connecting america’s leaders february 2011 $4.50 meet … · 2016-11-28 · connecting...

CONNECTING AMERICA’S LEADERS February 2011 $4.50

MEETTHE NEWBOSS

Rhode Island’s Christopher Koller

The nation’s onlyhealth insurancecommissionertakes on an industry.

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02.2011

FEATURES22 THE COMMISSIONER IS IN

How one regulator set out to transform the health-care system.By John Buntin

30 BUILDING BRIDGESForget the border wall. U.S. cities see big bucks in opening new crossings to Mexico. By Ryan Holeywell

36 PIPE DREAMSWith stormwater a major pollutant, cities are coming up with innovative ways to control the fl ow. By Linda Baker

40 WATER WORKSNew York City’s fi rst—and only—water fi ltration plant is a marvel of engineering. By Tod NewcombePhotographs by David Kidd

42 BY THE BOARDFor incoming governors like New York’s Andrew Cuomo, effi ciency commissions are more important now than ever before. By Jonathan Walters

VOL. 24, NO. 5

Construction workers inside the nearly complete water tunnel that will link New York City’s upstate reservoirs with its fi rst water fi ltration plant.

GOVERNING | February 20112

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PROBLEM SOLVER

44 Chicago Goes to Court To cut costs and save face, police misconduct cases are going to trial—all of them.

46 Smart Management Louisiana learns to use information about its students to create real-life benefi ts for them.

47 Idea Center Quincy, Mass., pilots pay-for-performance snow removal.

48 Tech Talk Colorado builds better e-government one micro-grant at a time.

50 Public Money With health care driving state spending, a focus on quality care could help cut costs.

52 Player Mike Flood’s deft negotiation skills have made him a successful speaker of the Nebraska Legislature.

DEPARTMENTS

4 In This Issue

6 Letters

8 Dispatch A list of priorities and issues helps us remember what really matters in tight fi scal times.

POLITICS + POLICY

11 Observer Food safety regulations and the new GOP mood.

13 Ballot Box A review of the 2010 census fi ndings and its implications.

14 Potomac Chronicle States don’t like the carrot that comes with Medicaid, but they can’t stop eating it.

15 At Issue More states are allowing patrons to bring guns into bars, but what eff ect will the laws actually have?

16 Health The National Alzheimer’s Project Act incorporates the state perspective in implementation.

18 Green Government Without a national clean-energy standard, states fi nd new ways to grow green tech.

20 Economic Engines When governors say no to infrastructure, is it fi scal prudence or politics?

21 Urban Notebook A certain fascination has developed with places that have fallen on hard times—like the Rust Belt.

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IN THIS ISSUE

The IC’s Changing Role

With the Aff ordable Care Act’s passage, the role of state insurance commissioners (IC) has been transformed, thrusting them into the center of the national debate about how (or whether) to imple-

ment health-care reform. In some states, these regulators are work-ing on eff orts to control the growth rate of premiums. But one IC is taking a more direct approach, tackling rising health-care costs head on. Rhode Island’s Christopher Koller is the nation’s only health insurance commissioner. In this month’s cover story, John Buntin profi les Koller’s unique role and his fi ght to make insurance more aff ordable.

And in this month’s economic development feature, staff writer Ryan Holeywell looks at some communities that believe that toll revenue, tourist dollars and industrial development associated with U.S.-Mexico border crossings will breathe new life into their strug-

gling cities. One such example is Donna, Texas, where construction on the Alliance International Bridge is now complete and offi cials see major potential. If all goes as planned, an industrial development sur-rounding the U.S. side of the bridge could triple the city’s tax base. This bridge actu-ally is one of three new crossings to open along the U.S.-Mexico border within the last year, and several other border com-munities also are pushing for new or expanded crossings. Turn to page 30 for more details.

Moving on to environmental issues, our Pipe Dreams story reviews the recent Environmental Protec-tion Agency (EPA) policy that puts strong pressure on states and localities to enforce water pollution controls—especially with regard to regulating stormwater and wastewater overfl ow. In this vein, Kansas City, Mo., and Philadelphia have proposed multiyear, billion-dollar green water infrastructure plans that will clean their water and make sewer overfl ows a problem of the past. Contribut-ing writer Linda Baker examines these eff orts on page 36.

Also this month, photographer David Kidd and editor Tod Newcombe traveled to New York’s Croton Water Filtration Plant to illustrate the complexity of upgrading a core component of city infrastructure to meet the needs of 21st-century society: drinking water systems (which in the U.S. face an annual shortfall of $11 bil-lion for replacing aging facilities and complying with existing and future federal water regulations). Croton is in the midst of bringing the new water fi ltration plant online, and its water into compliance with EPA regulations. This is a prime example of the challenges municipalities face when building and upgrading water systems.

Enjoy our February issue, and let me know how we’re doing by e-mailing me at [email protected].


Publisher Fred Kuhn

Editor Tod NewcombeExecutive Editor Jonathan WaltersEditor-at-Large Paul W. TaylorManaging Editor Elizabeth DaigneauSenior Editor Zach PattonAssociate Editor Jessica B. MulhollandChief Copy Editor Miriam JonesCopy Editors Elaine Pittman, Sarah RichStaff Writers John Buntin, Ryan Holeywell, Andy Kim, Russell Nichols, Tina TrenknerCorrespondents Katherine Barrett, Richard Greene, Alan Greenblatt Contributing Editors Penelope Lemov, Steve TownsColumnists William Fulton, Peter A. Harkness, Donald F. Kettl, Alex Marshall, Girard Miller, John E. Petersen

Creative Director Kelly MartinelliDesign Director & Photo Editor David KiddSenior Graphic Designer Crystal HopsonGraphic Designer Michelle HammIllustrator Tom McKeithProduction Director Stephan WidmaierProduction Manager Joei Heart

Marketing Manager Jenna AlifanteEvents & Program Manager Jennifer Carman

Founder & Publisher Emeritus Peter A. Harkness

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Associate Publisher Erin Waters [email protected]: Account Director Chris Hempel 818-445-4451South/Midwest: Account Director Jennifer Gladstone 281-888-4125East: Account Director Erica Kraus 202-862-1458VP Strategic Accounts Jon Fyff e jfyff [email protected] Director Strategic Accounts Shelley Ballard [email protected] Production Manager Kori Kemble 202-862-1448Advertising Coordinator Alina Grant 202-862-1450Advertising Coordinator Nikki Bogopolskaya 202-862-1456

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Reprint Information Reprints of all articles in this issue and past issues are available (500 minimum). Please direct inquiries for reprints and licensing to Wright’s Media: (877) 652-5295, [email protected]

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Governing (ISSN 0894-3842) is published monthly by e.Republic Inc., with offi ces at 1100 Connecticut Ave. N.W., Suite 1300, Washington, D.C. 20036 and at 100 Blue Ravine Road, Folsom, CA 95630. Telephone: 202-862-8802. Fax: 202-862-0032. E-mail: [email protected]. Web: Governing.com. Periodical postage paid in Washington, D.C., and at additional mailing offi ces. Copyright 2011 e.Republic Inc. All rights reserved. Reproduction in whole or in part without written permission of the publisher is prohibited. Governing, Governing.com and City & State are registered trademarks of e.Republic Inc.; unauthorized use is strictly prohibited. U.S. subscription rates: Government employees—free; all others—$19.95 for one year. Foreign subscriptions: $74.95 in U.S. funds. Post-master: Send address changes to Governing, 100 Blue Ravine Road, Folsom, CA, 95630. Subscribers: Enclose mailing label from past issue. Allow six weeks. Member: BPA International. Made in the U.S.A.

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Unrelated PPP Issues?The recent story Selling Out by Russell Nichols [December 2010] had several points of value, but unfortunately mixes in issues not related to “privatization.” The discussion of the diffi culties of two California cities had nothing to do with the provision of municipal services by the private sector, and unfortunately set a negative tone for the balance of the article.

Public-private partnerships (PPPs) can deliver substantial benefi ts for the public—when and if they are developed and managed correctly. Given the cur-rent challenges of budgets, deferred maintenance and expanding demands, PPPs should be examined as an option for many more government needs. It would be much more benefi cial to readers of Governing if the positives of PPPs were treated with as much diligence as the neg-atives—decision-makers need clear and accurate information.

The story does include accurately the need for continuing public-sector involve-ment in outsourcing contracts with the private sector. The National Council for Public-Private Partnerships has long sup-ported government doing a full “life-cycle costs analysis” (including all costs and not

just the obvious operation and mainte-nance fi gures) as a benchmark to evaluate a private-sector off er. And once a contract is awarded, the public sector needs to be involved in oversight and direction of the implementation of that contract.

LETTERS

One last point—“privatization” is when an asset’s ownership is transferred to the private sector, with minimal public control. When the public sector actively monitors and participates in the deliv-ery of services, this is a public-private partnership.

—Richard Norment, executive director, National Council

for Public-Private Partnerships

Forced CutbacksI liked your article [Trickle-Down Cuts,

January 2011] in Governing. I have served in county, city and state governments, and worked for states under 100 percent fed-eral contracts.

I think legislators are much better at seeking new grants than at making effi cient use of the resources already delivered to their respective states. In fact, oversight and looking for duplication or antiquated taxpayer programs is not done nearly often enough. It just might be the No. 1 problem in all of the U.S., especially for federal government, and to some sub-stantial degree, perhaps for most state and local governments as well.

I once worked for the Oak Ridge health services department—the only

Tennessee city government asked to run and pay for its own local health services when it moved to incor-porate in 1959. I am not sure the Tennessee state or county govern-ments where Oak Ridge is located would readily admit to telling Oak Ridge to be the “sole payer” of health, but for 25 years, the city paid, funded and operated its own independent city health operation where in all the other Tennessee cities, such service was from state/county government.

I am not in a position to tell you or others who have cut [about] the no longer needed

supplemental or duplicate or simply wasteful spending by federal, state or local governments. The governments all seem almost unwilling to cut. It has to be forced. I have seen our own governor apply a requested 5 percent cut in fund-ing, or even a few targeted layoff eff orts.

But to see true evaluation of deadwood programs, or programs less eff ective than the original or the intent, it seems few either know how to point them out, or are not willing to do so. There needs to be more serious attention to program audits at all levels, I would say.

It’s time for some experts to cut what is no longer most needed or most eff ective. Where are these experts? They might not be a welcome group of professionals, kind of like the tax collector, or worse. Who wants the job? Where are the consultants out there to take it on? (As a temp job, which makes more sense than permanent staff to do this type work.)

Trickle-down cuts need to come to reality. Duplication detection experts from private sector: Can they fi ll the gap of work not easily done from within government? Let the real critical consultants for today please stand up.

This is not easy work, and since those who perform it locally might sometimes have a risk, it might be best to consider contracting out. Outsiders do not know the community as well, and thus there is a downside to external contracting. But internal audits have their own challenges. Perhaps there is an argument for both approaches—but I am in favor of added dialog and added contracts.

Although I am a government employee, I only speak for myself.

—James D. Harless, environmental manager, Tennessee Department of

Environment and Conservations

By John E. Petersen

The electorate made it clear in November: Congress should cut up the federal credit card and restore fiscal sanity. Road maps

on how to do that were seldom mentioned. And it’s no wonder, since getting to a bal-anced budget will be exceedingly painful.

Right now, the federal deficit runs around $1.4 trillion dollars. A big share of that—$1 trillion—is cyclical and caused by the Great Recession and accompany-ing stimulus spending and tax cuts. The remainder—$400 billion—is structural or “built-in” to the budget. With the current economy recovering slowly, the federal government raises in current revenues about 57 cents to 63 cents for every dol-lar it spends. Even in good times, it raises only 90 cents for every dollar spent. Given the existing tax system and the way Med-icaid, Medicare and Social Security are designed, that structural deficit is des-tined to increase steadily. So we’ll have to cut spending, raise taxes or a combination of both.

But what programs do we cut and what taxes do we raise? The answers unleash a political fight too large for this humble column to take on. But we know one thing: State and local governments are deeply tied to federal finances, and they will feel the pain from federal cost cutting and revenue increasing.

In fiscal 2010, $654 billion in federal grants went to states and localities—an amount that equaled 26 percent of all state and local spending. A big chunk last year represented funding from the Amer-ican Recovery and Reinvestment Act, payments from which have peaked and are rapidly phasing out, reducing annual payments to state and local governments to about $60 billion. But that reduction in temporary federal outlays does not fig-ure into reducing the “structural deficit.” The $400 billion gap still must be closed.

The billions in federal programs directed toward state and local governments—and the multitude of tax preferences that ben-efit them—will provide fertile grounds for filling the deficit hole.

Let’s look at grants, one of which is Medicaid. More of the Medicaid load might be shifted to states, which now annually contribute $150 billion of their own funds to match federal grants of $220 billion. The feds might save $35 billion by making that cost match 50-50 across the board. Meanwhile, federal grant programs for education send $80 billion per year to the states; and another $200 billion to income security, trans-portation and community development programs. If the feds reduce all grants by 20 percent, a $100 billion revenue hole would be created in state budgets—but only 25 percent of the federal structural budget gap would be closed.

That’s not even the major danger. Via their taxpayers, states and localities receive indirect benefits through fed-eral tax deductions and credits. These “tax expenditures” (foregone revenues because of preferential tax treatments) amounted to $73 billion last year, includ-ing the deductibility of state and local

property, income and sales taxes ($51 billion), and the exemption of the inter-est on state and local bonds and interest from federal income taxation ($22 bil-lion). These preferences are on the chop-ping block, and their loss or reduction would prove costly to state and local gov-ernments whose citizens would find their tax burden increasing.

Finally, there are indirect cost-cutting or tax-increasing measures. Under fed-eral tax laws, homeowners now write off their mortgage interest costs. Over the years, this favoritism has driven up housing prices. Real estate values, now in very bad shape, serve as the founda-tion for local property taxes. But the feds lose $100 billion or so from the interest deduction. That makes it an attractive target for reducing the federal deficit. But such a step might permanently bend down future growth in housing prices and accordingly, the property tax base.

And there’s more. Expanded use of user charges and sales taxes to enhance federal revenue would mean intense intergovernmental competition for rev-enues. For example, raising the federal motor fuel tax by 25 cents to reduce the deficit would mean $30 billion in added federal revenues. But that would curb the ability of states to raise such taxes, even in the event of declining revenues. Ulti-mately all tax collectors go to the same well for water.

State and local officials must prepare for the fiscal Armageddon. This admoni-tion may come as a shock to newly elected governors and state legislators who rode into office astride promises to cut back government. They are likely to find that that job will be done in Washington. Over-night, they may have a lot less money to spend and more needs to spend it on. G

E-mail [email protected]

Trickle-Down CutsWhen the federal government starts reducing its deficit, watch out below!

Problem Solver | PUBLIC MONEY

GOVERNING | January 201146

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The nation’s 28 new governors assume offi ce at what appears to be the bottom of the Great Recession, following budget

shortfalls of $110 billion and $191 billion across 48 states in 2009 and 2010, respec-tively. They are beginning to dig out, but estimates from the Center on Budget and Policy Priorities suggest states face equally steep shortfalls in the next two years—$160 billion in fi scal 2011 and another $140 billion in 2012 .

Taking $600 billion out of state coff ers in four years forces unprecedented scru-tiny on how increasingly scarce taxpayer dollars are spent. The legislative monitor-ing fi rm State Net estimates that legisla-tive hoppers will fi ll with 164,600 bills this session, including almost 9,500 carried over from 2010 .

There is no single proven formula to making sense of the complexity of the issues or the mass of legislative pro-posals. That helps explain the cottage industry in the making of short lists of priorities and issues to watch during the session. Governing synthesized a num-ber of them in the January issue (see Issues to Watch).

