Pioneer Institute for Public Policy Research

Manufacturing’s Moment?

Steve PoftakBy Steve Poftak
February 3rd, 2012
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Manufacturing has a bad image these days. For those of us inside Route 128 , it can feel like there’s nothing left. But the reality for the rest of the state is very different.

Manufacturing still employs approximately 260,000 people or 8% of the workforce. And these people are working in good jobs at good wages – in the areas where manufacturing is still going on, wages in the industry are above the area median.

If you’d like to know more about manufacturing in Massachusetss, I’d encourage you to look at work by the state’s Commonwealth Corporation and Northeastern’s Barry Bluestone.

With Obama’s State of the Union, there’s increased attention to the industry. (I’m happy to see the attention paid to the industry but I’m far from convinced that his proposed tax credits are the answer.)

More important than government tax credits, US manufacturing is poised to regain at least some of its competitive position. A Boston Consulting Group report comes up with a surprising finding – the always-high (relative and absolute) level of productivity in the US is combining with rising labor costs in China to make US manufacturing competitive once again.

For Massachusetts, this may be the moment to secure existing jobs and create new ones in manufacturing. One place to start is addressing our high electricity costs. And I’m hopeful that the new community college/workforce development initiative from the Governor bears fruit (although inaction on years worth of comparative data makes me skeptical).

Contrary to the views of some, manufacturing remains an important employer in Massachusetts. Can we take advantage of this moment to make it even more so?

Crossposted at Boston Daily.

Carmen Ortiz is Making Beacon Hill Nervous

Steve PoftakBy Steve Poftak
January 31st, 2012
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Think you’ve had a tense few weeks at work? Consider potential targets of US Attorney Carmen Ortiz’s probe into wrongdoing at the state’s Probation Department.

The Globe Spotlight Team and the Ware Report detailed the madness, absurdity, and outright corruption of the Probation Department. It’s tough to do it justice in a few words — rigged hiring, pay-to-play promotions, alleged quid pro quo between department leaders and legislators, and on and on.

On January 17, the Globe reported that the US Attorney’s office had “essentially completed their investigation” and indictments were imminent. Given the number of legislators mentioned prominently in the Ware Report, this had to be cause for concern.

Tick, tick, tick. Still waiting.

Ten days later, the Lowell Sun ratcheted up the pressure, stating that “two sitting senators and two sitting representatives could face criminal charges. Plus, one former state legislator and 10 outsiders could also face charges.”

Beacon Hill is still waiting for the US Attorney to make her move.

Crossposted at Boston Daily.

BCBSF of MA and Health Affairs Spinning the MA Reform

Joshua ArchambaultBy Joshua Archambault
January 27th, 2012
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The Blue Cross Blue Shield Foundation of Massachusetts (BCBSF) put out an annual survey this week on the Massachusetts health reform law, along with a Health Affairs piece that has left me shaking my head. The presentation of the results seems to overstate the findings and draws unlikely conclusions about the federal law.

  • In my humble opinion, Health Affairs has lost some credibility with the pieces they publish on Massachusetts. Editor-in-chief Susan Dentzer admitted the publication’s bias in a recent speech to the Massachusetts Association of Health Plans.

A New Era in American Health Care: What it Means for Health Plans, Providers, Employers & Consumers from Eric Linzer on Vimeo.

On the actual BCBSF report, just a couple of comments:

  • The survey is a great way to capture a snapshot of what is taking place in Massachusetts, but the phone survey method should always be taken with a grain of salt.
  • Self-reported ER visits are predictably unreliable. Individuals know they should not have gone to the ER for their care, so they are prone to underreport their true actions. One year of a slight decline in visits is not worth a major finding; only a multi-year downward trend in ER visits will be noteworthy. Most state data has shown the opposite for ER visits. So, survey results from one year and one state report using administrative data (cited in the Health Affairs article) should be cautiously interpreted. I hope the trend holds, but the survey data should not be used as a talking point in support of the Massachusetts law– yet.
  • The study has a odd way to define affordability: “…there have been gains in the affordability of care for adults since 2006, as evident in a lower burden from out-of-pocket health care spending (excluding premiums)…”  Why would you exclude premiums in your definition? This exclusion is like celebrating a decrease in the price of printer ink while ignoring the increase in the price of the actual printer.
  • The discussion section of the Health Affairs article contains a heavy does of spin and takes every opportunity to highlight a positive slant on the data. There is only minor passing mention of possible differences in states, and no mention of differences between the Massachusetts and Federal laws.

