News

Dr. Arwi Srithongrung Kriz Publishes Working Paper and White Paper on State Government Efficiency

A study released today by the Institute for Illinois Public Finance at the University of Illinois at Springfield reports mixed results with respect to the efficiency of Illinois state government. Dr. Arwi Srithongrung Kriz, IIPF Research Fellow and an internationally recognized expert on efficiency measurement, develops measures of efficiency for eight functions of state government: Higher Education, Elementary and Secondary Education, Public Welfare, Health and Hospitals, Transportation, Public Safety, Environment and Housing, and Infrastructure. She compares numerous measures of the things that government produces such as the number of degrees awarded at public universities and the number of prisoners in correctional facilities with the costs of those services and the number of state employees in each function. Dr. Srithongrung Kriz employs a methodology which has been scientifically tested in many settings and is superior to measures used in previous analyses of state government efficiency.

The study finds that Illinois state government is in a group of the most efficient states in three functions: Higher Education, Environment and Housing, and Infrastructure. It is in the top 20 states for efficiency in Welfare, and in the top half of states for Public Safety and Health and Hospitals efficiency. However, the state ranks below average in efficiency in the Elementary and Secondary Education function and near the bottom in Transportation. The study is unique in that the measures of efficiency that are produced lead directly to recommendations for improving the efficiency of state government operations. Recommendations in the study include increasing regional or centralized services shared by local school districts for the Elementary and Secondary Education function and reducing capital project acquisition costs in the Transportation area.

The study is available in a longer Working Paper format that compares efficiency across all states, available here, and a shorter White Paper version that focuses on Illinois state government, available here. Media coverage of Dr. Srithongrung Kriz’ report can be found at https://www.wcia.com/news/uis-researcher-studies-government-spending/https://newschannel20.com/news/local/university-of-illinois-springfield-releases-study-on-state-efficiency,  http://www.wjbc.com/2020/01/16/study-illinois-report-card-includes-some-good-and-some-bad/https://www.wandtv.com/news/u-of-i-springfield-s-study-shows-mixed-results-for/article_1c07cf7e-37bb-11ea-8e45-ab960542ec4a.html , and https://agenparl.eu/uis-institute-for-illinois-public-finance-releases-report-on-state-government-efficiency/ .

Dr. Arwiphawee Srithongrung and Dr. Patricia Byrnes Publish an Article on Arts and Cultural Activities and Economic Development

Dr. Arwiphawee Srithongrung, IIPF Research Fellow and Dr. Patricia Byrnes, Affiliated Faculty, published an article on the causal linkages between arts and cultural activities and employment, the attraction of knowledge workers into a regional economy, and the resulting impact on economic growth. The journal in which they published their research is one of the top journals in the nation on the subject of economic development. Drs. Kriz and Byrnes find that the arts enhance a regional economy through direct and indirect paths. The empirical results add three points to the theory set out in the literature. First, the study suggests that there is a need to disaggregate arts and other knowledge-based occupations in the creative class occupational lists defined in previous studies because the two occupational types contribute in a distinctive way to the local economy, as shown by the empirical results in this study. Second, the accumulation of specialization in producing artistic goods and services tends to enhance local personal income. Third, artistic goods and services serve residents and hence attract and retain knowledge-class workers, which in turn act as an engine of growth. You can find the paper link on the Academic Papers and Presentation page.

Dr. Kenneth Kriz Presents Research on Behavioral Public Finance and Economics at 2019 International Conference: Experimental Research in Public Management

The conference, hosted by the KDI School of Public Policy and Management in Seoul, Republic of Korea, featured experts on behavioral public administration, public policy, and public finance from major universities throughout the United States. Dr. Kriz’ presentation focused on four areas within public finance and public economics that have seen much behavioral research using experimental methods: public good provision (for things like defense, public safety, and other services), tax salience (people’s awareness of taxes and the impact on behavior), tax compliance, and the willingness to pay for public services. Dr. Kriz’ full presentation can be found on the Academic Papers and Presentations page.

