North Carolina Needs King Cnut

by John W Rodat on May 30, 2012

And speaking of science and politics, North Carolina is considering prohibiting, by law, sea level rise. Here’s House Bill 819. And here’s an appropriately snarky, commentary by Scott Huler in Scientific American.

According to North Carolina law, I am a billionaire. I have a full-time nanny for my children, I have won the Pulitzer Prize, and I get to spend the entire year taking guitar lessons from Mark Knopfler. Oh, my avatar? I haven’t got around to changing it, but by law, I now look like George Clooney. There’s also a supermodel clause, but discussing the details would be boasting.

You think I’m kidding, but listen to me: I’m from North Carolina, and that’s how we roll. We take what we want to be reality, and we just make it law. So I’m having my state senator introduce legislation writing into law all the stuff I mentioned above. This is North Carolina, state motto: “Because that’s how I WANT it to be.”

You know, of course, about our passing May 8 of Amendment One, which has now written into our constitution anti-marriage discrimination against anyone who doesn’t fit one group’s image of marriage. It’s just as ugly as it sounds – just as ugly as the last time we wrote such marriage discrimination into our constitution, in 1875, when instead of protecting us against the idea of same-sex couples marrying, it was protecting us against racial miscegenation – down to the third generation, mind you. Good times!

Okay, though. These are hard days, people are crazyish, and you just have to soldier on, right? But then it turns out that North Carolina legislators are now tossing around bills that not only protect themselves from concepts that make them uncomfortable, they’re DETERMINING HOW WE MEASURE REALITY.

In a story first discussed by the NC Coastal Federation and given more play May 29 by the News & Observer of Raleigh and its sister paper the Charlotte Observer, a group of legislators from 20 coastal NC counties whose economies will be most affected by rising seas have legislated the words “Nuh-unh!” into the NC Constitution.

Okay, cheap shot alert. Actually all they did was say science is crazy. There is virtually universal agreement among scientists that the sea will probably rise a good meter or more before the end of the century, wreaking havoc in low-lying coastal counties. So the members of the developers’ lobbying group NC-20 say the sea will rise only 8 inches, because … because … well, SHUT UP, that’s because why.

Bill Chameides, also in Scientific American is just a bit more polite, but the sentiment is the same.

Should this legislation come to fruition, North Carolina would be planning for a sea-level rise of about one foot rather than the scientifically projected three feet by the end of the century. That leaves a whole lot of water unaccounted for. And it could leave whole communities up coastal creeks paying for roads and bridges that no longer make sense to maintain in the face of rising seas.

As of this writing, the jury’s still out on the sea-level bill’s fate. All this time I’ve been worrying about what will happen to my kids as a result of climate change. It was clear to me that we needed some really innovative, out-of-the-box solutions. Turns out we can just legislate it away. Big government to the rescue.

Jess Zimmerman in Grist is no less kind:

North Carolina is no stranger to the “if you dislike it then you should have made a law against it” model of legislation, but this is extreme: The state General Assembly’s Replacement House Bill 819 would rule that scientists are not allowed to accurately predict sea-level rise. By all legal calculations, the sea level will now rise eight inches by the end of the century. Sure, so far models have predicted an increase of more than three feet, but if they keep that shit up, they’re going to JAIL.

OK, there’s not really a prison sentence attached to this proposed rule, but that doesn’t stop it from being crazeballs. See, actual sea-level rise is nonlinear, because there’s feedback — the warmer it gets, the more the water volume expands, and the more stuff melts, and the more it expands, etc. That’s how most scientific models arrive at their predictions, because that is how physics works. But an increase that big is extremely inconvenient for a state with a beach-based tourist trade. So North Carolina’s solution is simple: Change how physics works, or at least change how people do physics.

Accordingly, this bill mandates that models use a linear increase — a consistent amount of change every year, based on historical data. This will lead to predictions that are much less catastrophic, and much more reassuring for people building resorts in the Outer Banks. The predictions will also be flat-out wrong, but that’s nothing new for North Carolina.

