As the legislative session comes to a close, hopes are high that lawmakers will advance the cause of reading education by allowing the Indiana Department of Education to end social promotion from 3^rd to 4^th grade if students aren’t reading at grade level.  Reading is the basic skill that makes all other learning possible – it’s common sense that if students are falling behind, schools should be obligated to get them the help they need to catch up rather than simply passing them along and compounding their struggles.

Unfortunately, some defenders of the current system would rather pay lip service to reading reform than accept the core responsibility of teaching our kids.  For example, John Ellis, executive director of the Indiana Association of Public School Superintendents, recently penned an editorial in the Indianapolis Star that rejects the idea of retaining students who can’t read at the end of third grade.

The Indiana Department of Education and State Board of Education have made early reading education a top priority.  They’ve endorsed a policy framework that includes increased classroom time allocated to reading, intensive professional development for teachers on research-based reading instruction, and tools for assessing student reading proficiency on an ongoing basis in grades K-3, to catch problems early and devote more existing resources to struggling readers.

Under this model, retention is a last resort – a final opportunity to get students back on track with more intensive instruction on reading (not just holding back students in the same classroom with the same approach).

Mr. Ellis conveniently ignores this broader strategy and issues dire predictions of ‘mass retention.’  But if reading is the most important activity in our classrooms, and schools have 3,500+ hours of instruction from kindergarten to 3^rd grade within which to teach kids to read, how little confidence must Ellis have in our public schools – his constituents – to fulfill their fundamental duties? 

He also attempts to undermine the progress made in Florida, which ended social promotion as part of an approach similar to what Indiana envisions.  Florida actually climbed from 31^st to 21^st in 4^th grade public school reading scores from 2002-2007, cutting failure rates by a third.  (During the same time, Indiana slid from 15^th to 27^th in national reading scores.)  He implies that minority students were left behind by the Florida reforms – in fact, African-American, Latino, and low-income students all improved their reading performance in Florida from 2003-2007 while closing the ‘achievement gap’ with the general student population (Gauging the Gaps: A Deeper Look at Student Performance – The Education Sector).

Questionable statistics are a poor answer to inarguable logic:  Our schools must teach their students to read. Absent new instructional strategies and measures holding them accountable, the job won’t be done.

Ellis reaches a rhetorical low when he says that the retention policy would ‘label our children as failures.’  No one is calling children failures.  It’s our schools that are failing too many of their students, and this has to change.

Mr. Ellis closes with an excerpt that cites more questionable studies and asserts that “…learning is difficult when leaders or anyone else is driven by ideology.”  I’d submit that the issue here isn’t ideological, but it does involve two competing philosophies:  Ours embraces accountability, his seems wedded to the status quo.  When it comes to preparing future generations of Hoosiers to succeed in school and in life, we can’t afford the latter.

I’ve written about CICP’s strong support for ending social promotion from 3^rd to 4^th grade unless Hoosier students are reading at grade level – the cornerstone policy of an overall emphasis on reading education that will refocus resources, implement new teaching strategies, and leverage community programs to ensure that every child learn to read.

This policy still has life in the waning days of the legislative session, and we’re pleased that Indiana’s senior Senator, Richard Lugar, has weighed in on behalf of this critical education reform.  Read Senator Lugar’s excellent statement here.

CICP director and State Board of Education member David Shane also penned this editorial on the effectiveness of retention policies for the Indianapolis Star; ending social promotion was a key drver behind the remarkable turnaround in reading achievement in Florida over the last decade.

As the legislative session draws to a close, lawmakers have a choice:  Will they demand that Indiana’s schools teach every child to read, or will they continue to allow tens of thousands of students every year to fall through the cracks, relegated by poor reading skills to a life of likely poverty and lost opportunities? 

Last week, our Central Indiana Transit Task Force publicly released its final report, presenting its recommendations to policymakers and the citizens of the region.  This report lays out a regional multi-modal transportation system with financing and governance recommendations, backed up with a rigorous cost-benefit analysis.  Now that the Task Force findings are in the public domain, we’re kicking off a year-long input campaign  – Indy Connect – that will invite a dialogue about Central Indiana’s transportation future, using our plan as a starting point.

I’d like to again thank co-chairs Al Hubbard, Bob Palmer and John Neighbours for their leadership, and all of the Task Force members – including CICP co-chair Jo Ann Gora – for their energy and insight in crafting this impressive study.

Their work will serve the region well.  We’ve lacked an integrated, forward-looking plan for regional transportation, and have paid the cost in terms of economic competitiveness, workforce connectivity, the vitality of our urban core and the potential for new investment and neighborhood redevelopment.  Our blueprint addresses all of these issues; now it’s up to elected officials and the public across the region to make the plan their own and decide if they’re willing to invest in it.  Please offer your two cents at indyconnect.org.

As the public thinks about transit, it’s important to understand the tremendous economic development impact that transit can have – I hope you’ll take a moment to read this excellent editorial from this weekend’s Star from Chuck Cagann of Mansur Real Estate, a Transit Task Force member, that addresses this issue:

Transit investments mean economic payoffs

When we think about economic development, we're likely to focus on tax breaks and other incentives for growing companies, competing against other regions for business opportunities.

That's true, but it's only one part of a bigger picture.  I'd argue that economic development has to be tied to what kind of community we want to build for ourselves and our families:  Do our citizens have access to diverse job opportunities?  Is our region growing?  Do we have great housing options, with thriving retail establishments and other amenities to serve our neighborhoods?

If we embrace this broader definition of economic development, then it's clear to me that a strong regional mass transit system is an important catalyst.

I was proud to serve on the Central Indiana Transit Task Force, a private sector-led group that last week unveiled a comprehensive transportation plan that includes strategic highway investments and an expanded regional bus system connected with light rail to serve the metropolitan area.

As business leaders, we understand a good investment when we see it – regional mass transit is an investment that will pay off in a healthier economy for employers, for taxpayers, for all of us.

Mass transit has been shown to create significant economic investment, as dense commercial and residential development grows along the transit lines.  For example, the Portland streetcar system has generated $1.4 billion along its 4.7 mile loop since 2001, a handsome return on its $300 million cost.  In Cleveland, more than $4 billion in private development is planned or in progress along the Euclid Avenue light rail corridor.  In Dallas, another $4.2 billion in business and new housing sprang up along the DART (Dallas Area Rapid Transit) system between 1999 and 2007.

This transit-oriented development boom can lead to higher property values and a broader tax base, easing the burden for other homeowners and businesses.  In Dallas, for example, high-value development along the DART lines is generating an estimated $127 million in additional tax revenues every year.  In Arlington, Virginia, half of all county property tax revenues are generated from its METRO transit corridors – allowing the county to maintain the lowest property tax rates in the region.

