Summer 2011

Summer 2011

Salary divide

Salary divide

Gov. Patrick is winning political points reining in the compensation of state authority executives, but some question his motivations and the long-range value of his actions

It’s 7:30 a.m. The MBTA’s Richard Davey is standing just inside the Roxbury Crossing station, sipping his coffee while getting an earful from a woman worried about security on Orange Line trains now that the number of operators has been cut from two to one. After she heads off to catch her train, another woman steps up, wanting to know if Davey really intends to force mothers to fold up their strollers when they get on buses. Then there’s the coffee shop next door leasing space from the T; its roof is leaking.

Davey, who has overseen the T and other state transit operations for more than a year, is spending several hours on this rainy mid-May morning listening to the concerns of everyday users of the T. He seems to enjoy the give and take, perhaps because it’s a break from the intractable problems facing him back at the office, where he oversees close to 6,000 employees and a budget of $1.6 billion. Davey’s job is to transport about 1.3 million people every weekday on a bus, subway, and commuter rail system that is old, prone to breakdowns, and effectively broke.

It’s one of the toughest jobs in state government and definitely one of the most important. The T keeps the eastern Massachusetts economy moving and is critical to the livelihoods of area residents and businesses. Yet the 38-year-old Davey is paid $145,000 a year, a figure that seems remarkably small compared to his responsibilities. Indeed, it’s less than what he was making in his previous job at the private company managing the T’s commuter rail network. It’s also $110,000 less than his predecessor at the T made, even though Davey has taken on more responsibility.

Compared to 13 other managers of similar-size transit systems around the country, Davey’s salary is far and away the lowest—$132,000 below the average. At Bunker Hill Community College, Davey’s salary would make him the fourth-highest paid employee on the payroll. Many Univ­er­sity of Massachusetts professors and even some assistant professors, not to mention deans and provosts, earn more money than Davey. Some of Davey’s own employees earn more than he does.

His job perks aren’t very generous either. He receives no car allowance, he pays for his own T commute to and from work, and on his last vacation he even took a side trip to South Korea—on his own dime—to visit a factory building new locomotives for the authority.

“I didn’t take the job for the money,” Davey says with an earnest smile.

Davey is one of the faces of the Patrick administration’s campaign to rein in the state’s quasi-public authorities and bring the salaries and perks of their top officials more in line with the rest of state government. It’s a good, old-fashioned house-cleaning. Two authorities have been eliminated and six authority chiefs have been ousted. The governor and his aides say the cozy culture of entitlement that once existed at the state’s quasi-public authorities is now dead.

But there is a growing chorus of people inside and outside the administration who see the governor’s move against the state’s authorities as good politics but bad public policy. They say the proverbial nationwide search to fill important authority posts with the best possible candidate has degenerated into a hunt for someone who will do the job for less. They worry that authorities, set up purposefully to be independent of the political process and operate more like public enterprise businesses, are being turned into wholly owned subsidiaries of the administration. And they say the crusade for lower salaries is just political cover for a governor trying to centralize control in his administration, as he did previously with transportation and education, and fill key authority posts with his own people.

Indeed, Patrick seems to have a split personality when it comes to authorities. He has forced out or lowered the pay of every authority executive earning more than $250,000 a year—with one exception. Dr. Susan Windham-Bannister, who heads the Massachusetts Life Sciences Center, the one authority Patrick played a personal role in creating, is earning $285,000 a year managing an agency with just seven employees and an annual budget of $2.5 million. Two of her em­ployees earn more than Davey makes at the T.

Crosby 
 Stephen Crosby, dean of the McCormack School at Umass Boston

Stephen Crosby, the dean of the Mc­Cor­mack School at the University of Massa­chu­setts Boston and the person Patrick chose last year to lead a commission analyzing compensation at quasi-public authorities, is a big believer in paying people what they’re worth. He says the juxtaposition of the pay of Davey and Windham-Bannister shows how outrageously low Davey’s salary is. But he says it’s incredibly difficult to pay competitive salaries in the public sector. “It’s a soft spot in democracy,” he says. “Setting high levels of compensation in the public sector is something where democracy has a problem.”

A “privilege” to serve

Jay Gonzalez, the governor’s secretary of administration and finance, says the old adage that you get what you pay for doesn’t always apply in state government. He, for example, makes $150,000 a year reporting to a governor making $10,000 less than he does. The salaries of both men are far less than what they used to earn in the private sector, but he says that’s the way government works.

“I came into state government knowing that the public sector is different and I was going to sacrifice some compensation versus what I was getting in the private sector in order to have the privilege of working in the public sector,” he says. “For anyone who has these positions, it is a privilege, an opportunity to serve the public in a unique way.”

Gonzalez says jobs at the quasi-public authorities should be no different. Sure, Gonzalez says, the quasis were established with their own boards and their own salary structures to make them independent of state government. Many of them are financially independent and receive no state money. But Gonzalez says the quasi-public authorities are still public and also a part of state government.

“The concern was that they had veered a little too far to their independent side and a little too far away from the public side,” he says. “It’s important that we are all working together toward common objectives, that we’re all rowing in the same direction.”

Gonzalez says hefty salaries came to symbolize how far the quasis had strayed. Many top authority chiefs were making $250,000 to $300,000 a year with perks unheard of in government. Tom Kinton at Massport stored up $450,000 of unused sick and vacation time. James Rooney at the Massachusetts Convention Center Authority is working on his second pension. Most of the authority chiefs were sitting on fat severance packages that paid them big bucks if they were removed before their contracts were up.

“The poster child was Ben Caswell at HEFA,” says Gon­zalez. Caswell earned a salary of $225,000 running the state’s Health and Educational Facilities Authority, plus deferred compensation of $67,500, a bonus of $14,583, a $5,000 car allowance, a T pass, and a health club membership. He also was promised a severance payment equal to as much as three years of salary if he was dismissed without cause.

“There were some absolutely ridiculous aspects of his benefit package,” says Gonzalez, who worked in the bond business before joining state government. “I will guarantee you you do not need to pay somebody what Ben Caswell was paid to get a qualified person to do that job.”

But what should someone running an authority be paid?

Gonzalez says each situation is different, but before negotiating a salary authority boards should do salary comparisons with authorities in other states, companies and nonprofits in the private sector, and state government. “One of the positions that should be looked at as a comparable for a CEO at a quasi-public authority should be me and other CFOs in state government,” Gonzalez says. He also says if a quasi can hire someone who is willing to work for less, it should. “It’s a sacrifice they make for the opportunity to serve,” he says. “We owe it to taxpayers to take advantage of that.”

The administration has overhauled the major quasi-public authorities, but there are nearly 30 smaller ones left that haven’t been touched. I ask Gonzalez which authority is next in line for review.

“None come to mind personally,” he says.

Secretary of administration and finance Jay Gonzalez

What about the Life Sciences Center, an authority Pat­rick created and on whose board Gonzalez sits? Does the governor feel Windham-Bannister’s salary is out of whack?

“That’s what we need to assess,” he says, noting Wind­ham-Bannister was hired before Crosby’s report on authority compensation was completed. “When her contract comes up, that’s something we need to look at.”

But Windham-Bannister doesn’t have a set-length contract. She serves at the pleasure of the board and can be terminated at any time, something Gonzalez should know as a member of that board. I ask him if Windham-Bannister’s sal­ary goes untouched because she heads an authority created by Patrick, while the other authority heads were targeted because they were brought on board by ap­point­ees of prior administrations.

“The process we’ve been going through is not to put our guys in,” Gonzalez says testily. “That’s not what this is about. It’s about getting good people in who are going to work together with the administration and others to further the mission.”

Shifting stance

The Patrick administration hasn’t always been so concerned about excessive pay at quasi-public auth­orities. That concern evolved over time, and took serious root after the governor’s efforts to place a political supporter in a high-paying job at one of the authorities blew up in a damaging patronage controversy.

In May 2008, Windham-Ban­nister was named to the top job at the state’s Life Science’s Center. No one raised concerns about her $285,000 salary at the time, even though two of Patrick’s top lieutenants headed the board that selected her.

Nearly a year later, according to administration emails and court documents, Patrick administration officials began lobbying behind the scenes to place then-state Sen. Marian Walsh, an early political supporter of the governor, in the No. 2 position at the Health and Educational Facilities Authority at a salary of $175,000. Instead of lambasting salaries at authorities, the report called them “appropriate” as a broad generalization.Caswell, HEFA’s executive director at the time, says in court filings that he resisted the hiring of Walsh because the position had been vacant for 12 years and she had little experience in finance. But he claims Allen Larson, HEFA’s chairman, insisted Walsh be hired. His lawsuit quotes Larson as saying Gonzalez “feels dirty about this but Patrick called him into his office and demanded to know why this was not done already and told him to get it done.”

At a March 12, 2009, board meeting, HEFA voted to hire Walsh, subject to a final approval the following month. The announcement set off a firestorm of protest that Pat­rick was engaging in exactly the sort of patronage politics that he had pledged to end during his run for governor.

Twelve days later, Patrick called in Crosby from UMass and asked him to review compensation at all the state’s quasi-public authorities. In a statement, the governor said recent criticism regarding compensation at HEFA “has drawn attention to the tension that exists between salaries appropriate to attract and retain talent and the sense of shared sacrifice the public demands in times like these.” He said Walsh, “a respected and qualified individual recently hired at HEFA, will lead by example by voluntarily reducing her annual salary from $175,000 to $120,000. She will work to lead the reform efforts at the agency to generate savings.”

