Rhode Island Employment Snapshot, February 2013: Mixed, Stagnant Picture

For the first time in years, Rhode Island’s unemployment rate is out of the bottom three for the nation, down to 9.4%.  Once again, however, the Ocean State’s “improvement” hinges on a loss of people in the labor force.

The first chart below shows that, while employment edged up in February, the total labor force (those either employed or looking for work) continued to fall.  February’s number was down, and at the same time, January’s number was revised downward, as well.  If the labor force had held steady from December, Rhode Island’s unemployment rate would still be a worst-in-the-country 9.8%.

The second chart shows that the Ocean State still has a long way to go to reach its January 2007 level of employment, and once again remains well behind Massachusetts and Connecticut, although Connecticut has been closing the gap through its own downslide.

Rhode Island Labor Force and Employment, January 2007 to February 2013


RI, MA, and CT Labor Force and Employment, February 2013 Percentage of January 2007

RI Medicaid Abuse Puts New Spin on “Laundering” Taxpayer Dollars

MEDIA: NBC- Channel 10, ABC Channel 6

The State of Rhode Island has developed a new spin on the idea of “laundering” money, as part of the cycle of taxpayer dollars that end up in the pockets of the special few, according to a follow-up post today on The Ocean State Current, the journalism wing of the RI Center for Freedom & Prosperity.

According to the post by Justin Katz, some unionized laundry workers at the Eleanor Slater Hospital, and throughout the Department of Behavioral Healthcare, Developmental Disabilities and Hospitals (BHDDH), routinely double or even triple their salaries to take home over $123,000 per year, due to suspiciously high overtime payments.

The post follows an investigative article published yesterday in The Ocean State Current about six-figure overtime payments to government employed nurses and psychiatrists.

These new laundry worker revelations depict the waste and abuse in the laundering scheme where local and national taxpayer dollars are recycled first through the government via collection of taxes, then, in the Eleanor Slater case, sent to state-run facilities in the form of excessive Medicaid payments, with the money then further cycled directly into the pockets of privileged union employees – in this case, to laundry workers via exorbitant overtime payments.

Result: our hard-earned taxpayer dollars legally recycled to lavishly benefit government workers.

The data for The Current’s article and post was collected by the Center, as part of its transparency effort.For more information about salary and overtime payments made to other state employees, please visit our popular transparency website, www.RIOpenGov.org.

High Overtime, Evasion Raise New Questions About Medicaid Fraud and Waste

Related Links: GoLocalProv, New Allegations Surface in RI Medicaid Fraud

In the wake of an investigative article published this morning in The Ocean State Current about suspiciously high overtime payments to government employed nurses and psychiatrists, the Rhode Island Center for Freedom and Prosperity plans to publish additional related information in the coming week.

Considering that public dollars are being paid to government workers who, for years, have collected six-figures in overtime from a facility that was cited in a recent Medicaid fraud and waste report, “one really has to wonder if the State of Rhode Island is defrauding itself: at taxpayer expense”, commented Mike Stenhouse, CEO for the Center.

The recent Block Report cited the Eleanor Slater Hospital in Cranston, a state-run facility that charges abnormally high fees, as a potential source for abusive Medicaid spending. In her article, Suzanne Bates, a freelance journalist, details how nine employees at that same facility received over $100,000 in overtime compensation alone, pushing gross annual pay for some to over a quarter-of-a-million dollars.

The article also describes the difficulties Bates and the Center faced in getting an explanation and in obtaining the data. The investigative article raises questions that go to the heart of our state government’s inability to manage its budgets in a way that serves all Rhode Islanders:

  • Why would the state-run Eleanor Slater Hospital, in Cranston, be so short-staffed that it must pay over one million dollars in overtime to just 9 employees year after year?
  • Is our state truly being served well if union contracts make it more cost-effective for the Dept. of Behavioral Healthcare, Developmental Disabilities and Hospitals (BHDDH) to pay exorbitant overtime to some, rather than to hire more people during these hard economic times?
  • If taxpayers are ultimately paying almost the entire bill for this expensive workforce through both state and federal Medicaid dollars, where is the oversight to keep these costs under control?

Later this week, the Center plans to publish a broader list of overtime payments made to other state employees. Next week, the Center plans to launch a new module – that lists regular and overtime compensation for all state employees – to its popular transparency website, www.RIOpenGov.org .

The Ocean State Current is the journalism wing of the RI Center for Freedom & Prosperity. The data for The Current’s article was collected by the Center.

Zero.Zero 2013

ELIMINATE THE STATE SALES TAX TO CREATE JOBS: The RI Center for Freedom & Prosperity proposes the elimination of Rhode Island’s sales tax as a means of high-impact economic development. Our RI-STAMP economic model suggests that the loss in state revenue would not be as large as static projections might suggest and would be well worth the boon to Rhode Islanders across the state.

