The year is winding down, but for non-profits and universities, the planning for 2018 fundraising has already begun. Understanding trends and challenges can enable you to drive engagement more efficiently and effectively. Before we start predicting what trends will impact development professionals next year, let’s take a look back at some of the 2017 trends that could continue to have an impact after the final chords of Auld Lang Syne play.
Next week, we’ll take a look at some of the new trends on the horizon. Until then, Happy New Year!
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Twenty-three states and the District of Columbia have enacted laws authorizing the use of marijuana for medical purposes since 1996, when California became the first to do so with Proposition 215. Four states and the District of Columbia have gone further, legalizing recreational use of the drug.
Source: National Conference of State Legislatures
Legend:
Legalized medical marijuana use: Arizona, California, Connecticut, Delaware, DC, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, Rhode Island, Vermont
Legalized recreational and medical marijuana use: Alaska, Colorado, Oregon, Washington, DC
In two weeks, hundreds of delegates across different industries will converge on London for the Impact Investing Summit 2018. The annual conference is just one sign of increasing interest by investors and consumers to put their money where it can do good. In fact, one of the planned keynotes is titled, "Impact Investing is the New Norm.” Addressing ethical expectations is becoming a strategic advantage. Research by British bank Barclays supports the trend. In a 2018 poll, the bank found a 13 percent rise in the number of investors under the age of 40 who had made an impact investment—from 30 percent in 2015 to 43 percent this year. While investors over age 50 haven’t yet made the leap to impact investing—only 9 percent of 50-59 year-olds and 3 percent of 60 and older—the fact that younger generations with less cumulative wealth are already targeting socially and environmentally responsible investments bodes well for the future of impact investing.
What is Impact Investing?
Impact investments are defined as investments that deliver positive social and environmental impact while still generating positive financial returns. In 2014, Abigail Nobel, Head of Impact Investing at the World Economic Forum, told Harvard Business Review that “Impact investing is about strategy. A lot of businesses have pursued social responsibility more out of their marketing departments or as some sort of charitable donation. Not only are they not capturing the full value because it doesn’t create that virtuous cycle, it’s just not sustainable.”
The Global Impact Investing Network (GIIN) identifies several core components of impact investing:
Keep exploring
The Supreme Court’s May 14 decision to strike down a federal prohibition on sports gambling may well turn out to be the financial boon many observers believe it can be. But getting there is going to be easier in some states than in others, and state revenue collectors will hardly be the only ones looking to legally grab a share of the billions of dollars Americans wager on sports each year.
Led by New Jersey – which instigated the challenge that resulted in the SCOTUS ruling in Murphy V. National Collegiate Athletic Association - a healthy number of states have already put themselves in position to take advantage of the SCOTUS ruling by changing their laws to authorize sports wagering should the court endorse it. West Virginia, Delaware, Pennsylvania, Connecticut and Mississippi are among those with previously approved legalization bills that are now joining the Garden State in preparing to move ahead as soon as possible.
Nineteen states have weighed such bills this year (see Bird’s eye view), and lawmakers in many more have stated their intention to introduce one. Most legislatures are already out for the year, but several bills are still pending in states that remain in session, including California, Illinois and Michigan. Conversely, legalization measures failed this year in Louisiana, Indiana, Missouri and Maryland.
States that have not already introduced legalization bills are likely not going to get into the game until 2019 at the earliest, and the process is likely to range from deliberate to downright ponderous even for those states with bills already in the pipeline. New York, for instance, passed a measure in 2013 that allows sports wagering at the Empire State’s four casinos, but Gov. Andrew Cuomo (D) told reporters last month he wants to move slowly on current legislation to implement statewide wagering. Whether state regulators and lawmakers are as willing to go at the pace he wants is unclear.
California is likely to take some time as well. Assemblyman Adam Gray’s (D) proposed constitutional amendment (ACA 18) will require a two-thirds vote in both chambers and endorsement by voters. But Gray has yet to even hold hearings on the proposal, and the final version is expected to draw intense interest from the state’s three current gambling sectors: casinos, race tracks and card rooms.
Under the plethora of current compacts Native American tribes have entered into with the state, casinos have exclusive rights to operate casino-type games. Steve Stallings, chairman of the California Nations Indian Gaming Association, which represents 35 federally recognized tribes in the state, told the Los Angeles Times that tribes would almost certainly see sports wagering as an extension of that gaming, and thus exclusively under their purview.
“I think the tribes are going to stand on the principle that only we operate full casino-style gaming in the state,” he said.
Card rooms and race tracks, however, are not expected to see it that way, potentially setting up a bitter fight over what a final resolution that goes before voters would look like. Given that uncertainty, it would seem unlikely the issue would get to voters prior to the 2020 election.
Questions abound in other potential sports gambling states as well. As many as a dozen were already allowed to conduct some limited forms of sports betting before the SCOTUS ruling, but only four - Oregon, Delaware, Nevada and Montana – were allowed to have broad sports wagering under the now-defunct federal law. Of those, only Nevada was doing so. While Delaware Gov. John Carney (D) said he expects the First State to be offering sports betting by June, officials in Oregon and Montana have not yet indicated whether they plan to follow suit any time soon.
With a potential revenue windfall at stake, most observers believe all states will eventually bet big on sports wagering. But even getting consensus on just how valuable the industry is now, or may be in the future, is difficult at best. As with other highly touted emerging revenue streams – think legal cannabis – the numbers put into the public sphere can vary greatly. That variation often can depend on the motivation of the person making the claim.
In a 2014 New York Times op-ed, National Basketball Association commissioner David Stern claimed “that nearly $400 billion is illegally wagered on sports each year.” But that figure was quickly met with serious skepticism by observers like Slate senior business and economics correspondent Jordan Weissmann, who noted that the figure Silver tossed out represented “an average of about $1,700 wagered by every American adult every calendar year, or equal to roughly 2 percent of the entire American economy.”
