EMMA, the Electronic Municipal Market Access operated by the Municipal Security Rulemaking Board reported that Albany County had filed its Annual Financial Report late.

In the municipal securities business, this is referred to as a “material event,” which are “municipal bond issuer information considered to be significant by a reasonable investor”. See the attached notice, Material Event Failure to File Audited Financial Report emma.msrb.org_ER622525-ER482684-ER885591.pdf, which reports that:

The County was late to file its 2011 annual financial report, due to the fact that the audit had not been completed within 180 days following the close of the County’s fiscal year. The County ahs (sic) filed its 2011 unaudited results with EMMA.

And here’s the Annual Financial Report, Albany County AFR 2011 emma.msrb.org_ER621986-ER482281-ER885191.pdf.

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As we head toward this coming week’s primary, a controversy has boiled over in Albany County District Attorney’s race. And rightly so.

Attorney Lee Kindlon is challenging the incumbent, David Soares. Initially the controversy was about an allegedly “secret” bonus program, supplementing the pay of some employees in the District Attorney’s Office. The controversy boiled over when the County Comptroller, Mike Conners gave a list of the employees receiving the bonuses to a blogger, Theresa Grafflin, who strongly supports the challenger and who has been critical of Soares for years. Unfortunately, that list, which Grafflin published online, included Social Security numbers. While she subsequently took the report down, for a period the Social Security Numbers of a number of County employees were out on the web. See one of her posts here, where she acknowledges that Conners gave her the list. Here’s the story in the Albany Times-Union.

The County Executive, Dan McCoy has evidently asked the FBI to investigate. I assume this is because of the release of Social Security numbers though I’m sure there are other good reasons as well.

My take on the issue?

First, the program may not have been publicized, but it was not a secret. As I will detail below, as the then County Commissioner of Management & Budget, I had a role in how the program was structured. I wasn’t fond of the program, but if we were going to have it, I thought (and think) it better to be structured in the manner it was, which made the bonuses less visible. And the County Legislature explicitly approved of the program.

Second, Comptroller Conners’s reckless behavior was bad enough, but it was not a surprise. I’ve seen it before, including the misuse of County information systems to which he or his staff have regular access. This is not the careful behavior that should be typical of any public official, much less a governmental fiscal officer, and certainly not in the pursuit of political meddling. Not that he will, but Conners should resign. If he does not, the County Legislature should restrict his role. Given his abuse of the power that he does have and given that Conners has been campaigning hard for the Legislature to give him subpoena power, neither the commission recently created to review the County Charter nor the Legislature itself should even consider such a change.

My take on the candidates?

I have no brief for either candidate for District Attorney. In fact, I’m at least grumpy with both of them for reasons that I won’t go into here. Indeed, at this stage, I pretty much don’t like either one of them and, much as is pains me not to vote, had tentatively figured to sit this one out.

Why the so-called “secret” program was structured the way it was and thus why it wasn’t a secret. Blame me.

When the bonus program was started, I was County Commissioner of Management & Budget. Thus, I’m aware of some details that have not been publicized well, if at all. And I had a role in how it was structured. A side effect of the structure was to make the details less visible, but that did not make it a secret.

The District Attorney received a grant from New York State to supplement the salaries of DA staff. This is a questionable State policy, especially given the disarray in the State’s policy regarding and its very limited support of indigent legal services. But from a local perspective, while I was in Budget, we particularly disliked these programs because they created a salary floor that didn’t go back down when the grant funds dried up and because they further distorted already unbalanced and often arbitrary County salaries. (For those not familiar with Albany County government, it does not have a standardized salary schedule. With the exception of collectively bargained salaries, all are personalized and the Legislature meddles constantly and extensively in determining the salaries of hundreds of individuals.) However, we couldn’t stop the Legislature from approving the program. Most agency heads, not just the DA would advocate for taking advantage of available funding like this. And since the Legislature thinks of grant money as free money, they approve it. And they approved this one.