Dr. Kenneth Kriz Presents Economic Outlook at Quad Cities Chamber of Commerce Annual Conference

Dr. Kriz presented an economic outlook for the nation, for the 3-state Iowa-Illinois-Missouri region, and the local Quad Cities economy. His presentation highlighted that while the national and regional economy has slowed, there was not a high likelihood of the economy tipping into recession in the near future. For the Quad Cities region, Dr. Kriz stressed that it needs to diversify away from industries that it has historically relied heavily upon to seek growth in industries that have better job and output growth prospects over the next 10 years.

Dr. Kriz’ full presentation is available on the Academic Papers and Presentations page. Media coverage of Dr. Kriz’ presentation can be found at https://wqad.com/2019/12/15/this-week-were-not-heading-into-a-recession/ and https://quadcitieschamber.com/news/blog/quad-cities-economic-growth .

IIPF Staff and Affiliated Faculty Presentations at the 2019 Association for Budgeting and Financial Management Conference

UIS and the IIPF had a strong presence at the 2019 Association for Budgeting and Financial Management National Conference in Washington DC, September 26-27. UIS faculty, staff, and students were involved with 11 papers or presentations at the conference (IIPF staff and affiliated faculty highlighted). These presentations are available on the Academic Papers and Presentations page.

Arwiphawee Srithongrung: Does State Infrastructure Spending Attract Business Relocation?

Arwiphawee Srithongrung: Using Performance Measurement to Inform Budget Allocation: The Case of Illinois

Elham Buxton, Kenneth A. Kriz, Matthew Cremeens, and Kim Jay: Applying Deep Learning to Medium-and Long-Term Revenue Forecasting

Can Chen, Kenneth A. Kriz, and Shuanglin Lin: Strategic Interaction in Urban Infrastructure Finance: A Spatial Econometric Analysis of Chinese Prefecture-Level Cities

David Merriman and Kenneth A. Kriz: Public Revenue Estimation in an Academic Setting under Significant Time and Institutional Constraints: An Illinois Experience

Tima T. Moldogaziev, Mikhail Ivonchyk, and Kenneth A. Kriz: Patron’s Largess and Fiscal Governance: Regional Debt in the Russian Federation

Beverly Bunch: Roundtable: Are the States Ready for the Next Recession?

Beverly Bunch, Patricia Byrnes, and Glenn Cassidy: Local Police and Fire Pension Funding Challenges in Illinois

Richard Funderburg, Joshua Drucker, David Merriman, and Rachel Weber: Is Tax Competition Strategic? Spatial Distributions of Business Property Tax Abatements in the Chicago Suburbs

Jinping Sun, Thomas D. Lynch, and Robert W. Smith: Presenting a Holistic Budget Format: A New Systems Perspective

Dr. Kenneth Kriz Presents on Fiscal Sustainability at Chulalongkorn University in Thailand

Dr. Kenneth Kriz presented to an audience of faculty and students in the Faculty of Political Science at Chulalongkorn University in Bangkok, Thailand on July 9. The topic of the presentation was the Theory and Practice of Assessing Fiscal Sustainability. Dr. Arwi Kriz provided translation for the remarks. After presenting for approximately one hour, outlining the theory of fiscal sustainability and highlighting two recently completed projects on the topic, Dr. Kriz took questions ranging from an assessment of the debt situation of the Thai nation to technical questions regarding the application of the techniques discussed in the lecture. Check out a picture from the presentation on the Main page of the Institute and the presentation slides on the Academic Papers and Presentations page. Also, Chulalongkorn University has a Facebook post on the event with video.

Dr. Kenneth Kriz Publishes a Co-edited Book on Tax Increment Financing

Dr. Kenneth Kriz has co-edited a new book titled “Tax Increment Financing and Economic Development.” The book brings together leading experts to examine the evolving nature of tax increment financing (TIF), the most widely used tool of local economic and community development. Originally designed as an innovative approach to the redevelopment of blighted areas, TIF has become a more general-purpose tool of economic and community development.

