All posts by Zack Hutchins

PPI Series: Business and Higher Education Leaders Support College- and Career-Ready Standards to Boost New York’s Economy

PPI Common Core: Here to Stay?

Part six of an ongoing series on higher standards in New York State

By themselves, new education standards cannot solve New York’s skills gap or remedial education epidemic, but they are an important piece of the puzzle.  Here’s how it works:  With clearer standards to guide educators, a higher percentage of high schoolers should graduate with the knowledge and skills they need to succeed in college, and fewer of them should require remedial courses.  A reduction in the need for remediation should increase college attainment rates.  Economists have shown that higher levels of college attainment lead to a more productive workforce.  College-educated workers earn higher wages, which enables them to contribute more in tax revenue and rely less on state assistance programs.

Figure 4. Theory of Action

New York’s neighbor to the east, Massachusetts, provides a convincing case study of how raising standards is an important step to improving educational outcomes and economic productivity.  In the early 1990s, a group called the Massachusetts Business Alliance for Education issued a report that became the blueprint for a bipartisan reform bill.  The reform package included three main components:  (1) More money to urban schools and pre-Kindergarten programs; (2) ambitious academic standards; and (3) a new set of testing requirements, including high school exit exams (analogous to New York’s Regents Exams), known collectively as the Massachusetts Comprehensive Assessment System (MCAS).   When the MCAS was first administered in 1998, students in urban schools performed terribly.  Improvement was so slow at first that researchers thought the reforms had failed, but State Superintendent David Driscoll insisted on staying the course.

Over the next ten years, Massachusetts became the envy of the nation for its education outcomes.  In 2005, Massachusetts scored at the top of all four categories measured by the National Assessment of Educational Progress (4th and 8th grade ELA and math).  In 2008, Massachusetts 8th graders tied for first in the world in science on the Trends in International Mathematics and Science Study exam.  From 2002 to 2009, NAEP scores for Massachusetts African-Americans and Hispanics on the 4th and 8th grade ELA improved faster than those of white students.  If Massachusetts were a country, its 2009 PISA scores would place it in the top ten, with countries like Singapore, Korea, and Finland.  Economic outcomes have improved as well.  The share of adults with a college degree has grown more in Massachusetts than in any other state, and worker productivity has grown more quickly in Massachusetts than in all but two other states.

If our policymakers wish to replicate Massachusetts’ outstanding educational trajectory, they will have to resist political opposition to tougher standards and tests, continue to gather high-quality data via standardized tests and other means, and throw their strong support behind policies that have the best chance of improving student outcomes.  Understanding this, New York’s business and higher education leaders—from IBM’s Stanley Litow and Xerox’s Ursula Burns, to SUNY Chancellor Nancy Zimpher and CUNY Chancellor James B. Milliken—have been vocal supporters of the Common Core standards, vigorously urging their colleagues, policymakers, and the public to see them through to full implementation.

Please click here to read part five in this ongoing series.

Biopharmaceutical sector provides outsized economic benefit

PhRMA is out with a study that shows the biopharmaceutical sector has an enormously positive impact on job creation and economic growth in New York State. According to a newly released report, the sector provides more than 50,000 direct jobs and nearly 200,000 in additional jobs are supported by the sector. These jobs range in industry from science, to management, to architecture and engineering, to transportation, and more.

Those jobs account for more than $19B in wages to New York State residents. That income translates to roughly $4.5B in tax revenue for the state and federal government.

Beyond that, between director and indirect output, the goods and services produced by the sector generates a combined $74.1B in economic activity. That equals roughly $182,000 in economic output per employee, a truly astounding figure.

The full PhRMA report can be accessed here. A copy of the New York economic impact is posted below.

Biopharmaceutical sector provides economic benefit

A thought on education

As voters across New York State head to the polls to approve or reject their school district’s budget, we thought it would be appropriate to share some freshly released data on education spending. According to Congressional Quarterly’s just released 2016 State Rankings, New York had the ninth lowest teacher/pupil ratio in the nation as of the 2014 school year. New York’s ratio of 13 students per teacher is significantly better than California’s, the worst state on the list – at 24.3 students per teacher. Not surprisingly, New York ranked first in teacher salary, coming in at an average of $77,628, $25,000 more than the 25th ranked state. Despite the low teacher/pupil ratio, and high salaries, New York remains toward the middle or bottom of the pack in reading and math proficiency (CQ ranked 4th and 8th grade students for the 2015 testing year). Adding to the bad news, our state ranked 39th in public high school graduation rates for the 2013 school year, at just 76.8 percent -well below the nationwide average of 81.4 percent. We also ranked near the top in both state and local government education expenditures and per capita state and local government spending, coming in at 3rd and 5th respectively.

