Follow up on Cash Dashboard

by John W Rodat on February 23, 2012

Couple of tweaks I’ll be adding to the Cash Dashboard when I get a chance:

  • To track and project cash from a more “organic” perspective, I’ll do a calculated field and display it excluding the borrowed cash from the Tax Anticipation Note (TAN).
  • Though, I haven’t decided on the best means of projection, I’ll some form of projection as well. For the time being, it would be no more than a calculated or statical forecast projection rather than one that included knowledge of upcoming events.

Additional suggestions welcome.

Tagged as: Cash, Dashboard, Tableau, Visualization

{ Comments on this entry are closed }

Which Might be the Better Cash Dashboard?

by John W Rodat on February 23, 2012

My on-again, off-again posting is mostly the result of some prototyping and developing analytical tools and visualizations I’m doing with public data. Some are broader, more-policy focused. Others are more nitty-gritty operational.

Here are two PDFs of a dashboard I’m working on for that most nitty-gritty of subjects, cash. Here’s an earlier post on its importance and some alternative depictions.

Albany County, NY takes a snapshot of its cash position every Friday. I’ve FOILED those data a couple times and will continue to do so because it provides some live data with which to prototype and test. I’m also working from my experience there both analytically and, as it relates to sweating cash through the worst of the recession, emotionally. Though I have and am working with other funds, all the data depicted here are for the general fund (unrestricted).

The two attached depictions are AC Cash Dashboard Test Print 1.pdf and AC Cash Dashboard Test Print 2.pdf. The top half of each is the same and includes a “heat map” of weekly cash and quarterly trends. All the available data are presented in those two visualizations.

My key question relates to the bottom half of the screen, which will be interactive. In Test Print 1, the user may select which years to show and which not to show by clicking or unclicking the year in the upper right corner. From personal experience, I thought this was useful because of the regularity of cash position patterns as each year unfolds. The primary difference from year-to-year is not the pattern, but the level. So one can not only readily see that more recent years (during and after the recession) follow the same pattern as say, 2004, but they’re at lower levels.

The second alternative, Test Print 2, shows the weekly data over the long term, including a trendline, but does not overlay the years as does Test Print 1. It does however allow the user to interact, by setting the level of the “danger zone,” which is currently set at $15,100,000. I chose that level to depict here because that is the amount of cash the County has borrowed in the two most recent years for intra-fiscal year cash smoothing, through a tax anticipation note (TAN).

  • So if you could choose one primary form of interaction, which would you prefer? Mind you, this will not be the only cash visualization. But I’m focused here on the front page, the most important.
  • And what’s your sense of the top half of the page?
  • Anything else?

Once, I’ve finished the first prototype, I’ll put it online for folks to interact with and I’ll update it. Key to the updating is that the technology can pull the data from a variety of sources and source types. These data happen to be in a dirt-simple Excel file. Each update involves no more than plugging in the updated number for each fund each week and all the depictions are automatically updated.

By the way, I’ve got my own preferences, but there are things I like a lot about both. Because I remember vividly, the needed to update our graphics and the godawful cash-juggling meetings we had each week during the recession, my primary purpose is as an operating tool. But it is interesting to look back to the recession years and see how truly thin we were. We were “using the damn data” and there were many weeks when those data were truly frightening.

Tagged as: Cash, Dashboard, Tableau, Visualization

{ Comments on this entry are closed }

NoSQL (Geek Stuff)

by John W Rodat on February 16, 2012

What we try to be about here is the intersection of information and organizational strategy and design and meeting complex challenges, both public and private.

And sometimes, we get a bit caught up in single issues where policy and decision-making flies in the face of the data. So tonight we’re wading through a backlog of things we just haven’t had time for the past few months.

Here are two that caught my attention.

First is an interesting summary here by Mike Loukides, “The NoSQL movement, How to think about choosing a database,” of changes in database design intended to keep up with a changing environment.