Four days later, the Boston Globe reported on email traffic between the Patrick administration and HEFA indicating that Patrick aides, despite earlier claims to the contrary, had orchestrated Walsh’s hiring and set her original $175,000 salary. In the ensuing furor, Walsh withdrew her name from consideration for the job.

After the Walsh fiasco, the administration’s attitude toward the quasi-public authorities hardened. In August 2009, Dan Grabauskas was fired as the general manager of the T even though he had nine months left on his five-year contract and was owed severance of $327,486.

That same month the Crosby commission released its report. Instead of lambasting high salaries at the authorities, it concluded that compensation packages “as a broad generalization” were “appropriate and reflect legitimately the context of each of their industries.” The report focused more of its attention on perks, recommending doing away with fixed contracts, excessive severance pay, guaranteed raises and bonuses, and cash payouts for banked sick time. It also said retirement benefits should be figured into salary comparisons.

But the Crosby conclusions did not deter Patrick. Over the next year and a half, Davey was hired at the T and paid $110,000 less than Grabauskas; Gonzalez appointed one of his own aides, Glen Shor, to replace Jon Kingsdale at the Health Insurance Connector Authority and paid him $88,000 less; Kinton was denied a $22,000 pay raise at Massport, forcing him out; James Rooney swallowed a $26,000 pay cut at the Convention Center Authority and the loss of $73,000 in bonus money, and Mitchell Adams was ousted from his $264,000-a-year job at the Massa­chu­setts Technology Collaborative. HEFA was merged into MassDevelopment, and the heads of both authorities (Caswell at HEFA and Robert Culver at MassDevelop­ment) were booted, replaced by Boston developer Marty Jones, who is making $215,000 a year—$309,000 less than the combined salary of her two predecessors.

The governor’s top aides orchestrated most of these changes, in some cases negotiating the new pay packages with little or no input from the authority boards. Some of the aides privately grumble about trying to find good people willing to do tough and often thankless jobs for less than they could make in the private sector.

The tone of the press releases announcing each new appointment has changed over time. When Shor was named head of the Connector in April 2010, his salary and the Crosby commission weren’t even mentioned. But by the time Jones took over at Mass­Development a year later, the press release noted her salary and effectively re­wrote the conclusion of the Crosby report by saying it had “outlined a plan to address excessive salaries and benefits for executives at independent agencies.”

Who Massport hires as its next administrator will tell a lot about the Patrick administration’s commitment to downsized salaries and contracts without guaranteed lengths. Massport runs Logan Airport which, like the T, is vitally important to the state’s economy. It’s also the airport where the two 9/11 planes that flew into New York’s World Trade Center originated. At the time, Logan was run by Virginia Buckingham, a political operative who had no aviation experience when she took the job. Just three months after the tragedy, a special task force recommended that Massport hire a very experienced chief executive and give him or her a five-year contract “to provide some insulation against political influence and pressure.”

Kinton, who came up through the ranks at Massport, was appointed to the top job in 2006 and given a five-year contract, a practice the Crosby report opposes. Sources say the Massport board began maneuvering last year to lock Kinton in for another three years. The board commissioned a salary comparison survey that found Kinton’s $296,000 annual pay was $12,000 above the median for managers at airports of Logan’s size. The board wanted to raise his salary to $318,000, which would have placed him just below the 75th percentile for managers of equal-size airports.

The board shared its findings with Transportation Sec­retary Jeffrey Mullan early in the fall. Sources say Mullan had no problem with the salary increase, but warned that the timing wasn’t good, given the down economy. Days before the Massport board was scheduled to vote on the salary increase, Mullan privately told board members he would fight it. The pay hike was scrapped and Kinton subsequently submitted his resignation. At press time, no replacement had been announced.

The Patrick administration’s crackdown on authority salaries has generated some savings. At the Connector, for example, the hiring of Shor set off a chain reaction of staff turnover and salary reductions. The 10 highest-paid Con­nector employees under Kingsdale earned a total of $1.66 million, while under Shor they earn a combined $180,000 less.

MassDevelopment boasts that its merger with HEFA generated payroll savings of $2 million, but the combination also ended a competition between the two authorities that yielded significant savings for higher education institutions, a cornerstone of the state’s economy. Prior to the merger, the two authorities competed aggressively for higher ed business, but after the merger MassDevelop­ment adopted one fee structure for all its deals. The result was a sharply higher fee structure for higher ed institutions. Harvard University, for example, issued tax-exempt debt through HEFA twice before the merger and paid a fee of $95,000 each time. Since the merger, Harvard has completed one deal, paying a fee of $677,000.

MassDevelopment is also refusing to pay Caswell a $562,000 severance payment he says he is owed. Caswell is suing, and a preliminary decision by the judge indicates the law may be on his side. It’s unclear whether the private attorneys representing MassDevelopment are working for less-than-market rates since since the authority is refusing to say what it is paying its lawyers, citing attorney-client confidentiality.

Many opinions on pay

Paul Levy, who ran the Massachusetts Water Resources Authority from 1987 to 1992, says he has watched with great concern as the Patrick administration has slashed salaries at quasi-independent authorities and curbed their independence.

“The public as a whole doesn’t like the idea of people in the public sector earning private sector salaries, but I think that’s shortsighted,” he says. “One reason you create authorities is to have them outside the purview of the regular politics of state government. The goal is to attract highly competent people and attract them away from the private sector.”

Levy says he hired Dick Fox to run the Boston Harbor Project and paid him a salary that made him the second-highest paid person in state government. Levy says Fox also paid his staff well. “We had a highly paid, highly skilled project team that was comparable to the teams we were contracting with,” Levy says.

Levy says it was no coincidence the harbor cleanup came in on time and on budget. By contrast, he says, the Big Dig didn’t take the same approach and the result was in many ways a disaster. Levy says Frederick Salvucci, the transportation secretary under former governor Michael Dukakis, would vouch for that. Salvucci and Levy take different stances on whether it makes sense to pay public workers private sector salaries.But Salvucci actually disagrees. He applauds Levy for hiring Fox and paying him a market-rate salary, and he acknowledges people running the Big Dig were not paid similarly. But he says the Big Dig’s problems wouldn’t have been solved by paying managers more. He says the real problem with the Big Dig was that it was handed off mid-stream during the transition from Dukakis to former governor William Weld and expertise and institutional memory were lost. That left Bechtel, the management company on the project, as the only entity with any institutional memory and, as Salvucci says, “It’s very easy to get along with yourself.”

Salvucci says it is possible to attract good people to government service jobs at lower pay if those being hired have the backing of top officials and feel they can really accomplish something, which he says didn’t happen with all the second-guessing surrounding the Big Dig. He says the T’s Davey is a good example of top-notch talent working for less. “He was attracted into a very tough job because of the excitement and the challenge of the mission. It makes it harder, but it is possible to do,” he says.

Unlike Levy and Salvucci, Crosby has never run a state authority. But he has served in the job Jay Gonzalez now has, as the state’s chief budget official, and he has probably studied government pay issues more than anyone else in Massachusetts. He played a central role in producing three reports on various aspects of government sector pay, in 2007, 2008, and 2009. The first two reports raised concerns about a growing gap between private and public sector pay, a gap that was making public service difficult for anyone except the wealthy or those already serving in government. The third report was from the commission appointed by Patrick to study whether compensation at quasi-public authorities was out of line.

Sitting in his office at UMass, Crosby—who is paid $171,000 as a university dean—remembers sitting down with Patrick prior to being appointed to head the commission. “Even at that point, I said to him, ‘I think you come into this with a predisposition that their salaries are too high and in general that salaries are really out of line. And I’m not sure I agree with you on that.’ I said that to him right up front. Frankly, I think they would have loved it if I came to that same conclusion.”

He says he and the other commission members were expecting to uncover a lot of sweetheart deals, but that’s not what they found. “There were a few freak things, but there really wasn’t much that was out of line,” he says.

Which is why Crosby has done a slow burn watching the Patrick administration as it slashes salaries and benefits while citing his report. He takes issue with the notion that authorities should be trying to hire people willing to accept less than the job is worth. He says Davey could take the job at the T because he can afford to; he has no kids and his wife is a partner at a big law firm. But Crosby asks what will happen when Davey leaves and everyone else across the country doing a similar job is making $300,000 to $500,000.

“You may have a good deputy in Massachusetts who’s making $115,000 for whom this job would be a raise, but it’s kind of an inherent market function,” he says. “In due time, there’s got to be a relationship between talent and compensation. There ought to be a relationship between authority, responsibility, accountability, experience, and compensation. That ought to be the measure.”

Crosby also worries about the administration’s control of quasi-public authority boards that are supposed to be independent. “It’s like enlightened dictatorship,” he says. “It’s fine if you’ve got a dictator who’s a good guy, but there’s no check and balance if he isn’t.”

As for what’s motivating Patrick, Crosby says he’s mystified. “I think he just wants control of the agencies. It’s about having his own people in the agencies,” he says. “I don’t know whether he genuinely believes that these people are paid too much or whether it’s punitive going with the times. That’s not really his style. It makes me think he thinks they are being paid too much, which puzzles me.”

