January 11, 2006

Federal Reserve Bank of BostonThe Boston Foundation

Greater Boston Chamber of Commerce

New England CouncilNational Association of Industrial and

Office PropertiesAssociated Industries of

Massachusetts

Mass Insight

January 11, 2006

RECAP: Greater Boston’s Key Challenges & Scan of the Competition

Mary Jo Meisner, Vice President for Communications, Community Relations and Public AffairsThe Boston Foundation

Greater Boston MSA Population 1969-1999

3918 3939

4134

4391

3600

3700

3800

3900

4000

4100

4200

4300

4400

4500

1969 1979 1989 1999

in T

ho

us

an

ds

Greater Boston MSA Employment 1969-1999

1605

1887

2159

2244

1500

1600

1700

1800

1900

2000

2100

2200

2300

1969 1979 1989 1999

in T

ho

us

an

ds

…Since 2001, MA’s pop. & employment have declined relative to the U.S.

Source: New England Economic Partnership

Metro Boston’s 1990s economic engines are now lagging

With a high and rising cost of living

Our region now has the highest family costs among competitors

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1990 2000 2004

Rat

io

Source: Median income from the Census (1990 and 2000) and Current Population Survey (2004). House prices based on the OFHEO index. Income needed based on a monthly payment including principal and interest on a 30-year conventional mortgage with 20% down, real estate taxes and insurance, and a qualifying income of 28%.

Yet the housing affordability gap in Greater Boston continues to widen

Threshold of Affordability

Ratio of Median Income to Income Needed to Purchase the Median-Priced House

The region has grown only due to immigrants, with recent net losses

With global & regional competitors catching up

Yet our public higher education funding is erratic & lower than competitor states

Despite gains, MCAS proficiency is stuck in neutral, scores for young children are falling, and dropout rates are rising

MCAS grade 10 English Language Arts score by race/ethnicity: Boston Public Schools and Massachusetts: 1998-2004

0

1020

3040

50

6070

80

1998 1999 2000 2001 2002 2003 2004perc

ent s

corin

g pr

ofic

ient

or a

dvan

ced

White-BPS

White-Mass.

Asian-BPS

Asian-Mass.

Black-BPS

Black-Mass.

Hispanic-BPS

Hispanic-Mass.

Source: Massachusetts Department of Education and Boston Public Schools

And waiting lists are rising for the first rungs of educational opportunity:Basic literacy & English classes

To top it off: Weak networks & “brand” compared to competitors

NETWORKS:

More fragmentation, less collaboration, fewer linkages

BRAND:

“Old, cold, expensive, unwelcoming, and anti-business – a difficult place to get things done…”

Our mutually reinforcing assets are now out of alignment, with housing costs our weakest link

RegionalNetworks and Collaboration

Infrastructure Costs

Demographics and Immigration

Regional Brand

Education

Mutual Reinforcement

RegionalNetworks and Collaboration

Infra-structure

Costs

Demographics and

Immigration

Regional Brand

Education

Unaligned Links

…when there are engines that are not contributing you may be only as strong as your weakest link.

Forces Within the Dynamic System Contributing to Growth

Strongest Link

Weakest Link

We Have Big Ideas:

• Focus strategies on talent & innovation

• Create a talent-friendly environment

• Drive growth from Greater Boston throughout the Commonwealth

• Be a leader in creating talent partnerships with China, India and other innovation clusters

But our competitors have Big Ideas, too:

• Often the same ideas…

For example:

Chicago Metropolis 2020:

a business-inspired,

broadly inclusive

plan for the 21st century

NC’s Research Triangle: ‘Where the minds of the world meet’

Research Triangle

Park

Innovation Philadelphia: local innovation/global partners, student retention initiative, wifi

Multiple languages at phila.gov

Central Florida: ‘Putting the pieces together’

TheSan Francisco Bay Area

A NEW MODEL: Coordinated, Distributed Leadership

John LaWareLeadership

Forum

Open, Dynamic Civic Leadership

World Class Human Capital 21st Century Infrastructure21st Century Jobs and Economic Strategies

Regional Branding & Marketing

•New England Council•Boston Fed

•5th Century Trustees

Pre-K-11 Education• Early Education for All Campaign

• Great Schools Campaign

Regulatory Reform/Home Rule:• Rappaport & Pioneer Institutes

• Sovereign Bank• MAPC

MMA, Mass Taxpayers, CURP

Innovation Economy Jobs• Economic Stimulus Bill•Jobs for Massachusetts

• Global Massachusetts 2015

Higher Education• Senate Task Force on Pub Higher Ed.