So, what does all this mean? It is our belief that the status quo is not working, and these numbers bear that out. The time has long since passed for New York to stop throwing more and more money at education without seeing better results. In our mind, this only highlights the need for elected officials to remain committed to a strong Property Tax Cap and resist calls to weaken it. The tax cap is working, now we need to pass the accompanying mandate relief and curriculum enhancements to ensure local governments remain solvent and our students are adequately prepared for the job opportunities that will be available to them. If you’re looking for proof that the combination of a tax cap and a strong commitment to higher standards equals results, look no further than our neighbors in Massachusetts. The Bay State, which enacted a property tax cap in 1980, three decades before New York, and led the way on higher standards, ranks at or near the top in virtually every CQ category. New York should join Massachusetts as an educational leader and not succumb to the voices fighting to maintain the status quo. One of the best and easiest decisions we believe state policymakers can make to improve our state’s education rankings is to provide additional funding and resources to innovative public education models like P-TECH and charter schools.

If the P-TECH program is not something you are familiar with, we encourage you to visit their website to learn more. You can also go to www.bcnys.org and search P-TECH for additional resources and information on this innovative and demonstrably successful education alternative, and read a FAQ for employers.

Weakening the tax cap?

We’ve made no secret of our support of the two percent Property Tax Cap, in our opinion, the tax cap – coupled with the self-imposed cap on state spending, have been the signature achievements of the Cuomo administration and have helped correct years of outrageous spending increases and rising property taxes. Despite these achievements, the voices calling for a weakening of the tax cap continue to grow louder.

In today’s Newsday, school officials are quoted as saying the two percent cap is putting the squeeze on their budgets, and they argue the two percent cap is really more like .2 percent, since inflation continues to be so low.

The change they are asking for is subtle, but substantive. They want lawmakers to make the tax cap a hard two percent, instead of currently capping increases at the lower of two percent, or the consumer price index (CPI). They say the lack of growth in the CPI is putting a strain on school budgets and forcing them to tighten their belts in ways the law never intended. It is our belief that the real “strain” does not come from the fact that the CPI has kept the tax increases significantly below two percent, it’s that municipalities continue to be held hostage by antiquated laws that make it far too easy for the teacher’s unions to achieve sizeable yearly pay increases well above the rate of inflation.

At a time when regular worker salaries remain stagnant, and overall economic growth is weak, it makes all the sense in the world that unions should play by the same rules. We hope lawmakers continue to recognize that the tax cap is a tremendous achievement and resist calls to weaken it.

Health Republic: What went wrong and why?

Crain’s New York recently published a terrific article laying out the reasons how and why Health Republic turned into such a catastrophic failure.

From the article:

“On Sept. 25, 2015, Health Republic was ordered to shut down by the same state and federal agencies that had given the insurer their regulatory blessings just two years earlier. In 20 months, from January 2014 through August 2015—when it became clear the insurer couldn’t survive—Health Republic had accumulated tens of millions of dollars in losses. The company was ordered to close its doors effective Nov. 30, leaving 209,000 enrollees to scramble for new coverage.

A three-month investigation by Crain’s New York Business shows that, from its conception in 2012, Health Republic was on unsteady ground. Crain’s found that management deliberately set low premium rates as a marketing ploy to attract customers. Regulators approved those rates but then wouldn’t let the company raise them after it became clear that the prices jeopardized the company’s solvency. 

To put it more bluntly; Health Republic’s failure was the result of negligent leadership and incompetent government oversight.

Again, from the article:

“By several accounts, DFS did not monitor Health Republic closely, aside from handling initial consumer complaints. It wasn’t until early 2015 that DFS began demanding monthly financial reports from Health Republic instead of only quarterly and year-end financial statements. By then, the company realized it had lost $77.5 million in 2014, an amount it had still hoped would be covered by the federal backstop. Meanwhile, Health Republic’s executives tried to reduce losses. They stopped selling policies in several upstate counties where claims were particularly high. The company also tried to interact directly with providers to manage patient care that generated expensive claims but was blocked by the restrictive contracts that had been signed with MagnaCare.”

Even now, months after the failure, the fallout continues. The real question is: What will New York State lawmakers and policy officials due to ensure that the regulators accomplish their primary mission of maintaining carrier solvency so this doesn’t happen again?

New York’s Economic Outlook: Dead last

A new report by the American Legislative Exchange Council (ALEC) finds New York ranks dead last in economic outlook among the 50 states.

From the report: “Rich States, Poor States examines the latest movements in state economic growth. The data ranks the 2016 economic outlook of states using fifteen equally weighted policy variables, including various tax rates, regulatory burdens and labor policies. The ninth edition examines trends over the last few decades that have helped or hurt states’ economies.

Used by state lawmakers across America since 2008, Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, is authored by economist Dr. Arthur B. Laffer; Stephen Moore, distinguished visiting fellow at the Heritage Foundation; and Jonathan Williams, vice president of the ALEC Center for State Fiscal Reform.”

This is the third year in a row that New York came in last place.

Small businesses are big business for New York State

On the same day dozens of small business owners from across New York rallied at the state Capitol, Comptroller Thomas P. DiNapoli released a report highlighting the nearly $1 trillion in annual revenues small businesses generate for the state.