Contributors to the book offer case studies of the uses, structures, and impacts of TIF projects alongside more general discussions on the theoretical, financial, and legal bases for the use of TIF. They also explore its effect on overlapping jurisdictions such as cities, counties, and school districts. Some of the case studies capture TIF at its best—redeveloping areas that would likely never develop without substantial incentives. Other cases highlight questionable uses, especially where it has been used in new ways that those who developed the tool never envisioned.

Originally published in 2001, an updated second edition of “Tax Increment Financing and Economic Development” is available for purchase in both hardcover and paperback from the State University of New York (SUNY) Press. According to the publisher, the updated book is “clear, comprehensive, and timely.” “This new edition features the latest research and thinking on TIF, including the political, legal, and even ethical issues surrounding its use.”

Dr. Arwi Kriz Presents at the Public Management Research Conference on Corruption and Efficiency in Public Capital Spending

Dr. Arwi Kriz presented her most recent research examining the link between corruption and public capital spending efficiency. While most of the existing research on this topic has tried to associate public capital spending levels with corruption, Dr. Kriz points out that more sophisticated measures of efficiency are available. These measures capture the growth of productivity in public capital investment, a key topic for understanding efficiency of public sector activities.  She finds that, controlling for other reasonable explanations, an increase of 10% in incidences of corruption reduces public capital productivity growth by 1.3%. While the magnitude of the effect is not large, there is an inverse relationship between corruption and productivity growth. You can find the presentation from the conference on the Academic Papers and Presentation page.

IIPF Director and Affiliated Faculty on IGPA Team Examining Alternative Structures for the Illinois Personal Income Tax

IIPF Director Dr. Kenneth Kriz and IIPF Affiliated Faculty members Patricia Byrnes and Glenn Cassidy were co-authors of a report for the Illinois General Assembly released on May 7, 2019 by the Institute of Government and Public Affairs, a University of Illinois System Institute chartered to provide non-partisan, evidence-based research and practical programs to engage leaders and inform policy in Illinois.

From the IGPA Press Release:

“IGPA [seeks] input from public policy leaders about what research topics would be most relevant. Illinois Senator Andy Manar reached out to IGPA seeking information about Illinois’ personal income tax system. “The Institute of Government and Public Affairs provides independent, rigorous and nonpartisan research that helps to inform important policy discussions. We’re glad Senator Manar reached out with these relevant questions, and we look forward to working with our scholars and other policymakers to help inform the conversation,” IGPA Interim Director Jon S. Davis said.

The questions the report seeks to answer are:

  • Can you describe the income distribution in Illinois and how this has evolved over the recent past?
  • Can you project out the income distribution in Illinois for the next five years and project personal income tax revenue with:
    • Illinois’ current personal income tax system?
    • A graduated rate personal income tax system comparable to other Midwestern states (e.g. Wisconsin, Minnesota, Iowa or Missouri)?
  • What personal income tax revenue would Illinois’ economy generate if it adopted the personal income tax structure of Wisconsin, Minnesota, Iowa or Missouri?
  • How are tax burdens distributed in the current tax system and how would they be different under alternative tax systems of the states listed above?

Although the questions were developed in conjunction with Senator Manar, he played no further part in the research, analysis or writing of the report. The report represents the non-partisan, evidence-based analyses of experienced and independent University of Illinois scholars.