Second-Year Report Card: Lack of Bold Action = Lack of Improvement

Related Links: 2012 Report Card

It isn’t surprising that a year of no bold legislative or executive action to free the Rhode Island economy or education system from its shackles, or to lighten the heavy hand of government, was a year of no significant improvement in the RI Center for Freedom & Prosperity’s annual Report Card on RI Competitiveness.

What changes the Ocean State saw in the report card’s ten major categories came in large part due to changes of the subcategories, a technical change in the Center’s methodology, and tiny shifts that were able to cross a line into a new letter grade.  In 2012, Rhode Island had five grades of F, two of D-, two of D, and one of D+. In 2013, the tally is three of F, four of D-, one of D, and two of D+. (One of the lost Fs was purely a change in the method of ranking states.)

The sheer number of below-average grades does much to explain Rhode Island’s continuing economic decline and population exodus.

“For all the talk last year about the positive legislative steps we supposedly took, the state’s dismal grade point average has barely moved”, said the Center’s CEO, Mike Stenhouse. “We’ve all seen the depressing headlines, but when compiled into a single report, the report card shows how poor public policy is strangling economic opportunities for families in our state.”

The report card organizes 53 national rankings into the following major categories:

  • Tax Burden (D-)
  • Business Climate (F)
  • Spending & Debt (D-)
  • Employment & Income (D-)
  • K-12 Education (D+)
  • Energy (D+)
  • Infrastructure (F)
  • Public Sector (D)
  • Health Care (D-)
  • Living & Retiring in RI (F)

Whether the decision is thoroughly researched or simply based on impressions, these are the categories on which the Ocean State is judged when businesses and individuals make important decisions about their lives and their economic well-being. Having the information all in one place may be discouraging, but it gives those with a vested interest in the health of the State of Rhode Island clear guidelines for what problems must be addressed.

Rhode Island Employment Snapshot, January 2013: RI Improves by Losing

With the help of a revision in the way the U.S. Bureau of Labor Statistics (BLS) calculates its results, Rhode Island’s unemployment rate fell below the 10% barrier in December for the first time in years. And with the help of people giving up their quest for work, it notched down to 9.8% in January.  That’s despite the fact that the state’s total employment fell for the first time since September 2011 (according to the revised numbers).

The first chart below shows that both labor force and employment turned downward in January, but since labor force fell even more than employment, the number of people who are technically “unemployed” went down as well. The second chart shows that the Ocean State still has a long way to go to reach its January 2007 level of employment, and once again remains well behind Massachusetts and Connecticut, although Connecticut has been closing the gap through its own downslide.

Nationwide, Rhode Island is still tied for the worst unemployment rate in the country, no longer with Nevada, however. The Ocean State’s last-place partner is now California, although the Golden State’s reason couldn’t be more different: California has been adding employment, but people are entering (or returning to) the workforce too quickly for the unemployment rate to go down.

Rhode Island Labor Force and Employment, January 2007 to January 2013

RI, MA, and CT Labor Force and Employment, January 2013 Percentage of January 2007

Commentary: Zero out sales tax to change R.I. game

by Mike Stenhouse. As appeared in the Providence Journal, March 4, 2013

For perhaps the first time in recent memory, the Rhode Island General Assembly will consider legislation that could have a profound positive impact on the lives of virtually all residents and businesses in the state. Rhode Island families are being torn apart. Parents, children and siblings are being driven out of the state in search of good work or retirement at a more reasonable cost of living. Businesses struggle in our uncompetitive business climate. With some of the worst job outlooks and population trends in the entire nation, the Ocean State is in dire need of “out of the box” thinking to restore financial security and hope for a brighter future for our home state.

The recommendation by the Rhode Island Center for Freedom & Prosperity to eliminate the state’s 7 percent sales tax, which would bring shoppers and retail and construction jobs back, keeping our families and businesses intact and at home here in the Ocean State, has resulted in bipartisan legislation submitted last month in the Assembly.

A 0.0% sales tax would bring an economic boom to RI

Those who defend the status quo, though they themselves pledged that the economy would be their No.1priority for the 2013 legislative session, argue that we should be “boxed-in” by a demonstrably failed state budget.Think of the numbers 50-50-50-1. Depending on the index, Rhode Island ranks at or near: 50th in employment; 50th in population out-migration; and 50th in business climate — all because it ranks first in the category of redistribution-of-income policies. This makes the Ocean State the most anti-free-market, anti-family, anti-jobs state in the entire country. No wonder Rhode Island is in a death spiral, with fewer and fewer productive people to support an ever-increasing and burdensome budget.And it is this very budget that opponents of our sales-tax-repeal plan point to as reason not to create tens of thousands of new jobs, not to breathe new life into our economy and small-business sector, not to reduce the cost of living for every family (especially helpful at lower incomes), and not to provide local municipalities with $150 million in annual windfall revenue.But Rhode Island is not about numbers, or a budget, or government: It is about real people, with real lives, who suffer real consequences as a result of poor public policy. Dare to imagine a brighter future for Rhode Islanders, where public policy, for once, works in their favor.

