Category: public finance

Federal Government Employees

tomkapostasy2 Comments
YearExecPostalEx+PostActMilTotalSubDefSubCivilianU.S. Pop
19551.9.42.32.95.24.11.1166
19601.8.42.22.54.73.51.2181
19651.9.42.42.75.03.71.3194
19702.2.52.83.15.94.31.6206
19752.1.62.82.14.93.21.7216
19802.2.52.82.14.83.01.8227
19852.3.73.02.25.23.31.9238
19902.3.83.12.15.13.12.0250
19952.0.82.81.54.32.32.0265
20001.8.82.61.44.02.02.0282
20051.9.72.61.44.02.02.0295
20102.1.62.81.44.22.22.0309
20152.1.52.61.34.02.11.9321
20202.2.52.81.44.12.12.1331
YearExecPostalEx+PostActMilTotalSubDefSubCivilian
19551.1%.22%1.4%1.8%3.1%2.5%.64%
19601.0%.23%1.2%1.4%2.6%2.0%.66%
19651.0%.23%1.2%1.4%2.6%1.9%.69%
19701.1%.27%1.4%1.5%2.8%2.1%.76%
19751.0%.26%1.3%1.0%2.3%1.5%.79%
19801.0%.24%1.2%0.9%2.1%1.3%.79%
19851.0%.30%1.3%0.9%2.2%1.4%.80%
19900.9%.30%1.2%0.8%2.1%1.2%.82%
19950.8%.28%1.1%0.6%1.6%0.9%.76%
20000.6%.28%0.9%0.5%1.4%0.7%.70%
20050.6%.24%0.9%0.5%1.4%0.7%.68%
20100.7%.19%0.9%0.5%1.4%0.7%.65%
20150.7%.15%0.8%0.4%1.2%0.6%.59%
20200.7%.15%0.8%0.4%1.3%0.6%.62%

All Employees, Federal (CES9091000001) | FRED | St. Louis Fed (stlouisfed.org)

All Employees, Federal, Except U.S. Postal Service (CES9091100001) | FRED | St. Louis Fed (stlouisfed.org)

All Employees, U.S. Postal Service (CES9091912001) | FRED | St. Louis Fed (stlouisfed.org)

1970 (usps.com)

US Population by Year (multpl.com)

DCAS Reports – Active Duty Deaths by Year and Manner (osd.mil)

U.S. Military Personnel 1954-2014: The Numbers (historyinpieces.com)

How Many People Does the U.S. Federal Government Employ? (historyinpieces.com)

Federal Workforce Statistics Sources: OPM and OMB (fas.org)

Executive Branch Civilian Employment Since 1940 (opm.gov)

Total Federal Government employment has ranged from 4-5 million across the last 65 years, from 1955, when post WW II changes were in effect until today, 2020.

While Federal Government jobs have been flat to down 20%, the U.S. population has doubled, from 166 million to 331 million people.

Hence, the ratio of federal jobs to population has dropped from 3.1% in 1955, or 2.6% in 1960-1965 to just 1.25% in 2020. The much maligned and mistrusted federal government is less than half as large, in relative terms, as it was from 1955-1965.

The detailed components are somewhat complex. The judicial and legislative branches have employed a relatively immaterial 30,000 to 66,000 during this time, doubling with the population.

The Executive Branch includes both the Department of Defense and other civilian agencies. It does not include active military employees. It typically does not include the postal service (USPS), which is seen as a truly independent agency. The Executive Branch started with 1.860 M employees and ended with 2.206 M in 2020. The low was 1.778 M in 2000 and the high was 2.252 M in 1990. In rough terms, flat employment for 65 years. As a percentage of the population, it has ranged from 1.12% to 0.65%, declining throughout the period.

The postal service started with 367,000 in 1955, grew to 761,000 in 1990, flattened out for 1995-2000, before declining to 492,000 in 2015 and 496,000 in 2020. So, we have a doubling in the first 45 years, adding 400,000 staff, followed by a reduction of one-quarter million in the last 20 years. As a percentage of the population, it grew from 0.22% to 0.30%, before declining to 0.15% in 2015-2020.

Combining the executive, legislative, judicial and postal branches, we get a subtotal that excludes the active military category. This is what most people think of as “federal” employees. This started at 2.3 M in 1955, grew to 3.1 M in 1990 before settling down a bit to 2.8 M in 2020. As a percentage of the population, it began at 1.36% and ended at 0.84%. This is a 38% reduction, removing more than 0.5% of the population from government employment.

The active military population has declined from 2.9M in 1955 and 3.1M in 1970 (Vietnam winding down) to 1.4M in 2000 (peace dividend), where it has remained. As a percentage of the population, this function declined from 1.77% in 1955 to 0.99% in 1975 to 0.49% in 2000 to 0.42% today. This is a 3/4ths reduction. moving 1.25% of the population out of military service.

