Report: States with Stronger Alcohol Controls Have Lower Alcohol-Related Traffic Death Rates

HARRISBURG, PA (May 15, 2012) — States that more heavily control the sale and distribution of alcohol have lower alcohol-related traffic deaths than states that take a more hands off approach, according to a Keystone Research Center policy brief.
These findings differ from those of economists John Pulito and Antony Davies, PhD, whose research was published by two “free market think tanks”—Pennsylvania’s Commonwealth Foundation and George Mason University’s Mercatus Center. 
The reason that KRC’s brief reaches different conclusions is simple: The Pulito-Davies research omitted two variables that are critical to explaining differences in alcohol-related traffic fatality rates among the states — average vehicle miles traveled and average per capita income. When you include those factors, Pennsylvania has an estimated 58 fewer alcohol-related traffic deaths among adults each year than it would have if the state had no controls over the distribution of alcohol.
In The Road Less Traveled: States That More Tightly Control the Sale and Distribution of Alcohol Have Lower Alcohol-Related Fatalities, Keystone aims to set the record straight for policymakers and others who have cited the Pulito-Davies research.
“What impact will privatization have on the safety of our roads and highways? This is a critical question for policymakers to answer, and they should have the facts,” said Mark Price, PhD, Keystone labor economist and co-author of the policy brief.
The Keystone policy brief also reinforces the findings of a task force of public health experts appointed by the director of the Centers for Disease Control and Prevention (CDC). In April, the Task Force on Community Preventive Services published a piece in the peer-reviewed American Journal of Preventive Medicine finding that alcohol privatization contributes to increases in alcohol consumption, creating a greater risk of alcohol abuse and its associated social costs.
“It is not surprising that the Keystone Research Center found that state control of alcohol distribution is associated with fewer alcohol-related fatalities,” said Task Force member Karen Glanz, PhD, MPH, a professor at the University of Pennsylvania. “This is in line with the Task Force's conclusion that retail alcohol privatization increases the risk of excess consumption of alcohol and associated risks. It is also in keeping with a larger body of research that has found negative social impacts from privatization of alcohol distribution.”
Dr. Glanz is the George A. Weiss University Professor, Professor of Epidemiology and Nursing, and Director of the Center for Health Behavior Research at Penn.
In the policy brief, Keystone researchers provide an overview of the Task Force’s findings, then reproduce the analysis done by Pulito and Davies except for adding in two omitted variables — vehicle miles traveled and per capita income. KRC found:

• Among adults (age 20 and older): Heavy control states (those that maintain control over the sale of at least two types of alcohol at the retail level and at least one type at the wholesale level — a group that includes Pennsylvania) have lower alcohol-related traffic fatality rates among adults each year than states that have no such controls. Pennsylvania has an estimated 58 fewer alcohol-related traffic deaths among adults each year than it would have if the state had no controls over the distribution of alcohol.
• Among youth (ages 15-19): There was no difference found in fatality rates for alcohol-related car accidents for youth ages 15 to 19 based on the degree of state control over the distribution and sale of alcohol.
• Among children (under age 15): There are lower fatality rates for alcohol-related car accidents for children under the age of 15 in states with heavy control over alcohol sales and distribution. (Pulito and Davies did not examine this group.)

Including vehicle miles traveled and per capita income is important, since control states tend to be ones in which people drive further and have lower incomes. Driving more increases the likelihood of fatal traffic accidents, while lower incomes mean people are less likely to be driving in newer cars with strong safety features.
“The Pulito-Davies research has been used repeatedly to muddy the waters regarding the negative social impacts of alcohol privatization,” said Stephen Herzenberg, PhD, economist and executive director of the Keystone Research Center. “It’s important that policymakers have accurate data on the significant impact of alcohol privatization.”
Read the full policy brief

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The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy. Learn more: www.keystoneresearch.org.

Privatized School Buses Cost Taxpayers More

New study recommends in-sourcing school transportation operations to save taxpayers millions

HARRISBURG, PA (March 13, 2012) — Pennsylvania school districts that contract with private bus operators end up spending more taxpayer dollars on transportation than those that manage their own bus fleets, according to a new report from the Keystone Research Center.

Total costs for all taxpayers are nearly $223,900 higher when a typical Pennsylvania school district goes from providing all bus services in house to contracting with a private operator. If every school district in Pennsylvania in-sourced transportation services, taxpayers would save an estimated $78 million.

“Handing the reins over to the private sector is not always a good bargain for taxpayers,” said Dr. Stephen Herzenberg, an economist and co-author of the study. “Over two decades of hard data make clear that school bus contracting is a poor bargain.