If it’s not obvious why this is stupid, look at it this way: In 1790, the year North Carolina is stuck in, the population was about 400,000. In 1900, it was 1.9 million. That’s an increase of 1.5 million in 110 years — so by the new rule, the state would prepare for a population of 3.4 million in 2010. Which might cause some strife among the 9.7 million people who live there now, but you know, whatever — the law is the law, so screw you, math. If the 6.3 million people unaccounted for by the legal model wanted housing and services, they should have fallen in line with North Carolina reality.

Anyway, we wish North Carolina the best of luck in staving off disaster by legislating what mathematical calculations people can perform. It will probably be about as effective as fixing the health-care crisis through etymology, or balancing the budget with entry-level yoga. But if it works, I’m moving to North Carolina, where living in a fantasy world has the force of law.

Funny that it’s not only bad science (OK, it’s not science at all), it’s questionable faith. Would that King Cnut be resurrected and provide an example to legislators in North Carolina.

Henry of Huntingdon, the 12th-century chronicler, tells how Cnut set his throne by the sea shore and commanded the tide to halt and not wet his feet and robes. Yet “continuing to rise as usual [the tide] dashed over his feet and legs without respect to his royal person. Then the king leapt backwards, saying: ‘Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth, and sea obey by eternal laws.’ He then hung his gold crown on a crucifix, and never wore it again “to the honour of God the almighty King”. This incident is usually misrepresented by popular commentators and politicians as an example of Cnut’s arrogance.

This story may be apocryphal. While the contemporary Encomium Emmae has no mention of it, it would seem that so pious a dedication might have been recorded there, since the same source gives an “eye-witness account of his lavish gifts to the monasteries and poor of St Omer when on the way to Rome, and of the tears and breast-beating which accompanied them”. Goscelin, writing later in the 11th century, instead has Cnut place his crown on a crucifix at Winchester one Easter, with no mention of the sea, and “with the explanation that the king of kings was more worthy of it than he”. Nevertheless, there may be a “basis of fact, in a planned act of piety” behind this story, and Henry of Huntingdon cites it as an example of the king’s “nobleness and greatness of mind.” Later historians repeated the story, most of them adjusting it to have Cnut more clearly aware that the tides would not obey him, and staging the scene to rebuke the flattery of his courtiers; and there are earlier Celtic parallels in stories of men who commanded the tides, namely Saint Illtud, Maelgwn, king of Gwynedd, and Tuirbe, of Tuirbe’s Strand, in Brittany.

Hey, maybe this is a way to solve the European debt crisis, or all manner of revenue shortfalls in government budgets.

Tagged as: Climate Change, Forecast, Modeling, Politics, System Dynamics

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No. Intentional Ignorance Does Not Improve Public Policy. Or Politics. Or Business.

by John W Rodat on May 30, 2012

Earlier this month the House of Representatives voted to eliminate funding for the Census Bureau’s American Community Survey (ACS). Lest you think that my objection is nothing more than my geeky self looking for more data to bathe in, here are a couple of examples of how these data are used:

  • Distributing $400 billion in Federal funds
  • Aiding local government decision-making
  • Location of emergency services
  • Site selection for businesses and medical services

The Congressman leading the effort to defund the ACS (successfully so far) is Representative Daniel Webster (R-Fla.), who evidently believes that the survey is unconstitutional.

The Constitutional question seems like a hell of a stretch, but on probability, statistics and sample surveys, Congressman Webster is painfully ignorant.

Representative Daniel Webster, for example, is a sponsor of the anti-ACS survey in part because he thinks $70 per survey respondent is “not cost effective … especially since in the end this is not a scientific survey. It’s a random survey.”

Huh? It’s scientific because those surveyed are chosen at random. A lot of politicians may be uncomfortable with math. But most of them are quite familiar with polling. It’s the lifeblood of campaigns. How did this guy get elected?

