Category Archives: State & Local Finance

Designing Pay-As-You-Throw schemes in municipal waste management services: A holistic approach

Source: Valerio Elia, Maria Grazia Gnoni, Fabiana Tornese, Waste Management, In Press – Corrected Proof, Available online 30 July 2015
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From the abstract:
Pay-As-You-Throw (PAYT) strategies are becoming widely applied in solid waste management systems; the main purpose is to support a more sustainable – from economic, environmental and social points of view – management of waste flows. Adopting PAYT charging models increases the complexity level of the waste management service as new organizational issues have to be evaluated compared to flat charging models. In addition, innovative technological solutions could also be adopted to increase the overall efficiency of the service. Unit pricing, user identification and waste measurement represent the three most important processes to be defined in a PAYT system. The paper proposes a holistic framework to support an effective design and management process. The framework defines most critical processes and effective organizational and technological solutions for supporting waste managers as well as researchers.

Highlights
• Pay-As-You-Throw (PAYT) schemes are becoming widespread in several countries.
• Economic, organizational and technological issues have to be integrated in an efficient PAYT model design.
• Efficiency refers to a PAYT system which support high citizen participation rates as well as economic sustainability.
• Different steps and constraints have to be evaluated from collection services to type technologies.
• An holistic approach is discussed to support PAYT systems diffusion.
Related:
Hanson, Mass., Cuts Trash by 64% and Saves $51,000 in First Year of Pay-as-You-Throw
Source: WasteZero, Press Release, July 27, 2015

At the one-year anniversary of its pay-as-you-throw (PAYT) waste reduction and recycling program, the town of Hanson, Mass., has reduced its solid waste by 64%, more than doubled its recycling rate, and saved $51,000 in disposal fees, according to new figures released by the town.

Delivering the goods – Co-op purchasing unpacks savings

Source: American City & County, Vol 130 no. 6, June 2015

The use of government cooperatives is increasing in popularity, because it often saves both time and money, according to recent study conducted by American City & County’s sister publication, Government Procurement and its partner, NIGP: The Institute for Public Procurement. The study was e-mailed to the magazine’s subscribers in August 2014, and was a follow-up to a 2011 survey on the same subject. More than 720 people responded to the survey, in contrast to 170 who responded in 2011. The current survey shows 94 percent of governments are using cooperative purchasing agreements….

State Spending on Medicaid

Source: Maria Schiff, Pew Charitable Trusts, State Health Care Spending, July 29, 2015

Medicaid, the largest health insurance program in the United States and the primary safety-net insurer for many of the most vulnerable Americans, turns 50 on July 30. This milestone comes amid the biggest change in Medicaid since its inception because of the implementation of the Affordable Care Act (ACA).

Last summer, the State Health Care Spending Project, a collaboration between The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation, released a report looking at the fiscal impact of Medicaid on the states, including an analysis of cost trends and enrollment.

The following four graphics illustrate some of those trends.
1. Medicaid Spending per Person Grew Slower Than That of the Nation’s Overall Spending on Health Care…
2. Since 2000, Public Insurance Coverage and Uninsured Rates Have Increased, While Employer-Sponsored Insurance Coverage Has Dropped….
3. A Small Portion of Medicaid Enrollees Accounts for the Majority of Spending….
4. 49 States Spent More of Their Own Funds on Medicaid….

Fair Pay For Quality Care: Fair wages for home care workers ensure economic stability and increase continuity of care

Source: Sabine Schoenbach, NC Justice Center’s Workers’ Rights Project, July 2015

From the summary:
North Carolina is rapidly aging – the population over 65 is projected to more than double by 2050. The aging of the state’s baby boomers will correspond with an increase in community members with functional and cognitive limitations, indicating a growing need for direct care that allows community members to continue to live with dignity.

Direct care occupations, including home care jobs, are some of the fastest growing occupations, as North Carolina rapidly ages. Yet these jobs offer some of the lowest wages in the state. Median wages in the caregiving occupations pay less than $10 an hour, compared to the state’s $15 an hour median wage. That means that half of all home healthcare workers aren’t earning enough to rise above the federal poverty line despite working full-time. And despite the high occupational injury rates, almost half of home care workers remain uninsured and the majority of workers have no earned paid sick days to take time to recover from injuries or illness.

Low wages increase worker turnover, increase long-run costs for providers, and interrupt the continuity of care for consumers. Additionally, making too little to pay for the basics such as food, housing, and health care can lead to increased dependence on public assistance programs.

Medicaid, administered by the state and jointly financed by the state and federal government, is the primary funding source for long-term services and supports (LTSS) for people with disabilities and seniors. Reimbursement by Medicaid programs, in large part, creates the framework in which employers set wages for direct care workers.