In his research, Weissmann discovered that Silver was quoting a highly speculative range given to him of between $80 billion and $380 billion annually. Silver’s motivation for going with the highest possible number seems clear: to encourage federal oversight of gaming that would supersede states’ individual efforts. Citing the overwhelming money at stake, Silver called on Congress to adopt “a comprehensive federal solution” that will allow states “to authorize betting on professional sports, subject to strict regulatory requirements and technological safeguards.”
Most industry observers now say that number was wildly inflated, but recent speculation is also all over the board. One estimate by the American Gaming Association pegged illegal sports gambling revenues at anywhere from $50 billion to $150 billion annually, while Ohio State University economist Jay Zagorsky estimated it to be approximately $67 billion a year. Other industry experts place the figure at between $200 billion and $300 billion.
All of those guesstimates presume that legal betting would completely supersede the illegal wagering now taking place in almost every state. Whether that actually happens is also open to debate. Even so, industry observers like Eilers & Krejcik Gaming, LLC, which tracks state-by-state gambling legislation, believe the pull of the money will lead to as many as 32 states legalizing sports wagering within the next five years.
Wagering supporters contend that even the lowest estimated gross revenues would produce big dollars for states. A 2017 study by Oxford Economics predicted that legalizing sports wagering nationwide would add $22 billion to the U.S. Gross Domestic Product, producing $8.4 billion in annual state and federal tax revenue and creating over 215,000 new jobs. Approximately $3.4 billion of that revenue would be at the state level.
Lucy Dadayan, a senior policy analyst at the Rockefeller Institute of Government, told Stateline that even if those projections are accurate, $3.4 billion is still a pittance – about .03 percent - of total state and local revenue.
There is another potential drain on the gambling cash flow: the sports themselves. All four major professional sports leagues – Major League Baseball, the National Basketball Association, the National Football League and the National Hockey League – as well as the Professional Golfers Association have made clear they expect to get their cut of the pie as well.
Led by the NBA’s Silver, who first brought up the concept of an “integrity fee” in his 2014 NYT op-ed, leagues are expected to seek a 1 percent commission on the total bets made on their respective sports. The leagues contend the growth of gambling will force them to commit more resources to monitoring their sports for suspicious activity and educating players, coaches and even officials about the brave new world of legal wagering. As such, they feel they deserve to be compensated for those increased costs.
They won’t be the only ones. Player unions are also expected to factor into the equation, given the presence of collective bargaining agreements that guarantee players a certain percentage of league revenues. It remains to be determined how resolute the leagues and players will be in seeking compensation, though there is some indication the leagues will be willing to take less than their initial 1 percent asking price.
All of which makes for a fairly uncertain background over the next few years. As with industries like legal cannabis and ridesharing, which have accelerated rapidly from illegality to acceptance, many states will be forced to adapt to a new order at a faster pace than they are prepared for. But as former California Assemblymember Lloyd Levine (D) notes, the SCOTUS decision will almost certainly impact all of them sooner than later.
“All I can say is that at this point, it is now a political question rather than a legal one,” he says.
Since 2000, millions of new residents have poured into Texas, expanding the population of Austin’s Travis County by 350,000, swelling San Antonio’s Bexar County by 500,000 and making three suburbs of those two cities among the fastest-growing counties in America.
“People have gone from a rural setting in Texas to a largely urban setting,” the state’s governor, Greg Abbott (R), said in a recent interview.
With a little over half of the new residents coming from Mexico, Guatemala, Honduras and other South and Central American countries, the state’s population is now 39 percent Hispanic, with African-Americans making up 13 percent and Asian-Americans nearly 5 percent.
Despite all of that demographic change, the state is still solidly red, with Republicans controlling both chambers of the Legislature with supermajorities, as well as holding every statewide elected office. But Democrats say the votes are there to make Texas a swing state, if the state’s voters would only cast them.
Hundreds of thousands of eligible voters haven’t registered, and millions more just don’t turn out on Election Day, possibly in part because of the strict voter ID law passed by the state in 2011.
“We’re not a red state. We’re a low-turnout state,” said state Rep. Rafael Anchia (D).
Most demographers say the state’s population explosion will eventually turn Texas purple. But Gov. Abbott, who’s up for re-election next year, still hasn’t drawn a serious Democratic opponent. And other prominent Democrats in the state, including Anchia, have decided not to run for statewide office.
“I still think we’re a couple of years away,” he said. (HILL)
The unauthorized accessing of sensitive financial and personal information about 145.5 million consumers at Equifax, which the company made public last month, has prompted numerous lawsuits, congressional hearings, and investigations by federal agencies and state attorneys general, along with a big drop in the company’s stock price and the sudden retirements of its chief information officer, chief security officer and CEO. The massive breach could also lead to a state regulatory crackdown on credit reporting agencies, which aren’t currently subject to some of the requirements imposed on other businesses that manage sensitive consumer data, and possibly to tighter controls on that larger universe of businesses as well.
Equifax and the two other major consumer credit bureaus, Experian and TransUnion, compile and store confidential information, including credit card numbers, phone numbers, addresses, birth dates and Social Security Numbers, on about 200 million Americans. The companies use that trove of data to calculate the credit scores used to help decide whether someone gets a credit card, a home loan or a job, among many other things.
Despite the critical function they serve and the lucrative target they pose for identity thieves, however, the credit reporting agencies, though required to abide by many of the data security laws that apply to banks and other financial institutions, aren’t subject to the same level of federal regulatory oversight as those entities, according to a report by the New York Times. While banks are continuously monitored for compliance by a team of agencies, the credit bureaus generally only come under scrutiny after a problem has arisen, that report indicated.