As it turns out, opposition to this move is pretty much non-partisan. Business Week reports that Killing the American Community Survey Blinds Business.

The fight over cutting funds for data-gathering agencies has opened up a rift in the deficit-hawk crowd. A handful of organizations that generally support big fiscal spending cuts have voiced their support for fully funding the three main data-gathering agencies: Census, the Bureau of Labor Statistics, and the Bureau of Economic Analysis.

The Chamber of Commerce, for example, strongly advocates funding them, since its members rely so much on the information they provide on basic things such as household spending, per capita income, and population estimates. The ACS is of particular value to them, says Martin Regalia, Commerce’s chief economist. “It is especially important to some of our bigger members for trying to understand geographic distinctions and other granularity in the economy.”

Tom Beers, executive director of the National Association of Business Economists, says that without good economic data, businesses would be “flying blind.” He adds: “You end up in a guessing game about what’s going on in the economy. The types of losses that result are far worse than what you end up spending to fund these surveys.”

Webster says ending the ACS could save $2.5 billion over the next decade. Asked to respond to concerns from the business community over the impact of stopping the ACS, Webster’s communications staff referred me to his comments on the House floor, which don’t address those concerns.

Conservative think tanks also think dumping the ACS is a bad idea.

Contacted last week, economists at conservative think tanks Cato Institute, American Enterprise Institute, and the Heritage Foundation all expressed support for the data-gathering agencies since all three rely heavily on the statistics they produce to study the economy. “Those agencies are essential,” says Phillip Swagel, an economist and nonresident scholar at AEI. “The data they provide really tell us what’s going on in the economy. This shouldn’t be a political issue.”

Of course it might be worthwhile and mischievous to inquire about the Chamber’s political support of Congressman Webster and all those who voted with him. There’s a touch of ironic justice in this. There would be even more if the House succeeds in defunding the ACS, however bad an idea that might be.

As we say a lot around here, “be careful what you wish for …”

Tagged as: Census, Data

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Chronically Confident Calculations

by John W Rodat on May 29, 2012

In Bias in Government Forecasts, Jeffrey Frankel, an economist at Harvard’s Kennedy School asks the question, “Why do so many countries so often wander far off the path of fiscal responsibility?” In his the full paper at the Oxford Review of Economic Policy Frankel details how national governments (with very rare exceptions) propose consistently optimistic budgets.

Frankel explores the mechanics of how US forecasts have been consistently optimistic:

Clearly, part of the blame lies with voters who don’t want to hear that budget discipline means cutting programs that matter to them, and with politicians who tell voters only what they want to hear. But another factor has attracted insufficient notice: systematically over-optimistic official forecasts.

Such forecasts underlie governments’ failure to take advantage of boom periods to strengthen their finances, including running budget surpluses. During the expansion of 2001-2007, for example, the US government made optimistic budget forecasts at each stage. These forecasts supported enacting big long-term tax cuts and accelerating growth in spending (both military and domestic). European countries behaved similarly, running up ever-higher debts. Predictably, when global recession hit in 2008, most countries had little or no “fiscal space” to implement countercyclical policy.

In most cases, the problems have long been plain for objective observers to see, but public officials kept their heads buried in the sand. Over the period 1986-2009, the bias in official U.S. deficit forecasts averaged 0.4 % of GDP at the one-year horizon, 1% at two years, and 3.1% at three years. Forecasting errors were particularly damaging during the past decade. The U.S. government in 2001-03, for example, was able to enact large tax cuts and accelerated spending measures by forecasting that budget surpluses would remain strong. The Office of Management and Budget long turned out optimistic budget forecasts, no matter how many times it was proven wrong. For eight years, it never stopped forecasting that the budget would return to surplus by 2011, even though virtually every independent forecast showed that deficits would continue into the new decade unabated.

How were American officials in the last decade able to make forecasts that departed so far from subsequent reality? In three sorts of ways. The first comes in the form of optimistic baseline macroeconomic assumptions such as a high and everlasting growth rate. OMB forecasts of economic growth were biased upward: by a huge 3.8% at the three-year horizon.

