Progress and challenges for workforce development efforts in Milwaukee

In a new report examining Milwaukee’s workforce development system, the Public Policy Forum cites a higher level of coordination and cohesion among key workforce development players since the establishment of the Milwaukee Area Workforce Investment Board (MAWIB) in 2007, but suggests a need for better coordination between the city’s economic development priorities and the needs of its unemployed.

The report – "Pathways to Employment" – analyzes the resources, programming, and priorities of MAWIB and the Milwaukee Area Technical College (MATC), widely considered the two most prominent workforce development entities in Milwaukee, and also summarizes the activities and spending of other key workforce agencies. In addition, the report explores promising efforts to coordinate workforce development activities in Milwaukee’s health care, manufacturing, and food and beverage sectors. 

On the whole, we find that sector-specific workforce strategies show considerable promise for the economy at large, but that many of the individuals being served by MAWIB may not have the education or skill levels to meet the requirements of area employers in sectors being targeted by economic development leaders – like advanced manufacturing, financial services, and water – or to benefit from related technical diploma programs at MATC or WCTC. As Milwaukee identifies economic development goals, therefore, it is important to determine the extent to which those goals should influence workforce development policies and programs. 

That is not to suggest the individuals MAWIB serves cannot advance beyond low-skill, entry-level positions through additional work experience and/or education, nor that the sectors targeted by regional economic development efforts should change. It does suggest, however, that MAWIB‘s role as the entity serving those with the greatest barriers to employment demands a commitment to a broad array of services and strategies that respond both to the needs of key industry sectors and the needs of its clientele.
Other key findings from the report include the following:

• MAWIB has made substantial progress in addressing several longstanding concerns that had surrounded its predecessor (the Private Industry Council), including improved coordination of local workforce development services and greater involvement of major area employers. Interviews with key stakeholders, however, indicate there is more progress to be made. 
• MATC’s technical diploma program offerings seem generally attuned to the demands of the Milwaukee area job market, as estimated by the Wisconsin Department of Workforce Development. In tandem with those offered at Waukesha County Technical College (WCTC), most MATC technical diploma programs seem to be appropriately scaled in relation to job projection numbers, though in many cases retention appears to be a problem. 
• The Milwaukee W-2 agencies’ designation as the one-stop job centers for Milwaukee County, and the sheer size of their funding base, make those organizations major players in Milwaukee’s workforce development system. Consequently, the education and skills levels of W-2 participants logically should play a prominent role in determining the city’s workforce development priorities and strategies. 
• Employment and training services in Milwaukee are largely supported by federal funding sources, which have been declining for many years. Consequently, local workforce development organizations must continue to pursue new revenue sources and improve efficiency in order to maintain existing service levels. The recent creation of the Milwaukee Area Workforce Funding Alliance to better leverage the funding contributions of local philanthropists and to pursue additional funding from national foundations has represented a positive start toward that effort. 

The report concludes by asking whether the region’s economic development vision – and the demands of specific area employers – should drive MAWIB funding priorities, MATC program offerings and Milwaukee’s overall workforce development strategies, or whether the education and skill levels of the local workforce should be the major factor in the development of both regional economic development planning and workforce development priorities.

The goal, it suggests, should be to strike a proper balance between the two.

R&D on the rise at Milwaukee-area universities

A recent Public Policy Forum report looked at the impacts university research can have on local economic development and presented several models that could help to expand technology transfer in southeast Wisconsin. We found that while coordinated infrastructure is needed to convert research into new businesses and jobs in the local economy, the impact on local economic development is also related to the level of investment in research.

New data from the National Science Foundation on total university research and development spending reveals positive trends for Milwaukee. Four Milwaukee-area universities combined to invest $281 million in research and development in 2010, up from just over $100 million in 2000. In addition, while the collective research investments at Milwaukee institutions are still far lower than the over $1 billion spent by UW-Madison, which ranks third in the nation in research spending, Milwaukee-area universities collectively increased research spending at a significantly faster rate than UW-Madison over that time period.

The table below shows the growth in R&D expenditures at Milwaukee, Madison, and Chicago universities over the past 20 years, as well as the national rank for each institution on that measure in both 2000 and 2010. The Medical College of Wisconsin has more than doubled its R&D expenditures since 2000 and now is poised to become one of the top 100 research institutions in the U.S. UWM has made large gains as well, more than tripling its R&D expenditures since 2000.