“Credit reporting agencies are the plumbing of our financial system but are much less regulated than many banks,” Rohit Chopra, a senior fellow at the Consumer Federation of America, an association of nonprofit consumer organizations, told the Times.
New York Gov. Andrew Cuomo (D) wants to change that situation. He has directed his state’s Department of Financial Services (DFS) to issue new regulations requiring credit reporting agencies to register with the state each year and giving the superintendent of the DFS the power to deny or revoke a credit bureau’s authorization to operate in the state for failing to comply with the state’s Cybersecurity Requirements for Financial Services Companies, which went into effect in March, or engaging in unfair, deceptive or predatory practices, among other things.
“A person’s credit history affects virtually every part of their lives and we will not sit idle by while New Yorkers remain unprotected from cyberattacks due to lax security,” Cuomo said, according to a DFS press release. “Oversight of credit reporting agencies will help ensure that personal information is less vulnerable to cyberattacks and other nefarious acts in this rapidly changing digital world. The Equifax breach was a wakeup call, and with this action, New York is raising the bar for consumer protections that we hope will be replicated across the nation.”
Whether other states will heed that call remains to be seen. But the Equifax breach also highlighted other gaps in the laws governing credit reporting companies and other financial institutions. According to congressional testimony given by former Equifax CEO Richard Smith this month, the company didn’t disclose its breach to the public until over a month after initially detecting it, in part because it took time to ascertain the extent of the infiltration and because it was advised by outside cybersecurity counsel to have a plan in place for protecting consumers affected by the breach first. Yahoo added insult to that injury when it revealed last month that it had suffered a breach affecting 500 million of its users back in 2014.
Forty-eight states have laws requiring private or public entities to notify individuals of breaches of their personal information, according to the National Conference of State Legislatures. But the laws are somewhat vague, generally requiring only that notification be provided expeditiously. Disclosure is complicated by the fact that it can take time to determine the size of a breach and what, if anything, was taken, and companies also want to protect their reputations.
“Is it really ‘lost’ if you can’t find it out in the Darknet for sale?,” said Chris Roberts, chief security architect at Acalvio, a Santa Clara, California-based company that provides advanced threat detection solutions, as TheStreet reported. “Is it ‘lost’ if you have no trace of it leaving? Is it lost and do we have to disclose if we can’t actually work out what happened? Disclosure is a mess, and that’s putting it nicely. Lawyers are involved, and they care less about the ‘normal human’ and simply have a duty to protect the corporation. It’s as simple as that.”
Another issue that has likely become apparent to many impacted by the Equifax breach is that taking action to prevent the fraudulent use of the information that was illegally accessed, such as initiating a “credit freeze,” blocking lenders from pulling your credit report and, thereby, preventing someone from fraudulently opening a new account in your name, or lifting a freeze once it is in place, isn’t free, unless you live in one of handful of states that bar credit bureaus from imposing such fees or you can prove you were the victim of credit theft, such as by providing the number of a filed police report. According to the consumer research website ValuePenguin.com, the fees for a freeze, for instance, generally range from $3 to $10, making the expense of freezing your credit at all three major credit bureaus as much as $20 until Jan 31, 2018, when a waiver of the fee for a credit freeze at Equifax expires and the cost rises to $30.
Some members of Congress have indicated their willingness to address these issues. U.S. Rep. Jim Langevin (D-Rhode Island) has reintroduced legislation (HB 3806) that would establish a 30-day national standard for breach notifications and direct the Federal Trade Commission to help coordinate the disclosures, according to The Hill. The publication also reported that U.S. Sen. Chuck Grassley (R-Iowa), chairman of the U.S. Senate Judiciary Committee, said he’s been working with U.S. Sen. Dianne Feinstein (D-California) and other senators of both parties on a national breach notification standard for years.
“I remain committed to getting a good bill put together and over the finish line,” he said before his committee’s hearing on Equifax this month.
U.S. Rep. Jim Himes (D-Connecticut) and U.S. Sens. Ron Wyden (D-Oregon) and Elizabeth Warren (D-Massachusetts), meanwhile, have all introduced legislation providing for free credit freezes, HB 3766, SB 1810 and SB 1816, respectively, according to LexisNexis State Net’s legislative tracking system. But the enactment of any of the congressional measures seems unlikely with a presidential administration inclined to loosen rather than tighten government regulations, most recently evidenced by the Environmental Protection Agency’s move to repeal President Barack Obama’s signature policy for curbing carbon emissions from power plants.
But at least five states have also introduced bills this year, or prefiled measures for next year, that were likely prompted by the Equifax breach, given their subject matter and the fact that they were proposed after the breach was made public on Sept. 7 (see Bird’s eye view in this issue). The measures include New York SB 6879, which would require credit reporting agencies to automatically place a freeze on consumer credit files affected by a breach, and SB 6880, which would require any business that uses computerized data including private information to disclose breaches of its system within 15 days of discovering them unless directed otherwise by law enforcement, as well as measures providing for free credit freezes in Illinois (HB 4095 and SB 2230) and Michigan (HB 5055). Bills dealing with data breaches and credit freezes that were introduced prior to the Equifax breach was made public are also still pending in at least nine states. And those measures could get a boost from the abundant media coverage of the Equifax incident.
Although the airspace over the United States is, by act of Congress, the exclusive regulatory domain of the Federal Aviation Administration, states have been very active in recent years on the issue of unmanned aircraft systems (UAS), more commonly known as drones. But Congress is now considering legislation that would reaffirm the FAA’s aerial authority with regard to drones specifically.