The right system will help our region attract and retain talented people, the skilled workforce that is a magnet for new business opportunities in our knowledge-based economy.  The regions of choice for educated workers provide diversity, arts and culture, an array of recreational amenities.  These regions also offer transit options – the ability to walk or bike to a rail or rapid bus station, to work on your laptop or chat with friends on the way to work.

By allowing employees to get to work more efficiently and affordably, a truly comprehensive regional system also allows local businesses to access a broader workforce, while giving commuters more disposable income to reinvest in the local economy rather than at the gas pump.

The Task Force strategy for mass transit is based on thoughtful planning and a rigorous cost-benefit analysis – but it’s only the beginning.  Now that this plan has been turned over to the public sector for action, every citizen will have an opportunity to weigh in during a series of public meetings and online at www.indyconnect.org. 

The dividends from investing in transit are many and far-reaching: Cutting commutes and putting more job opportunities within reach.  Connecting local businesses with more customers.  Spurring development that creates new jobs and tax revenues while rebuilding our neighborhoods.  The proposed transportation system may evolve over the next year, but it’s certain to be a winning economic development proposition  for all of us – please take part in the conversation and encourage your local elected officials to help turn this vision into reality.

Chuck Cagann is President of Mansur Real Estate Services; he serves on the Central Indiana Transit Task Force, which recently unveiled a strategy for a comprehensive regional transportation system.

The New Year has brought new opportunities for Indiana’s growing green manufacturing sector – the first few weeks of 2010 have seen several announcements that, collectively, show the momentum behind Hoosier manufacturing’s effort to electrify vehicles, make renewable energy sources a practical reality and more.

First, there was the news that Think North America had chosen Elkhart as the site of its first U.S. factory for its line of electric cars, joining Electric Motors Corp and NaviStar as the hub of a growing green vehicle cluster along Indiana’s northern border.

In Central Indiana, EnerDel – the only U.S. manufacturer of the cutting-edge lithium ion batteries that power hybrid and plug-in electric vehicles – announced a major manufacturing facility in Greenfield, Indiana, expanding a footprint that already includes its northeast Indianapolis headquarters and facilities in Hamilton County.  The Greenfield site will ultimately employ nearly 1,100.

Elsewhere, Brevini Wind (in Muncie) has earned $12.8 million in federal tax credits for its work manufacturing the gear boxes and other technologies for the turbines that generate electricity from wind.  Just two weeks ago, Secretary of Energy Chu visited Columbus to announce $54 million in federal stimulus grants to Cummins to increase engine efficiency.

Just like any technology-intensive, innovation-driven industry, a skilled workforce is a critical need for green manufacturing.  Here too, Indiana is moving forward – the state’s Department of Workforce Development recently earned a $6 million grant from the U.S. Department of Labor to create new curricula and retrain industrial workers from other sectors to take advantage of new green job opportunities.

Look for more announcements ahead from Indiana’s green manufacturing and clean technologies industries, as well as CICP’s Energy Systems Network initiative, as the state continues to solidify its position as a crossroads of energy innovation. 

Please take a moment to read the Indianapolis Star’s excellent editorial on Senate Bill 258, a measure which the Central Indiana Corporate Partnership strongly supports.

It’s perhaps obvious that reading is the defining skill on which all other education – and life success – depends.  The statistics are startling:  Only 2% of students who experience serious problems with reading go on to complete a 4-year college program.  Over 50% of people with the lowest literacy skills already live in poverty and over 70% are unemployed or have only a part-time job.  Nearly 70% of prison inmates nationally score below a fourth grade level of reading; 19% are illiterate.

In Indiana, approximately one of every four 3^rd graders fail the language arts I-STEP exam; we rank among the bottom half of states in National Assessment of Educational Performance (NAEP) reading tests as well.  There’s a clear connection between these failures in early reading and the fact that Indiana’s adult population is among the least-educated in the nation – a major economic handicap in our knowledge-based economy. 

The Indiana Department of Education is making reading education its top priority, exploring new resources and tools for educators to teach reading more effectively and measure student progress.  Private and charitable organizations support a network of extracurricular programs that support these goals – for example, the United Way’s “Success by Six” and “Early Reader’s Club” initiatives.

We also need public policy that supports reading success.  In reading education, 3^rd grade is considered the gateway year – as stated in the Star’s editorial, the last year that students learn to read, before lesson plans demand that they begin reading to learn.  According to the National Reading Panel, “Academic success, as defined by high school graduation, can be predicted with reasonable accuracy by knowing someone’s reading skill at the end of 3rd grade. A person who is not at least a modestly skilled reader by that time is unlikely to graduate from high school.” (emphasis added)

That’s why SB258 puts an end to social promotion from 3^rd grade to 4^th grade without demonstrating reading proficiency on the I-STEP exam.  This policy demands that schools teach every student to read, monitoring progress and allowing for special instruction from kindergarten on to make sure that the 3^rd-to-4^th grade threshold can be passed.

This policy has worked wonders in Florida, providing us a blueprint to emulate.  In 2002, the Sunshine State implemented a policy ending promotion of third graders who couldn’t read at grade level, implementing intensive reading instruction for retained students and other reforms; the results have been dramatic:

–      In 2001, 43% of Florida 3^rd graders failed to read at grade level or above as measured by FCAT (the Florida standardized test, akin to our I-STEP); in 2009 only 29% failed;

–      From 2002 to 2007, Florida climbed from 31^st in 4^th grade public school NAEP reading scores to 21^st, achieving the second highest positive change in NAEP scores in the nation; during the same time, Indiana slid from 15^th to 27^th in NAEP 4^th grade reading;

–      Using the non-promotion policy and focused intensive instruction, Florida cut is failure rates by one-third (FCAT 33%, NAEP 36%) in less than 10 years.

Florida’s path is clear – will Indiana follow? By requiring that schools meet their commitment to teach every student to read, SB258 is an important legislative component to our broader goal of giving future generations the best opportunity to succeed, academically and in life, by emphasizing what has been the called ‘the new civil right’ – the ability to read.

I hope you will take a moment to read the Indianapolis Star’s excellent editorial  on the fight for local government reform in the General Assembly.

The Central Indiana Corporate Partnership strongly supports reform.  Though the last legislative session was disappointing in its lack of progress on the broader Kernan-Shepard Commission recommendations, we have an opportunity this year to take at least a few small steps in the right direction  – focusing specifically on Indiana’s 1,008 township governments.

There are obvious ethics reforms that top this scaled-back agenda.  As lawmakers debate tougher ethics standards at the state level, they should also correct notable abuses among the townships.  It’s time to end nepotism in these offices, the widespread practice of hiring family members (often at exorbitant salaries).  (A review of public records show that two-thirds of township trustees share a last name with at least one person on their township payroll).  It’s also a clear conflict of interest to allow township employees to serve on the local legislative bodies that determine their budgets and salaries. 