Liquor battle brewing

Liquor battle brewing

With Massachusetts law on wine shipments overturned, Congress struggles with who should regulate alcohol distribution

massachusetts has long guarded its unique rules for regulating alcohol, so state officials weren’t happy last year when the federal appeals court in Boston struck down a 2006 state law that barred large wineries from shipping their products directly to Bay State consumers. The three-judge panel ruled that the law violated the Constitution’s guarantee of free commerce across state lines because it exempted Massachusetts’ own smaller wineries from the rule.

Now Congress is pondering legislation that would make it clear that such rules should be left to the states. And alcohol wholesalers, who oppose direct shipping because it takes business away from them, are leading the battle to get the bill passed.

Massachusetts is at the center of the debate, not only because of the appeals court’s decision but because the proposed law was first introduced in the House last year by Democrat Bill Delahunt of Quincy. It would give states near-total control over alcohol distribution and essentially reverse court decisions like the one that struck down the Bay State wine law. Since Delahunt re­tired at the end of last year to become a lobbyist, a Utah Republican, Jason Chaffetz, is carrying the bill forward.

Fighting the proposal are beer, wine, and spirits producers, many of them with Massachusetts ties, including Rich Doyle, the president of Boston’s Harpoon Brewery, and Peter H. Cressy, a former chancellor of the University of Massachusetts Dart­mouth and currently the president of the Distilled Spirits Council of the United States.

Beacon Hill lawmakers, who supported the measure overwhelmingly in 2006 and overrode then-Gov. Mitt Romney’s veto, are also watching the debate in Washington closely. Former state senator Michael Morrissey of Quincy, who was the wine law’s chief sponsor (and is now Norfolk County district attorney), says he pursued the legislation for fear that out-of-state wineries would avoid sales tax by shipping directly to consumers and because he wanted to protect the current distribution chain. He said the state’s small liquor store businesses—state law bars anyone from owning more than three liquor stores—rely heavily on wholesalers for their livelihood.

“These small mom-and-pops rely on the distribution chain to be able to get the product they need,” he says.

Large California winemakers challenged the law as a violation of the Constitution’s interstate commerce clause. They said it discriminated against them because it carved out an exemption for small vintners, including every winery in Massachu­setts, so they could ship directly to Bay State wine drinkers. Wineries producing more than 30,000 gallons a year were denied the same privilege.

The court’s decision has left the shipping situation in limbo. Technically, Massachusetts is now allowing direct wine shipments, but it has capped the amount of wine that any one household can buy at 26 cases per year. Because it’s impossible for any winery to know what a consumer has bought previously from other vintners, the Wine Institute —the trade group for California wineries—has warned its members not to ship to Massachusetts consumers. Neither FedEx nor UPS will ship wine to the state.

The threat to wholesalers hasn’t come only from the demise of laws like Morrissey’s. Large retailers have also challenged the wholesalers’ dominance by trying to buy directly from vintners, brewers, and distillers. Costco Wholesale Corp., for example, has in recent years financed a legal and lobbying campaign in Washington state to win the right to buy directly from producers. If it succeeds, and expands its direct purchase arrangement nationwide, wholesalers would be badly hurt.

The wholesalers insist that their lobbying campaign in Washington, where they maintain one of the country’s largest political action committees, is about more than preserving profits. They say that a three-tier distribution system—producer to wholesaler to retailer—helps states ensure that underage drinkers can’t get alcohol and that the alcohol business isn’t beset by corruption.

“This was the system set up after Prohibition that prevents the abuses that led to Prohibition,” says John Stasiow­ski, president of the Beer Distributors of Massachusetts, a state trade group. “It insulates the supplier from the retailer and prevents overconsumption and crime.”

Even if Congress doesn’t agree with that, Stasiowski says, the federal government should respect that “the states are the best governmental organizations to determine how alcohol is sold in their borders.” It hardly makes sense, he says, for the federal government to dictate to states as disparate in their values as Utah and Nevada how alcohol can be sold.

Legal experts are skeptical. Einer Elhauge, a Harvard Law School professor who has studied the issue, says that he fears the Delahunt bill could force the courts to oversee years of litigation over whether state rules supersede federal ones. In testifying before the House Judiciary Committee in Washington last fall, he argued the bill “would actually worsen the concerns about legal uncertainty and excessive litigation.”

In Elhauge’s view, the legal threat to state rules by alcohol producers and retailers has actually been minimal. States have continued to maintain their unique approaches to alcohol regulation, including the Massachusetts limits on liquor store ownership.

Delahunt insists the threat to state regulation is real. Citing his experience as Norfolk County’s district attorney prior to his seven terms in Congress, Delahunt says any threat to state alcohol regulation is a threat to public safety. The alcohol producers “have an economic interest to see the states not have the authority to regulate. Their economic interest is to have a wide open market, a Wild West,” Delahunt says, “despite the statistics in terms of drunk driving and alcohol and how it insinuates into criminal behavior among young people.”

Restricting direct shipments of alcohol, as the Mor­rissey law intended, will help prevent that, Delahunt says. “I bet there are a lot of teenagers now that are doing a healthy business, either consuming alcohol or selling it to minors after getting it by mail.”

Of course, Massachusetts alcohol producers point out that the state isn’t nearly so worried about the distribution chain when its own producers are involved. The state has long allowed in-state wineries to ship directly to consumers, and it allows in-state producers of all stripes to sell directly to bars and restaurants. It’s only out-of-state producers that must go through wholesalers.

That’s a huge loophole, all the more so since Anheuser-Busch—the beer maker that makes Budweiser and controls most of the US beer market—continues to be treated like an in-state manufacturer under the terms of the 1971 Massachusetts law that set the rules. That law grandfathered in out-of-state brewers that at the time had a license to do their own distribution in the state.

In his bill, Morrissey had allowed small vintners to continue shipping directly to consumers, he says, in order to protect the state’s own small wineries, which rely on direct shipping for a part of their revenue.

But local vintners say they never wanted the protection. “We don’t advocate any kind of protectionist measures,” says Kip Kumler, the owner of Lincoln’s Turtle Creek Winery and president of the Massachusetts Farm-Winery and Growers Association. “The more choices consumers have, the better.”

Kumler says that laws like Morrissey’s give license to other states to discriminate against his wines. “People come to Massachusetts. They taste our wine, they enjoy it, and they go home and they order it,” he says. “To lose that ability to ship would hurt us.”

As for the threat direct shipping poses to underage drinking laws, Kumler doesn’t buy it. Massachusetts teens could already try to buy Turtle Creek wine but don’t because of the shipping costs and the time lag before the product arrives. Direct shipping, he says, is a way for wine connoisseurs to get unique and often expensive products they can’t find in their local stores.

Direct shipping isn’t as big a deal for Massachusetts brewers, who rely heavily on wholesalers to get their product to market. That’s created a quandary for them: fight a bill they don’t like and risk offending their wholesalers or steer clear of the issue. Doyle, of Harpoon, declined to be interviewed, his spokeswoman Liz Melby said, for fear of offending his wholesalers. He wasn’t so reticent last September when he told the House Judiciary Committee in Washington that the proposed federal legislation could create huge headaches for brewers by, for example, allowing every state to adopt its own labeling requirements for beer bottles. New York recently tried to do just that, before a federal court intervened.

“As a small brewer in Massachusetts, I do not have the resources to fight every discriminatory state statute and regulation that restricts my ability to compete,” he said.

Social impact bonds

Social impact bonds

Boston company is looking for capitalists willing to invest in government social programs

tracy palandjian looks and acts like many of the other hotshot dealmakers in Boston. She dresses in upscale chic, occupies a 14th-floor office on State Street with panoramic views of the city, and peddles bonds to private investors. What sets her apart from most of her colleagues is the type of deals she’s pursuing. She’s not schmoozing with high-flying Internet startups or cultivating public officials trying to borrow money at low interest rates. Instead, she’s trying to entice private in­vestors to put money into projects that benefit society—keeping drug dealers and thieves from going back to their old ways after prison, and getting the homeless into permanent housing.

Think of it as do-gooder capitalism, a way of marrying the power of markets with the challenge of tackling longstanding social problems by getting investors to bet on the ability of private social entrepreneurs to perform government services more effectively and efficiently than the government does now.  

Palandjian’s company, Social Finance Inc., is an independent, information-sharing ally of a British firm by the same name that pioneered the sale of so-called social impact bonds—bonds that pay a healthy return if the privately-run government service exceeds expectations or pay nothing if it doesn’t. Social Finance and a Boston–based rival, Third Sector Capital Partners, are trying to jumpstart the business in the United States, acting as intermediaries bringing investors, social service entrepreneurs, and government officials together. President Obama is already on board, calling for seven test projects, and Gov. Deval Patrick is also looking to test the concept in Massachusetts.

“Boston seems like the ideal place to incubate these three-way partnerships. There’s money, there’s a broad culture of social services, and there’s a government that has no problem with setting precedent,” says Palandjian, who left Parthenon Capital Partners a year ago to launch the Social Finance startup in office space provided by Parth­enon. Palandjian built her resume managing money for Parthenon’s nonprofit and foundation clients.

Jeffrey Liebman, a professor of public policy at Harvard’s Kennedy School of Government who crafted the federal approach to social investing while working at the US Office of Management and Budget, says government tends to spend a lot on ineffective social programs because it doesn’t do a good job of measuring outcomes.

