behind Illinois and Minnesota. He quoted a UW-Madison expert as stating the state economy is in “very bad shape.” Meanwhile, Marc Levine’s recent editorial blasts local economic development efforts as being prey to “irrational exuberance.”

While that’s the tone we’re used to, it appears others see our economy and business climate differently. A two-part series (here and here) in the Minneapolis Star Tribune by Thomas Lee details a competition for biotech firms in which Minnesota is clearly the underdog. “When it comes to innovation,” Lee states, “Minnesota is quickly falling behind its neighbor.”

The articles cite a number of Minnesota-grown biotech start-ups fleeing to Wisconsin, where businesses interviewed claimed they had access to more money, and where organizations like the Wisconsin Alumni Research Foundation, University Research Park and Accelerate Wisconsin, along with tax incentives and investor capital, create a friendly climate for new ventures. (The Milwaukee County Research Park's Technology Innovation Center uses similar strategies locally.)

Even with a $6.5 billion deficit, the budget passed by Wisconsin legislators increases angel investor tax credits from $5.5 million to $18.25 million and venture capital credits from $6 million to $18.75 million. Minnesota has no comparable tax credits and, while Minnesota does not appear to track angel investors, Wisconsin has 22 angel groups that made 53 deals in 2008.

In the Star Tribune, Wisconsin and its Madison university are compared to Silicon Valley, North Carolina’s Research Triangle Park, MIT, and Stanford University and are said to feature “the most formidable university technology transfer program in the country” as well as “the country’s most industrial workforce.”

The director of business development at a Minneapolis health consulting group explains, “There is a real desire to succeed in Wisconsin. The state has no stodgy culture. It’s a culture of newness, a desire to try new things.” Another executive gushes, “Wisconsin is a very exciting place. You just get a sense of forward motion. Wisconsin is doing something right.”

What are we to make of the contrast in tones between how we see ourselves and how others perceive us? Judging from the above-referenced inter-state economic comparisons, as well as the Public Policy Forum’s own analysis of the Minnesota business community’s involvement with early childhood education reforms, in some ways, the grass is always greener on the other side. However, that does not change the fact that comparison with other states is an important tool for seeing one’s own state – its problem areas and its strengths – in sharper focus.

All politics and all health care reform is local

Here at the Forum we try to keep our work current, focusing on topical issues of importance. Health care reform is obviously one such issue. Yet the Forum's mission is to inform local policy debates, not national ones. So it was not immediately apparent what role we might have to play in the conversation about health care reform.

An article in last month's Governing Magazine made it more clear--local policy decisions can have big impacts on health care costs and on the health care system itself. The Governing article was actually about state budget decisions; it seems many states are cutting their support for poison control centers, which some studies have shown save big money in emergency treatment costs.

The author of the article (none other than Don Kettl, namesake of the Kettl Commission on state-local partnerships) notes that "most of the political and budgetary pressures we face are pulling policymakers away" from investment in system efficiencies and preventative medicine, and are instead resulting in "strategies that might save a few dollars now but drive up health costs in the long run."

As we digest the proposed 2010 City and County budgets, we should keep in mind that there may be long-term ramifications of budget cuts that will reverberate beyond Milwaukee. The proposed budget for the city's Health Department, for example, includes an 8% reduction in expenditures and an 11% reduction in staff compared to the 2009 adopted budget. Cuts in state and federal revenues result in a county budget that calls for a 9% reduction in expenditures in adult community mental health services and a 7% cut in expenditures for AODA services (drug and alcohol treatment) compared to 2009--leaving holes that are difficult to fill with local revenues.

These cuts may in fact reflect new efficiencies and may not negatively affect services or outcomes. Or, they may be penny-wise and pound-foolish from a taxpayer's point of view, saving money today that will create a debt later. Citizens need to be aware of the potential for either outcome and judge proposed budgets accordingly. The Forum will try to help; look for our detailed city and county budget analyses in mid-October.

Revisiting the Missouri approach to juvenile corrections

In a blog post published in March 2008, we cited an innovative juvenile corrections model used by the state of Missouri and asked whether that might represent a cheaper, better approach for Wisconsin.

Eighteen months later, the Missouri model is attracting increased national attention. ABC News recently ran a feature on the model, which utilizes small community-based residential facilities featuring intensive treatment as an alternative to large correctional institutions. This approach, according to the report, "has chalked up results that have corrections experts across the country taking notice."

Policymakers in Wisconsin also are taking notice. In April 2008, the Legislature's Joint Legislative Council established a Special Committee on High-Risk Juvenile Offenders to examine best practices to reduce recidivism among high-risk offenders. In April of this year, the committee produced a report outlining its proceedings and describing several bills recommended as a result of its deliberations.

The committee took a look at the Missouri model and considered draft legislation to pilot two or three Missouri-like facilities. The legislation did not make it into the committee's final recommendations, however, perhaps in part because of a memorandum prepared by the Department of Corrections showing that the Missouri daily rate for serving juveniles at its residential facilities is quite similar to the daily rate in Wisconsin juvenile corrections institutions if all related costs are considered.

Notwithstanding that finding, there may be a range of reasons to consider a more diverse service delivery model for juvenile corrections in Wisconsin. One is the potential to re-examine whether the state's institutional capacity could be reduced given the significant drop in the number of youth being sentenced to those institutions from Milwaukee County. The county averaged well in excess of 350 commitments per year in the late 1990s before seeing a precipitous drop to below 200 by 2004. After increasing in 2006-07, the commitment number is now trending downward again. This trend suggests there may be no better time to re-examine the closure of one of the state's three institutions in light of its fiscal challenges.

If the state were to consider such a move, it may need to be accompanied by additional community-based options. One such option could be a partnership with Milwaukee County to open a local residential facility based on the Missouri model. County officials have long complained about the cost of sending delinquent youth to the state facilities and may be willing to try a local alternative. Also, in light of the county's successful track record in operating alternatives programming (such as the Firearm Supervision, Wraparound Milwaukee and Focus programs), Milwaukee County could be the logical place to pilot another innovative approach.