Source: National Science Foundation – National Center for Science and Engineering Statistics

The following table shows the total R&D spending at Milwaukee, Madison, and Chicago universities since 1990. The collective investments of Milwaukee’s universities have grown from 18% of that of UW-Madison in 2000 to 27% in 2010. As a group, Milwaukee’s universities have expanded research spending at a faster rate than Chicago’s universities as well.

It will be interesting to track these investments over the next 10 years, especially in light of UWM’s major research and development push, which includes expanding the Great Lakes Water Institute, developing the new Innovation Park in Wauwatosa, participating in the water research and business accelerator at Reed Street Yards, and planning a new interdisciplinary research center for UWM’s main campus.

Due to the highly collaborative nature of many research efforts, a rising profile for Milwaukee universities could have compounding affects, as Milwaukee researchers become more attractive partners for research efforts taking place at UW-Madison, at universities in Chicago, and beyond.

Of course, new research facilities and more research dollars will not automatically provide substantial benefits to the local economy. As we found in our report, Technology Transfer in Southeast Wisconsin, the ability of entrepreneurs to develop new businesses from university research, and the channels by which to do so, are the other crucial elements.

Chicago's new economic development plan a good model for Milwaukee

The Public Policy Forum's November 2011 report on Milwaukee's economic development landscape - Assembling the Parts - has triggered considerable discussion about the need for strategic economic development planning in Milwaukee. Calls for such planning have been championed by the Milwaukee Journal Sentinel's editorial board and echoed by some business leaders. The response from city officials, however, has been tepid thus far.

Part of the problem, as we noted in Assembling the Parts, may be the impression that strategic economic development planning satisfies the demands of think tanks and academics, but fails to have real-world value. If that's the case, then skeptics may wish to check out the plan released by the administration of Mayor Rahm Emanuel in Chicago yesterday.

The aim of the 60-page Chicago plan, as the Chicago Tribune puts it, is to "shake up the status quo." The plan is highlighted by a thorough market analysis of the city's economic strengths and weaknesses, which is developed through the lens of five key market levers: clusters, human capital, innovation/entrepreneurship, infrastructure and public/civic institutions. That analysis is then used to establish 10 concrete strategies that "best position the specific advantages of Chicago and the region within the context of the global economy."

The rationale for Chicago's planning process is virtually identical to that outlined for Milwaukee in Assembling the Parts. The Chicago plan's "Call to Action" argues that "an economy the size of ours requires a coordinated, articulated economic development process by which the public and private sectors can align interests, investments and actions." Another key point of similarity is that key consultants to the Chicago planning process included the Brookings Institution and others involved in its metropolitan business planning initiative, mirroring a suggestion by the Forum (and backed by the Journal Sentinel) that Brookings be invited to guide our planning effort.

The Chicago plan also may provide a worthwhile model for Milwaukee as it seeks to define the geographic scope of an economic development planning process. While it was commissioned by the city and its focus is mainly city-based, the Chicago plan also recognizes the regional nature of the local economy. As noted in the report, "the Mayor directed that the plan start with a focus on the city and look outward, facilitating partnership to leverage assets and accelerate growth for the entire metropolitan region."

For those who are unclear about the concept of strategic economic development planning, the Chicago plan offers an excellent point of reference. And for those who are skeptical about the need for such planning in Milwaukee, it offers living proof of its potential utility as a means of establishing priorities and aligning the activities of public and private sector players.

Where's the plan to address central city unemployment?

As reported earlier this week in the Milwaukee Journal Sentinel, the UWM Center for Economic Development's latest report on race and employment paints a devastating picture of the depth of joblessness in Milwaukee's central city. According to the study, only 44.7% of African-American males in the City of Milwaukee between the ages of 16 and 64 were employed in 2010. That's the lowest rate ever recorded by CED, and a substantial drop from the already anemic 52.9% rate recorded just before the recession.

A brief review of the comments posted by readers of the newspaper's coverage shows predictable responses from the left and right. It's either Walker's or Obama's fault, or the problem is caused by the personal failings of the unemployed individuals or the greed of corporate robber barons who have moved jobs overseas.