Some key findings the report makes in answering these questions include:

  • Income inequality has been rising in Illinois since the late 1970s and has mirrored the increase in inequality at the national level.
  • High-income households are expected to receive a greater share of income over the next five years, but the pace of the increase will be smaller than in recent history.
  • The share of income going to those earning the least is forecast to fall initially, but then level out, and eventually rise slightly.
  • Changes in the income distribution over the next five years will have little effect on the revenue generated by the Illinois’ personal income tax system.
  • Compared to Wisconsin, Minnesota, Iowa or Missouri, Illinois’ tax system collects less revenue than every state, except Missouri, and the revenue Illinois does collect comes disproportionately from the lowest-income taxpayers.
  • Allowing for possible behavioral changes from taxpayers in response to tax-policy changes does not alter these conclusions.”

The report can be downloaded from the IGPA website at https://igpa.uillinois.edu/report/revenue-implications-tax-structure

IIPF Director and Affiliated Faculty Present Paper on Fiscal Sustainability at Federal Reserve Bank/UIC Government Finance Research Conference

IIPF Director Dr. Kenneth Kriz and Affiliated Faculty member Rick Funderburg presented a paper at the recent conference “Ready or Not? Post-Fiscal Crisis/Next Fiscal Crisis”, hosted by the Federal Reserve Bank of Chicago and the University of Illinois at Chicago’s Government Finance Research Center. The paper was titled “Measuring Fiscal Sustainability of Local Governments: A Stress Testing Approach Using Illinois Municipalities.” In the paper, Drs. Kriz and Funderburg assessed the fiscal sustainability of a sample of Illinois city governments using a technique called stress testing. This technique has been used to assess the solvency of financial institutions and the entire financial sector in the wake of the 2008-09 financial crisis. The researchers find that while some cities are well prepared for tough fiscal times, many others are likely to encounter severe fiscal stress during an economic downturn.

The paper is available on the Working Papers page and will be available soon at the conference website: https://gfrc.uic.edu/ready-or-not-post-fiscal-crisis-next-fiscal-crisis/ .

 

IIPF Director, Research Fellow, and UIS Political Science Professor Present Paper on Race, Gender & Municipal Bond Pricing at 2019 Midwest Political Science Association Conference

IIPF Director Dr. Kenneth Kriz, IIPF Research Fellow Dr. Arwi Kriz, and UIS Political Science Professor John Transue presented a paper on race, gender, and municipal bond pricing at the 2019 MPSA conference held in Chicago. Drs. Transue, Kriz, and Kriz analyzed data from over 300 city bond issues during the period 2005-2010. They obtained data about the race and gender of the cities’ mayors, city administrators or managers, and finance directors and analyzed whether those variables affected the cost of borrowing for the city, or it’s municipal bond credit rating. After controlling for other variables that could affect borrowing cost and credit ratings, the researchers were not able to identify a statistically significant relationship between borrowing cost and any of the variables of interest. However, they were able to identify relationships between Hispanic and Female finance directors and credit ratings. Cities with a Hispanic finance director tended to have higher credit ratings after controlling for other explanatory variables, while cities with Female finance directors had slightly lower credit ratings.

The presentation is available on the Academic Papers & Presentations page.

IIPF Research Fellow Presents Paper on Citizen Satisfaction Surveys and Quantitative Data Analysis Techniques at 2019 American Society for Public Administration Conference

IIPF Research Fellow Dr. Arwi Kriz presented a paper on citizen satisfaction surveys and more quantitative data analysis techniques at the 2019 American Society for Public Administration conference. In the presentation, Dr. Kriz assessed the usefulness of various tools for helping support performance-based budgeting (PBB) systems in state and local governments. These systems attempt to allocate resources based on the relative performance of different functions of government. In the first step in her research, Dr. Kriz develops a Data Envelopment Analysis (DEA) of health, education and other expenditures in a sample of countries, developing efficiency scores for those governments in providing services. She then correlates the efficiency scores with measures of citizen satisfaction with public services from two international surveys. She finds that her measures of overall efficiency as well as component efficiency indices are correlated with certain aspects of the citizen surveys. This suggests that quantitative methods such as DEA provide valid measures of efficiency that can be used by governments to adjust their performance-based budget allocations.

The presentation is available on the Academic Papers & Presentations page.