The fiscal circumstances facing state government suggest that some new thinking is needed to cut corrections costs and reduce recidivism among the juvenile population. Whether the Missouri approach is the right one for Wisconsin requires further deliberation, but such deliberation again may be warranted in light of the successful outcomes associated with that approach.

Perfect storm of increased need and decreased giving hits area nonprofits

This year’s Report Card on Charitable Giving is different than in past years. In every report prior to this one, we surveyed the same small bellwether group of organizations. For this year’s report, we surveyed a larger number of nonprofits in the region to get a broader picture of what local nonprofits are experiencing. We e-mailed surveys to 391 local nonprofits and received completed responses from 188 organizations for a response rate of 48 percent. Over half (51 percent) of the organizations surveyed were from the human services sector, while 18 percent were arts and culture organizations, 17 percent were education organizations, 10 percent were health organizations, and three percent were in the environment sector. Three respondents were funding organizations. Eighty percent of the 188 responding organizations service Milwaukee County.

Major findings:

• Sixty-eight percent of organizations report that the U.S. economic downturn has caused giving to their organizations to be less generous than usual. Only seven percent feel that the downturn has caused giving to be more generous.


• Compared to the first half of 2008, organizations report decreases in total revenue, revenue from donations, and overall staffing. However, they also report increases in actual fundraising efforts.


• Most organizations say they have had to cut costs due to budget constraints (83 percent). Forty-three percent have frozen salaries, 29 percent have frozen new hires, 24 percent have laid off staff and reduced benefits, 13 percent have reduced salaries, and nine percent have eliminated benefits.


• Of the organizations that offer direct services to clients, 62 percent report the demand for their services is increasing, while seven percent report the demand is decreasing. Furthermore, 43 percent of these organizations say that the charitable donations designated to meet the demand for these services are decreasing, while 14 percent say they are increasing.


• Even in these hard times, 44 percent of organizations feel very confident that they can meet the demand for services in 2009 and 45 percent feel somewhat confident. Furthermore, 26 percent of organizations anticipate that the likelihood of their organization’s long-term sustainability is very high, 33 percent report a high likelihood of sustainability, and 34 percent a moderate likelihood.

The report was commissioned by the Greater Milwaukee Foundation with sponsorships from Donors Forum of Wisconsin, The Faye McBeath Foundation and United Way of Greater Milwaukee.

One-time revenues are hilarious

Here at the Forum, we've been cautioning local governments for years about making budgeting decisions that help balance the current budget but contribute to deficits in future years. We just didn't see much humor in these types of desperate budget tricks.

Leave it to Jon Stewart and The Daily Show to prove how funny one-time revenues can be. On Tuesday night's show they skewered a proposal in Arizona to sell and lease back their capitol building. The building (which has no real historic value, as it was built in the 1960s to replace the original capitol) and several other properties would be sold for over $700 million and then leased back at an annual cost of $60 million over the next 20 years. At that time the ownership of the buildings would revert to the state. In the meantime, the state would maintain responsibility for upkeep and repairs. As far-fetched as it sounds, Arizona's governor signed a bill in early September clearing the way for the sale.

As The Daily Show comedians pointed out--it's a great deal for the buyer, who would nearly double his investment in just twenty years, but what does the state get out of it except an extra $700 million in the current budget? Unlike the lease of a government asset designed to bring in annual revenue over the long term (such as privatizing Milwaukee's airport or water works), this proposed "sale" is actually functioning as a collateral loan.

While the extra cash for operating expenses is a windfall now, what about the $60 million in rent Arizona would be paying next year? Even a fake journalist asks the tough questions: Wouldn't that just make next year's budget even tougher? And the 19 years after that? And would the private owner require more in maintenance and upkeep than the state would otherwise have spent?

The response? A blank stare from an Arizona state legislator. She just didn't get the joke, I guess.

Will economic crisis breed government innovation?

The Forum's recently released report on the City of Milwaukee's fiscal condition includes a small section discussing how other cities are grappling with their recession-induced fiscal challenges.

We essentially found two camps: those looking to "ride out the storm" by implementing one-time savings opportunties (e.g. employee furloughs) and tapping into reserves with the expectation that revenues would rebound once the economy recovers; and those who were convinced their challenges were structural in nature and would dissipate only slightly in a recovering economy, and who therefore sought long-lasting budget solutions.

A cursory review of newspaper headlines in the past couple of days yields additional insights from three different parts of the country, all distinct yet all with potential relevance to local governments and school districts in southeastern Wisconsin.

• In Phoenix, which recently cut 1,000 positions to bridge a $270 million gap in its budget that began July 1, a continued lag in sales tax revenue is forcing consideration of another round of mid-year cuts. While elected officials likely won't consider major budget fixes until early next year, city managers are getting started by asking employees to scour their own daily activities for savings. Examples include new policies on opening window shades instead of turning on lights, an intranet marketplace in which employees trade and recycle unused office supplies to avoid ordering new ones, and requirements that employees empty their own trash and recycling bins.


• In Detroit, newly elected mayor Dave Bing is contemplating widespread privatization of services not deemed to be part of the city's "core" mission. According to the Detroit Free Press, Bing's definition of core services are public safety, water and sewerage. He says everything else will be on the table for potential outsourcing, including internal services like accounting and payroll, and direct services like trash collection and running the transit system.


• In New Jersey, smaller towns and cities are considering consolidation of services to an extent few thought possible. Ideas such as consolidated police and fire departments, merged public health departments and joint trash collection are receiving serious consideration as a result of threatened cuts in state aids combined with state financial incentives tied to shared services.

Here in southeastern Wisconsin, we have seen some beginning rumblings of similar efforts, such as the potential moves to consolidate police services in Pewaukee and Jackson, and a Milwaukee alderman's request to city workers to identify savings opportunities. We also have seen some interesting new approaches to labor relations, such as West Allis' proposed deal with employee unions to tie pay increases to the city's overall revenue picture.