From the perspective of the Public Policy Forum, the issue is not one of politics, but of commitment. The German heritage of this town should dictate that when a problem grows to such an alarming magnitude and festers for two decades without meaningful improvement, then it's time to roll up our sleeves, develop a plan, and pursue it with discipline and gusto.

And therein may lie the problem. As we put it in "Assembling the Parts," our recent report on Milwaukee's economic development landscape: "Milwaukee’s elected, business, academic and civic leaders have taken several important and impressive steps in recent years to add both strength and focus to the city’s economic development efforts, but those efforts still could benefit from enhanced precision, cohesion and accountability."

In other words, it's not enough to have city government and private economic development organizations working on their own worthwhile projects and in their own important niches. We need a true economic development plan that establishes concrete goals (the foremost of which would have to be job creation for our unemployed), formulates specific strategies designed to achieve those goals, and develops performance objectives and accountabilities to accompany those strategies. Ideally, the plan would be updated annually, with all the parties focused with laser-like precision on the overall goals, and with strategies being adjusted as performance and new developments dictate.

Obviously, a problem as deeply-rooted and complex as central city unemployment will not be solved simply by developing a plan. But isn't it time for city and economic development leaders to spell out precisely how they aim to tackle this problem and how they plan to assess their progress?

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.

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."

Assembling the parts

In a 2006 report on the City of Milwaukee’s economic development efforts, the Public Policy Forum concluded that “unlike the vast majority of its peer cities, the City of Milwaukee has neglected to sit down with stakeholders and map out an economic development plan. Absent a plan or guiding vision, one is left to conclude that the City has and will continue to engage in economic investments, no matter how worthy, in an ad-hoc fashion.”

Five years later, the economic development landscape in Milwaukee has changed dramatically. Privately-funded entities such as the Milwaukee 7 and Milwaukee Water Council have become prominent players on the economic development scene, suggesting a level of public-private teamwork that had been found lacking in 2006. Nevertheless, important questions remain regarding the precise roles and responsibilities of the various players in carrying out citywide economic development efforts and in formulating the city’s economic development vision.

In a new report released today - "Assembling the Parts: An examination of Milwaukee's economic development landscape" - the Forum attempts to address those questions.

The report commends City and private sector leaders for adding “strength and focus” to the community’s economic development efforts, citing city government’s successful efforts to spur revival in the Menomonee Valley, the ground-breaking work of business-led groups to build industry clusters and support entrepreneurship, and the bold plans of university leaders to establish world-class research institutions. The report also suggests, however, that while we’re assembling the right parts, we may be missing the blueprint needed to build a well-oiled machine.

Indeed, one of the report's key findings is the continuing lack of a true citywide strategic economic development plan that establishes clear economic development priorities, links those priorities to specific strategic objectives, measures each objective with performance indicators and benchmarks, and names the entities to be held accountable for each objective. It cites examples from other cities in which such planning is being used “to meaningfully enhance collaboration and coordination, create new tools, and foster accountability and innovation.”

The report concludes by stating that Milwaukee’s elected and business leaders “should be proud of their efforts to build an economic development infrastructure that has assembled many of the parts needed for success.” It asks, however, whether they now “have the patience, skill and camaraderie to transform those parts into a cohesive and strategically organized whole.”

The full report can be accessed here, and the media release here.

TIF changes on the horizon in Wisconsin

In a rare showing of bipartisan accord in Madison last week, the Wisconsin Assembly unanimously passed a bill allowing local governments to create new tax incremental financing (TIF) districts jointly between two bordering municipalities. The changes included in the bill raise several questions about how TIF currently is used in metro Milwaukee, and how it could be used most effectively.

TIF is a financing tool that allows municipalities to borrow against future property tax revenue to fund current development projects. Though few people are familiar with TIF, it is the most widely utilized economic development tool in Wisconsin. In fact, a past Forum report, Too Much or Not Enough?, revealed that as of 2008, there were nearly 1,000 active TIF districts in Wisconsin with a total assessed value of over $15 billion.