Taken together, Massachusetts’s experience under the 2006 reform initiative, which became the template for the structure of the Affordable Care Act, highlights the potential gains and the challenges the nation now faces under federal health reform.

….

Just as Massachusetts’s 2006 health reform legislation provided the template for the Affordable Care Act, so the state’s experience under that legislation provides an example of the potential gains under federal health reform. Of course, the trajectory of policy and health reform will vary across the states, given the wide differences in their political, economic, and cultural environments and the wide range in the different states’ starting points

The comparison has become a messaging tactic by liberals and supporters of the federal law, most recently illustrated by John McDonough in his Families USA piece. These folks want the public to think Massachusetts is the same as the rest of the country, and the ACA will have the exact same impact nationally as it has locally.

I will offer just two examples why this is unlikely:

1)      Do health policy officials really believe that the outcomes from a

high-income; geographically compact; historically heavily regulated insurance market; non-profit dominated insurer and provider market; medically and technologically advanced state, with a younger and more active demographic makeup; and a culture of health insurance

state, such as Massachusetts play out in the same manner in as a

low-income; geographically  spread out; drastically different regulated insurance environment; mixed with both private and non-profit insurers; dealing with scarcity in medical infrastructure; heavily employed in service and tourism industries;  ethnically diverse; and without a culture of insurance

state, such as New Mexico?

2)      Differences between the two health care laws will lead to significantly different behavior and outcomes. One example: In Massachusetts, if employees are offered employer based insurance, they are not allowed into the exchange. (The only way into the exchange is if employees were to go uninsured for 6 months.)

In the ACA, entry into the exchange is based on an “affordability” threshold of 9.5% of your income or an actuarial value of your employer based insurance of less than 60. In other words, it is much easier to access the exchange and the economics are very good for employers to dump their employees into the exchange. This is a completely different world in public policy and a much more expensive one at that.

The Weakest Link?

Steve PoftakBy Steve Poftak
January 27th, 2012
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Like most places, Massachusetts uses elections to insure accountability in government. Don’t like how things are being run? Vote’em out.

So, it’s interesting to note that some of the most egregious breakdowns in public accountability over the past few years have occurred in that netherworld between bureaucrats and elected officials — the board of directors.

To be sure, the private sector has struggled with how to insure the accountability of boards of directors, but the public sector seems to be far behind in this area.

What are the key indicators of weak governance? Review the peformance of the Essex Country Regional Retirement Board, the Chelsea Housing Authority Board, and the Merrimack Special Education Collaborative Board.

In each case, a board appointed by elected officials has egregiously failed to protect the public interest — either through ‘capture’ by a powerful chief executive or an inability or unwillingness to understand what exactly they were approving.

Massachusetts’ public sector governance is marbled through with hundreds of appointed boards designed to protect the public interest. If we can’t solve the seeming intrinsic weakness of this level of oversight, we risk wasting more of the taxpayers’ money.

Chipping away at charters

Jim StergiosBy Jim Stergios
January 24th, 2012
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cracked statue.jpg

Charter school approvals are granted in February. They shouldn’t be.

They should have been granted on January 16th this year–Martin Luther King Day–for one simple reason: No education policy change has done more in Massachusetts to alleviate achievement gaps than charters. None.

We too often hear about how education is the civil rights issue of the 21st century. The fact is that education was the Civil Rights issue of the 20th century, starting with the landmark Brown v. Board of Education ruling and the battle to ensure that all kids, regardless of race or creed, had equal access to good schools.