For its part, the National Conference of State Legislatures bookended its Top 11 of 2011 list with balancing budgets in the lead position and infrastructure invest-ments bringing up the rear. In between are what the organization calls “deep, contro-versial and painful” budget cuts that will inform policy choices around reforming state pensions and higher education, job creation, unemployment assistance and health-care reform. Add to the mix the complexity and potential distractions of redistricting and immigration.

John Thomasian, director of the National Governors Association Cen-ter for Best Practices, narrows his list

By Paul W. Taylor

Keeping Short ListsA list of priorities and issues helps us remember what really matters in tight fi scal times.

DISPATCH

was in the sweet spot, where our core mission, core competencies and greatest opportunity for growth intersected? What needed to be moved so we hit all three objectives, and how would we do that? It brought focus to the programs that were either mandated or could be justifi ed by a legislative or federal requirement, and those things that were simply at risk. It also helped us hone our story and focused how we thought, spoke and wrote about the value of our agency’s work in doing the public’s business.

There were no consultants, coaches or forms to fi ll in. But it did bring the syner-gies between the governor’s priorities and the agency’s core competencies into bold relief. It did the same for its vulnerabilities. Moreover, it gave us lead time to realign, mitigate and make surgical cuts inter-nally—rather than always being subject to the blunt instrument of outside forces.

Granted, those were gentler times in many ways. That said, as the intensity and urgency about state government grows, it helps to have a short list of priorities to remember what really matters in these times of fi scal austerity. G


to a single defi ning characteristic of the incoming class of governors, being “resigned to eliminating programs people want.” He expects a year of “shedding and transferring” even valuable programs to balance budgets and protect a very short list of priorities.

There are proposals to close or privatize state prisons, printers and liquor stores, along with deep cuts to state subsidies for education, public transportation and health care for the poor. These are in addition to ongoing eff orts to reduce the operating costs of government through agency con-solidation and across-the-board cuts.

Despite the enormous problems facing states, short lists can help. On inauguration day 1997 in Washington state, then-Gov. Gary Locke (now U.S. Commerce secre-tary) had just been sworn in as the state’s 21st governor when his chief of staff faxed a short list of Locke’s priorities to all exec-utive branch agencies. At the Department of Information Services—where I served at the time—the list was used as a cata-lyst for a quick, dirty but intense internal review of everything the agency did.

The central question was: How did the agency’s work fi t with the governor’s priorities? It led to other questions: What

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ENERGYLEADERSHIPJOBSINFRASTRUCTURE

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OBSERVER By Zach Patton and Ryan Holeywell

Food (Safety) Fighttry. “If the idea was that the federal food-safety bill would help hard-hit state and local health departments anytime soon, that’s not going to happen.”

The new Republican mood in the states could have a similar eff ect on food safety measures. Last year, several states enacted tighter regulations. New York and Washington state banned the use of bisphenol-a, a hardening agent used in plastic food con-tainers that’s been linked to cancer, heart disease and diabetes. A new measure in California mandates that each of the state’s approximately 1 million food and beverage workers take courses in safe food handling, and a new law in Pennsylvania standardizes and consolidates restaurant inspections statewide.

But this year, Republican-led legislatures likely will focus on more business-friendly measures, such as carving out inspection exemptions for small farms and other low-volume producers, and allowing sales of more products like raw, unpasteurized milk. Last year, for example, Democratic Wisconsin Gov. Jim Doyle vetoed a bill to allow sales of raw milk. Now that both houses of the Wis-consin Legislature, as well as the governorship, are in Republican hands, the raw milk bill may be taken up again.

More than a thousand food-borne illnesses break out in the U.S. every year. A high-profi le outbreak this year could convince new lawmakers to pursue and fund tougher standards. G

Amid the fl urry of bills passed in the waning hours of 2010’s lame-duck Congress, the revamp of the federal food safety system was of particular interest to states and localities. In the fi rst major change to the nation’s

food safety policies since 1938, lawmakers gave great new author-ity to the Food and Drug Administration (FDA), shifting the agen-cy’s focus from reacting to national outbreaks of food-borne ill-nesses, to preventing them from occurring in the fi rst place.

But now that Republicans control the House, provisions of the measure—such as adding 2,000 new FDA inspectors—may be in jeopardy. President Barack Obama hadn’t even signed the bill yet when Georgia Rep. Jack Kingston, the ranking Republican member of the appropriations subcommittee that oversees FDA funding, said the price tag of the overhaul—an estimated $1.4 bil-lion over fi ve years—was too high. “No one wants anybody to get sick, and we should always strive to make sure food is safe,” he told reporters in December. “But the case for a $1.4 billion expen-diture isn’t there.”

The law was designed to be phased in slowly; many of its major provisions don’t take eff ect for 18 months. But congressional fund-ing debates could threaten to push the changes back even further. That’s bad news for states, says Dan Flynn, the editor of Food Safety News, a website that tracks safety policies across the coun-

Politics+Policy

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A look at the people, events and ideas that shape state and local government.

11February 2011 | GOVERNING

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Do roads pay for themselves? That’s the question posed by a new report from the nonprofi t U.S. Public Interest Research

Groups (PIRG). The organization’s con-clusion? A resounding no. Since 1947, researchers have found that the amount of money spent on highways, roads and streets has exceeded the funds raised from gas taxes and other user fees by $600 bil-lion, “representing a massive transfer of general government funds to highways.” In fact, as of 2007, fees charged to motorists covered only about half the cost of building

and maintaining the country’s roads. The rest is fi nanced with other taxes and bonds.

Beyond the numbers, the report further discredits highway advocates’ oft-repeated claim that, from a budget-ing standpoint, roads are self-suffi cient. The problem isn’t really that roads don’t pay for themselves. Rather, it’s that their advocates sometimes wrongly insist that they do, all in an eff ort to justify roadway construction at the expense of other forms of transportation like mass transit. “People want to keep this myth of user fees and self-supporting roads,” says Phineas Bax-

F or some time now, Americans have been blurring the lines between cities and suburbs. We sleep in one place, work in another, and shop and socialize in still other locales. Local tax struc-

tures don’t refl ect this shift: Regions have supplanted cities as the nation’s economic centers. That disconnect is making it harder for cities to recover from the recent recession. “It’s not just that the economy is in a downturn,” says Michael Pagano, dean of the College of Urban Planning and Public Aff airs at the University of Illinois at Chicago. “Our fi scal architecture no longer matches the economic growth engines of regions.”

It’s time to re-examine the way people fund municipal services, Pagano says. “This is one of those rare opportunities that regional local governments are confronted with—the chance to step back and think about whether they should restructure the way we pay for public-sector services.”

As an example, Pagano points to his own city, Chicago, where thousands of workers stream downtown every day, con-suming services such as road maintenance and fi re and police protection. Indeed, according to census estimates, Chicago’s population swells by about 5 percent during the workday. In other cities, that disparity is greater. San Diego’s daytime pop-ulation jumps nearly 12 percent, and Dallas and Houston each see their populations rise by about 20 percent during the day. That added population benefi ts from city services, but other than local sales taxes, they don’t really pay for them.

The idea of regional tax-base sharing isn’t exactly new. The Twin Cities metropolitan area in Minnesota has had a seven-county agreement in place since 1971. Under that statute, each

community contributes 40 percent of the growth of its commercial and indus-trial property tax base into a regional pool. Those funds are then redistributed based on a formula that looks at a juris-diction’s population and fi scal needs. For decades in Ohio, local communities have had the home-rule right to tax income based on citizens’ place of residence as well as their place of employment.

More recently, small communities across the country have become more amenable to the idea of shared govern-

ment services, in which a handful of towns may contract to “buy” services, like police and fi re protection, from a neigh-boring city. Although shared services agreements are gaining in popularity, according to Pagano, it’s hard to get a handle on just how many places are engaged in them. “We’re limited to anecdotal, place-specifi c information,” he says. “We know it’s pervasive; we don’t know how pervasive.”

What communities need to think about now, Pagano says, is taking all of those disparate ideas—regional tax-base pools, shared services and more fl exible income-tax structures—and combining them into a truly unifi ed, regional approach for taxing and providing services. “Local governments need to engage in a broader conversation about rethinking the way we price the services that government provides. We have the opportunity for a new social compact to be worked out.” G

Who Pays for Roads?

Politics+Policy | OBSERVER

Making the Case for Regional Taxes


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The Sun Belt wins again. In the once-every-decade process of reapportioning congressional seats, the Sun Belt gained 10 seats while the Midwest and Northeast lost a combined 10.

In recent decades, the U.S. population has shifted from the north and east to the south and west. As a result, the Sun Belt, including Florida, has gained infl uence in Congress.

The winners from the 2010 census are Texas (gaining four seats) and Florida (two), with one additional seat each for Arizona, Georgia, Nevada, South Carolina, Utah and Washington. The states losing seats are New York and Ohio (two each) and one each for Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey and Pennsylvania.

The last time a state north of the Mason-Dixon Line and east of the Continental Divide gained a House seat was 1960. Meanwhile, this represents the fi rst time the West has had more seats than the Midwest.

California retains the biggest state delega-tion at 53 seats, but it did not gain any for the fi rst time since the 1930 census. Texas remains second biggest, with its delegation growing from 32 to 36. Florida’s two-seat gain and New York’s two-seat decline moves them into a tie for third at 27 seats each.

Over the next year or so, state legislators (or in some cases, bipartisan commissions) will redraw congressional district lines, often with a partisan edge in mind. Republicans will have a free hand in drawing 210 of the 435 congres-sional seats, with Democrats controlling just one-quarter of that number, according to the political demographic fi rm Election Data Services. “The Republicans are better placed than they have been in decades [to draw their own maps],” says Clark Bensen, a political demographer with the fi rm Polidata.

If the census had only used citizens to calculate the reapportionment, rather than all “inhabitants” as the Constitution requires, several states would have fared worse than they did, especially a handful of large states with large Hispanic populations.

Texas would have gained only two new seats rather than four, New York would have lost three seats rather than two, Florida would have gained one seat rather than two and California would have lost fi ve seats rather than staying even, according to a Polidata estimate.

States that would have fared better under a citizens-only count are Iowa, Louisiana, Missouri and Pennsylvania, which would have stayed even rather than losing a seat; Ohio, which would have lost one seat rather than two; and Indiana, Montana, North Carolina and Oklahoma, which would have gained a seat rather than staying even.

Meanwhile, the outfl ow of people after Hurricane Katrina not only cost Lou-isiana a seat—the only southern state to shrink this decade—but likely made

possible one of the four seats Texas is gaining.

—Louis Jacobson

The Congressional Map Glows RedA review of the 2010 census fi ndings and its implications.

Get your state andlocal politics fi x atgoverning.com/ballotbox

| BALLOT BOX

andall, a senior analyst at U.S. PIRG who co-wrote the report. “It sort of privileges roads as a spending item.”

That’s a dangerous claim to perpetuate, especially at a time when budgets are tight. But it’s been an eff ective way to ensure that roads and highways get preferential access to funding. “Often when people come up with proposals on how to change transportation spending,” Baxandall says, “a big ending of conversation about reform is to say, ‘You can’t do that. The gas tax money is a user fee, which is dedicated for a particular purpose.’”

That line of reasoning makes even less sense considering that the Highway Trust Fund—which gets its money from the gas tax—has been supplemented with more than $34 billion in federal general fund revenue since 2008.

The report is something of a shot across the bow at groups like the Ameri-can Road & Transportation Builders Asso-ciation (ARTBA) and others that advocate for highway spending—though that’s not how they see it. “It’s like taking a shot at an aircraft carrier with a pea shooter,” says Jeff Solsby, a spokesman for ARTBA. “The reality is these guys live on another planet.” Solsby takes particular issue with a part of the report that notes that the nonmon-etary cost of highway expansion—such as environmental damage, the proliferation of sprawl and a heightened dependence on fossil fuels—is absent from their sup-porters’ calculations of cost. “It’s creating a new mathematical model nobody else uses,” Solsby says. “It’s trying to create a new set of rules to the game.”

But in some ways, that’s exactly U.S. PIRG’s point: The game is broken. “One of the reasons our voice is very diff erent is we don’t have a dog in the fi ght of how big aggregate transportation spending should be,” Baxandall says. The existing model ensures that highway projects have a guaranteed funding source, regardless of whether there are priorities elsewhere. “The bottom line is we should spend the dollars where they’re going to get the best bang for our buck,” Baxandall says. “From that standpoint, it doesn’t really matter where the dollar originated.” G


Texas retains the second biggest state delegation, growing from 32 to 36 seats.

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Vegetarian FederalismStates don’t like the carrot that comes with Medicaid, but they can’t stop eating it.

By Donald F. Kettl

What do Texas Gov. Rick Perry, the produce aisle at the grocery store and federal district court judge Henry E. Hudson have in common? Together, they’re a trio framing a hot and inescapable battle

not only over health reform, but also over the future of federalism.In a move that reverberated in state capitols across the country,

Perry stunned political watchers when he threatened to pull his state out of the Medicaid program. Perry told Fox News Sunday that the feds ought to turn the biggest federal health-care program for the poor into a block grant. End the federal program and give the states the money, he urged, because, “We think we can save substantial dollars for the federal government and for the states if they’ll allow us to implement that program.” How much? A December 2009 Heritage Foundation report suggested states would save $1 trillion over the next decade, with Texas reducing its Medicaid budget by about $60 billion to $64 billion between 2013 and 2019.

Until the passage of President Obama’s health-care reform, the fed-eral government’s health-care pro-grams were largely voluntary. Com-panies aren’t required to off er health insurance. However, they’re encour-aged to do so through tax deduc-tions—and many employees would fl ee if their company dropped cover-age. No hospital has to accept Medi-care patients, though few could stay in business if they didn’t. And no state has to provide Medicaid coverage for their poorer citizens. In fact, Medicaid is not one program. It’s 51 programs, with varying options in each state, layered atop the core federal program. As health-care costs have spiraled upward, and as the program has funded more seniors in nursing home beds, Medic-aid has become a budgetary Death Star, gobbling up ever more scarce dollars.

That gets us to the produce aisle: Federal health-care pro-grams have been carrots, with inducements to encourage everyone to play. Obama’s health-care reform was built on the premise that this vegetarian federalism wasn’t working well enough—too many Americans were left without health insur-ance—so the program requires individuals to buy insurance. It was never a government takeover of health care. Rather, the fed-

eral government merely created the mandate, set the basic rules and put the states in the tough position of having to build and manage the exchanges where uninsured individuals would buy their coverage. The states, in subtle but critical ways, moved out of the produce aisle of carrots to the hardware aisle of sticks.

That takes us to Hudson, the federal district court judge in Virginia who ruled against one of the reform’s core elements. The mandate, he said, would “invite unbridled exercise of the federal police powers,” and thus was unconstitutional. If the U.S. Supreme Court strikes down this keystone of the program, and if the states keep their promise to withdraw from Medicaid, it’s no exaggeration to say that the nation’s health-care system would collapse.

If the carrots aren’t working and the sticks might be uncon-stitutional, where does that leave us? This is a much bigger issue than the mega-issue of health care. A huge swath of federal programs—from enforcement of environmental regulations to highway speed limits—build on vegetarian federalism, and car-rots draw the states into conformance with policies shaped in Washington, D.C.

Not long after Perry made national headlines with his threat to opt out of Medicaid, a report by the Texas Department of Insur-ance and the state’s Health and Human Services Commission caused him to backpedal. The report found that bailing out of the program would leave 2.6 million Texans without health insur-

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AT ISSUE: Gun Control

ance and dump billions of dollars of care for indigent citizens onto fi scally strapped state and county budgets. Medicaid, the report revealed, pays for two-thirds of those in Texas nursing homes and half of all births in the state.