“This is to finally make it so the government only pays for what works, something that isn’t happening because government isn’t designed to operate that way,” Liebman says. “The question is whether there are interventions that will generate high benefits that will both bring savings to taxpayers and generate a return on the investment.”

Social Finance launched its business in the United Kingdom with a program designed to reduce recidivism among former prison inmates. Currently, the bulk of the UK’s 40,200 prisoners cycle in and out of prison at an alarming and costly rate, with about 60 percent of first-time offenders returning to jail within a year after their release.

Social Finance spent a couple of years convincing 17 investors, including the Rockefeller Founda­tion, to buy $8 million worth of social impact bonds to fund a program providing just-released inmates from a prison in Peterborough with assistance in finding housing and employment as well as financial, family, and addiction counseling. Peterborough holds more than 800 men and women prisoners, most of them first-time offenders.

The British Ministry of Justice agreed to refund the investors their original $8 million investment if the Peterborough re-entry program succeeds in reducing the recidivism rate at the prison by 7.5 percent over an eight-year period. If the recidivism rate drops even more, the investors and the British government agreed to split the savings.

In the United Kingdom, Social Finance spent months working with the Treasury and the Ministry of Justice to tightly define the exact population for the test drive. “This is why it’s a good idea to have an intermediary like Social Finance,” says Kippy Johnson, associate director of the Rockefeller Founda­­tion, which invested nearly $1 million in the UK experiment. “Not only do they put all the players together and do the negotiations, but they are going to have to drive the social service provider hard to ensure [good] outcomes get a return on the investment.”

The UK experiment tapped mostly nonprofit foundations as investors, but the Rockefeller Foundation thinks the program has broader appeal. It intends to spend $54 million to develop a plan to convince US for-profit investors to put money into programs attacking social and environmental problems. “The idea is to unlock private capital to invest in social problem solving,” says Johnson.

In his budget address earlier this year, Obama em­braced social impact bonds, using the name Harvard economist Liebman gave them—Pay For Success contracts. If Con­gress approves, $100 million will be set aside for seven pilot programs. “Instead of spending first and asking questions later, we’re rewarding folks inside and outside of government who are delivering results,” Obama said.

The Patrick administration is already angling to participate in one of the seven federal pilot programs and launch state ones as well. “We have to change the way we do business,” says Jay Gonzalez, the governor’s secretary of finance and administration. “What we’re doing is unsustainable. There are lots of good reform efforts, but I’m definitely excited about this one.”

The Patrick administration’s primary focus is to come up with ways to reduce the state’s homeless population and keep released inmates from winding up back in prison. “Is it going to be simple?” asks Gonzalez. “No. It needs some real rigor to make it right, but we’d be fools to not explore this, and the exploration has definitely begun.”

Patrick says the idea has tremendous potential. “It shows our willingness to invite new people to the table to solve old, intractable high-cost social problems,” he says. “To me, this is really, really appealing.”

Molly Baldwin, the founder and executive director of Roca Inc., says her 23-year-old Chelsea–based program for high-risk kids could flourish with the use of social impact bonds.  It currently receives only 12 percent of its funding from the state.

“When I read an article about what’s going on in the UK, I went berserk,” says Baldwin, who is already trying to line up investors for a project. “I’m in a business in which we all talk about how much money is being wasted on failure and never invested in success. We carefully track what we do. Meanwhile, our criminal justice system, which doesn’t track or ever adjust, is a miserable failure that’s ridiculously expensive. After all the talk of evidence-based practice, it’s time for the government to put its money where its mouth is.”

Cracks in cap and trade

Cracks in cap and trade

the same carbon tax concerns that have stymied climate change legislation in Washington are now starting to gain some traction in the Northeast.

Chris Christie, the Republican governor of New Jersey, says he plans to pull his state out of the Regional Green­house Gas Initiative by the end of this year. The Republican-controlled House in New Hampshire, led by conservative Speaker William O’Brien, voted in February to withdraw from the 10-state compact. Republicans in a handful of other northeastern states are pushing their own withdrawal bills.

Steve Lonegan, who heads the New Jersey chapter of the Americans for Prosperity Foundation, a group founded by conservative businessmen David and Charles Koch, says economic concerns are fanning opposition to the regional compact. He says the initiative was designed as a template for a country-wide cap and trade system, but now that the national legislation isn’t going anywhere he thinks the regional system should be scrapped as well. “If not,” he says, “the long-term steady, slow pressure of pushing rates up will damage the economies of these states.”

The Regional Greenhouse Gas Initiative was launched in 2009 and requires electricity generators in the region to buy allowances for each ton of carbon they emit. The sluggish economy has dampened demand for electricity, so the regional cap of 188 million tons of CO2 hasn’t been too painful yet, but the cap is supposed to start ratcheting down 2.5 percent a year starting in 2015.

The carbon allowances are sold at auction and the $789 million raised so far flows to member states, with a requirement that at least 25 percent of the money go for “consumer benefit.” Studies indicate just over half of the carbon tax money has been funneled to energy efficiency projects, with another 12 percent going for renewable energy development and technologies to reduce carbon emissions.

Environmental groups say this “cap and invest” approach pays dividends for the environment and consumers. Environment Northeast, a regional group supporting cap and trade, says investing money from the sale of carbon allowances in energy efficiency programs saves consumers money, puts downward pressure on electricity prices, and reduces overall demand for electricity and the need for new power plants. The environmental group says the economic payback for Massa­chusetts consumers is almost $3 for every $1 invested in energy efficiency.

Cap and trade opponents dismiss the benefits and worry about the cost. Power generators roll the cost of the carbon allowances into the electricity prices they charge their customers. The impact on utility bills varies by state, but officials at the Regional Greenhouse Gas Initiative say it ranges, on average, from a low of 28 cents a month in New Jersey to a high of 68 cents in Connecticut. The impact in Massachusetts is estimated at 57 cents a month.

Calling the cap and trade system a backdoor tax increase, the New Hampshire House voted 246-104 to pull the state out of the program. But the Senate in May voted 16-8 to continue the state’s participation with new restrictions on how the proceeds are spent. At press time, the two branches were working to resolve their differences, with Gov. John Lynch threatening to veto any move to pull the state out of the regional compact.

Christie says he believes climate change is real, but he calls the regional cap and trade program a failure in addressing it. He says carbon allowances are selling for $2 a ton and would need to rise to $20 to $30 a ton to force utilities to start shifting to cleaner energy sources. Yet he clearly doesn’t want to see that happen, calling the cap and trade program a “tax on electricity” that can hurt businesses in New Jersey. Ocean Spray Cranberries Inc. recently announced it was relocating a New Jersey processing plant to Pennsylvania in part because of high energy costs in the Garden State.

Ironically, New Hampshire and New Jersey, the two states where opposition to cap and trade is the strongest, have treated a portion of their carbon allowances as taxes. While most states participating in the initiative have used nearly all of their allowances for energy efficiency projects, New Hamp­shire and New Jersey both used a portion of their funds to balance their budgets. New Hamp­shire diverted $3.1 million, or 11 percent of its allowances, while New Jersey tapped $65 million, or 44 percent of its total. New York used $90 million of its carbon allowances to plug budget gaps.

stats

Mooring mess

Mooring mess

Private businesses are cashing in on access to public waters while boaters wait years for affordable mooring sites

Robert Guimond is like a lot of retirees who stay in Massachusetts. The biggest attraction for him is the ocean, which is why the former salesman for General Motors and his wife left New Hamp­shire and took up residence in their one-time vacation home in Bourne.

Guimond’s pride and joy, aside from his family, is his 30-foot Mainship motor boat that he uses for fishing and pleasure trips. He spends weeks waxing it, cleaning it, and getting it ready for the relatively short New England boating season.

 mooring
 Robert Guimond, and his 30-foot Mainship, tied up at his mooring in Bourne.

About the only thing that he dislikes about boating is the mooring he ties up to each night. Moorings are like city parking spaces for boats. You have to have one and there aren’t enough of them to go around. Bourne assigns about 1,800 moorings to the public and charges an annual fee of $70 apiece for them, but they rarely turn over and people wait as long as 10 years to get one. Guimond has moved up to No. 13 on the town’s waiting list for his area since he put his name on it three years ago. He’s not alone. There are nearly 500 boaters on Bourne’s waiting lists.

While he waits, Guimond rents a so-called transient mooring for the four-plus months his boat is in the water, where he pays a $1,200 lump sum based on a daily usage rate. It’s a lot more expensive than the standard public fee but not as costly as renting a mooring from one of several private boatyards, yacht clubs, and marinas. They operate a little like ticket scalpers. The town grants about 650 moorings to them at a commercial rate of $150 apiece, but the businesses turn around and re-lease those moorings for whatever the market will bear—typically $1,800 and up.

Parker’s Boat Yard in the town’s Cataumet section has about 130 mooring permits, with about 85 or so that are leased out seasonally for $2,300 plus tax, plus the $150 town mooring permit fee. A woman named Cathy in the office at Parker’s who did not want to give her last name says the boat yard has about a dozen moorings available. If someone on one of Bourne’s 34 waiting lists—one for each public mooring field along the town’s coast—wants to lease one, she says, all they have to do is write a check.