As the state’s fiscal climate continues to worsen and county and municipal governments face a “one-two punch” from the recession and property tax caps, it’s also time for binding oversight of township budgets by county councils. 

Township governments spend more than $400 million a year statewide, and have over-taxed their way to more than $230 million in unused surpluses.  We’ve heard story after story of blatant waste, even fraud, in township finances.  At best, the system is inexcusably inefficient – for example, spending an average of eight times more in overhead than the typical private charity in Indiana to deliver every dollar of poor relief to the disadvantaged.

At a time when government at all levels must make tough choices, we can’t allow townships to continue taxing and spending unchecked.  Just as the Department of Local Government Finance approves county budgets, counties should oversee and approve township budgets.

We’re pleased that the Star continues to be a strong voice for reform, along with other media across the state.  With enough public attention and outcry from their taxpaying constituents, the General Assembly will move to reform a 19^th century system of local government to serve Hoosiers more effectively and efficiently today.

As we’ve reported in this space (here, here and here most recently), Indiana is making progress in building a more entrepreneurial economy, as measured by that most pragmatic of indicators – the amount of capital that private sector investors are willing to commit to the success of promising young companies.

The life sciences sector has led the way in this regard, and earlier this week our BioCrossroads initiative announced another major milestone in this journey towards a more diverse and dynamic ‘bio-economy:’ the creation of the $58 million INext Fund, the successor to the successful Indiana Future Fund announced six years ago as one of BioCrossroads’ first major initiatives.

INext, like the Future Fund, is supported by major institutional investors  - Eli Lilly, IU and Purdue, the Indiana State Teachers Retirement Fund, the University of Notre Dame and the Fairbanks Foundation – and will function as a ‘fund of funds.’  That is, INext will not invest directly in start-up firms, but rather in local and national venture capital firms that will in turn focus on Indiana opportunities.  This strategy lessens the risk to the Fund’s investors, and also attracts a broader pool of capital to Indiana. 

The Indiana Future Fund has been a rousing success, and support for the INext Fund shows the continued commitment among  the state’s corporate, public and university investors for continuing the strategy.  Here is the full press release on INext:

Indianapolis, Dec. 16, 2009 - Capitalizing on the continued strong growth of Indiana's life sciences industry and an active venture capital market, leaders from BioCrossroads, Eli Lilly and Company, Indiana State Teachers Retirement Fund, Indiana University, Purdue University, the University of Notre Dame, Richard M. Fairbanks Foundation, and Credit Suisse today announced the establishment of the INext Fund, a $58 million venture capital fund of funds.

Organized through BioCrossroads, Indiana's initiative to grow, expand and invest in the life sciences, and managed by the Credit Suisse Customized Fund Investment Group, the INext Fund includes investments from Lilly, the Indiana State Teachers Retirement Fund (TRF), IU, Purdue, Notre Dame, and the Fairbanks Foundation. This fund of funds is a capital pool that will invest in venture capital funds that are focused on the life sciences, thus encouraging and facilitating direct investment in Indiana life sciences opportunities.

"Six years ago, we launched the Indiana Future Fund to stimulate and grow Indiana's venture capital sector, and we've made incredible progress building a market where VC firms, both local and out of state, are investing in our promising life sciences companies," said David Johnson, president and CEO, BioCrossroads. "Launching a follow-on fund like the appropriately named INext Fund is proof of concept of BioCrossroads' mission, and evidence of the substantial market opportunities here in Indiana to put private equity to work. Capital formation is a huge problem for every region across the U.S., but Indiana's institutional investors have once again proven ready, willing and able to build and maintain strong funding sources for our entrepreneurial companies."

Lilly, one of the original participants in the Indiana Future Fund (IFF), has committed an investment in the INext Fund.

"The INext Fund will be a catalyst for the continued growth of Indiana's life sciences. Our investment in the fund is smart not only from Lilly's business perspective, but we also view it as a part of a collaborative effort to strengthen our community," said Bart Peterson, Senior Vice President of Corporate Affairs, Eli Lilly and Company. "Lilly's investment strategy is to find the best opportunities, and we look all over the world to find them. It just so happens that some of the best innovations are happening in our own backyard."

The Indiana Future Fund, a $73 million fund, has been the life blood of 14 Indiana life sciences companies, and continues to provide the foundation for Indiana's venture capital growth. The IFF has also been a trailblazer in securing additional capital from beyond Indiana for Indiana companies, helping to bring over $160 million to Indiana start-ups from venture capital firms across the country.

"Given the current challenges in the U.S. economy, building a return-driven fund of this magnitude is very impressive," said Phil Belt of Credit Suisse's Indianapolis office. "Indiana's life sciences industry is full of both promise and opportunity, and progress continues to be made. This state is now a life sciences leader and is on the map for venture capital firms from the east and west coasts and points in between."

Indiana has seen an increase in the number of entrepreneurial life sciences companies, both university-based and private start ups, since the formation of the IFF. One of the investments that the IFF firms made in 2006 was BioStorage Technologies, an Indianapolis based biomaterials storage and inventory management company. Since that time, BioStorage has tripled its workforce, announced a $6.1 million investment in a new facility in Indianapolis and will add another 125 employees by 2012.

"We brought this group of industry, university and community leaders together with a common goal -- to generate good returns on investment while doing good for our community," said Darren Carroll, vice president, Lilly New Ventures and chairman of the INext Advisory Committee. "This is how public-private partnerships work -- giving Indiana's life science companies the opportunity to compete and win in the global economy."

 "We continue to see promising innovations from our technology transfer offices more than 170 patents and 50 companies have come through the Purdue Research Foundation over the last six years," said Purdue University President France Córdova. "Having a vibrant venture capital community and bringing in new dollars from outside the state to help these companies grow is imperative. This funding builds the companies that will advance the life sciences and improve the health of Indiana's citizens."

Indiana University is tapping investments and private contributions to stimulate Indiana's economy. No tax or tuition dollars are involved. In early December, IU announced the formation of the $10 million Innovate Indiana Fund. "With incubators cropping up all over the state and breakthrough research coming out of our university labs, there continues to be great discoveries in our life sciences," said Indiana University President Michael McRobbie. "The INext Fund provides us with another way we can direct capital to talented and innovative companies and gives them another funding resource."

"By investing in INext, Notre Dame is supporting the advancement of the life-sciences industry in Indiana and throughout the nation, with the hope that this support will lead to new applications that will benefit the lives of many and also create successful businesses. It is a good investment from many perspectives," said Thomas Burish, Provost, University of Notre Dame.