Since 2013 27 states have enacted laws and 15 states have adopted resolutions dealing with drones, according to the National Conference of State Legislatures (see Bird’s eye view). The bills have commonly addressed issues such as privacy and the use of drones by law enforcement or for hunting, while the resolutions have generally provided for studies of the issue.
At least 41 states have introduced legislation related to drones this year, according to NCSL and legislative data from LexisNexis State Net. Seven states - Idaho, Indiana, Oregon, Tennessee, Utah, Virginia and Wisconsin - have passed 10 drone bills apiece, NCSL said. The measures include Indiana’s HB 1013, which allows the use of drones for photographing or video-recording traffic accident scenes; Oregon’s HB 4066, which, among other things, makes operating a weaponized drone a class A misdemeanor; Tennessee’s SB 2106, which makes it a crime to operate a drone within a certain distance of critical infrastructure; and Utah’s HB 126, which sets various criminal penalties for flying a drone in restricted airspace over a wildfire and for disrupting, colliding with or causing the crash of aircraft fighting a wildfire.
But many of those recently enacted state laws and pending measures could be nullified by an FAA reauthorization bill (US SB 2658) currently under consideration in Congress. Section 2142 of that 133-page bill would preempt any state or local law “relating to the design, manufacture, testing, licensing, registration, certification, operation or maintenance of an unmanned aircraft system, including airspace, altitude, flight paths, equipment or technology requirements, purpose of operations, and pilot, operator, and observer qualifications, training, and certification.”
Section 2142 spells out in detail what the FAA Modernization and Reform Act stated more vaguely in 2012: that regulating drones is the prerogative of the FAA. In specifying the extent of that authority the provision calls into question the legality of many of the drone laws passed by states in the four years since then.
One of the dozen new laws that took effect in Tennessee this year made it illegal to fly a drone over a fireworks display, a correctional facility or an event attended by over 100 people. James Mackler, a Nashville-based attorney who specializes in drone law, said the law came about as a response to a series of drone incidents.
“A couple of incidents with stadiums is what got it started,” he told UAS Magazine. “As lawmakers were discussing how to regulate flights over public events, there was an incident over a jail, so they added jails. And then a guy flew his drone through the Nashville fireworks display a year ago, so they added that, too.”
In drafting the law, Tennessee lawmakers expanded the crime of criminal trespassing to include drone flyovers and stipulated the law would only apply in airspace not regulated by the FAA. But Mackler still questions whether the law is enforceable. And he said other states are passing similarly motivated and similarly questionable laws.
“What we’re having are state reactions to specific incidents with real questions about the states’ authority to regulate,” he said.
Presumably SB 2658’s preemption clause would answer those questions in a way that doesn’t favor states. But U.S. Sen. Dianne Feinstein (D-California), whose state has been a leader in the development of drone laws, is backing an amendment to SB 2658 that would limit its preemption language to apply only to the manufacture and design of drones, and only allow the preemption of state and local drone operation laws that conflict with FAA rules.
“Reckless drone use varies significantly in different states and even within a state, which is why we need to maintain the ability for states to set their own standards of drone operation,” she told USA TODAY.
Local government officials say cities should have that same authority. (Some state lawmakers evidently disagree. Georgia’s General Assembly passed HB 779 this year, which preempts all local ordinances adopted after April 1. And Virginia is considering HB 412, prohibiting regulation of drones by local governments.) The National League of Cities and the United States Conference of Mayors wrote a letter in March to the U.S. Senate Commerce, Science and Transportation Committee, where SB 2658 still resides, stating: “Much like automobiles and land use development regulations, local leaders know best how to regulate issues that affect their residents in their own backyards.”
As Troy A. Rule, a law professor at Arizona State University’s Sandra Day O’Connor College of Law, asked in an op-ed for the Wall Street Journal: “During what hours of the day should drone-assisted pizza deliveries be permitted in dense urban neighborhoods? Under what conditions should real estate photographers in a beachfront community be permitted to use drones to capture aerial views of homes being listed for sale? Or how close to a suburban high school’s football stadium should drone flying be allowed on game nights?”
“Centralized federal agencies are incapable of tailoring drone-use restrictions to fit the unique characteristics and preferences of every local jurisdiction,” Troy concluded. He added that one of the reasons Congress was “seriously considering statutory language that would effectively prohibit local drone-use restrictions” despite the advantages of involving localities in the process was that it would benefit Amazon and Google.
“Federal pre-emption of local regulations would make it simpler and less expensive for these companies and others, such as Wal-Mart, to launch drone-assisted delivery operations in the U.S., Troy wrote. “With FAA authorizations, they would be free to disregard local drone-use restrictions.... Flocks of corporate drones could buzz indiscriminately over residential rooftops, day-care facilities, school playgrounds, and even local prisons, ignoring the wishes of communities and landowners below.
Whatever the motivation for SB 2658, Matthew Colvin, principal associate of infrastructure and development at the National League of Cities, said as currently written, the bill grants the FAA authority that goes beyond regulating the safety of the U.S. airspace and treads on the right of local governments to ensure the safety of their citizens.
“That space just feet above your head has never been regulated by FAA,” he told The Hill.
Both Colvin’s group and the U.S. Conference of Mayors support Feinstein’s amendment to SB 2658. The National Conference of State Legislatures, the National Governors Association and the National Association of State Aviation Officials do as well. But The Hill reported that the sponsors of the bill appeared unlikely to support any changes to the preemption provision, since local governments would still be free to enact privacy and safety laws applying to drones as long as the laws didn’t refer to drones specifically.
SB 2658’s Section 2142 states: “Nothing in this subtitle shall be construed to limit a State or local government's authority to enforce Federal, State, or local laws relating to nuisance, voyeurism, harassment, reckless endangerment, wrongful death, personal injury, property damage, or other illegal acts arising from the use of unmanned aircraft systems if such laws are not specifically related to the use of an unmanned aircraft system for those illegal acts.”