Imagine the headlights on highways Route 95 and Route 195 jammed with traffic of shoppers and families coming into the Ocean State, instead of the tail-lights of those heading out.

Imagine the thousands of unemployed who will be able to earn a paycheck instead of a welfare check.

Imagine $900 million left in the pockets of area shoppers to reinvest in the local economy.

Imagine the new shoppers, higher revenues and profits, and lower compliance costs for local businesses.

Imagine Rhode Island businesses competing regionally and stepping to the plate without a proverbial 7 percent weight on their bats.

But the ruling class in Rhode Island has no such imagination. All its members can see is the $900 million in sales-tax revenue that might be lost from their prized budget; $900 million less that they can hand out to preferred insiders. This is not leadership but fear of upsetting the apple-cart by hiding behind the limitations of a failed, job-killing budget.

But lo, the Center for Freedom & Prosperity has crunched the numbers and found that the ruling class’s sacred $900 million obstacle is imaginary. In reality, our estimates suggest that it would take only $105 million in budget savings in fiscal year 2014 to implement this game-changing reform. The legislation on the table would eliminate the sales tax as of Oct. 1 of this year. That means the state would still cash in on the busy summer tourism months, even as the people and stores of Rhode Island see their holiday shopping dollars go further.

Then, if political leaders were serious about making the economy their No. 1 priority, they would apply last year’s budget surplus to help pay for repeal of the sales tax. And if the political class was serious about making jobs its number one priority, it would likewise freeze the 2014 budget at 2013 levels.

And finally, by realizing the huge projected increases in other taxes and fees because of the massive economic boom the state would see, just under $105 million in savings would remain to be found in the budget to put Rhode Island on a fast path to growth and renewed vitality.

Repeal of the sales tax is not a budget-busting reform policy by any stretch of the imagination. This is a win-win solution for the state of Rhode Island. Imagine that.

Mike Stenhouse is CEO for the Rhode Island Center for Freedom & Prosperity, a free-market public-policy think tank.

Center Estimates Waste & Fraud in Rhode Island be as High as $185 Million

The release by the Chafee Administration of a redacted report on waste and fraud in Rhode Island’s human services programs failed to provide the total taxpayer dollars discovered by Ken Block’s Simpatico software firm that were spent on illegal or other inappropriate activity; instead the report was limited to examples of impropriety and generalities of findings within the state’s Medicaid and food-stamp program.

Based on a brief analysis of related national findings and anticipated state budgets, the RI Center for Freedom & Prosperity estimates that up to $185 million dollars may be currently wasted in the Ocean State. With planned Medicaid expansion, this total could approach a whopping $221 million in future years, almost three times the amount of the 38-Studios debacle … every year.

The biggest portion of the fraud likely comes from Medicaid abuse. Common estimates of such waste and fraud nationally assume that 10% of related spending applies. In our updated report on the Zero.Zero sales tax initiative, the RI Center for Freedom & Prosperity referred to a U.S. House of Representatives Committee on Oversight and Government Reform document that uses that number.

Estimates from the federal Department of Health and Human Services, however, put current “improper payments” at 7.1%, with 6.4% as the target.

The governor’s budget document for fiscal year 2014 revises the current estimate of what the state will spend this year on “medical assistance” (i.e., Medicaid) to $1.616 billion, going up to $1.743 billion next year. Using the 2013 estimate puts the range for waste, fraud, and abuse for Medicaid alone at between $114.7 million and $161.6 million.

The other large portion of wasteful government spending in the report pertains to the food stamp program – also known as the “Supplemental Nutrition Assistance Program” (SNAP) – which uses electronic benefit transfer (EBT) cards to distribute the funds.

As predicted by a post in The Ocean State Current prior to the report’s release by the Chafee administration, and based on report on government waste that U.S. Senator Tom Coburn (R, OK) published in October, dead people in Rhode Island often receive food-stamp benefits.

Coburn’s report actually provides a low-end, for our purposes, estimating around 3% in “improper payments” nationwide. The more official number from the Department of Agriculture is 3.8%, however the Associated Press reported that Rhode Island’s “error rate” for the food stamp program in 2012 was 7.69%.

Governor Chafee’s revised expenditure for SNAP in 2013 is $298.2 million, recommended to hold steady through 2014. That puts the range for food stamp waste, fraud, and abuse between $11.3 million and $22.9 million.

In summary, our Center estimates that the total amount of criminal and abusive activity in Rhode Island’s current human services programs is in the range of $126 million to $184.5 million.

However the story does not end with today’s figures. With the Governor, Lieutenant Governor, and the Secretary of Health and Human Services opting to support expansion of Medicaid, as provided under the Affordable Care Act, the RI Center for Freedom & Prosperity expects that an additional $36.5 million of taxpayer money will be abused as part of the anticipated $365 million in new Medicaid spending in future years.

This could bring the total amount of waste and fraud up to $221 million per year.