The “Total” column shows the 5.2M start and 4.2M end. The percent of population falls from 3.13% down to 1.25%. The Federal Government is a much smaller employer today than in the “post-war” era.

The next column combines the Department of Defense in the Executive Branch with the active military to give a total military. This does not include the Veterans Affairs or Department of Homeland Security which serve quasi-military functions. We start with 4.1M in 1955, touch 4.3M in 1970, fall to 3.2M in 1975 and 2.0M in 2000, ending at 2.1M in 2020. The percentage of populations falls from 2.5% down to 0.6%.

The remaining federal employees began with 1.1 M in 1955 and grew fairly constantly to 2.0M in 1990, remaining flat for the next 30 years, ending at 2.05M in 2020. As a percentage of the population, this measure started at 0.64%, peaked at 0.82% in 1990 and has since declined to 0.62%, just below where it started.

After the Clinton/congress budget compromises in the mid-1990’s, criticism of the size and growth of Federal employment quieted down for the next 2 decades. Some criticism has restarted, as Federal agencies have increased the amount and variety of outsourcing employed through contracting and grants. The main summary shows that “contract” employees, those who work directly on Federal contracts, have been in the 3-5 million range since 1985. It reports that grant funded employees have been 1-2 million per year. The total is 4-7 million, the same order of magnitude as “regular” federal employment. I was unable to find comparable numbers for the 1955-1980 timeframe, so cannot be sure that this category has grown faster than the U.S. population. My guess is that there is some degree of “employee shifting” from regular to contracted employment. A subset of this is probably politically motivated, to please congressional oversight committees. On the other hand, corporate America discovered outsourcing to foreign factories and specialized firms in the 1980’s and probably moved 15-25% of jobs out of the Fortune 500. At one point, firms like GM and AT&T had 1 million employees.

Public service and the federal government (brookings.edu)

How big is the federal workforce? Much bigger than you think. – The Washington Post

The True Size of Government | The Volcker Alliance

The true size of government is nearing a record high (brookings.edu)

The sheer size of our government workforce is an alarming problem | TheHill

Good News: U.S. Charitable Giving

tomkapostasy3 Comments

U.S. charitable giving to GDP ratio is 1.44%. Canada is second at 0.77%. UK is third at .54%. Italy at 0.3% is representative of Europe. U.S. giving is 5 times as high as other developed countries. (Table 27). U.S. private overseas aid is $44B. UK is second at $5B. (Table 25).

U.S. Generosity (philanthropyroundtable.org)

The World Giving Index has consistently rated the U.S. as the most generous country of 125 reviewed. Across 2010-19, US is 3rd highest percentage of those surveyed reporting they had “helped a stranger in the last year” at 72% compared with 48% global average. US was 5th highest with 42% reporting they had volunteered time for a charity in the past year versus 20% global average. US was 11th highest in percent reporting monetary donations in the last year (61%), versus global average of 30%.

WGI_2019_REPORT_2712A_WEB_101019.pdf (cafamerica.org)

In general, total US charitable giving has grown on a per capita or percent of GDP basis for more than 50 years. There is a clear “step up” in giving in the late 1990’s. Real (inflation adjusted) per capita giving has nearly doubled from representative $600 in 1970’s to $1,100 in 2000’s. (table 1). The US nonprofit sector reflects that growth, even though program fees are a much larger share of revenues, rising from less than 2% of GDP in the 1930’s-50’s to 3% in the 1970’s to more than 5% by the 2010’s. (table 6).

U.S. Generosity (philanthropyroundtable.org)

The US nonprofit sector now has 1.5M organizations and employs 10% of the US workforce. (table 5).

U.S. Generosity (philanthropyroundtable.org)

The Nonprofit Sector in Brief 2019 | National Center for Charitable Statistics (urban.org)

These sources also report that roughly one-fourth of Americans volunteer each year, donating 136 hours of work. (graph 8).

U.S. Generosity (philanthropyroundtable.org)

The Nonprofit Sector in Brief 2019 | National Center for Charitable Statistics (urban.org)

Total US charitable donations as a share of disposable income ratio has averaged roughly 2% across the last 40 years. Charitable giving as a percent of GDP averaged 1.7% in the 80’s and early 90’s, before increasing to 2.1% in the “oughts” and teens.

The most widely reported figure shows total real (inflation adjusted) US charitable giving since 1979. This has increased together with real US GDP. Representative years and amounts: 1982 ($150B), 1992 ($194), 2002 ($317), 2012 ($355) and 2019 ($450B).