Michael Drobac, executive director of the Small UAV Coalition and senior policy advisor for the legal firm of Akin Gump, said the preemption provision would also prevent a patchwork of state and local regulations that could hinder the development of the drone industry, according to The Hill.
“There are some industries and areas that require uniformity with a federal approach, and U.S. airspace is one of them,” he said. “This provision is essential to the prosperity of technology that will transform the way we live for the better and save lives.”
The FAA maintains that state and local efforts to regulate drones also raise “substantial air safety issues,” according to a Fact Sheet the agency issued in December.
“If one or two municipalities enacted ordinances regulating UAS in the navigable airspace and a significant number of municipalities followed suit, fractionalized control of the navigable airspace could result,” the FAA document stated. “In turn, this ‘patchwork quilt’ of differing restrictions could severely limit the flexibility of FAA in controlling the airspace and flight patterns, and ensuring safety and an efficient air traffic flow. A navigable airspace free from inconsistent state and local restrictions is essential to the maintenance of a safe and sound air transportation system.”
The American public doesn’t seem to support that view, however. As reported via Business Wire, 68 percent of the respondents to a survey released last month by Smart Government, a smart-cities research and advocacy group, said they believe drone laws should be created by state and local governments because the federal government doesn’t know what’s best for their community. Seventy-nine percent said they believe their local government should have the authority to pass laws restricting drones from flying at low altitude over their properties. And 83 percent said there should be restrictions on the delivery of packages by drones.
The fracas over SB 2658 begs the question: Will it pass? The bill’s sponsor, U.S. Sen. John Thune (R-South Dakota), chairs the committee that is considering the measure and is a 12-year veteran in a Congress controlled by his party. But another FAA reauthorization bill with no federal preemption clause has been introduced in the U.S. House (HB 4441). That measure is also sponsored by a veteran Republican Congressman, U.S. Rep. Bill Shuster (R-Pennsylvania), who is the chairman of the committee to which the bill has been assigned. It remains to be seen whether states will wait and see how the issue plays out on the Hill, proceed with greater caution, or keep moving ahead at full throttle.
PR departments and agencies looking for great cross-promotional opportunities in the fall have an ace in the hole: In many parts of the world, it's the start of a new school year. The back-to-school experience is relevant across a huge range of geographic and cultural divisions, and with the right campaign, a promotion can turn this annual tradition into an attention-grabbing jumping-off point.
Becoming part of an overall conversation bring eyes to a company in an organic way, especially if the brand can come up with a hook that matches the rest of the coverage. In 2008, the year PR Week spotlighted, the focus was on brands lowering prices in the face of the oncoming recession
Every year and region will have a dominant tone to back-to-school coverage. Brands that keep a close watch on the media in their targeted markets will likely be able to place their stories more effectively and receive the type of coverage they're
after. Those with good media monitoring or media intelligence operations will be able to perform these actions more effectively.
One of the most exciting parts of back-to-school season from a PR perspective is that with the right angle, a huge variety of campaigns can get a boost from a tie-in. From the most obvious items to more ambitious options, anything can be the subject of an effective pitch. If you are monitoring trends and identifying hot topics, you can make your pitch highly relevant and timely. Here are a few examples from this year's crop, each spotlighting a different approach:
PR departments looking to launch the perfect back-to-school campaign will improve their effectiveness if they have a clear view of the rest of the industry. What kinds of messages are competitors sending? Which news sources put a special emphasis on the back-to-school season? What local micro-trends are particularly relevant in the regions they're targeting? Departments and agencies with effective media monitoring are able to answer these questions, then carefully monitor the reaction to and spread of their back-to-school campaigns.
It's up to leaders to decide whether their products can tie into the themes of back-to-school season. For an overwhelming number of companies, the answer will be a resounding yes with the right campaign. Once the choice has been made, it's simply a matter of choosing an angle and monitoring the results carefully. The annual ritual of the new school year can become a periodic way to grab headlines. Now, how do they keep the attention?
At least 21 states have introduced bills or resolutions dealing with digital currencies in 2018, about double the number of states that did so last year, according to analysis by the National Conference of State Legislatures and LexisNexis State Net. Six states have enacted such measures this year. One of the states, Wyoming, enacted three of them.
Thirty-one states and the District of Columbia have expanded Medicaid in accordance with the Affordable Care Act (ACA) but left to states discretion by the U.S. Supreme Court’s ruling in National Federation of Independent Business v. Sebelius in 2012. Seven of those states have obtained federal waivers giving them more flexibility in designing their Medicaid programs to reduce costs and improve care.
Source: Kaiser Family Foundation
For our recurring Q&A series, we spoke with Patrick Moulette, Head of the Anti-Corruption Division at the OECD (Organization for Economic Cooperation and Development). He shares how the legislative landscape has changed since countries signed the OECD Anti-Bribery Convention 20 years ago, and the impact it has had on companies’ attitudes towards compliance.
LN: What has the Anti-Bribery Convention achieved in the last 20 years?
PM: The Convention has had a clear impact on legislation and institutions globally. The scope of the Convention is focused on targeting the bribery of foreign public officials. When the Convention was signed in 1997, foreign bribery was only an offence in the US—other countries did not have this legislation on their books. Now, foreign bribery is of course prohibited in the 43 states who have signed the Convention.
But the Convention has had an impact beyond transnational bribery. When countries change their laws to challenge foreign bribery, it has a much wider effect. For example, when countries improve their legislation for holding companies liable for foreign bribery, in fact this also changes the law for domestic corruption and other financial crimes. It is our ongoing monitoring program of individual countries’ anti-bribery work that triggers these reforms.
