Entries by Steve Poftak

The Teachers Union Meets the Market

There’s an interesting experiment going on in Boston right now — the Boston Teachers’ Union is starting a pilot school next year and is working, hard, to attract students. (Let’s not talk about the cynical process that lead to the expansion of pilots in Boston, ok?) They are facing the challenges of a start-up school. With just a building and two lead teachers (its version of a principal, I believe) in place, how do you get parents interested and committed? They are taking an interesting approach, attempting to start next year with K1, K2, Grade 1, Grade 2, and two Grade 6 classes. Why two Grade 6 classes? My hunch is that the BTU knows that there is big overhang […]

16 Years Later, Merger Savings Realized!

As we contemplate a major shake-up of our transportation system in order to capture efficiencies, it’s worth pondering some cautionary tales from state government. Today’s Herald brings news that the State Police are considering the consolidation of barracks, particularly in the Boston area (a region with barracks in Government Center, Boston, Brighton, and South Boston, as well as Milton and Framingham a bit further out.). This duplication is due in part to the merger of the MDC police with the State Police in 1992. The state police union is implacably opposed (I’m not shocked), but I’d note that many of these barracks are in absolutely shameful physical condition. But the larger lesson is: realizing even obvious efficiencies in state government […]

Additional Assistance is Gone?

The Governor’s Budget was released today (well, some of it anyway, it’s four hours after the formal release and none of the companion bills are available yet). One really surprising finding was the elimination of Additional Assistance, a roughly $380 million piece of local aid. To see who gets what currently from this line item, look here. In principle, this is a good idea. Additional Assistance stands out among a variety of local aid programs as having almost no rationale for the distribution of aid (unlike lottery and chapter 70 education aid). But as a practical matter, it’s a pretty big pill for certain municipalities, like Boston ($164 million of a $2.1 billion budget), to swallow, particularly in a single […]

Great Moments in Public Management, Pt. MCMLXVII

New York’s Inspector General has released a scathing report on the former state health commissioner (and former Surgeon General) Antonia Novello that details her rampant abuse of state automobiles and employees. She used them to ferry her on various shopping expeditions, run numerous personal errands, and perform household tasks. My favorite comment from a former employee, as pointed out by the New York Times: Novello’s fondness for shopping was so well known that employees in the office would give her sales fliers or coupons to encourage her to leave the office so that they would not have to work late

Fiddling while the budget burns

It took about a year after I left the State House to realize that no one outside the building cared when the Governor’s budget was released or who vetoed what or hundreds of other ‘events’ inside the building. With that in mind, I think its time for the House of Representatives to call themselves to order for real. The protracted drama over Sal DiMasi and the now-resolved Rogers-DeLeo spat made for great palace intrigue. But they crowded out important policy issues, like massive mid-year 9C cuts, a $3 billion deficit in FY10, and..yes..the upcoming release of the Governor’s budget.

What Problem Are They Trying To Solve

Bureaucracies have a wonderful, self-sustaining way of letting rules and regulations evolve. They are less skilled at pulling back from their day-to-day existence and asking “why do we do this?” I bring this up to frame a story of one particular family’s experience registering with the Boston Public Schools (which have seen enrollment decline over the past 10 years). And from anecdotal evidence, I can assure you that no one from outside Boston is sneaking their children into Boston’s kindergartens. Yet, upon presentation of proof-of-residency that included a copy of their property deed, multiple utility bills, proof of mortgage payment, and car registration, they were informed that additional documentation would be needed. (And as a sidebar, all this information is […]

Jeremy Piven?

Today’s Globe has a well-meaning op-ed that uses Jeremy Piven’s alleged mercury poisoning as its lead. This would be the ‘mercury poisoning’ that required him to go to Thailand to recuperate. For those of you with great interest in the topic, the NYPost recaps a variety of Mr. Piven’s exploits during his illness, including boozy late night parties and using mass text messages as a way of…ahem..meeting new friends. And a fisheries trade group took the liberty of posting Mr. Piven’s recent Good Morning America appearance on you-tube, with their own running commentary. In their defense, the op-eds authors do clear their throats two paragraphs into the piece, noting that Piven is widely discredited at this point. So don’t use […]