Today, the face of Civil Rights has many colors, and the principal battleground is in inner cities, places like Lawrence, Massachusetts, where district schools have failed the city’s children. Failure’s not a word that the education world likes to hear. But when 10 percent of the district’s largely Hispanic students drop out each year, and when only 30 and 40 percent reaching proficiency in math and reading, respectively, I think we are on safe ground in using the term. That’s precisely what is going on in Lawrence today.

So with approvals to be announced in February, how is implementation of the 1993 Education Reform Act’s charter provisions and the 1997 and 2010 expansions of charter schools going?

The 1993 education reform act articulated two broad goals for charter schools:

  1. by giving schools greater autonomy while holding them accountable for results, stimulate innovations in public education, and
  2. provide kids high-quality learning environments as demonstrated by state assessments

In 2010, the legislature, Governor Patrick, and Mayor Menino lifted several caps (and imposed some new restrictions) on charters, allowing them to serve up to 18 percent of the total number of students in urban districts where test scores continued to be low.

In 2011, the largest crop of charters was approved. So far so good. But pop the hood and there are some troubling cracks in the charter engine.

First, the charter school process, and the Commissioner of Education’s role, has grown cloudy. When David Driscoll was commissioner (1997-2006), he was hired by the Board of Education, which jealously guarded its independence from political interference. Strong leaders in the Senate (Senate President Birmingham) and the House (Speaker Finneran) agreed with Governors Weld, Cellucci, Swift, and Romney to let the Board act with independence. In part they were seeking to shield themselves from the day-to-day battles in implementing academic standards and testing.

The departure of strong educational leaders in the State House left a void, which Governor Patrick, in particular, filled by getting the legislature to dramatically change governance of education policy. In 2008 laws were changed to create a new Secretary of Education position and give the governor the ability to truncate terms and add new Board members (translation: to pack the board).

The current commissioner of education, Mitchell Chester, serves at the pleasure of the governor’s Board of Education. His budget is set by the Secretary, Paul Reville, also appointed by the governor.

On charter policy that puts the commissioner between a rock and a hard place, as seen in the infamous midnight email from the secretary to the commissioner urging him to approve the Gloucester Community Arts Charter School’s application.

The secretary asked for the commissioner’s help in order to keep the Boston Globe and the Boston Foundation on his side politically. The fact is that there are several other recent examples where interference is likely, including charter decisions in Lowell and Lynn.

One-offs? The fact is that the current approval process is much sloppier and harder to understand than before. Do the charter school office’s criteria stand as the source of decisions? Is it the commissioner who’s calling the shots? The secretary–and therefore the governor?

How does one read the commissioner’s announcement, made without any previous communication, that a decade-old charter in Fitchburg (the North Central Charter Essential School) was being placed on “probation”? How is that possible after, as the Fitchburg Sentinel notes, the school

had been lauded by state officials for the school’s academic improvements as recently as last fall.

How to make sense of the earthquake that occurred in the education department’s charter school office (CSO), where seasoned staff simply got up and left last year? Dramatic shifts in personnel always occur for reasons. And the state’s history of having a highly professional CSO has done a lot to distinguish Massachusetts charters from those in other states.

We will have to see how this plays out. The new head of the charter school office, Marlon Davis, brings real-life experience from the Benjamin Banneker Charter School, but he and new staff members will have to get up to speed fast–and demonstrate the quality and independence of their analyses.

And what to make of the governor and the secretary of education’s push to direct which specific city districts to target for charter applications? The 2010 education law lifted the caps for all lower-performing, poorer districts. But in implementing the law, they have unilaterally decided to focus last year on Boston charter applications, and this year on cities outside Boston.

Their political impulse is to package charter approvals for maximum press, but that’s not what the law says. Short term, what about kids in districts that don’t fall into “target” areas chosen by the administration?

Long term, it’s hard to see a more opaque, personality (and politically) driven process helping advance the Massachusetts brand of consistently strong charters. After all, here’s what we know:

  • Charter schools in some states have a mixed record, often because the state approval and closure processes lack rigor, and state standards and testing are weak.
  • Charters work where state public policy works.
  • Massachusetts charter schools have a far better batting average than those in many other states. By far the majority of Massachusetts charters outperform their sending districts; moreover, a large percentage of our charters perform at the highest levels in the state.
  • For a very long time, Massachusetts boasted an approval and accountability system that was a national model, with objectively determined approvals and closures.

