Friday, July 22, 2011

People Speak poll: High rates of satisfaction with municipal services

The latest edition of the People Speak poll, released today, finds that residents of southeast Wisconsin are mostly satisfied with the services they receieve from their city, town, or village government. The poll, conducted in late June and early July, surveys 391 adult residents of Milwaukee, Ozaukee, Washington, and Waukesha Counties.

The majority of survey respondents also report feeling their municipal government is a good value. The overall perception of local government's value is mostly unchanged from 2001, the last time we polled on this issue.

Other highlights:

  • High rates of satisfaction with municipal service quality (89% are satisfied), types of municipal services (85%), and access to municipal services (87%). Lower rates of satisfaction with the cost of municipal services (67%).

  • When asked to name the most important municipal service, 34% of respondents named a public safety service such as police or fire. About half (51%) of these respondents feel public safety services are best provided by individual municipalities, 17% feel they are best provided collaboratively by two or more municipalities, and 23% feel they are best provided by county government.

  • The sharing of municipal services across municipal boundaries is seen by a majority respondents as a likely way to cut costs. The percent of respondents saying service sharing is likely to save taxpayers money varies by the type of service.

  • When asked whether they would support state policy to require or provide incentives for greater collaboration or consolidation among municipalities or school districts, a majority of respondents indicate they would oppose such legislation. Fifty-four percent would oppose state fiscal incentives to encourage municipal service sharing and 55% would oppose requiring consolidation of small school districts.
The People Speak is conducted by the Forum in partnership with the Center for Urban Initiatives and Research at UWM and The Business Journal Serving Greater Milwaukee. The latest poll was funded by UWM.

For complete poll results, see the People Speak website.

Monday, July 18, 2011

The tools in Milwaukee's revenue toolbox

As the Public Policy Forum’s 2010-2011 Norman N. Gill Civic Engagement Fellow, I have completed my year-long project that analyzed how local governments raise revenue. The report, The tools in Milwaukee's revenue toolbox, stems from a 2009 Forum report that assessed the fiscal health of the City of Milwaukee. That report found that the city is over-reliant on state shared revenue as its main revenue source, and handcuffed by rising fringe benefit costs for city employees and growing expenditure pressures associated with police and fire services (which account for more than one half of all city operating expenditures).

Under the recently adopted state budget repair bill, the city has been granted cost-saving “tools” that will allow it to impose greater fringe benefit cost-sharing for non-public safety city employees. Yet, some city officials and policymakers are unsure if these tools, because they exempt public safety employees and are coupled with a cut in state shared revenue, will be enough to alter the city’s fiscal predicament. Consequently, my project explores the other side of the debate – the revenue toolbox. It asks what alternative revenue structures exist in other cities, and whether they are suitable for Milwaukee.

To answer these questions, we researched 15 cities that are comparable to Milwaukee, analyzed each city’s budget, and compared how each city generates revenue. Our key finding was that Milwaukee relies heavily on intergovernmental revenue (i.e. state shared revenue) to fund its budget (46% of general budget revenue), while the comparison cities raise the bulk of their revenues via the use of broad-based sales, property, and/or income taxes. In fact, no other city relies on intergovernmental revenue for even a third of its budget, and the vast majority has a dependence of less than 10%. Meanwhile, Milwaukee’s use of broad-based taxation for only 20% of its general budget pales in comparison to the other cities, the vast majority of whom use broad-based taxes for more than half of their general budgets.

Given these findings, we next examined the sales, income and property tax and their potential application in Milwaukee if city leaders were authorized to use them to reduce reliance on state shared revenue. Some of the insights we gleaned are as follows:

  • Because Wisconsin has a relatively low sales tax compared to other states, implementing a city sales tax of .01% to 1% would not put Milwaukee out of line with comparable cities nationally, and could benefit the city by requiring non-residents to contribute toward the cost of city services. Milwaukee does not have the ideal sales tax base, however, because of the comparably low amount of retail sales that take place in the city, and because of Milwaukee’s high poverty rate.

  • A city tax on individual income would allow for the possibility of shielding the poor from tax liability through specific tax rates for different income groups, or the ability to utilize deductions and credits. Also, such a tax potentially could be applied to non-residents who work in the city as well as residents, thus providing a mechanism to collect revenue from non-residents who use city services. On the other hand, even without a local income tax, residents in Milwaukee already have a relatively high state income tax burden, and adding an additional layer of income taxation could be harmful to the attraction of residents and businesses.

  • Using a property tax to fund a greater proportion of the city budget could allow for a more predictable revenue stream because local governments would have some ability to change the tax rate to meet expenditure needs or to accommodate a decline in property values. Yet, because Milwaukee has comparably low assessed property values, funding a larger portion of the general budget with property taxes would require Milwaukee to add substantially to its already high property tax rates.

  • An option in which city leaders were allowed to pursue a better balance of revenue sources by implementing a 1.0% city sales tax would allow for a sizeable decrease in property tax rates and reduced reliance on state shared revenue.
In the end, the report demonstrates that there are no easy answers to the City of Milwaukee’s revenue dilemma. In the event that the cost-saving tools contained in the budget repair bill are not enough to address Milwaukee’s longstanding fiscal problems, however, it also shows that it may be helpful to consider a balanced revenue structure that is more comparable to the other cities we studied.

Special thanks to the Gill family for their generous support of this project through the Norman N. Gill Fellowship, and the Public Policy Forum for their assistance and guidance throughout the year.