All We Got Was Paint and Carpet

Pioneer HQ has just undergone a facelift, but it appears we set our sights too low. Among the dirt thrown at departing Merrill Lynch CEO John Thain was that he spent $1.2 million sprucing up his office, including: $87,000 for an area rug in Thain’s conference room and another area rug for $44,000; a “mahogany pedestal table” for $25,000; a “19th Century Credenza” in Thain’s office for $68,000; a sofa for $15,000; four pairs of curtains for $28,000; a pair of guest chairs for $87,000; a “George IV Desk” for $18,000; six wall sconces for $2,700; six chairs in his private dining room for $37,000; a mirror in his private dining room for $5,000; a chandelier in the private dining […]

If you thought of them as customers, existing ones would be important

The Turnpike cranked out one of the more inexplicable pieces of public policy last week — adding a $.50/month charge for FastLane transponders. For potential new users, this is a actually a passable deal — you can get a transponder for free (versus $25.95 one-time charge) with a payback of more than four years. For existing users, this is ridiculous — you paid a flat fee upfront and the Turnpike is changing the terms of the deal. I wonder if EZ-Pass Arbitrage will increase? This space is a huge booster of open road tolling, so its disappointing to see the Turnpike do this, unless its part of some brilliant political strategy whereby the Turnpike alienates as many political constituencies as […]

Ken Lewis is on the clock

Ken Lewis’ dramatic firing of John Thain from BofA only highlights the next departure — Ken Lewis. He bought Merrill at the height of the crisis and clearly fumbled the due diligence on the deal. Otherwise, why does he need $20b in funds and $120b in guarentees from the Feds to do the deal only a few short months later? A hidden winner in all this? Old Friend Brian Moynihan, who takes over for Thain.

Tax Time

Some smart aleck once said that the two most effective reforms would be to require every elected official to send their kids to public school and to fill out their taxes without any outside assistance. The second part of that point is reinforced today by the story of Treasury Secretary Geithner’s tax problems — he failed to pay a portion of his taxes during his term at the IMF and had a housekeeper who was briefly out-of-status. The point here is that the head of the New York Fed and presumptive Treasury Secretary, using an accountant, can’t properly understand the tax code. What are mere mortals supposed to do?

Who's the DINO Now

After a legislative hearing on public-private partnerships last month, the Governor reportedly tee’d off on one of the hearing chairs: Patrick….suggested that Baddour’s [the hearing chair] preference for privatizing roads and bridges suggested Republican leanings, according to people familiar with the conversation. Now comes news that the Mass Turnpike is indeed planning to put the turnpike service plazas out for a long-term lease. We are pleased to see the Administration’s new-found openness to the concept and hope they have had a chance to read our analysis of PPPs and case studies on their usage in Massachusetts. Given the Governor’s control of the Turnpike, this is doubtless being done with his blessing. However, with no comprehensive transportation reform plan out publicly […]

The Free Market Reponse to Partners-Blue Cross

Several folks, including a recent commenter, have posed a similar question — if the handshake agreement between Partners and Blue Cross has raised healthcare costs so much, why hasn’t someone come up with a non-Partners insurance product? I can’t say that I have an absolute answer. But, I would point you in the direction of the closest analogue I can think of — Unicare’s Commonwealth Choice PPO plan, which is available to state employees. It limits you to a variety of community hospitals, BIDMC, and Children’s Hospital (the only contact with the Partners network, as far as I can tell. Jump on our GIC health insurance comparison website — www.gicestimator.com — and pretend to be an employee of one of […]

More Bailout Fun

First, the nonsense — signaling the illogical end of this process, the…ahem…adult entertainment industry has put in for its share of funds. Next, the impossible overreach — a Massachusetts firm has put in for $1.84 billion loan to construct production facilities. Now, don’t get me wrong — I hope the company succeeds in its efforts to make next generation batteries that might catalyze the use of more electric vehicles. But, for a company with around $40 million in yearly revenues and only $205 million in assets, this is a massive bet with our money on a specific company and a specific technology. Its good business on the company’s part — they’ve found an investor willing to take equity-type risk that […]