Along with corporate and university investments, the INext Fund has received an investment commitment from Indiana's Teachers Retirement Fund as well as the Richard M. Fairbanks Foundation.

'Indiana's robust life sciences industry is one of the key drivers of our economy, and investing in INext is expected to deliver investment returns by capitalizing on that strength," said Steve Russo, Executive Director of the Indiana State Teachers Retirement Fund.

"The Richard M. Fairbanks Foundation is participating in the INext Fund both because we believe it is a good investment, but also because it is supportive of our goal of strengthening the economic vitality of our community," said Leonard J. Betley, president of the Richard M. Fairbanks Foundation.

About BioCrossroads
BioCrossroads (www.biocrossroads.com) is Indiana’s initiative to grow, advance and invest in the life sciences, a public-private collaboration that supports the region’s existing research and corporate strengths while encouraging new business development. BioCrossroads provides money and support to life sciences businesses, launches new life sciences enterprises (Indiana Health Information Exchange, Fairbanks Institute for Healthy Communities, BioCrossroadsLINX, and Datalys Center), expands collaboration and partnerships among Indiana's life science institutions, promotes science education and markets Indiana's life sciences industry.

The Tax Foundation has released its annual State Business Tax Climate Index for 2010, with good news for Indiana – we advanced two positions in the rankings, from 14^th to 12^th, and continue to lead the Midwest in business tax competitiveness.  Download the Executive Summary here and view the full report here.

While ‘business climate’ is an increasingly complex concept in today’s knowledge-based, innovation-driven economy, taxes still matter to companies seeking a hospitable location to locate and grow.  This latest news is certainly positive for the state’s prospects for attracting jobs and investment – the surest way to overcome the current fiscal challenges we’re facing.

As lawmakers gather at the Statehouse for Organization Day today, we urge them to forge ahead with the critical issue of local government reform.  As legislators ponder the growing gap between government collections and spending, and consider whether to include property tax caps in the Indiana Constitution, they can’t continue to ignore the fundamental need for structural reforms that would allow local government to do more with less. 

During the last session, the General Assembly rejected the common-sense government reforms recommended by the bipartisan Kernan-Shepard Commission, changes that could have saved taxpayers up to $600 million statewide (according to studies by Ball State economists).  This session, legislators should at least push for increased openness, oversight and accountability to ensure that tax dollars are used efficiently and effectively during these tough times.  As state-level lobbying reform and other government ethics proposals are in the headlines, transparency in local government (especially the oft-overlooked township offices) shouldn’t fall by the wayside.

We couldn’t make the case any better than this editorial from Gary Reiter – this version appeared in the Indianapolis Star a few weeks back.

Times too tough to ignore township government

Gary Reiter

The recession has hit Hoosiers hard – we’ve seen it in our 401(K) statements, the family checkbook, the fortunes of the businesses that make up our economy.  Government isn’t immune; there’s been a lot of attention over the last two weeks to the state’s plummeting revenues, short more than $250 million over the last quarter.

But even closer to home, local government is facing the budget axe, too.  The recession and the property tax caps passed by the General Assembly last year are a one-two punch that have forced Indianapolis into cutting funding for parks, the arts, correctional facilities (raising the specter of early inmate releases) and other public services. 

During times like these, there can be no sacred cows.  As Governor Daniels recently said, everything has to be on the table – and that includes the operations and oversight of township government.

A few weeks ago, the Indianapolis City-County Council held a hearing on the financial practices of Marion County’s township offices.  I attended to learn more, and came away more convinced than ever that we desperately need reform.  Tough times demand an informed public, but when it comes to township officials, taxing and spending happens largely out of sight and out of mind.

I heard several troubling facts during the Council hearing that led me to do additional research:

Marion County township governments are hoarding more than $48 million in unused surpluses.  We’re being overtaxed, and townships are sitting on more than enough excess cash to plug the budget deficit for the entire county – instead of maintaining our parks, restoring arts programs and keeping criminals behind bars, we’re padding the bank accounts of township trustees. 

Washington Township, for one, holds a $5.4 million surplus, enough to operate for two years without taxing citizens another cent.  You may recall that the Washington Township advisory board voted itself a 69% raise last year.

In Franklin Township, the trustee’s office held a surplus of more than $5.5 million at the end of 2008.  Wayne Township has an amazing $12.7 million surplus!  Imagine if these funds could be spent on public safety, economic development or mass transit…or used to cut property taxes for homeowners.

The townships are also inefficient in administering the money they did spend.  In Center Township, less than half of spending related to poor relief went directly to those in need.  In Warren Township, the trustee’s office spent $12.20 in administrative expenses for every dollar dedicated to poor relief and fire protection.  In Washington Township, the figure was $9.44 in overhead for every dollar in services. 

It’s incredible that tens of millions of our tax dollars continue to be funneled through this largely-ignored layer of bureaucracy during a fiscal crisis, while the City-County Council has little authority except to hold hearings. 

It’s time to shine a light on township government.  It’s time to push for oversight and accountability, and a real public debate over whether townships have outlived their usefulness altogether in providing services that could be more efficiently and effectively provided at the county level. 

This debate starts with taxpayers getting informed and  speaking up – please don’t fail to make your voice heard.

Gary Reiter is the Chief Financial Officer of KERAMIDA Inc., a Global Environmental, Health, Safety, and Sustainability firm located in downtown Indianapolis and a resident of Center Township.

It’s no secret that U.S. students are falling behind their international peers when it comes to math and science.  The latest Program for International Student Assessment (PISA) test scores shows our students performing below average among other industrialized countries in both math and science – indeed, our average scores rank us 24^th out of 25 industrial (OECD) nations.

Today, the latest National Assessment of Educational Progress (NAEP) math scores show progress has stalled nationally and here in Indiana – another bad sign.

But here in Indiana, our BioCrossroads initiative is tackling the need to improve science, math and technology education through its I-STEM (Science, Technology, Engineering and Math) Network, a resource for K-12 teachers designed to raise the level of STEM education in Indiana.  I-STEM, which brings together higher education institutions with private and philanthropic partners, offers curriculum ideas, professional development opportunities and other resources for educators.

Today, the Lilly Endowment announced its continues support for I-STEM – valuable aid in the battle to boost student achievement in these critical disciplines.  More details:

Investing in the future: $2 million Lilly Endowment grant to CICP Foundation will support Indiana Science, Technology, Engineering and Mathematics (I-STEM) Resource Network I-STEM's services provide rigorous and quality professional development programs  --  more than 6,000 teachers and counting

INDIANAPOLIS, October 15, 2009- The Indiana Science, Technology, Engineering and Mathematics (I-STEM) Resource Network announced today that a $2 million grant from Lilly Endowment Inc. to the Central Indiana Corporate Partnership Foundation will support the I-STEM Resource Network. The initiative was established in 2007 and partially funded by a $3.4 million grant from the Endowment.