FUNDRAISING INSIGHTS FROM THE GIVING USA 2020 REPORT – AskRIGHT

Giving by individuals has fallen from 80% to 70% of the total. Bequests have increased from 7-8%. Foundation giving has more than doubled as a share of the total, from 7 to 16%. Hence, the real individual giving numbers are solid and rising, but their growth rate has slowed through time. 1982 ($130B), 1992 ($160), 2002 ($250), 2012 ($250), 2019 ($310).

FUNDRAISING INSIGHTS FROM THE GIVING USA 2020 REPORT – AskRIGHT

While the total and individual charitable donation amounts have increased, the percentage of individuals donating has declined significantly. Years, percentages and average donation. 2002: 67%, $2,000. 2008: 65%, $2,300. 2012: 59%, $2,400. 2016: 53%, $2,500. Various authors speculate that the decline is caused by increasing inequality, lower confidence in institutions and changes in tax deduction laws.

Fewer Americans are giving money to charity but total donations are at record levels anyway – Lilly Family School of Philanthropy (iupui.edu)

In the early 2010’s there was a significant decrease in charitable giving percentages by non-itemizers (10%) and a much smaller decrease by itemizers (5%).

Leadership 18 Applauds New Legislation Aimed at Halting Decline in the Number of Americans Who Give to Charity | Business Wire

There are various reports that break down giving rates by state, city, religion, politics, region, marital status, generation and income. Perhaps most important is that the decrease in the giving percent from 67% to 53% means that the percentage giving zero, and dragging down the average, has increased from 33% to 47% of the population, from one-third to nearly one-half.

More than 90% of individuals with income above $125K donate to charity. 77% of those with incomes of $50-125K donate. This drops off to 58% at the $25-50K range and 37% under $25K (graph 11).

U.S. Generosity (philanthropyroundtable.org)

As a percentage of disposable income, individuals below $50K donate 1.5%, those at $50-200K donate 1.75% and those above $200K donate 2-3-4%.

Massive charitable donations by the rich and famous are making the same big splash as always (phys.org)

Many predicted that 2020 would be a reduced year for giving due to the pandemic or post-election concerns.

Presidential Elections and Charitable Giving: What Does the Data Tell Us? | CCS Fundraising

Percentage of Americans Donating to Charity at New Low (gallup.com)

One source indicates that actual 2020 giving increased by 5%, with 1% more people making donations. This report also indicated that 23% of affluent donors increased their contributions to local projects and increased their unrestricted contributions.

One way wealthy people changed their charitable giving during the pandemic – MarketWatch

Another source indicates that 2020 donations were up by 11% and the number of donors was up by 7%. They reported a 15% increase in small donations (<$250), an 8% increase in medium-sized donations and a 10% increase in large donation ($1,000+).

Fundraising Effectiveness Project: Giving Increases Significantly in 2020, Even as Donor Retention Rates Shrink | Association of Fundraising Professionals (afpglobal.org)

The US has a solid track record of individual charity. Donations have risen in real terms through time. Americans support nonprofits through cash and time donations. The decline in the percentage of individuals making donations is a concern. The “one-time” tax deduction for non-itemizing filers may help to spur increased contribution habits.

Charitable Giving Statistics & Facts for 2021 | Balancing Everything

Indiana Coronavirus May 14

tomkapostasyLeave a comment

Indiana Coronavirus update. Daily cases are a little (-10%) lower. Last 3 weeks averaged 1,032 versus 1,144 in prior 3 weeks. This is up a little from the March average of 800 but way down from the Nov-Jan peak average of 4,700. Daily deaths have dropped even faster, from 75 at the peak to 11 in March to 7 in April/May.

The death rate is now less than 1%, compared with 2% last Fall and 1.6% during the peak infection period (improved treatment and age profile).

Indiana vaccination rate has lagged, after a positive early start, with 31% fully vaccinated. This is 39th best state. Median state is 36% vaccinated. 4 adjacent states are 35-37% vaccinated. Indiana’s vaccination rate (74%) for seniors (65+) is slightly better than the national average (72%).

National vaccines per day increased to 2M by the end of Feb and 3M by the end of Mar, peaking in early April. Daily vaccine rate declined to 2.6M at the end of April and continues to fall. Indiana follows the same pattern with 35,000 per day at the end of Feb, 42,000 at the end of March and April, but just 30,000 in mid-May.