Told You So

My colleague, Jim Stergios, mused a few weeks ago about Bernie Madoff and the lack of trust out there right now. And Jim is exactly right. In a previous life, I was part of group that attempted to raise an investment fund (obviously it didn’t work out, did it?). My colleagues were forever pitching the idea to a variety of placement agents, fund-of-fund operators, and miscellaneous middlemen. These gentlemen were always impeccably dressed, impossibly self-assured, and gave off a well-monied whiff that, by virtue of pedigree, education and/or previous employer, each had some link to sources of capital. That fund never got raised (obviously) but I was reminded of those particular types as I read Harry Markopolos’ devastating critique of […]

Overstimulated

Ed Glaeser has an interesting and thoughtful piece in today’s Globe on the various stimulus ideas floating around. I am a bit concerned about the rush to spend billions of dollars willy-nilly. The stimulus package has turned into a Christmas Tree of sorts, with every group hanging their desired ornament on it. But I fear most people are not paying attention to the details. The State has cranked out its list. There are some worthy projects here, but there is also a lot that has not been fully vetted. $200 million for rebates for biomass pellet furnaces? $200 million buys you about 60,000 of those furnaces outright (against a housing stock base of around 2.5 million) and it increases as […]

Will they give the money back?

As I was walking to work this AM, a cab (thanks hackney license #385!) ran a red light, stopping only to berate me for walking in a crosswalk with a walk signal. It got me to thinking about the fare increase of this summer. Back in August, in the throes of the gas crisis, the city of Boston raised rates after a series of complaints by cab drivers and their representatives. I advocated back then for a break in the artificial monopoly that supresses the number of cabs in the city (read the comments too). As gas prices have dropped from $4+ in August to less then half that (at least where I live), the new, higher rates remain in […]

Cut the Income Tax! Raise the Sales Tax! Lower and Raise Property Taxes!

Hey, its not my idea. It’s a proposal floated by a consultant to the the Readiness Project, tucked in an appendix to the Readiness Finance Commission, released on New Year’s Eve (see “Beware the Doldrums“). To quote from the appendix itself: 1. Increase the burdens of state-level general sales taxes by 25 percent and state-level selective sales taxes by 60 percent. 2. Create a local-level general sales tax with a burden of $2.00 per $1,000 of personal income. 3. Decrease state-level personal income taxes by 15 percent and state-level corporate income taxes by 10 percent. 4. Decrease local-level property taxes by 10 percent but create a state-level property tax with a burden of about $1.50 per $1,000 of personal income. […]

Massachusetts Healthcare Reform: A Framework for Evaluation

Passed in 2006, the Massachusetts healthcare reform bill represents an innovative approach to healthcare reform in the United States. The bill (Chapter 58 of the Massachusetts Laws of 2006) has four main goals: to use an individual mandate to expand access to near universal levels; to establish guidelines for employers’ fair share’ contribution and involvement; to reorganize insurance markets and manage the distribution and subsidization of several insurance plans through the new Massachusetts “Connector”; and to establish transparency that will aid in understanding and assessing the bill’s cost and quality of care.

Additional Reforms for the Governor’s Accelerated Bridge Repair Proposal

The Governor’s proposal to fix structurally deficient bridges is an aggressive approach to addressing the massive backlog of deferred maintenance in the Commonwealth. To be sure, this approach does not create revenues, it only accelerates planned future spending. However, this acceleration will result in greater value by fixing hundreds of decaying bridges sooner rather than later; thereby avoiding the effect of construction inflation and higher future repair costs due to ongoing deterioration.

GIC Consolidation

The Middle Cities Initiative seeks to help the Commonwealth’s older cities, which face economic, demographic, and political challenges. These challenges cover a wide range of issues—entrenched political cultures, significant infrastructure costs, underperforming schools, struggling retail and manufacturing sectors, crime, and poorly targeted state programs. The Initiative’s goal is to develop and disseminate concrete policies to help the Middle Cities grow.

