Cost Containment: A Survey of Current Practices at America’s State Colleges and Universities

Source: American Association of State Colleges and Universities and SunGard Higher Education

Member institutions of the American Association of State Colleges and Universities are witnessing measurable success in identifying and implementing cost containment strategies in order to reduce operating costs. Nearly all survey respondents at AASCU institutions place high importance on cost containment, with most having implemented cost control strategies in multiple operational areas. As a result, a majority of the state colleges and universities participating in this study indicated sufficient satisfaction with their cost containment efforts.

Institutions rely more on support and business functions in their cost control efforts than on core academic functions. Energy management and consortium purchasing are the two most common areas of focus for cost containment. Although responding AASCU members’ cost containment efforts have chiefly focused on support functions and business operations, the large majority of respondents are willing to consider any area of operation for potential cost containment opportunities. Breadth is key: Institutions witness greater satisfaction with their cost containment efforts to the degree they achieve savings in a broad range of operations and services.

Despite progress made to date, the data suggest there remains significant opportunity for AASCU members to benefit further from implementing additional cost containment strategies. While three-fourths of responding institutions indicated satisfaction with their cost containment activities, a quarter indicated some dissatisfaction, pointing to a desire for increased progress and accomplishment in realizing cost savings. Data suggest that institutional investment in identifying and implementing cost containment initiatives could be increased, producing an even greater return on investment at more colleges and universities.

Full report (PDF; 842 KB)

Foreclosure to Homelessness: the Forgotten Victims of the Subprime Crisis

Source: National Coalition for the Homeless

From press release:
The National Coalition for the Homeless released a report today forecasting an increase in homelessness due to the foreclosure crisis. The report, Foreclosure to Homelessness: the Forgotten Victims of the Subprime Crisis, summarizes the findings of a national survey of state and local homeless coalitions conducted in winter 2008 to ascertain whether their communities were seeing an increase in homelessness due to the foreclosure crisis.

Among the survey findings:
• 61 percent of survey respondents reported an increase in homelessness in their communities since the foreclosure crisis began in 2007.
• Respondents reported a variety of living arrangements among the newly homeless victims of the foreclosure crisis, including stays with family and friends, in emergency shelters, and on the streets.

The report criticizes state legislatures and Congress for their inattention to homelessness prevention initiatives in their response to the foreclosure crisis. “Nearly forgotten in the foreclosure crisis are the thousands of homeowners and renters who have become homeless once their equity is exhausted,” said Bob Erlenbusch, President of the National Coalition for the Homeless. “We hope this report will sound an alarm and inspire policymakers to take proactive measures that prevent more Americans from falling from foreclosure to homelessness.”

Full report (PDF; 524 KB)

Looming Workforce Shortage Pressures Long Term Care Costs, According to Research

Source: Genworth Financial

From press release:
Not only has the cost of long term care in U.S. nursing homes, assisted living facilities and in the home increased for the fifth consecutive year, but the nation faces an impending shortage of direct-care workers, further driving up long term care costs. Those are two of the key conclusions drawn from cost of care research by Genworth Financial.

Each year Genworth surveys the cost of care in more than 10,000 nursing homes, assisted living facilities and home care providers in all 50 states and 90 geographic regions including the District of Columbia. This year the survey adds adult day health care findings. The most comprehensive cost analysis in the industry, it surveys three times the number of providers and offers more regional detail than similar studies, and is the only survey that provides comparative data for the past five years.

This year, Genworth’s study found the price of most long term care services are rising faster than inflation, and by 2050, the nation’s bill for providing long term care services is expected to top $379 billion. In 2008, the average annual price of a private nursing home room reached $76,460 nationally – more than one and a half times the average annual household income in the U.S. of $48,2011. The most preferred form of care is in the home, and the cost of home care performed by a non-skilled home health aide remained flat in most regions of the country.

This year’s Cost of Care Survey is complemented by additional research released today by Genworth entitled “A Workforce to Care for Our Aging.” This study identifies an imminent shortage of caregivers as the driver of increasing long term care costs. By 2030, the number of Americans 65 years and older will double. The U.S. will need to recruit 200,000 new direct-care workers each year to meet future demand among our aging population.

Cost of Care Survey (PDF; 1.2 MB)
2008 Cost of Care Map (interactive)
Survey Trends and Findings

The Robust Relationship between Taxes and U.S. State Income Growth

Source: Robert Reed, National Tax journal, Vol. LXI, No. 1, March 2008

I estimate the relationship between taxes and income growth using data from 1970–1999 and the forty–eight continental U.S. states. I find that taxes used to fund general expenditures are associated with significant, negative effects on income growth. This finding is generally robust across alternative variable specifications, alternative estimation procedures, alternative ways of dividing the data into “five–year” periods, and across different time periods and Bureau of Economic Analysis (BEA) regions, though state–specific estimates vary widely. I also provide an explanation for why previous research has had difficulty identifying this “robust” relationship….

Where Did Your Federal Dollars Go in 2006?

Source: U.S. Census Bureau

From the press release:
The federal government disbursed $2.45 trillion in domestic spending in 2006, according to two reports published by the U.S. Census Bureau. That represented an 7.5 percent increase in federal spending over 2005.

The first of the new reports, Consolidated Federal Funds Report: 2006 (PDF; 2.6 MB), provides a broad overview of how and where the federal government allocates funds. Statistics are provided for each federal department and agency, and presented by state, county and subcounty area.