At the county level in metro Indianapolis, the vaccine rates vary widely. Central Marion County is at 28% fully vaccinated. 4 counties are at 30-33% (Morgan, Johnson, Shelby and Madison). 4 others are at 40-41% (Boone, Hendricks, Hancock and Hamilton)

. https://www.npr.org/…/how-is-the-covid-19-vaccination…

https://www.coronavirus.in.gov/vaccine/2680.htm

https://covid.cdc.gov/covid-data-tracker/…https://www.coronavirus.in.gov/2393.htm

High ROI Suburbs

tomkapostasy2 Comments

Many of America’s highest income, politically conservative suburbs have successful pursued high amenity public service strategies.  How is this high spending approach economically and politically justified?

http://en.wikipedia.org/wiki/Tiebout_model

In 1956, economist Charles Tiebout developed a model of competing suburban governments providing different levels and combinations of services to match the varied preferences of groups.  Subsequent research on suburbs and private real estate communities has confirmed that individuals prefer to choose amenity/payment bundles which match their values.

http://www.springerlink.com/content/r1v378785j2588j8/

Why would members of this usually tax and government-averse high income group willingly choose to live in a high amenity suburb?

The sociological observation that individuals prefer to belong to groups of like individuals is a partial explanation.  Exclusive communities are more homogeneous.

Brand name communities also provide some luxury goods type value from their exclusive status as high income, wealth and service communities.

High income, wealth, tax and service communities screen out criminal elements and benefit from low service costs to security services, delivering a safe environment.

High service communities provide signaling benefits in a world of imperfect information.  Transferred corporate executives rely upon education and amenity cues in choosing a residence.  Universities rely upon the reputation of school districts in selecting among applicants. 

Most importantly, a high service strategy delivers a great financial return on investment – especially for the initial group of residents.  High service communities proactively pursue strategies to minimize the cost to existing residents.

They invest in all service dimensions to ensure that the community is recognized as “a” or “the” leader in the metropolitan area and region.  Schools, roads, utilities, zoning, parks, transportation, libraries and cultural institutions achieve recognition.

They increase the tax base through annexation, selective density increases and attracting commercial firms.

They pursue “good government” initiatives, outsourcing services, consolidating services, utilizing volunteers and boards, leveraging regional, state and federal funds, employing specialized consulting firms and retaining highly qualified staff that benefit from the community’s growth and financial stability.

They invest in economic development, using Tax Increment Financing districts, user fees, economic development incentives, balanced zoning and negotiation to take advantage of the economic value of their attractive locations.  Retail, office, distribution, services, logistics and light manufacturing firms are welcome in the right zoned areas.

High service communities make capital investments to provide future economic returns.  Schools, parks, roads, libraries, utilities, cultural services, transportation and recreation assets are created through donations, local and regional government actions.

Suburbs compete with other metropolitan suburbs for residents and with other regional centers for commercial investments.  The right investments provide an atmosphere with low taxes, high services and a high quality of life. 

A Midwestern suburb of 75,000 has invested almost $1 billion in the last 20 years in its schools, roads, utilities, library, parks, infrastructure, cultural institutions and economic development incentives.  In essence, each of the existing 25,000 households has made a $40,000 bet on the future.  There has been some political and journalistic opposition.  A typical residence is valued at $250,000.  There are another 3,000 commercial firms with $250,000 property investments, making the total property value $7 billion. 

The community has annexed the unincorporated areas, increased density, attracted new businesses and continued its build-out towards a 120,000 population.  The number and value of commercial enterprises is expected to grow from .75B to $4B in 20 years.  Through zoning measures, growth and increased demand for a singular resource, the average residence will be valued at $400,000, with the existing residences appreciating from $250,000 to $325,000.  The built out residential market value will be $16B, for a total property value of $20B.

The original 25,000 households will gain a real $75,000 on their housing values.  Because of the community’s economic and population growth, their capital investment will be reduced to less than $20,000.  The early residents will clearly benefit from this high service and investment strategy.  The new residents will benefit from the investments and have the opportunity to “vote with their feet” in determining if the services delivered are worth the property values and taxes required.

High income families demand high quality services and are willing to pay for them.  They also require their municipal governments to take all possible steps to increase the cost effectiveness of these services.

Tale of Two Cities

tomkapostasy4 Comments

In a recent speech at the Carmel Rotary Club, Indianapolis Star editor Dennis Ryerson warned the audience of the risk of a central city meltdown in Indianapolis as he had observed in Cleveland 20 years ago.  As someone who has lived in each region for more than 20 years, this prompted me to collect some historical statistics and speculate on the differential success of these two mid-sized Midwest areas.

In 1900, Indy was two-thirds the size of Cleveland, which at 654,000 people, was the nation’s seventh or eighth largest urban area by various definitions.  Indianapolis was in the 21st-25th range.

By 1930, Cleveland had grown by an astonishing 173%, adding 1.1 million people for a total of 1.8 million, reaching a peak national ranking of 6th to 8th.  Indianapolis was the turtle in this race, adding a mere 200,000 residents to grow by 50% to reach Cleveland’s 1900 650,000 population level, while maintaining a 21st-25th highest population ranking.