The Network is a statewide consortium of 18 Indiana higher education institutions dedicated to measurably improving K-12 student achievement in the STEM disciplines.  Over the last two years, the Network has focused on providing research-based professional development for current Indiana math teachers to help meet statewide academic standards. More than 6,000 teachers, who work with more than 150,000 K-12 students throughout Indiana, have participated in I-STEM professional development programs.

"Lilly Endowment is pleased to support the I-STEM Network, which impressively marshals the intellectual resources of Indiana colleges and universities," said Sara B. Cobb, the Endowment's vice president for education. "This unprecedented collaboration should significantly help

K-12 teachers enhance the impact of their teaching in these STEM disciplines so critical to our state's future," added Cobb.

 While programs are being developed across all STEM disciplines, the I-STEM Resource Network has focused on statewide programs in mathematics, including coursework for middle level mathematics teachers and the development of the Indiana Algebra Readiness Initiative, a series of conferences and workshops led by nationally-recognized experts, to help teachers prepare students for success in algebra.

Algebra is a "gateway" course  and a focus for the teacher training because it is a critical building block for the more advanced mathematics courses. Math educators agree that learning algebra is absolutely critical if a student has any aspirations for a career in the life sciences.

"More than ever, algebra teachers need a variety of resources to help all students in Indiana improve their algebra skills. The Network provides those resources," said Bill Reed, past president of the Indiana Council of Teachers of Mathematics and algebra and calculus teacher at Hamilton Southeastern High School in Fishers. "It is imperative for teachers to continue to improve their knowledge and methodologies for teaching algebra."

"By providing Indiana's current teachers with easy access to rigorous and quality professional development opportunities in the STEM disciplines, I-STEM has provided the foundation for strategic, systemic change in STEM education in Indiana," said Anne Shane, vice president of BioCrossroads and one of the founders of the Network. Improving achievement in science and math will maximize students' opportunities to succeed in the future life sciences workforce. To nurture and help build this life science sector  is one of BioCrossroads' key initiatives.

 "Research shows that the most important factor in accelerating student achievement is teacher quality. The I-STEM Network provides access to professional development that allows teachers to brush up on their subject matter expertise in math and science that they need to be more effective in the classroom," said Tony Bennett, Ph. D., Indiana superintendent of public instruction.  "The programs are also a powerful tool to develop our future workforce and to encourage students to enroll in the STEM disciplines in postsecondary education." The Indiana Department of Education has been instrumental in the development of I-STEM.

Besides providing professional development tied to Indiana's academic standards, STEM Resource Centers at each partnering institution in the Network have been providing grassroots education opportunities for teachers in their regions and throughout the state.

The Math Matters program in Southeastern Indiana is a joint project that Indiana University-Bloomington's School of Education and a team from the Lilly Endowment-funded initiative in the region, Economic Opportunities

2015 (EcO15),  have  instituted to bring project-based learning into math instruction.

K-6 Teacher Science Institutes have been held at St. Mary's College and Integrated Math-Science Workshops (MS2) for teachers in grades 5-9 were organized at Notre Dame. 

PRISM and the Homework Hotline at the Rose-Hulman Institute of Technology, both also funded by Lilly Endowment, continue to provide support to teachers and students looking for information on how to teach and learn STEM subjects.

"Teachers just don't have the time to search online for quality resources to aid in classroom instruction. PRISM has done the research for us," said Diedre Adams, a science and math teacher at West Vigo Middle School in Terre Haute who was a 2008 Albert Einstein Distinguished Educator Fellow at NASA.  "The lessons and information it provides are invaluable in helping STEM teachers supplement classroom materials, locate the latest research, and find new and fun ways to motivate students in science and math."

The Network is also involved in building a strategic plan for science education reform with the Indiana Department of Education.  The development of new professional development programs to be offered through the I-STEM Network for science teachers is in progress.

"In its short history, the I-STEM Network has made significant progress in providing Indiana's STEM teachers with new professional training opportunities, and this additional funding will build upon that foundation," said Bill Walker, executive director of the Network.

"Instructors bring new ideas and energy into these professional development classes. This is good for the teachers and their students."

Purdue University provides day-to-day management for the I-STEM Resource Network.  The participating institutions are: Ball State University, Indiana University Bloomington, Indiana University Purdue University Fort Wayne, Indiana University Purdue University Indianapolis, IU Southeast, Marian University, Northwest Indiana Consortium for Teacher Education (Valparaiso University, Purdue Calumet, IU Northwest, Purdue North Central and Calumet College at St. Joseph), Purdue West Lafayette, Rose-Hulman Institute of Technology, University of Indianapolis, NISMEC (University of Notre Dame, St. Mary's College  and IU South Bend) and the University of Southern Indiana.

INDIANAPOLIS (October 6, 2009) – Senior Business Development Director Scott Fulford accepted Indy Partnership’s three Excellence in Economic Development Awards today at the International Economic Development Council annual conference in Reno, Nevada.

Indy Partnership was named the winner in two award categories and received an honorable mention in a third. The annual Excellence in Economic Development Awards are meant to recognize the world’s best economic development programs and partnerships, marketing materials, and the year’s most influential leaders. The awards are broken down into three population tracks – under 50,000; 50,000-200,000; and more than 200,000 people. Indy Partnership competed in the population of more than 200,000 people category.

Excellence in Economic Development Awards won by Indy Partnership include:

·Best Economic Development Website in America – WINNER

·Best Economic Development Newsletter in America – WINNER

·Best Economic Development Magazine in America – Honorable Mention

Indy Partnership President Ron Gifford, who is currently in China with the Indiana Pacers on a business and cultural exchange, said that this is the second time this year that Indy Partnership has been recognized for excellence by national and international organizations. Site Selection, a leading national economic development trade magazine, named Indy Partnership one of the top 10 economic development groups in the country in May.

“The International Economic Development Awards are our industry’s Academy Awards or Grammy’s,” Gifford said. “When you consider that we were competing against regions that are many times our size – regions including more than 100 other major metros such as New York, Los Angeles, Chicago and Houston – it really speaks to the quality of the work that Indy Partnership is doing on behalf of Central Indiana.”

For Indy Partnership, these awards follow 18 months of strategic planning and execution of a new brand identity, which includes the award winning website, newsletter and magazine.

The Indy Partnership website (www.indypartnership.com) is an advanced interactive economic development tool with geographical information system (GIS) mapping that allows both point data and thematic data to be plotted on the same map. Indy Partnership’s site was the first dedicated economic development website in the U.S. to offer this technology, which is marketed as Indy InSite™ to site selection consultants and corporate location managers worldwide.