Many things have changed since the advent of relational databases:

  • We’re dealing with much more data. Although advances in storage capacity and CPU speed have allowed the databases to keep pace, we’re in a new era where size itself is an important part of the problem, and any significant database needs to be distributed.
  • We require sub-second responses to queries. In the ’80s, most database queries could run overnight as batch jobs. That’s no longer acceptable. While some analytic functions can still run as overnight batch jobs, we’ve seen the web evolve from static files to complex database-backed sites, and that requires sub-second response times for most queries.
  • We want applications to be up 24/7. Setting up redundant servers for static HTML files is easy, but a database replication in a complex database-backed application is another.
  • We’re seeing many applications in which the database has to soak up data as fast (or even much faster) than it processes queries: in a logging application, or a distributed sensor application, writes can be much more frequent than reads. Batch-oriented ETL (extract, transform, and load) hasn’t disappeared, and won’t, but capturing high-speed data flows is increasingly important.
  • We’re frequently dealing with changing data or with unstructured data. The data we collect, and how we use it, grows over time in unpredictable ways. Unstructured data isn’t a particularly new feature of the data landscape, since unstructured data has always existed, but we’re increasingly unwilling to force a structure on data a priori.
  • We’re willing to sacrifice our sacred cows. We know that consistency and isolation and other properties are very valuable, of course. But so are some other things, like latency and availability and not losing data even if our primary server goes down. The challenges of modern applications make us realize that sometimes we might need to weaken one of these constraints in order to achieve another.

Some of the following quote may be too technical for some. But read it anyway, because it’ll give you a sense of the challenges and tradeoffs in very large, distributed database systems that have to be highly available and responsive:

What about transactions, two-phase commit, and other mechanisms inherited from big iron legacy databases? If you’ve read almost any discussion of concurrent or distributed systems, you’ve heard that banking systems care a lot about consistency. What if you and your spouse withdraw money from the same account at the same time? Could you overdraw the account? That’s what ACID (atomicity, consistency, isolation, durability, ed.) is supposed to prevent. But a few months ago, I was talking to someone who builds banking software, and he said “If you really waited for each transaction to be properly committed on a world-wide network of ATMs, transactions would take so long to complete that customers would walk away in frustration. What happens if you and your spouse withdraw money at the same time and overdraw the account? You both get the money; we fix it up later.”

Even if you’re not technically inclined or employed, if your work involves organizations, strategy, finance customers, whatever, it involves information and you’ll be well-served at least having a general sense of the capabilities and constraints of modern information systems as they manage radically larger amounts of data.

Also on NoSQL, is the forthcoming book, Seven Databases in Seven Weeks: A Guide to Modern Databases and the NoSQL Movement by Eric Redmond and Jim R. Wilson. I don’t know how long these links will be good, but for the time being here’s one for the book and here’s one for a “beta” announcement. I must say this is the first time I’ve ever heard of a book being in “beta.” That’s amusing. The topic is not.

If you are technically inclined, so much the better. You own the future.

Tagged as: Database Design, NoSQL

{ Comments on this entry are closed }

County Operated Health Services & How We Got Here

by John W Rodat on February 16, 2012

County operated nursing homes have a long history. They haven’t kept up with the changing environment. So even if a bit oversimplified, it’s worth taking a long view.

First Generation. Non-Medical, Primarily County Funded

Long before Medicare and Medicaid were established in the mid-1960s, county government provided classic public health and backstop services. Indeed, long before the establishment of Social Security in the 19th century, counties operated “poor farms” and “county homes.” The homes were not primarily health services. They were homes for the elderly, including the healthy elderly, especially widows, who did not have enough money to maintain a private home. And as part of their public health services, many also provided public health nursing services.

With the establishment of Social Security, these facilities were less necessary, but many continued because there were still people who still had insufficient income to maintain their own home.