By 1960, Cleveland had added another one million residents (50%), reaching 2.7 million residents and maintaining a top 10 population ranking.  Indianapolis grew a little faster on a percentage basis, adding 400,000 residents to reach the 1.1 million population level.  Its national population rank slid to 26th as Sunbelt and west coast cities began to grow.

In the next five decades to 2009, Indianapolis continued its modest 1-1.5% annual growth rate, adding 750,000 residents to reach a population of 1.8M, while sliding to 34th place in the national metro population rankings.  Cleveland reached a peak population of 3M in 1970 before declining to 2.8M in 2009, good for a 26th place metro population ranking. 

In summary, Cleveland grew by 1 million people from 1900-1930 and from 1930-1960, but added ZERO population in the next 50 years!   Indianapolis added a quarter, half and three-quarters of a million people in those 3 periods.  What could possibly account for these divergent trends in cities located only 300 miles apart?

The locations are not very different.  Indy claims to be the “crossroads of America”, while Cleveland has said it is “the best location in the nation”.  Cleveland is on the New York to Chicago train line, the Great Lakes and interstates I-80, I-90 and I-77.  Indy boasts I-70, I-65, I-74 and I-69 interstate access.  Indy has leveraged its location and lower labor costs to become a greater distribution hub.  Cleveland has enjoyed a decade as a mini-hub for Continental, while Indy once served as a minor USAir hub.  Both cities have attracted rural residents from a 100 mile circle, but Cleveland’s area is only half as large due to Lake Erie.

Both cities had strong historic banking companies.  All of the Indy companies are gone.  Cleveland maintained National City Bank and KeyCorp as major banks through most of the period.

Cleveland has maintained a large Fortune 500 headquarters lead.  Firestone, Republic Steel, Uniroyal, Goodrich. TRW, Std Oil, White Motor, Eaton, Sherwin-Williams, Cleveland-Cliffs, Hanna Mining and Reliance Electric appeared in the 1960 list.  Cleveland had grown from 12 to 15 firms by 2009, adding Progressive Insurance, National City, KeyCorp, Parker-Hannifin, PolyOne, Lubrizol and Travel Centers of America.  Indy had 5 firms in 1960: RCA, Lilly, Curtis Publishing, Stokely Van Camp and Inland Containers.  It maintained only Lilly, WellPoint and Conseco in 2009.

On the professional sports scene, Cleveland has maintained football and baseball teams, while adding basketball, but dropping the second level hockey Barons.  Indy added the Colts and moved the Pacers from the ABA to the NBA.  Indy has successfully pursued an amateur sports strategy, attracting the Pan-Am games, the NCAA and many collegiate tournaments.

The cities share historical strengths in their art museums and orchestras, with Cleveland’s ranked higher.  Indy has added the Children’s Museum and Eiteljorg Museum, while Cleveland added the Rock n Roll Hall of Fame museum and lost the Salvador Dali museum.  Neither city has a major state university, with IUPUI and Cleveland State growing in parallel.  Cleveland has Case Western Reserve as a local research university.  Greater Cleveland has a much stronger community college system.  The Cleveland Playhouse and theatre groups offer more than Indy’s scene.  Cleveland’s Coventry/University Heights area is more vibrant than Indy’s Broad Ripple.  Cleveland adopted Michael Stanley while Indy embraced John Mellencamp.

Both cities focused on manufacturing for growth, especially automotive and metal forming manufacturing.  Cleveland had a greater emphasis on basic manufacturing in steel, rubber and plastics.  Indianapolis attracted a significant amount of investment from Japanese manufacturers.  Indianapolis’ health care industry has benefited from Lilly, Roche and IU, while Cleveland has leveraged CWRU University Hospitals and the Cleveland Clinic.

Net, net, Cleveland should have continued to grow slightly faster based on the factors above.  The drivers for Indianapolis’ positive differential growth include:

Better public relations regarding momentum.  Cleveland’s river fire and “mistake on the lake” moniker have hurt.  Indy was able to overcome the “naptown” label through continued positive growth and publicity.

Indianapolis and Indiana have maintained a low tax and low service environment conducive to business investment.

Indy has benefited from being the state capital and the only large city in Indiana, while Cleveland has battled Columbus and Cincinnati for state leadership.

Indianapolis has avoided major racial conflicts.  The 1966 Hough riots in Cleveland contrast with the calming Bobby Kennedy speech after Martin Luther King’s 1968 assassination.

Indianapolis public schools have not fallen as far as IPS.  Busing and white flight had a bigger negative impact in Cleveland where a more established Catholic school system option existed.

