Metro Milwaukee nonprofit organizations rate the region's philanthropic efforts

In each of the past 15 years, the Public Policy Forum has surveyed nonprofit leaders in southeast Wisconsin to gain insight into the financial health of their organizations and their success in generating support from philanthropic and government entities in Greater Milwaukee. This year’s 15th annual Report Card on Charitable Giving is based on the November 2011 survey responses of 95 nonprofit leaders and finds the responding organizations report greater fiscal stability and more optimism about the future than in the previous two years.

In fact, it appears the nonprofit sector may have seen the bottom of the recession’s impacts, with a greater number of nonprofit leaders reporting they are financially healthy – and fewer reporting chronic financial problems – than in 2009 or 2010. It is also clear, however, that nonprofit organizations have yet to bounce back to their pre-recession status, and that most continue to be challenged to meet increasing demands for their services within the context of their budget constraints.

Major Findings
• While about half of respondents feel the state of philanthropy in the metro Milwaukee area in 2011 did not change from the previous year, the percentage of those feeling it is getting worse decreased sharply from two years ago.

• The majority of respondents continue to feel the U.S. economic downturn has caused giving to be less generous than usual, yet the proportion of respondents feeling that way has declined in each of the past two years.

• A majority of respondents say the outlook for the long-term sustainability of their organization is high or very high. Very few have low expectations for long-term sustainability.

• Recession-driven demand for direct services continues to grow, but most respondents this year say they are at least somewhat confident they will be able to meet the demand. More respondents this year say they have been able to increase their staffing levels in response to increased demand and more say they feel donations are increasing relative to the increased demand for services than in the previous two years.

• Budget constraints continue to challenge nonprofit organizations, with many continuing to freeze salaries or take other steps to reduce expenses.

• More respondents in 2011 report overall revenue growth and growth in donations as compared to 2010.

In rating child care provider quality, Wisconsin can learn from other states

In June 2010, Wisconsin’s Joint Committee on Finance approved YoungStar, a new quality rating and improvement system (QRIS) for the state’s nearly 8,500 child care providers. YoungStar supporters believe the new system will improve the overall quality of childcare in Wisconsin by motivating and supporting providers to make quality improvements and by providing parents with the information they need to choose high-quality child care options.

In the Forum's latest Research Brief, we examine several issues and challenges that have arisen in other states or jurisdictions with QRIS policies, how those entities have tackled those challenges, and the lessons their experiences might yield for Wisconsin. We found five common implementation challenges that have confronted other states and that have the potential to occur in Wisconsin, as well.

1. Bridging the disconnect between theory and policy: QRIS policies are partly based on a theory that greater demand for quality child care will cause quality to improve. Yet, the QRIS policy provides incentives to child care suppliers, not those in demand of care. This disconnect can be bridged via extensive outreach to parents to educate them about the rating system and its benefits, or by creating financial incentives for parents to choose higher-quality care. Wisconsin is planning an outreach effort, but may also wish to explore demand-side incentives should it become clear that demand for higher-quality care is lacking even after YoungStar is fully implemented.

2. Establishing meaningful differences in quality across tiers: QRIS policies assume that there are real differences in quality across the ratings tiers—meaning higher-rated providers benefit child outcomes more than lower-rated providers. If tiers are poorly defined, or if the cut-points between tiers are arbitrary, there may not be meaningful difference in quality between providers with different ratings. Wisconsin will not know if this is a problem until all providers have been rated and have had time to make improvements needed to move up along the tiers.

3. Coordinating QRIS policy with existing quality improvement policies: Wisconsin already has several policies and funding streams in place aimed at improving child care quality. Coordinating these efforts with QRIS so as to maximize the positive outcomes of these many investments could potentially be a challenge. Provisions regarding technical assistance and improvement grants appear to be reinforcing QRIS goals; however, professional development scholarship and stipend programs have yet to be tied to YoungStar.

4. Promoting higher quality systemwide without causing higher costs systemwide: Increasing the state reimbursement to child care providers serving low-income families as their quality ratings increase, otherwise known as tiered reimbursement, is a common incentive used in many states. Wisconsin’s tiered reimbursement strategy is unique, however, in that it not only increases reimbursement for highly-rated providers, but also reduces reimbursement for low-quality providers. As no other state has implemented a carrot and stick approach, Wisconsin cannot use other states’ experiences to predict the effect the tiered reimbursement will have on costs to private pay parents.