However while unable to stop our receipt of the funds or their use, I was able to convince the Legislators and staff involved that the grant funds should be approved in bulk rather than being assigned to individual (personal) lines in the County’s line-item budget. When funds are assigned to individual lines, they look like and effectively are salary increases. Thus they tend strongly to become permanent even when the State grant funding for them has disappeared. So the solution was to establish the program structure without explicitly assigning amounts to individual personnel lines in the County budget.

I’m guessing that everyone in Albany County government is so habituated to seeing every individual’s salary in the budget, that they assumed that the only possible alternative was some sort of secret and inappropriate behavior. Not this time. It never was a secret, the Legislature approved it in this form and I still believe that this was the appropriate manner to handle these grant funds.

So blame me, not the District Attorney.

But the abuse of the County’s information systems and reckless release of Social Security numbers is a different matter entirely.

Since supervision of the County’s information systems were also part of my responsibilities, I’m familiar with the key system (called Munis) that’s part of the Social Security data controversy. Based on my experience with the County Comptroller, Mike Conners, my immediate guess was that he was the one who got and released the data, including the Social Security numbers and that was because of all the people who I knew would have access to the information, he was the one most likely to abuse it.

In fact, I have previously seen Conners or his staff abuse the County’s key information system, which among other things includes all financial functions. Conners’s staff accessed (and even changed information) they had no right to. Even when it was his staff who abused the system, Conners refused to discipline them. Moreover, while I assume that Conners released the Social Security numbers out of carelessness rather than intent, such carelessness is his routine.

Though not directly relevant to this controversy, I was not a fan of the County’s financial information system and one of the key reasons was its weak security and privacy framework that that tied the Social Security numbers to the individuals when the bonus data were generated. In contrast Conners touts the system, even to other counties.

There is much to criticize the current District Attorney for. And if you don’t approve of bonus programs or disapprove of how he distributed these bonuses, that’s fine. But you can’t blame him for structuring the bonus program in the way it was. And you can’t say it was secret.

In contrast, it is entirely reasonable to blame Mike Conners for behavior that would be inappropriate and probably illegal for anyone, but for the chief fiscal officer of a government is way out of bounds. The only redeeming part of this mess is that at least now, the public is getting a taste of how careless and reckless he is.

So make your choice on District Attorney, but don’t base it on a “secret” bonus program set up by incumbent Soares. But don’t forget that, at least in this controversy, the real issue is not either candidate for DA, but the County Comptroller, whose carelessness is unforgivable for any public official, but especially for one in his role.

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Nassau County, NY is not in financial trouble because of economic decline. It’s among the wealthiest counties in New York. It is in financial trouble because of an lengthy history of bad decision-making and evidently an inability to break its debt habit.

Nassau County has a history of borrowing to pay tax refunds. Having been blocked by the County Legislature from bonding to pay the refunds that now have a court decision behind them, they’re considering borrowing from private investors. Of course, it’s still borrowing and no county in New York approaches Nassau on several of a variety debt related indicators.

Here are three examples from 2010, total debt service costs, debt service as a percentage of total spending, and debt service per capita, adjusted for property value. NYS County Debt Indicators – 2000 – PublicSignals, LLC.pdf. Nassau ranks first in all three categories.

Nassau’s borrowing patterns are nothing new. In fact, they go back at least to 1998, the first year for which we’ve run the data. (The data, by the way are from official financial filings with New York’s Office of the State Comptroller.)

Here are the trends for selected metropolitan counties in New York (excluding New York City).

The first is for total debt service. Selected NYS County Debt Service Expenditures – Trend – PublicSignals, LLC.pdf .

The second is for debt service as a percent of total expenditures. Selected NYS County Debt Service Expenditures as Percent of Total Expenditures – Trend – PublicSignals, LLC.pdf . (Note that there was a significant accounting change regarding distribution of sales tax proceeds to municipalities, first implemented in 2007, that would show as a significant increase in expenditures and therefore affect related calculations. I’ve not yet adjusted for that.)

Since 1998, total property value in Nassau has climbed very rapidly so debt in relation to the property value base has actually declined. But in relation to population, it has gone up very quickly.

Nassau County’s finances are already under the supervision of a State imposed financial control board.