LN: What other areas have been affected by the Convention?
PM: A good example is whistle-blower protection. In 2009, the OECD adopted a recommendation that countries should improve their domestic legislation to protect whistle-blowers when they report allegations of foreign bribery. When countries introduce this kind of legislation, it usually does not just cover foreign bribery but whistleblowing protection in a much broader sense. So as we add more guidance to the Convention, and give advice to countries, it has a very significant impact on legislation to fight corruption and other financial crimes.
LN: Where is there still work to be done?
PM: There are still not enough concluded foreign bribery cases. Half of the 43 states under the convention still do not have a single conviction for the bribery of foreign public officials. Of course in the US there are many sanctions, convictions and settlements, which some countries like Germany are following, but it is worrying that the enforcement results are not at the level we would expected. This is a big challenge for members of the Convention.
Another challenge is that there are some important countries in international business and commerce who are missing from the Convention. Several important members of the G20 likeChina, India, Indonesia and Saudi Arabia have not signed it. This hampers the objective of the Convention.
LN: How does bringing 43 countries together under one Convention benefit the global fight against corruption?
PM: We have signed up the 35 OECD countries and eight non-OECD members, and there are major countries we still want to get to sign the Convention. Over time, meetings and gatherings of law enforcement officials from these countries have become more frequent, and anti-corruption prosecutors worldwide are getting to know each other. This is very important because it leads to more effective international cooperation and mutual legal assistance. Twice a year, prosecutors, police, magistrates and judges from different countries meet. They discuss challenges they have when prosecuting cases of foreign bribery. So we have made significant progress in the development of law enforcement capacity.
LN: Has the Convention had any effect on companies?
PM: The Convention is mostly about criminal law prosecutions and investigations; there is little or nothing about compliance and how companies will need to adapt behavior. It took until 2009 for the OECD to adopt a recommendation which contained a good practice guide for companies on the main headlines or items that should be included in any compliance programme. But what is interesting is that the business sector had not waited until 2009 to make significant changes to the way it approaches corruption.The main change has been the development of initiatives in the area of compliance. This means the development of internal programmes, training, ethics and codes in companies or business organizations. Today we are living in a new era of compliance which is a direct consequence of the Anti-Bribery Convention.Of course, not all companies are compliant, otherwise there would be no bribery. But the way most companies do business has changed a lot in 20 years - the establishment, definition and application of compliance has been a revolution.
LN: What changes have you noticed in how businesses approach anti-corruption in the last 20 years?
PM: Companies are really moving in the right direction on compliance, putting in place internal program which are robust on paper. But sometimes the programs are treated like a box-ticking exercise, and the measures are only superficial so it is really important that companies create a real and substantial culture of compliance.
LN: What are the main trends in the field of anti-corruption at the moment?
PM: The four main trends are the development of negotiated settlements, a rise in companies voluntarily disclosing corruption, greater whistle-blower protection and increasing mutual legal assistance between countries.The development of negotiated settlements has become widespread practice; our 2014 report on foreign bribery showed that in 69% of cases where a company was sanctioned for foreign bribery cases offences, it was resolved with a negotiated settlement.Deferred Prosecution Agreements are mostly used in the US but several other countries have developed similar systems. Yet at the international level, there are still no guidelines on negotiated settlements, so we will study this trend in more detail.
LN: Can you identify any emerging future trends in anti-bribery and corruption?
PM: I think right now, and in the future we will need to reflect on digital corruption and digital enforcement. How you fight corruption and bribery with information technology is a very important topic for the future.
LN: What about human rights?
PM: Protecting human rights and fighting corruption are very much linked. The issue is more closely covered under the OECD’s guidelines for multinational enterprises, but it is something that the OECD Anti-Corruption Division always keep in mind in its monitoring work on the implementation of the Convention.
LN: What about beneficial ownership?
PM: There is still a lot of work to be done on beneficial ownership. It is an issue that the OECD and the FATF (Financial Action Task Force) have addressed in the areas of tax crime and money laundering. But it is also a key issue in the fight against bribery and corruption—if you do not know who the real owners of a company or any legal entity are, this can then lead to every kind of financial crime.
LN: What role does the media have in tackling corruption?
PM: The media has a fundamental role to play in fighting foreign bribery. On 12 December 2017, we published a significant cross-country study on the detection on foreign bribery, and one of the chapters is precisely about the role of investigative journalism in detecting corruption. The media is a prominent source of information about bribery and corruption allegations and most of the time it is useful and reliable. The results of enforcement would not be the same without the active work of the media and journalists. Investigations on corruption are often triggered with a press article.
LN: What are your hopes for the Anti-Bribery Convention in 20 years’ time?
PM: I hope the Convention will be even more pertinent, with major countries in Asia finally joining. We would like China and India to join at least, and maybe a few other countries in Asia. The Convention is already more global than the OECD membership because it includes countries such as Argentina, Brazil, South Africa, Russia and Colombia, but it has not reached Asia, with the exception of Japan and Korea. This is a big issue given the importance of Asia’s economy in the world. Asia is also the only region in the world which has not introduced an anti-corruption treaty or convention. There are conventions for American states, in Europe, in the African Union, but not in Asia. It’s also important to maintain strong global standards against bribery and corruption and adapted to the world of today.
Finally, I hope that the level enforcement of anti-foreign bribery laws will further increase, i.e. that all state parties will have at least one conviction for foreign bribery and that the number of concluded cases with convictions will have at least doubled.
Next Steps1. Download our ISO 37001 eBook for guidance on establishing due diligence and monitoring systems to mitigate corporate ABC risk.2. Share this blog with your colleagues on LinkedIn to keep the conversation going.3. Watch for our next Q&A.
