Briefcase

Legislature Approves UMass Funding Increase
BOSTON — UMass President Robert Caret commended the state House and Senate for approving a major funding increase for the UMass system, funding sufficient for a second consecutive tuition and mandatory-fee freeze for in-state undergraduate students. “UMass is poised at the brink of a new era as a result of what would be an extraordinary, two-year, $100 million state investment in its future and in the futures of the tens of thousands of students who bring their aspirations and abilities to our campuses every year,” Caret said. “We are honored by this expression of support from the Legislature, particularly because the members of the House and Senate, given how in tune they are with their constituents, take this step because they recognize the vital role that UMass plays in every corner of the Commonwealth.” Henry Thomas III, chairman of the UMass board of trustees, called the Legislature’s action “historic,” adding: “over the past two years, the University of Massachusetts has received one of the largest increases of any public university in the nation, and this provides opportunity for our students and a strong foundation for our Commonwealth’s future. In addition to thanking the Legislature and its leaders, I want to commend President Caret for his leadership and vision and note the key role the chancellors play in making this process work. We are here in part because we have demonstrated the significant steps the university has taken in the areas of efficiency, transparency, and accountability — and these steps have been championed by our leadership team at the system and campus levels.” He added, “this historic moment would not be occurring without the support of our governor, as Gov. Patrick has been our university’s staunch ally throughout his tenure in office, vividly understanding education’s transformative power.” The fiscal year 2015 state budget approved by the House and Senate funds UMass at $519 million — a $40 million increase over FY 2014 and enough for the second tuition-and-fee freeze as envisioned under Caret’s 50-50 proposal. The state budget approved by the Legislature now goes to Patrick, who has 10 days to review it. Because the $40 million appropriation increase the university received in FY 2014 carried with it an additional $10 million in state fringe-benefit funding, UMass actually saw a $50 million hike in state funding during the year — a pattern that would be repeated in FY 2015 if funding for UMass remains at $519 million. Advanced by Caret after he assumed the UMass presidency in July 2011, the 50-50 plan called for a two-year, $100 million increase in state funding for UMass, with the goals of strengthening the university overall and equalizing the amount of money students and the state provided for educational programs. UMass said it would freeze tuition and mandatory fees in each of the years it received full funding of the 50-50 program. UMass received the first year of 50-50 funding during 2013-14 and froze tuition and fees for in-state undergraduate students. Student charges vary from campus to campus, but under the rates recently approved by the UMass board of trustees, tuition and mandatory fees for in-state undergraduate students at UMass Amherst in 2014-15 will remain at $13,258. The cost of attending the university’s flagship campus with room and board factored in would be $24,215. “College affordability is an issue that is on people’s minds in every corner of the Commonwealth,” Caret said. “Students and parents want to be sure that there is going to be an affordable, high-quality educational opportunity available for the young man or young woman who has worked hard and has achieved at the K through 12 level. And that is what is so important about the action the House and Senate has taken. The Legislature is saying that the Commonwealth of Massachusetts and the University of Massachusetts stand ready to be your partners in achievement. That is a critical message, and one that is being heard across the state.”

