A Lesson from the Quiet Company

Northwestern Mutual (NML), Milwaukee's second largest corporation (112th largest in the United States), is highlighted in a recent Wall Street Journal article as possibly the only company in corporate American that invites a small group of policyholders to evaluate the company and issue an annual report. According to Ed Zore, NML CEO, every year the company brings in four or five policyholders to pour over books and meet with senior management. Mr. Zore states:

"...they come up with ideas for us that are usually pretty helpful on how we can improve the business. It keeps us on our toes because we know every year we're going to have some new people that come in and we've got to explain to them all we do and how we do it. They always challenge us..."

The public sector could learn something from NML. Why not invite a few taxpayers into some of our large public institutions to kick the tires, interview department heads and issue an annual report. Essentially, this is what was recommended by the Public Policy Forum in last year's report on City of Milwaukee economic development efforts. The recommendation was to have the city "submit a comprehensive annual report on economic development progress to the common council, the mayor, and general public." After all, why spend $100 million per year on economic development if we don't know what we're getting out of our investment.

Just this month, the City of Milwaukee Department of City Development published its first annual report. It provides details on jobs created and retained, number of housing units created, private dollars leveraged and amount public support. To make future annual reports more robust it may be beneficial to include performance comparisons with previous years and other peer cities along with notes on any progress made on strategic goals.

Like at NML, where policyholders annually challenge upper management to prove their worth, it may be time for us taxpayers to annually challenge our governments to report measurable and strategic results.

Social experiments as good public policy

New York City Mayor Michael Bloomberg recently announced a new privately-funded program aimed at moving families out of poverty. The program, Opportunity NYC, is being called a conditional cash transfer program. The basic gist is that participating families will work toward a series of goals and will receive cash bimonthly for each goal they meet. After a year a family could earn up to $5,000.

It will be interesting to see how this program is received. Most of the goals are short-term (school attendance, doctor and dentist visits, job training activities), but it is long-term planning and goal setting that will be the key to truly lifting these families out of poverty, I would guess. It's not clear how many years the families will be in the program, nor how long they anticipate the funding will last. Opportunity NYC is modeled on a cash transfer program in Mexico that has been shown to be effective. Whether small cash rewards provide the same incentive in New York City as they do in Mexico is yet unknown.

The most encouraging thing about this program, however, is that it is designed with a built-in evaluation, so that its effectiveness can be analyzed scientifically. (There will be a comparable control group of families who will work toward the goals but not receive the cash.) If a government is going to try a new and innovative program, even if it is privately funded, ensuring there will be a rigorous evaluation is important. If it works and is cost-effective, great...bring it to scale. If it doesn't, it is unfortunate, but better to know than to expose even more families to it.

This is a lesson Milwaukee and Wisconsin should learn. Innovation in public policy can be desirable, but without evaluation from the get-go, we don't know whether we should invest more or try another option. It shouldn't matter whether the innovation is publicly or privately funded; taxpayers want to know they are making wise investments just as much as foundation officers do. Evaluating after several years and even more millions are spent is not good public policy. . . no matter what the results of the underlying program turn out to be.

Capital Project Audits Show Continuing Problems

The City of Milwaukee’s Comptroller Office released its audit of the Canal Street expansion project. The audit was requested by Alderman Murphy in order to determine why the project cost millions of dollars more than was originally projected. The audit determined that the City of Milwaukee Department of Public Works (DPW) had never provided an accurate cost estimate of the entire project.

The most disturbing part of the audit is that many of the recommendations to improve the capital project planning process were made four years ago in the comptroller’s audit of the 3rd District Police Station project. These recommendations include the development of better cost estimation procedures; a cohesive system for monitoring and reporting capital projects; and a comprehensive project budgeting system rather than separate budgets for different project components.

The city is currently involved in a very large, expensive capital project: the City Hall restoration. According to DPW and the Department of Administration, the process for this project is going much more smoothly and is in accordance with some of the comptroller’s recommendations. Hopefully, these mechanisms will keep the city’s capital projects in check.