Buoyed by the votes of suburban women and independents, Democrats gained hard-won ground in the nation’s statehouses in Tuesday’s midterm election.
Democrats won seven governorships and six legislative chambers previously held by Republicans. They also took outright control of the New York Senate, which has been run by a Republican-dominated coalition despite a technical Democratic majority.
These outcomes were widely seen as a negative referendum on President Donald Trump, but Democratic gains were significantly less than Republicans posted in two midterm elections when Barack Obama was president.
“It was a good night for the Democrats, but it was not a banner night,” said Tim Storey, a political analyst with the National Conference of State Legislators (NCSL).
Democrats lost 24 chambers in the 2010 election, Storey noted. On average, 12 chambers have changed party hands in every two-year election cycle back to 1900.
The legislative chambers won by the Democrats on Tuesday include the senates in Colorado, Connecticut, Maine, the House in Minnesota and both chambers in New Hampshire.
The seven states in which Democratic governors will replace Republicans are Illinois, Kansas, Maine, Michigan, New Mexico, Nevada and Wisconsin. These were open seats except for Illinois, where billionaire Democrat J.B. Pritzker routed Republican Gov. Bruce Rauner, and Wisconsin, where Democrat Tony Evers narrowly ousted Republican Gov. Scott Walker.
Four of the seven new Democratic governors are women: Janet Mills in Maine, Gretchen Whitmer in Michigan, Laura Kelly in Kansas and Michelle Lujan Grisham in New Mexico.
Kelly’s win over Kris Kobach in normally Republican Kansas disappointed anti-immigration conservatives. Like Trump, whom he embraced during the campaign, Kobach believes the United States is seriously endangered by illegal immigration from Mexico and Central America.
“Kansas is dead to me,” tweeted conservative commentator Ann Coulter after learning of Kobach’s defeat.
Republicans took solace Tuesday at holding onto the governorships in the key states of Ohio and Florida, albeit narrowly for now in the Sunshine State, where a recount is under way.
They also won the governorship in Alaska, where Republican Mike Dunleavy defeated Democrat Mark Begich after independent Gov. Bill Walker withdrew. In addition, the GOP won the Alaska House, which had an opposite situation to the New York Senate: a technical Republican majority in which control was exercised by a Democratic-leaning coalition.
History was reaffirmed by the big picture of the election, in which Democrats won the House of Representatives. Democrats gained at least 30 seats and hold a 225-200 lead with 10 seats undecided. In 28 of the last 30 midterm elections, the party out of power in the White House has gained in congressional and state elections.
But the U.S. Senate went against the grain. Republicans picked up three seats in Indiana, Missouri and North Dakota. The GOP now holds a 52-47 majority and could wind up with 53 senators.
In the U.S. Senate race in Arizona, the Associated Press late Monday declared Kyrsten Sinema (D) the winner over Martha McSally (R). In Florida, the recount continues in the Senate race in which Gov. Rick Scott (R) leads incumbent Sen. Bill Nelson (D).
The brightest spots for Democrats were the gubernatorial races. Going into the election, Republicans had a 34-15 edge with one independent. The seven Democratic victories left the GOP with a narrower 27-23 edge.
Republicans still hold an overwhelming lead of 61-37 in state legislative chambers. Unicameral Nebraska is nominally non-partisan but Republican in all but name.
Overall, there are several positive takeaways from the 2018 elections. One is voter turnout, which soared above 100 million for the first time in a midterm election. At least 113 million Americans cast ballots.
Diversity was a hallmark of the election, which sent more women than ever before to the U.S. House and state legislatures. Kansas and New Mexico sent Native American women to the House. Muslim women were elected to the House in Michigan and Minnesota. All were firsts, and all were Democrats.
Another first occurred in Colorado where Democrat Jared Polis, a wealthy congressman became the first openly gay man elected governor in any state.
The election was also a reminder that governors who are perceived by voters as effective can win in politically unfriendly states even in an era of hyper-partisanship. Govs. Charles Baker of Massachusetts, Larry Hogan of Maryland and Phil Scott of Vermont, moderate Republicans in Democratic bastions, were reelected handily. So was Gov. Tom Wolf, a centrist Democrat, in Pennsylvania.
Trump became president because he won states — notably Michigan, Pennsylvania and Wisconsin — that normally vote Democratic in presidential elections. All three now have Democratic governors and a base from which to build in 2020.
The presidency aside, the outcome of the 2020 elections will have an impact when states redraw legislative and congressional districts in 2021. District maps can determine district outcomes. The lines drawn by Republican legislators in 20ll following their 2010 victories saved many GOP legislators and House members from defeat Tuesday.
Two issues dominated this year’s campaign. One was the alleged menace of illegal immigration, epitomized by a Central American caravan of immigrants whom Trump demonized as “invaders” even though they are hundreds of miles away from the U.S-Mexican border. Many Republican candidates took up this theme, and many Democrats avoided the issue as best they could.
The other issue was health care, a turnaround issue that helped Democrats. In 2010, when the Affordable Care Act, known as Obamacare, had been passed but was not yet operative, Republicans made political hay with promises to repeal it.
But the ACA has become popular, most of all because it guarantees coverage to Americans with pre-existing medical conditions. A Trump executive order permitting state health insurance plans that do not cover these conditions put Republicans on the defensive throughout the 2018 campaign.
The ACA is now safe with Democrats in control of the House. Senate Majority Leader Mitch McConnell (R-Kentucky) said after the election that Republicans would not try again to repeal Obamacare.
Voters in Tuesday’s election weighed in favorably on Medicaid expansion, which the ACA has made possible. Ballot measures to expand Medicaid were approved by voters in Idaho, Nebraska and Utah, all reliably Republican states.
