Muncipal Efficiency: a Muskie School Report “Got it all Wrong”

from Maine Townsman, July 2004)
By Jeff Austin, Legislative Advocate, MMA
 

          A little more than a year ago, Evan Richert of the Muskie School at the University of Southern Maine published a report on Maine municipal government.  The thrust of the report is that Maine has too many small towns.  The consequence of these small towns is that services are too costly and therefore property taxes are too high, according to Richert.  His solution: replace small towns in Maine with large county-style government.

       The report has been given considerable positive coverage in the media, particularly the Portland Press Herald, and it was the basis for a legislative initiative forwarded last year by Governor Baldacci to create municipal service districts.

       This article is about MMA’s review and analysis of the Richert report.  Our conclusion is that Richert and the Muskie School got it all wrong.  Moreover, MMA believes that the media should have spent less time merely repeating the assertions of the Muskie School and more time actually investigating the claims made in the report.

The Richert Report

       Evan Richert, an associate professor at the Muskie School and former head of the Maine State Planning Office, authored an 8-page paper last year, entitled “Regional Government, New England-Style.”

       The report has no index, no bibliography, no listing of sources, no table of contents.  The basis of the conclusions found in the report draws primarily from “selective” census data; however, there are no tables or charts, or even footnotes included.

Out with Towns, In with Counties

       The Richert report asserts that Maine local government is inefficient.  The alleged reason local government costs too much is that there are too many towns in Maine:  “The number of general purpose governments delivering local services appears to be more important to efficiency than geographic size and density.” 

       This alleged inefficiency results in wasteful spending at the local level.  The more efficient model, according to the report, is county-based local government. 

       The Portland Press Herald editorial writers published a lengthy promotion of the Richert report entitled “Taming Local Government” on August 31, 2003.   On the eve of the June 8th primary election, the PPH again repeated the conclusions of this report in an anti-Question 1 editorial.  The report has been cited on other occasions as well, and the PPH Editorial Writer John Porter makes this claim over and over again in his editorial capacity. 

       The basic position of Richert and Porter can best be summarized by the PPH editorial of June 8: “With almost 500 local government entities duplicating one another, Maine is dreadfully inefficient in the way it furnishes local government.”

       This thesis is not new to Mainers, it has been tossed around for years.  What makes the Richert report a little different is its assertion to have proven the thesis. 

Half-Baked Bread

       So, what is the proof that Maine’s local government is inefficient?  The Richert report compares local government employment (both municipal and county combined) in Maine to the comparable local employment levels in five selected “peer” states.  These peer states (Oregon, West Virginia, North Dakota, South Dakota and Idaho) rely more heavily on county government for local services than does Maine.

       According to the U.S. Census, Maine local governments collectively have 410 employees per 10,000 population versus an average of 350 employees in the five peer states.  Accordingly, Richert asserts that Maine has approximately 7,200 too many local employees.

       Efficient is defined in the dictionary as being a relationship of output to input.  The Richert report only looked at input (employment) and is virtually silent as to output (services).  It is inappropriate to make an assertion about efficiency while only looking at input.

       Output should have been discussed in two macro-respects.  First, do Maine’s municipalities deliver more services than our peers?  Second, do Maine’s municipalities deliver better services than our peers?  While more and better services do not absolutely justify higher employment levels, they may provide a useful explanation.

       Answering these output questions is difficult.  But if one is going to suggest that we restructure Maine’s centuries-old form of local government, a more detailed and objective analysis of the current structure is warranted.

       In addition, the Richert report doesn’t even disclose that it is ignoring outputs.  The report doesn’t say that “services provided” are an important component of efficiency.  And, the report assumes that Maine and the peer states are comparable in the level and quality of services provided.  Ignoring outputs raises serious questions regarding the report’s conclusion that Maine’s municipalities are inefficient compared to these peer states. 

Taking Our Lumps

       Another problem with the Richert report is that it does not account for the differences in state, county and municipal governments depending on the state you are looking at.

       The source of data for employment was the U.S. Census Bureau.  The Census lumps together municipal and county government statistics.  There is no separate municipal employment report.  Thus, the 410 employees cited as “local employment” in Maine are both municipal and county employees. 

       The efficiency of county government compared to municipal government in Maine (and the peer states) would be an important factor to consider.  What if counties were inefficient compared to municipalities in Maine and therefore jacking up local employment numbers?

       Further, the Richert report does not explore the issue of which services are state or local.  Could it be that Maine’s local employment is higher than these “peer states” because local governments in Maine provides services which are provided at the state-level in the peer states?  Given the history and intensity of local control in New England generally and in Maine particularly, it wouldn’t be at all surprising to find that more tasks are provided by municipalities in Maine than in Oregon or Idaho. 

       The Census itself gives credence to this hypothesis.  In addition to local employment statistics, the Census also provides combined “State and Local” employment data.  Interestingly, there is little difference between the combined state and local employment in Maine (578) and the average of the five peer states (562).   What had been a 60 person gap at the local level alone (410 v. 350) has shrunk to 16 at the combined state and local level.