IF was originally created to facilitate redevelopment efforts in blighted urban areas, but in 2003, state law was broadened to allow TIF to be used for nearly any type of development project deemed impossible to realize without public assistance. The bill approved by the Wisconsin Assembly makes TIF even more flexible. In addition to allowing TIF districts to cross municipal borders, the multi-jurisdictional districts would also be exempt from a state law restricting municipalities from creating new TIF districts if 12% of their total property value already falls within existing TIFs.

Past Forum research has revealed that the City of Milwaukee utilizes TIF at a far lower rate than many smaller cities in the metro area and many large cities in the Midwest. According to the Wisconsin Department of Revenue, the City of Milwaukee’s current TIF utilization rate is 3.9%, which falls below the state average and far below the state’s limit. Allowing the City to team up with its neighbors could help to boost Milwaukee’s TIF utilization rate and property values, provided there are promising and fiscally sound projects at the city’s edges. The same may be true for other large municipalities in the Milwaukee metro area. The Forum’s economic modeling has suggested a 10% increase in TIF utilization by Wisconsin cities with populations over 50,000 could result in a 2% increase in their total property values.

However, Too Much or Not Enough? also suggested TIF utilization rates at the municipal level have regional economic impacts. Exempting shared districts from the 12% state limit could result in over-utilization in suburban and rural communities on the metro edge. Our economic modeling indicated a 10% increase in TIF use by an average Wisconsin suburb could result in a 0.2% decrease in property values for that community and a 1.1% decrease in the property values of the central city. All of the communities in the Milwaukee metro area that currently have TIF utilization rates in excess of the state limit are smaller suburbs, so new shared TIF districts in those places should be analyzed carefully to avoid detrimental regional effects.

There are also several practical hurdles potential cross-municipal TIF districts will have to overcome. First, all of the taxing jurisdictions within which the project is located would need to sign off on the project. For example, a hypothetical new TIF district on the border between West Allis and Brookfield would have to get the approval of two cities, two counties, two school districts, and two technical college districts. In addition, under current Wisconsin law each municipality is allowed to use its own set of criteria to determine whether a project qualifies for TIF, so potential projects would have to meet the standards on both sides of the municipal border.

With TIF districts crossing borders and having regional economic impacts, it may be more useful than ever to develop uniform TIF standards for the metro area that facilitate the development of this new type of district while helping municipalities to choose new TIF districts that are beneficial not only for their own property values, but for the Milwaukee region as a whole.

Maxmizing the local economic benefits of academic research

This afternoon the Public Policy Forum takes up the topic of the economic impact of academic research at our Viewpoint luncheon. One specific way in which research leads to job creation and business development is via technology transfer – the legal process in which new discoveries are patented, marketed, and licensed to commercial manufacturers. Southeast Wisconsin is home to several academic research institutions, each of which goes about technology transfer independently, for the most part. A new Forum report to be presented at the luncheon today examines whether greater collaboration among the region’s research institutions is needed to maximize the local economic impacts of technology transfer.

Our analysis finds that there are three models that might be considered by academic leaders to enhance collaboration in technology transfer and potentially augment the effectiveness of existing efforts:

• Joint Office of Technology Transfer
  A joint office of technology transfer could potentially result in greater expertise in economic development practice for the participating institutions, as well as economies of scale. However, a joint office may stretch the resources of technology transfer officers to the point that some institutions may experience reduced levels of service. Equitably funding a joint office to serve public and private institutions also would be challenging.
• Joint Infrastructure for Informal Technology Transfer Activities
  Currently, much of the technology transfer work performed by academic institutions is of the informal variety - building awareness of academic research projects by industrial researchers and investors through networking and partnering. At the federal level, this work is performed by a permanent consortium of the federal research labs. A similar consortium of local institutions could be created and charged with raising the profile of translational research for local industry. Each participating institution would have to trust, however, that its financial contributions to the consortium would eventually result in benefits for its researchers.
  
• Joint Economic Development Entity
  We found four different types of collaborative economic development agency models aimed at increasing the local economic impact of academic research. All are aimed at encouraging and supporting the transfer of technology to local industry and start-ups, but each does so a little differently. The biggest hurdle for this model is sustainability - a previous, state-funded, southeast Wisconsin economic development effort, TechStar, proved unsustainable.