Parking garages are silly investments for the State

Today’s Globe reports on a bond bill earmark that gives Salem funding to build a parking garage. The article focuses on environmental advocates objections. They (correctly) don’t want to see the bulk of Transit-Oriented Development funding going to a single project. And I’ll give you another reason to dislike the idea — parking garages should be able to support themselves. If there really is ‘demand’ for parking, then people will pay for it. And if parking generates a revenue stream, then it should be able to finance some portion of the garage, if not all of it. Perhaps a private developer could be given a 20 year lease to take any risk off of the community. Don’t believe me, take […]

One Last Word on the Film Tax Incentives

Yesterday’s Globe had an article critical of the film tax credit offered by the Commonwealth. I will say that it has significantly improved the celebrity level of the gossip columns, minimizing the Globe’s Names & Faces section’s embarassing fascination with C-list celebrities eating chinese food at the Kowloon. Wow! John Waite? Pro wrestlers? Wasn’t exactly Page 6 material. However, the Department of Revenue’s report makes one fact clear — these are temporary jobs: …the 20 film productions for which tax credits were claimed in calendar year 2006 employed approximately 2,267 individuals, with an average employment duration of 3.2 months, with the employment duration ranging from one week to 12 months. Weighted for the number employed and the duration of employment […]

What’s Going on at Higher Education

The Commonwealth released a mundane piece of annual debt disclosure a few days ago. One interesting section, on page 11, is the number of budgeted workers in the state’s workforce, which has grown by almost 6,000 employees (from a base of 62,000) since June 2004. Leading the charge? The Department of Higher Education, which has added almost 2,700 employees during that span, an increase of 22.5%. Yet, their enrollment levels have only increased by 6% at best during the span. What gives?

Lottery Questions

Interested in how your town fares under the Lottery — take a look here: Lottery Workbook This spreadsheet tells you how much your town gets from the lottery relative to the sales of lottery tickets in the community. It also calculates how much people win from those tickets and adds it into the amount of aid to give another angle to the notion of return on investment. Feel free to comment on tweaks, mistakes, or observations from the data.

Boston Cops and the Civil Service Commission

Michelle McPhee, late of the Herald and currently on WTKK, has a gripping piece on the efforts to root out corruption in the Boston Police Department. McPhee was on the crime beat before and her dramatic writing gives an important story even more life. Halfway through the piece, McPhee fingers one of the key suspects: BPD leaders say one of the biggest hurdles to cleaning up the force is the state’s Civil Service Commission, an independent body established in 1884 to prevent politicians from interfering in the hiring practices of public agencies, or managers from canning people unfairly…Any police officer—or civil servant—who has been disciplined or fired can appeal to the commission and have a full hearing. If it decides […]

Reaching

Slate’s Tim Noah attempts to draw a parallel between Obama’s membership in Reverend Wright’s church and Hillary Clinton’s interview with reporters and editors at the Pittsburgh Tribune-Review, owned by Richard Mellon Scaife. The clear implication is that Clinton should be held accountable for some statements of the paper’s owner, as recounted by Noah. He’s reaching. Her appearance at the 3rd most widely circulated newspaper in a hotly contested primary state should hardly be newsworthy. Particularly if Noah’s chosen candidate has (gasp!) spoken with reporters at the very same paper.

Open Markets and Open Skies

The thicket of regulations which used to govern air travel between the US and Europe, which severely limited which airlines could fly to and from various destinations, will be gone on March 30. Here’s hoping the innovators in low cost travel in Europe (Ryanair, Wizzair, et al; take a look at their sites and the unbelievable prices) will make transatlantic travel more affordable. Of course, as an investor, you might be interested in Warren Buffett’s take on the industry: “if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

I went to a fight

…and a birthday party broke out. Sheesh, two police reports from kids’ birthday parties — one at a Chuck E. Cheese and the other from the Good Time Emporium in Somerville. At least the second one was on Easter.

Getting the Incentives Right

At the end of the day, compensation systems are intended to attract a workforce appropriate to the task. So, the details in Monday’s Globe story on expanded State Police recruitment are alarming. The story leads with a push for greater diversity but quickly gets to the point: Thirty-nine percent of the department’s 2,429 officers are eligible to retire because they’ve been on the job for more than 20 years, and more than half of those already qualify for a full pension, according to State Police. “Over 500 troopers have maxed out their pension and could walk out the door any time,” said Colonel Mark Delaney. As our 2006 paper on state pensions points out, the Commonwealth builds all kinds of […]