It is commonly said that crisis breeds opportunities for positive and innovative reform. As county, municipal and school district leaders get set to unveil budgets in the next few weeks, it will be fascinating to observe whether government ingenuity and innovation emerge as a silver lining of our long and painful economic downturn.

Racial achievement gap in SE Wisconsin not shrinking

The Forum's latest research on K-12 education finds the region’s racial achievement gap on state reading and math tests has remained virtually constant over the past five years, as has the statewide achievement gap.


As previously noted on this blog, on the national NAEP test Wisconsin is the only state to have a growing achievement gap. That the state and the region are also unable to shrink the gap on state tests reflects a persistent pattern.

The new report indicates, for example, that 85.8% of the region’s white 4th grade students performed at a proficient or advanced level in reading during the 2004-05 school year, compared to 58.8% of African-American 4th graders. Five years later, more (89.4%) of the region’s white 8th graders were proficient or advanced in reading, while African-American reading proficiency remained at 58.8%.

Similarly, the region’s math achievement gap over the past five years grew slightly, although both white and African-American math proficiency improved during that time. The statewide reading and math achievement gaps also grew slightly from 2004-05.

While most of the region's African-American students are enrolled in the Milwaukee, Racine, and Kenosha school districts, the gaps in those districts are not as wide as in some others in the region. However, the smaller gaps in these three urban districts are due to the lower scores of the white students in those districts, rather than higher African-American scores.


The Forum’s schooling report was funded by Cardinal Stritch University, Multiple Listing Service, Northwestern Mutual, Southeastern Wisconsin Schools Alliance, Stifel Nicolaus, and the Waukesha County Technical College. A copy can be downloaded at the Forum’s web site, http://www.publicpolicyforum.org/

City of Milwaukee finances: between a rock and a hard place

Milwaukee's mayor has labeled the city's 2010 budget "by far the most difficult" he has faced in 25 years of public service, while the majority of its common council already has supported a proposal for sharply higher user fees. Meanwhile, the independently elected comptroller has proposed exploring a politically volatile lease of the city's water utility as a strategy for addressing the city's worsening fiscal challenges.

So how bad is the city's fiscal condition? Are its challenges solely the byproduct of economic recession, or do they reflect a more fundamental structural imbalance that has been building over time? Can they be met with short-term solutions designed to “ride out the storm” until the economy recovers, or do they require radical fiscal and programmatic change?

Those are the questions the Public Policy Forum seeks to answer in its latest report: "City of Milwaukee's Fiscal Condition: Between a Rock and a Hard Place", which can be accessed by clicking here.

Using the same respected fiscal monitoring system employed for a similar report on Milwaukee County government earlier this year, we examine fiscal trends, compare Milwaukee with similar-sized cities, analyze the root cause of problems and discuss potential solutions.

What we find is a city government on the precipice of serious fiscal and programmatic disorder. While still maintaining outstanding bond ratings, a comparatively well-funded pension system and healthy reserves, the city's revenue streams have exhausted their capacity to support its expenditure needs. We also find that this reality is not solely the consequence of economic recession, but one that has been building for more than a decade despite the efforts of city leaders to manage it.

The city is now where Milwaukee County was six or seven years ago – on the threshold of major fiscal imbalance and in need of far-reaching solutions. Whatever actions are decided upon must involve both city and state officials and must be of the size and scope needed to truly address the city’s fiscal challenges. Otherwise, as we argue in the report, the city will be unable to avoid several successive years of deciding between police or potholes.

Who says MPS needs more accountability?

The MPS school board will soon be considering a controversial recommendation from a special committee created to increase fiscal accountability within MPS. The committee's recommendation is to create a new Office of Accountability that reports directly to the school board and to move some functions that were formerly performed by administrative departments to the new office. In effect, the recommendations put direct oversight of certain fiscal procedures in the hands of the school board.


Some would say, as the policy body of the school district, board members are micromanaging by seeking to have these types of functions report directly to them, rather than to the superintendent. In addition, there's an argument that since the superintendent is hired and supervised by the board, they already have the oversight they need.


On the other hand, it can be argued that by putting all fiscal oversight directly with the board, the superintendent and his administrators are freed up to focus on educational improvement. It could even be argued that this is a return to the decades when MPS functioned with a superintendent to oversee education and pedagogy and a business manager to oversee the day-to-day management of a large organization employing thousands of people.


I was a member of the special committee, which was created at the June 4, budget adoption meeting when the board approved the following budget amendment :

Establish an Office of Accountability under the Office of Board Governance. The Board authorizes the Board President to convene a committee of a least five members to establish the description and organizational structure of the Office of Accountability. The Office of Accountability is to become effective on January 1, 2010. Allocate $150,000 for start-up of the Office of Accountability.

My role on the committee was to inform my fellow committee members of the best practices for accountability in local government. Unfortunately, Milwaukee's largest local governments aren't always practitioners of these best practices. Those that the Forum has identified and that we emphasize should be in place in every local government, from Vliet Street to the county courthouse to the village hall, include:

• Independent certification of revenues, so that a budget can be crafted based on a common set of revenue assumptions


• Clear and transparent evaluation of long-term effects on solvency of short-term fiscal and policy decisions


• Timely and regularly reporting fiscal data and projections to the public in easily understood terms

I urged the special committee to include these principals in their recommendations, and I believe it has done so. That doesn't mean the Forum or I advocate on behalf of the specific proposal before the school board, as the research is mixed regarding what type of district administration model results in higher student performance. Split responsibilities are quite common, but are not necessarily linked to better student achievement. This lack of conclusive data makes it difficult for a non-partisan organization to take a stand.

Where we do stand, however, is in our insistence that the board, the superintendent, the mayor, the governor, and anyone else who has or may take responsibility for the fiscal condition of MPS adhere to the principles listed above. Accountability is a word thrown around all too often in local government, particularly in school districts. It can only truly be achieved if the public can understand and participate in current debates that have long-lasting implications.

