New Protection from Up-Front Debt Settlement Fees

There is a new Federal Trade Commission (FTC) rule prohibiting debt relief firms from collecting up-front fees. Most companies selling debt relief services over the telephone are no longer allowed to charge a fee before settling or reducing a consumer’s credit card or other unsecured debt. Under this new rule, debt settlement companies must provide consumers with agreements from creditors indicating how much their debt will be reduced. If a consumer gives consent to move forward, then a debt settlement company may charge a fee for their services. The rule, however, does not apply to businesses selling debt settlement services in-person. The FTC is also considering whether the rule applies to tax debt relief services.

Market Drop and State Budget Maneuvers Bring State Employee Pension Fund Liability to 22-Year High

"The state's pension fund now holds less than 45% of the funds it needs to meet future obligations to workers, plunging below the halfway mark for the first time in more than two decades, according to the latest, biennial report from fund analysts," reports the Connecticut Mirror

The new actuarial valuation also found that while fund investment earnings rebounded over the last year, they could not overcome significant losses from 2009, coupled with various pension-weakening maneuvers ordered due to the state budget crisis.

State government had $9.35 billion in assets in the pension fund as of June 30, 2010 compared with $21.1 billion in obligations, which together represent a funded ratio of 44.4 percent according to the valuation. Actuaries typically cite a ratio of 80 percent as fiscally healthy the Mirror noted.

The state's annual pension contribution, which currently stands at $844 million, is projected to grow just beyond $1 billion next year according to the valuation.

Reduction in Care4Kids Eligibility

Beginning November 6, 2010, the Department of Social Services’ child care program, Care4Kids, reduced the income limits from 75% of the state median income to 50% for families enrolling in the program on and after that date. For a family of three, allowable income dropped from $64,035 per year to $42,690.

More States Privatizing Economic Development

An increasing number of states are moving to privatize some or all of their economic development efforts, according to a recent article on Stateline.org, a nonpartisan news site funded by the Pew Charitable Trusts. States that have privatized aspects of their economic development functions include Florida, Indiana, Michigan, Texas, Utah, and Virginia. Other states considering proposals to privatize include Arizona, Iowa, Ohio and Wisconsin.
States choosing to privatize structure their plans in different ways, with varying levels of involvement and oversight by government officials. Privatization efforts have shown mixed results. The issue can be summarized as “how to empower business leaders to play a more meaningful role in state economic development efforts without sacrificing the accountability and transparency with which public funds are used[.]”

Bradley Airport Authority?

An article in HartfordBusiness.com discusses governor-elect Malloy’s proposal to create an independent authority to administer Bradley Airport. It quotes Tim Bannon, Malloy’s chief of staff as stating that “early action on this will be important to send a message that Connecticut is committed to economic growth.” Among the issues yet to be decided are whether the (1) authority would have jurisdiction over the state’s seaports and (2) changes will be incremental or all at once. The airport currently operates on a budget of $55 million that comes exclusively from the Bradley Enterprise Fund.

E-Commerce and the Implications for State Sales Tax Revenues

The U.S. Census Bureau reports that U.S. e-commerce retail sales for the third quarter of 2010 were up 13.6% from the same quarter in 2009 and up 4% over the previous quarter. E-commerce sales accounted for 4.2% of total sales in the third quarter of 2010.

Because some of the largest internet retailers (like Amazon) do not collect state and local sales taxes, many states typically lose revenue from these transactions. Researchers at the University of Tennessee, who periodically estimate state and local revenue losses from e-commerce sales, estimate that Connecticut will lose between $56.7 and $63.4 million in FY 2011 in sales tax from e-commerce sales. They project over $10 billion in revenue losses nationwide in FY 11 attributed to e-commerce.

For more information, see OLR's report, 2010-R-0193.

Did the Subprime Crisis Tank the Economy and Reduce State and Local Revenue Flows?

No, according to experts who participated in a conference last May on what the subprime mortgage crisis did to state and local revenues. The conference was sponsored by the Lincoln Land Institute and Urban-Brookings Tax Policy Center. The mortgage crisis may have sparked the downturn, but overleveraged financial institutions fueled it.

Experts separated the crisis’ effects on the downturn from other economic factors and found they had little effect on state and local revenues. Real estate transfer, income, and sales tax revenue generated by real estate sales and construction accounted for 2% of the revenue loss nationwide, about $15 million. Property taxes remained high, even increased in some states, the experts reported.

(“What the Housing Crisis Means for State and Local Governments,” State Tax Notes, November 29, 2010  is available in the Legislative Library)

Race to the Top Round Three In Doubt

As it winds up its post-election “lame duck” session, Congress faces several unfinished education appropriation decisions of interest to Connecticut. Among them is a proposed extension of the “Race to the Top” (RTTT) grant program, which rewards states for their progress on teacher quality, academic achievement, and school improvement. Despite passing a major education reform law in 2010, Connecticut received no money in the first two rounds of the RTTT competition.

Because Congress has not passed any appropriations bills for the 2011 federal fiscal year, which began on October 1, 2010, programs are funded at 2010 levels under a series of continuing resolutions, the latest of which expired on December 21. Even if Congress approves it, third-round funding will be lower than the $4.3 billion already awarded. The administration requested $1.35 billion and, in the initial appropriations bills, the House approved $800 million and the Senate, $675 million. After those bills failed to pass, a House-approved “extender” appropriated $550 million for RTTT Round 3. Senate Majority Leader Harry Reid pulled the appropriations bill from the Senate floor because of a disagreement over earmarks, leaving RTTT Round 3 funding on hold probably until at least mid-February or March.

Funding for other major competitive education grants is looking less likely. These include an Early Learning Challenge Fund designed to encourage states to improve early childhood education and funded in the House extender at $300 million, and a new round of “i3” (Investing in Innovation) grants intended to spur innovative practices for improving student achievement and closing achievement gaps and funded in the House extender at $240 million.