State Business Confidence Off in June, Up on Year
BOSTON — The Associated Industries of Massachusetts (AIM) Business Confidence Index recorded a reading of 53.7 in June, making for a second-quarter average of 53.8. “The positive quarterly average reflects the diminution in recent months of major economic-policy conflict in Washington, which has contributed to stronger business confidence,” said Raymond Torto, global chairman of research at CBRE and chair of the AIM Board of Economic Advisors (BEA). “With less ambient uncertainty, employers are becoming more positive about adding personnel, a sign of confidence that is reflected in our survey. The other notable improvement is in responses from small employers, those with 25 or fewer employees, who are now about as optimistic as mid-size firms.” The AIM Index has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. In June 2013 it stood at 48.9. Nearly all of the sub-indices based on selected questions or categories of respondent were down from May, but all were up from last June. The Massachusetts Index, assessing business conditions within the Commonwealth, was up 3.3 points on the year to 50.9, and the U.S. Index of national business conditions was 7.6 points ahead of last June at 48.2. “Massachusetts has generally outperformed the nation economically since the onset of the recession,” said Alan Clayton-Matthews, professor at the School of Public Policy and Urban Affairs at Northeastern University, and a BEA member. “Our state is well-positioned to continue to thrive, but is inevitably standing out less as the rest of the country returns to normal performance.” The Current Index, which assesses overall business conditions at the time of the survey, was 4.1 points above last June’s level at 52.8, and the Future Index, measuring expectations for six months out, was up 6.7 points from a year before at 54.6. “The consensus of economic forecasts calls for faster growth through the rest of this year and into 2015, and most respondents to our survey agree,” Clayton-Matthews noted. “Small and large employers are more optimistic about the near future than mid-size companies; manufacturers rate current conditions lower than other employers, but have similar expectations for the second half of the year.” The Company Index, reflecting survey respondents’ assessments of conditions for their own operations, was up 5.3 points on the year to 56.5. The Employment Index was up the same amount at 54.6, and the Sales Index gained even more, 7.6 points to 57.6. All three were off fractionally from May. “The employment results, even with a marginal loss for the month, continue to reflect a moderate upward trend,” said BEA member Elliot Winer, chief economist for Northeast Economic Analysis Group LLC. “Among employers responding to the survey, 41% expected to add personnel in the next six months, while only 10% foresaw staff reductions, a marked improvement from the already positive 38%-23% split for the prior six months.” Confidence fell in the manufacturing sector (down 2.9 to 51.5) but rose among other employers (up 2.8 to 56.8), and lower outside Greater Boston (52.8, down 1.5) than within the metropolitan area (54.1, down 0.2). Small employers (25 or fewer employees) were about as confident as mid-size firms (26 to 100 employees), while employers of more than 100 were more positive. “Responses on employment were, however, remarkably uniform,” Winer noted, “by region, for manufacturers and other employers, and for companies of all sizes.”

Construction Spending Inches Higher in May
WASHINGTON, D.C. — Total construction spending edged higher for the third straight month in May, as solid increases in private non-residential and public construction outweighed a downturn in residential projects, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials cautioned that the pickup in highway spending is in jeopardy of reversing sharply unless policy makers act urgently to shore up the federal Highway Trust Fund. “The May figures show that construction activity continues to expand, but with lots of variability by month and project type,” said Ken Simonson, the association’s chief economist. “These uneven patterns seem likely to continue for the rest of the year.” Construction put in place totaled $956 billion in May, 0.1% above the upwardly revised April total and 6.6% higher than in May 2013. For the first five months of 2014, total spending rose 8.2% from the January-May 2013 total. Private residential construction spending in May retreated 1.5% from April, when homebuilders may have put in extra hours to make up for adverse winter weather in many regions. The May total was 7.5% above the May 2013 level, representing an 11% increase in single-family spending, a 31% boost for multi-family, and a 2.4% decline in improvements to existing housing. Private non-residential spending rose 1.1% in May and 11% over 12 months. The largest private segment, power construction — comprising work on oil and gas fields and pipelines as well as electricity projects — rebounded 4.3% from a sharp drop in April and was up 30% year-over-year. Among other major private nonresidential segments, commercial construction climbed 6.5% over 12 months, manufacturing construction rose 6.7%, and office work jumped 23%. Public construction spending rose 1.0% for the month and 1.2% year over year.

Cost of Unemployment Insurance to Fall
BOSTON — Massachusetts employers will save money on unemployment insurance under legislation signed by Gov. Deval Patrick Thursday as part of a compromise to raise the state’s minimum wage. The new law freezes the rates for the insurance this year at 2013 levels, and lowers them slightly in 2015, 2016, and 2017. Currently, Massachusetts has the fourth-highest unemployment-insurance cost, with companies spending $714 per employee, on average. Under the new law, the minimum wage in Massachusetts will increase to $11 per hour by 2017, from $8.