• MetroBoston College Presidents’ Alliance

Transportation• Multi-stakeholder CURP Initiative

Workforce Training• SkillWorks

• Community - Industry Partnerships

Housing• Commonwealth Housing Task Force

Health Care• Multi-stakeholder initiatives

Energy• Mass Tech Collab., NE Council;

Technology Access/Solutions• MA Technology Leadership Council

Regional Planning• MAPC’s MetroFuture

NewLeadership

Pipeline

Cultural FacilitiesEconomic Stimulus Bill/Match





Massachusetts

Mass Insight

January 11, 2006

Chapter 40R & 40S … and Beyond

Getting the Incentives Right: Housing

Barry Bluestone

Director, Center for Urban & Regional PolicyNortheastern University

New Single Family Home Permits – Greater Boston

8,639

7,7757,102

6,313 6,4086,020

7,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1998 1999 2000 2001 2002 2003 2004

Pe

rmit

s

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

Me

dia

n H

om

e P

ric

e

Permits Median House Price

The Commonwealth Housing Task Force

• Not a new organization but a federation of business, labor, environmental groups, housing developers & advocates

• Relies on housing studies & “report cards” to analyze the problem, craft new solutions

• A partnership with NU’s Center for Urban and Regional Policy to encourage new housing construction

Principles for a New Approach to Housing

• INCREASE PRODUCTION EFFICIENTLY: Zone enough land to meet the demand for new housing when and where it is needed.

• SMART GROWTH: Protect open space and enhance historic preservation while providing more housing.

• GET INCENTIVES RIGHT: For developers and for local communities.

40R Basics

• Overlay Districts near transit & city, town and village centers – the olde New England model

• “As of right” residential development, with minimum allowable densities

• 20% of the units affordable

• Mixed Use

40R Incentives

up to 20 units -- $ 10,000 201-500 units -- $350,000

21-100 units -- $ 75,000 over 500 units -- $600,000

101-200 units -- $200,000

A one-time “Bonus” for each new or rehabbed unit

The School Cost Problem

• A modest home in a typical community will have, on average, 1 student

– the home will contribute $2,000 - $2,500 annually in property taxes for education, but the student costs $7,000 - $10,000 to educate

– community forced to: reduce average education expenditures per child, or increase taxes through an override

A Stumbling Block

• Communities reluctant to permit higher density: municipal finance implications are not favorable.

• School costs are a stumbling block (constraints from Prop 2 ½ and declining local aid)

Declining Local Aid

Non-Chapter 70 Real State Aid Per Capita to Municipalities, by Type

0

50

100

150

200

250

300

350

400

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

In $

20

00

Do

lla

rs

Additional Assistance Lottery Other

Local Spending Lagging

Real Growth in Spending or Income, 1987-2004

2.4

2.9

3.3

1.1

1.7

2.0

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

Non-Education Municipal Expenditures

All Municipal Expenditures

State Spending (Net of Local Aid)*

Massachusetts Personal Income

U.S. Personal Income

U.S. Personal Consumption Expenditures

Annual Average Percent Change* 1988-2004

Residential Property Tax Stress in the Commonwealth

Change in Property Tax and Household Income, 1989-1999

59.1

-5.3

66.6

6.5

-10 0 10 20 30 40 50 60 70 80

Average Single FamilyTax Levy

Median HouseholdIncome

Average Single FamilyTax Levy

Median HouseholdIncome

Percent Change

Median Town in Top Half of Income Distribution and Growing Median Household Income, 1989-99

Median Town in Bottom Half of Income Distribution and Declining Median Household Income, 1989-99

40S School-Cost Insurance

• Provides “insurance” for net new school costs

• By underwriting net school costs, the Commonwealth provides an incentive for communities to permit modest priced single family home construction

The Costs/Benefits of Chapter 40S

• No costs until FY 2008

• < $2.0 million in 2008 ramping up to $35,000,000 in FY 2014

• Goal: 11,000 new single family housing units

• Only 0.8% of the projected Chapter 70 School Aid budget in 2014.