Downtown Indianapolis has recovered based upon major public and private investment in the Circle Center Mall, convention center and sports arenas.  Cleveland’s investment in the Brown’s stadium, Jacobs Field, Cavaliers arena, major office buildings and “the flats” has never reached the critical mass required for downtown growth.  Indianapolis’ downtown residential growth has been modest, but adequate.

Indianapolis pioneered the concept of uni-gov, merging the city into the county.  Cleveland has remained an island within Cuyahoga County and a small island within the metro area. 

Indianapolis civic leaders found a variety of ways to preserve and grow the central city and avoid having widespread areas of decay.  As Mr. Ryerson noted, this strategy will be more difficult to maintain as the surrounding counties grow at the expense of Marion County.  Both cities could benefit from some degree of regional government and taxing authority that aligns the interests of suburbs with the central city.

  Cleveland Indy  
  7 counties 9 counties  
       
1900          654         429 66%
1910          913         489 54%
1920       1,426         569 40%
1930       1,784         656 37%
1940       1,817         702 39%
1950       2,154         829 38%
1960       2,734       1,071 39%
1970       3,000       1,248 42%
1980       2,833       1,305 46%
1990       2,759       1,381 50%
2000       2,844       1,605 56%
2009       2,791       1,824 65%
       
1900-30       1,130         227  
  173% 53%  
       
1930-60          950         415  
  53% 63%  
       
1960-2009            57         753  
  2% 70%  

Indiana School Finances

tomkapostasy1 Comment

Indiana state school funding will decline for the next 3 years.  The current 5% expense reduction is just the first step.   School districts need to take bold actions to reduce their underlying cost structures.  Other organizations are reducing costs by 10% and increasing labor productivity by 5-8%.  Innovative schools can achieve the same financial gains while improving the quality of education.  These 20 ideas may be infeasible, but they might help to generate some creative solutions.

  1. Rank order career & technical programs and eliminate the single least effective one.
  2. Replace some career and guidance counselors with web resources and volunteers from local civic group partners.
  3. Assign administrators to jointly teach 1 FTE of classes in a technical field.
  4. Employ technology for teaching and testing and eliminate 1 staff/department.
  5. Carefully define “special needs” education and obtain separate funding or sponsorship.
  6. Double the fees for extracurricular programs to cover all costs, including coaching supplements and subsidies for low-income students.
  7. Maximize the use of capital budgets and bond funding for capital maintenance expenses.  Refinance bonds and use savings for capital maintenance.
  8. Reduce employee benefits by one-half for the first 5 years of employment.
  9. Add an additional teaching period for tenured staff.
  10. Assign a mentee to tenured staff and provide incentives for retention/progress.
  11. Provide teachers with a financial incentive in years 3-6 to remain in place.
  12. Eliminate future degree/credit hours based compensation increases.
  13. Outsource transportation, IT, HR, marketing and financial services.
  14. Extend textbook lives by 2 years.
  15. Move to a used computer strategy, recycling the 3-year-old units from local businesses.
  16. Consolidate library/AV staff and resources with community libraries.
  17. Reduce the cost of transportation by increasing the share of walkers, reducing the number of stops and limiting extra services.
  18. Move discipline problem students to countywide alternative programs after 3 strikes.
  19. Collect fees for AP and dual credit programs.
  20. Increase the use of teacher’s assistants when they can cost-effectively increase classroom sizes while providing quality education.

All changes have costs and benefits.  In a world of 10% less funding, schools that are able to identify the areas where the greatest cost reductions can be found with the least negative impact will be the ones that best serve their students, teachers and communities.  Schools should reach out to their communities for help in generating solutions to the coming crisis.

Indiana Redistricting Proposal Adds Value

tomkapostasyLeave a comment

“For the want of a nail, the shoe was lost; for the want of a shoe the horse was lost; and for the want of a horse the rider was lost, being overtaken and slain by the enemy, all for the want of care about a horseshoe nail.”  —  Benjamin Franklin

 Now, more than ever, society must rely on real economic growth to make the pie larger and allow us to choose how to divide the pie.  In the hot policy areas – global warming, health care, unemployment, alternate energy, retirement security, national security, adequate food – all solutions depend upon our ability to grow the economy.

 The private sector, especially in the last 30 years, has demonstrated its nearly unlimited ability to create value.  The contrast between productivity growth in the competitive sectors (ag, manufacturing, distribution, communications, mining, transportation, media, banking, IT, services) and the others (government, social services, utilities, education, health care) is instructive.  About 60% of the economy delivers 3-5% annual productivity improvements, while the other 40% is stuck at 0-1%.

 The slow growth sectors are all in areas where market failure is the rule – sometimes because services are natural public goods and sometimes due to natural monopolies, externalities, or unequal information.  In each case, there is a key role to be played by the government in shaping these industries to pursue continuous improvement as happens naturally in other sectors.