The Census Data

       The five peer states were determined to be “peer” for several reasons including weather, racial demographics, and low population density.  While the selection of peers is certainly debatable, these states appear to be peers to Maine in many significant ways and they ultimately provide a useful comparison.

       But what if Alaska, Montana, Wisconsin, Minnesota and Wyoming had been selected instead?  If these also comparable states had been used, the data would have shown an average of 407 full-time local government employees (per 10,000) to Maine’s 410. 

       The census compiles employment data in 32 employee categories.  Examples of these categories are “firefighters,”“airports,”“hospitals” and “parks and recreation.”  Each state is profiled in terms of full-time equivalent (FTE) employees per 10,000 of population so that cross-state comparisons are more easily made. 

       For certain categories there is employment in some states but not in others.  For example, Idaho’s local government has a high number of hospital employees (35), Maine has a low number (6) and North Dakota has none. 

       The report excluded two of these categories (hospitals, and “electric power supply”) from its employment review.  Thus the 410 vs. 350 comparison cited above is based upon 30 of the 32 Census categories.  This bit of editing is not necessarily objectionable.  Further editing could have been done, but this is not a basis of objection to the Richert report.

       Of the 30 categories, Maine had higher employment levels in 16 categories, lower employment levels in 10 categories and equal (no employees for any state) in 4 categories.

An Ounce of Analysis is Worth a Pound of Editorials

       This is as far as the Richert report takes you.  Consequently, it is as much as the media have reported.  For the media, the story is over.  Local government in Maine employs too many people compared to the Richert report’s “selected” peers . . .  The difference between Maine and our peers is that our local services are provided on the municipal level and theirs are county based . . . Ergo, we must stop everything and embrace the county form of government immediately.

       Yet, any open-minded individual who bothers to actually look at the census data can not help but be struck by an additional piece of information that screams to be presented – namely the identities of the census categories that actually explain the 410 vs. 350 gap between Maine and the peers.

       Two of the 30 categories that are in the analysis represent K-12 school employees (one for teachers; one for non-teaching staff).  If those two categories are separately calculated the employment gap between Maine and our five peer states all but disappears (see chart on page 15).

       The unfavorable 60-employee gap can easily be explained by Maine’s investment in public education.  The Richert report does not provide this bit of data and although MMA presented this information to the Portland Press Herald editorial writers, it has been ignored by the newspaper thus far. This is not to say that the reported 60-employee gap is false or inaccurate.  It is just misleading and is being misued to unfairly smear local government.

       The census data clearly show that full-time equivalent employment on the municipal side of local government in Maine is not much different from other states.  On the municipal side of government, the part-time and front-line, working supervisors for police, fire, public works, recreation, assessing, welfare, waste removal, harbormasters, animal control, code enforcement, planning/economic development and other functions make the difference between Maine’s municipal-based employment level and that of the Richert-selected “peer states” negligible.  The employment “gap” shrinks from 60 to a mere 4 per 10,000; or, in the aggregate, 480 employees statewide. In other words the price of all this so-called duplication is, on average, one employee per town.

       Maine’s municipal government (excluding education) has 20 fewer employees per 10,000 population than the alternative set of “peer” states cited above.

       The assertion that Maine’s high number of municipal governments is the cause of inefficiency, excessive employment and high property taxes is actually unsupported by the facts.

Hidden Truth

       On the education side of local employment, there is a significant difference between Maine and our peers.  Maine employs 275 education employees per 10,000 versus an average in the Richert “peer states” of 220; for a difference of 55.

       Why did Richert and the newspapers bury the fact that 95% of the local employment difference between Maine and our western peers that is cited in the Richert report is due to K-12 education spending?

       There could be four explanations.

       1. Mainers Like Their Schools

       Lets face it, the media does not want to appear to be “anti-education”.   An editorial that states “Taming Local Government” will meet a lot less resistance than one that reads “Taming Local Schools.”

       Furthermore, a claim that Maine’s schools are “inefficient” while only looking at “inputs” (the number of teachers) won’t do.  The public will demand an analysis of relative “output” as well.  That is, how do Maine’s students fare on standardized tests relative to our peers; what is our class size, special education services, etc.?  On this ground, there is a general understanding that Maine’s students do quite well. 

       2. Regionalism Failed To Keep School Costs Down

       The second reason to bury the fact that the schools are the source of the employment gap is that education is the one local service that has undergone the most regionalism in Maine.  The Portland Press Herald loves to remind readers that there are almost 500 towns in Maine. 

       Yet, there are a little over 700 schools and about 280 school systems in Maine – a sizeable reduction from the early 1900s.  In fact, a school consolidation study conducted by the University of Maine in the mid-1990’s stated that Maine had closed about 2,000 schools during the 1920s and 1930s – mostly one-room schoolhouses.  More recent school consolidation has resulted from the Community School District law in 1947 and the Sinclair Act of 1957.