Second Generation, Convert to Health Facilities, Medicare and Medicaid Funding Streams Opened … Wide

With the establishment of Medicare, and even more so, Medicaid, there were new reimbursement streams that made locally funded or subsidized services essentially superfluous. At that time, the county “poor farm” was no longer necessary. But rather than reverting to the more traditional public health role for home care and rather than abandoning their homes, most counties turned their operations into health programs in order to capture the newly available revenues. They thought they could “make money.” (It also meant that using Federal and State money, they could continue the job patronage, but we’ll save that story for later.)

Initially after the creation of Medicare and Medicaid and the very rapid rise in their spending, county homes generated revenue to partially offset the expenditures which previously had been almost entirely based on local property taxes. In some cases, the law had not caught up and they were able to generate revenue from multiple sources for the same expenses.

For example, in the late 1970s, New York’s Public Health Law, Article VI, which pertains to public health functions provided Public Health reimbursement of about 50 percent for allowable functions. That still included capital costs for county nursing homes even though capital costs were also an allowable expense under the new Medicaid program. (Talk about stovepiping!). So apparently counties could include nursing home capital costs and be reimbursed by Medicaid while being reimbursed 50 percent for the same expenses as a public health function. In 1976 or 77, the Public Health reimbursement for 50 percent of county capital costs for new nursing homes was eliminated. But even that change was not without a fight. The counties that had already taken advantage to build new facilties were grandfathered and still got the extra reimbursement.

But at the same time, these new revenue streams were also opened on private for-profit and not-for-profit programs. They grew very rapidly, simultaneously:

  • Reducing or eliminating the need for county facilities.
  • Increasing Medicaid expenditures, including ironically in New York, county Medicaid expenditures.
  • Causing a Federal and State financial backlash.

Third Generation, Medicare and Medicaid Becomes Expensive and Attempts to Control Costs

By the early 1970s, states had already recognized that their Medicaid expenditures were growing very rapidly. In response, New York embarked on a detailed, increasingly sophisticated, intrusive regulatory scheme which controlled prices and access to health markets. While it arguably slowed the growth in Medicaid, it never stopped it and even restraining cost growth was a never-ending battle. Moreover, because the regulatory framework was provider rather than patient focused. Both funds and focus were on individual transactions and services rather than on integrating care.

Of course, the Medicaid cost growth during this period, also cost counties because counties had to pay for a share of Medicaid and its growth. So counties, often without the sheepishness one might have hoped for, would argue for Medicaid cost control and simultaneously argue for expanded Medicaid spending on nursing home care. This has continued even since the enactment of the cap on growth in the local share of Medicaid costs.

In the mid-1990s, mandatory managed care was enacted. But because of the clients and services that were exempted, that mandate essentially applied only to moms and kids on welfare, populations that were relatively healthy. The exemptions may have only applied to 30 percent of the clients, but since those were the clients that had higher need for health services, the exemptions also applied to 70 percent of the expenditures.

So with this history as well as the jobs at stake, it’s no wonder that there’s active resistance to change. But eventually, it had to end.

Fourth Generation, Years of Conventional Medicaid Cost Containment Fail; State Decides to Abandon Fee-for-Service Health Care in Favor of Managed Care for Everyone

In 2011, New York essentially said, “enough.” The State finally decided to bring the rest of the Medicaid population into some form of capitated, case-managed care.

For the purposes of county decision making, this means:

  • That the long-term care population from which the bulk of nursing home days of care are drawn, the market for nursing home and home care services, will be managed by a variety of health plans. Nursing homes will no longer bill Medicaid directly for days of care. They will negotiate contracts with health plans and be paid in accordance with those contracts.
  • In contracting with health plans and working with them, nursing homes that are the most efficient and the most organizationally responsive, i.e., nimble will have significant advantages over those that are neither.
  • The care plans responsible for long-term care patients has an active and compelling incentive to minimize days of care in nursing homes.

County nursing homes are neither financially efficient nor, because they need public debate and political sign-off for any change in operations or policy, organizationally nimble. While they are still figuring out how to get legislative sign-off, their competitors will have already have signed and implemented contracts with health plans.

So is it any wonder that many counties are actively seeking the means to extricate themselves from this trap? Is it any wonder that I argue that Albany County should “Sell it Now“?