According to the report: “New York’s small businesses generated $954 billion in receipts in 2012, the latest figures available, accounting for approximately 43 percent of all business receipts in New York, according to DiNapoli’s report.

Among the more than 455,000 businesses in New York, more than 451,000 are small businesses.  Almost two-thirds of small businesses have fewer than five employees. More than 80 percent have fewer than ten employees.

Firms with 20 to 99 employees comprised approximately one-third of the total small business employment with over 1.2 million employees. The larger firms (those with 100 to 499 employees) had the highest average payroll per employee, nearly $56,000 per year.”

This report should serve as a stark reminder to lawmakers of the myriad of benefits small businesses bring to their communities as they contemplate a 67 percent increase in the state’s minimum wage.

That wage increase would cost anywhere from 200k to 600k and further erode the job prospects and opportunities for growth among our state’s poorest citizens.

Please visit www.minimumwagerealitycheck.org to learn more about this misguided proposal and to join our growing coalition against the $15 an hour minimum wage.

U.S Chamber goes to court

The U.S. Chamber of Commerce, of which The Business Council of New York State is a member, filed a lawsuit in U.S District Court for the Western District of Washington earlier this week to “challenge a Seattle ordinance that authorizes union organizing of for-hire drivers working as independent contractors, highlighting that the ordinance will burden innovation, increase prices, and reduce quality and services for consumers.”

According to Amanda Eversole, president of the Chamber’s Center for Advanced Technology & Innovation, “this ordinance threatens the ability not just of Seattle, but of every community across the country, to grow with and benefit from our evolving economy. Technology companies are leading the charge when it comes to empowering people with the flexibility and choice that comes with being your own boss, and that is something to be championed, not stifled.”

Now, this of interest to us here in New York for two reasons: first, Uber and Lyft are currently operating as for-hire vehicle service companies in New York City and second, they are actively trying to expand to the rest of New York State. Whatever happens with this suit would set a precedent that could then be applied here. The Business Council has been vocal in its support of for-hire vehicle companies like Uber and Lyft. We believe they would be an economic development tool for many upstate communities that lack reasonable and robust public transportation options.

This litigation, and the issues it brings up vis a vis the definition of “independent contractors”, was the subject of one our recent Labor/HR webinars. You can learn more about this series here, and sign up for our March 17th webinar focused on “Paid Family Leave”.

State Senate honors Wegmans

The New York State Senate today passed a resolution commemorating the 100th Anniversary of Wegmans Food Markets, Inc. Wegmans, based in Rochester, NY, is a longtime member of The Business Council of New York State, Inc.

The resolution, sponsored by Senator Richard Funke (R, Rochester) said, in part, “Since 1998, Wegmans Food Markets, Inc. has consistently been ranked on Fortune magazine’s 100 Best Companies to Work For list, and was rated No. 9 on Forbes magazine’s 2015 list of America’s Best Employers. In addition, it was named the best for corporate reputation among the 100 most visible companies nationwide according to the 2014 Harris Poll Reputation Quotient study. Wegmans Food Markets, Inc. prides itself on raising the bar on the shopping experience by providing the best quality, a spectacular abundance of choice, restaurant-quality prepared foods, beautiful stores and displays, and an exceptional level of customer service.”

This is a tremendous achievement for the company and the entire Wegman family. We would like to offer a special note of congratulations to Paul Speranza, the Vice Chairman, General Counsel and Secretary of Wegmans Food Markets, Inc., and the Vice Chair and Treasurer of The Business Council of New York State.

New video highlights benefits of New York’s Commercial Division

A new film about the Commercial Division of the New York State Supreme Court explains why the court has become the premier forum for business litigation.

In less than 15 minutes, the film describes the origins of the court and the reasons why it has transformed New York from a dreaded venue for the resolution of business disputes, to the preferred setting.

The professionally filmed video, produced by the Historical Society of New York State and the Commercial Division Advisory Council, comes on the heels of a special event last spring when the Business Council hosted a breakfast spotlighting the business benefits of the Commercial Division (see July/August issue of Connect). At the breakfast, Heather Briccetti recalled the “bad old days” when it would have been inconceivable that the New York courts could be viewed as an attraction for businesses seeking to relocate to New York.

Those days, as the new video makes clear, are gone.

Featured speakers include:

Gregory Palm (Goldman Sachs), Joseph Wayland (ACE Limited), Michael Fricklas (Viacom, Inc.), Michele Mayes (New York Public Library), Daniel Jonas (ConMed Corporation), Stephen Cutler (JPMorgan Chase & Co.), Elizabeth Moore (Consolidated Edison, Inc.), Richard Walker (Deutsche Bank AG), Douglas Lankler (Pfizer Inc.) and David Ellen (Cablevision Systems Corp.).

The video is available on several sites, including the court system’s YouTube channel. A full transcript is available on the court system’s website.