Are you your own worst enemy?

The Business Journal recently reported the findings from an Aurora Health Care public health survey ("Violence cited as top city health problem.")

Violence was stated as the city of Milwaukee’s top health problem followed by alcohol and drug use and chronic disease. The article states 58% of those surveyed felt violence was one of the 3 biggest health issues Milwaukee faces. However, obesity-related diseases, such as heart disease and cancer, are the main concern of insurance companies (Fischer, 2007). So what should one be more concerned about in Milwaukee? Violence or chronic disease? The answer may depend upon your age group.


The Wisconsin Interactive Statistics on Health from the Wisconsin Department of Health and Family Services allows users to query for the most prevalent causes of mortality in our seven county area. The data from the graph above suggests people’s fears of violence as a health concern may be warranted if you are young. Ages 15-29 are more likely to be killed by violence versus cancer or heart disease, and they are even more likely to die in an accident.

There may be several reasons why more people in the survey feared violence versus chronic disease. The immediate danger of someone being the victim of a criminal act may be more frightening than the prolonged danger of developing a chronic disease. Lets say you were to put a person in a room with a serial killer and a doughnut; chances are your test subject would be much more fearful of the murderer. However, in the real world we are more likely to be tempted by junk food versus chased by violent criminals. It may be that people are more fearful of what others may do to them versus what they may do to themselves. Also, media attention to violence may instill fear among viewers more so than warnings about lifestyle habits leading to certain chronic diseases. Often times the six o'clock news will show a crime scene with victims being hauled off in body bags or stretchers, but they often do not show the actual victims of chronic disease fatalities.

Also check out the national odds of dying of certain diseases and injuries.

We don't predict; we project

The Forum’s latest report on taxable property values reveals that Waukesha County’s day in the sun may have to wait a few centuries. If we weren’t researchers, we’d probably be embarrassed because a few years ago we projected Waukesha was on track to overtake Milwaukee County by the middle of the next decade. Instead, the city of Milwaukee has achieved a turnaround and currently leads the region, and the state, in tax base growth.

In 2000, our annual research brief on taxing and spending reported Waukesha’s value was growing 7% annually and at that rate would soon overtake Milwaukee, which was growing just 4%. The latest report found Milwaukee County valued at $64 billion, up 12% over last year whereas Waukesha County grew a relatively small 9% to $49 billion. This means Waukesha would be projected to overtake Milwaukee … never. Not that I’m making any predictions.

Radical Surgery: PPF Viewpoint Luncheon

The Forum's next Viewpoint Luncheon May 9, 11:45 am, Pfister Hotel:

Radical Surgery--Wisconsin’s search for access to lower-cost health care

A panel of experts will sort out various ideas and recent plans for improving health care access and costs for Wisconsin residents.

Panelists include Kevin Hayden, secretary, Wisconsin Department of Health & Family Services; Jon Richards, assistant minority Assembly leader; David Newby, president, Wisconsin AFL-CIO; and Dianne Kiehl, executive director, Business Health Care Group of Southeastern Wisconsin.

Moderated by Paul Nannis, vice president of government & community relations, Aurora Health Care.

Sponsored by Foley and Lardner, LLP and United Healthcare.

For more information and to reserve your place visit http://publicpolicyforum.org/events.php.

A New Commission?

The Milwaukee Journal-Sentinel reports that Governor Doyle has appointed a Commission to Reduce the Racial Disparity in Wisconsin's Criminal Justice. The key is to figure out why Wisconsin has the third highest ratio (18:1) of incarcerated minorities to whites, and to fix it.

While the main charge of the group seems to be to look for discriminatory practices throughout the state's criminal justice system, the story said the governor wants to consider how poverty, parental involvement, education and abuse all factor into the crimes. That is certainly a laudable goal, but doesn't an examination of the root causes of crime deserve its own high-profile commission?