Second, some politicians argued that tax cuts were consistent with fiscal discipline by appealing to two fanciful theories: the Laffer Proposition, which says that cuts in tax rates will pay for themselves via higher economic activity, and the Starve the Beast Hypothesis, which says that tax cuts will increase the budget deficit but that this will put downward pressure on federal spending.

Sanguine macroeconomic assumptions will do the job in the context of OMB forecasts and fanciful theories about the effects of tax cuts can deliver the rosy scenarios of presidential speeches. But to get optimistic fiscal forecasts out of the Congressional Budget Office a third, more extreme, strategy was required. (In 2003, when some Lafferite congressmen tried to get CBO to say that “dynamic scoring” of the effects of tax rate cuts would show higher revenue, the estimates from the independent agency did not give the answer they wanted.)

To understand the third strategy, begin with the requirement that CBO’s baseline forecasts must take their tax and spending assumptions from current law. Elected officials in the last decade therefore hard-wired over-optimistic budget forecasts from CBO by excising from current law expensive policies that they had every intention of pursuing in the future. Often they were explicit about the difference between their intended future policies and the legislation that they wrote down.

In a shorter version of his analysis, Frankel notes Chile as an exception and as a possible alternative model.

So, how can governments’ tendency to satisfy fiscal targets by wishful thinking be overcome? In 2000, Chile created structural budget institutions that may have solved the problem. Independent expert panels, insulated from political pressures, are responsible for estimating the long-run trends that determine whether a given deficit is deemed structural or cyclical.

The result is that, unlike in most industrialized countries, Chile’s official forecasts of growth and fiscal performance have not been overly optimistic, even during economic booms. Thus, unlike many countries in the North, Chile took advantage of the 2002-2007 expansion to run substantial budget surpluses, which enabled it to loosen fiscal policy in the 2008-2009 recession. Perhaps other countries should follow its lead.

Though perhaps not surprising … or not at all surprising …Frankel’s analysis is very useful. It’s always useful to see analytical confirmation of what we suspect. (The opposite is even more useful, but not the subject of this post.) However, I’m a bit concerned about his solution.

Providing structural protection for forecasters might, as Frankel suggests, get forecasts, less politically influenced. But I don’t see how that necessarily leads to stockpiling surpluses during economic expansions. Is the appropriate policy? Certainly. Keynes would agree. But even in good economic times, among legislators and other elected officials, there’s a strong incentive to spend what’s available.

Among the states in the US, there’s also a trend of overestimating revenue. In March of 2011, a Pew Center on the States and the Rockefeller Institute report, States’ Revenue Estimating: Cracks in the Crystal Ball, found that “in fiscal year 2009—the first of the ongoing budget crisis—half the states overestimated revenues by at least 10.2 percent. That equated to an unexpected shortfall of nearly $50 billion in personal income, corporate income and sales tax revenues. In a year when state policy makers faced $63 billion in mid-year shortfalls—coming atop $47 billion they already had closed when crafting their budgets—this was a significant challenge. States had to close the gaps by cutting spending, increasing taxes and fees, tapping reserves and borrowing.”

Perhaps in contrast to Frankel’s analysis, the Pew/Rockefeller study found that “the primary culprit driving more serious and frequent errors is not the states’ processes, methods and techniques, but rather, the increasing volatility of the revenue streams themselves. This appears to result from states’ growing reliance on income taxes and the ways in which highly fluctuating capital gains affect income tax revenue.” I’m not so sanguine or trusting of state processes.

My working assumption is that, if only because they have less technical capacity, the quality of the forecasts will diminish at lower levels of government. Moreover, with local governments, cutbacks, especially layoffs, are more personal, thus harder to accomplish. But I haven’t seen a study of local governments that’s similar to the ones above.