I’ve not been following the intricacies of Nassau’s decision making. I’ve just been following the data, which have been highlighting this problem for years. But the data as well as the news suggests that somebody’s got to get their arms around this and slow and then stop the repeated borrowing for knowable annual expenditures. This is a failure of governance. Other governments in New York, counties and otherwise, have been and are dancing along the fiscal edge. But Nassau is the worst and given its wealth, it has the least excuse.

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Rules for Wonks and Hacks

by John W Rodat on September 6, 2012

Dredging the archives, we came across Rules for Wonks and Hacks, which I first posted in January, 2005. I was amusing myself while watching the Kabuki drama that is a budget hearing.

  1. Wonks and hacks rarely understand one another. The rare wonk who understands the politics or the rare hack who understands the technical will always be able to finesse those who only understand only one or the other. Those who understand neither should be in another business … but don’t count on their leaving because of rule number 2.
  2. Once you’re here, the odds are you’ll stay here. Like so many states, and even the Federal government, we’ve gotten into the incumbency protection game. It’s really hard to get run out of town. And Civil Service? Well, you need the “jaws of life” to get out of that.
  3. If you don’t have the money (or the stomach) for a lobbyist, start outside of the Capitol and change the public’s mind. If you don’t have the money to change the public’s mind, target 200-1,000 influentials and change their minds.
  4. The less money you have to lobby or to change the public’s mind, the more time it takes. Figure that in years, not months.
  5. It’s better if the first time you come to Albany, you don’t ask for anything.
  6. If you lose on the same issue year after year, change the subject.
  7. If you need help from Albany, it’s better if you can describe your problem without attacking a major interest group, i.e., defining them as the problem. (Witness, doctors attacking lawyers for the last 25 years. It’s gotten them a lot, right?)
  8. When your lobbyist reports that an issue that makes you crazy is bubbling again, check the age of his car. He may be in the market for a new one. And he wants you to pay for it. Lobbyists call these issues “annuities.”
  9. Really good lobbyists can move a lot of money with a mere phrase.
  10. If you can’t afford a large PAC, don’t have any. You won’t be able to compete with the big guys, but those seeking contributions will still expect them.
  11. If you’re a healthcare or other service provider, elected officials never value your services as much as they do when their mothers-in-law need them.
  12. Everyone pleading their case to the State lies about their profits and financial condition.
  13. Prior to the budget release, the projections will always show a deficit.
  14. Prior to the budget release, masked news stories will begin to appear about some horrible situation, but they’re really about what large constituencies want. (See rule 3.)
  15. Beware of new services sold to save money. They don’t.
  16. Real innovation never comes from government funded demonstration projects.
  17. Bureaucratic politics are rougher than legislative politics.
  18. Everyone complains about excess regulation … except when you deregulate. Then they complain about how they’re going to be disadvantaged.
  19. It’s always better to write the first draft. You can slant things your way and, if you’re good at it, you can hide things as well. If you’re reacting to someone else’s proposal or to someone else’s draft, you are always playing catchup.
  20. Republicans like personal stories. Democrats like data. It’s best to have both. Neither Republicans nor Democrats are frightened by data or stories alone.
  21. If an experienced analyst can’t explain a program to you, it’s time to change the program rather than the analyst. However, it’s easier to change the analyst. And it’s better still to learn the complexities yourself and to use your knowledge to your own advantage. (See rule 9.)
  22. Regulations are silt in a river. They pile up invisibly, grain-by-grain. Individually they don’t make any difference, but collectively, they make movement impossible.
  23. More agency personnel than you would think actively dislike the clients of the programs they’re responsible for.
  24. If you’re around long enough, there will always be an opportunity to get even. That applies to the other guy as well as you however.
  25. We ought to systematically evaluate the effects of the programs we operate. But we rarely do. And when we do, we spend too much on the evaluation and we usually don’t learn much.
  26. The quantity of data submitted to state agencies always exceeds the quantity of information they release.
  27. A scrupulous reporter may be a pain when they’re on your case, but they are to be treasured nevertheless.
  28. Beware of reporters who try to put words in your mouth when they’re interviewing you. They’ll do the same in their stories and neither you nor your mother will like it.
  29. Beware of lazy reporters. You may be able to put something over on them from time-to-time, but eventually, it will backfire.
  30. If you don’t have money or power, the next best thing to have a sense of humor.

