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Chamber Executive Article Archive

Fixing the Leaky Bucket

By Peter Perl

Winter 2015

 

In most cities and states, the chamber of commerce has many more pressing priorities than delving into the complex problems of the American prison system. Not many business people see a reason to devote time, energy and money to reforming the penal code, examining the rationale of court sentencing policies, or revamping the process of reintegrating prison inmates into society after they finish their jail terms.

But in Kentucky, the state’s business community realized it had no choice. “We spoke out on prisons, which is certainly not a traditional business issue, and some chambers today might still raise their eyebrows about talking about this.” said David Adkisson, CCE, president and CEO of the Kentucky Chamber. “But we had done an analysis, and we realized that spending on prisons had become unsustainable.”Mike Schlossberg is a Pennsylvania State Representative and a former vice president with the Greater Lehigh Valley Chamber of Commerce. He is also a social media consultant (www.mikeschlossbergsocialmedia. com) and author of Tweets and Consequences: 60 Social Media Disasters in Politics and How You Can Avert a Career-Ending Mistake. 

The Kentucky Chamber’s unlikely advocacy and lobbying effort began in 2010 with an in-depth report about runaway state spending on prisons and elsewhere, an urgent call to action titled “The Leaky Bucket.” Illustrated with an eye-catching cover of a silver bucket leaking tax dollars like water, the 20-page report portrayed a system in crisis: Kentucky already had the fastest-growing prison population in the nation, and corrections spending was rising at a rate 50 percent faster than the state budget, exceeding $500 million annually.

Unless uncontrolled prison expenditures were swiftly, deeply curbed, the report said, they would soon destroy Kentucky’s ability to make progress on the issue that was the chamber’s top priority: education. Only by boosting school spending—from K-12 through college—could Kentucky become a vibrant place for workforce development and for the investment of new capital to create jobs and prosperity. But education spending, crowded out by prison growth, had alarmingly decreased by five percentage points as a portion of the budget.

 

Public Policy from Research, Data, and Analysis

The chamber’s timing in engaging this fight could not have been better. At the same time, Governor Steven L. Beshear and legislative leaders were negotiating an agreement to invite the Pew Charitable Trusts to come to Kentucky to launch an unprecedented effort to study the entire corrections system and propose a series of reforms.

Pew, which previously was just in the grant-making business, was in the early stages of building its national Public Safety Performance Project, which has assisted 35 states with Pew’s signature approach to public policy: conducting in-depth research, yielding a data-driven, non-partisan analysis of the issues, and then providing reliable and objective proposed solutions to a state’s political and legislative leaders.

The Kentucky Chamber and Pew launched an informal partnership that would yield transformational results, passing major new legislation in 2011 and 2013 bringing comprehensive reforms to both the corrections system and then to the deeply troubled state public employee pension system. In addition, it marked the start of a collaboration which both Pew and chamber officials believe can become a model for promoting beneficial legislation on many issues in various states.

“Pew’s research provided a critical role in creating a middle ground where issues could be debated on facts and data, and not with political rhetoric,” Adkisson said in an interview. This role of “honest broker” was particularly important because the Bluegrass State has long had a deeply divided government. Neither fully red nor blue, Kentucky has a Democrat governor, a Democratic state house, a Republican state senate, and two Republican U.S. senators.

Moreover, this divided legislature meets in the capital city, Frankfort, for only 30 days in odd-numbered years and 60 days in even-numbered, when passing a new budget leaves little time for compromise on any new legislation. And, bills that fail in either legislative chamber must be reintroduced all over again the next year. “For a decade, we formed task forces, but we never even nibbled at the problem; we just kicked the can down the road,” said Democratic Rep. John Tilley, chairman of the House Judiciary Committee, who credits both Pew and the Kentucky Chamber for creating a bipartisan breakthrough.

 

Plain Language, No Acronyms

Adkisson spearheaded a multi-pronged publicity and lobbying campaign involving dozens of public meetings and legislative hearings, newspaper op-eds, and radio and TV appearances. Throughout, he stressed the importance of plain language: “We don’t write reports as PhDs or technical white papers. I ask our people to write them for the guy sitting in the back row of the Rotary Club. We have to translate it for Main Street, so that guys who are out there making bourbon, making Toyotas or Corvettes, and everything else we make in Kentucky, we have to speak their language…We’ve outlawed acronyms, too.”

Slashing prison spending would mean reducing sentences for low-level crimes, providing more drug treatment, and delivering rehabilitative services to reduce recidivism—measures favored by liberals and often regarded as soft on crime. “We knew everyone wants to be tough on crime, but when you point out to that Rotary Club or chamber member that it costs $20,000 to send somebody to prison for a low-level drug offense, and that’s equivalent to sending three people to a community college, they see it doesn’t make sense to lock up everyone hanging out on a street corner,” Adkisson said. The chamber always stressed, however, that its interest was purely fiscal: “We did not debate this as a humanitarian issue.”