NYC inspired by Milwaukee

The new transportation hub at the World Trade Center, designed by Santiago Calatrava, has risen from the pit of ground zero and looks to be a near twin of the Milwaukee Art Museum.

The building is slated to open in 2012. Cost overruns and a slow construction pace are making the project controversial in New York. At a total cost of $3.2 billion, it's no wonder the public is wondering where its money is going.

Milwaukee seems to have received more bang for its buck from its Calatrava, which compared to the New York building seems like a bargain at about $125 million. Both buildings have the same spiny exterior profile in vivid white and an oval great hall, but the New York version will not be able to flap its wings. In New York, Calatrava originally seemed intent on improving his Milwaukee design by making wings that could open to allow in fresh air over the train platforms. But due to security needs (in response to terrorist attacks on train stations in Madrid and London) the building will have shorter ribs that will remain stationary.

Most of the enormous price tag of the New York building is due to the extensive underground construction necessary to accommodate four PATH-train platforms, 500,000 square feet of retail, and pedestrian tunnels to other ground zero buildings, the subway station, and up to the street. The budget was also increased significantly to improve the building's security.

Milwaukee's Calatrava has become the iconic symbol of our city, giving us an identity that many might argue was well worth the price. New York seems unlikely to get that mileage from its $3.2 billion. Being at ground zero, the building will certainly be seen as a symbol of rebirth and renewal. But there will be other more powerfully symbolic buildings there, too, including the new World Trade Center itself, designed by another superstar architect, Daniel Liebskind, and the 9/11 memorial. New York City, home of the Empire State Building, Statue of Liberty, and the Chrysler Building, isn't exactly in want of an architectural icon, and a train station seems unlikely to unseat any of those buildings from their positions of prominence.

But I can't help but wonder if anyone in New York City would notice if Milwaukee sent an invoice for a finder's fee?

PPF Pearls: Mayoral takeover of schools

Last winter, at the behest of the Greater Milwaukee Foundation, the Forum conducted an analysis of other urban school districts that had undergone governance reform such as state or mayoral takeovers. Our findings are pretty much summed up by the subtitle of the report: The Devil is in the Details. It's becoming tedious to say, but we found, again, that there are no silver bullets in education reform.

At the time our report was released, neither the mayor nor the governor had explicitly said a mayoral takeover was on the table, but that has changed now, perhaps largely because the U.S. Department of Education has made clear that this kind of governance reform can be rewarded with federal "Race to the Top" funds.

These federal funds being dangled in front of our leaders are not a sure thing, however. As part of the Race to the Top grant program, they would be competitive funds, awarded to the state only if certain criteria are met. These criteria are still in draft form, but include the state (and the district) making "assurances" that steps are being taken in four areas to improve student outcomes. The four areas include:

• Standards and assessments--adopting common standards and implementing common, high-quality assessments


• Data systems to support instruction--implementing a statewide longitudinal data system that is accessible to parents and other stakeholders and using data to improve instruction


• Improving teachers and leaders--providing alternative pathways to teaching and school leadership, measuring and rewarding teacher performance, ensuring the most effective teachers and principals are equitably distributed across schools, and measuring and reporting the effectiveness of teacher preparation programs


• Turning around struggling schools--intervening in the lowest-performing schools and districts, increasing the supply of high-quality charter schools, and turning around struggling schools.

In addition, a specific draft criterion would require the state to demonstrate that education is a funding priority by not cutting K-12 aid from 2008 levels. Other factors to be considered are the support of the teachers unions and the state's progress toward closing the racial achievement gap.

For Wisconsin and Milwaukee, meeting many of these criteria may be a stretch. Maintaining K-12 aid has been difficult in the past several budget cycles, even prior to the recession and the loss of state income tax revenue. The racial achievement gap in Wisconsin is among the worst in the nation and is not narrowing here as it is in other states. The strong teachers union has voiced opposition in the past to many of the items to be "assured," most notably the idea of tying teacher pay to student performance.

In addition, before the mayor gets a chance to try his hand at running the school district, the legislature will have to make certain statutory changes.

In the meantime, the school board will be debating significant structural changes within the district's administration and recruiting a new superintendent. Could all these forces come together in a federally-funded "perfect storm" that raises student achievement in Milwaukee? The chance seems remote, but you may want to keep an umbrella close at hand, just in case.

Slow growth in property values could mean higher tax rates

After several successive years of property tax rate decreases and a slight increase in 2008, gross property tax rates in Southeastern Wisconsin increased 2.8% in 2009, according to the Public Policy Forum’s latest report on property taxes and values, which can be accessed here. A pull-out poster listing property values and tax rates for individual municipalities can be accessed here.


Not surprisingly, the increase in property tax rates coincides with slowing growth in property values in the region. After enjoying robust property value growth for the past several years, municipalities and counties saw a significant slowdown in 2008. Property values for 2009 are due to be released later this month.


The fact that property tax rates in the region already have begun to increase as the growth in property values simply has slowed does not bode well for 2010 budgets. Considering the high likelihood that property values in the region will decline in many Southeastern Wisconsin counties and municipalities in 2009, this finding illustrates the difficult challenge faced by local officials in controlling property tax rates, particularly when other negative factors produced by the economic downturn are factored into the equation.


The following are additional findings from our analysis of property taxes and values in Southeastern Wisconsin:

• Growth in property values in Southeastern Wisconsin has slowed dramatically, even prior to the onset of the economic downturn. The total equalized property value for Southeastern Wisconsin increased 2.2% from 2007 to 2008, the smallest increase in a decade. Meanwhile, 28 municipalities in Southeastern Wisconsin had a decrease in their total value from 2007 to 2008. In 2007, only three municipalities had a decrease, and in 2006 only one municipality lost value.

• The impact of this reduced growth on property tax rates has been significant. The gross tax rate for southeastern Wisconsin was $19.34 per $1,000 of property value in 2009, an increase of $0.53 over the 2008 rate of $18.81. This was the second year in row with an increase, though the 2008 increase was only $0.03, and was largely attributable to a significant increase in Milwaukee County. The region experienced a $1.11 decrease in 2007 and annual decreases in each additional prior year going back to at least 2001.