The carrots have drawn states in so deep that there’s no getting out—but they’re chafi ng under their share of these programs’ costs. Minnesota Gov. Tim Pawlenty and New Jersey Gov. Chris Christie have joined the rebellion calling for a re-evaluation of the states’ role in health reform. The program is not only putting the states in a central role with the exchanges, but it’s also bringing many more individuals into Medicaid—almost 16 million by 2019, according to the Henry J. Kaiser Family Foundation—which will cost states $21 billion. They don’t have to opt in, they can’t aff ord to opt out, and they don’t think they can aff ord the program either way. That poses huge risks for the fate of health reform—and federalism.

For nearly a century, we’ve built a remarkable array of federal-state-local programs premised on vegetarian feder-alism: If the feds supply carrots, state and local governments will eagerly devour them. Like many of us, they have often complained about eating their veggies, but they’ve found them irresistible nonethe-less. With state fi nancial crises dragging on long past the fi rst stages of economic recovery, and with the crises sure to be stoked by unsupportable pension costs, this vast legacy of vegetarian federalism could be in very deep trouble. G


By Andy Kim

Packing Pistols and Pulling Pints More states are allowing patrons to bring guns into bars, but what effect will the laws actually have?

For years, many states have allowed citizens to carry fi rearms into places that sell alcohol. But a series of gun laws passed last year raised new questions about where gun-toting citizens are allowed to go. The controversy centered mostly on the defi nition of “bars” versus “restaurants.” In the past, most states banned guns in establishments that earned more than half their money from alcohol (although what counts as a “bar” can vary state to state). Now that’s changing, as a handful of states have recently expanded gun rights to include bars as well as restaurants.

That’s a risky move, according to gun control advocates. Alcohol and fi rearms make for a bad combination, they say, and allowing guns in bars puts principle above personal safety. “The issue here seems to be more symbolic, and also very danger-ous,” says Laura Cutilletta, senior staff attorney for the Legal Community Against Vio-lence, a legal-aid group focused on preventing gun violence. Cutilletta and her peers say that permitting handguns in bars creates a potentially hazardous environment for patrons and workers.

Gun rights advocates say these laws are merely an extension of their existing Second Amendment rights—that they should be able to protect themselves no mat-ter where they are. Furthermore, they say, forcing bar-going gun owners to leave their fi rearms in their cars could potentially be dangerous.

For years, the only state where bar patrons could carry fi rearms was Maine, which has allowed fi rearms in bars since 1989. Other states, however, have been hesitant to adopt similar legislation—until recently. In 2009, Arizona Gov. Jan Brewer signed legislation allow-ing guns in bars and restaurants that serve alcohol. Last year, Virginia Gov. Bob McDonnell and Georgia Gov. Sonny Perdue supported similar legislation in their states, signing the bills into law after their state legislatures approved them. And although Tennessee Gov. Phil Bredesen vetoed his state’s legislation, saying that “guns and alcohol don’t mix,” the state House overrode his veto.

South Carolina and Ohio also debated guns-in-bars bills last year, and are expected to reintroduce legislation this year. Many states, however, have remained neutral on the issue, while others—including Connecticut, Massachusetts, New Jersey and New York—simply let local jurisdictions regulate these policies.

But will the new laws really make much of a difference? In the fi ve states that now allow fi rearms in drinking establishments, individual bar owners still reserve the right to ban guns in their bars. Even Cutilletta, who opposes these laws, says they probably won’t have much of an effect. “I think in the end, the laws won’t have that much of an impact, because property owners want to protect their customers and make good business decisions.”

A simple “No guns allowed” sign, however, doesn’t always suffi ce. “As a busi-ness owner, you must now take a prohibitive step to prevent guns in bars,” says Cutilletta. Arizona’s law, for example, requires the establishment owner to put up a sign that is in a visible location, contains a crossed-out fi rearm image and reads, “No fi rearms allowed pursuant to A.R.S. section 4-229.”


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By Jessica B. Mulholland

Taking Action on Alzheimer’sThe National Alzheimer’s Project Act incorporates the state perspective in implementation.

In a Phoenix nursing home, a 96-year-old Alzheimer’s patient who was previously agitated, combative and reluctant to eat has completely changed—she’s now calm and peaceful, and even willing to eat.

The diff erence in her behavior stems from a nontraditional method of care, according to The New York Times. In her new nursing home, the patient is allowed to sleep, be bathed and eat whenever she wants—even if it’s at 2 a.m. She also can eat what-ever she wants, regardless of how healthful it may or may not be, like unlimited chocolate.

Expect to see stepped-up treatment, traditional and nontra-ditional, of this debilitating illness, thanks to the recent passage of the National Alzheimer’s Project Act (NAPA), which Presi-dent Obama signed into law on Jan. 4.

NAPA has a goal of accelerating the development of a vari-ety of treatments that would prevent, halt or reverse Alzheimer’s while improving early diagnosis. Federal involvement relies on an advisory council of representatives from all federal agencies concerned with health, science and aging to address Alzheimer’s in a coordinated fashion with states, some of whom have been paying attention to the illness for some time.

In fact, early planning by a number of states is what drove NAPA into existence—many either are in the process of develop-ing plans or have plans on the books, says Toni Williams, associ-ate director of public relations for the Alzheimer’s Association Public Policy Offi ce. “There’s been a trend in several states where they’re rising to the challenge of Alzheimer’s and preparing for an

onslaught of Alzheimer’s cases, particularly because of the aging baby boomers.”

Those states with plans already in place won’t have to do any-thing diff erently. For states that don’t have plans, however, the passage of NAPA will help them begin to address the issue.

So far, 17 states have fi nished the planning process and are moving into implementation, according to Matthew Baumgart, senior director of government aff airs at the Alzheimer’s Asso-ciation, noting that each plan is somewhat diff erent because it’s tailored to meet each state’s needs. Most plans, he says, address

the need for home- and community-based services, long-term care fi nances, education and training, and some public health surveil-lance. “But some have some innovative things,” Baumgart says. “Texas has a very strong public health component in its plan to educate, to pro-mote early detection, to con-duct brain health promotion. And North Dakota had a very innovative care consulta-tion part of its plan where it divided the state into fi ve regions, and each region has a care consultant specifi cally for people with Alzheimer’s.”

As the federal government focuses on the law’s imple-mentation, it will work closely with the states to align policy and coordinate a strategic national plan, according to Rob-ert Egge, vice president of public policy at the Alzheimer’s Association. There will be formal discussions as part of NAPA that will include federal offi cials and two representa-tives from state health departments. “There’s recognition in the legislation that interplay between the federal and state issues in Alzheimer’s is critical and it has to be dealt with explic-itly,” adds Egge.

Will they discuss letting Alzheimer’s patients eat as much chocolate as their hearts desire? That may be getting a bit too nitty gritty for NAPA, according to Baumgart. But the new, combined federal and state focus on the problem bodes well for Alzheimer’s treatment overall. G


Politics+Policy | HEALTH

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By Russell Nichols

Pushing Ahead on Clean EnergyWithout a national clean energy standard, states fi nd new ways to grow green tech.

F or years now, states have far surpassed the federal govern-ment in implementing clean energy technologies. That

balance isn’t likely to change anytime soon, however, since neither climate change nor green energy will be high priorities in the Republican Congress this spring. Still, even without a nation-wide clean energy standard—and in spite of dwindling American Recovery and Reinvestment Act funds—states continue to move ahead.

“Federal action would drive change more powerfully across the nation as opposed to what can be done on an individual stage,” says Robert Keough, assistant secretary for communications and public aff airs at the Massachusetts Executive Offi ce of Energy and Environmental Aff airs. “But I think states are showing that it is possible and even desirable from an economic standpoint to make real progress in substituting dirty energy with clean energy.”

In many ways, the federal delays have given some states time to experiment with renewable energy alternatives beyond traditional options like wind and solar. Iowa, for instance, recently had its fi rst biomass harvest in which it converted biomass into ethanol, and the state is planning to build its fi rst commercially viable plant that converts algae into biofuel. “I think that diversifying our energy portfolio in this country is arguably the most important thing we can do,” says former Iowa Gov. Chet Culver, who lost his seat to Republican Terry Branstad this past November.

But states can go only so far. Without a federal energy policy, energy companies can’t really gauge the stability of the U.S. mar-ket, which can hamper clean energy expansion on the state and local levels, according to Patrick Quinton, business and indus-try division manager at the Portland Development Commission in Oregon. “We have made big bets around these companies, and they’re here because they’re looking at the potential of the U.S. market,” he says. “But they’re not really sure of what the landscape is. Their growth rate would be diff erent if they had certainty around how the U.S. will be treating renewable energy sources in the next 20 years.”

In the meantime, states can still push clean energy innovation through key policy strategies, according to A Clean Energy Road-map: Forging the Path Ahead, a report from the Ewing Marion

Kauff man Foundation. Based on outcomes from three clean energy summits, the report highlights fi ve ways states can help accelerate the national green agenda:

• Cooperate. Through smart collaboration, governments can create interstate policies that spur the economic development on a regional level.

• Standardize. With consistent energy policies, states can reduce uncertainty in the market and establish viability for utility companies.

• Democratize. By opening up access to the power grid, utility companies can bypass operational requirements, and customers can potentially generate and store their own energy.

• Expand. Cross-sector collaboration can help states cre-ate regional energy innovation clusters that promote job creation and accelerate clean tech in the market.

• Support. With so many universities at the forefront of innovation, states should encourage the development of products and processes, and make investments in com-mercially viable projects.

States can’t aff ord to wait, Culver says, because an eff ective national clean energy policy must start at the state level. “We still need the states to push the limits of what’s possible,” he says, “and then shape state and federal policies necessary to help new innovations grow to the next level.” G


Politics+Policy | GREEN GOVERNMENT


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Last fall, Iowa conducted its fi rst biomass harvest in Emmetsburg, which included nearly 85 local farmers and nearly 60,000 tons of biomass.



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diff erent states, but also diff erent reali-ties. The governors’ actions are a sign of how political infrastructure building has become. While there was a time when infrastructure eff orts were in large part bipartisan, much of it now, particularly when the word “train” is involved, has become tied up with partisan battles about the state’s role in lean economic times.

These lines were in evidence when Ohio and Wisconsin governors-elect, John Kasich and Scott Walker, respectively, pledged to throw more than $1 billion in federal funding back to Washington, D.C., for intercity rail service. Such projects, championed by President Barack Obama, would waste the state’s money in frugal times, they said.

For leaders in state and municipal gov-ernments, when it comes to infrastructure spending, the choices are about who to believe and follow. While distinguished economists back defi cit spending, angry citizens advocate fi scal restraint. And while China, Western Europe and much of the world build high-speed train lines, they are still unproven in the U.S.

Yet McDonnell makes quite rational arguments about why infrastructure development is good to do right now. These arguments apply equally to train lines as to roads.

Given this, it’s hard not to see actions like Christie’s as particularly shortsighted by the very values espoused by his col-league in Virginia. The additional set of tunnels under the Hudson River were to supplement century-old tubes packed with hundreds of thousands of commut-ers every day. New Jersey Transit’s train ridership into Manhattan has grown from 10 million in 1980 to 45 million in 2008, according to the agency. There was no question the new tunnels were needed.

“Every year that goes by increases New Jersey’s need for this sort of tunnel,”

The Cohesion FactorWhen governors say no to infrastructure, is it fi scal prudence or politics?

In December, Virginia Gov. Bob McDon-nell, a rising Republican star, announced a plan to borrow $4 billion to build more roads, saying, “Right now is the best

time in modern Virginia history to get new roads and bridges built,” because of “low construction costs and interest rates in an economy struggling to rebound.” The state, he says, needs to “put people back to work.”

A few weeks before McDonnell made his announcement, another rising Republican star, New Jersey Gov. Chris Christie, announced that his state could not commit $2.7 billion to a new com-muter rail tunnel under the Hudson River to New York City, even though

the project—20 years in the making—was already under construction, and the federal government and a bi-state agency, the Port Authority of New York and New Jersey, were paying most of the $8.7 billion cost.

Although Christie campaigned in sup-port of the tunnel, he now says the state cannot aff ord it, given the potential for cost overruns. Little mention was made of jobs, lower construction costs and the project’s long-term benefi t.

What is going on here? Two Republican governors, of similar ideological hues, both elected in 2009, give diff erent rationales for starting and stopping big infrastructure eff orts. It’s as if the two lived not only in

By Alex Marshall

Politics+Policy | ECONOMIC ENGINES

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A commuter train pulls into New York’s Penn Station. Ridership from New Jersey has qua-drupled in 25 years, raising the need for a second rail tunnel.



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February 2011 | GOVERNING

Step aside Boston, New York City, San Francisco and Seattle. Sorry, but you’re just not cool anymore. These days, you need to have crumbling roads, triple-decker apartment buildings, old-fashioned neighborhood bars and lots of rust to gain any hipster cred. When Anthony Bourdain, host of the trendy travel and food show No Reservations, passes up Tuscany, Provence and Barcelona to visit Baltimore, Buff alo and Detroit, you know the Rust Belt has arrived.

The “rust is chic” movement has been around for a while, but thanks to blogs and online magazines, such as RustWire.com, a certain fascination with places that have fallen on hard times like the Rust Belt—which stretches from the Midwest through

the mid-Atlantic and up into the Northeast—has taken hold. Part of it is the scruff y, industrial look. It may also be a rejection of cities with gleaming condo towers, bis-tros and boutiques that were once so trendy yet now seem so frothy and fake in the wake of the economic meltdown.

But the other fascination is the defi ance these Rust Belt cities have shown. Many of them, such as the gritty cities Bourdain visits, refl ect a rebellious attitude. Youngstown, Ohio, has to be the poster child of this stance. Once part of America’s steel manufacturing hub, Youngstown went into a death spiral as the industry col-lapsed in the mid-1970s. Today, Youngstown’s population is 75,000, less than half of its original size, and is 43 percent vacant.

Yet nearly 10 years ago, the city made the bold decision to embrace its new shrunken state rather than put time and money into trying to grow back. Public offi cials created a master plan, called Youngstown 2010, that envisioned a smaller, but thriving city with a more diversifi ed economy. Indeed by 2010, certain elements of what Youngstown could become were falling into place.

The downtown area has come back to life, and more importantly, economic development has begun to take hold, delivering an interesting range of jobs to the area. The Youngstown Business Incubator (YBI) has played a key role, providing free or reduced rent and equipment to startup software companies. Ohio provides a large chunk of the YBI’s funding, and the payoff so far is about 300 technology jobs.

Recently, software fi rm Reserve Data in Silicon Valley, Calif., pulled up stakes from pricey San Francisco and opened shop in inexpensive Youngstown, trading California’s Bay Area chic for Rust Belt grit. The number of jobs that follow may be modest—50 to 100—but the staff will be able to enjoy Youngstown’s unique social scene, which includes the Rust Belt Brewing Co., located in an old train station.

Meanwhile, Youngstown’s manufacturing tradition isn’t over yet. French com-pany Vallourec announced plans to invest $650 million in a steel manufacturing facility that will put another 350 people back on the payroll. How chic—sorry, “gritty”—is that? G


according to The Economist. “The exist-ing infrastructure serving rail commuters is already under heavy strain. If a natural disaster or terrorist attack knocks out the current tunnel, there’s no backup. That would be devastating for the region’s economy.”

It is widely believed that Christie’s main motivation was to take the tunnel’s billions of dollars and replenish the state’s impov-erished highway trust fund, thus avoiding politically damaging gas tax increases. By canceling the project now, however, Christie is missing out on the lowest inter-est rates for construction costs in decades, condemning his citizens to a future of overcrowded trains and putting a ceiling on the growth potential of his state. For the moment though, Christie has won accol-daes for his fi scal austerity rather than condemnation for short-changing his state’s economic future.

Still, even with prominent leaders receiving praise for canceling projects and rejecting federal billions, other major infrastructure projects remain intact, even those involving trains and federal money.