  • Chautauqua County has released criteria for evaluating potential purchasers of its nursing home.
  • Saratoga County has begun the process of evaluating sale of its nursing home, Maplewood Manor.

    And Washington County has begun the decision-making process as well, with the predictable reactions of nursing home employees and the also predictably extreme predictions of what will result. My favorite is, “Many expressed fears that privatizing the nursing home and public health home care services into a for-profit business would place restrictions on Medicare patients and, if not profitable, would result in the new owners vacating the county altogether and leaving unemployed health care workers behind.”

    Perhaps, as I’ve spent the last five years listening to the most implausible possibilities being used as scare tactics, I’m being a bit unfair or insensitive. But it’s kind of hard to imagine a business spending millions to purchase a county nursing home or home care agency, going through the trouble and expense of reconfiguring it, and then shutting it down. In any case, there are contractual means of assuring operation for at least a stipulated period, say a decade, as a condition of sale.

  • Suffolk County is in court after a lengthy difficult fight to sell its nursing home. The political fight over the sale took so long that even after the County had selected a buyer, that State policy changed making it a far less attractive market, the agreement with the buyer expired, and the buyer walked away.
  • Ulster is evaluating how to sell its facility.
  • Genesse County has already paid for a study of how to reduce its role.

A generation ago, counties hitched their nursing homes to Medicaid. It was great for the first few years, while they were making capital investment decisions. But those decisions trapped them for 30-40 years, while Medicaid got tighter and tighter. Now, it will not only be tighter, it will be fundamentally different and most counties are looking to extricate themselves. Only two counties, Schenectady and Albany, are looking to jump in even deeper by building new facilities. Most however, recognize that if they continue operating nursing homes, they will do so with primarily the same local property tax funded operations that they started with a century or more ago, but they’ll be doing so with much more expensive facilities.

There’s no future in that. The primary issue today is how to manage the transition out.

Tagged as: County, Healthcare, Home Care, New York, Nursing Home, Public Health

{ Comments on this entry are closed }

Sell it Now!

by John W Rodat on February 14, 2012

So if New York does the right thing and tells Albany County that no, they cannot build a new money-losing nursing home, what happens next? And before the State acts, if the odds are say 50/50 or higher that the State will reject the application, what should be done in the meantime?

Sell it. Sell it now.

There are potential buyers. Moreover, there are potential buyers who have a history of operating effectively in New York and doing so in a unionized environment.

Sell it now to an operator with a history of operating a good facility or facilities and who would be neutral on the issue of unionization, softening a key objection.

Sell it now to reduce the County’s losses and to enable another organization to operate efficiently. Mind you, this is not to criticize senior management, which is actually rather good under remarkably limiting and trying circumstances. Albany County’s failure is not of management, but of governance.

Sell it now before its market value declines even further. Other counties are already in the process of selling or evaluating the sale of both nursing homes and home care agencies because they recognize that the long-term care environment is too fluid and financially dangerous to do otherwise, and because they recognize that the market value of their programs has already started to decline.

Were the State, as it should, to reject the application to build a new facility, the current facility can and presumably will remain operating. We’ve written about that elsewhere. But it’s dead-ended. Moreover, potential buyers would know that the County was cornered and reduce their offers accordingly.

So what the County should do now is issue a request for proposals for organizations to submit specific proposals to purchase the Albany County Nursing Home. Not only should such proposals include prices, they should include information on the quality of their current operations and at least a pledge to remain neutral with respect to unionization. As there are better sites for a nursing home than by the airport and distant from other health services, it would also be preferable if the County only sold the operation and not the building, but retained the land.

Albany County could have and should have used its role and leverage to expand home and community based services. Similarly, Albany could could and should have expanded other residential alternatives to building a new nursing home. It chose the opposite path.

The County Legislature, and so far, the new County Executive have chosen institutionalization. Indeed, the current Chairman of the County Legislature sponsored a resolution, which was adopted to require that the first priority be to keep the facility full. Later, the Legislature required that the County’s transitional case management program be restricted from helping current ACNH patients find other settings in which to live. Eventually, even that was too much and the program was closed.