5. Inadequate financial planning: Improving the quality of the child care market is a costly endeavor. To do so will require adequate and sustainable revenue sources, not only for conducting YoungStar rating and improvement processes, but also for subsidizing the higher program costs that may result from the improvements. Because Wisconsin has a unique tiered reimbursement structure, the financial plans of other states are not useful in helping estimate potential costs here.

Despite the 26 child care quality rating and improvement systems across the country, a robust body of research has yet to develop that can provide insight into the effectiveness of specific state child care regulatory policies. As a result, Wisconsin, like other states, must be prepared to closely monitor the costs and the child outcomes resulting from its QRIS policy, and make policy changes as necessary.

The Forum's top five research findings of 2011

With the end of the year upon us, it’s time once again for the Forum to unveil its top five research findings of 2011. We started this annual tradition last year with a list that included findings on Milwaukee's skilled workforce, Milwaukee Area Technical College spending habits, and the imbalanced state of Milwaukee County's adult mental health system. This year's list is equally diverse and provocative (or so we hope). Without further ado, here they are in chronological order:

1. Greater Milwaukeeans need to be better educated about how their individual actions impact regional water quality. Our January report detailing results of a survey of 400 area residents on water-related issues revealed that nearly 85% feel "the actions of individuals do not have an impact on water quality and quantity problems," while only 4% feel they "have a responsibility to future generations to protect the region’s water resources." Those responses may be linked to the survey's additional finding that respondents place a relatively low value on water quality as a factor in the regional economy, and suggest that stepped up public education efforts are in order, particularly if the region's status as a freshwater innovator is to be promoted.


2. MMSD's capital spending needs are daunting and may conflict with the capital needs of other local governments. Our comprehensive fiscal assessment of the Metropolitan Milwaukee Sewerage District (MMSD) - released in June - found a local governmental body that is in sound fiscal condition. Nevertheless, despite the completion of deep tunnel expenditures and expiration of stipulation agreements with federal and state regulators, "the types of enormous capital investments that distinguish MMSD from other local governments...may need to continue because fundamental water pollution problems remain." We caution that in light of their enormity, MMSD’s capital priorities may need to be debated in the context of the investment needs faced by other local governments for schools, parks, roads, libraries, etc.


3. Milwaukee County was housing or paying for an average of 556 fewer adult and juvenile inmates per day at the end of 2010 than it was at the end of 2008. In a June research brief, we documented the remarkable decline in the county's inmate population and speculated on possible causes. We also calculated related financial savings, estimating the county spent $12 million less on adult and juvenile incarceration in 2010 than it did two years earlier. The brief noted that while some county law enforcement officials disagreed on the public safety impacts of reduced inmate populations, the county's fiscal woes demanded consideration of strategies to sustain the downward trends.


4. Analysis of the budgets of 15 comparable cities shows Milwaukee is the only one funded substantially with intergovernmental revenue. While the Forum has consistently reported on Milwaukee's significant reliance on state government, even we were surprised at the extent of that reliance when compared to other cities. A July report by the Forum's 2010-11 Norman N. Gill fellow found that the 15 comparison cities use intergovernmental revenue to fund about 18% of their budgets, as compared to Milwaukee's 46%. Meanwhile, at least half of every other city’s budget is funded by local tax revenue, with most having access to a local sales or income tax to supplement property tax funding.


5. Strategic economic development planning is a national trend that has not yet taken hold in Milwaukee. "Assembling the Parts," our November report on Milwaukee's economic development landscape, noted that while impressive progress has been made by city and private sector leaders to assemble the right pieces of a comprehensive economic development strategy, the city still could benefit from a strategic vision and plan that ties those pieces together into a "cohesive and strategically organized whole." We cited the existence of such plans in other cities and discussed a new "metropolitan business planning" concept engineered by the Brookings Institute that could provide great value to Milwaukee.

With 20 research reports in 2011, it was not easy for us to narrow down our list of top findings to five. Left off the list this year were important findings related to the readiness of area child care providers for the state's new quality ratings system; the impacts of the state budget repair bill on Milwaukee's city and county budgets; the views of area residents on municipal shared services and consolidation; and the potential for greater collaboration in technology transfer among local universities. Those interested in reviewing those and other findings can check out our full list of research publications here.