In Los Angeles, Mayor Antonio Villaraigosa is pushing his 30/10 Initia-tive, which proposes to build 12 essen-tial transit projects in the region in 10 years rather than a projected 30, using an already referendum-approved half-cent sales tax as leverage to seek federal loans. He’s taking a page from Denver’s FasTracks expansion program, which sought a similar rapid enlargement of its transit system.

How all these eff orts fare in the next few years will say a lot about the state of the economy and the political climate intimately associated with it. The U.S. is typically said to suff er from an infrastruc-ture defi cit, which is true; we’re certainly spending far less than China or even West-ern Europe as a percentage of our econ-omy. It would help us gain cohesion as a society to return to essential conceptions of infrastructure, as necessary investments for a strong future, when such projects are well conceived and well executed. G


By Tod Newcombe

| URBAN NOTEBOOK

Burnishing That Rust Belt Look

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IfIf proximity were a reliable guide to power, you would think Blue Cross & Blue Shield of Rhode Island has it and that Christopher Koller, the state’s health insurance commis-sioner, does not. Blue Cross & Blue Shield (BCBS) occupies space in a $125 million offi ce tower that sits at the foot of Capitol Hill in Providence. Koller’s offi ces are in Cranston, nine miles south of the capital. His desk is in a building that used to be the old state alms-house, next to what was once the state house of correction and the asylum for the incur-ably insane. “The joke goes,” Koller says of the occupants of the Cranston buildings, “that it used to be criminals, the mentally ill and poor people—and now it’s state employees.”

If size were another guide to power, you’d have to give it to BCBS again. The insur-ance giant employs some 1,100 people in Rhode Island. Until recently, Koller had a staff of just three dedicated employees—an executive assistant, an attorney and himself—but a federal grant has allowed him to double his workforce to six.

Yet sit down with BCBS of Rhode Island CEO James Purcell, and you’ll hear a very diff erent assessment of the balance of power between Koller’s offi ce and the state’s $3 bil-lion commercial health insurance industry. “We are probably the most heavily regulated insurance industry in the country,” Purcell says. And that, he adds, is largely a function of Koller’s unique job: He is the nation’s only health insurance commissioner.

“In the old days, when there was just an insurance commissioner,” Purcell says, “he or she had a lot more to do, which from my old-school perspective was a good thing.” But now, he continues, “what does Chris think about every day? He thinks about us.” And in Koller’s case, thought has given rise to radical action.

In the winter of 2007, Koller made a decision that took him well beyond the scope of activities common among even the most aggressive state insurance commissioners. Instead of reviewing rate increases, preventing plan insolvency and fi elding the com-

How one regulator set out to transform the health-care system.

By John BuntinP H O T O G R A P H S B Y D A V I D K I D D

THE COMMISSIONER



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R IS IN

Rhode Island’s Christopher Koller



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plaints of policyholders, Koller addressed the aff ordability of the health-care delivery system as a whole .

His admirers see his approach as nothing less than ground-breaking. “He is the person in government who can have an impact on the private delivery system,” says Lt. Gov. Elizabeth Roberts, who as a state senator sponsored the legislation that cre-ated Koller’s offi ce.

But to insurers and some providers, Koller’s approach has been deeply unsettling. “There is a very uneasy line between who manages Blue Cross Blue Shield,” Purcell says. “That’s really my job, not his.” Some critics have gone even further. In late 2010, the state’s most powerful hospital group, Care New England, went to court to stop Koller, charging that the health insurance commis-sioner had become “a rogue operator.”

Surprisingly, behind these very diff erent assessments of Koller’s actions, there is an underlying agreement about what he has sought to do. Koller, says Roberts, “has tried to use it as an offi ce that could reform the system, not just regulate it.” In the process, what started as a seemingly quixotic eff ort may well emerge as a model for health insurance regulation, if Koller’s attempt to take on two of Rhode Island’s most powerful indus-tries—hospitals and health insurers—doesn’t do him in fi rst.

Insurance regulation is one of state government’s oldest func-tions. Most states have insurance departments that date back to the late 19th century. Their purpose today is strikingly similar to what it was back then: insuring that the policies

purchased by consumers are backed up by real companies with real fi nancial assets.

“Every insurance commissioner, regardless of their political party, has a duty to ensure solvency of the marketplace and to protect consumers,” says North Carolina insurance commissioner Wayne Goodwin. That means not only ensuring that the rate is not discriminatory or excessive, but also that it’s adequate enough for the company to maintain solvency and not breach its policy-holder obligations. Setting the right rate, says West Virginia insur-ance commissioner Jane Cline, is “a balancing act.”

Historically, being an insurance commissioner hasn’t been an unduly demanding job. Only about half of the states require commercial insurers to seek prior approval for rate increases, and until recently, insurance commissioners spent only a small por-tion of their time focused on health insurance. That has changed, thanks to rapidly rising health insurance premiums and to the passage of President Obama’s health-care reform legislation, the Aff ordable Care Act.

Although rising premiums and health-care reform are often linked in the public mind, the fi rst development preceded the pas-sage of the second. A recent Commonwealth Fund study tells the story. Between 2003 and 2009, health insurances premiums for businesses and their employees nationwide jumped by 41 percent, while per-person deductibles rose by 77 percent. Some states have seen even more dramatic increases or proposed increases. Last spring, Anthem Blue Cross shocked California regulators by announcing plans to increase premiums for individual health insurance policies by more than 30 percent. Outside actuaries found problems with their assumptions, and Anthem retreated,

but another big California insurer, Blue Shield of California, recently announced a third round of rate hikes for individual poli-cyholders that will bring total rate increases for some individual insurance policies to 59 percent. At the current growth rates, the cost of the average family policy, which was $13,027 in 2009 , will top $23,000 by 2020.

State regulators have watched these increases with mounting dismay, and several have been in the forefront of taking action to reign in rising premiums. A particular focus of concern has been health insurers’ reserves, particularly the building up of surpluses beyond what is necessary to meet solvency requirements. “We are now saying,” says Mike Kreidler, Washington state’s insur-ance commissioner, “‘Wait a minute. Why are they continuing to build surpluses when they are not-for-profi t insurers, and I am continuing to get double-digit rate increases?’”

Kreidler’s offi ce is now working with the state Legislature to gain authority to take insurers’ reserves into account when making rate approval decisions. In Maine, Insurance Superin-tendent Mila Kofman also has sought permission to consider health insurers’ overall fi nancial position when reviewing rate increases rather than focusing only on narrow actuarial analyses of the plans at hand.

Despite such attempts to control the rate of premium growth, even the most aggressive regulators say that there’s simply not very much they can do about rising health-care costs. “Even with pretty comprehensive rate reviews, we can’t do magic,” Kofman says. “I don’t think any insurance regulator can control medical costs. That’s just the reality.”

It’s a sentiment most insurance commissioners agree with. But over in Rhode Island, Koller isn’t one of them.

Koller’s unusual attitude refl ects his unusual posi-tion as not just insurance commissioner, but as health insurance commissioner. No other state (with the partial exception of California, which

has the Department of Managed Health Care) has broken out health insurance as the responsibility of a distinct and separate offi ce. Rhode Island did so back in 2004. The decision to create such an offi ce came from the realization that the state did not have the information, much less the authority, to aff ect—or even understand—the relationship between insurers and providers in the large- and small-group insurance markets. The legisla-tion that Lt. Gov. Roberts sponsored as a state senator sought to change that by creating an offi ce with broad powers to improve the health-care system’s quality, accessibility and aff ordability. What this would mean in practice, however, remained somewhat unclear—until Koller took offi ce in 2005.

Since then, Koller has engaged in what resembles, at least in some ways, a game of health reform “chicken,” invoking his powers to demand changes while trying to avoid putting them to the test. It’s a high-wire act that causes even admirers to hold their breath. “The commissioner is moving ever closer to the precipice,” says William Martin, the co-chair of the Offi ce of the Health Insurance Commissioner’s advisory committee and the chief operation offi cer of a biotech company. “I don’t know how much longer he can do that.”

THE COMMISSIONER IS IN



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Rhode Island Blue Cross & Blue Shield CEO James Purcell says his state has “the most heavily regulated insurance industry in the country.”




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The fi rst thing that strikes you about Koller is his height— he’s 6’ 7”. The second is his wonkiness. Koller, age 49, fi rst got interested in health-care policy as a junior at Dart-mouth College. His undergraduate thesis compared and

contrasted the case mix indices of for-profi t and nonprofi t hospitals. After graduating, Koller, a native of Rochester, N.Y., worked for a year with the Jesuit Volunteer Corps in Washington, D.C. Then it was on to Yale University to get masters degrees in management and religion. After working in various positions at an HMO in Buff alo, N.Y. , Koller was off ered a position as the CEO of the Providence-based Neighborhood Health Plan, a network of health clinics serv-

ing primarily low-income Rhode Islanders. By 2005, Neighborhood Health Plan had grown from 40 employees to 175; its budget was $174 million and it served 75,000 Rhode Islanders a year.

“It was a great experience,” he says now. However, after nine years of running what had essentially become a Medicaid man-aged care plan, Koller was eager to return to the health-care policy world. So when Gov. Donald Carcieri off ered him a posi-tion as the head of the newly created Offi ce of the Health Insur-ance Commissioner, as well as assurances that he’d be a primary health-care adviser, he leapt at it.

Koller’s early steps were fairly traditional. At fi rst, he focused on the politically volatile issue of BCBS’s $300 million-plus reserves. A study commissioned by Koller but paid for by BCBS found that the insurer was, if anything, slightly undercapitalized. Koller also pushed such modest but eff ective measures as requir-

ing the state’s major insurers to send proposed rate increases—and the assumptions of medical infl ation and utilization that undergirded them—to his offi ce at the same time so they could be posted online . This step has allowed policymakers to examine diff erences in assumptions and has created pressure among insur-ers to avoid being seen as proposing the highest price increases.

As satisfying as these achievements were, Koller’s primary goal—promoting quality, accessibility and aff ordability—remained elusive. When he pushed the state’s two primary insurers to report on what they were doing, he got what he describes as “a laundry list” of initiatives. Some seemed substantial. Others did not.

“I had seen at Neighborhood Health Plan how one health insurer comes in with one plan, and another comes in with another plan,” Koller says. “Doctors do not want to diff erentiate how they provide care based on who’s paying the bill. Having health plans send them diff erent instructions was tremendously counterproductive.”

So in the fall of 2007, Koller convened an advisory panel to help him develop a dif-ferent approach—one that sought to defi ne priorities for the state’s commercial health insurance sector as a whole.

Among academic researchers and health-care policy experts, there are certain areas of agree-ment about how the health-

care delivery system could be changed and improved: A better functioning system would spend more on primary care. Care for people with diabetes and other chronic ill-nesses would be managed to prevent expen-sive and dangerous rounds of hospitalization. Providers would utilize electronic medical records to prevent redundant testing and to identify patients who need extra attention. Payments systems would move away from paying providers for the volume of services provided and instead pay for quality.

Citing the broad statutory language that created his offi ce, Koller decided in the spring of 2009 to require insurers to do all four. Koller put forward four principles that he expected the state’s three leading insurers to embrace. First, he asked insurers to increase the portion of their medical expenses that went to primary care by 1 percentage point for fi ve consecutive years. The goal was to raise Rhode Island’s primary care expenditures from a substandard 5.9 percent to something approaching such high performance systems as Pennsylvania’s Geisinger Health Plan.

Koller’s second requirement was that state insurers support the expansion of the Rhode Island Chronic Care Sustainability Initiative, which seeks to pair providers with case managers who can direct care for patients with chronic conditions. Providers would agree to meet a level of accreditation in keeping with the

Continued on page 28

Lt. Gov. Elizabeth Roberts created the commissioner’s offi ce as a state senator.




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Leaner, Better GovernmentA lean approach is the most effective way to improve service despite limited resources.

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L EAN GOVERNMENT IS ABSOLUTELY CRITICALin today’s environment, in which budgets are shrinking and citizen demands are growing. The recession has hit

everyone hard. And while unwieldy government processes have been satisfactory for decades, the world we live in today is much less forgiving.

A lean approach is what’s needed. It saved post-war Japan, and propelled forward and differentiated giants like Toyota in the automotive industry. Fast-forward to 2011, and it can also help government. Lean is a waste-reduction technique that initiates organizational change, examines current processes and improves operational efficiency by decreasing process time — all while producing a product or service that meets the demands of internal and external customers.

The key element is looking at how things are done today, breaking a process down and examining where the actual work is being done — and where inefficiencies are holding everything up. Many government agencies have taken a lean approach and found that in some processes, about 5 percent of the time is spent doing actual work, and the other 95 percent is inefficiency slowing things down. That’s why processing a tax return takes just a few minutes of actual work, but citizens must wait months to get their refunds. Or why social service benefits take so long. Or why citizens stand in line at the DMV for a painfully long time.

By taking a lean approach and removing the wasteful parts of a process, government can see operational efficiencies that dramatically speed up the work. Some governments have seen an

80 percent increase in processing times. In Iowa, Maine, Georgia and other states, government agencies have increased their speed, reduced citizen wait times by 50 percent, doubled capacity, cut costs and seen other significant improvements.

Lean TodayIn today’s economic climate, a lean approach is more valuable

than ever. It can help government get its work done faster, and with fewer people. W. Edwards Deming showed Japan how to do it after World War II. Later, U.S. manufacturers adopted those same lean principles, which were aimed at more efficiency, less waste and fewer errors.

Today, limited capacity is a huge issue for government. There’s simply too much work to do and not enough people to do it. Ken Miller — founder of the Change and Innovation Agency, a firm dedicated to helping its clients increase their capacity to do more good — has worked with numerous state, county and local governments to increase their efficiency.

According to Miller, capacity is the key issue. “All of the symptoms of what government is facing right now — the high costs, the budget constraints, customer service issues, morale issues — they’re all symptoms of one big cause, which is capacity,” Miller said.

He pointed to some grim statistics for social service organizations, thanks to the worsening economy: a 40 percent increase in demand for services, coupled with a 20 percent decrease in staffing.

“The demands on government are not going down, but the resources are,” said Miller, who is also a speaker, author and former deputy director of the Missouri Department of Revenue. He uses an analogy of pipes to describe the problem affecting government agencies. “There’s a bunch of water coming in one side and a little trickle coming out the other side, and the water just keeps flooding in and it’s just creating more and more pressure on everybody.”

Miller helped Missouri make big strides in efficiency — but only after finding that the pipes, or government processes, can be awfully twisted out of shape. Instead of water flowing smoothly through the pipes, it’s bent and choked and delivered long after it’s needed. For example, many of these kinks, Miller notes in his book We Don’t Make Widgets, are due to “safeguards” that have been installed in government processes to avoid being blamed when things go


“The demands on government are not going down, but the resources are.” — Ken Miller, founder, Change and Innovation Agency

CONTINUED ON PAGE 4



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CASE STUDY

Multiple SavingsGeorgia saves large amounts of time and money with automated workforce management.

The State Personnel Administration (SPA) of Georgia is on a mission to recruit, develop and retain a strong and diverse

workforce. SPA is also working as efficiently as possible, using Kronos to automate timesheet management across several agencies — saving huge sums of money in the process. In fact, SPA’s return on investment has been so significant that other state government organizations are taking note.

Ron Shultis, assistant commissioner of Workforce Development and HR Shared Services for SPA, said the agency is using a suite of Kronos products for greater efficiency and lower costs. Automated timesheets alone are saving SPA hours of payroll processing time. The savings add up quickly. “We’re putting back into the business almost a million dollars’ worth of employee hours per year,” Shultis said. “That gets the focus away from administrative work and back into the core business.”