A Contribution to Economic Development – beyond Housing

• New research at CURP -- working with NAIOP – underscores the critical role of local municipalities in economic development

• Firms locate in cities & towns, not states

• Local fiscal capacity is essential to attracting and retaining people AND firms

• Must offset high private sector costs with quality public services

• Limit high local property taxes

40S is only one aspect of local Aid Reform

• The Massachusetts Taxpayers Foundation recommends an increase in local aid to 40% of state generated revenues - an estimated increase of $1 billion back in FY2005

To Ensure Prosperity:

• Implement Chapter 40R & 40S – New incentives to reduce the cost of living

• Advocate for increased local aid investment in cities & towns to help them retain & attract business and jobs

• Replicate “federation” approaches like the Commonwealth Housing Task Force to create consensus

• Focus on leadership, partnership, and getting the incentives right





Massachusetts

Mass Insight

January 11, 2006

Building an Integrated System of Educational Excellence

Maura BantaCorporate Community Relations ManagerIBM

Our global & regional competitors are advancing in educational attainment

Education & immigrants – the key to the future workforce

24.7%

20.9%

13.8%

4.2%

36.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Less than HighSchool

High School Some college Associate's Bachelor's orhigher

Source: MassInc, US Census, CPS data.

Educational Attainment: Immigrant Labor Force arriving in MA 90 - 00

And despite investment and gains, MCAS proficiency is stuck in neutral

MCAS grade 10 English Language Arts score by race/ethnicity: Boston Public Schools and Massachusetts: 1998-2004

0

1020

3040

50

6070

80

1998 1999 2000 2001 2002 2003 2004perc

ent s

corin

g pr

ofic

ient

or a

dvan

ced

White-BPS

White-Mass.

Asian-BPS

Asian-Mass.

Black-BPS

Black-Mass.

Hispanic-BPS

Hispanic-Mass.

Source: Massachusetts Department of Education and Boston Public Schools

Our funding of public higher education is erratic & among the lowest

The OVERARCHING GOAL: An Excellent Pre K- 16 & Workforce Development System

Public &Private

Colleges,Universities

K-12

EarlyEducation

Lifelong Learning

Workforce Development

Adult Literacy & English Skills (ABE/ESOL)

Out-of-SchoolEnrichment

Healthy ChildDevelopment

Broad Agreement Among Business Leaders on Core Goals

• Quality Early Education• Quality Teaching/Teacher Training• High Standards (Proficiency), Quality Measures• Overcoming Disparities in School Quality & Student

Outcomes• Excellence in Math & Science • Ready Access to Adult Basic Education

(ESL, ABE)• Importance of Public Higher Education• Workforce Development At All Levels

Excellent Business-Supported Initiatives Underway

PRE K- 12• Early Education for All

Campaign• Just for the Kids -Mass

Business Alliance on Education

• Great Schools Campaign – Mass Insight Education

• Rennie Center – Research plus

• Teacher 21 – Mass Business Roundtable

• NGA Grant to MA

HIGHER EDUCATION• Senate Task Force on Public

Higher Education -Budget Recommendations

• R & D Centers of Excellence – Technology Road Map/Mass Insight

• STEM (Science, Technology, Engineering, Math) - School to Career

• Goldberg Seminar –collaboration among institutions

Workforce/Career Development

SkillWorks: A New Initiative

• 5-year, $15 million partnership: Foundations, City of Boston, Commonwealth of MA

• Directly engages employers

• Targets health care and hospitality

• $30-$40 million pending Economic Stimulus Bill

A fragmented “system.”