“How is that fair to a guy like me when I’m waiting for a mooring?” Guimond asks in exasperation. “That’s not right. We pay our taxes and everything else. We should be entitled to something. It seems like there’s favoritism.”

Jennifer Chisser, who oversees mooring permits in Bourne’s harbormaster office, says the favoritism is by design. She says commercial moorings are issued to help waterfront businesses. “They can rent them out. That’s for them to earn a living,” she says.

But should private waterfront businesses be allowed to cash in on their access to public moorings? That question goes to the heart of a public policy debate taking place between the Patrick administration and Inspector General Gregory Sullivan. The Patrick ad­ministration takes a laissez-faire attitude on moorings, leaving it up to local harbormasters whether they want private businesses to make a profit on moorings. By contrast, the inspector general says state laws mandate that the waters along the coast be open and accessible to the public and not parceled out to private interests. Moorings, the IG says, should be distributed on a first-come, first-served basis with reasonable fees.

The policy split is visible up and down the state’s 192-mile coastline. Plymouth and Gloucester do not issue commercial mooring permits or allow private entities such as yacht clubs to dole out moorings, but many other communities do, including Bourne, Duxbury, and Beverly. There are other irregularities as well. State regulations clearly say that individuals cannot transfer their moorings to anyone other than immediate family members, but websites such as Craigslist and eBay are full of listings of mooring sites for sale. And even though state law prohibits it, many communities along the coast charge nonresidents more for moorings.

It’s a system where one harbormaster says he can give away publicly-owned property rights for a private business to cash in on, while the town next door says it won’t allow such a practice because it’s against state law. It’s a process where the state insists everyone is equal yet does little to ensure it. It’s a mishmash of interpretations of the law and regulations that in the end means the average boater is left adrift and, in many cases, upstream without a paddle.

Fair and equitable

According to state law and regulation, moorings are supposed to be granted in a “fair and equitable” manner. Cities and towns are allowed to collect “reasonable fees,” which for the season generally range from $1 per boat foot to several hundred dollars. Boston collected $171,133 in mooring fees in fiscal 2008, the most recent data available, while Duxbury, with about half the number of moorings, raked in nearly $135,000 in 2009. Barnstable, which has the most registered recreation boats of any community in the state with nearly 4,700, reported about $200,000 in mooring and waiting list fees last year.

When all moorings are taken, regulations require harbormasters to keep a waiting list and update it regularly. Moorings cannot be sold or leased by individuals and transfers can only occur among members of an immediate family. In most towns, there are people who have been on waiting lists as long as 20 years, with the average generally being 12 to 15 years. Marshfield has two people who have been waiting for nearly 40 years for moorings in the popular Green Harbor section of town.

Moorings, unlike the more expensive slips and docks, are “blue collar,” with far more people like Robert Guimond manning the helm than trust fund babies. According to Boat Owners Association of the US, registration data show three out of four boat owners have a household income of under $100,000.

Unlike slips, where boats can tie-up to land-based docks or piers for much higher fees, moorings are located offshore. Indeed, mariners need a boat ride to get to a boat that is secured on a mooring, which is usually identified by a large ball floating on the water’s surface. Moorings are secured to the bottom by a heavy anchor or concrete block.

The law and regulations are largely silent on the issue of commercial moorings. They don’t say whether moorings can be leased for a profit, although they do say that nothing in the regulations should be read to prohibit private entities from granting moorings to customers or members.

The state’s Department of Environmental Protection concludes “fair and equitable” is determined by the harbormaster in each town. Ben Lynch, head of the Water­ways Division of the DEP, says the statute expressly delegates authority to harbormasters in each town.

“It’s kind of a classic home-rule situation,” he says. “For me, it seems like a very practical and good regulation because authority should rest locally. Due to the wide variety of different kinds of harbors, it makes sense to let them handle it rather than to have one overarching regulation.”

Lynch says it’s perfectly OK for a community to allocate moorings to businesses so they can sell them and turn a profit. “There are a lot of active waterfronts and businesses on those waterfronts that contribute to the local economy,” he says. “Many of them are reliant on having some guaranteed access to the local waters.”

The inspector general’s office acknowledges the authority of local harbormasters, but says that if they violate the law the state must step in. Citing a Supreme Judicial Court decision from 2000 and long-standing legal principles, the inspector general argues that the waters off the coast belong to the public, and that private businesses cannot be allowed to parcel out those waters for personal profit.

Jack McCarthy, a senior assistant inspector general, casts the debate in class terms. He says private yacht clubs and marinas tend to sell moorings to well-heeled boaters while average Joes get stuck for years on waiting lists. “Not every boater’s got that kind of money to burn. Not everybody has a yacht,” he says.

A report this spring by the inspector general found the town of New­bury, where there are scores of boaters waiting as long as 20 years for a mooring, had granted nearly 100 mooring permits for little or no money to four private businesses on the waterfront. The investigation found that at least one of the boatyards offered a mooring to people who purchased boats from it. It was similar to previous investigations in Harwich and Chatham that also found private businesses with mooring permits offering them to customers without regard to others who had been waiting for years.

Caulkett

Gloucester harbormaster James Caulkett

James Caulkett, the harbormaster in Gloucester, says his community views the law the same as the inspector general. He doesn’t give preferential treatment to waterfront businesses or allow them to resell moorings at a profit. “Everybody has to go through the harbormaster and everybody has to get on a waiting list. No exceptions,” he says.

But moorings go hand in hand with waterfront businesses in many other communities. Many boatyards in those communities view their mooring permits as their own personal property. In Mattapoisett, the Aucoot Cove Boat Yard is up for sale with an asking price of $1.3 million, and the owners say 30 moorings are part of the deal. In Marshfield, the private boat yard Mary’s Boat Livery is on the block for $3.8 million, and the sales pitch includes about 100 moorings. At an average of $1,500 per mooring for the season, the moorings alone are worth $150,000 a year.

Marshfield Harbormaster Michael DiMeo says whoever buys Mary’s should not bank on automatically having the moorings transferred, a fact he says he has conveyed to the owner, who did not return a call for comment.

“It’s illegal,” says DiMeo, who is also a patrolman in the town police department. “The moorings cannot go with it. All those moorings he has out there are not his moorings, they’re the town’s moorings. He’s fully aware of that.”

Many of the private businesses and yacht clubs that control moorings do not maintain waiting lists as required by law or offer the moorings to those on local harbormasters’ waiting lists. Some, such as the Squantum Yacht Club and Wollaston Yacht Club in Quincy, advertise quick and easy—but not cheap—access to moorings.

“Join now while mooring space and membership are not wait-listed!!” Squantum Yacht Club declares on its Craigslist ad offering memberships and mooring for $1,075 for the first year. Memberships alone are $475.

Norfolk County District Attorney Michael Morrissey, a former state senator and an avid boater, says he believes communities should be allowed to give moorings to waterfront businesses. To clarify the law, he introduced a bill in 2008 that would have given harbormasters the power to grant mooring permits to private for-profit or not-for profit entities. The bill died in committee.

Morrissey says the waterfront businesses are part of the economy and rely on mooring income to maintain profitability. He said their moorings should not be taken away without compensating them. “If you want to take them away, I’m all for it,” says Morrissey. “Just pay them for their loss.

Moor for me

It’s not just businesses that treat mooring permits as their own property. Many individuals look to cash in on their permits by either selling them when they get rid of their boat or move, or offering to sublease them. Despite regulations prohibiting such transfers, some individuals say they have the backing of local officials.

Since early April, I have found a number of mooring sites along the Massachusetts coast put up for sale or lease to the highest bidder on Craigslist and eBay. Posing as a potential buyer, I contacted many of the sellers and in­quired as to how the moorings could be purchased while the city or town had scores of people waiting for moorings.

“The harbormaster told me when I sell it to come to the office with the new owner and he would collect the city mooring fee, which for me was the $130,” says one boat owner in an email. He was selling his spot and its accompanying mooring hardware in Salem Harbor near Beverly for $1,800.  “When the fee is paid, he will transfer your information to the mooring ownership,” he says.

Including the mooring hardware in the sale is how most sellers justify their high prices. The mooring fee that communities charge covers just the space itself; to actually moor a boat at that space the boat owner needs a block anchored to the bottom as well as a chain and float to which the boat can tie up. The cost of mooring gear can vary considerably, but typically runs about $600. People selling their moorings say they are technically selling their gear, not their moorings.A New Bedford boater named Ken, who did not want his last name used, charged considerably more for his gear. He says he sold his anchor, chain, and float for a mooring in the protected Pope’s Island area for $2,000. He says his buyer separately purchased the mooring spot itself for $150 from the city’s assistant harbormaster. The buyer wasn’t on the waiting list for moorings in that area.

 “It was the gear that I sold,” says Ken. “All you own is the gear. I sat down with the guy that bought it along with the assistant harbormaster and did all the paperwork.”

Tommy Vital, the acting New Bedford Harbormaster, conceded that Ken’s story may be true. He says his oversight of moorings has been lax. “I started with the moorings and I kind of just got away from it,” he says, explaining his lack of involvement in the process. “I don’t really like to deal with it. . .We were a little more loose with the regulations.”

Harbor attendant John Anderson, who took over the mooring permitting duties from Vital in 2009, says because of the prior lax oversight and lack of local regulations along with the increasing popularity of New Bedford’s harbor, the city has begun enforcing mooring regulations more strictly. He says the waiting list has been updated, unpaid mooring fees have resulted in revoked permits, and moorings are no longer transferred to people not on waiting lists.