 Unfortunately, our political system does not produce “philosopher kings” who cooperate to find optimal solutions.  In a two-party democratic system, the best that can be hoped for is that the two parties will define contrasting, yet centrist policies and employ politicians who can seek re-election by solving some problems rather than merely demonizing the other side.

 The gerrymandering of Indiana congressional, senate and representative districts every 10 years encourages a polarized political environment.  The party in power draws districts to maximize their representation by creating as many 55-60% safe districts as possible, while consolidating their opponents into as few 80-90% majority districts as possible.

 This process results in extreme left and extreme right candidates winning nearly all races.  Centrist candidates have no chance in stacked districts.  Centrist voters have no influence in stacked districts.  The political parties attract extremist candidates.  They attract extremist supporters.  Only in a small minority of districts do voters have a choice between two qualified centrist candidates who mainly differ by a modest degree on the political spectrum. 

 The Indiana Senate’s Republican Caucus, Secretary of State Todd Rokita and Carmel representative Mike Delph have floated various proposals to turn redistricting over to some form of non-partisan commission, required to take advantage of the computer software which can define boundaries to maximize the compactness of each district, without considering socio-economic, religious, racial or political factors. 

 A visual example of the current skewed districts versus neutral districts is shown at http://bolson.org/dist/IN/.

 Members of both political parties should be able to see that the skillful use of gerrymandering today is a recipe for failure.  Even California voters are now seeing that structures that lead to polarization can bankrupt a state.  Indiana voters who care about the future should pursue this “good government” initiative.

Indiana Metro Growth Trends Continue

tomkapostasy3 Comments

Since 1900, a majority of Indiana counties have grown by less than 0.4% per year.  These 47 rural counties have been trapped in a time machine, slowly evolving from 20,000 to 24,000 people per county.  In 1900, they accounted for 38% of the population.  This dropped to 23% in 1950 and 17% in 2010.  These counties account for half of the counties and land, but only one-sixth of the population.  The urbanization of Indiana continues slowly, decade after decade.  The 47 rural counties had a population of 960,000 in 1900 when William McKinley of Ohio was elected president and only 1,120,000 in 2010.

 On the other hand, the urban counties have more than tripled in population (+241%), increasing from 1.6 to 5.3 million.  Indiana has grown by 155%, from 2.5 to 6.4M people.  Fully 96% of this growth has taken place in the 45 urban counties.

 The ten medium-sized cities and their immediate counties increased by two-thirds between 1900 and 1950 and then by one-sixth through 2010.  They accounted for 460,000 people in 1900, increased to 760,000 in 1950 and maintained minor growth to 870,000 in 2010.  Evansville, Anderson, Muncie, Terre Haute, Kokomo, Marion, Richmond, Bedford, New Castle, and Huntington grew from counties with 30-70,000 residents in 1900 to counties with 40-170,000 citizens across the century.

 The five largest cities – Indianapolis, Fort Wayne, Gary and South Bend/Elkhart – grew significantly faster.  They increased from about 0.4 million in 1910 to 1.4 million in 1950 to 2.2 million in 2010.  The rapid growth from 1900 to 1950 has since tapered off.  These 5 areas have grown from one-sixth of the state’s population to slightly more than one-third.  

 The greatest changes have taken place in the suburbs.  Fully 28 counties plus Lafayette and Bloomington have benefited from the growth of metropolitan areas.  These 30 counties have grown from a 1900 average population of 23,000 (abut the same as the rural counties) and total of 680,000 to 860,000 in 1950 (up 26%) to 1,950,000 (up a stunning 186%) in 2000 and an even higher level of 2,250,000 in 2010.  The suburban counties have increased from 27% to 35% of the Indiana population.

 Indiana’s population growth is expected to drop back to 6% for the 2010 decade after a 10% increase in 2000, 1% in 1990 and 6% in 1980.  This follows a post-war period where 15% growth per decade was the norm.  This decade continues to show very unequal growth.  The 30 suburban counties show a 14% growth of 305,000 people.  The other 62 counties increased by only 1%, from 4.1 to 4.2 million people.  The 30 suburban counties have 88% of the population growth. 

 Indiana has been blessed to have 6 urban areas that drive significant population growth: Chicago/Gary, South Bend/Elkhart, Ft. Wayne, Indianapolis, Cincinnati and Louisville.  The state legislature would be wise to adopt policies that reinforce this century long trend.

Civic Investment in Monuments

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I’ve noted a pattern in our local government investments.

CIB Conseco Fieldhouse, CIB Lucas Oil Stadium, Carmel Clay Parks Monon Center, Indianapolis Airport Authority Midfield Terminal, Carmel Regional Performing Arts Center and the CIB Convention Center Expansion seem to have the same issues.

