Tracking the Stimulus: Ten Months Later, a Sustainable Model for Recovery?
STIMULUS
Worcester Telegram & Gazette
Jessica Leving
Boston University Washington News Service
Dec. 4, 2009
WASHINGTON—Ten months after President Barack Obama signed the stimulus package into law, the Worcester area’s $90 million portion of the aid is in full swing, paying for a variety of projects from police and teacher jobs to new public buses to scientific research.
But some critics wonder: How effective has the stimulus really been in jump-starting Worcester’s economy? Can these projects sustain themselves when the funds run out, or are the current measures just a Band-Aid?
It makes sense to use stimulus funds for one-time expenses, said Roberta Schaefer, president of the Worcester Regional Research Bureau, a private non-profit group that analyzes public policy issues. “But putting it into recurring costs like teacher salaries…what are you going to do when you don’t have stimulus money? If [the stimulus] is just going to prop up existing institutions without making any changes in how they operate, it can’t be sustained. That’s a really big problem.”
In particular, Ms. Schaefer pointed to the stimulus funds – approximately $27.3 million – that were funneled into the Worcester Public Schools and reportedly saved around 500 jobs.
“The school department got stimulus money that stemmed the tide for them,” she said. “Next year, because there will be no stimulus money, they’re facing a $26 million deficit without any way of funding it. The stimulus money, in effect, just delayed the inevitable.”
The economic crisis earlier this year caused traditional revenues to plummet for the Worcester Public Schools as well as other Worcester institutions. When the economy rebounds, stimulus recipients expect those revenues—particularly in the form of property taxes, state aid and, for some, profits–to return.
(All numbers cited for stimulus dollars are based on the federal government’s spending reports through October on Recovery.gov, the official Web site used to track the stimulus funds, unless otherwise noted.)
Brian Allen, chief financial officer for the school system, confirmed that the department has projected a $26 million deficit for next year but said that the exact amount is not yet known.
“What we’re doing now is working with the school community, developing budget priority, and looking at ways to restructure the delivery of service,” he said. “We don’t have recommendations yet. I think it’s going to be a combination of cuts across the board.”
Though Mr. Allen said he does not know where funding for rescued teacher salaries will come from without stimulus money, he said he could not fault the state government for using stop-gap measures.
“[The stimulus] was in anticipation that the economy would rebound,” he said. “But we haven’t seen that happen.”
Similar questions have arisen over the sustainability of the $1.9 million in aid to the Worcester Police Department announced Nov. 23, especially the 25 police officer jobs that were saved after layoffs were scheduled for November.
Police Sgt. Kerry F. Hazelhurst said attrition and careful overtime planning will carry the officers into the next fiscal year.
As far as what will happen after that, he said, “We’re hoping by then we get additional money coming in. We’re hoping the economy turns around.”
Jeffrey A. Simon, director of infrastructure investment for Massachusetts Recovery, the state unit that tracks stimulus funds in Massachusetts, admitted that some of the federal money amounts to “riding out the storm” and waiting for the economy to improve.
“We don’t want to have this funding cliff that towns fall off of in 27 months when the stimulus money is gone,” he said. “We absolutely take that into account. But when you’re dealing with job creation, it gets much more difficult to take that issue into consideration. We feel if we can save those jobs the economy will improve to where the cuts will not be necessary.”
Worcester-area congressmen, who voted for the stimulus, said they stand by their decision and are pleased with the stimulus progress.
“I voted for the stimulus because it was clear at the time that something simply had to be done,” said U.S. Rep. John W. Olver, D-Amherst. “Everything is moving forward as envisioned. In Massachusetts, we’ll see quite a few of these projects move into the construction phase come spring.”
U.S. Rep. James P. McGovern, D-Worcester, said use of the stimulus funds to stave off layoffs was appropriate.
“There are two challenges: one, to stem off immediate crisis and two, to invest in more jobs for the future,” he said. “Not investing in teachers would have been detrimental to our ability to create jobs in the future. You need to keep people working right now but you also need to be able to invest in industries. This stimulus tried to do both. If I had written a stimulus package it might have been different, but… if anybody tells you this stimulus package didn’t work, they’re not looking at the facts. Countless jobs were saved and created. Without it the economy would be much, much worse.”
Some agencies have more readily available sustainability models than others. The Worcester Regional Transit Authority, for example, which received $12.4 million—14 percent of the total funds allocated to Worcester—is using the money to pay for 18 new buses, four of which will be hybrid diesels, clarify as well as upgraded technology and consultants hired to discuss possible reorganization measures.
“We’ll save money in two ways,” said Stephen F. O’Neil, WRTA administrator. “We’re ridding ourselves of old buses, which means less repairs, and we’re getting a new system where we’ll be able to monitor buses on a more frequent basis to determine when items need to be repaired. We’re also looking at a 25 percent increase in mileage on our buses, and acquiring automatic passenger counting so we can make adjustments to service runs that will better accommodate the public.”
Mr. O’Neil said a consultant has also been hired to discuss the possibility of moving the transportation hub from City Hall to Union Station, where passengers could more easily make connections to other trains and buses. A new building could also implement solar- powered technology, he added.
The Great Brook Valley Health Center received two awards that will end up paying for themselves, according to John Hess, vice president of planning and development. The center, which received $1.4 million, about 1.5 percent of the total aid to Worcester, used the bulk of the first grant to hire doctors and support staff for more than 14 new positions.
“These providers will generate revenue from [the insurance plans] of the people they see,” Mr. Hess said.. “Once their practices are going full-tilt, they’ll generate enough to pay their own salaries.”
The second grant was used specifically for facility improvements, which Mr. Hess said will create space for the new providers and generate more patient visits.
“This is one-time boost money to get us going and get us serving more patients,” said Toni McGuire, president and CEO of the center.
A large chunk of the federal grants in Worcester, more than 25 percent, has gone to research at local universities. The University of Massachusetts Medical School has received 79 grants to date from the National Institutes of Health, totaling $36.6 million, according to the most recent university report.
UMass Medical School Chancellor Dr. Michael F. Collins said in a statement that every dollar invested in medical research yielded at least twice that amount in growth in payrolls, supply purchases and support staff.
Other schools such as Worcester Polytechnic Institute and Clark University also received funding for research projects.
At Clark, more than $674,000 in funds is being used to study a range of projects, from the transition to adoptive parenthood for lesbian couples to why Latino men under-utilize depression treatments.
“Federal research grants typically have a project lifespan of three to five years, after which the grant expires and the researchers seek new funding,” said Jane Salerno, spokeswoman for Clark. “These stimulus grants are similar. When the stimulus funding has expired, our researchers will continue to seek alternate funding from public and private sources.”
The Worcester Housing Authority has used its $4.6 million grant for large-scale facility improvement projects such as roofing and rehabilitation.
Raymond V. Mariano, executive director of the authority, said these projects are one-time fix-ups and “there is no sustainable cost there.” For example, he said, “We just replaced the roofs. That will last for 20 years.”
In recent weeks, the Recovery.gov web site has been criticized for widespread reporting errors and exaggerated figures for job creation.
An analysis of the Worcester data did not find any major hiccups, but the massive Recovery.gov spreadsheet detailing area projects was not error-free.
Most glaringly, Community Builders Inc., a nonprofit urban housing development, listed 23 jobs created twice—once for each grant—reporting a total of 46 jobs for only 23 positions.
Data such as the awarding agency and project description was also missing from several grants, though the information could be tracked down by searching other databases by award code number.
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