The second report, Federal Aid to States for Fiscal Year 2006 (PDF; 3.7 MB), contains data on federal grants to state and local governments.

Defense spending totaled $400 billion in 2006. This amount includes procurement contracts, payroll, military pensions and grants. Department of Homeland Security spending totaled $57 billion.

Per capita spending among states was highest for Louisiana ($16,263). Mississippi was second ($14,516), followed by Alaska ($13,805). The states that received the lowest per capita distribution of federal funds were Nevada ($5,852), Utah ($6,162) and Minnesota ($6,175).

California received 10.3 percent of the total distribution of federal expenditures while Texas received 6.8 percent, followed by New York at 6.2 percent.

Nearly half of all domestic government spending (excluding interest on the federal debt) went to Social Security, Medicare and Medicaid, which accounted for $1.16 trillion. The one-year increase in spending for these three programs was approximately $170 for every person living in the United States.

The government spent $739 billion on retirement and disability. Of that amount, 80 percent, or $594 billion, went to Social Security. Social Security was comprised of retirement insurance payments ($350 billion), survivors insurance ($107 billion), disability insurance ($99 billion) and supplemental security income payments ($38 billion). The remaining federal dollars spent on retirement and disability went to civilian government workers’ retirements ($59 billion), military retirements ($36 billion) and veterans’ benefits ($34 billion).

Wake Up, America! The Future Public Health Workforce is at Risk

Source: Center for State and Local Government Excellence

A new Center for Excellence poll finds that most Americans are unaware that state and local public health departments are facing a serious shortage of skilled professionals that could put the health and lives of citizens at risk.

Most Americans don’t see it as a problem. As many as 45 percent of public health workers are expected to retire within the next five years. But the poll of 1,200 adults, which was conducted for the Center by by Princeton Survey Research Associates International, finds that only one in three Americans see this as a major problem for state governments, and only one in four see it as a problem for local government.

“We count on public health professionals to prevent the spread of disease, protect us from bioterrorist threats, make sure our food is safe to eat, and our air is safe to breathe,” said Elizabeth Kellar, executive director of the Center for State and Local Government Excellence.

“Those closest to the public health infrastructure know that the safety net is fragile. The public sector workforce is older than the private sector’s, and state and local governments are facing their greatest turnover ever. Public health is an area that already faces critical shortages, so there is no time to lose.”

Full report

National Compensation Survey: Employee Benefits in State and Local Governments in the United States, September 2007

Source: Bureau of Labor Statistics

Eighty-nine percent of workers in state and local government had access to employer-sponsored retirement benefits in September 2007. Almost three times as many workers had access to defined benefit plans (83 percent) than to defined contribution plans (29 percent). Nearly all workers (96 percent) who had access to a defined benefit retirement plan chose to participate in it, whereas only 63 percent of workers with access to defined contribution plans chose to enroll in them. (See table 1.)

Eighty-seven percent of workers had access to medical care plans, greater than access to dental care (55 percent) and vision care (38 percent). Over four of five workers with access to a plan participated in the medical, dental, or vision plan offered by their employer. This summary presents information on the incidence and key provisions of these and other employee benefit plans by a variety of worker and establishment characteristics. (See table 5.)

The summary is the first release of data on benefits in state and local government since 1998. The National Compensation Survey (NCS) has been undergoing significant restructuring and changes in its approach to collecting, tabulating, and presenting its data. The NCS will begin publishing benefits data on the civilian economy every year, with separate estimates available for private industry and state and local government and for a variety of employer, employee, and geographic characteristics. Data for March 2008 will be available later this year.

Full report

The Miracle of Funding by State and Local Pension Plans

Source: Alicia H. Munnell, Kelly Haverstick, Steven A. Sass and Jean-Pierre Aubry, Center for State and Local Government Excellence

The brief’s key findings are:
* State and local pension plans, overall, are as well funded as private plans, with assets covering nearly 90 percent of liabilities.
* This outcome is striking, even “miraculous,” given that public plans:
– tend to pay larger benefits;
– use a more stringent funding yardstick; and
– are not covered by any national legislation that mandate funding standards.
* Assets per worker increased markedly in the1990s after states and localities responded to new standards issued by the Government Accounting Standards Board.

Full report

From Medical Malpractice to Quality Assurance

Source: Frank Sloan and Lindsey Chepke, Issues in Science and Technology, Spring 2008

A properly designed malpractice insurance system could actually decrease the prevalence of errors and enhance the overall level of care.

Every decade or so, the United States is seized with a fervor to reform medical malpractice. Unfortunately, this zest is typically motivated by circumstances that have little to do with the fundamental problems of medical malpractice, and the proposed changes to the system do not address the true flaws. A well-functioning malpractice system should focus not only on how to compensate patients for medical errors but also on how to prevent these errors from occurring in the first place.

Full article

Time to Act on Health Care Costs

Source: Peter Orszag, Issues in Science and Technology, Spring 2008

Popular discussions of the long-term fiscal challenges confronting the United States usually misdiagnose the problem. They typically focus on the government expenses related to the aging of the baby boomers, with lower fertility rates and longer life expectancy causing most of the long-term budget problem. In fact, most of the long-term problem will be driven by excess health care cost growth; that is, the rate at which health care costs grow compared to income per capita. In other words, it is the rising cost per beneficiary rather than the number of beneficiaries that explains the bulk of the nation’s long-term fiscal problem.

Full article