There were and are better service and program alternatives. But, clearly the highest priority of Albany County’s elected officials is institutionalization. Certainly as a practical matter and often as explicit policy, Albany County Legislative leadership has rejected home and community based services in favor of institutionalization.

That being the case, that institution may as well be operated efficiently. And the only way to do that is to sell it to an organization that can operate efficiently.

Sell it now.

Tagged as: Albany County, Certificate-of-Need, New York, Nursing Home

{ Comments on this entry are closed }

Reader’s Digest Version on Albany County Nursing Home and Interactions of State Policies

by John W Rodat on February 13, 2012

Short version of previous posts, particularly here, on State Health Department practices and Albany County’s application to build a new nursing home that the County itself acknowledges is a money loser.

  1. The County’s own consultants projected a 52 percent operating loss in the third year of operation of a new facility. That’s $26 million per year. They did that projection before the State published its new nursing home rate methodology which make the numbers even worse and probably underestimates the effects of new State Medicaid policies, particularly with respect to managed long-term-care.
  2. The State Health Department has historically allowed counties and other municipal governments to offer a commitment to subsidize such operating losses through the imposition of higher local property taxes.
  3. That Health Department practice now contradicts and undermines the State’s policy of slowing and capping the growth in local property taxes.
  4. Moreover, the Health Department practice relies on promises that are legally hollow; they need not be kept. That is because no legislature may bind a subsequent legislature. Therefore, that practice also undermines the Department’s own certificate-of-need program.
  5. Thus in reviewing certificate-of-need applications, the Department should abandon the practice of relying on local “commitments” to use local taxes to subsidize otherwise money-losing health programs.
  6. Therefore, the State Department of Health should not only change its practice, it needs to reject Albany County’s proposal to build a new nursing home.

That should about cover it.

Tagged as: Albany County, Certificate-of-Need, Nursing Home

{ Comments on this entry are closed }

Albany County Nursing Home, Why New York Needs to Change How it Reviews Subsidized CON Applications

by John W Rodat on February 13, 2012

It’s time to end the practice by New York’s Department of Health of allowing county “commitments” to using local property tax increases to subsidize nursing home losses as a means to meet the financial feasibility criterion in the certificate-of-need process. This practice contradicts and undermines the State’s policy of slowing growth in property taxes. Such commitments are legally hollow and also undermine the certificate-of-need process.

And given the needed change noted above in the Health Department’s practice and the huge property tax subsidy needed to close a staggering deficit, it’s time to close the door on Albany County’s certificate-of-need application to build a new nursing home.

This is a long and wonkish post. So be prepared. In it, I call for a fundamental change in State practice.

On December 8, 2011, at the recommendation of the Committee on Establishment and Project Review, New York’s Public Health and Health Planning Council (PHHPC) deferred action on the proposed construction project to replace the Albany County Nursing Home. Nominally, the Committee did so pending Albany County’s evaluation of the potential effects of new Medicaid rates recalculated pursuant to the new reimbursement rate methodology. While the Albany County Legislature passed a resolution on December 5, 2011 confirming its commitment to the project (prior to the release of new rates to evaluate), the County’s erstwhile commitment to permanently subsidize substantial projected losses through local property taxes is irrelevant to the financial feasibility criterion necessary for certificate of need approval.

The financial feasibility of this project should be evaluated without a local tax-based subsidy, just as if proposed by a for-profit or not-for profit sponsor. The Department of Health’s historical practice has been to allow a public sponsor to fund the gap between costs and revenues with local property or other taxes. That may have been a satisfactory practice in the past but due to the increasing constraint on local tax revenues, it is no longer. Witness the number of counties that, regardless of prior commitments, are now seeking to abandon their nursing homes and home health agencies. At a minimum, this Department practice should be re-evaluated. Even better, it should be abandoned. To the degree that it relies upon a local tax based subsidy, Albany’s project should be rejected.