This administration has changed course on key elements in the original 1993 education reform, including accountability, standards, and (soon) testing. Now it is chipping away at our charter school model.

Crossposted at Boston.com’s Rock the Schoolhouse. Follow me on Twitter at @jimstergios, or visit Pioneer’s website.

Meet the Transportation Dashboard

Steve PoftakBy Steve Poftak
January 24th, 2012
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How well did the Patriots do this weekend? That’s easy. Look at the scoreboard.

How well has the state spent your tax dollars since the enactment of transportation reform? Well, that’s harder. There’s some reports that highlight the changes in management structure and some of the cost savings.

But what about the things that really matter to the customer. Some of those measures are in a .pdf file on the MassDOT website, if you know where to look. (And the MBTA actually is a bit more forward with their data.)

Pioneer thinks something bolder, more public, and customer-focused is needed. Using simple desktop tools, we put together a transportation dashboard with public data. It’s far from perfect, but we hope its starts a conversation about what’s important to us in the transportation system and how the system is performing. If we expect to have an ‘adult conversation’ about new revenues, that conversation needs to start with a critical assessment of how we are spending our current resources and what impact it has had. Take a look at the dashboard on our website (where you can examine backing data) or take a look at the snapshot below. Let us know what you think.

Transportation Dashboard

9 Keys For Reality TV Chefs

Steve PoftakBy Steve Poftak
January 20th, 2012
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(What, you think we can only do policy?)

There’s been a proliferation of reality cooking shows — Top Chef, Kitchen Nightmares, Iron Chef, Chopped, and so on — as well as spinoffs and brand extensions. For those aspiring chefs seeking to success on these shows, some pointers:

1. Always cook something. Seems obvious, but every competition has some person who makes a crudo or carpacchio. It’s not a slicing-and-marinating competition, folks; you need to cook.

2. Never do a duo. The indecisive or overly ambitious chef will decide to take a main ingredient and go for multiple preparations on a single plate. The problem is that you are competing against yourself — one preparation is going to be better than the other, and judges will note that. Figure out which one is better, and just do that. And let’s not get started on trios, OK?

3. Never make a napoleon. They never work. Trust us.

4. Avoid pre-fab food. Again, it’s a cooking show. Baking a cake from a box or using tortillas from a bag is not going to win it for you.

5. Don’t cook the same dish over and over again. Every chef has a style and a point of view, but you can’t make a variation of the same thing the whole series. In the immortal words of Fabio from Top Chef: “This is Top Chef, not Top Scallop,” mocking a fellow contestant who made scallops every week. The prominent exception to this rule (and the guy who wrecked it for any one-dish Charlies who tried to follow) is Ilan from Top Chef season 2, who cooked variations of a handful of Spanish dishes for pretty much the entire series.

6. Learn to make dessert. Most of the folks on these shows are chefs, not pastry chefs, so any challenge involving a dessert becomes a greater challenge. Particularly problematic are team challenges where someone gets stuck cooking dessert while everyone else is cooking in their comfort zone.

7. Learn to use a pressure cooker. The homely pressure cooker is a key tool on these cooking shows. Most challenges have significant time constraints, and the pressure cooker offers the only option in many cases for braising certain cuts of meat. Yet, highly trained chefs seem to be utterly befuddled by the device, particularly the lid. Put away the molecular gastronomy chemistry set, buy one, and learn to use it.

8. Learn/remember how to cook on non-commercial ranges. Many of the cooking shows are sponsored by makers of cook-tops and ovens, so it’s always puzzling that so much footage of chefs complaining about their stoves and equipment makes the final cut. Professional chefs are used to cooking on commercial ranges — which throw off a lot more BTUs than your typical home stove. So any challenge that uses a residential range is going to be an adjustment.

9. Know your host and judges. Watch the show ahead of time. It still amazes me that people serve Tom Colicchio undersalted food. If you are going on Hell’s Kitchen, you should be able to cook Beef Wellington in your sleep. And don’t bother serving Scott Conant, the judge on Chopped, a dish that combines fish and cheese.