In addition to considering the creation of a new full-fledged collaborative infrastructure based on one of the three models above, the region's research institutions could consider collaborating on more targeted strategies to ensure that their research positively impacts the local economy:

1. Expand the UWM-MCW First Look Forum to other research institutions—Offer more researchers the opportunity to participate in these events designed to connect academic researchers to investors and industry.
2. Jointly offer start-up support or an entrepreneur-in-residence program—Collaborate to ensure local researchers have the opportunity to be educated about commercializing technology through company formation, mentored through the technology development and venture formation process, and connected with outside resources that can provide services, advice, funding, and management expertise.
3. Jointly raise funds for pre-seed grants—Expand the UWM Catalyst Grant program to other research institutions by working together to raise additional funds from foundations and industry.
4. Utilize a joint tech transfer advisory committee—Maximize local resources by forming a joint advisory committee of investors and industry leaders to advise on patenting decisions, particularly those arising from research projects conducted collaboratively by two or more CTSI institutions.
5. Create a local industry database—Provide researchers at all local institutions with data about industry needs and interests, as well as contacts, by jointly creating and managing a local industry database.
6. Host clinician informant panels—Increase awareness among researchers who are not also clinicians by jointly hosting opportunities for discussion of clinical problems in need of solutions.

It is clear that the region’s academic research institutions have yet to capture the full economic development potential of their research. By collaborating more closely to identify local discoveries that fill gaps in the global market, and by working together to help create or grow local players in that market, academic leaders could take better advantage of their rapidly emerging research prowess.

Economic development strategies in Milwaukee County: E pluribus unum?

Milwaukee County Executive Chris Abele recently named Brian Taffora as Milwaukee County’s new director of economic development. According to the press release, the new director will be responsible for achieving Abele’s economic development priorities as well as several larger goals.

Two of the specific priorities, as one might expect, involve job creation in the Park East and further job growth within the County Grounds in Wauwatosa—both county-owned properties. More generally, however, the new director indicated that he will focus on the creation of partnerships among municipalities, universities, trade groups, and businesses located in the county in order to retain and grow existing businesses and increase new employment and economic opportunities.

An upcoming report by the Public Policy Forum on economic development goals and activities in Milwaukee will indicate that the new director is entering an economic development landscape well-populated by a variety of municipal agencies, public corporations, regional partnerships, and non-profit organizations. All of these entities cite a variety of economic development initiatives in which they are engaged. In fact, many of the economic development activities mentioned by Mr. Taffora are being undertaken, at least partially, by these other economic development participants.

If the county intends to increase its economic development efforts, as the county executive and his new economic development director seem to indicate, several questions should be considered at the outset.

First, what specific strategies will the county use to recruit or expand businesses in the area and how will these strategies complement the current strategies used by municipalities in the county? Second, if county government wants to increase economic development-based partnerships within the county, how will its efforts complement—or differ from—regional economic development organizations such as the Milwaukee 7? Third, what role will the county play when economic development disagreements arise between municipalities in the county such as the recent dispute over the potential relocation of Eaton Corporation? And finally, what economic development tools does the county have at its disposal that might advance regional priorities?

As the region emerges from an extended economic downturn there is little doubt that increased efforts, like those of the county, are needed. However, with such a variety of economic development efforts occurring in southeastern Wisconsin, perhaps the next question for the entire region is how to achieve greater coordination and prioritization among participants.

For example, as strategies change and new organizations form, would the region benefit from an economic development plan that explicitly states, for the public and the organizations themselves, what role each group will play? Stay tuned for the Forum’s forthcoming economic development report—tentatively scheduled for release in late summer—for detailed analysis of this and other strategic economic development questions facing our region.

Anchor institutions may be called on to do more

A New York Times article yesterday noted that financially-challenged municipalities across the country are calling on land-holding non-profit/tax-exempt organizations to make larger contributions in lieu of property taxes. These organizations, usually college campuses or hospital facilities, might represent a significant portion of a municipality’s property tax base. These “eds and meds” thus represent a potential drag on city government finances by requiring considerable city services but paying no property taxes.

Viewing education and medical campuses as drains on the tax base is hard to resist during tough budget times, and Milwaukee itself budgeted an 8.4% increase in payments in lieu of taxes for 2011. Yet some are able to see these organizations as assets in economic development. From that lens, the eds and meds are “anchor institutions” serving as resources for local economic development. These institutions are neighborhood anchors due both to their size and resources. They are often among a city’s largest employers, but unlike a private business, they are unlikely to relocate.