“They used to call it the Wild West down here,” he says. “We’re coming a little more of age.”

Christopher Sanborn, the Danvers harbormaster, requires boaters seeking a mooring to purchase the mooring gear from the previous owner. Sanborn says someone looking to unload a mooring in his community is given the names of the top three people on the waiting list. Sanborn says the owner is allowed to negotiate the best deal he can with one of those people, but he says the owner is technically selling his gear, not the mooring site itself.

Asked why buyers can’t just buy the mooring permit and install their own gear, Sanborn says: “We could throw out hypotheticals all day long. The laws, they’re interpreted differently in different towns. I think we have a good grasp of it here in Danvers.”

Land ho

Dating back to the early Roman days, there is a legal principle commonly referred to as the “public trust doctrine.” Simply stated, the doctrine says the air, sea, and shore do not belong to any one person but rather the general public and, as such, restrictions cannot be placed by individuals claiming ownership.

The state’s courts and Legislature have consistently upheld the public’s right to access the coastal waters, whether through beach access or navigation. During colonial times, the laws were written to codify the so-called “public trust doctrine,” and in 1866 Massachusetts enacted the nation’s first laws regulating and licensing activities in the tidal areas.

State law prohibits coastal communities from discriminating against inland residents when it comes to accessing the water. But dozens of communities, including Boston, ignore that mandate and either charge a higher mooring fee for nonresidents or charge them higher fees for related permits or services.

“The statute says you can’t discriminate on basis of residence,” says Morrissey, the district attorney and former state senator from Quincy. He should know because, when he was a state senator, he wrote the law covering access to public waters. “People [in other towns] say it’s their shores, their waters, they can limit access to their residents. I tell them, ‘Fine. Just don’t travel on my streets in Quincy when you come up to Boston.’”

In 2006, in an appeal by a Truro resident who was charged a higher price than local residents to moor his boat in Provincetown, the Department of Environmental Protection ruled that a higher nonresident fee was illegal and ordered Provincetown to cease charging it.

Despite the ruling, many coastal communities continue to discriminate against nonresidents. A review of local regulations by CommonWealth found more than two dozen cities and towns are either charging nonresidents higher mooring fees or charging them more for related services and permits.

Boston, for example, charges its 849 residents with mooring permits $1 per foot for the season. The 876 nonresidents who have mooring permits pay $4 per foot.

Danvers makes it much harder for nonresidents to obtain a mooring permit, restricting them to every fourth mooring that becomes available. Nonresidents and residents pay the same amount for a mooring permit, but non­residents pay twice as much as residents for a waterways fee.

Wollaston
The Wollaston Yacht Club in Quincy offers quick and easy – but not cheap – access to moorings.

In Marion, locals and out-of-towners pay the same $60 fee for stickers verifying that a boat is legally tied to a mooring plus $1 per foot for the mooring site, but nonresidents are charged an extra $100 for a “privilege permit.” In neighboring Mattapoisett, the mooring fee is the same for all, but nonresidents pay four times more per foot for a sticker. In addition, the town has racks for dinghies that boaters can use to access their moorings. There are 35 racks for town residents, but only five for non­residents, which are assigned by lottery, and the fee for nonresidents is twice as much.

“It’s a shame that [communities] are choosing to flaunt this,” says Patrick Donovan, a Quincy attorney who has represented boat owners in appeal actions. “Boat owners at first blush are not the most sympathetic kind of class, but moorings are working class—people who don’t belong to yacht clubs or marinas. For towns to be charging [nonresidents] five times as much, it’s terrible what they’re doing.”

Appeal confusion

There are roughly 30 appeals of harbormaster decisions to the DEP each year and in nearly every instance the DEP sides with local authorities. “We look at the facts, ask the harbormaster and give him a chance to respond, and then we act,” says Lynch of the DEP. “Our regulations presumptively find in favor of the harbormaster.”

Even when the state rules against local officials, sometimes little, if anything, changes. Jim Fiset of Duxbury has a mooring for his 27-foot Catalina sloop, but it is far offshore, and he has been on a waiting list since 1992 to get one of the coveted deep-water basin spots in the inner Duxbury Harbor. He says he has watched as people who were not on the waiting list received moorings while others delinquent on their payments were given extra time to make good, a violation of town and state regulations.

He documented his concerns with mooring numbers and dates and filed an appeal with the DEP. In 2006, state officials informed the harbormaster that if the town did not offer Fiset the next available mooring, the agency would audit the dozen moorings Fiset cited in his appeal. In essence, they said, we won’t investigate potential illegal actions if you give this man his mooring.

“If the Harbormaster elects to continue the appeal pro­cess, the DEP will require written support to explain the rules used to assign each of these permits versus the permit denied James Fiset,” according to a letter in the appeals file.

But no one at the DEP ever told Fiset about the decision. DEP records indicate no appeal was ever filed so officials presumed Fiset got his mooring and the case was closed. The Duxbury harbormaster, who did not return calls for comment, did offer Fiset a mooring suitable for a 25-foot boat last year but Fiset could not take it because his boat is two feet longer, a fact the harbormaster had to know because the boat’s length is on the waiting list next to Fiset’s name.

Fiset says he is still waiting for an inner harbor mooring, sitting at No. 2 on the list. But he also did not want to rock the boat any more out of fear of losing his spot. He says he took a lot of flak when he took on local officials with his initial complaint.

“It is uncomfortable,” he says. “When I went through this, I didn’t have a lot of friends.”

Lynch concedes there is no consistent rule of law when harbormasters and towns make their own decision about what parts of what law applies to them.

“Enforcement is discretionary as well,” says Lynch.

The inspector general’s office says the state needs new mooring regulations and more uniform enforcement of existing rules. At press time, McCarthy and other officials from the inspector general’s office were planning to sit down with Rick Sullivan, the secretary of energy and environmental affairs, to discuss the situation.

“It makes sense for the DEP to let harbormasters en­force the regs, but when they don’t do their jobs, that’s when DEP has to step in,” says McCarthy. “And so far, they haven’t.”

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Criminal capacity

Criminal capacity

gov. deval patrick wants to close two prisons this year to save money, but the Legislature isn’t enthusiastic about the idea, partly because of fears about violence stemming from cramming too many prisoners into tight spaces.

According to 2009 data from the US Department of Justice, Massachusetts has one of the 10 most overcrowded prison systems in the country. The system is operating at 140 percent of its capacity, with 11,300 inmates living in prisons originally designed to hold just under 8,000.

North Carolina has the most overcrowded prisons in the country, with facilities operating at 397 percent of planned design capacity. Mississippi’s prisons are the least crowded, with just 50 percent of prison beds in use.

The problem with the Justice Department numbers is that states use different yardsticks to measure overcrowding. States like Massachusetts compare inmate population to the designed capacity of the prisons. Others compare the inmate population to prison square footage or to the amount of staff, programs, and services offered. The Justice Department data don’t distinguish among the three approaches.

Patrick administration officials have not publicly identified the prisons targeted for closure, but Terrel Harris, the spokesman for the Executive Office of Public Safety and Security, says officials are confident they can accommodate more inmates at fewer facilities without creating safety or security problems.

Harris says the Patrick administration is also eyeing sentencing reform so fewer nonviolent criminals end up in prison in the first place.

 “We have proposed several reforms to the state’s criminal justice system and sentencing laws that will help address issues like overcrowding in our prisons,” Harris says.

State of States

Mixed media

Mixed media

Dueling documentaries underscore the great divide in American education

the trend at first seemed heartening. The problems in the US education system had become so compelling that filmmakers recently produced several documentaries on the topic, with some even enjoying commercial success at theaters. It suggested that the critical issues facing schooling in America might finally be registering on a broad scale. But after attending screenings of two of the new education documentaries, I found myself more dispirited than uplifted.

My education double-feature, with viewings separated by a few months and a few miles, started at the Loews Boston Common theater, where Citizen Schools, a Boston-based nonprofit that operates after-school programs, sponsored a screening of Waiting for Superman. The film was produced by Davis Guggenheim, who won an Academy Award for his documentary on Al Gore’s battle against climate change, An Inconvenient Truth.

The movie focuses on the dismal prospects facing American students in large, urban school districts. For the students profiled in the film, hope comes in the form of a numbered ping-pong ball being drawn from a drum, the method used by many charter schools to conduct lotteries when demand for their seats exceeds the supply. The families in the movie have given up on dysfunctional district schools, and feel that admission to a higher achieving charter school represents the only hope that their child will get a quality education that will prepare him or her for college.   

Several months later, I was at the Belmont Studio Cinema for a showing of a very different documentary. Race to Nowhere paints a picture of a high-pressure, achievement-oriented school culture that is destroying our kids, stealing their childhood, and causing everything from stress-induced stomach illnesses to suicide among teenagers who are running faster than ever on the rat-race treadmill that US schooling has become. We hear from students who could never take enough AP courses to satisfy their maniacal helicopter parents and from those who literally made themselves sick throughout high school by working day and night to get accepted at the “right” colleges.

The film was met with knowing nods from parents in the affluent Boston suburb, who shared worries during a discussion session after the screening that their children were suffering from the same sorts of pressures.