Don’t Ask, Don’t Tell

A new Pentagon report says the long-standing ban on openly gay Americans serving in the military could be lifted with minimal disruption to unit cohesion and retention in the short run. And “longer term, with a continued and sustained commitment to core values of leadership, professionalism, and respect for all. . .the U.S. military can adjust and accommodate this change, just as it has others in history.” Seventy-percent of service members surveyed believe that lifting the ban would have a positive, mixed, or inconsequential impact on their units. The report says that while moral and religious objections to homosexuality should be taken seriously, many fears are groundless.

New GAO Report Examines the Effect Raising the Retirement Age Would Have on Older Workers

By 2050, people age 65 and older are expected to comprise more than 20% of the nation’s population, up from 13% in 2010. This demographic is expected to put further strain on the Social Security Trust Fund, which is predicted to be exhausted by 2037. A new report by the U.S. Government Accountability Office (GAO) looks at suggested ways to reduce the strain on the trust fund—increasing the earliest eligibility age (EEA) for Social Security benefits, the full- benefit retirement age (FRA), or both.

The authors suggest that while many workers could stay in the workforce longer and thus save more for retirement by delaying the collection of Social Security benefits, many older workers would face health challenges that could prevent this. Some older workers would become disabled and apply for federal disability benefits or other assistance programs. The authors note recent research concluding that raising the FRA would increase the number of federal disability income recipients.

The authors suggest that raising the EEA would have a larger effect than a comparable rise in the FRA. They offer various policy options for addressing any corollary increases in disability claims and helping those individuals who cannot work longer.

US Supreme Court Hears CT ERISA Case

On November 30, the US Supreme Court heard oral arguments in CIGNA Corp. v. Amara. The case stems from the summary plan description (SPD) CIGNA issued to explain the conversion of its traditionally defined benefit pension plan to a cash balance plan. In 2008 the U. S. District Court, District Connecticut, ruled that CIGNA’s SPD violated the Employee Retirement Income Security Act (ERISA) by failing to provide notice of a significant reduction in the rate of future benefit accrual, and failing to adequately disclose modifications that could result in reductions, losses, or forfeitures of benefits that a participant might otherwise reasonably expect to receive (534 F. Supp. 2d 288 (D. Conn. 2008)). The U.S. Court of Appeals for the Second Circuit affirmed the decision in 2009. The issue presently before the Supreme Court hinges on whether proof of “likely harm” caused by the misleading SPD is enough to entitle a plaintiff to recover damages. The Court should issue its decision sometime in the spring.

School to Prison Pipeline

“School to Prison Pipeline” refers to the cycle of suspending, expelling, and arresting students, essentially criminalizing what many consider to be normal adolescent behavior. In Indiana, the legislature recently passed HB 1193, which establishes a statewide, 24-member study group composed of police, judges, principals, and others who work with children who get into trouble at school.

The group will evaluate and make recommendations on specific local practices, such as when law enforcement and schools should collaborate, when school administrators should be notified before a student is arrested, what types of arrests should not occur on school property, and what pilot programs and best practices should be considered.

College Graduation Rates Can Be Misleading

College and university graduation rates typically only count students who enter and graduate from the same institution. For instance, students who transfer from one school and graduate from another are often not counted in the second school’s graduation rate. But a new report from the U.S. Department of Education looks at college completion from the student’s perspective, measuring the percentage of students who earned a degree or credential from any institution within six years of starting college. The study reports data from the group of students who began college in 2003-04. Here is an excerpt from its findings about students who began college that year:

About 9% had received a certificate, 9% had received an associate’s degree, and 31% had received a bachelor’s degree within 6 years from any institution…Another 15% had not yet received a degree but were…enrolled at some institution (7% at a four-year institution and 8% at a less-than-four-year college), while an another 35% had not received a degree and were not enrolled at any institution.

Lead Found in Reusable Shopping Bags

Newspapers across the country, including the New York Times, recently reported that some reusable shopping bags contain lead. Although there is no evidence of an immediate threat to public health, studies found potentially unsafe lead levels in tested bags, most of which were manufactured in China. The presence of lead raises concerns about long-term risks posed by lead from discarded bags seeping into groundwater and food being contaminated by lead paint flaking off bags. U.S. Senator Charles Schumer (D-NY) has contacted the U.S. Food and Drug Administration, U.S. Environmental Protection Agency, and the Consumer Products Safety Commission, asking them to investigate and ban bags containing higher than acceptable lead levels.

New Federal Law Protects Gift Card Users

Under the 2009 federal Credit Card Accountability Responsibility and Disclosure Act, gift card issuers cannot charge dormancy, inactivity, or service fees unless the fee terms were clearly disclosed to consumers before they bought the card and the card has been inactive for more than 12 months. Even then, only one fee may be charged each month. The cards also cannot expire for at least five years after they are issued. The law took effect August 22, 2010.

In addition to the federal law, some states, including Connecticut, provide additional consumer protections for gift card users. The National Council of State Legislatures has produced a chart with state gift card statutes and recent legislation.

Federal Mortgage Modification Efforts Showing Mixed Results

The Home Affordable Modification Program (HAMP), a federal government initiative launched in March 2009, resulted in about 467,000 permanent mortgage modifications by September 30, 2010. Almost 700,000 trial modifications were cancelled after failing to become converted to permanent status, 28,000 permanent modifications were canceled due to missed payments, and 173,000 trial modifications were still being processed.

These figures are from the most recent quarterly report to Congress by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). The SIGTARP report includes an analysis of how HAMP has affected loan servicing. It also criticizes aspects of the program, including its lack of benchmarks for permanent modifications.

State-Level Election Results

Republican candidates made sizeable gains in the November 2 election not only at the federal level, but also at the state level. According to the National Conference of State Legislatures, control switched from Democrats to Republicans in 11 state legislatures, including Maine, Pennsylvania, and Wisconsin. Beginning in 2011, more Republicans will serve in state legislative seats than at any other time since 1928.