Equipped with these simple rules, you can now compete and, while you might not win, you won’t embarrass yourself. Bon appetit.

Beacon Hill Budget Games

Steve PoftakBy Steve Poftak
January 20th, 2012
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I’m a bit perplexed at the latest round of expectation-setting from Beacon Hill regarding the FY2013 budget.

First, it turns out we still have a structural deficit. But, didn’t the Governor tell us that the FY12 budget “eliminates the structural deficit I inherited from my predecessors”. And MTF President Mike Widmer came close to concurring, noting the near elimination of the structural deficit. Now, we find out there’s a $550 million structural gap. (Plus the cost of pushing out the pension fund, but that’s a bit harder to understand.)

Working from MassBudget’s curiously well-informed preview of the FY13 Governor’s Budget, I next learn that the Consensus Revenue Estimate says we’ll have an additional $840 million in available funds for the budget. Great, flush times, right?

Yet the same document projects an additional $1.4 billion in costs, attributed “primarily to inflation”, leaving us with a deficit of over $1 billion before we start the budget process. That’s an increase of 4.6% based on last year’s budget of $30.6 billion. As a yardstick, inflation was 3% in the 2011 calendar year. Even in relevant sub-categories, like medical care, inflation was 3.5%. Compensation costs for government employees only grow by around 1.5% during this period.

So what’s going on here? Why is the cost of our state government outstripping all the relevant indexes? Let’s figure out why before we turn to…ahem…revenue enhancements.

Crossposted at Boston Daily.

Budgeting Innovation?

Steve PoftakBy Steve Poftak
January 13th, 2012
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If you deal with budgets regularly, you know the pain of trying to get through those last final steps of balancing spending and revenue to the penny.

But our friends at the State House may have delivered a new innovation — the negative expenditure. What’s that? It’s a spending account with a negative number, which has the virtue of canceling out actual spending.

If you download the FY12 budget line items from the state’s website, you find an account — 1599-0015 Intergovernmental Secretariat Budget Team Savings Reserve — with an amount of -$25 million attached to it.

That account doesn’t exist in the budget the Legislature posted on-line nor does it exist on the initial detail page on the State Budget website. But the careful observer will note that the totals on the detail page don’t foot out to the line items listed on the same page.

Only on a lower sub-page with historical information does the account surface. And the narrative that accompanies the budget discusses in general terms the potential savings from the Budget Savings but doesn’t explain the $25 million number. Plus, if you expect savings at various departments, their budgets should be reduced by that amount or how do stop them from spending the savings on something else?

In the context of a $30 billion+ budget is a $25 million a huge discrepancy? No. But the use of accounting gimmicks (particularly ones that are not consistent across budget documents) is not a good practice. As we enter the next budget season, I’ll watch more carefully this time.

Crossposted on the Boston Daily website.

Are We Fighting Health Care Costs or Health Care Spending?

Joshua ArchambaultBy Joshua Archambault
January 13th, 2012
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healthcare_costs

Liberal blogger Matt Yglesias over at Slate recently made a great point about the difference between health care costs and spending. It is one that I hope local pols on Beacon Hill will keep in mind as they consider payment reform legislation that will regulate by price controls.

The health care system in the United States has a lot of problems, but I think people are sometimes too pessimistic about it. This happens largely through slippage between the phrases “health care spending” and “health care costs.” Everyone knows, for example, that economy-wide spending on tablet computers has surged over the past three years. But nobody says “tablet costs are skyrocketing.” What happened is that iPads came on the market, followed by a bunch of lame competitors nobody liked, followed by the Kindle Fire which is cheap enough to open up a whole new market segment.

By the same token, it always bears noticing that the health care that’s so expensive in 2011 is qualitatively different from the cheaper health care of 1961. [The] chart, delivered to us by Austin Frakt, illustrating steady progress in fighting cardiovascular disease illustrates the point.

That’s not to let the health care status quo off the hook for its myriad flaws, but simply a reminder that “health care” is not a static target.

Find me on Twitter: @josharchambault

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