       As Gordon Donaldson of the University of Maine (Orono) clearly demonstrated in his recent review of the Sinclair Act, regionalism-inspired legislation failed to keep some school costs down.  While this does not mean Sinclair failed, it simply means that one hope of the Act, fiscal savings from consolidated administration, was largely unfulfilled. 

       3. Education Spending  is No Longer A Purely  Local Decision

       The opponents of municipalities also know that towns are not solely in charge of education spending.  Mandates from both the state and federal government (special education, teacher qualification, testing etc.) are responsible for a considerable amount of “local” spending on education.  Even the anti-municipal voices know it would be unfair to blame town government for political decisions made at the state and federal levels.

       4. Political Agenda

       The Richert report was published during the first session of the 121st Legislature.  It was published just as Governor Baldacci was trying to craft a competing measure to Question 1A and as the state’s bigger newspapers were beginning their anti-Question 1 campaign.  They needed something with which to battle Question 1A.  Instead of offering property tax relief, they decided to blame the towns for the property tax problem.

       Furthermore, highlighting spending on education during the Question 1A campaign is not what the opponents of tax reform wanted.  That would have led to a discussion of both the quality of education in Maine and the steady erosion of the state’s financial support for public schools.  

       The last three pages of the Richert report introduce the idea of municipal unions as an alternative to municipalities.  The report provides a fair amount of detail concerning these unions.  In each union there would be “20,000 people and 3,000 students. . . containing at least 250 square miles.” 

       These municipal unions (or service districts) were the centerpiece of Governor Baldacci’s first attempt at crafting a competing measure to Question 1A.  The proposal was not well-received by local officials or state legislators and it was summarily disposed of in favor of what became known as Question 1B, which made no mention of “municipal service districts”.

       Nevertheless, the Portland Press Herald continued to misuse this flawed and misleading “study” as a centerpiece in its active campaign against Question 1A.

Regionalism is Not a Dirty Word

       For those who seek to restructure and limit local government, a new champion appears to be on the horizon.  Carol Palesky’s tax cap may yet kill local decision-making in Maine.  However, even the fans of regionalism are rejecting this would-be heroine.

       If the tax cap passes, the ability of the average Mainer to impact the delivery of local services will end.  The Palesky Proposal would cut approximately $600 million from the local property tax revenues.  Even with an infusion of Question 1 funds and even with significant staff and program cuts at the local level, a substantial amount of revenue would need to be found at the state level to restore vital services.

       You can be sure that if the state pays the piper, it will certainly call the tune.  Thus, instead of regionalizing into 25 or 50 municipal unions as Richert proposed, towns as governmental entities will fade fairly quickly as state government assumes more and more financial responsibility and authority over local service delivery.

       Municipalities have been exploring ways to provide services on a regional basis for decades.  MMA even put a manual together on how to do it.  MMA is actively participating this summer in a municipal-county working group on how to foster collaborative regional solutions.  Question 1 promotes regional service delivery.

       Regionalization is important and exploring possibilities should be on every municipal “to do” list.

       Municipal officials, however, don’t suffer from blind allegiance to “regionalism.”  Regionalism, as a belief-system, is not good.  The belief that bigger is better, no matter what, is not correct and is not healthy.  Regionalism looks at the government structure only and ignores service delivery.  It is an article of faith for “regionalists” that services will be provided equally well and at less cost if only the government structure were bigger.  Regionalism, like many “isms” must be handled with care.

Conclusion

       For municipal officials, services always come first and the government structure second.  If it makes sense to provide particular service on a regional basis, then they will offer to do so. 

       There should be no doubt that in any institution run by humans, waste and inefficiency occurs.  Towns are not perfect and improvement is always possible.  One form of improvement is the regionalization of certain local services and we believe towns will continue to explore this path.

       Furthermore, people who believe that fewer, larger governments are preferable to more, smaller governments are free to do so.

       Yet, when alleging that a certain source of data proves that bigger is better, be they journalists or professors, those proponents have a duty to present the facts clearly and objectively.  So far, the efforts of the regionalists have been woefully lacking in this regard. 

       The Richert/Muskie School Report and the media coverage of it, particularly that of the Portland Press Herald, was remarkably misleading.  An employment gap that was 95% due to education spending (and would have highlighted the state’s abandonment of its obligation to public schools) was concealed so that municipal clerks and administrators could be made the high property tax scape-goat. 

       Now more than ever we need to carefully scrutinize the blame-towns-first claims.  We will be hearing a lot more of this over the next few months as Palesky supporters try to sell the same anti-municipal story.  We will be here to remind them that they can have their misguided opinions, but they may not conceal the facts.

 

FTE Employees per 10,000 Population

                                                                     Maine                 Peers*     Difference

Municipal  (28 of 30 categories)                         135                    131                       4

Schools  (2 of 30 categories)                              275                    220                     55

Total (30 of 30 categories)                                 410                    350                     60

 

* The five “peer states” are Oregon, West Virginia, North Dakota, South Dakota and Idaho.

Source:  U.S. Census Bureau, Public Employment & Payroll, Local Employment, 2001.  Note:  This data is available online at: http://www.census.gov/govs/www/