The Indy Partnership monthly electronic newsletter, which also carries the Indy InSite moniker, is distributed nationally to site selection consultants, business leaders and Indy Partnership investors. The newsletter prioritizes data and information downloads, quick-read facts and figures, and multimedia that appeal to a broad economic development audience.

Indianapolis Region, which received an honorable mention for best marketing magazine in America, is a 52-page annual profile of the Indianapolis Region. It includes 10 original feature articles on the advantages of doing business in the 10-county Indianapolis Region, and other content of interest to economic development and general business readers. Indianapolis Region is produced in partnership with and as a supplement to the Indianapolis Business Journal.

The Excellence in Economic Development Awards are adjudicated by a distinguished, international group of economic development experts from both the public and private sectors.

About The International Economic Development Council

The International Economic Development Council (IEDC) is the premier membership organization dedicated to helping economic development professionals create high-quality jobs, develop vibrant communities and improve the quality of life in their regions. Serving more than 4,600 members, IEDC represents the largest network of economic development professionals in the world. IEDC provides a diverse range of services, including conferences, certification, professional development, publications, research, advisory services and legislative tracking. For more information about IEDC visit www.iedconline.org.

About The Indy Partnership

The Indy Partnership is a privately-funded, not-for-profit organization dedicated to bringing new jobs and capital investment to the Indianapolis Region—10 central Indiana counties including Boone, Hamilton, Hancock, Hendricks, Johnson, Madison, Marion, Morgan, Monroe, and Shelby counties. Working collaboratively with local economic development officials, government, universities, and the business community, the Indy Partnership secures the Indianapolis Region relocation of companies through superior economic development services. Key services include point of contact for business development leads, incentives assistance, business research and demographic data, and regional marketing. For more information about Indy partnership visit www.indypartnership.com.

Yesterday, Deloitte Consulting released a national survey of manufacturers in conjunction with The Manufacturing Institute (the research and education arm of the National Association of Manufacturers, or NAM).  Considering the vital importance of manufacturing to Indiana’s economy – we continue to be the most manufacturing-intensive state in the nation, with one of every five working Hoosiers employed in the industry – the results have special relevance here.

In a question that cut right to the heart of the matter, respondents were asked to identify the top three drivers of business success over the next two or three years.  The responses were, in order of importance – new product innovation, high-skilled workforce, and low-cost producer status.

Policymakers can do their part on the ‘low-cost producer’ front by ensuring a competitive business climate that minimizes tax and regulatory costs on manufacturers.  We’re doing well enough in this arena, as the Tax Foundation reports that the state has earned the 12^th best tax climate in the nation, leading the Midwest in this category.

But the other two categories relate directly to human capital – a skilled workforce, and innovation, which comes from talented and creative employees working together.  Because workforce drives productivity, the availability of skilled workers even impacts a company’s ability to be a low-cost producer (to do more with less).

This reaffirms the strategy of our Conexus Indiana initiative, which identifies human capital as the primary challenge facing the state’s manufacturing and logistics industries and is implementing a variety of strategies to connect industry and academia, pull more young people into the workforce pipeline for these fields, and dispel public perceptions that these industries don’t offer a promising array of high-tech careers.

Indianapolis, September 10, 2009 – Now generating more than $11 billion in annual revenues, the global orthopedics sector concentrated in Warsaw, Indiana, represents more than half the U. S. market share and more than one- third of the world’s market for developing orthopedic medical devices. 

How does an industry -- contained within a community -- continue to maintain its strong economic presence and position itself for future growth?  BioCrossroads, Indiana’s organization for investment, development and advancement of the state’s signature life sciences strengths, explores and outlines a series of action-oriented responses to this question in a new published report, Warsaw, Indiana: The Orthopedics Capital of the World  -- An overview, analysis and blueprint for future industry and community growth. 

The report represents one of the most comprehensive studies ever conducted of Indiana’s outsized share of this remarkable industry, and it suggests a range of broadly supported steps that the industry, the community and the State can pursue to ensure this sector continues to thrive on Hoosier soil.

Initiated through a planning grant funded by the Lilly Endowment, Inc., the BioCrossroads report reveals stunning statistics that highlight the growth of a sophisticated business sector and the community supporting it:

Kosciusko County has grown its Health & Biomedical employment base by 39 percent since 2001 compared with 15 percent for both Indiana and the U.S.

In 2007, the concentration of jobs in Kosciusko County in the medical devices and equipment category had a location quotient of 51.86, which is nearly 50 times that for the national average, [resulting in] a location quotient that is literally “off the charts.”*

When compared with the larger Metropolitan Statistical Areas analyzed nationally in the Battelle Technology Partnership Practice biennial state by state industry analysis for the Biotechnology Industry Organization (BIO), the Warsaw, IN Micropolitan Area (population 12,500) would rank as the 15th largest regional employer in medical devices and equipment in the U.S.

“The Warsaw orthopedics community is one of the most robust and concentrated medical equipment development sectors in the world, and a world-class economic asset that powers growth for all of Indiana,”  said David Johnson, President and CEO of  BioCrossroads.  “The integration of all this research has resulted in a picture of an industry cluster in Warsaw, that is currently robust, respected and globally competitive.  While this orthopedics device sector has been tremendously successful to date, our research and the truly global scale of this sector’s reach make it very clear that global pressures now confronting our whole economy, including all our life sciences sectors, have sparked a broadly perceived need for a community and industry engagement strategy focused on education, talent recruitment and retention, workforce and community development to ensure sustainability. 

“We’re now in the process of developing a Warsaw-based, regionally focused organizational initiative that can better define and prioritize the challenges and opportunities, and then seek funding to bring the best and most responsive ideas to life,” Johnson added.

The report details seven initial focus areas for such an initiative to explore:

•             Branding and Awareness – promote the Warsaw community as the orthopedics capital of the world

•             Community Enhancement – develop and add specific, cultural and recreational amenities

•             Education – enhance options and opportunities for K-16 education

•             Talent and Workforce Development – further and focus the necessary collaboration among industry, government and education to identify future needs for this industry’s highly skilled management and workforce

•             Transportation and Logistics – analyze regional transportation challenges and develop specific options for improvement

•             Industry/Technical Support Enterprises – research market opportunities and business cases for specific enterprises that could provide valuable “business infrastructure” for Warsaw’s diversified orthopedics industry

•             College and Research University Engagement – promote and establish specific mechanisms and programs for collaboration among Indiana’s academic and research institutions and between academia and industry to promote innovation and enhance processes for research and development.