It is obvious how these institutions can assist in economic development: by employing significant numbers of resident workers, investing in neighborhood infrastructure, and purchasing goods and services from local vendors. What is less obvious is why they may wish to do so. Lacking a mission to serve local residents, why should an institution implement preferences for local employees, goods, or services?

A report from Chapin Hall at the University of Chicago analyzes the costs versus the benefits of local investments by anchor institutions and concludes that, while it will differ by institution, in general the benefits to the institution will outweigh the costs. For example, investing in streetscaping and lighting beyond the campus may bring about a measurable decrease in crime or vandalism on campus. But more often, these benefits can be somewhat intangible, arising from the goodwill, trust, and knowledge gained by partnering with local government and/or community organizations.

Many of the anchor institutions in Milwaukee practice local investing. Marquette University, for example, has helped lead the redevelopment of the neighborhoods on the city’s near West Side. UWM and Aurora Health Care have “walk to work” programs that provide faculty and staff with home-buying assistance when purchasing homes in the neighborhood.

Never the less, while it is likely that these investments have improved property values in the neighborhood, when a local government is faced with an unsustainable structural deficit, the tax-exempt property owned by an anchor institution may feel more like an anchor around the neck.

What’s the right peer group for Metro Milwaukee?

Identifying the right group of metro areas with which to compare Milwaukee is a frequent dilemma for Public Policy Forum staff. Our answer is ever evolving. Typical decisions affecting our choices include level of geography (city, metropolitan statistical area, seven-county region), population size, data availability, and project timeline and resources. Depending on the project, we may be looking for best practices that might be replicable in our region or how other cities tackled similar issues to those faced by Milwaukee.

In our Innovation Index, launched in spring 2010, a narrow list of benchmark cities was adopted, combining typical Midwest metros (Indianapolis, Minneapolis, and Cincinnati) and a few existing or rising innovation leaders (Austin, Portland, and Kansas City). The benchmark cities were chosen to provide both a regional context and a set of peers that could set the bar high for Milwaukee’s innovation strategies.

Recent studies from the Brookings Institution Metropolitan Policy Program and the Federal Reserve Bank of New York may reshape how peer groups are determined. Both studies establish new comparison typologies based on the shared economic and/or demographic characteristics of metro areas, as opposed to geographic location alone.

In State of Metropolitan America, Brookings establishes new metro groupings that include Border Growth and Mid-Sized Magnets, Diverse Giant/Next Frontier, New Heartland, Skilled Anchor, and Industrial Core. Milwaukee falls into the Skilled Anchor category, which is defined as “slow-growing, less diverse metro areas that boast higher-than-average levels of educational attainment.” Brookings’ broad analysis of social, demographic, and economic data shows that metro regions can be grouped based on the types of challenges they’re facing, which the authors argue may allow similarly positioned regions to develop “common solutions.”

The Federal Reserve Bank’s Knowledge in Cities assigns cities to 11 different knowledge clusters based on occupational skills requirements and existing industry employment patterns. The clusters include Making Regions, which have high knowledge of manufacturing, but low knowledge in commerce occupations; Understanding Regions, which have very high knowledge of arts, sciences, and the humanities, but low knowledge of manufacturing; and Building Regions, which have high knowledge of construction and transportation. Several areas in Wisconsin (Eau Claire, Green Bay, Racine, and Wausau) fall into Making Regions. Milwaukee is grouped with the Enterprising Regions that have high numbers of jobs in commerce and IT fields. Other enterprising regions are Atlanta, Charlotte, Cincinnati, Denver, Kansas City, Minneapolis, Portland, and St. Louis.

Ultimately, determining the most appropriate metro peer groups may depend on how the Milwaukee region defines itself and its vision for the future. Will the City of Milwaukee’s ranking as the 4th highest in poverty level define the city and link us with similarly impoverished regions? Or will the rise in a skilled computer workforce be leveraged for regional economic gain and link us with the Austins, Pittsburghs, and Seattles who are strengthening their information infrastructure? The answer may lie in how our region responds to its challenges and whether it is able to successfully build on its strengths.