The Governmental Accounting Standards Board (GASB) is working on some new requirements for local governments. If implemented, over time the resultant reports might be able to give us some insight on local economic forecasting and the variation over time and between jurisdictions. We’ll have more on that later.

Tagged as: Budget, Deficit, Economics, Forecast

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Usually Customer Dissatisfaction Leads to Reduced Prices

by John W Rodat on May 29, 2012

Usually customer dissatisfaction leads to reduced prices … but not always in health care.

Lousy care, but the price keeps going up. Didn’t we already know that? If this isn’t evidence that there are significant distortions in the healthcare market, I don’t know what might be. And if there are significant distortions in a market, beware of overly simple, “market solutions” to healthcare.

Robert Wood Johnson Foundation, NPR, and Harvard School of Public Health poll measures Americans’ views on costs and quality of medical care.

Poll: Many Sick Americans Experience Significant Financial Problems and Report their Care is not Well-Managed

And take a look at this NPR story on belated progress on better understanding what we are spending healthcare dollars on.

And make no mistake, this is a broad economic problem.

And after a hiatus, states are once again trying to deal with healthcare economics. Here’s Massachusetts. And here’s California. Of course, one persons expenditure is another’s revenue. Here are Pennsylvania hospitals whining about getting too little.

Tagged as: Economics, Healthcare

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Are You Kidding Me? No Property Taxes at All?

by John W Rodat on May 29, 2012

North Dakota is considering … voting on a Constitutional amendment … abolishing property taxes.

I say go for it. Leave the place to wingnuts and survivalists. Those with IQs, both intellectual and social, above mediocre and anyone who prefers that their children be educated will flee.

The Center for Budget and Policy Priorities has a more measured explanation for why it’s a really bad idea.

Here’s some more background.

Tagged as: North Dakota, Property Tax, Taxes

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In Memorium

by John W Rodat on May 27, 2012

Thomas Trammel Hart, III

MIA in Laos, December 21, 1972.

Tagged as: Military

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Friday Afternoon Before a Holiday

by John W Rodat on May 25, 2012

Always release bad news late Friday before a holiday weekend. Right?

Just a few minutes after posting about New York counties, including Albany, needing to repay the Federal government for excess payments received for their nursing homes, Albany County finally sent an update of their cash position.

First look? Not as bad as it might have been. However, had the County not borrowed again with a Tax Anticipation Note (TAN) to even out the peaks and valleys, it would likely have missed a payroll or contractor payments at the end of January and possibly early February.

Of course, that’s before taking the repayment they’ll have to make to the Feds.

I’m about done updating the graphics, but it is a holiday weekend, right? Maybe I’ll post it on Tuesday.

Tagged as: Albany County, Cash

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Feds Want Their County Nursing Home (IGT) Money Back

by John W Rodat on May 25, 2012

The word is out that the Centers for Medicare and Medicaid Services has made a final decision and will be retroactively recovering “Intergovernmental Transfer” (IGT) funds from counties operating nursing homes in New York. This retroactive recovery goes all the way back to State fiscal year 2006-07. This will be partially counterbalanced by a small enhancement for more recent years. The numbers are preliminary but it appears the net effect statewide will be about $7.2 million, but there’s a lot of variation among the counties. That’s the result of a $46.5 million recovery less a $39.3 million enhancement for more recent years.

The legal crux of the issue is the distinction between calculations based on dates of service rather than calculations based on dates of payments. For some time, the understanding was that the Federal share for this program was based on dates of payment. However, CMS has recently argued that it should be based on dates of service.

The financial crux of the issue is that during the Great Recession, a key component of the ARRA (Federal stimulus) was an increase in the percentage (FMAP) of Medicaid costs that the Federal government would pay. While it varied somewhat depending on unemployment rates, that enhancement only applied during a specified period. So if counties claimed during periods when the FMAP was higher, they were financially advantaged. Unlike regular Medicaid reimbursement for individual services, however, IGT is rarely in place at the time of service. For State fiscal years 2006-07 through 2008-09, there wasn’t even a Federal approval of the entire program until after the fact. Then, counties with nursing homes were offered the opportunity to claim in a block for the entire retroactive period. Counties were also offered the option to take the entire amount in a single lump sum or to spread it over a period up to two and a quarter years.