Feel free to add your own.

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Wonks and Hacks

by John W Rodat on September 6, 2012

Bill Clinton’s speech last night brought it all back. Blending politics and policy, he put the lie to the unfortunate, unnatural and danger of their separation. This is likely to be a setup for a lengthy post. Stay tuned.

Anyway, I posted Wonks and Hacks in March, 2004. Here it is in full.

Bruce Reed, was Bill Clinton’s domestic policy adviser and is now president of the Democratic Leadership Council. So he clearly has his biases. And they show in this column, Bush’s War Against Wonks: Why the president’s policies are falling apart.

But he’s also got a funny and insightful take on the distinctions between politicians and policy analysts, “hacks” and “wonks.”

Hacks come to Washington because anywhere else they’d be bored to death. Wonks come here because nowhere else could we bore so many to death.

Some journalists are wonks, but most are hacks. Some columnists are hacks, but most are wonks. Lobbyists are hacks who make money pretending to be wonks.

We wonks think we’re smarter than hacks. Hacks think that if being smart makes someone a wonk, they’d rather be stupid.

Wonks think all hacks are creatures from another planet, like James Carville. Hacks share Paul Begala’s view that wonks are all “propeller heads,” like Elroy on “The Jetsons.”

Along with politics and ideology, these tribal differences are at work in the controversy over the Medicare cost estimates and the muzzling of the Chief Medicare Actuary.

Of course, there are no differences between hacks and wonks in Albany, right?

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In the midst of the political season and the political conventions, in which the role of corporations is an increasingly significant issue (no corporations are not people), David Burge, who blogs here as Iowahawkblog, tweets this:

“Government” is just a word for things we do together.
“Corporation” is just a word for things we do together voluntarily.

Not quite.

Not quite enough, at least not in a democracy or some form of legitimately representative government.

For in a democracy, the public, the customers if you will, have a role in governance. The leverage of individuals may be small, but it is nevertheless real.

It’s not quite the case with corporations. Yes, stockholders have some theoretical leverage, but how real is that? Only large stockholders have any leverage.

Not quite when customers have limited choices Customers may have some leverage in that they can sometimes go elsewhere. Except, of course in a highly concentrated economy.

And not only “not quite,” but not even close for employees. It’s certainly not the case within corporations, where the power of employers and employees is not even remotely balanced.

And it’s certainly not the case when corporate behavior imposes costs on the public and individuals without their assent (in economics, “externalities”), e.g., pollution.

And this is why the increasing financial power of corporations in government (lobbying) and politics (campaign contributions) and their interactions is increasingly dangerous.

It’s a cleverly written point. But way too simplified, perhaps dangerously so.

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Constituent Consistency

by John W Rodat on September 5, 2012

One of the things that’s interesting about this story in the Observer, out in Dunkirk, NY is how the comments (vitriol included) are so like what you’ll read and hear all over New York where a county is considering doing anything other than building a new nursing home.

Here are a couple of examples:

FredoniaFred:The Home never has and never will run up a $2 million deficit!. The Home has always received a good return on its contribution to the IGT,thats until Greg decided to mess with it and underfund it!.By the way,any Nursing Home(not private)is allowed $3.1 million a year in contributions!.The County has never even been close to this figure!.Why?.I will tell you why,because Greg and some of buddies wanted and want the Home to fail,thats why!.

teacherteacher:Whats facts do you want to know that are not in the report?. That the County is hiding electronic notebooks in the bombshelter in the basement of the Home?.Equipment thats needed to upgrade,make the Home operate more efficiently,thus saving money!. The equipment is there, and it is not being used!. Why is Greg not letting the Home use this equipment!?

That teacherteacher is not in the CGR report! Because it is being hidden!.

One more thing, lets blame it on the workers that are caring for our elder and not blame management including the county executive for mismanagement of the home. Its the low man on the totem pole that gets it shoved up the a**. I hope you are willing to dole out more money when the home is sold and all the workers turn to DSS to help with there needs because the new owners cut their salary in half. Still tax payers money now isn’t it.