“The medical innovation coming out of Warsaw is some of the best in the world, so it’s critical that we have a plan for sustainability and growth.  With true and widespread business and community participation, BioCrossroads has created a roadmap to move us forward, and we are fortunate to have such an action-oriented champion for our community,” said Cheryl R. Blanchard, Ph.D., Chief Scientific Officer and Senior Vice President, Zimmer, Inc.  “Community and industry leaders are eager to become engaged in this effort and find the best ways to make a positive impact on our community.”

 “Warsaw’s economic vitality is driven by our orthopedics companies, not only for the success of the largest industry leaders, but also for the entrepreneurs and service companies that support this sector,” said David Findlay, Chief Financial Officer and Executive Vice President of Administration, Lake City Bank.  “The work that BioCrossroads has done in developing this strategic framework will help our community progress, enhancing our assets and filling in our gaps.  I can readily report that there is a lot of energy surrounding this initiative.” 

The report is available on the BioCrossroads Web site:  www.biocrossroads.com

The BioCrossroads report draws heavily upon research by Battelle– both a 2001 study and an update to that work completed in 2009.  In addition, a community study, including a number of in-depth interviews and facilitated discussions with key business and community leaders in the Warsaw region, was conducted and facilitated by Mary Walshok, Ph.D., an international expert in community and economic growth, professor of Sociology at the University of California, San Diego, and a principal in Global CONNECT at UC-San Diego.  The report also includes specific recommendations for new types of enterprises and facilities developed by distinguished orthopedic surgeons.

A trade delegation led by Governor Daniels is scouring the Far East in search of new jobs and business opportunities this week, meeting with business and government leaders in China and Japan in hopes of adding to the historic influx of foreign investment Indiana has enjoyed over the last several years.   Today, the Hoosier State is home to more than 200 companies from Japan alone, employing as many – or more – workers than Detroit’s Big Three automakers here.

That’s the upside of the global economy: Manufacturing jobs, lured to Midwestern states like Indiana by the weak dollar, a ready workforce and proximity to the world’s biggest consumer market.  But we also have to be mindful of the threats posed by globalization, primary among them the erosion of the United States’ biggest competitive advantage, our capacity to innovate. 

It’s great that Indiana is attracting jobs based on our low business costs, the technical proficiencies of our workers and our geographic advantages.  But to create long-term prosperity in the high-tech economy, we also have to be a place where new technological advances and scientific breakthroughs are brought to life and commercialized. 

But as a nation, we’re falling behind in the race for innovation.

We aren’t encouraging innovation the way we should.  A new study by the Information Technology & Innovation Foundation shows that we now lag behind many industrialized and rapidly-developing countries in R&D tax incentives.  We were the first nation to reward innovation through the tax code, implementing the R&D credit in 1981.  But over the last decade, we’ve slipped to 17^th among OECD countries in R&D tax generosity, and developing nations like China, India, Singapore and Brazil are also employing more aggressive R&D strategies.  (China, for example, provides a 150% tax deduction on R&D expenses if companies increase investment by 10% or more over the previous year.)

Ultimately, though, tax credits don’t create innovation – people do.  But the U.S also lags in the human capital competition.  I’ve written previously about the massive investments China has made in higher education over the last decade, but a few numbers bear repeating:  More than 800 new colleges and universities built, the number of students in higher education more than tripled, and the number of graduates exploding from 8 million annually to more than 30 million.

Because of these trends, it’s widely recognized that there will be significantly more PhD engineers and scientists in China  than in the U.S. as early as next year.  A broader study by Rice University makes the startling projection that, again by 2010, 90% of all the world’s PhD-level engineers will live in Asia. 

We can’t surrender our numerical superiority in scientists, engineers, and other skilled workers without eventually seeing our innovation edge disappear.

And in fact, we’re already seeing the impact.  This thoughtful piece by TechPoint Chairman Mark Hill explores how the U.S. is slipping in our innovation-based economy relative to global competitors; for example, over the last decade, the $30 billion trade surplus that the U.S. used to enjoy in advanced technology products turned into a $53 billion deficit.

The overseas exploration that Governor Daniels and regional economic development groups like the Indy Partnership are engaged in is a critical part of succeeding in the global economy.  But it’s also essential to tend to our innovation infrastructure here at home – building an educated, creative workforce and incentivizing them to bring new ideas to market.

Recent data released by the U.S. Bureau of Economic Analysis has sobering news for the Indianapolis region – the metropolitan area ranks 325^th out of 366 metros in per capita income growth over the last five years.  The performance of our region – the center of economic activity for the state – mirrors the widening income gap that Indiana has seen over the last few decades.  The average Hoosier worker makes less than 90 cents for every dollar earned by the typical American.

President Obama visited Northern Indiana on Wednesday, August 5, to announce $416 million in federal stimulus grants to Hoosier companies focused on vehicle electrification and advanced battery technologies.  In all, Indiana received the second-largest infusion of federal grants for green vehicles of any state, behind only Michigan (where most of the money flowed to automakers already being supported by bailout funds or companies receiving significant state incentives to boost the struggling economy there).

In Indiana, the grants will accelerate the momentum of the state’s clean technologies sector, already making great strides in developing critical components for the next generation of plug-in electric/hybrid vehicles (from passenger cars to heavy-duty trucks).  While government has often proven itself ill-suited to picking winners in the marketplace, the volume of grants to Indiana certainly recognizes our rich heritage of energy innovation and the fact that companies here are working together (through initiatives like the Energy Systems Network) to bring exciting new technologies to market.

Please take a moment to look over two editorials by Paul Mitchell, President & CEO of CICP’s Energy Systems Network, which offer key insights on how these grants can trigger even more growth and investment in our cleantech industry:

Jump start for green vehicles - Indianapolis Star, August 17, 2009

Indianapolis homeowners got some good news this week, as the Indianapolis Star reported that the second installment of Marion County’s 2008 property tax bills should be slightly less than the first – and significantly lower than 2007.  We can thank the property tax caps proposed by Governor Daniels and passed by the legislature last year for this relief…

But for every action, there’s an equal and opposite reaction – this law of physics also applies to lawmaking.  As property taxes go down, so do revenues for local governments.  Already, communities like Muncie have announced fire station closings and firefighter layoffs as they struggle with growing budget gaps; Indianapolis stands to lose $21 million when the caps are fully phased in next year (that’s enough to pay for more than 220 new IMPD officers with vehicles and full equipment, to put it into perspective).

It didn’t have to come to this.  During the last legislative session, the General Assembly had an opportunity to enact sweeping local government reforms – eliminating outdated, inefficient township governments and consolidating administrative county offices under an elected county executive and council.  These moves would have helped local governments do more with less, and avoid budget meltdowns.  I’ve talked about these reforms ad nauseum here and elsewhere, but the topic is worthy of more commentary – we need reminding again and again about those legislators who turned their backs on reform, killed the Kernan-Shepard recommendations and abandoned cities and towns to struggle with growing deficits.