I had an entirely different reaction, however. I was struck by the fact that these parents—and the film—were decrying a high-achievement culture that families in Waiting for Superman were desperate for their children to gain access to.

There is certainly plenty that’s wrong with American schools, and the pressure on students and obsession with grades, college rankings, and SAT scores clearly is over-the-top in some communities. It mainly seems to be a problem in affluent suburbs, however, and it is as much the fault of parental pressure and the broader culture as it is of the schools themselves. But these are problems that millions of American schoolchildren will never have to contend with. They are consigned to school districts where 15-year-olds are struggling with basic math and reading skills, and where the question isn’t who got into which top college but whether graduating students are prepared to handle introductory courses at a community college.

It is that grim reality that has inspired school reformers to insist that we create schools of excellence that set high standards for poor children and provide them with the support to reach that bar. George W. Bush was not known for his eloquence, but he captured the essence of the challenge in his 2000 speech on education to the NAACP, in which he decried the “soft bigotry of low expectations.”

American children may all head off to school each morning, but they arrive at two entirely disconnected worlds. Which one they are in almost invariably depends on their zip code. There is perhaps no more powerful reminder of this than the fact that one world seems to be suffering from a gluttonous excess of achievement-focused competition, while families in the other would give anything for their children even to be able to sip from that cup.

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Public records makeover

Public records makeover

CommonWealth long has focused on the need for greater transparency in government. We’ve highlighted the needless secrecy surrounding the recipients of state tax credits and the shortcomings of the financial disclosure forms filed by government officials. We’ve even had some success in addressing those issues. The state plans to start identifying the recipients of certain tax credits next year. And we’ve tried to make financial disclosure forms more accessible to the public by spending thousands of our own dollars buying copies of the forms from the State Ethics Com­mission and posting them on our website.

But one area where we’ve had little success is the state’s Public Records Law. We published a cover story on the law in 2008 (“Public records not so public,” Fall ’08), highlighting the many stonewalling tactics used by public officials to avoid turning over documents. We’ve also published numerous articles on our website about rulings on appeals of records denials.

In this issue, Michael Morisy offers his own unique perspective. Morisy runs MuckRock, which files public records requests on behalf of the public. Users simply fill out a form detailing what information they want and Muck­Rock takes care of the rest. It writes the request, figures out who it should be sent to, and follows up if the information isn’t forthcoming.

MuckRock’s results so far have been disappointing. Of 94 requests MuckRock has helped users file at the state and local level in Massachusetts, only 36 have been answered, Morisy writes. That’s a good batting average for baseball, but it’s pretty dismal for gaining access to the inner workings of government.

“The opacity carries a very real cost,” writes Morisy. “In the past few years alone, Massachusetts has paid a terrible price for a lack of transparency in the form of patronage, kickbacks, payoffs, and the implosion of one of the Com­mon­wealth’s largest investments in a private company, Evergreen Solar.”

While a revamped Public Records Law wouldn’t solve all of these problems, it could help. We rely on the Public Records Law a lot at CommonWealth. In this issue, contributing writer Colman Herman gathered much of the information for his Inquiry on the lucrative lease deals given to the Swan Boats in the Public Garden and Sullivan’s on Castle Island using the Public Records Law. He also spent more than six months trying to obtain records on other real estate deals from the state Department of Con­servation and Recreation and the Division of Capital Asset Management with minimal success.

For my story on the governor’s crackdown on compensation at the state’s authorities, I tried to find out how much MassDevelopment was paying its private attorneys to fight a $562,000 severance payment being sought by Ben Caswell, who was booted from his job at another authority when it was merged with MassDevelopment. Mass­Development denied my request, arguing that the fee arrangement was protected by attorney-client privilege and exempt from the Public Records Law. I can understand why a lawyer’s legal advice to a client would be shielded, but I see no reason why the fees he is paid deserve the same protection. We’re appealing the authority’s decision.

It seems obvious the Public Records Law needs a make­over. It should be expanded to cover the governor’s office, the judicial branch, and the Legislature. Exemptions from the law should be minimized and spelled out more clearly. Oversight of the law needs to be concentrated in one office instead of split between the secretary of state and the attorney general.

But most of all there needs to be a fundamental change in attitude about transparency in government. All too often the pursuit of information becomes a game of cat and mouse between government officials and reporters, with excesses on both sides. The games need to end. After all, what’s at stake is nothing less than the accountability of government to those they govern. Pretty important stuff, we think.

Transparency missing from government

Transparency missing from government

MuckRock finds Public Records Law isn't working

For more on the Public Records Law, see CommonWealth’s updated guide to public records.

last november i received an email from an attorney working at the Department of Transitional Assistance informing me that if I didn’t remove from my website information I had received from his office through a public records request, I could “be fined not more than $1,000 or imprisoned not more than 1 year, or both.”

I was surprised. Public records requests are about the dullest form of journalism, involving a mix of bureaucratic judo, boundless patience, and lots of stamps. I had created MuckRock.com, where the data were posted, to take as much of the tedium out of the process as possible and encourage more citizens to exercise their right to access public records. Rather than having to draft their own letter from scratch, look up the agency contact information, and constantly remind the government that the request was overdue, users could simply click a template, type in what they wanted, and let us handle the rest.

The data in this case were simply the amount of money the government had reimbursed stores throughout the state under the Supplemental Nutrition Assistance Program, commonly known as the food stamp program. There was no personal identifying information; it was just stores and dollar amounts.

But the state insisted that the data had been “erroneously released,” and that I was obliged to remove the material. After consulting with Rob Berstche, a nationally known media lawyer who offered us pro bono assistance, we decided to share the emails with our readers, leave the information up on the website, and wait to see what would happen. We were never contacted by the Depart­ment of Transitional Assistance again.

Looking back now, after having filed more than 500 public records requests on behalf of myself and others throughout Massachusetts and the rest of the country, I’m surprised that I received any response to my request. In my experience, most valid public records requests are simply shelved and ignored.

The opacity carries a very real cost. In the past few years alone, Massachusetts has paid a terrible price for a lack of transparency in the form of patronage, kickbacks, payoffs, and the implosion of one of the Commonwealth’s largest investments in a private company, Evergreen Solar. Despite occasional rumblings otherwise, the state of transparency here is about as grim as the long winter we endured.

I didn’t expect an easy road when I cofounded MuckRock. As a reporter, my requests typically met with mixed results. Occasionally, documents would trickle out, almost invariably late and arbitrarily redacted by agencies that rarely complied with, or even understood, the public records laws. Tradi­tionally, the only recourse in these cases has been to sue, an expensive proposition.

We take a new approach: By making the process as transparent as possible, we highlight agencies that violated public records rules (including how many days, exactly, a given request was overdue). Instead of selectively cherry-picking the results, we also publish records in full, to allow people to see what reporters were seeing when they wrote their stories. Such a radical notion of accountability was appealing to a lot of groups, including the Pioneer Institute, which signed on as an early partner.

But government officials were not always as receptive. Of 94 requests MuckRock has helped users file at the state and local level in Massa­chu­setts, only 36 have been fulfilled at the time of this writing.

Two requests, originally submitted March 9 to the Office of Medicaid for department cost estimates, have gone completely unanswered despite repeated follow-up voicemails requesting a response.

Another request, for a copy of the most recent contract between the Executive Office of Economic Development and private lender MassBusiness, was submitted on Jan. 15. I finally received an update on April 6 saying the request had been received and the department would “respond as soon as possible.” As of the end of May, I still hadn’t heard anything.

In Massachusetts, agencies are required by statute to respond to a public records request within 10 days, but in my experience that rarely happens. A request seeking information on state layoffs broken down by department took 99 days to fulfill from first submission to final response. At the federal level, such delays would at least mean copying and other fees would be waived, but state officials charged Pioneer $368, or $61.33 per page, for a six-page spreadsheet. To make matters worse, despite repeated requests for the responsive information to be provided digitally, the department mailed me a printed copy of the spreadsheet, making it needlessly difficult to analyze and sort.

The lack of responsiveness to public records requests is almost endemic in Massachusetts. On Sept. 28, 2010, freelance reporter Kate Chappell filed a request seeking information about why the Boston Redevelopment Authority gave a $200,000 loan to the failing Bay State Banner newspaper, a move that raised eyebrows nationally for its ethical implications. Despite repeated acknowledgements of the request, no information has yet been provided. The lack of responsiveness is almost endemic.More recently, in a masterstroke that Orwell would appreciate, the Boston Globe was forced to sue the Patrick administration over blacked-out documents detailing gag agreements with former state employees who received severance agreements. In other words, you can’t see who was paid with your tax dollars not to talk.

We asked the Massachusetts Technology Collaborative and then the Massachusetts Clean Energy Center—two agencies that invested millions of tax dollars and incentives in Evergreen—for resumes and other documents indicating staff experience with the solar energy industry or consultation with industry experts. The answer from the Clean Energy Center was terse and dumbfounding. “MassCEC does not possess the records you have requested.” None of the other seven requests I made regarding the state’s solar energy investment policy have received a substantive response yet.

The problems with public records compliance stretch the breadth of state government.  Pioneer filed a request with the Department of Elementary and Secondary Edu­cation more than a year ago, only to be met with stone­walling and demands for document production costs that have almost tripled to $17,000 from the initial estimates.  