Friday, July 8, 2011

A misplaced trust in leadership

There is a common presumption that when it comes to improving public school performance, constructive changes, whether originating at the top or the bottom, cannot take hold unless they are championed by the superintendent. The superintendent of the Atlanta Public School District is often cited as an example of the type of leadership that brings about dramatic improvement. Dr. Beverly Hall had one of the longest tenures of any large urban district superintendent, having led APS over 12 years. She won many national awards and accolades over those years and the Atlanta schools were on a steep trajectory of improvement.

Now, the Atlanta Journal-Constitution reports that trajectory was launched not by the vision of a strong leader, but was systematically manufactured by a superintendent who tolerated, and possibly encouraged, outright cheating by school staff on state standardized tests. The evidence, gathered by a governor's task force, is overwhelming, alarming, and shocking. The task force report names 178 educators, including 38 principals, as participants in cheating. More than 80 educators confessed to actions such as erasing students' wrong answers and changing them to correct answers. Cheating was confirmed in 44 of the 56 schools examined.

The consequences are yet unknown—Will Dr. Hall have to pay back performance bonuses earned by improved test scores? Will colleges stand behind acceptance decisions for which good test scores were a factor? Will the federal government hold the district accountable under the No Child Left Behind Act? Will criminal charges be brought? One clear result: Students who never learned their real scores lost opportunities to improve their weaknesses and build on their strengths.

Like the recently-exposed problems with the New York state exams, this cheating scandal raises questions about the wisdom of building education reforms around standardized tests. Some will use these developments as a reason to oppose merit pay for teachers, strengthening No Child Left Behind, or requiring private schools accepting voucher students to participate in the tests. Others will argue that a few bad actors cannot be allowed to spoil the best, albeit imperfect, method of monitoring school performance.

These opposing views each have a foothold in Wisconsin, which is currently in the process of developing a new standardized testing scheme. The public debate over the ways in which the new test is to be used for policymaking and accountability purposes is sure to be long and hard. But this debate gives rise to an opportunity to make Badgerland lemonade from other states’ lemons. Wisconsin could anticipate the potential for organized cheating on standardized tests and explicitly spell out the ways in which the Department of Public Instruction will monitor test security and integrity, and the penalties for cheating. For example, DPI might rule that any school turning in score sheets with wrong-to-right answer erasures numbering more than three standard deviations above the norm (statistically unlikely to have happened coincidentally) would trigger an automatic investigation.

Currently, according to DPI's policy and procedure manual, penalties for school staff found to be complicit in cheating are not regulated by the state; it is left to a district to administer any penalties according to local policy. The New York Times reports that in Atlanta, the school board was loath to criticize Dr. Hall, whom the directors felt had done much to improve the perception of their schools and city. Perhaps the lesson of Atlanta is that districts cannot be allowed to self-police as long as their test results are used to determine more than just student performance.

Friday, July 1, 2011

Time to consider a countywide comptroller in Milwaukee?

The announcement earlier this week by longtime City of Milwaukee Comptroller Wally Morics that he will not run for re-election in 2012 creates a vacancy in one of our region's most important, but least understood, elected public offices.

The comptroller essentially functions as the chief financial officer for city government, exercising fiscal control, per the city Web site, "over the activities of approximately 40 city departments and agencies." Perhaps most important, the comptroller's office sets the tone for fiscal responsibility and accountability in city government. It does so by establishing accounting policies and procedures for all city departments; overseeing the city's debt portfolio (which exceeds $750 million); administering all federal and state grants; reviewing all proposed development projects involving city economic development tools; conducting audits of internal city functions; and certifying all revenue figures used in the annual city budget.

In an August 2009 report, the Public Policy Forum found that despite serious fiscal challenges, the city "by most any financially well run." In many respects, that is attributable to a chief financial officer position that not only is specifically charged with ensuring that the city's finances are responsibly, accurately, and transparently managed, but also one that, because of its independently elected status, can do so without fear of recrimination from other city leaders.

The Forum also has opined, in several of its recent reports on the finances of Milwaukee County government, that the absence of a similarly charged independent controller's office in that government has contributed to its financial difficulties. Consequently, in light of Mr. Morics' impending retirement, is it worth considering whether the elected city comptroller should be transformed into an elected countywide position that would fulfill the same fiscal oversight functions for both city and county government?

Admittedly, questions of home rule, statutory and logistical issues, and turf concerns would make such a proposition difficult to implement, particularly in time for the April 2012 election cycle. But among the potential benefits of such a move - in addition to giving the county the type of independent fiscal oversight it has long needed - would be the following:

  • Combining certain city and county accounting and internal audit functions within one office could promote greater quality and efficiency, and perhaps save money by allowing for staff reductions and/or merged financial management and payroll systems.

  • An independent office overseeing the financial affairs of both governments would be able to provide greater perspective on regional infrastructure needs and priorities, and how they should be funded. This is counter to the existing state of affairs, in which each government issues long-term debt for capital projects without knowledge or concern about the other's borrowing decisions.

  • This could be a significant initial step toward far greater city-county cooperation, as having common fiscal policies and procedures and a unified set of accountants could make it much easier to consolidate other services down the road. The professionals working in a consolidated comptroller's office also could be a source for new ideas on how to consolidate other "back office" functions, such as information technology, human resources, health care administration, procurement, etc.

  • A joint city-county comptroller's office might even be able to provide accounting, audit, payroll or financial management services to other Milwaukee County municipalities at a price that would save money for the municipalities.

Again, while this idea would require substantial additional research and deliberation, doing so would be consistent with the shared services and consolidation discussions that are occurring with increasing frequency among the new county executive and local municipal leaders. If ever there were a time when such an idea should be considered, it would appear to be now.