NCSL has more information on the composition of state legislatures and a post-election map.

Feds Call for Mandatory Motorcycle Helmet Laws

The National Transportation Safety Board (NTSB) wants states to require all motorcycle riders to wear helmets.

Currently 20 states require helmets for all riders, 27 states require them only for some riders, and three states do not require them at all. Connecticut requires helmets for all riders under age 18 and for people seeking a motorcycle-endorsed driver’s license when they are operating a motorcycle on a training permit.

An NTSB statement said that motorcycle fatalities increased 150% between 1997 and 2008, an increase exceeding that of any other form of transportation. Although the number of motorcycle fatalities decreased from 5,312 in 2008 to 4,462 in 2009, motorcycle deaths still accounted for 13% of all motor vehicle fatalities. According to the National Highway Traffic Safety Administration, head injury is a leading cause of death in motorcycle accidents, and the use of a helmet that meets federal safety standards is the “single critical factor in the prevention and reduction of head injury.”

For a history of the state motorcycle helmet law, please see OLR Report 2010-R-0465.

New Wind Technology Tested in Connecticut

As reported in an October HartfordBusiness.com article, Connecticut renewable energy start-up Optiwind finished installing its first 150-kilowatt turbine designed to maximize the power harnessed from the wind at its Torrington location on Krug Farm. The turbine has six fans placed on either side of a steel cylinder — similar to a silo — mounted on a steel tower 200 feet tall in lieu of the usual design of blades on a mast. The company calls it a compact wind acceleration turbine, offering a more powerful alternative to other on-site turbines. The company will install a more powerful 300-kilowatt turbine of a similar design on the University of Connecticut Torrington campus, which it hopes will provide enough power to cover all the campus’ electricity needs. The Optiwind turbine is more expensive than a traditional onsite turbine, but it produces more power. The 300-kilowatt Optiwind turbine costs $750,000 to buy and install, compared to the $500,000 cost of the 100-kilowatt turbine at the Phoenix Press near I-95 in New Haven. Because the Optiwind turbine costs $2.50 per kilowatt compared to $5 per kilowatt for a traditional turbine, the company estimates that the point where a customer earns all the upfront costs back through energy savings will come at nine years, rather than 18.

Employer-Provided Health Coverage is Not Taxable

Starting in tax year 2011, the federal Patient Protection and Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2. However, to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with this requirement, the Internal Revenue Service (IRS) is deferring the reporting requirement until 2012, making that reporting by employers optional in 2011.

This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.

For more information, see the IRS guidance.

Federal Deficit Cutting Commission—Changes In Medicaid

The just-released report of the National Commission on Fiscal Responsibility and Reform includes several recommendations for saving federal health care dollars. Some of these are in the Medicaid program which, as a joint federal-state program, could have an impact on the state’s Medicaid budget.

One proposal would be to eliminate so-called “provider taxes” that states use to leverage more federal Medicaid matching funds. Connecticut has such a tax on nursing homes and its elimination here could reduce the amount of funding available to these homes.

Another recommendation is to have state Medicaid programs take full responsibility for (1) managing the health care of individuals eligible for both Medicaid and Medicare (dually eligible) and (2) enrolling them in managed care programs to ensure better care coordination. Connecticut has taken small steps to manage the health care of this population.

A third proposal would allow expedited applications for Medicaid waivers, which would “presumptively” qualify states for the waivers. Normally, the waiver process can take many months.

The Art of Sprawl

Photographer Christopher Gielen offers an aerial perspective of suburban sprawl in this CNN feature. The images, taken from a helicopter, reveal the patterns and geometry of the suburbs. Gielen, who plans to publish the photos in a book next year, hopes that the aerial study of American sprawl makes people reconsider “how they live through art.”

Connecticut Ranks 45th in Protecting Kids from Tobacco

Connecticut ranks 45th among the states in funding programs to prevent children from smoking and in helping smokers quit, according to a national report recently released by a coalition of public health organizations. Connecticut currently spends $400,000 a year on tobacco prevention and cessation programs, substantially less than that recommended by the U.S. Centers for Disease Control and Prevention.

Challenging States on the Fairness of Education Funding

A new study finds that many states fall short in the “fairness” of their school funding models, measured not just by the amount of money they provide to education, but also by whether they direct sufficient resources to the poorest schools.

The Education Law Center, a N.J.-based organization that advocates for equal opportunities and funding for public school students through research, policy development, and legal action published the report in October. The center examined pre-recession data and found about four-fifths of the states evaluated received a “C” grade or lower on the extent to which they “progressively” fund education—or channel greater resources to poorer, rather than wealthier, districts.

The authors evaluated the states’ performance on four separate categories of funding fairness. Six states scored relatively well on all of them: Connecticut, Iowa, Massachusetts, New Jersey, Vermont, and Wyoming. Even though Connecticut was only graded a “C,” we were 10th on the list of all states in the fairness rating.

Four states generally rated poorly across all or most of the four indicators: Illinois, Louisiana, Missouri, and North Carolina, the authors said. In all 19 states were given a “D” or a “F.”

After adjusting revenues to make states comparable to each other and controlling for factors such as wages and population density, the authors identified broad disparities in the combined amount of state and local funding that students in different states receive.

Can Connecticut be in Several Places at the Same Time?

Yes, according to several recent studies ranking states according to different economic factors. For example, one study ranks Connecticut fifth with respect to innovation while another ranks it 47th with respect to business tax climate. A third study gives Connecticut mixed grades—it ranked us fifth with respect to workforce, but below the top 10 with respect to entrepreneurship, infrastructure, taxes and regulations, and other factors.

So, what gives? Obviously each study looks at different factors, and these factors reflect the authors’ theories about what makes an economy tick.