Now the Federal government is saying that claims had to be based on date of service, so that the ARRA enhanced FMAP would not apply. Thus, there will now be a retroactive recovery. For more recent periods, this new interpretation will advantage counties. But in the meantime, there will be some pain.

The big net losers?

  • Albany, $3.7 million
  • Broome, $788 thousand
  • Delaware, $124 thousand
  • Erie, $5.3 million
  • Fulton, (which has since sold its nursing home), $298 thousand
  • Monroe, $586 thousand
  • Montgomery, $85 thousand
  • Niagara, $1.3 million
  • Sullivan, $982 thousand
  • Ulster, $1.5 million
  • Westchester, $2.1 million

Reportedly, counties will have to pay by the end of June, 2012 – yes, next month. Counties suffering from financial distress and limited cash may be able to spread some of this into the first quarter of 2013. That will be within the current State fiscal year, but would be in the next county fiscal years, allowing them to budget sufficient funds for the payment if they don’t have enough now.

It will be very interesting to see the list of counties that seek and are granted that deferral, won’t it?

There will be some interesting accounting issues as the revenue flowed to county nursing homes and into their enterprise funds, but the recoveries will be lump sum payments from the counties’ general funds. I would expect some guidance from the State Comptroller on how to account for that.

Tagged as: CMS, County, Healthcare, IGT, New York, Nursing Home

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Outdated Legal Doctrines

by John W Rodat on May 22, 2012

Read Stephen J. Gottlieb’s, Outdated Legal Doctrines.

This is how it starts:

The law of contract, based on the consent of the parties, and the law of torts, based on our obligations when no agreement covers what happened, are fundamental to American law. There is only one problem. Both fields are hopelessly out of date.

We live in a “sign here” world. We‘re chastised for holding everyone up if we try even to read the contracts in front of us. For my first home mortgage, the bank attempted to make me sign without reading documents with all sorts of unconscionable language. Sometimes we can’t read the contract until after we’ve bought something because the contract is under the shrink wrap. Or we are presented with contracts too long to bother with for small online purchases. We call that “click wrap” because you have to click that you agree. But even if you did read it, you’d have no idea what was built into the document. And you couldn’t do much about it. Most people don’t try.

The notion of consent is gone. The only excuse for the rules that enforce this nonsense is what conservative law and economics advocates call private ordering – of, by and for companies and corporations – the rest of us don’t have a chance.

Gottlieb is Jay and Ruth Caplan Distinguished Professor of Law at the Albany Law School This piece is not too long. Go read the whole thing.

Tagged as: Contract Law, Game is Rigged, Tort Reform

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Albany County. Once Again Between a Nursing Home Rock & a Nursing Home Hard Place

by John W Rodat on May 22, 2012

Albany County Legislators are frustrated. They want to build a new nursing home, but they’ve bungled it repeatedly so they’re in a “no-man’s land” in the approval process. At the same time, Federal regulations require all Federally qualified nursing homes to have sprinklers by August of 2013. The only exception to the rule is when construction on a replacement facility has already begun. Failure to adhere to the rule or to have a replacement facility under construction means that Federal funds are cut off.

Last night the Executive proposed a contract to install sprinklers in the existing building. Price? $684,000. That’s the financial price. It doesn’t count the inevitable disruption.

But once again, not having done their homework or being in a state of denial, the Legislature put off the decision.

Is it a waste of money? Yes. ACNH is a tired, inefficient building that is way too big for its current use. And Albany County is never going to spend the funds to really spruce it up. Are they going to spend the money anyway? Yes, because to do otherwise would be tantamount to saying that they will shut down late in 2013.