Program at a crossroads

Since its establishment in 2005, the Main Street Milwaukee (MSM) Program has been a highly touted economic development program designed to promote economic growth and revitalization in six selected city neighborhoods. MSM - a partnership between the City of Milwaukee Department of City Development (DCD) and the local chapter of the Local Initiatives Support Corporation (LISC) - is a key component in the city’s overall economic and community development strategy.

In light of the program’s important role in city development, the Forum’s 2009-2010 Norman N. Gill fellow, Sandra Zupan, took a look at the MSM and its outcomes. Her report, Main Street Milwaukee: Program at a Crossroads, explores the program's public and private investment, financial sustainability, expenditures, outcomes, and governance.

The report’s key findings include:

• The total investment in the MSM program between 2005 and 2009 was $3.3 million. Although the goal was for public and private investments in the MSM Program to be equal, the public portion accounted for 64% of the overall investment, while the private portion accounted for 36%.


• While the MSM neighborhoods were originally planned to be financially self-sufficient within six years, none of the districts will meet this goal and in fact, public investment continues to be crucial for sustaining the program.


• As a result of the program, more cohesiveness and stronger working relationships have been created among stakeholders within the neighborhoods.


• When compared to the program's estimated outcomes over its first five years, the total private investment in exterior building improvements exceeded estimates by a considerable amount. However, the number of businesses created in the neighborhoods is 86% of the original estimate, while 57% of the estimated jobs have been created.

The MSM Partners Board, made up of public and private officials, recently initiated an effort to consider substantial restructuring of the MSM program. As they move forward, the report urges them to consider the following issues:

1. The MSM program goals need clarity, and may need to be revamped in order to be more suitable for Milwaukee’s low-income neighborhoods;


2. The mismatch between the intended goals of the program and the purpose of the program’s main funding source likely has contributed significantly to the program’s failure to meet initial estimates, and needs reconciliation;


3. The program structure is overly complex and coordination among the neighborhoods and partners is poor;


4. Transparency and accountability for achievement of outcomes is lacking;


5. Resources need more leverage, and the program's branding, marketing, and visibility are insufficient; and


6. More volunteers are necessary for the program to be viable.

Finally, the report points out that city officials, LISC, and the MSM Partners Board may wish to research further whether there is a tangible connection between economic development improvements in Main Street neighborhoods and the program itself. In addition, the overall question of how the city's economic and community development strategy relates to its anti-poverty strategy is ripe for future research and analysis.

For the full report, please visit the Forum's website.

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

Meeting the workforce development needs of healthcare employers in southeast Wisconsin

A Public Policy Forum survey of healthcare employers finds that despite near-record unemployment rates in the region, southeast Wisconsin’s healthcare sector faces a distinctive challenge: finding sufficient numbers of qualified and trained workers to fill current and future job openings. Survey respondents said applicant quality (60.7%) and retaining qualified workers (30.2%) are the biggest challenges they face in meeting their organizations’ workforce needs. Gaps in applicants’ basic skills, especially soft skills such as professionalism, team skills and verbal communication, also make it harder for healthcare employers to recruit and hire competent job candidates.

The recent survey of 28 healthcare facilities included the four largest hospital systems in Southeast Wisconsin, as well as nursing and residential care facilities such as medical offices and diagnostics labs.

Respondents said current job openings are greatest for registered nurses and nursing aides and attendants. However, a significant number of respondents were unwilling or unable to provide data on current job openings or predict how demand for healthcare professionals will change in the next one to three years.

This is important because lack of job growth data limits the ability of workforce development officials to adjust regional workforce development training resources to address healthcare employers’ short-term needs. Nevertheless, the challenges indentified in the survey point to areas for regional workforce development organizations and area healthcare employers to work together to increase the supply of healthcare workers.

The Public Policy Forum conducted the survey on behalf of the Milwaukee Area Healthcare Alliance (MAHA), a new workforce development partnership between the YWCA of Greater Milwaukee and the Milwaukee Area Health Education. The Research Brief titled Assessing Healthcare Employers Workforce Development Needs in Southeastern Wisconsin, which can be accessed here, details the survey’s results and highlights challenges healthcare employers face in hiring and retaining a qualified workforce.