Lets see, sell the home for cash to a corporation that has a horrible reputation and move on. It will not lower your taxes. They will connect the gas well and sell it and make money that the county could have been making. That’s smart business.

commentor:Do a search on William(Avi)Rothner you pea brain!.This is what you and other people want?.Selling the Home to him?.#6 on the top 10 list of the worst owner/operators of nursing homes in the the State of Illinois?.This is how much you and others care about the elderly,sick and disabled?.Throwing their lives into the greedy hands of private owners like this,whos only concern is making money?.You are not human!.

Do not believe the lies and deception Greg is spewing!.He has a personal agenda against the Home.The Home is not as bad as he and some of his cronies are painting a picture that they want you to think it is!.

Substitute some of the names and it may as well be Albany or any of a number of other counties. Similar diatribes are heard in virtually every county considering an alternative path for their nursing home.

Most of the substance of the article is on another Center for Governmental Research (CGR) study and on the long term viability of relying on Intergovernmental Transfers (IGT) to minimize the financial losses from county operated nursing homes. It doesn’t sound like many people in Chautauqua understand the IGT program any better than they do in most places. And, as is also common, too many of them seem unduly optimistic.

Chautauqua County Executive, Greg Edwards, while believing that it was a “smart business move” to take money out of fund balance to make the payment necessary to draw IGT funds, “has since affirmed that selling the County Home makes the most financial sense for the county.” Of course, he gets skewered for it.

On the other side of New York, Orange County is still has a tug-of-war going on what to do with its nursing home, Valley View. Orange County already has potential buyers for their nursing home. It had been only partially funded in this year’s budget, but the Legislature restored funds to get deeper in the year. This story is from the Mid-Hudson News in late August:

Orange County Executive Edward Diana has just over a month before he must present his proposed 2013 county budget to the legislature. He has prided himself with bringing in fiscally conservative spending plans with little to no property tax hikes.

Last year’s proposal was a tough one as that is when he defunded the county’s Valley View nursing home after June 30. The county legislature earlier this year restored funds through September, but the county’s 2013 budget picture hinges on the future of the nursing home. Diana’s fear is that lawmakers will let slide all four purchase proposals by private companies, and that, he said could put the county in a very serious position.

“The next option is bankruptcy and I’m telling you, not under my watch, no way, no how,”

Bankruptcy? It won’t make a difference to the complaining constituents.

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My liberal friends will be appalled. But suffice to say, there are at least some writers who at The American Conservative who offer a different perspective that what we’re getting from political “conservatives,” (most of whom are really radicals) and who at least know when it’s appropriate to gag. I may not be as conservative, but I appreciate a conservative argument that has integrity in its foundation. Most conservative rhetoric today not only lacks that, but it’s downright tribal, racist, selfish, ugly.

Here’s Scott Galupo’s Is Romney-Ryan Campaign Duping Seniors on Medicare? Referring to seniors and the Medicare debate, he says:

They’re well aware of what Romney and Ryan are proposing — and, more important, they’re aware that it won’t affect them.

This will sound harsh, but here goes. The brilliant cynicism of the Romney-Ryan Mediscare strategy is the bargain it strikes with the affluent white 55-and-over demographic — a critical segment of the GOP base this cycle. It says, “We won’t touch your benefits,” as it implies that Obama is taking those benefits and transferring them to his layabout black “base.”

This is “bold” stuff, all right — bold enough to make you bring up your breakfast.

Here’s Daniel McCarthy’s How Conservatism Lost its Mind. Here’s how he starts:

Earlier this week the New Yorker’s John Cassidy asked, “Where are the real conservative intellectuals?” The short answer is that “conservative” once signified an intellectual tendency with partisan overtones, now it signifies a partisan tendency that would prefer not to have intellectual overtones — there are no votes in that.

The Democratic Party’s publicity apparatus isn’t producing intellectuals either, but liberalism has other institutional bases besides the Democrats, including the academy and a variety of somewhat independent magazines, so the left is not quite as monolithic as the right. The right only has institutional bases in the GOP and among the people whose dollars create and support think tanks, and neither a party nor a moneyed interest is going to be all that keen to promote thinking. Not beyond the minimal amount of thinking necessary to make rhetoric sound clever. Call me a cynic, but isn’t this an accurate, even complete, description of the GOP, Fox, National Review, and all the rest? Ideas are allowed at the edges but must never detract from the bottom line.