• The Kaufman Foundation focuses on jobs in information technology, exporting, business start-ups, use of digital technology, and capacity for research and development (The 2010 New Economy Index: Benchmarking Economic Transformation in the States).
• The Tax Foundation focuses on business taxes because “companies will locate where they have the greatest competitive advantage” (Background Paper: 2011 State Business Tax Climate Index).
• Like the Kaufman Foundation, the U.S. Chamber of Commerce and the National Chamber Foundation see innovation and entrepreneurship as key to creating jobs, but measure the capacity to do so differently. They also rank states according to separate measures, which explains why Connecticut scores high on some and low on others (Enterprising States: Creating Jobs, Economic Development, and Prosperity in Challenging Times).

State Prison Populations Declined Nationwide in 2009; Connecticut Decline the 4th Largest

Connecticut’s prison population declined by 4.6% in 2009, tying us with Maryland for the fourth largest decline among the states. With a decline in 24 states and an increase in 25 states (Iowa did not report data), overall state prison populations dropped for the first time in 38 years. Rhode Island experienced the largest decline, dropping 9.2%, while Alaska had the largest increase at 5.9%.

A National Conference of State Legislatures report discusses this data and trends in criminal justice policy. It focuses on states’ increasing investment in community-based policies and programs as a way to reduce prison populations and costs. The report also has useful links to other resources on this topic.

Bicyclist’s Death May Lead to Change in Police Training Standards

The Hartford Courant reports that the arrest of an off-duty police officer in connection with an accident that killed a 15-year old bicyclist is prompting legislative leaders to consider changing training and evaluation standards for police applicants. The officer had been rejected by five police departments before he was hired by the Windsor Locks Police Department, where his father is a police sergeant, according to the Courant. The State Police investigation concluded that the officer had been drinking for nearly six hours before the accident occurred.

Bond Rating Agencies Affirm Stable Outlook for Connecticut

The three credit rating agencies, Standard & Poor’s (S&P), Moody’s, and Fitch reaffirmed their AA (S&P and Fitch) and Aa2 (Moody’s) ratings on $570 million of taxable and tax-exempt Connecticut general obligation (GO) bonds this fall. The agencies see a stable outlook for Connecticut based on its:

• “Substantial and diverse economic base” with strong anchors (S&P)
• High income and wealth levels 
• Stabilizing revenues 
• Conservative revenue estimating
• Active revenue monitoring and quick identification of budget shortfalls
• Absence of legal limitations on state revenue

 The main credit risks are Connecticut’s:

• History of “highly cyclical” budget performance
• Above average debt levels and unfunded pension liabilities
• Large structural budget gaps produced by “steep revenue losses combined with persistent spending pressure” (Fitch) 

Ratings of Connecticut GO bonds dated September 30, 2010 (Fitch), October 4, 2010 (S&P), and October 6, 2010 (Moody’s) are available from the Legislative Library.

Number of Mortgage Loan Delinquencies Down But Still Remains High

According to the Associated Press, data recently released by the Mortgage Bankers Association (MBA) shows that the number of Americans at risk of foreclosure improved slightly over the summer, but not enough to indicate the housing market crisis is almost over. The number of homeowners who missed at least one mortgage payment in 2010’s third quarter dropped to about 9.1 percent from 9.9 percent in the second quarter and a high of more than 10 percent in the first quarter, after adjusting for seasonal factors. Additionally, the percentage of mortgage holders who were seriously delinquent (i.e., at least 90 days past due) fell from 4.8 percent to 4.3 percent. But it may take several years before these modest improvements translate into housing market security. MBA’s Vice President of Research and Economics stated, "We still have three to four years to work through this overhang of delinquent loans.”

New Federal Initiative to Combat the Impact of Violence on Children

On September 23, U.S. Attorney General Eric Holder announced the Defending Childhood Initiative, making it a priority for the U.S. Department of Justice to reduce high levels of violence and its impact on children.  The initiative seeks to prevent children’s exposure to violence as victims and witnesses, more fully understand the impact of violence on children and mitigate its effects, and develop best practices.  The initiative will fund demonstration sites, research, and public awareness. Eight demonstration planning grants were awarded to cities (including Boston and Portland, Maine), Indian tribes, and counties. 

Colleges and Health Care Reform

As employers, the nation’s universities and colleges are affected by the federal health care reform legislation enacted earlier this year. University administrators are grappling with a host of questions about the health care plans they offer employees. One of the early decisions for employers, including higher education institutions, is whether or how to retain “grandfathered” status for a plan. Such status means that a plan is exempt from some of the new law’s requirements if the employer does not make major changes to the plan, such as reducing benefits. A recent article from Inside Higher Ed discusses this and other issues in greater detail.

DPUC Approves UIL Purchase of CNG And Southern

The state Department of Public Utility Control (DPUC) has approved UIL’s purchase of Connecticut Natural Gas (CNG) and the Southern Connecticut Gas Company (Southern) for $1.156 billion. UIL is the holding company for the United Illuminating electric distribution utility. CNG serves approximately 157,000 customers in the Hartford-New Britain area and Greenwich. Southern serves approximately 176,000 customers from Westport to Old Saybrook, including Bridgeport and New Haven.

 

Among its many findings in approving the transaction, DPUC determined that:

1. the transaction would help level UIL’s cash flow throughout the year, as gas usage peaks in the winter and electric usage peaks in the summer;
2. although UIL has never owned a regulated gas distribution company, many of its directors, managers, and employees have significant experience in the regulated natural gas industry;
3. UIL expects to rely on CNG’s and Southern’s existing employees, plants and facilities and does not intend to implement workforce reductions; and
4. the decision would have no immediate effect on rates and no rates would change without further DPUC review. 

Searchable Independent Expenditures Database Now Available

The State Election Enforcement Commission’s (SEEC) website now features a searchable database of independent expenditures. Independent expenditures are those that support the election or defeat of a candidate and are made without the consent, coordination, or consultation of a (1) candidate or candidate's agent, (2) candidate committee, (3) PAC, or (4) party committee.