SPA is using a shared services model, in which it handles human resource transactional work for numerous agencies. Shultis works on getting the most efficiency possible out of the payroll system. He recently brought 15 more agencies into the shared services arrangement. Those 15 were using a manual, paper system for timesheets of about 900 employees. That meant the processing center had to handle 3,600 pieces of paper each month. They all came in during a six-day crunch period, and had to be processed quickly.

That was a big burden on the payroll staff, but it’s much easier now with Kronos. There are other benefits too. Before implementing the Kronos Workforce Management solution, there were 36 critical payroll errors in just six months. Aside from the legal risks this posed for the organiza-tion, it meant reissuing numerous checks, which meant additional work to an already overtaxed payroll staff.

“With Kronos, the errors are down to zero, from my processing side,” said Shultis. “Before, I had a lot of errors, manual processes and paper. Now I have zero errors on the processing side, and I have no sheets of paper coming in for time and attendance.” Shultis is also impressed with the reporting and auditing features Kronos provides, as they too help the state work more efficiently. Kronos provides more than 300 different reports, so an agency can quickly find the type of information it’s looking for, and auditing features allow an agency to look up — even years later if nec-essary — information on any timesheet changes, approvals or

issues, because the auditing keeps track of all changes and who made them. Considering that the number of labor compliance lawsuits has increased rapidly for government entities in the last few years, the pre-configured pay rule features and the audit-ing capabilities that the Kronos system provides are extremely important.

More Savings SoonTo save more money and work even more efficiently, the state

is aggregating the use of Kronos among other state agencies that had already been using it. Those agencies had set it up individually, with their own licenses and using their own servers to host it. The state is now working with Kronos on an overall solution over the next few years, which will result in lower costs for the state.

Shultis said automation is more helpful than ever with today’s economy. “Before the recession hit, I would have had problems getting agencies to join shared services,” he said. “Now that agency leaders are looking at budget reduction, they see this as a win-win for them. We always look for opportunities to gain efficiency and provide employees a better system, and that’s what this is doing.”



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wrong, resulting in arduous signoffs and approvals that add an enormous amount of time to just about every government process.

The lean approach is about taking the kinks out, and straightening the pipes so systems work faster. Greater speed improves capacity, and government agencies can get more work done. They can serve more people in a given time period. And Miller pointed out that government employees want to serve more people. It’s the systems that are broken, not the employees.

Lean Workforce ManagementWhile the employees are not broken, public servants play

a crucial role in the service production line, and the processes involved in managing the workforce can be as kinked and inefficient as other government processes, adding time and expense to any agency’s operations. More efficiency and less waste can make a big difference, and lean principles can work very well when applied to workforce management. Most governments spend 45 to 50 percent of their operational budgets on payroll. While the workforce is often the largest expenditure, it also presents a big opportunity to become more efficient and reduce costs with a lean approach.

“It stands to reason that labor would be one of the first areas you should focus on, in terms of operational efficiency gain,” said Christine Carmichael, director of government industry marketing for Kronos, a leader in automated workforce management. “If you’re managing your workforce in a manual environment, you’re undoubtedly dealing with mountains of paper. Things like your timesheets, schedules, vacation requests and leave requests are all being managed by trails of paper that get shuffled between the employee, the supervisor, human resources, payroll, legal advisers,

and so on. Ultimately that paperwork is being shuffled all over the city or county. And if the mountain of paper isn’t a big enough concern, the legal requirements around labor compliance laws and things like overtime tracking are important considerations for government leaders.”

Manual workforce processes are slow and inefficient — and can be greatly sped up with electronic automation. Automation helps straighten the pipes of government. Automated workforce processes bring fewer errors and lower costs. Automation also provides a documentation trail, and it gives managers a real-time look at workforce data, so better decisions can be made.

“Because lean has a measurable impact on time, capacity and customer satisfaction, lean projects can produce amazing results,” Carmichael said. The Kronos philosophy is all about lean — helping government work more efficiently. Kronos helps with time and attendance, scheduling, absence management, HR, payroll, hiring and labor analytics. It can handle complex rules, regulations, company policies, collective bargaining agreements, overtime issues and more. And it’s all done much more efficiently than with manual processes.

Today’s government must find every opportunity to make operations more efficient and reduce costs, and Kronos helps government manage its costliest — and most valuable — asset: its workforce.

For more information visit www.kronos.com/stategov or call us at 800-225-1561.


CONTINUED FROM PAGE 2

This e.Republic Thought Leadership Profile is sponsored by Kronos. © 2011 e.Republic Inc. All rights reserved. Printed in the U.S.A.

“Because lean has a measurable impact on time, capacity and customer satisfaction, lean projects can produce amazing results.” — Christine Carmichael, director of government industry marketing, Kronos



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GOVERNING is pleased to announce our new series of Leadership Forums.

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National Committee for Quality Assurance’s patient-centered medical home. Insurers would agree to pay a case management fee and fund nurse-case managers.

Koller’s third condition was that insurers implement meaning-ful incentive programs for physicians to adopt electronic medical records. Finally, he asked insurers to commit to a serious discus-sion aimed at overhauling the payment system as a whole.

The reaction to Koller’s demands was euphoric from certain sectors, notably primary care providers. From insurers, however, the reaction was mixed. Ultimately, insurers like BCBS’s Purcell agreed that “directionally this was correct.” After all, many of

Koller’s ideas were inspired by projects that BCBS had already begun. But there was another consideration as well. In addition to pressuring insurers, Koller was preparing to take on one of the biggest cost drivers in health care—rising hospital costs and utilization.

The situation in 2009 crystallized the issue. That year, the state’s three major commercial health insurers fi led for double-digit rate increases. As Purcell remembers it, “We were in the depths of the recession, and a num-

ber of community leaders, including the governor, asked if there was any way to skip an increase. I said, ‘Governor, if I were you, I would be asking that too, but to agree to inadequate rates does nobody any favors.’” Purcell argued that if the state made BCBS rates inadequate by 5 percent, then “next year it will be whatever it is next year plus that 5 percent.’”

Rhode Island’s public offi cials disagreed. That year, Koller approved a much smaller rate increase. His decision cost BCBS approximately $100 million dollars. However, Koller and the business community took to heart one of insurers’ primary argu-ments—that hospital costs, primarily increases in outpatient utili-zation but also prices, were one of the major drivers behind rising

premiums. A study of insurer contracts with hospitals produced by Koller’s offi ce in January 2010 came to a conclusion already supported by the literature: Consolidation of hospitals makes cost containment diffi cult. In Rhode Island, that was particularly true for insurers dealing with Care New England, a local hospital group that included Women & Infants Hospital in Providence, where 80 percent of the babies in the state are born. As Purcell notes, “It is essentially unthinkable not to have Women & Infants in your network.” And that made negotiations with Women & Infants diffi cult.

And so in early 2010, Koller extended his delivery overhaul eff orts to the state’s hospitals as well. In doing so, William Martin, who chaired Koller’s advisory board, knew that the health insur-ance commissioner would be “poking the bear a little bit.” But Martin agreed that such actions were necessary, given the struc-ture of Rhode Island’s health-care system. “There is no competi-tive force in the marketplace,” Martin says, adding that Koller’s offi ce “has to come in and put that force in through regulation.”

Although Koller has no oversight authority over hospitals, he and his counsel decided that he did have the authority to pres-ent “contracting principles” that would guide insurers in their dealings with hospitals. In July 2010, he put forward six of them, among them provisions requiring quality incentives and stan-dards for care coordination and simplicity. Perhaps the most controversial of all, however, was a provision that would cap the guaranteed rate of hospital cost increase at the level of the Medi-care consumer price index, which in 2009 amounted to a mere 2.7 percent increase . In doing so, Koller was engaging in the kind of high-stakes bluffi ng he had perfected in dealing with insurers.

“As a regulator, you have a variety of choices about how you communicate,” notes Koller. At one end are formal regulations. At the other end is oral advice. In between there can be bulletins, guidance and information sheets. “I have specifi cally chosen to communicate this guidance as written guidance coming from the offi ce, not as formal regulations—although that may change going forward—with the understanding that failure to comply with this guidance will be taken into consideration during the annual rate review. So it is very important to have the rate review process in place and functioning.”

But this time, Koller apparently overstepped. Care New Eng-land fi led a lawsuit against Koller’s offi ce, seeking to block the insurance commissioner’s new conditions, saying they were an impediment to negotiations with UnitedHealthcare of New Eng-land. In December, Koller settled part of the lawsuit—a setback for now.

The health insurance commissioner has not, however, given up on his goals. Despite all the tools and pressures he’s put in place, premium increases in Rhode Island are not signifi cantly lower than in surrounding states. All of his actions, he points out, are consistent with what it takes to keep a lid on rates of increase. “Communities that are good at this are ones that have an empha-sis on primary care, payment reform and systems measure, and have delivery system leadership,” Koller says. And he remains determined to ensure that Rhode Island is one of them. G


Continued from page 26

Health adviser William Martin says Koller’s offi ce brings much-needed competition to the insurance marketplace.




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See an interactive map here: governing.com/innovationnation

Building the

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BUILDING

The Gateway to the Americas International Bridge in Laredo, Texas, is one of four crossings operated by the city, which has benefi ted economically from its role as the closest American entry port to Mexico’s industrial center of Monterrey.



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Forget the border wall. U.S. cities see big bucks in opening new crossings to Mexico.

By Ryan Holeywell

BRIDGES

DDonna, Texas, a sleepy farming town of about 18,000 people, is perhaps best known for its corn maze. The eight-acre agricultural attraction draws families from across the region. But without it, most drivers along U.S. Route 83—the highway that snakes the U.S.-Mexico border in Texas—would likely speed past the community without a second thought.

City leaders here hope that will soon change, thanks to the new multimillion dollar, eight-lane Alliance International Bridge across the Rio Grande, which opened in December. If the bridge is as popular as city leaders anticipate, it could transform Donna into an industrial center, bringing much-needed jobs and money along the way. For Donna—whose leaders initially began discuss-ing a bridge 50 years ago—the linkage across the water to Rio Bravo, Mexico, could be a game changer. Offi cials envision Donna becoming a hub for warehousing and shipping businesses servicing companies that transport goods north across the border.

Those hopes are based largely on a proposal by Rhodes Enterprises, a company that plans to invest, through the Alliance River Crossing Project, more than $950 million to develop 900 acres of land surrounding the bridge. Ernesto Silva, a consultant hired by the city, says the development could nearly triple the city’s tax base. Meanwhile, Ken DeJarnett, director of development at Rhodes Enterprises, says the project could boost Donna’s annual sales tax revenue to $36 mil-lion annually—it’s currently around $1.5 million—and create 7,000 new jobs. That’s nearly the number of working age adults currently living in the city. B

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If that happens, the fortunes of Donna, whose poverty rate is 40 percent, could be forever changed. “It would be a whole new town,” says Silva, a former assistant city manager of nearby Pharr, Texas, which has an international bridge of its own. “These bridges are economic engines.”

At a time when politicians in Washington and state capitals are hotly debating the topic of immigration, and the federal govern-ment has literally built walls between the U.S. and Mexico, leaders in border cities and counties are increasingly making it easier to enter the country. By becoming host to a land port linking the U.S. and Mexico, a locality hopes to create a valuable hub for busi-nesses that facilitate the international transport of goods—and in the process yield revenue from tolls and taxes on businesses, property and sales.

The gamble is risky. Although federal and state money paid for much of the project, Donna is still on the hook for about $28 mil-lion . And the bridge, which opened with a ceremony that included Mexican President Felipe Calderón, is coming on line when fewer people are making the trip between the two countries, amid fears of drug cartel violence. Commercial traffi c—a prerequisite of any industrial development—is not yet allowed on the bridge, because U.S. Customs and Border Protection has not yet committed to staff commercial inspection stations.

Still, despite the obstacles, it’s a chance Donna is willing to take, says DeJarnett. “You’ve got to risk a little to gain a lot.”

When the Anzalduas International Bridge near McAllen, Texas, opened a little over a year ago, it became the fi rst new U.S.-Mexico border crossing in more than 10 years. The 3.4-mile

bridge, which passes over a wall built in 2008, in part, to keep undocumented workers from entering the country, creates a strik-ing visual juxtaposition between two diff erent attitudes toward Mexico. Proponents of border crossings say it’s not inconsistent to encourage Mexican tourists to visit the U.S. while opposing undocumented Mexicans living here, since there’s a distinction between legal and illegal visitors.

Now, a bevy of communities across the Southwest are planning new and expanded border crossings. A new bridge in El Paso County, Texas, could open in 2015 . The project is demolishing an existing crossing and incorporating it into the new structure—the Guadalupe Tornillo International Bridge. In Nogales, Ariz., the Mariposa Land Port of Entry—the main port of entry for produce entering the U.S. from Mexico—is undergoing a massive $184 million reconfi gura-tion that’s scheduled for completion in 2014. And leaders in the San Diego area are planning a new freeway and port, the Otay Mesa East project, for 2015 that could cost as much as $700 million.

In most cases, the funding for the crossings—which typically include widened roads, expanded infrastructure and new inspec-tion facilities—comes from a combination of local, state and fed-eral money. But in all cases, local leaders play an integral role in lobbying federal offi cials for the projects by trying to persuade the State Department to grant the necessary permits and convince U.S. Customs and Border Protection to staff the sites.

These communities believe the investment and energy will be worth it: New crossings bring new money. In some cases, that

means tolls. The bridge in Pharr, for example, which connects to the manufacturing center of Reynosa, Mexico, is expected to generate $9.5 million in tolls this year . That’s almost as much as Pharr’s property tax revenue and even more than its sales tax rev-enue. Only half those funds are needed to operate the crossing; the rest goes to city coff ers.

Retail spending is another revenue driver. Shopping is the pri-mary reason Mexican nationals visit the U.S., largely due to the lower prices, higher quality and a greater variety of stores. Mexi-can shoppers spent nearly $8 billion in Arizona, California and Texas border counties in 2004, one of the busiest years ever for crossings, according to a study from the University of Texas-Pan American. In shopping center parking lots in U.S. border com-munities, it’s typical to see just as many Mexican license plates as American ones.

The real revenue hope, though, is that a new crossing will spur industrial development. American companies use low-cost laborers in Mexican factories called “maquilas” to manufacture textiles, electronics and vehicle components. Companies with


Stores in downtown McAllen, Texas, are a favorite shopping destination of Mexican nationals, who account for more than a third of retail sales in the city.

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maquilas often have nearby corporate offi ces on the U.S. side, and warehousing and trucking industries serve the fl ow of goods coming north. Laredo, Texas—the closest U.S. crossing to Mexi-co’s industrial center of Monterrey—is home to more than 1,000 logistics companies.

For these fi rms, congestion at border crossings is a major issue. Heightened post-9/11 security measures have dramatically increased wait times, and as more manufacturers have shifted to a just-in-time delivery model, backup on the highway can be a big problem. “That’s why I think you’re seeing so many bridges open up and border crossings open up,” says Keith Patridge, president and CEO of the McAllen Economic Development Corp., whose organization is under contract with the city to encourage busi-nesses to locate to McAllen and Reynosa. “It’s really being driven not necessarily by volumes of traffi c but the speed at which the traffi c needs to move.”

Border cities are more than happy to help alleviate that con-gestion by building new crossings that bring truck traffi c their way and may in turn encourage new companies to locate nearby. Among the most ambitious new border crossings in the works is San Diego’s Otay Mesa East project. Traffi c at the area’s three existing bridges has skyrocketed since the North American Free Trade Agreement took eff ect in 1994, says Marney Cox, chief economist with the San Diego Association of Governments (SAN-DAG), a regional group of 18 cities and counties. Today, Cox says, traffi c can take up to four hours to move through the crossings. (Actual border-crossing times are much higher than those offi -cially reported by U.S. Customs and Border Protection, because federal stats don’t include congestion on the roads leading up to the crossing.)