  • Given the State’s recently enacted cap on property tax growth, the Department of Health’s historical practice of allowing governmental sponsors to cover losses through property tax increases is woefully out of date and should be ended. The Department’s practice, especially in the case of the Albany County Nursing Home, directly undermines the State’s property tax policy. (Note that from 2011 to 2012 the Albany County property tax was increased by 8.7 percent, well above the State standard. Building and operating a new nursing home would require further such increases.)
  • Over the expected life of a capital project, the Health Department cannot legally rely on any statement by county officials that they are permanently committed to subsidize such a project.

A well-established principle of law is that, within Constitutional boundaries, no legislature may tie the hands of a subsequent legislature. Thus, there is nothing to prevent a future legislature from not only changing a law, but from reversing it. Indeed, there is no legal constraint on a current legislature from reversing itself. Therefore while the current Albany County legislature may be committed and the County Executive may be committed, there is nothing to prevent a future (or even the current) County Executive or Legislature, to conclude that their predecessors made a mistake and to abandon the Albany County Nursing Home. Thus, the commitment to a tax-based subsidy cannot be relied upon and the Department and Council cannot make exceptions to the financial feasibility test. (Though not relevant to the Albany County case, as public authorities, such as the Health and Hospitals Corporation are separate corporations rather than governments arguably this limitation may not apply to such entities.)

The financial feasibility test has the following public purposes.

  • First, the certificate-of-need (CON) process grants rights excluding others based on the long-term expectation of availability of the services proposed. Granting a CON, for which there is a reasonable probability that the project in question will not be available to serve the public for the planned period, potentially locks a system into less than necessary capacity to serve the public and undermines the planning process.
  • Second, the capital component of the Medicaid payment rates favors governmental (and non-profit) providers by front-loading capital reimbursement. Specifically, as reimbursement is based on depreciation plus interest, while the County’s debt service cost is based on amortization plus interest, sponsor’s cash flow is positive during the first two decades or so, it is negative during the balance of a facilities useful life. In effect, Medicaid is making a front-end investment for a longer-term. Were a sponsor to abandon a facility or program before the end of its useful life, the capital component of the Medicaid rates would have to be restarted with another front-loaded investment. Clearly this makes no sense for Medicaid. Moreover, the longer a facility is operating the bigger the gap and the greater the incentive to abandon such a facility.

Both of these purposes are undermined by the practice of allowing potential but uncertain local tax subsidies to be used to meet the financial feasibility test.

Even the obligation to repay funds borrowed to build a new facility would not bind the County to operate a facility, but merely to repay the debt. This is particularly so in this case as the projected operating losses are so much greater than the capital costs that the County could borrow, build a new facility, close the existing facility and still be better off financially were it to never operate the new one.

Since the deferral, the Department of Health has released its new reimbursement methodology, which does indeed suggest modestly worse numbers than the already huge losses previously projected. However, much more important, but not taken into account are the major changes in State Medicaid policy enacted in 2011.

The much more significant Medicaid changes are the planned movement of the long-term care population into various forms of managed care and managed long-term care. Though the current arrangements may be fluid, we should assume that a managed care model will reduce the demand for nursing home capacity and reasonably soon will allow managed care plans to make their own price arrangements with participating institutions. In that case, more expensive facilities, which ACNH would clearly be, would be at a severe market disadvantage. In that case, ACNH would suffer a significant decline in census – and even larger deficits – or it would be forced to further reduce its price below cost – leading to even larger deficits. In either case, Albany County cannot count on Medicaid paying even full capital costs, much less full operating costs.

Even the County’s relatively optimistic projections amply demonstrate with a $26 million loss (52 percent), a rebuilt ACNH is not financially feasible on its own. Far from it, the Council has not likely dealt with many, or any, projects that were as far from financially feasible as this one.