The database covers candidates for statewide office, the General Assembly, and probate judge. Search criteria include the candidate’s name, office sought, and entity making the expenditure. It is part of the SEEC’s eCRIS Search, which also includes databases of committee names, documents filed, disbursements, receipts, and summary totals.

Consumer Websites

State residents have a variety of websites to help them when making tough or tricky consumer decisions: 

1. The Department of Consumer Protection provides helpful links to consumers
2. The Better Business Bureau site
3. The Attorney General’s office’s helpful links on a wide range of consumer choices

National Commission on Children and Disasters Reports to President and Congress

The National Commission on Children and Disasters has released its 2010 report assessing children’s needs in relation to the preparation for, response to, and recovery from, all hazards.

The report makes findings and recommendations on: child physical health, mental health, and trauma; child care and child welfare; elementary and secondary education; sheltering, temporary housing, and affordable housing; transportation; juvenile justice; evacuation; and relevant activities in emergency management.

The independent, bipartisan commission is charged with identifying gaps in disaster preparedness, response, and recovery for children and making recommendations to close them.

Federal Rights for Gay and Lesbian Spouses?

A lawsuit filed in Connecticut’s federal district court this month challenges the constitutionality of the Defense of Marriage Act, which bars federal recognition of marriages between partners of the same sex. The seven plaintiffs, spouses or widowers living in states where same-sex marriage is legal (Connecticut, New Hampshire, and Vermont), seek access to the same federal benefits to which different-sex married couples are entitled. These include income tax rules and social security, family and medical leave, health insurance, and retiree benefits.

The case has been assigned to U.S. District Judge Vanessa L. Bryant.

When Does Federal Healthcare Reform Take Effect?

The federal Patient Protection and Affordable Care Act became law on March 23, 2010. Some provisions took effect on September 23, 2010 and several more will take effect each year through 2018. The Kaiser Family Foundation recently developed an interactive tool to explain when and how federal health reform provisions will be implemented over the next several years and allows you to sort them by topic area.

Connecticut Agriculture is a $3.5 Billion Industry

According to a September 2010 University of Connecticut report, the agriculture industry contributes $3.5 billion to the state economy and accounts for about 20,000 jobs statewide.

Credit Unions Gaining Customers

The New York Times reports that some home buyers are turning to credit unions to obtain mortgages with lower rates and fewer fees. Credit unions are non-profit, cooperative financial institutions owned and run by their members. Membership is limited to groups in a common professional association or occupation or a certain region.

The Times reports that since the 2008 subprime mortgage market crisis credit unions have provided more than $100 billion in first-time loans, including both mortgages and refinancing.

The state Department of Banking regulates credit unions.

Inspector General Critiques OSHA Whistleblower Program

The federal program to protect private sector whistleblowers does a poor job, according to a report from the U.S. Labor Department’s Office of Inspector General.

The Occupational Safety and Health Act (OSHA) of 1970 created the whistleblower protection program. Since then OSHA has been assigned whistleblower duties under more than a dozen other federal laws.

This audit looked at whether complaints filed by whistleblowers were appropriately investigated and whether the complainants received appropriate protection under OSHA. The report found that 80% of applicable investigations under OSHA and two other major laws did not meet one or more of eight elements essential to the investigative process. As a result of not providing complainants with thorough investigations, OSHA could not provide assurance that complainants were protected as the various whistleblower statutes intended.

The audit found that during the period under review, 77% of complaints were dismissed or withdrawn, 21% were resolved through settlements which were generally minimal in nature, and two percent were found to have merit.

Texas Lawmakers Propose Pulling Out of Medicaid

The New York Times reports that some Texas lawmakers favor pulling out of Medicaid and the Children’s Health Insurance Program to reduce the state’s $25 billion budget shortfall. The Heritage Foundation estimates that this could result in a savings of $60 billion between 2013 to 2019.

Others are taking a more cautious approach, willing to consider the opt-out only if it can be shown to make fiscal sense without jeopardizing care. The Texas Health and Human Services Commission, which runs the programs on behalf of 3.6 million enrollees, will release its own study later in the year.

Time Is Running Out…

If Congress does not intervene, a number of tax cuts, deductions, credits, and other provisions will expire in 2011. Over 50 major changes to the federal tax code are scheduled to sunset after December 31, 2010, including provisions affecting the:

• Individual, capital gains, and estate tax rates;

• Child tax credit;

• Dependent care credit;

• Adoption credit;

• Student loan interest deduction; and

• State death tax credit.

Construction Starts on West Haven Station

As reported in the November 10th edition of the Connecticut Post, construction has started on a new Metro-North Railroad commuter train station in West Haven. The $103 million project includes the station, which will have a waiting room, restrooms and a news stand, as well as parking for about 660 vehicles. The station is expected to open by the end of 2012.

Teacher and School Administrator Contract Negotiations

The Connecticut Association of Boards of Education (CABE) reports “big changes” in recently negotiated teacher and school administrator contracts due to the economic situation. CABE’s data covers 68 of 74 teacher and 34 of 39 administrator contracts negotiated in 2009-10. In these contracts, average across-the-board wage increases for 2010-11 are 0.46% for teachers and 0.82% for administrators. If step increases for those not at the top of the pay scale are included, average increases are 0.77% for teachers and 0.75% for administrators.

According to CABE, many new contracts also include such measures as furlough days and shorter school years, no step increases in the first year of new contracts, increased employee contributions for health insurance, and contract extensions to cover costs. Of the 102 contracts included in CABE’s report, 13 went to binding arbitration. Of these, arbitrators decided nine and the remaining four were settled by stipulated awards. Please see OLR Report 2010-R-0244 for information about the number of issues arbitrators awarded to unions and school boards in binding arbitration over the last five years. CABE’s Settlement Update (June 11, 2010) is available only to CABE members.