• In 2008, the average residential equalized value in the region increased only 0.9%. This reduced growth rate contributed to higher property tax rates in each county in 2009. The gross tax rate for Southeastern Wisconsin increased 2.8% in 2009, and the gross tax bill increased 3.8%. Put another way, the average property taxpayer in Southeastern Wisconsin is beginning to see his or her tax bill and rate increase steadily despite significantly reduced growth in the value of his or her property.

• To illustrate the potential 2010 impact of stagnant property values on property taxpayers, we developed projections for property tax rates in each Southeastern Wisconsin county assuming that 2009 equalized values will stay the same, and that the property tax levy in each county increases based on five-year averages. Our projections indicate that for the region as a whole, the gross tax rate would increase $0.92, which would amount to a $219 property tax increase for the average residential property in Southeastern Wisconsin.
  

By analyzing the strong linkage between property values and property tax rates, our report highlights the severe challenges that local elected officials will face in developing 2010 budgets that minimize property tax rate increases while providing the necessary resources to maintain existing levels of government services.

In a separate assessment of the fiscal condition of Milwaukee County government, and a similar soon-to-be-released analysis of the fiscal condition of the city of Milwaukee government, we note the problematic nature of over-reliance on one or two significant sources of revenue. This report amplifies that issue, and suggests the need for renewed debate and discussion regarding revenue diversification for counties, municipalities and school districts in Southeastern Wisconsin.

MPS teachers link preschool to better performance in Kindergarten

Survey results released today by the Public Policy Forum conclude that MPS Kindergarten teachers feel high quality early childhood education can have positive impacts on school readiness and academic performance. The survey is part of the Forum's three-year research project investigating the impacts of high quality early childhood education on economic development.

Of the 77 five-year-old Kindergarten (K5) teachers surveyed, nearly all (97%) feel they can generally tell early in the school year which of their students attended preschool or four-year-old Kindergarten (K4), and a similar portion (93%) feel attending preschool or K4 better prepares students for K5. All teachers feel spending time in preschool or K4 prior to starting K5 is important.

With regard to the specific skills deemed necessary for Kindergarten, teachers report that the skills that are more difficult to impact during the K5 year are the skills that students are more likely to lack upon entering Kindergarten--skills pertaining to social/emotional development and cognition/general knowledge. However, teachers feel that high quality early childhood education can help children get ready for school in these hard-to-impact skills groups and believe the effects last through K5 and beyond.

When asked about their 2008-2009 class of K5 students, 45% of the teachers surveyed report having classrooms in which at least 80% of the students had attended preschool or K4, and 54% report that at least half of their students were adequately prepared for K5. However, teachers in schools with student poverty rates above the district average are significantly less likely than teachers in lower-poverty schools to report that the majority of their students had attended preschool or were adequately prepared for Kindergarten.

The survey’s reinforcement of the connection between the quality of early childhood education and school readiness suggests that policymakers seeking to improve academic performance in MPS may wish to consider ways to increase quality early childhood opportunities for Milwaukee children. Because there appear to be links between poverty and preschool attendance and between poverty and school readiness, another area of focus may be accessibility and affordability of high quality early childhood education specifically for low-income families, as well as the quality of programs currently available and affordable to these families.

The full report is available for download here.

PPF Pearls: Addressing Milwaukee County's transit crisis

The more things change, the more they stay the same when it comes to Milwaukee County's mass transit debate.

In the wake of Governor Doyle's veto of a Milwaukee County-only transit authority with sales tax authority, the county's struggling transit system submitted a report to the County Board last week projecting huge deficits beginning in 2011, as well as significant service cuts to bridge a smaller gap in 2010. Not coincidentally, the projected budget gaps are eerily similar to those projected by the Public Policy Forum in our May 2008 report, "Milwaukee County's Transit Crisis: How did we get here, and what do we do now?"

The updated transit budget projections cite the need for an additional $11.4 million in county property tax levy in 2011, $19.9 million in 2012 and $24 million in 2013 to maintain proposed 2010 service levels and fare structures and conduct needed bus replacement over a four-year period. Our May 2008 report projected gaps of $18 million, $24 million and $21 million in the three years following the next budget (2010-2012).

Of note is that we did not factor in the receipt of $25.6 million in federal stimulus funds for new buses nor the significant service cuts proposed for 2010, and we used a three-year bus replacement schedule. The deficits projected by transit officials would be even higher than our original projections if not for those factors.

But perhaps even more indicative of the extent to which little has changed is the following passage from our 2008 report, in which we suggest the need for a "triage" approach to stabilize the system's finances and service in the short-term:

"The underlying philosophy of this approach is that while a comprehensive, dedicated funding source appears necessary to permanently address MCTS’ structural budget problems, it is uncertain when and whether this approach will actually happen...In the meantime, the data indicate it is critical to hold the line on fare increases and service cuts for at least the next two to four years to help stabilize or even begin to grow ridership, and to take other prudent steps to reduce the magnitude of a full-fledged funding crisis when significant bus purchases are required."

In light of the significant service cuts proposed for 2010 - which include the elimination of all freeway flyer service - and the continued uncertainty of a state-authorized funding solution, policymakers may wish to re-read our discussion of the need for and components of a triage strategy that could be pursued without state legislation. There are short-term strategies that local policymakers can consider on their own, if they have the will to do so.

New Milwaukee effort avoids the pitfall of recreating suburbs

It is an uphill battle to revitalize downtown retail in this economy, but Milwaukee’s downtown Business Improvement District is responding by hiring Deanna Inniss to recruit retailers to the city.

One may question why her list of tasks, as reported by the Journal Sentinel, does not include the troubled Shops of Grand Avenue on Wisconsin Ave., and why she does not plan to recruit big box stores. A glance into Minneapolis’ experience with downtown retail indicates there may be sound reasons for such an approach.