Benchmarking the region's pursuit of innovation

As elected officials, business leaders and economic development officials across the country work to position their regions to compete successfully in the 21st century global economy, "innovation" has become a key theme.

While not easily definable, "innovation" when applied to economic development generally is thought of as applying knowledge and new ideas to the workplace to generate jobs and productivity. Or, as famous management consultant Peter Drucker puts it, "Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth."

In southeast Wisconsin, transitioning our economy to one that is based on knowledge and innovation has become a critical goal for groups like the Milwaukee 7 and a growing number of non-profit and academic entities that are working diligently to encourage and fund technology-based start-ups, talent development and capital formation. It also has become a buzzword for elected officials and leaders in academia, who are pushing for new investment in water technology, engineering and similar fields of academics and research that are seen as pivotal in positioning Greater Milwaukee to compete for jobs and talent.

In light of this emphasis, it is pertinent to ask how our region is faring in its pursuit of innovation as a key component of economic success. Hence, the Public Policy Forum's new Innovation Index.

The Index provides baseline data for sets of indicators that are closely linked to the 21st century economy: areas like idea development and commercialization, entrepreneurship and availability of knowledge and skilled workers. We use this data not only to track the region's progress during the past several years, but also to compare it to six peer regions, including three that are commonly seen as leaders in innovation and that can set the bar for southeast Wisconsin's efforts.

The initial Innovation Index finds that the southeast Wisconsin region (defined as Milwaukee, Waukesha, Washington and Ozaukee counties) is trending positively in several areas, including growing university research and development spending, increased educational attainment and more jobs created by small firms. Other trends are less promising, however, including patent activity and knowledge workers per capita.

When compared to the six peer regions, southeast Wisconsin's performance also is mixed. We're doing quite well, for example, in terms of availability of skilled and technical workers (an attribute cited recently as a major contributor to the successful effort to lure Spain's Ingeteam to the Menomonee Valley), but not so well in areas like business dynamics and capital formation.

Our plan is to update the Index annually in order to continue to track the region's progress and provide insights for policymakers and business leaders regarding where we are succeeding and where enhanced efforts or new approaches may be needed.

The full report can be accessed here, and a snapshot of the Index here.

Conference casts Wisconsin as uniquely engaged with water issues

Last week’s “Water and People” conference presented by the Marquette University Law School underscored the importance of water to Wisconsin in terms of a natural resource, an economic development driver, and a commodity to be regulated and potentially traded. Numerous speakers described Wisconsin residents as being far ahead of other areas in understanding water’s importance and influence on quality of life.

Where water issues intersect with policy issues, Wisconsin’s abundance of water was identified as both a positive and a negative. Having so much water, which is priced relatively cheaply, may discourage some from realizing the need for conservation, taxes, regulatory policies, and relative equity in water distribution. This contrasts with public debates about oil and other energy sources, where scarcity and high prices generate concerned consumers, interest in conservation, and a multitude of regulations. Dr. Jame Schaefer, a professor of theology at Marquette University, did caution against viewing water as a commodity or resource, however, stressing that it has intrinsic worth beyond its usefulness.

As Wisconsin positions itself to emerge as a leader in freshwater technologies, the division between environmental concerns and economic development was identified by some conference panelists as a false dichotomy. Art Harrington, a partner at the Godfrey and Kahn law firm, said that a main challenge is not necessarily having regulations, but uncertainty about what regulations will be. He called for clear guidance from government on what water policy will be 15 years in the future, since certainty contributes to economic opportunity and investment.

Despite the codification of many water use policies in the Great Lakes Compact, some water issues are still up for debate. Maureen Taylor, Executive Director of the Michigan Welfare Rights Organization, cast water as a human rights issue, noting that 42,000 Detroit households had their water shut off in one year. The conference also explored questions such as: Who should have access to water and to whom does water belong? Who should pay for water and how should it be priced? As southeast Wisconsin moves forward in conservation, regulation, and entrepreneurship, we have the potential to break new ground in answering these questions within the context of their environmental, economic and ethical implications.

Stay tuned for the results of the Forum's latest People Speak Poll, conducted in conjunction with the Center for Urban Initiatives and Research at UW-Milwaukee and The Business Journal, which probes public opinion on various water issues in the region. The poll results will be released in The Business Journal on March 12.

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 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.

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.

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.