Make no mistake, Albany County cannot afford to run its nursing home without Federal funds. It already loses buckets of money. Operating the Albany County Nursing Home as they do now but without Federal funds, would turn buckets into rivers. It would rapidly endanger not only the Nursing Home’s but the entire County’s financial viability.

Even if they could stand the bad press, which they couldn’t, and even if they retained and admitted new non-Federal patients, which they won’t, they couldn’t afford it. For context, the property tax levy for this year is about $82 million. At the end of 2011, the County’s reported undesignated fund balance was $23.5 million. This year the total budgeted revenue for the Nursing Home is $27.2 million and over 85 percent (about $23.2 million) of that has at least a Federal component so it would be lost. Thus, continuing to operate the nursing home would require another 28 percent tax increase … on top of everything else or burning the entire fund balance in one year.

Ain’t happening.

Moreover, if the County were to consider selling, it must take into account that, even on an interim basis, there will be no buyers for a facility that’s on the verge of having Federal funds cut off.

No way in hell, Congressman Tonko helps them on getting a waiver. He or any other member of Congress would be a fool to try. They’d be bigger fools to succeed, especially were there some sort of emergency event to occur without sprinklers. Those headlines would write themselves, “Congressman intervenes to weaken protection of nursing home patients…” And what an irony it would be that both the County Executive and the Chairman of the County Legislature and wannabe State Senator are current or former firefighters. That would be great political symbolism, huh? “Firefighters seek exemption from Federal sprinkler requirements …”

I’ve given other counties in similar situations exactly the same advice. I might prefer that you shut down, but if you’re not going to, don’t get caught in no-man’s land without sprinklers.

The Legislature’s Majority Leader blames the State:

It’s inaction by the Department of Health that’s causing the situation that the Albany County is in,” Commisso, a strong supporter of building the new home, said. “If they’re going put us out of the (nursing home) business, fine, let them tell us.”

The Nursing Home Facilities Committee, floundering as usual, voted to defer action for two weeks.

Well here’s a hint. The very same edition of the Albany Times-Union that reported on the delay in Albany’s action, also reported that Schenectady’s new nursing home is moving ahead. Can you spot the differences?

Albany: $71 million, 200-bed nursing home
Schenectady: $35 million, 200-bed nursing home

Duh. Same size facility would cost Albany County double.

Mind you, Schenectady still expects to lose money and a lot of it, but not on Albany’s scale.

For Albany County to have even remote chance of getting a new nursing home approved, it has two choices:

  • Fake the numbers and don’t get caught. That ain’t happening. I wouldn’t even mention this option except that a lot of people expect the Albany County Legislature to try to fake it. They may try to fake the numbers, but they won’t get away with it. Even if the Legislature had the knowledge to fake it, which they don’t, everybody’s eying them suspiciously. No professional will fake the numbers for them. Given how Legislative leaders disowned their own professionally produced estimates when they got into trouble a few months ago, they may have trouble getting anyone to do anything for them.
  • Start over. Give the architects directions that are radically different from those originally given. It can no longer be “best of everything.” “Best of everything” costs $70 million in capital alone. Instead, instruct the architects to give you a design that will cost half that in capital and will be be configured to allow operations with a much smaller staff. Among other things, this means no single rooms. More importantly for the sprinkler issues, Albany County does not have the capacity to start over – from scratch – get an entirely new design, get a new set of financials, modify their certificate-of-need application, get it approved, go through the bidding process for construction, bond the expenditures and start construction before August of 2013. They may think they do, but there’s nothing in their history to suggest this is correct. Moreover, if they take the chance and are wrong on the schedule, then they will pay dearly.

Mind you, even if Albany County literally goes back to the drawing board, so much has changed that they may still get turned down as they should.

Of course, there’s an even better option. Give it up. Sell it now. Sell it now after starting on new sprinklers.

Is spending on sprinklers a waste of money? Yes. They’ll do it because they have to do it.

Tagged as: Albany County, Nursing Home

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