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.

MMSD's fiscal condition: downstream accomplishments, upstream challenges

This morning, the Public Policy Forum released a comprehensive asessment of the Milwaukee Metropolitan Sewerage District (MMSD). This is the fourth in a series of reports analyzing the financial condition of major Milwaukee area local governments. It finds that while MMSD has experienced few of the financial difficulties experienced by others, it faces difficult long-term issues nonetheless.

The report uses the same fiscal monitoring methodology employed previously for reports on Milwaukee County, the City of Milwaukee, and MATC. It examines fiscal trends, compares MMSD with other wastewater treatment agencies nationally, and analyzes emerging fiscal challenges.

The good news is that MMSD’s decision in the late 1990s to outsource most of its operations has greatly reduced operating budget pressures and risk, while its capital program has benefited from careful planning and prudent debt management practices. In fact, as measured by commonly used fiscal indicators, MMSD enjoys sound fiscal health and appears well-positioned for the future.

A closer look, however, also reveals that the cost to maintain the existing sewer system and achieve MMSD’s water quality goals could amount to many billions of dollars, and that the district may struggle to identify the means to fund both basic infrastructure repairs and watershed planning strategies.

Key findings from the report include:

• MMSD’s well-funded reserve accounts and long-term operations contract with Veolia Water, as well as its user-based revenue structure, provide a level of operating budget stability not enjoyed by most local governments.


• The net value of MMSD’s capital assets is nearly $3.5 billion, which means the district’s residents have invested more in MMSD’s property, plant and capital equipment than in the facilities of Milwaukee County, the City of Milwaukee and MATC combined.


• National data show MMSD's sewage and treatment capacity offers greater protection from sewage overflows than most other districts and provides higher-quality effluent discharges. MMSD also ranks high in comparisons on operating efficiency.


• After decades of aggressive capital spending, MMSD’s capital projects will decline significantly under the district’s six-year capital financing plan in order to stabilize a rise in debt service expenditures. Project funding may be further affected by state budget actions. Those developments may hamper MMSD’s efforts to work with local municipalities to reduce stormwater runoff and infiltration and inflow from laterals on private property.

The report explains that completion of the Deep Tunnel and its extensions allows MMSD to shift its focus to broader priorities, including provision of technical support and financial assistance to repair deteriorating private sewer laterals, and provision of funding for “green” projects aimed at reducing stormwater runoff, which is now the major source of regional water pollution.

Increased policy flexibility also may bring increased conflict, however, particularly over the question of who should pay. For example, there are more than 3,000 miles of private property laterals within the district, and the district’s efforts to partner with municipalities to improve infrastructure on private property raise new questions about the financial responsibility of both local governments and individual homeowners for repair costs.

The full report - which was made possible through grant funding by the Northwestern Mutual Foundation - can be accessed here. A media release is available here.