That means very few trucks can make multiple crossings in a day, slowing down and increasing the cost of shipping goods from Mexico. A 2006 study commissioned by SANDAG found that long wait times caused travelers to skip as many as 8.4 million trips annually, resulting in a loss of $1.28 billion to the San Diego area and preventing the creation of about 31,000 jobs . The federal gov-ernment has been reluctant to put money toward the project, Cox says, but SANDAG has projected that demand for a faster crossing is so high that it can fi nance nearly the entire project with tolls. “Of all the things discussed in the region here,” Cox says, “I can’t think of another that has as big an impact as facilitating traffi c across the border.”

Other cities have similar hopes for easier border crossings—even in the state with the nation’s toughest immigration laws. In December, San Luis, Ariz., celebrated the opening of its second border crossing, designed to ease congestion at an existing cross-ing downtown. “We have over 1,000 acres of developmental land around the new port of entry,” says Julie Engel, president and CEO of the Greater Yuma Economic Development Corp. “We’re hoping it will kick-start and generate a major economic impact, not only for the city but the whole region.”

It’s easy to imagine an almost endless loop of returns: More crossings mean more businesses, which mean added congestion, which calls for more crossings. “Is there a point where you say, ‘We don’t need any more bridges?’” says Patridge. “I guess there probably is, but I don’t know what that is.”

Even as many border towns are racing to build new crossings, however, the economics are already start-ing to shift. For one thing, personal travel across the border has fallen sharply over the past few years, in

large part due to concerns over drug-related violence in northern Mexico. Noncommercial crossings, such as tourists and shoppers, are down by almost 30 percent since their peak in 2005. That’s a problem that’s here to stay, says Xochitl Mora Garcia, a spokes-woman for Laredo, which has shelved plans to build what would have been its fi fth border crossing. “It’s not temporary,” Garcia says of the decline. “It’s not a fl uke. [The violence in Mexico] doesn’t seem to be subsiding anytime soon.”

Fears of violence could begin to aff ect commercial transport as well, although that traffi c is relatively stable for now. Just last month, the manager of a Black & Decker maquila in Reynosa—who lived on the American side of the border—was found stran-gled, his body left in a vacant Reynosa lot. Although the circum-stances of his death are unclear, local offi cials worry those types of incidents could deter companies from locating there in the future. “What we have to do,” says McAllen City Manager Mike Perez, “is work with the Mexican government to ensure that the people setting up manufacturing operations in Mexico feel comfortable and safe for the managers to cross back and forth.”

Violence aside, some critics of the renewed zeal for building bridges question just how benefi cial they actually are to the local community. One of the persistent ironies of border towns is their sky-high poverty rates. While the increased number of cross-ings has helped the northern Mexico economy, poverty remains a “hallmark” of U.S. border communities, according to a paper published by the Federal Reserve Bank of Dallas. Border cities such as San Luis, Pharr and Brownsville, Texas—which all have international crossings—also have poverty rates in excess of 32 percent, more than double the national rate. And the McAllen and Brownsville regions have among the lowest median household incomes in the country.

Ports of entry used to be reliable cash cows for any city or county fortunate enough to have one, but that’s not always the case anymore, says Nelson Balido, president of the Border Trade Alliance, a nonprofi t group of government and private-sector representatives advocating for improved trade relations. A new crossing still almost always yields some benefi t to the local econ-omy, even if it’s just a small boost. But cities can no longer count on bridges being the moneymakers they once were, says Balido. “A lot of municipalities automatically think a bridge equals big bucks. That’s not necessarily true.”

Those concerns haven’t dimmed hope for the new bridge in Donna, however. While the newly opened crossing is currently surrounded by little more than fi elds of cotton, sorghum and corn, offi cials envision a future building boom. Silva, the bridge consul-tant in Donna, is confi dent that the project will be a hit. “We’ve heard, ‘Why are you going to build the bridge? There’s an eco-nomic downturn,’” he says. “I don’t think they fully understand that people still have to live. People still have to buy products. You’re still going to need bridges.” G



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Departments of transportation (DOT), turnpike authorities, and other transportation entities have extremely important work to do. People must get from place to place and they need dependable roads, bridges, and other infrastructure to help them reach their destinations. And despite tough eco-nomic times and smaller budgets for transportation departments, people still expect quality services from state and local transportation agencies.

To remain productive despite smaller budgets and workforces, transportation agencies often employ technology. Today, transportation organizations increasingly depend on software to plan budgets, track bridge safety, evaluate progress, manage day-to-day operations, and mea-sure their own performance against their goals.

As a result, they have more informed and efficient operations. Government

agencies can collect and analyze data, helping them keep construction proj-ects on schedule and within budget. They can recognize issues more quickly and respond to them immediately. And they can share data across numerous agencies or divisions.

Road and bridge development, contract-bidding processes, strategic planning, auditing, reporting, and more can be done more cost-effectively with the right software. Cash flow forecast-ing can now be more accurate than it was in the past. Performance can be measured and factored into future plans. And with limited budgets requir-ing agencies to work more efficiently, the need to measure performance is greater than ever.

Many agencies have used SAP® soft-ware for years to streamline and opti-mize productivity in enterprise resource planning (ERP), business intelligence,

performance measurement, HR, report-ing, analysis, and other functions. Whether it’s making back-office opera-tions more efficient or helping agencies track and manage construction projects, SAP solutions improve the process. And SAP software helps governments man-age bidding, cash flow, data analysis, and more.

Success StoriesThe Colorado Department of

Transportation (CDOT) depends on SAP software to make business run more effectively for several major areas — financial, HR, operations, budget formu-lation, and business intelligence. SAP solutions make the department more efficient in numerous ways, with the greatest improvement occurring in pay-roll processing and financial reporting.

“We wanted a more expeditious way for our CFO and executive management

ADVERTISEMENT

Transportation agencies gain needed efficiencies with software.

MOVING AHEAD

Case Study | SAP

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to be able to pull reports and find the data they are looking for,” says Olga Ekberg, IT agency services director of CDOT. “We now have executive-level reports, includ-ing dashboards, which play a key role in providing the information necessary to make both strategic and operational decisions,” she continues.

The department uses data from reporting to make better decisions. “There is now more of a single source, a single truth on the data,” Ekberg adds. “It is easier to say with confidence that your data — and thus your reports — is accurate now that the data is stored in one location, in contrast to the compila-tion of data from different locations and different data sets formerly required for these reports,” she states.

This e.Republic custom publication is sponsored by SAP. © 2011 e.Republic Inc. All rights reserved. Printed in the U.S.A.

Following the implementation of SAP software, there have been fewer payroll errors, Ekberg says, and the depart-ment saw many improvements when it consolidated numerous systems onto one platform with SAP software. “We went from 50 or 60 disparate systems to this one enterprise system. There is less duplication of data, greater access to data, and good security around it. From the IT perspective, one enterprise appli-cation is easier to support than several different systems,” she states.

SAP software also helped CDOT secure funding from the American Recovery and Reinvestment Act. “Because we have SAP, we got our grants very quickly — and not all states were able to do that,” says Ekberg. “So it did benefit us in that way. And we are able to be more transparent when legislators want information about our financials, HR, or anything they might want to see. In this vein also, with SAP as the source of record, the depart-ment’s financial audits have gone more smoothly than in the past,” she says.

Better PerformanceThe North Carolina Department of

Transportation (NCDOT) has been using business-intelligence software from SAP to ensure that projects are completed on time and on budget and to ensure that projects meet necessary goals.

“Our biggest objective is present-ing things in a dashboard form that will help our executives make deci-sions,” says Gary Thomas, IT director

of NCDOT. “We don’t want to display items that just look interesting; we want items that we can take action on. If you have a project that’s in the red, you want to pick up the phone and take action to fix it,” he adds.

The dashboards give executives a high-level view of how projects are per-forming. But the dashboards also can go deeper. “They also allow executives to drill down into more detail as to why something is going well or not so well,” says Thomas. “It allows them to get into whatever level of detail they deem nec-essary. It helps us make decisions on a daily basis,” he states.

Thomas says that NCDOT also uses SAP tools to analyze the various finan-cial scenarios that could result from choosing certain projects. “When you start moving your data around your dashboard, it shows the financial impact of your decisions,” he adds.

The strategic planning that the department needs to do is greatly aided by SAP software and the data it collects. “It’s a way to rank and select your proj-ects based on pure facts,” Thomas says. “You’re trying, as much as possible, to remove the politics. Instead of going by who is asking for it or what area it’s in, we base it on data. We base it on facts and pure need,” he says.

With all the pressure on transporta-tion agencies to do more with less, the potential of software can’t be over-stated. It’s already making a big impact for numerous DOTs — helping travelers get to where they’re going.

To learn how SAP can help your agency achieve its strategic objectives, contact an SAP representative at 1-877-727-1127 extension 12000.

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Portland, Ore.’s “Big Pipe” will soon be ready for action. Much of the untreated sewer and stormwater that spills into the Willamette River will begin fl owing into the $430 million underground tunnel—22 feet wide and six miles

long. The Big Pipe will greatly reduce the amount of raw sewage that sloshes into the river, fi xing an older system.

As in many cities, Portland’s older neighborhoods were being served by a series of pipes that collect both sewage and stormwa-ter, the latter being water that fl ows over impervious surfaces into the storm drain. When rain comes pouring down, these pipes are designed to overfl ow, sending millions of gallons of raw sewage straight into the river. Under this system, Portland has about 100 combined sewer overfl ows per year. With the help of the Big Pipe, which will store and divert overfl ows to a treatment plant, the number should drop to fewer than fi ve. “It is,” says Dean Marriott, director of the city’s Bureau of Environmental Services, “a 94 to 95 percent improvement.”

DREAMSPIPE

Portland isn’t the only city investing hundreds of millions of dollars to manage sewer overfl ows. Under federal man-date, dozens of municipalities are proceeding with mitigation projects, including “gray solutions,” such as massive tunnels, as well as “green solutions,” like eco-roofs and landscaped curb extensions that absorb stormwater before it ever enters the sewer system.

Triggered by environmental degradation (Portland’s Big Pipe grew out of a lawsuit fi led by a clean water organization), the combined sewer initiatives spotlight the problems associated with stormwater, which is becoming a leading cause nation-wide of water pollution. Regulators are taking note. The U.S. Environmental Protection Agency (EPA) is expected to enact new national stormwater regulations by 2012—and the agency already is beginning to issue specifi c pollution criteria for states, cities and developers. The rules could cost municipalities mil-lions of dollars. Florida, for one, puts a number on that cost.

WITH STORMWATER A MAJOR POLLUTANT, CITIES ARE COMING UP WITH INNOVATIVE WAYS TO CONTROL THE FLOW.

BY LINDA BAKER



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Like sewage, stormwater is something of a dirty little secret, channeled out of sight through a network of underground pipes, only to emerge to contaminate lakes, rivers and streams. Combined sewer systems, which exist in about

700 cities, are only one part of the stormwater conundrum, which as Devine puts it, is “a multi-headed beast.”

To understand what he means, consider the myriad problems urban rainwater creates. In a natural environment, rainwater is slowly absorbed into the ground. But in the concrete-covered city, the water has nowhere to go but into the sewer system, which dis-charges high volumes into streams, eroding banks and fi lling water-ways with sediment.

There are other adverse impacts. As stormwater fl ows across asphalt and fertilized lawns, the runoff picks up oil, metal, pesti-cides and other contaminants, with toxic results for wildlife, habi-tat and people. About 13 percent of U.S. rivers, 18 percent of lakes and 32 percent of estuaries are classifi ed as impaired by stormwa-ter, which means they’re unsafe for swimming or fi shing.

Under the current permitting system, the EPA issues guidelines for cities and states on how to manage stormwater impacts. But environmental groups have criticized those standards, which tell builders to reduce runoff to the “maximum extent practicable,” as vague and ineff ective. Monitoring of sewer overfl ow systems has also been weak, clean water advocates say.

Responding to those criticisms, the EPA is beginning to defi ne its requirements more precisely. “The mechanisms in the Clean Water Act that deal with stormwater and overfl ows are beginning to be implemented in keeping with how other pollutants are regu-lated under the law,” Devine says.

As oversight becomes more rigorous, states and localities are responding with varying degrees of compliance and resistance. Kansas City, Mo., for example, partnered with the EPA to craft a $2.4 billion agreement to reduce combined overfl ows, which results in annual discharges of 7 billion gallons of raw sewage into the Missouri, Blue and other rivers. “We are on this path because we knew intervention was coming,” says Francis Reddy, project manager for the Kansas City Water Services Department. “Instead of having the feds fi le a suit, we contacted them.” The plan features a combination of tunnels, sewer rehabilitation, water treatment technologies and green infrastructure, includ-ing curbside gardens and rain barrels to sequester stormwater.

Staking a claim to innovation, Philadelphia aims to bypass the typical storage tunnels entirely. Instead, the city’s $1.5 billion plan focuses almost exclusively on eco-friendly solutions—bioswales, permeable pavement, street trees—as a way of reducing the city’s 15 billion gallons of annual overfl ow. According to Howard Neu-krug, director of the Philadelphia Water Department’s Offi ce of Watersheds, the city is “wrestling with the EPA” on details of the proposal, including the timeline and metrics for success.

For their part, EPA offi cials say the scale of Philadelphia’s commit-ment to green infrastructure for wet-weather control is impressive. “We are working closely,” says David Sternberg, a press offi cer for the EPA’s Region 3 offi ce. The EPA, he notes, wants “to ensure that this is an iron-clad model that advances green techniques while also ensuring full compliance with our combined sewer overfl ow policy.”


In a lawsuit it fi led against the EPA, it claims that new EPA standards, which, for the fi rst time, set statewide limits on the amount of allowable nutrient pollution (from wastewater and stormwater), will cost Florida governments and industry up to $200 billion.

But if the costs—and federal controls—are sparking local pushback, the stricter regulations also are expected to create a more sustainable urban landscape, giving cities an economic boost in the process. As urbanization increases, so does the amount of stormwater runoff , explains Jon Devine, a senior attorney for the National Resources Defense Council water program. The obvious solution is to return the landscape to a more natural, permeable state—an approach that will require an army of eco-friendly landscape architects and urban design professionals. “We think there is going to be an industry boom in meeting the new requirements,” Devine says. “We’re going to see a renaissance in urban and suburban green infrastructure.”

Portland, Ore.’s “Big Pipe” will store and divert sewer overfl ows to a treatment plant.

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On the subject of nutrient pollution—one head of the storm-water beast—Florida isn’t working quite as companionably with federal regulators. Although the attorney general’s offi ce declined comment on the pending lawsuit the state fi led against the EPA, Florida claims that states are responsible for water quality control and that the new rules, which stemmed from a settlement with environmental groups, infringe on Florida’s clean water program.

David Guest, an attorney with Earthjustice, a legal defense group that represented fi ve environmental groups in the original case, notes that the federal clean water standards aim to reduce phosphorus and nitrogen deposits. These toxic deposits, he says, have created a “thick green slime” in Florida’s waterways.

Initially, local governments in Florida seemed more likely to embrace the new regulations. About 40 cities and counties have already taken steps to restrict use of urban fertilizer—which con-tributes to the nutrient pollution. Nevertheless, in January, the Florida League of Cities, along with Pinellas County, also fi led suit to stop the EPA limits. For their part, state legislators aim to pass a law this session that would roll back the local fertilizer ordinances.