North Carolina’s reimbursement rates have been frozen or reduced since 2009 and the most recent reduction places North Carolina rates more than $4 per hour lower than the national average rate paid to provider agencies.

To address these challenges North Carolina must raise the wage floor for paid caregivers in the context of the state’s Medicaid program and look to best practices in states like Montana and Maine that tie wage-improvement strategies to reimbursement rates.

These include: An automatic update mechanism, such as a link to an annual inflation-adjustment; A way to ensure enforcement through mandatory reporting and data collection; A built-in mechanism for evaluating reimbursement rates, or the wage floor, over time to ensure that the rate remains competitive.

US Public Pensions: Pension Liabilities Rise for Most of 50 Largest Local Governments

Source: Thomas Aaron, Jessica Raab, Timothy Blake, Moody’s Investors Service, Sector In-Depth, July 24, 2015
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Pension burdens increased in fiscal 2013 for 31 of the 50 largest local governments. We define the largest governments by fiscal 2013 debt outstanding. Looking ahead to fiscal 2014 reporting, we expect moderate declines in Moody’s Adjusted Net Pension Liabilities (ANPLs) due to strong investment performance, particularly for those governments with fiscal years ending June 30.

• Overall, pension burdens moderately increased from 2012 to 2013. ….
• Discount rates in 2013 were higher than in 2012, resulting in lower ANPLs. ….
• Fiscal 2014 pension disclosures point to moderate declines in ANPL for many local governments. …..
• Pension cost and liability burdens still vary widely. ….

Related:
Moody’s: Pension Liabilities Increased for Most of the Largest Localities
Source: Naomi Jagoda, Bond Buyer, July 27, 2015
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Pension burdens increased in fiscal 2013 for 31 of the 50 local governments that had the most debt outstanding in that year, Moody’s Investors Service said in a new report. The overall increase in pension burdens for the localities in fiscal 2013 – typically from July 1, 2012 to June 30, 2013 — is moderate, the rating agency said. Moody’s adjusted net pension liabilities for the localities in the aggregate increased by 14% to $365 billion in fiscal 2013 from $320 billion the previous year. The median ANPL for the governments increased to 204% of revenues in FY-2013 from 175% of revenues in FY-2012, the rating agency said.

Pension health varies
Source: Nick Thornton, BenefitsPro, July 28, 2015

Pension liabilities for 31 of the 50 largest local government entities increased in 2013 according to a newly released annual report on the sector by Moody’s. Combined, the 50 pensions’ aggregate liabilities increased 14 percent in fiscal year 2013, from $320 billion to $365 billion….

Annual Survey of Public Pensions: State and Locally Administered Defined Benefit Data Summary Report: 2014

Source: Phillip Vidal, U.S. Department of Commerce, U.S. Census Bureau, Economy-Wide Statistics Division Briefs: Public Sector, G14-ASPP-SL, July 2015

From the tip sheet:
The Annual Survey of Public Pensions provides a comprehensive look at the financial activity of the nation’s state- and locally-administered defined benefit pension systems, including cash and investment holdings, receipts, payments, pension obligations and membership information. Statistics are available at the national level and for individual states.
National level findings include:
• Total assets increased 12.8 percent, from $3.3 trillion in 2013 to $3.7 trillion in 2014.
• Earnings on investments grew 40.6 percent, from $382.2 billion in 2013 to $537.5 billion in 2014.
• Contributions grew 8.4 percent, from $153.7 billion in 2013 to $166.6 billion in 2014. The overall increase in contributions was driven by increases in government contributions.
• Government contributions increased 11.1 percent, from $108.9 billion in 2013 to $121.1 billion in 2014.
• Employee contributions increased 1.7 percent, from $44.7 billion in 2013 to $45.5 billion in 2014.
• Total payments grew 5.6 percent, from $258.3 billion in 2013 to $272.9 billion in 2014.
• The total number of beneficiaries increased 3.2 percent, from 9,263,846 people in 2013 to 9,561,562 in 2014.

Discounting Pension Liabilities: Funding Versus Value

Source: Jeffrey R. Brown, George Pennacchi, National Bureau of Economic Research (NBER), NBER Working Paper No. w21276, June 2015
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From the abstract:
We argue that the appropriate discount rate for pension liabilities depends on the objective. In particular, if the objective is to measure pension under- or over- funding, a default-free discount rate should always be used, even if the liabilities are themselves not default-free. If, instead, the objective is to determine the market value of pension benefits, then it is appropriate that discount rates incorporate default risk. We also discuss the choice of a default-free discount rate. Finally, we show how cost-of-living adjustments (COLAs) that are common in public pensions can be accounted for and valued in this framework.