Greenfield Launches Technology Master Plan
GREENFIELD — The town of Greenfield announced recently that implementation of the town’s technology master plan is underway. The master plan, an initiative started by Mayor William Martin in the fall of 2010, is another step in the mayor’s continuing “Stabilize and Expand Greenfield” Campaign, an effort to create a sustainable and resilient community that also prepares for opportunities created by external forces in the form of jobs, grants, loans, and recreational, cultural, and societal enhancements, as well as upgrades related to infrastructure, buildings, and quality of life. The plan includes upgrading the town’s information-technology assets and building a town-wide ‘last-mile’ broadband infrastructure to serve every business and resident that chooses to subscribe. “This is the culmination of three years of independent research and planning,” Martin said. “We have read and reread the information, discussed with internal and external experts, and now seek to follow a pathway outlined by this research and discussion that will produce a new, technology-rich future for the town of Greenfield. It will allow us, as local providers, to serve our citizens and businesses in a proactive, efficient, and user-friendly manner. We will have the ability to provide Internet access to many of our citizens who cannot currently access the Internet today or are prevented from a rapid and broad connection.” Beginning in 2010, Martin and Economic Development Director Robert Pyers began an effort to focus on the town’s lack of telecommunications and information-technology infrastructure. They believed that an investment in technology would help spur economic development, enhance public-health and public-safety communications, increase quality educational opportunities, and encourage government efficiency and local democracy. Research had also shown that investing in technology would help the town retain technology-based businesses and spur a knowledge-based economy while helping residents take advantage of the global educational, economic, and entertainment resources available through the Internet. “Over the course of the past three years, we have engaged three consulting firms to plan our approach,” said Martin. “The three Massachusetts-based consulting firms include Kelley Management Group Inc. of Wilbraham, JFK Systems of Somerset, and the Skyline Group from Uxbridge. Each has completed their studies and presented their strategic recommendations, which we are now deploying.” Kelley Management Group produced a Municipal Telecommunications Business Plan, which recommends that Greenfield move forward as a municipal telecommunications services provider with full town ownership and control. KMG’s business plan suggests the town will provide the best telecommunications services to every municipal entity, business, and residence at the lowest possible cost. Martin has accepted this plan and is moving forward with the creation of a town-owned Greenfield Technology Division, which will operate a break-even business with reserves for investment into future capital expenditures. JFK Systems developed a comprehensive municipal information-technology strategic plan, which defines and coordinates how the town focuses its IT resources and provides a consistent process necessary to link the various IT departments’ plans and initiatives with the needs of the citizens of Greenfield. The Skyline Group produced a municipal LAN/WAN site-assessment report and recommendations for the town’s municipally owned and town-occupied buildings. This report gives an assessment, inventory, and analysis of current network infrastructure, along with the risks associated with the current deployment. It also provides recommendations to achieve network enrichments in preparation for the town’s new municipal telecommunications network and services. Implementation of the technology master plan is a three-step process that is currently underway. The process begins with upgrading and/or selecting new municipal IT business applications that support the town’s business processes and incorporate industry standards and best-practice functionality and technologies. The next step in the process involves a redefinition of the technical requirements of the newly selected municipal IT business applications — requirements such as CPU speed, memory, data-networking speed, storage, data management, security, data sharing, etc. — and then building an optimal IT infrastructure, including computers, printers, servers, local area networking, etc., required to support it. The final step is the town’s most ambitious and will have the greatest impact on the community: Greenfield will build a low-cost, high-speed ‘last-mile’ broadband infrastructure to support the town’s new IT infrastructure, and to meet the voice, data, and Internet needs of every business and resident.

2015 Healthcare Costs Projected to Grow 6.8%
Growth in healthcare spending is expected to tick upward next year, in part because consumers are now seeking care they put off during the economic downturn, according to a report released this week. Authored by PricewaterhouseCoopers’ Health Research Institute, the report forecasts medical cost growth of 6.8%, compared to 6.5% for this year. The projected increase is slight compared to double-digit increases seen before the downturn, but the rate of growth had been slowing in the past five years, so the upward shift is worth noting, said Ceci Connolly, managing director of the institute.

Number of Jobless Seeking Aid Falls
WASHINGTON, D.C. — The number of Americans seeking unemployment benefits declined late last month, the latest evidence that an economic slowdown earlier this year hasn’t caused employers to cut jobs. Weekly applications fell 2,000 to a seasonally adjusted 312,000, the U.S. Labor Department said. The four-week average rose 2,000 to 314,000, but the average has fallen 9% since Jan. 1.

Home Sales Post Largest Gain Nationally Since 2011
WASHINGTON, D.C. — Sales of previously owned homes posted the best gain in nearly three years in May, the National Assoc. of Realtors reported, rising 4.9% to a seasonally adjusted rate of 4.89 million. That gain was the fastest since August 2011; still, sales are 5% below the pace of May 2013. And the pace of home sales is well below the 5.1 million homes sold in 2013 and off the pace of 5.5 million annual sales that would reflect a healthy economy. Sales were dampened by last year’s rise in mortgage rates, tight supplies, and tougher lending standards.