Richard Jerome, who directed Pew’s prison reform effort, said the chamber’s strong push provided “very significant foundational support” for conservative lawmakers who might otherwise have been afraid to be seen as soft on crime. Rep. Tilley said chamber backing “provided cover” for worried legislators “and cover is very important when you are trying to advance an idea that needs time to catch on.”

The result: despite partisan differences, the far-reaching reforms passed in 2011 by an astounding 96-1 margin in the House and unanimously in the Senate, whose president, David Williams, said it was “one of the best days in the 26 years I’ve been up here.” The law has yielded dramatic change: Kentucky has sharply reduced the rate of recidivism and has projected savings of $422 million over the coming decade.

Adkisson, who has run the state chamber nearly 10 years, knows his way around Kentucky politics. He was elected mayor of his hometown of Owensboro at age 34, served two terms, and ran unsuccessfully for Congress as a Democrat. During his tenure, the chamber has assembled a staff with five registered lobbyists and an array of top former state officials as consultants. Jack Brammer, who has covered Kentucky politics for 35 years for the Lexington Herald-Leader, described Adkisson as a legislative “birddog” whose proactive approach has led the chamber to a high point in terms of credibility and respect.

 

Plugging the Pension Leak

The chamber next turned its attention to another huge leak in the bucket: Kentucky, like many states, had a history of increasing workers’ pension benefits without fully funding them, and had taken a huge investment loss following the 2008 recession. The state pension plan became one of the worst-funded in the country, covering only 55 percent of total liabilities, and reaching a projected shortfall of $23.6 billion—more than twice what the state collects annually in taxes. That year, Pew launched a nationwide pension-reform effort, and Kentucky became one of Pew’s first projects— with a new and valuable ally in the chamber.

The long-standing pension gridlock hinged on whether to maintain the existing “defined benefit” plan, favored by Democrats, which guaranteed workers a specific income, or whether to opt for the Republican-backed “defined contribution” in which the state paid a fixed sum, with workers getting no guaranteed benefit because of investment risk. Complicating matters, neither political party wanted to cut benefits that were already promised to current workers and retirees.

Drawing on knowledge of the financial trends of other states’ pensions, Pew outlined a choice of “hybrid” plans that would guarantee benefits—but not as generously as before—with workers and the state sharing the risk of potential investment losses.

“I thought we would end up in the usual partisan impasse that we’d had for years,” says Republican Senator Damon Thayer, co-sponsor of the pension legislation. “Things were never moving.” Eighty local chambers united under the Kentucky Chamber’s leadership to represent an impressive array of 90,000 employers, from mom-and-pop farms to Fortune 500 industrials.

But it was only in 2012 that it fully flexed its lobbying muscles, Thayer said, “The Kentucky Chamber engaged on a level I’ve never seen it engage before…It’s one thing to say in a membership newsletter that you support a policy, but it’s another thing altogether to fully engage all your resources—op-eds, public relations efforts, paid media. They came on the court as a starting player, and we were happy to have them come off the bench and play a major role.”

 

Rallying Local Businesses

“We would not have had action so urgently and quickly” without the chamber, said Democratic Rep. Mike Cherry, the pension co-sponsor. The key, he said, was that the chamber mobilized its grassroots. “When you come home from Frankfort and have local businesses” lobby you, he said, legislators really start to pay attention.

On the final day of the 2013 session, the legislature overwhelmingly passed a pension package that eliminated costof- living increases unless matched by new funding, committed the state for thefirst time to full funding, and even dared to divert $100 million from road construction to start paying down pension debt.

“I give so much credit to the leadership of Dave Adkisson,” said Steve Stevens, CCE, former president of the Northern Kentucky Chamber, “He helped all of us understand it; that we did not really have a choice; that the state was drowning because the liability was so great and the burden was so heavy.”

Joe Crosby, the director of the State Chamber Policy Center, said the Kentucky Chamber’s collaboration with Pew was a new kind of partnership, which holds great promise for other states. Pew can provide state chambers with crucial data, he said, and chambers can be an “external validator” which solidifies Pew’s credibility in each state.

Adkisson, as a former chairman of both the Association of Chamber of Commerce Executives and the Council of State Chambers, has already helped promote this partnership nationally and sees it as a natural alliance. “We have a common approach in terms of accountability, government efficiency, data-driven policies, extensive research and independent analysis,” he said, “We stand outside government, but we both have an interest in putting government under a magnifying glass. We both have interest in being the voice of reason, and that role is absolutely critical in a politically polarized culture.”

 

Peter Perl, a former senior editor at The Washington Post, is a freelance writer living in Maryland.

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