The Dire State of Public Housing

Public housing projects across the nation are falling apart, the New York Times recently reported. New York City housing authority tenants have to wait at least three years for basic repairs. The U.S. Department of Housing and Urban Development (HUD) estimates that it would cost between $22 billion and $32 billion to rehabilitate the nation’s federally funded housing projects. In fact, HUD want to allow the local quasi-public agencies that own and manage these projects to raise the necessary funds by borrowing public and private capital, using their land and buildings as equity.

Link Between PTSD and Dementia

The results of a new study reported in the September issue of the Journal of the American Geriatrics Society suggest that veterans with post traumatic stress disorder (PTSD) are at greater risk for dementia than other veterans, even those who suffered traumatic injuries during combat. The study found that veterans with PTSD had twice the chance of later being diagnosed with dementia than veterans without PTSD. While the authors are not currently able to determine the cause for this increased risk, they stress the importance of determining whether the risk of dementia can be reduced by effectively treating PTSD.

Seniors Participate in Food Assistance Program at Lower Rates than Younger Individuals

A new report by Mathematica Policy Research shows that seniors (age 60 and older) continue to participate in the Supplemental Nutrition Assistance Program (formerly known as Food Stamps) at lower rates than other eligible people. In FY 2009, 67% of all eligible individuals participated in the program, but the number of eligible seniors who ultimately participated was only 35%. The number of seniors participating in SNAP rose between 2002 and 2006. Connecticut’s enrollment rates during this period nearly mirrored the national average.

The study provides state-by-state data on (1) the number of senior SNAP participants, including their characteristics; (2) seniors eligible for benefits in 2009; and (3) senior participation rates between fiscal years 2002 and 2006. It also discusses initiatives states have undertaken to improve the take-up rates for this subgroup of individuals.

Post-Employment Benefits Commission Publishes Final Report

The State Post-Employment Benefits Commission has published its final report on the state’s underfunded retiree benefit programs. Although it made few specific recommendations, the commission suggested several options, including increasing employee contributions, raising the retirement age, discouraging early retirements, and stipulating that a portion of any future state surpluses be used to fund retirement benefits.

The commission failed to agree on the value of replacing the state’s defined benefit (pension) plan with a defined contribution (401K) plan. Those in favor of changing to a defined contribution plan worried that the state’s current problems would only get worse, while those opposed to a change believed that 401k plans would cost the state more money, provide less security to retirees, and fail to address current funding problems.

However, the commission did advise against issuing pension obligation bonds because of their impact on the state’s debt level, financial flexibility, and credit rating. It also advised against any future retirement incentive programs that failed to include a multi-year actuarial analysis and a method for funding any actuarial losses. The commission also stressed that any savings realized by its suggestions had to be reinvested to reduce the retirement plans’ unfunded liabilities.

Comments Sought for Revisions to Child Support Guidelines

Federal law requires every state to have child support guidelines and to review them periodically. Connecticut’s Commission for Child Support Guidelines is reviewing ours and considering whether revisions are warranted. It is seeking comments and suggestions from people who have used the guidelines and from those who have paid or received child support.

Study: Average Price of College Education Decreasing for Full-Time Students

Despite significant increases in tuition and fees, the average net price of higher education has actually decreased in recent years for full-time students. That’s according to “Trends in College Pricing,” a recent report by the College Board, the national non-profit membership association best known for producing the Scholastic Aptitude Test and other standardized tests. The report found that the tuition and fee increases were offset by increases in grant aid and federal tax benefits, meaning that, when adjusted for inflation, the average net tuition and fee cost in 2010-11 is lower than it was in 2005-06.

The report includes data concerning tuition and fees, room and board, net prices, institutional revenues and expenditures, enrollments, and other categories.

Collection Results from National Take Back Day

This fall the U.S. Drug Enforcement Administration (DEA) and state and local law enforcement officials held the first national “Take Back Day,” to collect unneeded and unwanted prescription drugs. At 4,094 collection sites across the country, including 44 in Connecticut, individuals were able to anonymously drop off prescription drugs at no cost and with no questions asked.

The program is meant to prevent prescription drug abuse and ensure proper disposal of unused medication. People often throw unused medication down a sink or toilet, polluting water and harming septic systems and aquatic wildlife. In New England, the officials collected 25,810 pounds of prescription drugs (5,050 pounds in Connecticut).

More information about the New England collection results is available through the DEA. Information about proper disposal of prescription drugs, including local household drug take back programs, is available through the state consumer protection department.

New Consumer Product Safety Commission Crib Safety Campaign

The U.S. Consumer Product Safety Commission (CPSC) has recently released a crib safety video as part of its new outreach program. The program attempts to inform new parents of the risks associated with infants’ sleep environment.

In order to create a safe sleep environment for infants, the video suggests:

• Placing infants to sleep on their backs

• Using a firm, tight-fitting mattress

• Never using extra padding, blankets, or pillows under baby

• Removing pillows or thick comforters

• Not using positioning devices

• Regularly checking cribs for loose, missing, or broken parts or slats

• Not trying to fix a broken crib

• Placing cribs and playpens away from windows and window covering cords to avoid fall and strangulation hazards

• Placing baby monitor cords away from cribs or playpens to avoid strangulation

For more information, check Connecticut's Department of Consumer Protection.

Credit Card Offers Increasingly Complex

Credit card offers, which became increasingly complicated over the last decade, have improved somewhat since the passage of federal Credit Card Act of 2009, according to an October 2010 report by the nonpartisan Center for Responsible Lending (CRL). Analyzing the frequency of numbers appearing in the “summary of terms” boxes on direct mail offers, CRL reports that from 1999 to 2009, the number count increased by 250%. By May 2010, the number count had decreased by 23% from its 2009 peak. In May 2010, 41% of the numbers appearing in summary of terms boxes related to the card’s annual percentage rate, while 27% related to penalty fees, 24% to miscellaneous fees, and 8% to other provisions.