The Minneapolis equivalent of the Shops of Grand Avenue is a $150 million development called Block E. Completed in 2002 with $39 million in city subsidies, the retail and entertainment complex was to revitalize a key downtown block and lure suburban shoppers to the city center. It has some features that many in Milwaukee would envy: the light rail line is just a few blocks away, and its complex contains a hotel, a 15-screen movie theater, restaurants, an arcade, and a bowling alley. It is within one block of popular downtown sporting events, a main music venue, and many nightclubs.

The debate over how to best draw people from the suburbs to spend their time and money in Milwaukee's downtown has included arguments for similar investments here: a light rail line, some brand new development with substantial city investment, and anchor stores like a movie theater and arcade. But despite having all of those things in Minneapolis, the 30% vacancy in Milwaukee’s downtown mall ends up being an exact match for the projected vacancy in Block E.

Recent coverage about Block E in the Minneapolis Star Tribune included “Downtown complex gets a C for challenged,” “’E’ may stand for ‘emptier’,” and a columnist whose opinion was summed up in the headline as, “Block E: Let’s put it out of its misery.” Crime outside Block E is an issue, its Borders bookstore closed, its nightclub closed, and major tenant Sega Gameworks just announced it will sublease its space due to declining revenue. In addition, few buildings in Minneapolis have produced such outspoken hatred regarding architectural choices. Block E’s new construction has been referred to by columnist James Lileks, who advocates a full tear-down, as a “faux-historical façade … the architectural version of the elephant designed by a committee.” One online commenter called it "a suburban eyesore." The end result is that many downtown convention-goers bypass Block E in favor of taking light rail to the suburban Mall of America.

By focusing on recruiting small independent street retailers that are unique to downtown, Milwaukee's Business Improvement District may avoid some of the pitfalls experienced by Minneapolis. The more difficult question is posed in a Journal Sentinel editorial board blog post: "OK, but what to do about Grand Avenue Mall?" There appear to be no easy answers for that. Trying to create a suburban mall experience in a downtown setting has been problematic here and elsewhere; perhaps capitalizing on the diverse street-level hustle and bustle of city life could hold promise for Milwaukee’s downtown.

Is it time to dissolve Milwaukee County government?

With Milwaukee County Board Chairman Lee Holloway's proposal to abolish the position of county executive, and County Executive Scott Walker's counter-proposal to eliminate all of county government, policymakers and opinion leaders in Greater Milwaukee once again appear primed to discuss big changes in the structure of local government.

But will this iteration really lead to comprehensive structural change, or will it result only in minor reforms, as did the discussion following the 1996 report from Milwaukee County's 21st Century Commission, and the 2002/2003 discussion related to the county's pension scandal?

Research recently commenced by the Public Policy Forum may play a significant role in answering that question. The purpose of this research - which has been commissioned by the Greater Milwaukee Committee - is to explore the fiscal, legal and logistical issues involved with transferring the various services currently provided by county government to other entities, and the options that might exist for doing so.

Does that mean the Forum has taken a position in support of the elimination of county government and is preparing the plan for this endeavor? Absolutely not. We do believe, however, that this suggestion has received enough public attention and civic support, and that the fiscal issues facing county government are sufficiently severe, to at least merit rigorous and objective research as to whether downsizing or eliminating Milwaukee County government might be accomplished and, if so, what options exist.

The fact that rigorous research is needed should not be overlooked. While significant governance change often is seen as a panacea for difficult problems facing local governments or school districts, the experience of those who have attempted such change indicates that fiscal savings can be limited, and that the benefits associated with structural reform can take years to manifest.

In the case of Milwaukee County, the seemingly simple notion of "blowing it up" is fraught with complexity that is caused by some of the very factors that have created the county's current fiscal crisis. The county has more than $2 billion of pension and retiree "legacy" liabilities, as well as close to $500 million of outstanding general obligation debt, that don't simply disappear if the county ceases to provide certain functions. Either those costs must be distributed to the entities that take over county services - a proposition the receiving entity is unlikely to embrace - or they must remain with a shrunken county government that is even less equipped to pay for them with a reduced workforce and receding revenue streams.

The analysis we're undertaking will deconstruct the county budget, showing what the county is actually spending to deliver key services, as opposed to what is budgeted for those services because of the way the county distributes legacy costs across all departments (see our March 2009 report for more detailed description of this issue).

By isolating county retirement costs and their true impact on county services, we hope to engender an informed policy discussion about how those costs should be managed and whether alternatives might exist to prevent them from continuing to diminish the level and quality of every county service. We will then analyze and assess the fiscal and non-fiscal impacts and considerations associated with moving certain functions out of county government, and the pros and cons of various alternative government structures.

As long as the notion of dissolving county government or radically altering its structure is seen as a possibility, it will serve as a convenient excuse by some to delay meaningful action on the dozens of excruciating financial and policy decisions that face the county right now, and that have been pushed off for years. It is time to take the next step in determining whether such an approach is possible and desirable. Stay tuned for our report, which we hope to release by the end of this year.

Who's responsible for the achievement gap?

A new federal study of standardized test scores finds Wisconsin has the most persistent achievement gap in the nation between African-American and white students. This story received prominent play in the New York Times on Tuesday, but was covered with a just short article inside the local section of the Milwaukee Journal Sentinel on Wednesday.

The Times coverage quotes the head of the Education Trust, a national education advocacy group, as saying principals in Wisconsin were "stunned" to find out the results.

It sounds incredulous that Wisconsin principals weren't truly aware of the extent of the problem. But it is important to note that the findings are based on a national standardized test, the National Assessment of Educational Progress (NAEP) and not on the state standardized test, the Wisconsin Knowledge and Concepts Exam (WKCE). NAEP scores are always presented at the state level because the test is actually taken by a sample of students across the state, and not by every student in every district, as is the WKCE. So principals are probably less likely to feel the statewide NAEP results truly reflect the status of their school or district. In addition, some studies have shown that the NAEP is more rigorous than the WKCE; a score earning a grade of "proficient" on the WKCE is much lower than a proficient score on the NAEP. So principals whose students do well as defined by the WKCE might be "stunned" by lower performance on the NAEP.