But what works?

Need research & pilots at all levels

The First Rung of the Ladder: Early Education…





Massachusetts

Mass Insight

January 11, 2006

Understanding the Importance of Early Education

Mara G. AspinallPresidentGenzyme Genetics

The Early Years Are Learning Years

Brain Growth Compared to Public Expenditures on Young Children

0

10

20

30

40

50

60

70

80

90

100

Age of child (years)

Sources: Public expenditures: RAND analysis.

Percent of totalbrain growth

Cumulative percent of public dollars spent on children

Early Education Pays in Better Child Outcomes

Source: Reynolds, "Journal of the American Medical Association.

The Children of the Chicago Child-Parent Centersat Age 20

55%

25%

25%

15%

50%

47%

23%

14%

17%

39%

38%

9%

0% 10% 20% 30% 40% 50% 60%

Completed High School

Dropped Out

Retained in Grade

Placed in Special Education

Arrested by Age 18

Arrested for Violent Crime by Age 18

CPC PreschoolParticipants

ComparisonGroup

$3K

$7K $10K $14K $58K

$14K

$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000

Costs

Benefits

$7.16 in benefits for each dollar invested

Welfare Special education Taxes on earnings

Justice system Crime victims Preschool

Early Education Returns $7.16 Per $1 Invested

(Lifetime savings per participant (based on age 27 follow-up) in 2001 constant dollars, discounted 3% annually)

Sources: Barnett, High/Scope Press.

An Increasing Priority Across the Nation:

– 3 States have Universal Pre-K • Georgia • Oklahoma • Florida

– 12+ States moving toward Universal Pre-K • New York • New Jersey • North Carolina

– Early Ed a top priority in Gubernatorial Elections • Virginia • New Jersey

– 26 States increased Pre-K Investment in FY06

H.4582: An Act Relative to Early Education and Care

CREATES:

– The framework for a new voluntary, high-quality universal early education program

– Research-based standards

– Accountability via strong child assessment & program measurement

What Can Business & Civic Leaders Do?

– Join the Campaign

– Contribute expertise for economic & policy analysis

– Participate in legislative advocacy

– Connect EEA with HR staff to engage your employees

www.earlyeducationforall.org





Massachusetts

Mass Insight

January 11, 2006

Developing a Brand Name for New England

Lynn Browne

Senior Vice PresidentFederal Reserve Bank of Boston

• Mike Reopel of Deloitte Consulting:

– New England does not offer potential investors a clear positive message

– Little marketing compared to competitor regions

– Region should develop and market its “brand”– An easy fix

• Mike continued:

– New England states should work together

• Greater impact

• Region is more marketable than individual states and cities

– Boston’s dynamism and culture complemented by recreational opportunities and lower costs elsewhere

Audience comments:

- Massachusetts has a brand: state is a difficult place to do business

- We need a positive theme that drives action

- Example: Singapore as talent hub

• What to do?

• Develop a positive message–True–Meaningful–Brandable

• Market message aggressively–Both governments and business

• Act to reinforce our message

• What to do?

– Attack our negative image• Fix problems• Dispel inaccuracies• Say less about things beyond our control• Can we be more courteous/welcoming?

- Smiley face was invented by Harvey Ball of Worcester

• Elements of a positive regional message

– Innovative, entrepreneurial culture– Sophisticated professional workers & firms– Magnificent research & teaching institutions– Abundant recreational & cultural opportunities– History everywhere

• New England states already have a common website: Team New England

• Marketing tag lines– Massachusetts: It’s All Here– You Belong in Connecticut– Blue Sky Rhode Island: Think Big, Start

Small, Scale Fast– Think Vermont

• Could we

– Convey a more substantive message?

– Be clearly linked to our region?

• What next? Form a task force to work on a regional brand

and a marketing strategy

• Send ideas and suggestions toSusan Asci, New England Council

Lynn Browne, Federal Reserve Bank of Boston





Massachusetts

Mass Insight

January 11, 2006

Documents

January 11, 2006