People Speak: Citizens concerned about health care costs and reform

The latest edition of the People Speak poll finds Milwaukee area citizens are concerned about health care costs in general, as well as the costs of the new health care reform law.

Of the 436 residents polled in early November, a majority (62%) agree with Wisconsin joining 25 other states in challenging the constitutionality of the federal health care reform law. Residents do not seem to base their support on uneasiness with the mandate that individuals be required to have at least minimum insurance coverage, however. In fact, 64% say they favor a requirement of this type. Support for the individual mandate drops to 42% when the question is rephrased to include a hypothetical tax increase to cover the costs for those who cannot afford insurance on their own, indicating concerns about the cost of the law may factor into support for the legal challenge.

These concerns about the cost of reform may reflect respondents' personal situations. A majority (64%) say they are very or somewhat worried that they will not be able to pay their medical bills in the event of a serious illness in the future, although just 23% say that cost has prevented them from seeing a doctor for a medical problem in the past 12 months. Of these 101 respondents who have skipped a doctor visit in the past year due to cost, almost half (47%) report having employer-provided insurance.

Other findings:

• The 64% of respondents in favor of requiring all Americans to have at least minimum health insurance includes 80% of Democrats and 55% of Republicans.


• While 67% of respondents overall agree that states should be allowed to opt out of the federal health care reform law and devise their own health care coverage systems, 92% of Republicans and 42% of Democrats agree.


• Almost half (48%) of respondents favor guaranteeing health care for every American, even if it doesn't do much to control health care costs.


• On the whole, however, health care is not at the top of people's minds when asked to name the most important issue facing the Milwaukee region. Just 2% said "health" or "health care" is the top issue, while 47% said "jobs" or "unemployment" is most important.

The People Speak poll is a tracking poll conducted three times per year in partnership with the Center for Urban Initiatives and Research at the University of Milwaukee and The Business Journal Serving Greater Milwaukee. Full results of the November 2011 poll and all previous polls can be found at the People Speak website.

Does Milwaukee County have a bigger role to play in economic development?

On its face, the recent announcement that Wauwatosa mayor Jill Didier is leaving office to become Milwaukee County's new Economic Development Coordinator is promising news on the economic development front.

As a former mayor, Didier obviously has strong connections to area business and municipal leaders, which should bolster the county's economic development activities.

In addition, the specific jurisdiction over which she presided is key. Wauwatosa is home to the Milwaukee County Grounds, which houses the county's Parks Department, Behavioral Health Division, and Juvenile Justice Center, as well as the Regional Medical Center. As the Forum has suggested in previous reports, determining the county's appropriate ownership of land and buildings on the County Grounds in light of the land's value, and within the context of its diminished workforce and fiscal challenges, should be a major priority for policymakers. The new Economic Development Coordinator's familiarity with those properties and County Grounds tenants could be quite helpful in that regard.

The Forum also is pleased to see that another research finding recently trumpeted in our Assembling the Parts report - that greater coordination is needed between metro Milwaukee's impressive array of economic development initiatives and players - has been cited in connection with Didier's appointment. As reported in the Business Journal Serving Greater Milwaukee, the county's Economic Development Director cited that finding and said the new coordinator position - as well as Didier's appointment to it - reflect the county's intention of playing an important role in such coordination.

A word of caution may be in order, however, in light of another finding from Assembling the Parts. In examining the role that Milwaukee County traditionally has played in economic development, we note that its tools and resources are rather limited, which explains its limited activities in this area. Unlike other economic development players, for example, the county cannot grant tax incentives or credits to businesses; has little access to real estate or business financing; and can't create tax incremental districts. Consequently, its traditional role has centered primarily on managing and marketing its own real estate.

The coordination and "cheerleading" role envisioned by county leaders takes the county in a new and expanded direction and may prove to be very beneficial, particularly in light of Mayor Didier's background and connections. The only question is whether an entity that lacks economic development tools will command the respect needed to coordinate the region's players, and whether such an entity can truly make a difference in business attraction and retention efforts.

In light of the region's pressing economic development needs, it is difficult to fault county leaders for trying to carve out a larger role for themselves in the region's economic development landscape. As they do so, however, they may wish to keep in mind our Assembling the Parts warning that their efforts "not simply duplicate, but rather strategically complement, those conducted by other players."