The EPA has issued a statement that refutes Florida’s “exaggerated doomsday claims” regarding the high costs that Florida municipalities and residents will assume as a result of the new rules. Instead of $200 billion, the agency

puts the cost at about $130 million. Nevertheless, as more cities embark on stormwater and wastewater control projects, utility customers nationwide can expect higher utility bills. In Portland, one of the fi rst cities to build a large tunnel—the Big Pipe is actu-ally one of two overfl ow tunnels the city built—residents now pay among the highest sewer rates in the country. Average monthly rates that were $30 in 2001 clock in at about $55 today and are

expected to reach $69 by 2016. The Kansas City overfl ow plan will increase sewer bills by 15 percent for fi ve years and 13 percent for the following eight years.

To help mitigate the expense to residents and diff use opposition to new stormwater initiatives, a few cities off er fi nancial incentives for property owners who manage runoff onsite. Ensuring aff ord-ability is one of the main reasons Philadelphia is embarking on its “green fi rst” stormwater and overfl ow strategy. In a budget-stressed and shrinking city—Philadelphia’s population has declined by about 70,000 people in the past decade—it makes little sense to invest $8 billion in a massive overfl ow tunnel, says Neukrug. Instead, he prefers taking a lower-cost, street-by-street approach to reducing stormwater, especially since it creates jobs, beautifi es the city and increases property values.

It’s a compelling argument. No other city, however, has tried to use green strategies alone to combat combined overfl ows. Such tactics are considered ideal for new buildings but more diffi cult to apply in older urban areas with miles of impervious pavement. Portland, considered a leader in sustainable storm-water solutions, uses various infi ltration techniques—discon-nected downspouts (they allow roof water to drain to gardens instead of sewers), vegetated curb extensions and porous pave-ment—to sequester 35 percent of the total annual stormwater runoff in the combined sewer area; 39 percent is managed by the pipe system.

The green portion of the Kansas City plan targets a 100-acre residential neighborhood that has less asphalt than downtown. If that pilot project proves successful, the city will expand the use of natural stormwater management techniques to other parts of the city.

As local, state and federal offi cials debate the effi cacy of diff erent stormwater solutions, a few things seem cer-tain. First, managing stormwater is becoming one of the most important environmental issues facing cities today.

Second, new urban development policies will leapfrog oceans of concrete in favor of landscaping that is green, grassy and water absorbent. And fi nally, tighter regulations are expected every-where—in the stormwater discharge permit process, as well as standards governing sewers and treatment facilities. “We are,” says Marriott, “seeing more and more attention to these issues—by EPA and the state.” G



“ Like sewage, stormwater

is a dirty little secret, channeled

out of sight through a network

of underground pipes. Philadelphia’s green stormwater strategy calls for rain barrels, curbside gardens and permeable pavement.

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siemens.com/answers

The Chesapeake Bay spans over 200 miles, and its communities are home to millions of people. Every day,Siemens is helping improve the waters they depend on.That’s why, after years of neglect, the bay is startingto come back. And it ’s just one example of the workSiemens is doing from coast to coast. Siemens purification

and wastewater treatment technologies are helpingmunicipalities big and small improve the health of their waterways. Somewhere in America, our team of more than 60,000 employees spends every day creating answersthat will last for years to come.

Restoring life below the surface,and above it.Siemens answers are helping keep waterways healthy and productive for future generations.

© Siemens AG, 2011. All Rights Reserved.


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New York City’s water is so fresh and clean that it remains one of only fi ve large cities in the nation that isn’t required to fi lter its drinking water. That will change slightly in 2012, however, when the Croton Water Filtration Plant

goes online and starts fi ltering about 10 percent of the city’s drink-ing water.

Back in 1993, the U.S. Environmental Protection Agency ruled that the Croton Watershed—one of three operated by the city—required fi ltering, launching an initiative that has become one of the largest, most expensive water fi ltration projects in the country. Located on a golf course in the Bronx, the plant was required to fi t on a footprint smaller than 10 acres, forcing engineers to blast down more than 90 feet into bedrock, and then stack the various fi ltration components on top of each other.

Today, the estimated $2.8 billion project is a construction bee-hive, with workers installing massive pumps and pipes, huge hold-ing pens, enormous tanks and miles of electrical wiring. On a cold, winter day complete with falling snow, men and women in hardhats work steadily underground in the massive 600-foot-long caverns of concrete , their radios blasting Jimi Hendrix or Lady Gaga as they bolt and weld the fi ltration plant to life.

At the very bottom of the site is the 9-foot-diameter, 8,000-foot -long tunnel that will connect the plant with the aqueduct that deliv-ers water from reservoirs more than 60 miles away. Bernard Daly, the site’s executive construction manager , stands in the middle of the tunnel and tries to explain the immensity of the project he over-sees. Talking in a clipped Irish accent, Daly explains that the tunnel is about to be sealed off , the fi rst of the fi nal stages of construction that will end in another 24 months or so, if all goes according to plan. “Above, we’re going to build a golf driving range over the entire site. You won’t know you’re standing on a fi ltration plant,” he says, knowing that the public will never see what he and his workers have created. G

WATERWORKSNew York City’s fi rst–and

only–water fi ltration plant

is a marvel of engineering.

By Tod Newcombe

Photographs by David Kidd

See more photographs of the Croton Water Filtration Plant construction project at: governing.com/Croton



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Left: Work continues on the installa-tion of massive ultraviolet units that will disinfect drinking water pumped in from the Croton Watershed. Top left: A worker uses a machine to fi t pipes. The multilevel plant is laced with more than 66 miles of pipe, some of which are more than 5 feet in diameter . Top center: Several of the plant’s 48 fi ltration tanks. Top right: One of the 1,300 work-ers who have been building the $2.8 billion fi ltration plant, which is scheduled to go online in 2012. Above: The nearly complete tunnel, which will link water fl owing from the reservoirs to the plant, is 9 feet in diameter.



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It’s perennial. A new governor is elected on promises of making government more effi cient—eliminating waste and rethinking programs. After inauguration, the new adminis-tration convenes a group of well-respected citizens—often from the business world—to scour state government for duplication, obsolescence and ineffi ciency. This group, or

commission, is charged with creating a blueprint for setting gov-ernment on the road to high performance.

The rhetoric is grand. So are the promises as numerous rookie governors—28 newly elected this year—try to wrestle their bureau-cracies into smooth-running machines that also, by the way, save the general fund a bundle of taxpayer dollars.

It’s a safe bet that a dozen or so such commissions will be in action this year. Those commissions will be asked to review every-thing from services states should deliver to the way government should be structured—including taking a hard look at the authori-ties, commissions, boards and agencies that have accreted over the decades. The work will refocus state government on its core responsibilities and suggest ways to restructure government so that it meets those responsibilities in the most effi cient manner possible.

What’s questionable is whether these blue ribbon commissions will—or can—make a diff erence. Recent eff orts show mixed results: Some reports achieve almost immediate paper-shredder-ready sta-tus, while others actually gain traction. Why are some helpful and others an expensive waste of time?

Bill Leighty, former chief of staff to Virginia Govs. Mark War-ner and Tim Kaine, and a veteran of two state government rein-vention commissions, is one of the nation’s more accomplished, self-taught scholars on the subject. He notes that Virginia’s

fi rst reinvention commission, which was convened in 1916, was followed by 13 more, the latest under current Virginia Gov. Bob McDonnell. That’s an average of one every 6.5 years.

Practiced or not, these exercises have always had a tough time when it comes to implementation. “It’s like trying to coax 100 feudal kingdoms into seeking nation-state status,” Leighty says. As he sees it, every department is a feudal kingdom, and no nation-state ever came about because all these kingdoms wanted to join together voluntarily. “It’s invariably the result of a strong outside force,” he says. That strong outside force is the commission.

The modern-day model for government performance study commissions may have been set by the Texas Performance Review (TPR). Launched in 1991 by then-Texas Comptroller John Sharp and the late, legendary Lt. Gov. Bob Bullock, the

review was a top-to-bottom scrub of state government for effi ciency and eff ectiveness. It was inspired by a looming state budget crisis and a primal fear that some in the Legislature might fi nally and credibly push for a state income tax to solve the state’s fi scal problems. The TPR unleashed 100 auditors on Texas government to fi nd savings, identify cuts and look for potential alternative revenue streams.

According to a study by the University of Texas’ Lyndon B. Johnson (LBJ) School of Public Aff airs, the TPR had some posi-tive—although clearly mixed—results. Auditors identifi ed nearly 975 ways the state could save $5 billion . Those ideas included con-solidating 12 human services departments into one and expanding experiments with privatized prisons. In the end, the state enacted about two-thirds of the TPR’s recommendations, adding up to $4.2 billion, $2 billion of which came from tax and fee increases.


For incoming governors like

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more important now than

ever before.

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If Texas’ attempt at using a top-to-bottom government review to eff ect change was credible, then California’s recent eff ort to rein-vent government was a real stinker. The 2004 California Perfor-mance Review pretty much represents a master list of don’ts when creating a reinvention commission and trying to peddle its wares.

Gov. Arnold Schwarzenegger started the process by saying he was going to “blow up the boxes,” says Mark Baldassare, president of the nonpartisan Public Policy Institute of California. “Naturally, the people in the boxes are all going to be very nervous.” Instead of bringing all the parties together to begin a long, hard eff ort to actually restructure, it had an antagonistic quality from the start. And that, Baldassare notes, made it hard to implement.

Nor did it help that the Performance Review’s fi nal report was more than 2,500 pages and contained 1,200-plus recommenda-tions. In other words, there was something in it for everyone not to like—and for everyone to resist. According to the LBJ School analysis, the Schwarzenegger version of War and Peace ended up mostly being about war. It picked fi ghts with unions, the Legisla-ture, dozens of boards and commissions—along with their mem-bers, staff s and constituents—and just about every other special interest native to the Golden State. And it simultaneously sought to beef up executive oversight in a lot more of California govern-ment, a notion that the California Legislature didn’t care for at all.

So it wasn’t much of a surprise when then-Senate President John Burton characterized the governor’s game plan for Califor-nia’s salvation as “dead on arrival,” which it certainly proved to be. This, in its way, was tragic, given the amount of sincere and hard work that went into producing the report, not to mention that it included some sensible—and even vitally necessary—recommenda-tions on how to get some control over the behemoth that Califor-nia’s state government had become. Among other things, the report suggested tackling the state’s notoriously bureaucratic personnel system and eliminating 88 state boards and commissions.

How might Schwarzenegger have done it diff erently? Kevin Bacon, one of the professors who managed the LBJ government transformation research project, off ers a pretty succinct list on what a commission should be:

• bipartisan and inclusive; • transparent in its operations and dealings; • succinct in its recommendations; and• clear in its ultimate goal of improving government in the

interest of all citizens.After that, it’s all about execution, including two absolutely

necessary ingredients for success. First, there must be a staff and plans in place to implement recommendations. Second, there must be unstinting executive follow-up.

“Most commissions’ greatest downfall is they don’t allocate the right level of resources to getting things done,” says Leighty. He admits that it sounds contradictory since many of these com-missions are about saving money. But the staff and resources must be in place to follow up on commission recommendations.

Meanwhile, governors who launch reinvention eff orts must signal that they mean business, and they need to signal it con-stantly. “Every time the governor walks into a room and one of his

cabinet secretaries is there,” Leighty says, “he should walk right up to them and ask, ‘How are you doing on recommendation X?’”

A more recent and well regarded example of how to set up and run an eff ective commission was in Georgia, where Republi-can Gov. Sonny Perdue’s Commission for a New Georgia modeled many of the Bacon/Leighty keys to success, and it included a wide variety of players: business people, bipartisan lawmakers, govern-ment insiders, members of various advocacy groups and informed citizens. Instead of immediately tackling proposals that had built-in or dug-in opposition, the commission pursued issues that everyone could agree on, such as improving state contracting procedures and more effi cient disposal of surplus government property.

Observers think another characteristic made the Georgia commission successful: It set itself up as a transparent, standing, consulting group that made recommendations for improving pro-cesses and reorganizing functions as it found things to fi x.

Still, there will always be some unavoidable tension in setting up and operating one of these commissions. Often the impetus for a commission is that a state is in deep and immediate fi scal trouble. Yet many commissions recommend signifi cant structural reform, which takes time. “You’re redoing the machinery of gov-ernment,” says Bacon. “The problem is, you need savings right now, like a payday loan. As a result, real reform oftentimes gets pushed aside due to the immediate demand for savings.”

The most immediate and interesting test of how that point of tension plays out is in New York, where new Gov. Andrew Cuomo launched not one, but three commissions: One to tackle Medicaid; another mandates; and the third, called the Spending and Govern-ment Effi ciency (SAGE) Commission, to pore over state govern-ment for duplication, ineffi ciency and obsolescence. According to Cuomo’s pre-election agenda, “The SAGE Commission will be directed by business leaders with experience in restructuring complex organizations, and its charge will be simple: Reduce the number of agencies, authorities, commissions and the like by 20 percent.” While the charge might be simple, execution will not.

With a $10 billion defi cit this year, the Empire State will be the latest—and easily one of the highest stake—proving grounds for whether the magic of reinvention commissions is real or just rhetorical. Not since the California Performance Review debacle has a state restructuring commission been handed such a com-plicated and starkly diffi cult job. The government in Albany has been famously described as perennially “dysfunctional,” with a fractious Legislature that seems to love battling governors just for recreation’s sake. Public employee unions, meanwhile, are sure to fi nd nothing to like in any restructuring plan that involves cutting state jobs. They’re already spoiling for fi ghts over Cuomo’s pro-posed state employee pay freeze and statewide property tax cap.

That doesn’t mean that anyone should give up on New York state’s ability to reform. There is hope. The key will be commit-ment, says William Eggers, author of numerous government transformation books. “People know they can outlast these things if they’re just one-off s,” he says. “To be successful, a commission needs to be serious—and serious over the long haul.” G





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In 2009, Chicago’s court system was hopelessly clogged by cases alleging police misconduct. For years, the city’s Department of Law had watched as the

number of misconduct allegations crept upward. With the increasing strain on municipal resources, Chicago’s attorneys were forced to settle many cases out of court, which refl ected poorly on the city’s bottom line and police force.

But Chicago found a somewhat coun-terintuitive way to save money and save face—by taking every single police mis-conduct case to court.

In July 2009, Chicago Superintendent of Police Jody Weis wrote to James F. Holderman, chief judge of the U.S. District

Court for the Northern District of Illinois, to notify him that the city would be chang-ing its strategy for dealing with lawsuits fi led against police offi cers. Rather than settling these cases out of court, the city would take them to trial.

“I have asked the Department of Law to litigate those cases which would have been settled [as] a matter of fi nancial con-cern,” Weis wrote. “If plaintiff s know their complaint will in fact be litigated, more focus and concern will be given to the fac-tual validity of the complaints signed.”

In other words, if plaintiff s knew they’d have to go before a jury, they’d be less likely to fi le frivolous misconduct cases. Plaintiff attorneys knew the city’s

reputation for settling out of court, and the Police Department thought the law-yers had come to view misconduct cases as easy wins.

After reviewing the city’s settlement strategy, the Law Department came to the same conclusion that the police had. But there was a problem: Taking every case to court would require resources well beyond what the city could aff ord. Given the available staff , there simply was no practical, in-house way to try every case brought against an offi cer.

So the city turned to private-sector fi rms to fi nd defense attorneys. The move wound up saving money. Thanks to the recession, the fi rms weren’t picky

Chicago Goes to CourtTo cut costs and save face, police misconduct cases are going to trial—all of them.

By Heather Kerrigan

Problem SolverReal-world solutions and ideas for government managers.


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with how they got paid. Rather than pay-ing the lawyers an hourly rate, the city developed a bulk-case program. Any eli-gible law fi rm chosen by the city would receive a fl at fee per case, plus a bonus if the city won the case. Firms hired by Chi-cago were required to build up each case and take it to trial—they were prohibited from settling cases out of court. “By pay-ing them that fl at fee, that actually made this much more cost-eff ective for us,” says Jennifer Hoyle, public aff airs director for the Law Department.