And here’s Mike Lofgren’s Revolt of the Rich. This is a longer and quite critical piece on today’s wealthy. Here are a few of the nuggets:

Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it. If one can afford private security, public safety is of no concern; if one owns a Gulfstream jet, crumbling bridges cause less apprehension—and viable public transportation doesn’t even show up on the radar screen. With private doctors on call and a chartered plane to get to the Mayo Clinic, why worry about Medicare?

Being in the country but not of it is what gives the contemporary American super-rich their quality of being abstracted and clueless.

This one resonates a lot for me:

In both world wars, even a Harvard man or a New York socialite might know the weight of an army pack. Now the military is for suckers from the laboring classes whose subprime mortgages you just sliced into CDOs and sold to gullible investors in order to buy your second Bentley or rustle up the cash to get Rod Stewart to perform at your birthday party. The sentiment among the super-rich towards the rest of America is often one of contempt rather than noblesse.

Lofgren goes on at length. He doesn’t become “liberal.” He suggests that those who are blessed have obligations to the rest of society. Take a look.

There’s much here that I disagree with, but it’s not the party line and much of what I’ve read the past week or two is not nuts. These days, that’s refreshing.

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What was reported by New York’s counties, excluding New York City for general government administration and operations and miscellaneous general government administrative costs in 2010?

Another way to think of this is general overhead; it excludes administrative costs in program functions, e.g., public safety administration. We’ll do that calculation later. Though they are included for accounting purposes, the following figure also excludes distribution of a share of sales tax revenues to municipal governments, legal judgements, and zoning and planning. So it would include such things as county legislative costs and the costs of putting budgets together and the cost of managing payrolls.

Now that we’ve been so precise, what was the number in 2010?

$2.464 billion.

That was an increase of $122.6 million from 2009 (5.2 percent) and an increase of $953.6 million, an increase of 63.1 percent from 2000.

Three counties had increases from 2000 over 200 percent (i.e., they more than doubled). They were Saratoga, Tioga and Allegany. Over the decade, five counties had decreases: Yates, Wyoming, Erie, Sullivan and Schoharie.

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For regrettably too many local officials in New York, the flip side the the “unfunded mandates” argument is “no mandates.” Aside from sheer ignorance, this takes a couple forms. The first is there’s no mandate, but we’ll spend a lot of money anyway, e.g., county nursing homes. The second, is there are mandates, but we’ll ignore them:

Lake Luzerne Supervisor Gene Merlino said he has a way to balance the Warren County 2013 budget without a tax increase or job cuts.

Merlino has proposed a 10 percent cut to the portion of social services spending that is paid for by county taxpayers, a decrease that would amount to just under $1.7 million based on this year’s Department of Social Services budget.

That money would easily close a projected general fund budget gap of over $1 million, he said.

Recipients who would lose some of their food stamps or other public assistance should be able to adjust to the cut, according to Merlino.

Someone who normally receives $500 a month would instead get $450, not an insurmountable cut, he said.

Merlino made the proposal at a Warren County Board of Supervisors Budget Committee meeting earlier this month. He pointed to statistics that show the county’s share of social services spending has risen 72 percent, from $9.8 million in 2000 to just under $17 million this year.

Federal and state support of social services program has risen 38 percent during the same time period.

“The county taxpayers are paying a bigger share of this bill every year,” he said.

Merlino said he understands state and federal mandates require public assistance programs be funded at certain levels, but leaders need to take a stand against “entitlement” programs at some point.

OK, I get it. I understand the frustration. But at best, this is a distraction. If a county were to act on such an idea, it would do nothing more effective than incur legal expenses. It’s particularly weird that this focuses on Food Stamps, the costs of which are reimbursed entirely by the Federal and State governments (i.e., it’s a mandate, but entirely funded).

Surely local officials can be more creative than this in conjuring up solutions.

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