At any rate, the federal study shows that Wisconsin schools are losing ground in comparison with schools in other states when it comes to narrowing the racial achievement gap. The study doesn't note which states have open enrollment programs, which allow students to choose to attend schools outside their resident districts. Might the presence of this program in Wisconsin help explain our "stunning" results?

Most of the state's African-American students attend school in districts in southeast Wisconsin, which is also where most of the students participating in open enrollment (and the smaller Chapter 220 interdistrict integration program) attend school. Consequently, in many of the region's school districts, non-resident students make up a significant portion, if not nearly all, of their minority student population. In addition, the region's scores on the WKCE, on the whole, lag behind the rest of the state's.

Open enrollment and Chapter 220 may thus have a relationship to the achievement gap if the performance of the students opting for these programs differs from that of other students. This kind of gap might not get addressed if there is a perception within a district that performance should be measured mostly by the test scores of the district's "own" students, meaning resident students, because these students are more likely to stay in the school or district throughout their schooling career and are truly products of that district. While non-resident students may in fact be less likely to spend their entire schooling career in one district, if much of a district's diversity comes from its non-resident students, how can this attitude result in anything but a racial achievement gap?

If a district is only responsible for resident students, then no one should be stunned by the pursuant gap. But it's harder to sustain this argument when it is a statewide result being analyzed. These children are all Wisconsinites. They all count when it comes time to measure up to the rest of the country.

If the scores of resident students could be compared to those of non-resident students, we could analyze the extent to which the achievement gap may or may not be due to a lack of concern about non-resident performance. But state law does not instruct districts to disaggregate the scores of open enrollment or Chapter 220 students. Some districts, of course, likely do so anyway, at least internally, which may be the basis for the perception of success with their "own" students. But there is no way of knowing, on a statewide basis, whether the children who have exercised a choice to attend a school outside their resident district are being left behind, causing Wisconsin's achievement gap to grow ever larger.

Interesting tidbits from Texas Transportation Institute Study

Television and newspaper coverage of the new Urban Mobility Report from the Texas Transportation Institute (TTI) has emphasized the $300 million annual cost of traffic congestion to Milwaukee area commuters while also acknowledging that Metro Milwaukee's traffic conditions are tame when compared to other urban areas.

A review of the full set of performance measure data yields several additional interesting tidbits and questions that may be relevant to taxpayers and elected officials as we prepare for billions of dollars of expenditures on I-94 reconstruction and expansion and a major overhaul of the Zoo Interchange, and as we continue to debate new transit options for the region. Here are a few:

1. The mobility data - which tracks back to 1982 - indicates that while freeway congestion levels in Metro Milwaukee grew considerably from the early 1980s to mid 90s, they have leveled off since then. For example, while the average Milwaukee peak hour commuter suffered seven hours of delay per year in 1982, that number tripled to 21 in 1993. Since that time, however, it has stayed about the same, and even decreased to 18 in both 2006 and 2007. Does this finding cast doubt on the accuracy of repeated projections that traffic congestion in Metro Milwaukee would grow precipitously without major investment in added freeway capacity? Or, conversely, does it support the value of investments we have made on a new Marquette Interchange and other improvements? Does the data speak mainly to freeway congestion, which may have reached its natural limit, as opposed to congestion on parallel arterials, which may have increased instead? Also, how does this finding mesh with recent projections utilized to plan the I-94 and Zoo Interchange projects?



2. A key indicator used by the Texas Institute is a Travel Time Index, which measures "the ratio of travel time in the peak period to travel time in free flow". Milwaukee's Travel Time Index in 2007 was 1.13, which means a trip that would take 20 minutes in free flow conditions would take 22.6 minutes on average in peak periods. Again, a look at the historical trend shows that this index leveled off in the mid 90s and is lower in 2007 than it was earlier in the decade. But what is perhaps most striking is just how low the index is. With an average two-and-a-half minute delay in peak conditions versus free flow for a 20-minute commuter, should we be surprised that highway expansion proposals often are contentious? Likewise, is the lack of intolerable traffic congestion in Metro Milwaukee perhaps the biggest reason why proposals for modern transit investments have not taken hold here as they have in other cities? Should the other benefits associated with such transit investments really be the basis for our deliberations?



3. TTI tracks "operations strategies" utilized to manage congestion from 2000 to 2007. This data indicates significantly greater usage of three such strategies in Milwaukee: freeway ramp metering, freeway cameras, and better signal coordination on arterials. Is there a need to further explore the causal relationship between these lower cost strategies and steady congestion levels in Metro Milwaukee before we consider costlier alternatives?

There's a lot of data in TTI's report, and it certainly can be used by advocates on all sides of the transportation spectrum to make the points they wish to make. Let's also hope that in the course of our upcoming transportation deliberations, those presenting options to policymakers and citizens also make fair and objective use of it.

Is there an optimal rate for municipalities to use tax increment financing?

Tax incremental financing (TIF) is the most widely used economic development tool of local governments in Wisconsin. TIF uses future property tax revenue to provide up-front assistance for real estate developments. Notable projects such as Grand Avenue Mall and the recent redevelopment of Bayshore Mall relied heavily on TIF assistance. TIF plays an integral role in our region’s economic development.

While TIF use is growing throughout the state, its benefits and the extent to which communities should use TIF are still hotly debated.

The work of the Forum’s 2008-2009 Norman N. Gill fellow, John Kovari, has resulted in a research brief Too Much or Not Enough?: A Statistical Analysis of TIF in Wisconsin, which adds to the debate and takes a closer look at TIF and its economic benefits.

Specifically, the report explores the relationship between TIF and property values at the local and regional level using economic data from all Wisconsin municipalities between 1990 and 2006. Economic, statistical modeling provides an estimate of the average impact of TIF on property values in a way that might be useful for local officials in making economic development decisions.