The standing contract, which currently involves 14 diff erent law fi rms, pays the fi rms $35,000 per case in monthly install-ments over two years, plus a $15,000 bonus for each win. Not every case goes to out-side attorneys. The private fi rms mostly handle small-exposure cases—those seek-ing damages of less than $100,000—which the city considers defensible.

The move is working better than any-one had anticipated. In the fi rst year after the city began taking every case to court, the number of federal civil rights cases fi led against police offi cers dropped by

almost 50 percent. In addition, cases brought against offi cers are being volun-tarily dismissed at higher rates. In 2009, about 18 percent of plaintiff s voluntarily dropped their case. By October 2010, nearly 46 percent of plaintiff s dropped their case. The Department of Law told the city that the results are “nothing short of astonishing.”

Even when the city takes a case to trial, it’s still paying less money than it had when it settled out of court. In 2010, the city was projected to pay approxi-mately $1.7 million in case settlements. In 2008, it was $9 million. Farming out every single case to private counsel would still cost only about $5 million per year in fl at fees and bonuses, so the city comes out ahead. The Law Department attri-butes the overall savings to the decreased number of lawsuits fi led—and it expects that downward trend to continue. If the number of cases continues to fall, so will the legal expenses.

The savings presented by the city have in some cases drawn criticism from plain-tiff s’ lawyers. The lawyers argue that they

would have been willing to settle out of court for less than what was awarded to a plaintiff at trial. Add to this attorneys’ fees and trial costs, and some have argued that the city loses money. However, the declin-ing number of cases still leads to overall savings for Chicago.

The feedback from those most closely aff ected—law enforcement offi cers—has also been positive. They had long advocated for small federal civil rights cases to go to trial, in some instances arguing that settling the cases refl ected poorly on individual offi -cers’ performance, especially if a trial would have proven that the offi cer had acted appropriately. As Weis stated in his 2009 letter to Holderman, offi cers had raised “concerns that their reputation is being tarnished, they are not allowed to clear their names, and, that criminal defendants are using civil litigation to either assist their criminal defense or to intimidate the offi -cers from conducting lawful enforcement activity.” Thanks to the new strategy, that mentality is changing. G



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sands of man hours on data cleanup, data merging, data organizing,” says George Noell, executive director of the Offi ce of Strategic Research and Analysis for the Louisiana Department of Educa-tion. What Noell and other researchers were fi nding is that they could get tons of snapshots about individual years, but they couldn’t see the moving picture—which would require easily tracking the infor-mation they wanted across years.

But the times and technology have changed. With better use of new tools, data now is collected and stored in a way that makes access much easier. Perhaps more important, computers now allow the information to be accessed in close to real time. Faculty can use data about this year’s ninth graders to help students while they’re still in ninth grade. In the past, information about the ninth-grade class could not be accessed in a timely fashion, which meant it could only be used to help inform decisions about future ninth graders.

Some readers are doubtless waiting for us to get to the question of standardized tests—one of the most vigorously debated topics in education. But we’re going to skip right over that.

Louisiana’s data goes far beyond big standardized tests: It is focusing on attendance data, capturing information on a weekly basis so educators can look for shifts in attendance patterns at the district, school and individual levels. When unexcused school absences accel-erate, administrators can deal with them right away.

This is important, says Noell, because “dropping out is not an event, it’s a jour-ney.” Statistically, it’s apparent that the journey leading up to that catastrophic life event is an increasing rate of absences. With attendance data, Louisiana can tar-get high-risk students before they become

By Katherine Barrett and Richard Greene

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Problem Solver | SMART MANAGEMENT

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But data by itself gets you nowhere. Questions about how this information should be put to use are the ones begging for good answers. It’s our tendency in this column to stay away from topics for which we can’t provide time-tested and proven models. Given the critical nature of this issue, however, it seemed more than worthwhile to look at the work that’s being done in Louisiana, a state that’s clearly further along than many others in using educational data and off ers at least a hint of benefi ts to come.

Louisiana’s education system began using individual student identifi ers back in the mid-1990s. The point was to track student progress as boys and girls moved through the education system. Having the data identifi ers was a great start, but for some time it was really tough to make use of this material. “I literally spent thou-

Data LessonLouisiana learns to use information about its students to create real-life benefi ts for them.

One of the most contentious topics in the public sector these days—at local, state and federal levels alike—focuses

on K-12 education. Many agree that something must be done. You would have to be a hermit to avoid running across a depressing multi-hued chart that shows the U.S. lagging other nations on this front. When it comes to fi guring out what actions should be taken—and how we can best evaluate their worth, success and failure—the academic fur begins to fl y.

One potent trend has emerged: More educational data is being gathered now than ever before. This is partly driven by $250 million in American Recovery and Reinvestment Act funding and reforms pushed by the Obama administration. It’s also been spurred by improvements in technology.



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a dropout statistic. (They can also blend information to focus on individuals who most fi t the dropout portrait—students who are behind their age group in school, for instance.)

Louisiana also gets immediate feed-back on new programs it introduces. Consider the Ninth Grade Academy, a kind of school within a school that allows students to interact in smaller high school communities with more direct teacher attention. The theory is that students will be more successful in their high school careers if they get more help in the transition to high school. But as with most programs, success is often determined by how the program is implemented, and that varies from school to school. Louisiana’s data sys-tems have enabled it to look for schools that seem to have better results on this initiative and those that aren’t doing as well. Educators can then investigate what the diff erences are.

The data also points more quickly to extant programs that aren’t success-ful. For example, the Options Program for ninth graders helped students work toward a GED diploma. A review of the longitudinal data demonstrates that it hasn’t worked well, and a working group is in place to fi gure out how to change or replace it.

Louisiana’s intense use of educational data has come with numerous lessons. One key lesson is that data has a price, so you need to know the reason you’re collecting information and who will be able to use it. Another is that you must understand what data systems can and can’t do, and who they will benefi t. “It’s not all going to be relevant to teachers and some that’s relevant to teachers won’t be relevant to policymakers,” says Noell. “There are defi nitely good people who get this, but certainly our popular discourse at the federal level is not getting that diff erent consumers need diff erent levels of granularity in the data. The same data won’t be useful to everybody.” G


By Andy Kim

Pay-for-Performance Snow Removal Some services—no matter how dire the budget—just can’t be cut at certain times of the year. One such service is snow removal in the winter. In 2009, the city of Quincy, Mass., initiated a pilot program that lowered snow-removal expenses by revamping payment methods. The city’s Department of Public Works awarded a contract to a snow removal company that pays per inches of snow plowed, rather than the standard pay scheme of number of hours worked. It eliminates costly idling time charged by most contractors, holds the company accountable for plowing certain parts of the city and pays based on the amount of snow each snowstorm produces, with larger payments for larger storms. Mayor Thomas Koch is expanding the program this winter by enlisting another snow-removal company to cover other parts of the city. Half of the city’s six wards will be cov-ered in this expanded pilot, with the remaining areas plowed by a combination of private companies and city trucks—paid hourly.

| IDEA CENTER

Teaching Teen ParentsTexas has the third highest teen birthrate in the country, according to the Centers for Disease Control and Prevention. For every 1,000 Texas females age 15 to 19, 63 will be teen mothers. In an effort to lower the state’s teen birthrate, state offi cials use two programs to teach teens the realities and responsibilities of teen parent-ing. Parenting and Paternity Awareness is a 14-session curriculum focusing on topics that include the fi nancial challenges of single parenting, the importance of father involvement and the inner workings of child support. High schools receive training on implementing the program, and use it to fulfi ll a 2008 mandate in the state’s health curriculum requirement. The other program, No Kidding, is a series of presentations where young parents talk about their fi rst-hand experiences as teen

parents. Both programs were developed with help from the Texas Attorney General’s Child Support Division.

Find more ideas forcreative programs atgoverning.com/ideas

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By Steve Towns

Tackling a Catch-22Colorado builds better e-government one micro-grant at a time.

Problem Solver | TECH TALK

of $100,000. Another 40 applicants were off ered free services from SIPA—things like website development, payment pro-cessing and Google applications. In all, 89 eligible government entities applied and 64 went away with something.

John Conley, SIPA’s executive director, says applicants tended to be small cities and counties in rural parts of the state—many of which are struggling to meet basic technology needs. For instance, one applicant received $549 to buy an account-ing program that will let the city post gov-

ernment spending information online. Another will receive cash to purchase GIS software to support 911 dispatchers.

“The average citizen would think these are fundamental services that govern-ments already are supplying and funding,” Conley says. “But if you’re doing zero-sum budgeting, even small amounts of tech-nology spending mean a city council may need to cut somewhere else.”

Other projects go beyond meat-and-potatoes software purchases. One small

As the fi nancial vice tightens on local governments, there’s a widespread assumption that technology can help agen-

cies maintain critical services with less money and fewer employees. It’s true that automation done correctly can help, but there’s no avoiding the fact that it usually takes upfront investment to implement what ultimately may be money-saving technology. For local gov-ernments mired in the depths of a reces-sion, that’s a tough proposition.

Colorado’s Statewide Internet Portal Authority (SIPA)—a quasi-governmental organization that runs the state web-site—is addressing this Catch-22 through a new program that gives micro-grants to the state’s cities and counties. The idea is to give away small, but vital, amounts of money to fund technical innovation through a very simple grant process. So far, it appears to be working.

In January, SIPA announced cash awards for 24 applicants totaling just shy

town won $8,000 to buy video gear to conduct telemedicine appointments. And $1,350 will help launch online class regis-trations in another rural village.

All awardees were chosen with an eye toward incenting further e-government innovation, but pressure for results was kept intentionally low. Grant applicants needed their elected offi cial’s blessing to apply—local leaders must sign off on what’s called an “eligible governmental entity” agreement—but the SIPA money comes with lower expectations than funds carved painfully from city or county bud-gets. Indeed, some of the projects may fail—and that’s OK, Conley says.

“We want every applicant to succeed, but if two or three or fi ve of them don’t, we’re still getting people to think cre-atively,” he says. “We’re going to accept a level of failure, because we want them to take those lessons learned and use them on their next project. This is intended to be an incubator of innovative thought in local, rural governments.”

Befi tting the small grant amounts, SIPA kept the application process as simple as possible, asking just 13 questions designed to be answered in less than an hour. The cash comes from leftover budget money the self-funded authority has amassed over the past fi ve years. SIPA, which sup-ports itself through fees on electronic driver’s license renewals and other Web transactions, intends to plow that money back into communities through the grant program over the next few years.

“I grow weary when people think gov-ernment doesn’t work anymore,” Conley says. “This is a way to show that this stuff does work if you put some resources in the right hands.”

In other words, a little bit of help from SIPA might go a long way. G



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By Girard Miller

Many of us—and I am one of them—have been skeptical of promises made during the health-care debate, namely

the claim that the health-care reform law could bend the medical-cost curve. I continue to have my doubts. That said, I strongly support the Obama administra-tion’s new eff orts to focus on quality of care. It has real potential to cut costs.

The new 10-year, $10 billion initia-tive that Obama announced in November seeks to boost the quality of medical care by eliminating mistakes, improving effi -ciency and transferring the proven tech-niques of quality control management from the factories and service-processing industries to the health-care sector. IBM, the American Nurses Association, insur-ance giant WellPoint, the National Busi-ness Coalition on Health and consumer advocates have come out in support of this nonpartisan eff ort.

There’s no guarantee that improv-ing quality will necessarily lead to lower costs. But health-care expenses could actually decline if providers bungle fewer cases, and if there is someone around to remind chronically ill seniors to take their medications.

Unlike the $1 trillion health-care reform plan, this program has a modest budget and humbler aspirations. Even so, $1 billion per year is enough to get indus-try attention if deployed strategically. The president’s more realistic expectations could be readily met if the central players work together. Let’s give this one a chance. Anyone who remembers the medical mal-practice and ineptitude in the movie The Hospital (starring George C. Scott) should urge support of this initiative.

Governors, state insurance com-missioners, county commissioners and mayors should follow this eff ort closely, and craft their own bipartisan and non-

partisan strategies to participate in it. The challenge is to fi nd a way for the state and local governmental health-care purchasers to exercise their collective bargaining power to insist on quality improvements and control. This can’t be done from Washington, D.C. State-level eff orts and policy coordination will ultimately make or break this quality initiative from the demand side, while the White House seeks solutions on the supply side.

There’s an opportunity to use another hot-button medical-care issue to lever-age the quality-care initiative. By pushing for state-level tort reform (such as limits on punitive damages) as an incentive to improve quality, a win-win solution could reward conscientious health-care provid-ers with reduced litigation risks and costs. This is where meetings with industry leaders at the state level could prove most productive. The insurance companies, medical associations and hospitals that constantly complain about tort reform have an opportunity here to “put up or shut up.”

State-level medical tort reform, for instance, could enable a doctor or hos-pital to accumulate “consistent qual-ity control” points over time. Superior scores when aggregated would reduce

their potential exposure to punitive damages in a future case of alleged mal-practice. Even with a spotless record and consistently improving quality scores, such providers would still be liable for malpractice awards for actual damages, including lost income. But their risk of multimillion dollar punitive damages would be curtailed, and the plaintiff ’s attorneys would know that. Insurance rates should directly refl ect the lower risk of litigation costs.

This arrangement would provide strong incentive for providers to clean up their act and become quality fanatics. Mistakes would decline, patients would get better care and redundant procedures would fall off . Meanwhile, the perenni-ally incompetent would pay higher insur-ance premiums and suff er the wrath of juries when their track records are exposed in court.

There could be a fi scal “penalty” for 10 states, including California. These states secretly siphon off a chunk of punitive damages awards and use them as a hidden revenue source through so-called “split award” statutes. These states would col-lect less. However, that should be a drop in the bucket compared to the statewide gains in quality, reliable care and the dam-ages that are avoided.

The business community would have preferred to achieve tort reform by federal action, which is understandable because it would simplify the rules for multistate fi rms. But they might be wiser now to pur-sue state-level actions and let the “labo-ratories of democracy” in our federalist system provide some tangible examples of what can work. With large Republican victories in state legislatures last year, they might fi nd plenty of opportunities to achieve success in the state capitals. G


Curing a Cost CurveWith health care driving state spending, a focus on quality care could help cut costs.

Problem Solver | PUBLIC MONEY


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52

Player

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Mike FloodPosition: Speaker, Nebraska Legislature

Age: 35

Education: B.A., University of Notre Dame; J.D., University of Nebraska-Lincoln

Occupations: Lawyer; radio broadcaster

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In a Time magazine profi le, the 35-year-old speaker of Nebraska’s unicam-eral Legislature likened his life in his hometown of Norfolk, Neb., to the old TV show Ed. In the show, the main character was a lawyer and bowling alley owner. In Mike Flood’s case, replace the bowling alley with a radio station.

Flood has worked in radio since he was 15. As a student, he ran the Uni-versity of Notre Dame’s radio station and started his fi rst station during his fi rst year of law school. Today he helps run two radio stations: one classic rock and the other country. As a broadcaster, Flood became aware of and active in the issues facing his state, so he ran for state senator and was elected in 2004.

Three years later, Flood was elected speaker of the Nebraska Legislature. At the time, almost half of the senators were term-limited, providing Flood the opportunity to take on a leadership position without having any experience as a committee chair. As speaker, he sets the legislative agenda for the 50 senators in the nation’s only state unicameral Legislature.

Flood acknowledges that his fast rise was due to favorable circumstances. But fellow senators claim Flood’s success as speaker should be credited to his deft negotiation skills and the ability to fi nd common ground on issues that include education and water use. Those skills will be useful when the Legisla-ture meets over the next two years to address the state’s $986 million defi cit. “The speaker really has a role in our Legislature [in] trying to bring people together, trying to fi nd solutions to confl ict,” Flood says. —Tina Trenkner



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