In addition to considerations of financial feasibility, due to questions that were raised during the earlier Committee meeting, you should be aware of the following:

  • The Berger Commission did not specify 250 beds; it required that Albany County Nursing Home be no greater than 250 beds.
  • Specifically for Albany County, the Berger Commission required new support of home and community based services. Both Federal and State policy, including the Governor’s recent emphasis on the spirit of the Olmstead decision also require movement toward and support of home and community based services. However, Albany County’s recent budget decisions have exactly the opposite effect. While increasing spending on its nursing home, it reduced appropriations for home care (EISEP) and home-delivered meals by 20 percent, and abandoned a new case management program that it had just implemented.

Even without the uncertainties created by moving Medicaid long-term care into the managed care realm, the extreme nature of the projected losses and the legal hollowness of the County’s “commitment” to use local tax funds to subsidize those losses make it more probable that a new Albany County facility will be abandoned long before the end of a new building’s useful life. This would make a determination of “financial feasibility” meaningless. Moreover, a subsidy that forces property tax increases well outside the bounds of current State policy on property tax increases. The application should be judged exclusively on the financial projections, without a County subsidy and it should be rejected.

Tagged as: Albany County, Berger Commission, Certificate-of-Need, New York, Nursing Home

{ Comments on this entry are closed }

Dancing Along the Edge – In the Dark

by John W Rodat on February 9, 2012

Dance too close to the edge … Well you know what happens.

When things are tight is when to be most careful, but wanting to avoid public acknowledgement of trouble, some public officials get closer to the edge and then topple over. It’s even worse, when public officials avoid the bad news and operate in the dark.

Here’s the first killer line from the State Comptroller’s report on the Town of North Greenbush for the period, January 1, 2009 to May 31, 2011:

The condition of the Town’s financial records was not sufficient to determine the Town’s true financial condition.

Here’s the second killer line:

The Board and Supervisor did not provide adequate oversight of the former Comptroller’s activities.

North Greenbush, NY was short of cash in the General Fund. So Michael Strenka, the Town Comptroller, transferred cash from other funds. Though whether the Town Board really knew what was happening, some members did and more to the point, there was no formal resolution authorizing the transfers and other procedural failures as well.

Danielle Sanzone of the Troy-Record writes:

In a scathing report, state Comptroller Thomas P. DiNapoli said the town’s finances are in such disarray it’s impossible to know its true fiscal condition and warned that without complete and accurate accounting it will have a difficult time allocating money this year.

…

According to DiNapoli, the town board failed to provide adequate oversight to Strenka who, without authorization in the form of a board resolution, made interfund transfers of $681,712 and more than $920,000 from the water and sewer funds to the general fund from 2008 to 2010. As a result, according to DiNapoli, the board could not monitor or manage town operations because it was not given complete and accurate information.

Strenka said when he started with the town in 2008, the general fund was in the red which is illegal and he had meetings with the board to discuss options. He said he remembered finding about $650,000 that could be transferred. Before doing so, though, the action was discussed by the board, but not at a public meeting, and the action was audited by a third-party firm.

“So I made the journal entries,” said Strenka. “In retrospect, I should have made a formal resolution to put before the full board to fully adopt the entries.”

…

According to DiNapoli, interfund borrowing is used to meet short-term cash flow needs. These loans are supposed to be approved by the board and be paid back by the end of the year, with interest, if the loan is between funds with different tax bases.

Starting in 2007-2008, probably close to every government in the country was in financial trouble during the period in question. Some, evidently including North Greenbush, adopted a “see no evil” stance. Now they’re paying the price.

Here’s a summary of the audit and a link to the full report.

Tagged as: Cash, Deficit, QOTD

{ Comments on this entry are closed }

A More Accurate & Richer Way to Think about Economic Growth, Budgets, & Other Forecasts

by John W Rodat on February 9, 2012

In the past four years, Nate Silver has done more than anyone else I can think of to bring the world of probability and statistics to the realms of politics. Oh, everyone reads polls, but Silver introduced a wider audience to many subtleties and to how to combine multiple polls into richer and more reliable results. He then combined state-by-state polls into a forecast of Electoral College results (thus, 538, the number of votes in the Electoral College) in the 2008 Presidential election. Unsurprisingly, Silver had previously applied his knowledge to sports statistics. The New York Times was smart to pick him up.