They were built with public funds to meet public and private needs.  The bondholders are well secured by public revenue sources and commitments.  The operating revenues are less than what is required.  The users do not want to pay more.  Current political forces are criticizing historical decisions and current operations.  The public thinks that the politicians are incompetent and/or captured by special interests.  The public wants a simple solution that does not include more taxes.

The greatest problem is that these facilities inherently serve BOTH private and public purposes.  The CIB facilities serve customers, but also the nearby local businesses and our collective sense of importance in hosting the undefeated Colts.  The airport serves passengers, but also economic development.   The Monon Center offers an alternative health club, but also provides subsidized recreational programs.  The CRPAC offers ticketed cultural events, but also subsidizes local arts groups and stimulates the hospitality and retail arts industry.

In each case, the public is confused because it is not clear what part of the capital and operating costs are due to private and public uses.  It is not clear what part of the costs are being paid by the users and what is being picked up by the public through current and future taxes.

Political and civic leaders would be well served to clarify these “buckets” of costs, benefits and responsibilities in the future.  It is not easy to do and any well-defined fence will be inherently arbitrary and sub-optimal.  However, the political costs of an ostrich approach are now apparent.  I’m sure that many local leaders decided that this “direct” communications style would be impossible, because well-informed Hoosiers would choose to NOT invest in any ventures where each did not personally receive an ROI.   I point to the overwhelming success of the Wishard Hospital campaign as a counterexample.  I point to the recent consensus that requires schools and other local groups to seek voter approval as a situation of “what’s good for the goose is good for the gander”.

State leaders should review these investments and outline a state review process that meets the public needs.  There is an inherent bias towards overinvestment by civic and political leaders.  Many constituencies benefit greatly in the short-run from major projects.  The operating deficits are often a decade away.  The positive ego benefits of creating 50-300 year monuments is too attractive.

Future capital projects should be required to clearly explain public and private benefits, costs and funding sources.  The projects should protect taxpayers at a level equal to bondholders.  Contingency funds should be included to handle the typical 5 year business cycles.   Even with these constraints, our local leaders will be able to justify investments in viable projects.

Value of Public Libraries

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The century old consensus regarding the value of public library services is increasingly
questioned.  Rising costs, anti-government sentiments, accountability demands, on-line
materials delivery, an increasingly individualistic and commercial society, and reduced
public funding combine to challenge libraries to clearly define their services, respond to
public demands and justify their very existence!
 
Libraries need to build upon their historical strengths to clearly define the value they
provide, measure ongoing progress and actively promote their value.
 
Libraries deserve public support because they deliver value:
 
1) Economic ROI of 200%+ compared with 10% returns for private capital.
 
2) Near-zero incremental cost personal growth with positive spillover benefits to the
community, leading to an improved quality of life for all citizens.
 
3) Libraries support the effectiveness of our democratic society, building universal
literacy, access to education, information and interaction opportunities.
 
4) Libraries serve as a physical embodiment of the community’s belief in itself.
 
1) Economic Returns
 
Materials can be used 30 times, rather than once.
Materials in all categories achieve targeted usage rates.
Services ensure that all age, socio-economic status and geographical groups benefit. 
Higher cost materials providing value to many patrons.
Lower demand materials are used by many individuals, schools and libraries.
Librarians maintain specialized knowledge of value to patrons.
Materials are professionally selected to be of highest value to patrons.
Short-term demands and long-term portfolio needs are balanced.
Libraries deliver highest demand services, creating a community asset.
 
2) Personal Growth Gains
 
Access to individual paced personal and career growth materials.
Develop a love of reading and learning in all students.
Facilitate an interest in life-long learning in adults.
Access to life-long professional growth.
Opportunities to explore materials of interest.
Opportunities beyond areas of mastery to explore diverse topics and cultures.
Provide adults with introductions, exploration and mastery level experiences beyond
careers, professions and economic progress.
 
3) Civic Benefits
 
Develop general, economic and political literacy.
Materials represent all sides of public policy issues.
Promote the core views of the American public, educating immigrants.
Offer diverse viewpoints, encouraging the general public to consider their views.
Sophisticated access to all materials and viewpoints.
Historical and contrary viewpoints on current issues to ensure full consideration.
Training and experience to evaluate claims from proponents of all views.
Encourage low income/resource individuals to use the library for personal growth.
 
4) Community Benefits
 
Spaces for community meetings.
Promotion of personal and community growth.
Common learning experiences unite diverse elements of society.
Opportunities for volunteers, donors, advisors, respondents and citizens.
Opportunities for intergenerational interaction.
A positive view of the future through progress.
 
Summary
 
Libraries face threats to their public funding.  By adapting programs, delivering value
and informing the public, libraries can continue to fill their vital value added role for
society.