And these are all requests to agencies that are subject to the Public Records Law. In Massachusetts, unlike many other states, the judiciary, the Legislature, and governor’s office are all exempt from public disclosure rules, as are personnel files, deliberative process materials, and materials covered under attorney-client privilege. This last exemption has led to the questionable practice of officials copying their lawyers on sensitive emails to avoid public scrutiny.

The state hasn’t had much success releasing its own data directly to the public. The Open Data Initiative was launched with great fanfare a year and a half ago as a way to promote transparency by allowing the public to view and analyze raw government data. Today, however, the initiative consists of a few outdated Excel files here and there coupled with a lot of links back to agency websites, but very little to entice the software developers, entrepreneurs, or journalists the site ostensibly caters to. The site’s blog has not been updated since May 2010. When I tried to sign up for the site’s mailing list, I received the following message: “Because this mailing list is private, you must be approved by a mailing list administrator before you can become a member of this mailing list.”

The information being sought by MuckRock isn’t part of a fishing expedition, nor is it likely to turn up any “smoking guns” that result in a string of public firings, reforms, or political grandstanding. It is, generally speaking, simply asking to see the details of how taxpayer money is spent, particularly when there is an indication that the money is being wasted with little oversight (in the case of Evergreen Solar) or of very broad public importance (in the case of health care reform).

It’s exactly the kind of necessary, wonky material that is receiving less scrutiny in the media as news organizations work to untangle their own revenue issues. But rather than embracing the idea of an eager volunteer pool of citizen auditors, overseers, and strategists, the state of Massa­­chu­setts seems determined to keep the doors of policy and power as closed as possible, despite the repeated costs incurred to both the state’s coffers and the electorate’s trust. Both are in perilously short supply these days.  

Michael Morisy is the cofounder of MuckRock.com, a website dedicated to helping people request, track, and recover public data and documents. MuckRock and Pioneer Institute are partnering on a project on state government spending.

Morphing Malcolm

Morphing Malcolm

Change was the one constant in a complicated life

Malcolm X: A Life of Reinvention
By Manning Marable
New York, Viking, 594 pages
Reviewed by Kevin C. Peterson

during the final weeks of his life, Malcolm X, the voluble and acerbic American Muslim evangelist, was in a veritable tailspin. No longer tethered to the Nation of Islam and the Honorable Elijah Muhammad, Malcolm’s tragic end was attended with much trouble: He was being accused of adultery by his wife, Betty Shabazz; men whom he had mentored now openly reviled him; mainstream Civil Rights Movement leaders eschewed him; he was homeless after his house was firebombed; he was mired in financial difficulties; and he was being hotly pursued by a coterie of religious zealots determined to see his death.

These extraordinary details form just one slice of the most extensive and fact-rich biography to date of Malcolm X’s life since his assassination more than four decades ago. In Malcolm X: A Life of Reinvention, Man­ning Marable gives readers an intimate and honest assessment of a man who, at the height of his popularity, still found himself in the daily struggle of constructing a full political and moral identity.

While serving as a leading social protest voice, especially among a disaffected, northern, urban, and increasingly cynical generation of blacks, Mal­colm X, in his final days, was searching for new intellectual and spiritual foundations. He was pursuing pathways from his former role as a racially conservative Islamic minister to a human rights leader who embraced pluralism and full democratic engagement.

A work in progress for more than two decades, this latest biography on Malcolm X is the final, masterful expression of Marable, the venerable Col­umbia University scholar who had long been recognized as perhaps the leading academic interpreter of black leftist political movements. Marable, who died just three days before the book was released due to complications related to a double lung transplant, has produced a distinctive and honest biographical portrait of the leader whose improbable life led him from humble beginnings in Nebraska, to stints in Detroit, Boston, and then New York, where, at his demise, he was one of the most recognized people on the planet.

The book alters our understanding of Malcolm, whom generations of high school and college students have come to know mainly through reading the highly glossy Autobiography of Malcolm X, on which he collaborated with Alex Haley, the future author of Roots. Compared to the Auto­bio­graphy and even Spike Lee’s movie treatment of Malcolm in 1992, A Life of Reinvention is an act of deconstruction wherein Marable objectively strips the subject of all romantic patina. Marable portrays a man with a calm, steadfast humanity, exposing his great inclinations along with his vanity and many foibles.

The book is supported by healthy doses of previously unreleased FBI files, previous scholarship, and more recent interviews of people who worked closely with Malcolm, including the current Nation of Islam leader, Louis Farrakhan. That access allow­ed Marable to produce a book of intellectual sophistication and previously un­achieved detail regarding Malcolm’s highly complicated life and his sometimes chameleon-like and constantly morphing identity.

Malcolm Little was born under humble circumstances in Omaha, Nebraska. His parents, followers of the black separatist Marcus Garvey, suffered the pangs of poverty as well as the stings of the racial terrorism being propagated by the Ku Klux Klan, which was then at the height of its influence. Malcolm’s boyhood home was firebombed at least once by the Klan. And there exists some evidence that yet another racist group, called the Grand Legion, murdered Malcolm’s father.

Having his family dispersed by unforgiving state agencies after his mother suffered a nervous breakdown, Malcolm was transformed by his circumstances and settings as he crisscrossed the country, surviving with siblings and sympathetic relatives. In Michigan, Malcolm was called Red for the bright, attractive color of his hair as well as his hot temperament. In New York, he became the accomplished street hustler, a cocaine and reefer user, and a pimp. While serving time in jail in Boston, and perhaps under the hallucinogenic sway of intense highs induced by a nutmeg-sniffing habit, he was called Satan for his misanthropic and anti-Christian views.

It was while serving jail time in Massachusetts that Mal­colm transformed himself yet again. This time he morphed into a committed Muslim, a tireless autodidact, and a racialist firebrand ready for service in Elijah Muham­mad’s little noticed Nation of Islam. For 12 years he lived an austere Muslim lifestyle, eating only one meal a day, marrying, fathering four children, and transforming an inauspicious urban Islamic sect founded in Detroit into a nationally recognized religious hotbed. During the final arc of his life, he transformed himself from Malcolm X to El Hajj Malik Shabazz, a sign that he was adapting to a more traditional form of Islam. He had also begun to shed much of the racial separatist doctrine taught to him by his Garveyite parents and the American Muslim sect.

The different reincarnations Malcolm experienced during the course of his life are the theme at the center of Marable’s book. Marable prompts his readers to marvel at the tenacious ambition that fueled his subject’s search to transcend the racial constraints that characterized America’s apartheid culture.

Malcolm’s impact was felt keenly within the mainstream political and social establishment. His strident and accusatory nationalist positions on race relations, and his boasting about engaging in retaliatory violence, often stood in stark contrast to Rev. Martin Luther King’s moderate stances, causing the broader white community to sympathize with King as the lesser of two evils. In these instances, Malcolm provided the moral and political leverage that King needed as he attempted to accelerate the integrationist policies emanating from Washing­ton, DC, during the Johnson administration. In this light, the 1964 Civil Rights Act and the 1965 Voting Rights Act may belong as much to Malcolm as they do to Martin.

In some way, Marable suggests, Malcolm’s successive personas, which he describes in greater detail than one finds in the Autobiography, were the distinct products of his incessant need to make sense of the vast racial landscape that boiled around him and sometimes inside him. Amer­ica defined Malcolm as much as he defined it and its values.

Describing Malcolm’s protean nature, Marable asks that we take note of Malcolm’s “ability to reinvent himself in order to function and thrive in a wide variety of environments. He carefully crafted his physical presentation, the manner in which he approached others, drawing upon the past experiences from his own life as well as from African-American folklore and culture.”

Marable’s work is not without its shortcomings. There are instances where the author makes sweeping statements but fails to back them up. He refers to one of Malcolm’s last speeches as one of his greatest, but fails to explain why. And then there are what seem to be attempts to grab headlines with the author’s speculation that Malcolm was bisexual, an effort that proved successful if measured by press reports on the book. Marable’s slim evidence rests only on veiled disclosures that Malcolm enjoyed a friendship with a wealthy, white Boston socialite named Paul Lennon and that his “coolness” toward his wife was indicative of lack of interest in women.

Towards the end of his life, Malcolm had rejected the coarse version of black racial separatism he had assumed as an American Muslim under Elijah Muhammad’s tutelage. He repudiated the concept that non-whites stood on a natural spiritual high ground. He also rejected such ideas as black Americans founding their own country within the confines of the American Northwest. Moreover, Mal­colm was inclined toward a moral salubrity and expressed regrets of all kinds. To Boston-born Louis Farrakhan, he lamented that he had not married a woman whom his mentor, Elijah Muhammad, would eventually impregnate as Muhammad led the sect into a full-blown sexual scandal. He would also regret his racist jeremiads with the Nation of Islam, when he often described whites as “devils” who could play “no role” in ending American racism.

Relentless in the days leading to his assassination, Malcolm was constantly on the road speaking and crafting a highly integrated world view which Marable details with extraordinary clarity. To Alex Haley, Malcolm one night admitted his evolving social philosophy and theology: “I believe in religion, but a religion that includes political, economic, and social action designed to eliminate some of the [world’s suffering] and make a paradise here on earth while we are waiting for the other.”

Days after uttering these words, the harried Malcolm X would be dead.

Kevin C. Peterson is founder and director of the New Democracy Coalition, a Boston-based organization promoting civic literacy, civic policy and electoral justice.