In one picture, Silver’s now introduced the depiction of probability theory in economic forecasting to a larger audience. Mind you, economists and analysts think this way. Probability is behind their work. But they (we) almost always hide the hard stuff from the larger audience.

So here’s Silver’s Hypothesized US GDP growth, published by Joe Weisenthal at Business Insider.

Nate Silver Hypothesized US GDP Growth.png

The left (vertical) scale is not labeled. It’s probability. So it’s possible that there will be zero growth, but it’s less likely than two percent growth and less likely than three percent. But no growth is more likely than seven percent growth and more likely than a four percent decline. The exact placement of the curve is less important than its general location and its shape.

Combine a shaped forecast, i.e., one based on probabilities with another shaped forecast and you have a forecast richer still. With such forecasts, you’ve added an extra dimension so that you can say, “we believe the probability that our total revenue will exceed X is Y percent, but that it will be less than another value by Z percent.” On the expenditure side, this is the essence of what actuaries do for health plans: forecast rates of medical service use and the costs per services. Another, public sector example might be, a probability-based forecast of welfare caseload times a probability-based forecast of the benefit cost per client.

Regardless of whether you’re the decision maker yourself or providing forecasts to someone else, it’s useful to go through the process and useful to having a more structured, risk assessment with your forecast.

You will find some for whom this is too much, either because they can’t grasp it or they’d rather not know. For years, one of my mantras for presentations was “you can’t get into trouble treating your audience as intelligent and thoughtful. If nothing else, most will consider it a compliment.” I was wrong of course; I did get into trouble in Albany County, NY, where the Legislative leadership actively wanted less information and wanted what they did get dumbed down (if not outright distorted). So we did do some probability based forecasts, but we never shared them. Nevertheless, going through the process was useful.

Tagged as: Budget, Economics, Kudos, Monte Carlo, Probability, Projections

{ Comments on this entry are closed }

Remember “Stages of a Project”?

by John W Rodat on February 8, 2012

It appears that Schenectady County is moving ahead with building a new nursing home. Too bad.

If it gets done, it will be just under the wire.

The closer Schenectady has gotten to re-building, the more County leaders have made their discomfort explicit. Many will now say in private that it’s a mistake, but having gotten out on a political limb by over-promising, they can’t reverse their positions in public.

If they’re already regretting the decision before a new facility is built, imagine what it’s going to be like afterwards. It reminds me of some wag’s description of the true stages of a project:

  1. Wild enthusiasm, euphoria and excitement
  2. Disillusionment and disenchantment
  3. Total confusion (optional stage?)
  4. Search for the Guilty
  5. Punishment of the Innocent
  6. Reward for the Uninvolved

In this case, buyer’s regret (stage 2) is setting in even before the actual purchase. If Schenectady doesn’t regret this decision, they should. Much has changed since their initial decision, most notably a complete redirection of long-term care financing in New York’s Medicaid program. By the time a new facility is in operation, rather than fee-for-service, most of long-term care will be financed and operated within a managed care framework. The rest will follow quickly.

We tend to be analytical, even geeky here and we’ve done a lot of careful calculations to show why building new county operated nursing homes is a bad call. But especially when considering the finances and the burden on taxpayers, there’s a much simpler way to think about it. Can you imagine that all of a sudden, the State and Federal governments will stop, smack themselves in the forehead and say,

“damn, we’re making a terrible mistake. We really should be radically increase what we spend in Medicaid for nursing home care”?

No, neither can I. So county nursing homes will inevitably lose even more money than they’re losing today.

It’s possible, even likely that Schenectady’s will be the last county nursing home built in New York for at least a generation. And that means that Albany won’t build a new one. More on that later today.

Tagged as: Albany County, New York, Nursing Home, Schenectady County

{ Comments on this entry are closed }

← Previous Entries

Next Entries →