Connecticut’s Voter Turnout Rate is 5% Higher than National Average

According to initial estimates by the United States Elections Project, Connecticut’s turnout by the voting eligible population (VEP) was 46%, about 5% higher than the national average of 41.5%. Oregon had the highest VEP turnout rate at 56.9% and Texas had the lowest at 32.5%. Similarly, Connecticut’s turnout by voting age population (VAP), all residents age 18 or older, was 42.1%, compared with the national average of 38.2%.

VEP turnout rate is the vote for the highest office divided by the VEP. It excludes people who are not eligible to vote such as non-citizens or felons (depending on state law). VEP turnout rate differs from the VAP turnout rate, which is the vote for highest office divided by all residents age 18 or older.

In a midterm election, the highest offices on the ballot are for Governor, U.S. Senator, and House of Representatives.

For more information on turnout rates in 2010 and previous elections, read 2010 General Election Turnout Rates

Cell Phone Ban Enforcement Program Yields Good Results

Most motorists know it’s dangerous to use a hand-held cell phone or send text messages while driving. But it can be hard to wean ourselves from the handy little devices. A federal agency wanted to see whether a stepped up enforcement program in Hartford (including East and West Hartford) could make a difference.

The National Highway Traffic Safety Administration’s (NHTSA) demonstration program combines dedicated law enforcement for a specific period of time with a media campaign to publicize the crackdown. The project, which has now completed two of four enforcement “waves,” appears to be successful. NHTSA reported a 56% drop in cell phone use and a 68% drop in texting between the program’s start in March 2010 and the end of the second enforcement period in late July. NHTSA considers an enforcement rate of 20 tickets per 10,000 people sufficient to change motorists’ behaviors in effective seat belt programs. The Hartford enforcement rate for cell phone violations was five times that.

But, according to NHTSA, “the intent of a high visibility enforcement campaign is not to issue tickets. Rather the intent is to deter drivers from engaging in that behavior in the first place.” “In other words,” the report continued, “if drivers violate a particular law, there should be a high certainty that they will receive a ticket.” More information on the study can be found at NHTSA's site.

New Hydrogen Fueling Station and Buses

As reported in the October 15 edition of CT Environmental Headlines, earlier this month Proton Energy Systems, an on-site hydrogen generation company, and SunHydro, a firm developing hydrogen fueling stations, opened the state’s first hydrogen fueling station at 10 Technology Drive in Wallingford.

Proton Energy Systems and SunHydro are sister companies and the station will run under the SunHydro banner. The solar-powered station marks the start of the East Coast Hydrogen Highway SunHydro is creating to make it possible to travel from Maine to Florida using hydrogen.

Also this month, four fuel cell-powered hybrid-electric transit buses were introduced in Hartford. They join an earlier generation bus that began service in 2007.

Federal Health Care Reform Provisions Effective September 23, 2010

On March 23, 2010, President Obama signed comprehensive health reform, the Patient Protection and Affordable Care Act, into law.  Several insurance provisions took effect on September 23, 2010 and apply to plans issued on and after that date.  The law prohibits individual and group health plans from (1) placing lifetime limits on the dollar value of coverage, (2) rescinding coverage except in cases of fraud, (3) denying children coverage based on pre-existing medical conditions, or (4) including pre-existing condition exclusions for children.  It also restricts annual limits on the dollar value of coverage (and eliminates annual limits in 2014).  For more information on the federal health care law, see OLR’s Backgrounder, 2010-R-0255.

No Social Security COLAs in 2011

The U.S. Social Security Administration has announced that there will be no cost-of-living adjustments (COLAs) in Social Security benefits in 2011. This is the second year in a row that benefits will be frozen. The reason for the freeze is that by law, any increases are tied to increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-CW) in a certain calendar quarter. Because there was no increase in this index during that quarter, there is no COLA.

OLR backgrounder (2009-R-0385) provides a history of Social Security COLAs.

Recent Study Analyzes the Fiscal Impact of Local-Option Taxes in Massachusetts

The New England Public Policy Center at the Federal Reserve Bank of Boston released a study in February examining the impact of local-option taxes on Massachusetts’ municipalities. This comes as cities and towns in Connecticut and across the country look for additional revenue sources to close budget shortfalls and reduce their reliance on property taxes. The study analyzes the fiscal implications of Massachusetts’ recently enacted local-option meals tax and potential local-option sales, income, and payroll taxes. It uses Geographic Information System maps to illustrate how local-option tax capacity varies geographically across the state.

The study finds that while local-option taxes provide some towns with considerable new revenue sources, they are likely to exacerbate fiscal disparities. This is because low-income, property-poor towns lack the tax bases for new local-option taxes. The study also finds that the municipalities subject to the fewest cuts in state aid in FY 09 had the most to gain from the new local-option taxes. Those subject to the largest state aid cuts would not be proportionally compensated for their loss in aid.

The author suggests that the state could reduce these fiscal disparities by changing its existing aid formulas to target towns with the lowest local-option tax capacity.

Accountable Care Organizations and Health Care Reform

The federal health care reform act attempts to improve the health care delivery system through a variety of incentives. One of these encourages the creation of Accountable Care Organizations (ACOs). But what is an ACO? Basically, it is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of patients. At this point, ACOs are just a concept as federal regulators have not yet established the rules for their operation. But as contemplated by the reform act, ACOs would be integrated delivery systems involving doctors, hospitals, and other providers whose reimbursement would be based partly on meeting certain quality and cost measures. Medicare will start using the ACO concept in 2012. Providers are also currently developing ACOs for the private insurance market.

As providers begin to establish these new entities, some questions and concerns have arisen. The most significant is the possibility that providers’ new networks could run afoul of current antitrust and anti-fraud laws in terms of restricting competition or fixing prices. Insurers, on the other hand voice concerns that providers could use the leverage of ACOs to demand higher prices.