The report’s key findings:

* TIF Growth. TIF utilization in Wisconsin municipalities has grown considerably (400%) since 1990, especially in the southern and central areas of the state. More than one quarter of the municipalities using TIF are now over the statutory TIF value limit.

* Who Uses TIF? Medium-sized municipalities (under 50,000 residents) and those with growing property tax bases are using TIF more often than those with lower rates of property value growth, including Wisconsin’s biggest cities. Although TIF was originally intended to spur economic development in struggling areas, TIF is being used more frequently by communities that are experiencing economic growth.

* TIF Benefits. TIF has the potential to be a useful economic development tool for villages and cities in redeveloping “blighted” properties and raising property values. On average, for every $1 increase of TIF value, total property value is estimated to increase by $6.

* Differences Across Communities. Differences in TIF use exist between Wisconsin’s largest metropolitan cities and outlying municipalities. On average, outlying localities are at risk of over-utilizing TIF. Statistical modeling estimates that if the average Wisconsin suburb were to increase its TIF amount by 10% (keeping all other factors constant), then its total property value would likely decrease by 0.2%. Meanwhile, Wisconsin’s largest cities appear to under-utilize TIF: the model indicates that a 10% increase in TIF value would likely increase property values by 2%.

* Regional TIF Effects. Within Wisconsin’s metropolitan regions, greater TIF investment in suburban communities may impair property value growth in the corresponding central city (i.e. Wisconsin’s largest cities). According to the model, a 10% increase in suburban increment value would likely result in an estimated 1.1% decrease in central city property value.

Overall, using historical data to model estimated TIF impacts suggests that excessive TIF use has the potential to negatively impact the economies of individual communities as well as Wisconsin’s largest cities. In other words, excessive TIF use (especially in outlying municipalities) may potentially create a scenario in which property value growth in the state is impaired.

At the same time, TIF can be a successful tool in redeveloping areas in Wisconsin’s largest cities. The model suggests that these cities (those over 50,000 residents) have not utilized TIF at the ideal rate to maximize property values.

Local and state officials are encouraged to look at TIF in a way that asks whether their communities are using TIF “Too Much or Not Enough.”

Special thanks to the Gill family for their generous support of this project through the Norman N. Gill Fellowship.

The future is today for STEM-savvy workers

The Forum's latest report, on the need for science and math skills in the state's future workforce (which was reported in Sunday's Milwaukee Journal Sentinel and followed-up with an editorial today) highlights opportunities for the state to strengthen policies regarding science, technology, engineering, and math (STEM) education in K-12.

And while our findings focus on forecasted workforce needs, today's New York Times reports that the few occupations where the current recession has had only a glancing blow are those requiring skills in math, science, or technology:

[The Conference Board's] monthly count of online job openings — listed on Monster.com and more than 1,200 similar Web sites — breaks the advertised openings into 22 broad occupational categories and compares those with the number of unemployed whose last job, according to the bureau, was in each category. In only four of the categories — architecture and engineering, the physical sciences, computer and mathematical science, and health care — were the unemployed equal to or fewer than the listed job openings. There were, in sum, 1.09 million listed openings and only 582,700 unemployed people presumably available to fill them.

In addition, like the Forum's report, the Times article does not limit its observations to just those jobs requiring a college degree. The article notes that "middle skills" jobs are those hardest to fill right now, in the midst of the recession; for example, welders, electrical linemen, and respiratory technicians. These jobs require education, but often not more than high school, along with some training and on-the-job experience.


For today's high school graduates, being adequately prepared to step into a training program could mean not only finding a job when others cannot--it could mean the difference between thriving and surviving as their future arrives.

Is Wisconsin state-of-the-art for K-12 science and math education?

The Public Policy Forum's latest report, released today, finds that of the 10 career clusters predicted to grow the most over the next five years, seven include occupations requiring strong backgrounds in science, math, technology, or engineering (STEM). Of the 10 specific jobs predicted to be the fastest growing in the state, eight require STEM skills or knowledge and six require a post-secondary degree.

Do Wisconsin's state educational policies reflect this growing need for STEM-savvy and skilled workers? Are Wisconsin education officials focusing on STEM in a coherent and coordinated way? Our new report probes those issues by examining state workforce development data and reviewing state-level policies and standards that impact STEM education.

We present several policy options that could be considered to build on localized STEM initiatives and establish a greater statewide imperative to prioritize STEM activities in coordination with workforce needs. Those include:

* Strengthening state standards in science, math, and other STEM fields, creating model curricula in STEM fields, and aligning standards to workforce needs and college matriculation requirements.

* Creating incentives to recruit and retain qualified STEM teachers and ensuring districts use teacher standards and professional development goals in hiring, evaluation, promotion, and possibly compensation.

* Creating incentives for more coordination of local efforts and increasing support, both financial and regulatory, for district-level STEM initiatives.

The data indicate that a coordinated state-level focus on STEM education will be critical in meeting our state's future workforce needs. Is Wisconsin up for the challenge?

Go to the full report: PREPARING THE FUTURE WORKFORCE Science, Technology, Engineering and Math (STEM) Policy in K12 Education

The art of selling tap water

In a bid to solve some of the city's budget woes, a proposal was floated last fall to privatize the city water works. Opponents of the idea noted that privatization would likely mean higher costs to water users, which in turn caused the common council to consider keeping the water works and just raising prices themselves. They are currently studying their options. But how will they convince city water users that the higher price is worth it?

According to Governing Magazine's blog, many cities are now marketing their tap water, although not necessarily to justify higher prices. New York and San Francisco market tap water as a means to reduce bottled water consumption and "green" their cities.

But over in Europe, Venice, like Milwaukee, is struggling with budget problems. Without streets, garbage collection in Venice is quite costly, so the city is aiming to reduce bottled water usage, and the amount of garbage collected, by promoting tap water. Venetian water has been branded "Acqua Veritas," complete with fancy logo and promotional appearances by the city's mayor.

Could "L'eau Milwaukee" be the next hip drink? Imagine the advertisements covering every bus shelter: "Tom Barrett drinks Milwaukee tap water, do you?"