“At a time when deep cuts to schools are driving up class sizes and limiting student opportunities, should we pay more to private companies to transport kids to school?”

Transporting school students is a booming private industry today. 4,000 companies nationwide transport roughly 25 million students to school each day. In Pennsylvania, 72% of school bus transportation was contracted out by school districts in 2008, up from 62% in 1986.

Some school districts contract out school bus transportation to gain a short-term infusion of cash from selling bus fleets—an especially alluring option with districts now facing deep cuts to funding for classrooms. The state also currently provides higher reimbursement for districts that contract out school bus services, distorting district decision-making and contributing to the higher overall price tag for taxpayers.

Rather than folding transportation funding into block grants for school districts, as proposed by Governor Corbett, the Keystone Research Center recommends eliminating the higher reimbursement for contracted services and channeling state savings into higher basic education funding. With the playing field level between contracting and self-supplied bus services, the state should provide technical assistance so that districts can capitalize on opportunities to cut costs through in-sourcing, and negotiate better deals with private companies when they do contract out.

The Keystone study relied on state Department of Education data from 1986 to 2008. Researchers examined the impact of contracting out on costs after controlling for school district enrollment, special education student transportation costs, the price of fuel, and the wealth and income of each district.

Researchers found that, because it more generously reimburses districts when they contract out, the state picks up essentially all of the cost increase with contracting out.

The researchers also identified 29 school districts that substantially increased their use of private carriers between 1992 and 2001. In the first year after privatization in these districts, total spending on student transportation increased by 10% or more in 20 out of the 29 school districts.

One reason contracting out costs more, the Keystone researchers note, is the leverage contractors have once a school district sells its bus fleet. “The upfront cost of repurchasing a fleet of buses is a major obstacle for a district that wants to cut ties with a private operator,” said Dr. Mark Price, economist and co-author of the study. “Switching to a new contractor may not be an option either, because some areas have only one or two private companies. As a result, contractors negotiate higher payments or slip in added costs for field trips or special services.”

Private profits and high private-sector executive- and managerial-level salaries also contribute to the high rates charged by private companies. Districts also incur costs for monitoring contractors.

The limited competition, contractor leverage, and high private salaries that lead to higher costs with privatization are not unique to the school transportation industry. Academic research shows that these challenges arise with privatization of many services. This underscores the importance of using data to evaluate when to privatize or in-source, and not simply assuming that privatization is more efficient.

Keystone recommends that technical assistance to school districts to reevaluate their transportation services be delivered through the Pennsylvania Association of School Business Officials. The state could also make low-interest loans available to assist districts with the purchase of new school buses, and create a non-profit that steps in when needed to provide more competition. A commonwealth non-profit also avoids the need for district-owned fleets.

“Pennsylvania should make every tax dollar count instead of giving school districts incentives to adopt inefficient transportation systems,” Dr. Herzenberg said. “We can change course now and use the savings to improve the quality of our children’s education.”

Appendix F in the Keystone Research Center report includes data on how much individual districts contract out.

Read the Full Report

New AFSCME Report on Private Prisons: “Making A Killing”

A new report exposes how the private prison industry thrives in a pay-to-play culture; making our communities less safe and more prone to violent crime

WASHINGTON — This Wednesday, May 4, 2011, as correctional officers from around the country arrive in Washington for National Correctional Officers week, the American Federation of State, County, and Municipal Employees (AFSCME) released a new report entitled, “Making A Killing: How Prison Corporations Are Profiting From Campaign Contributions and Putting Taxpayers at Risk.”

Each election cycle, America’s largest private prison companies pour hundreds of thousands of dollars into the campaigns of governors, state legislators, and judges, in the hopes of advancing their political agenda—establishing more private prisons and reducing the number of public ones. The report tracks the flow of money from the companies to the people in power, and details some of the worst cases of violence and death in the nation’s least safe facilities.

“Private prison companies have one goal, and that’s to maximize profits,” said Ken Kopczynski, Executive Director of the Private Corrections Working Group. “States considering privatization should be clear about the problems associated with these corporate facilities—high rates of violence, high staff turnover, lax security, and routine mismanagement. We should be securing our prisons, not selling them off to the highest bidder.”

“Making A Killing” was released on a press conference call today by Ken Kopczynski, Executive Director of Private Corrections Working Group, Glen Middleton, Chair of AFSCME Corrections United, Tom Jones, former Senior Manager of Quality Assurance at Corrections Corporation of America (CCA), and Marty Hathaway, Correctional Officer at the Iowa Medical and Classification Center in Coralville.

The report is now available at the following url: http://www.afscme.org/prisonreport