For more information see:

Health Care Providers, Insurers: Accountable Care Organizations Bring Legal Worries

JAMA Commentary Reviews Accountable Care Organizations


ACOs: A Quick Primer


Creating Accountable Care Organizations

Education Department Issues Parents’ Guide to Bullying Law

The State Department of Education (SDE) recently issued a guide for parents on what to do if their child is being bullied in school. The guide, which is written in question and answer form, summarizes the state’s school bullying law and addresses such issues as how to find a school district’s anti-bullying policy, how to file a formal written complaint of bullying, and what happens after the complaint. It also provides advice on the kinds of behavior and incidents a parent can report, what to do when the bullying happens outside of school, and how to make schools safer. It includes names and contact information for the SDE and other state agencies and private groups that can help. Bullying and Harassment in Connecticut: A Guide for Parents and Guardians is available on the SDE website.

Innovate, Innovate, Innovate

“Innovation” drives many economic development policies. The federal Small Business Administration recently awarded $100,000 grants to 20 organizations across the country, including Connecticut Innovations, Inc. to help them capture federal research and development (R&D) dollars.

Scientists often come up with new ideas, but many don’t know how to make them profitable. That’s why Canada just launched a $50 million program to teach recent college graduates how to start, organize, and manage businesses.

Today, anyone can copy your product or service, so protecting trade secrets is a hot topic. But there’s a downside to strict trade secret laws. A recent Congressional Research Service report explores their pros and cons.

Older industrial states see innovation as a key to maintaining or regaining their competitive edge. Michigan fosters innovation by helping groups of related businesses collaborate with each other. A recent study suggests this strategy works.

Sentenced Inmate Population Down; Unsentenced Population Up

As of October 25, 2010, Connecticut’s prison population was 18,336. This is well below the high of 19,894 inmates on February 1, 2008. Over nearly four years (since January 1, 2007), the prison population ranged between the high of 19,894 and a low of 18,052 on January 1, 2010.

The prison population primarily consists of two types of inmates: those who are sentenced and those who are unsentenced. Unsentenced inmates are those held on bond while awaiting trial or convicted and awaiting sentencing.

In recent weeks, the sentenced population has been at its lowest point in the last four years while the unsentenced population has been at its highest. Since January 1, 2007:

1. the sentenced inmate population varied from a low of 13,765 on October 13, 2010 to a high of 15,465 on February 8, 2008 and

2. the unsentenced inmate population ranged from a low of 4,011 on May 8, 2009 to a high of 4,772 on September 21, 2010.

State Offers Incentives for Voluntary Tax Compliance

The state’s Voluntary Disclosure Program gives businesses and individuals who have not complied with state tax laws an incentive to do so. Businesses and individuals who did not register for or pay Connecticut taxes, or failed to report some or all of their taxable income or gross receipts, may ask the Department of Revenue Services (DRS) to permit them to register and pay the amount they owe. In exchange, they can receive a penalty waiver, limit their look-back period for taxes owed, and avoid the discovery process involved in a state investigation and audit.  To be accepted into the program, a taxpayer must, among other things, give DRS a written admission of liability and statement of the amount of potential tax liability.  More information about the program and its requirements and benefits is available on DRS’s website. The website also provides contact information for taxpayers wishing to contact DRS about the program anonymously.

History of Studying the Greenhouse Effect

The history of thinking about how the Earth's atmosphere traps heat dates back to the 19th Century and French scientist Joseph Fourier, according to a story on National Public Radio. Fourier calculated that some heat from the sun must be reflected from the Earth and back into space but his calculations showed a gap between the amount of heat reflected and the temperature of the Earth. He realized some heat must be held in by the Earth's atmosphere.

State Governments and Social Media

The National Association of State Chief Information Officers conducted a survey of the states about the use of social media in state governments. The findings include that while the use of social media is widespread throughout the states, policies about the use are not: only one-third of the 43 states who responded have policies in place. Only 19% of states are operating with a statewide strategic policy issued by the state's chief information office.

Driverless Cars on the Horizon

Search engine company Google revealed the company has been working for several years on technology that would allow a car to be operated without a human driver. Using a combination of radar, lasers, and GPS, a car with a person observing from behind the wheel, drove itself from the Bay Area to Los Angeles as well as down San Francisco's famously zig-zagging Lombard Street. Experts say it might be as much as eight years before it the techonology finds its way to the mass market. That should allow plenty of time for the law to catch up to the technology, changing laws to allow for cars that aren't controlled by people.

State and Local Business Tax Study

Prepared by Ernst & Young for the Council on State Taxation, a study, Total state and Local Business Taxes looks at the total tax burden on businesses in each state.

Voting for Pac-Man

Two computer scientists, without breaking the tamper-evident seals on the machine, programed a Sequoia AVC Edge touch-screen voting machine to play Pac-Man.

State-by-State Film Tax Credit Comparison

Wondering how Connecticut's film tax credit compares to credits offered by other states? The Screen Actors Guild offers a state-by-state comparison.

An Alternative to Paying for Software Licenses

OpenOffice.org is an open source office suite free to users. Governments and organizations around the world have switched from similar products requiring payment for user-licenses.

Connecticut's Traffic Situation: 41st Worst

A recently released study by the Hartgen Group of North Carolina shows Connecticut's as the 41st worst highway system. The study, using 2008 data, "measured the condition and cost-effectiveness of state-owned roads in 11 categories, including deficient bridges, urban traffic congestion, fatality rates, pavement condition on urban and rural Interstates and on major rural roads, and the number of unsafe narrow rural lanes." Among other findings, Connecticut ranked in the top five states with the worst traffic, along with California, Minnesota, Maryland, and Michigan.

The study's findings specifically about Connecticut show a few positives, including best in the nation in rural interstate condition and fifth-best highway fatality rate.