Here’s the math at the highest level.  The property tax caps are expected to cost local governments a collective $400 million in 2010.  An analysis conducted by the Ball State Bureau of Business and Economic Research estimates that $600 million could be saved by implementing all of the Kernan-Shepard reforms.

At the township level, it’s simple common sense.  There’s little accountability in this relic of Civil War-era bureaucracy:  Around 70% of township trustees and advisory board members run unopposed, and get elected by less than 15% of the population they serve.  More than half of Indiana’s township provide poor relief (their major responsibility) to 20 households or less.  There’s little question that county governments could absorb these duties more efficiently. 

Townships across the state are also currently hoarding more than $230 million in unused surplus funds – money that could help communities avoid tax increases or budget cuts as they adapt to the dire fiscal realities.

At the county level, accountability is also the issue.  County government is fragmented into a host of administrative offices, operating with little public oversight.  These aren’t policymaking roles – ask yourself if there’s really a Republican or Democratic way to file a marriage license or record a deed.  Consolidating these offices under a single county executive and an expanded county council would provide a simpler system with checks and balances – just like the President and Congress, or the Governor and the General Assembly.

These reforms would make local government more transparent and accountable, less costly and more efficient.  But the status quo is protected by entrenched interests, thousands of local politicians who get jobs and support from the current system.

During the last session, the status quo won.  But the problem isn’t going away – and the campaign for local government reform isn’t either.  We’ll be back, for the next legislative session and beyond, fighting for the taxpayers to overhaul a 19^th century system of government that’s given birth to 21^st century cronyism.

Our Conexus Indiana initiative today released its annual Manufacturing & Logistics Report Card, which assesses how our state measures up in several areas related to these two important industries – which continue to employ more than one of every five Hoosiers and account for more than a third of our Gross State Product. 

There are really any shocking revelations in the Report Card for those of us who follow economic development trends – Indiana remains the most manufacturing-intensive state in the nation, with the greatest share of per capita employment in the sector.  (While manufacturing employment has taken a hit during the recession, the decline has been across the board – not more dramatic in Indiana or the Midwest than the rest of the nation.)  We’re also among the top ten states in logistics employment, befitting our geographic advantages as the ‘Crossroads of America.’

We’ve also established a strong global position in manufacturing, both in exporting manufactured goods and attracting foreign direct investment from across the globe (indeed, we’re the only state in the Midwest to attract manufacturing investment from every continent…except Antarctica, of course).  The recession will slow our export growth, but the last several years have seen sustained record levels of manufacturing goods flowing outside of our borders.

Our tax climate is also very competitive, and leaves us well-positioned for future growth.

Our most negative ‘grade’ in this report card was in human capital – the strength of our workforce. Indiana ranked 29^th among states in our percentage of the workforce with a high school diploma and 42^nd in college-educated workers; we were also a dismal 35^th in first-year retention rates in the community college system.  In today’s knowledge-based economy, workforce is a critical competitive advantage – and Indiana is falling behind, as has been detailed extensively in this blog and elsewhere.  Manufacturing and logistics are high-tech industries that demand post-high school education/training – as the economy picks up and mass Baby Boomer retirements begin, thousands of positions could go unfilled – leading to missed opportunities for growth.

You can view the entire report card, with good scores and bad, here.

From an interesting article by Mary Beth Schneider in Sunday’s Star about the political calculus behind local government reform – particularly the elimination of township government:

Steve Dillinger, one of three Hamilton County commissioners, said he and other county officials recently met with their legislators and laid out the stakes for them.

Lawmakers, he said, were told that if they eliminate a lot of township and county offices, the people who hold those jobs now might run for the legislators' jobs.

“The legislators may be giving themselves a whole lot of competition," Dillinger said.

It leads me to wonder – shouldn’t  lawmakers also be worried about challenges from pro-reform candidates?  And what about the general anger of voters who face service cuts and/or local tax increases to pay for outdated, inefficient layers of government?

Yesterday, there was even more bad news about Indiana’s fiscal plight, with state tax revenues falling $142 million below expectations for January.  As lawmakers struggle with the state’s budget in this climate, local officials face a daunting challenge as well: An estimated $400 million budget shortfall next year, as caps on property taxes are fully phased in.

In these tough economic times, it’s even harder to justify Indiana’s 1850’s-vintage government structure, featuring nearly 3,000 units of local government (including more than 2,000 with the power to levy taxes) and 10,000+ elected politicians.  This bloated structure means multiple layers of government and overlapping bureaucracies siphoning off tax dollars.

Take township government, with its collective operating budgets of approximately $400 million a year.  Imagine eliminating township offices altogether, as recommended by the Kernan-Shepard Commission.  It’s reasonable to assume county government could shoulder the duties of the townships (primarily poor relief and fire protection) for at least 25% less, by merging offices and consolidating budgets while at the same time maintaining and even improving services.

That’s $100 million a year that could help local governments face a looming budget gap.  The property tax caps passed by the General Assembly in 2008 are expected to hit some localities with significant revenue shortfalls in 2010, estimated at approximately $400 million statewide.  Reducing these anticipated deficits by 25% or more would help city and county governments avoid more dramatic cuts in services or local tax increases as they face the new reality of lower property tax revenues.

Indeed, consolidating township government would also free up significant surplus funds that could help localities in their transition to capped property taxes.  The state’s 1,008 townships hoard hundreds of millions of tax dollars they don’t even use, holding $230 million in cash balances (excluding cumulative funds) as well as millions more in unused assets like buildings and land).  That these surpluses are padding the coffers of township offices while dire budget forecasts are looming at the state and local levels is certainly a compelling argument for local government reform.

To look at one notable example: Marion County’s nine township governments held a collective fund balance of nearly $40 million at the end of 2007.  The property tax caps are expected to hit Marion County government to the tune of $63 million in 2010; tapping the township surplus would close two-thirds of this gap and allow Indianapolis to address critical priorities. 

In the private sector, tough times force successful companies to work smarter, to look for opportunities to cut waste without slashing budgets in ways that are counterproductive.  While state government can’t ever truly be ‘run like a business,’ the analogy certainly applies in this case:  As legislators debate budget priorities as revenues dwindle, it’s ludicrous to ignore the hundreds of millions of tax dollars being funneled into a patchwork of township governments that persist as relics of the Civil War era.

It’s hard to find a silver lining in our cloudy economic forecast.  But if one good thing comes out of this downturn, it could be that budget challenges finally force the General Assembly to do what should have been done decades ago – eliminate township government, pass the other reforms outlined by the Kernan-Shepard Commission, and allow local government to do more with less.