In addition Gov.-elect Kelly in Kansas promised during her campaign to expand Medicaid. Legislation to do so was previously approved by the Kansas Legislature but vetoed by a Republican governor. Similarly, in Maine, Gov-elect Mills has said she will implement Medicaid expansion. Voters approved expansion in 2017 but its implementation was blocked by outgoing Republican Gov. Paul LePage.
President Trump’s performance in the 2018 elections was mixed. On the one hand he deserves much credit for the high voter turnout, as his fiery rhetoric motivated supporters and critics alike. On the other, his divisive denunciations of immigrants, the media and anyone who disagrees with him alienated suburban and educated women and political independents, according to several surveys.
Trump campaigned more frequently and vigorously than Obama did in 2010 and produced results — in both directions. Democrats said that intense dislike of Trump was a principle factor in helping them win so many suburban districts and control of the House.
But Trump also played a major role in the defeat of Democratic senators in Indiana, Missouri and North Dakota, states Trump carried in 2016. If Trump is disliked in the cities and suburbia, he remains popular in rural America, as the results Tuesday demonstrated.
A decade ago a Texas journalist named Jim Bishop wrote a book called The Big Sort, which described how Americans were dividing into like-minded states and communities that had little tolerance for the other side.
The polarization of America that Bishop deplored played out with a vengeance in the 2018 election. For the first time in 104 years, said Storey, the lower and upper chambers of every state except Minnesota will be controlled by the same party.
The division of our country into red states and blue states that swear at Trump or by him augurs more polarization in the next two years.
But at a time that gridlock looms in Washington between a Democratic-controlled House and a Republican-controlled Senate, states have an opportunity to set the national agenda.
Storey observed that environmental legislation sought by the Democrats in New York State and education policy changes proposed by the Democrats in Colorado had been blocked in recent sessions by Republican opposition.
Democrats will have no partisan barrier to inaction in these states now that they control all the levers of power. Nor will Republicans in the 23 states in which they will hold the governorship and both legislative chambers.
As a result of the 2018 election, America’s representatives will now test the advantages and limitations of political polarization.
El Niño, the warmer-than-usual Pacific water temperatures that influence the weather worldwide, is shaping up to be one of the most powerful on record—and businesses should be taking note. You may have noticed that being prepared is a hot topic right now, thanks to FEMA’s National Preparedness Month. It’s also been a decade since New Orleans and the surrounding area was devastated by Hurricane Katrina in late August/early September 2005. While we can’t always accurately predict the next hurricane, blizzard or even earthquake, it is possible to mitigate risk—including supplier risk—with a proactive strategy.
The costs of weather-related and other natural disasters is enormous. According to a recently published risk bulletin from Allianz Global Corporate & Specialty (AGCS), 10 years later, Hurricane Katrina is still the most costly windstorm loss to date, with $125 billion in overall damages and nearly 2 million insurance claims filed. But the danger of disruption lies beyond the physical damage of being in the path of a hurricane or the flash floods that recently hit the headlines. The barriers to conducting business worldwide have disappeared, leading to more complex, global supplier networks. Unfortunately, this also means that an Ell Niño-driven weather event in Southeast Asia or South America could have disastrous consequences for companies in the United States and elsewhere.
When you think about it, your company is like a ship. You hope for smooth sailing, but top leaders also keep on the look-out for storms that could cause disruption. Proactive supplier monitoring puts you in the crow’s nest so that you can identify potential risks on the horizon and change course, if needed, to mitigate risk. In addition to tracking potential environmental disruptions within your supplier network, you should be watching for other key risk factors.
The best way to find the answers you need—and maintain an effective supplier risk management strategy—is by leveraging a comprehensive range of global news, business, industry and country information for on-going, multi-tier monitoring of your supplier network. Are you ready for whatever hits next?
2 Ways to Apply This Information Now.
Gary Cohn, president and COO of Goldman Sachs, knows a thing or two about regulatory risk. After all, the financial services industry faces constant scrutiny—and headline-generating enforcement actions—for violations of anti-money laundering, anti-bribery and corruption and a host of other regulations. But you might also find it interesting that Mr. Cohn has said, “If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business.” We touched on the subject in last week’s blog post about how globalization has led to elevated compliance risk. Today we’re taking a look at three industries that aren’t generally considered ‘high risk,’ but have encountered problems just the same.
When reports surfaced that modern slavery was rampant within the Thai fishing industry, immediately, calls went out to boycott grocery stores and restaurants that may have sourced products acquired using forced labor. And it wasn’t just activists leading the charge. New Jersey Republican Congressman Chris Smith, a member of the House Foreign Relations Committee, said, “All of us may find ourselves eating a slave-made product without knowing it, but once we know it, we all have a moral obligation, I believe, to make a personal decision to boycott it.” Not surprisingly, consumers raised their voices in protest too.
After all, consumers are paying more attention to where their food comes from these days. Organic food has moved from fad-status to a widely-embraced preference. Consumers have raised expectations on companies to meet ethical and environmental standards, demonstrating a clear preference for ethically-sourced products, according to a Nielsen survey. As a result, if consumers learn that the shrimp, chocolate, coffee or tea they’re enjoying comes from slave labor, they tend to blame the brand they know best, not some nameless third-party far along the supply chain.
Last month, models strutted down runways in New York City and Paris and celebrities mingled with designers in a grand celebration of fashion. But style comes at a cost, and we’re not just talking about high fashion price tags. The fashion supply chain travels a long, often convoluted, path—and government bodies, non-governmental organizations (NGOs) and consumers are looking more closely at what takes place in the journey from concept to closet.
CNBC reported in August that “Ten of the world’s 12 biggest garment-exporting countries hold a high or extreme risk of slaves working in their supply chains.” The risk starts early—in the growing and harvesting of cotton, for example. Check out this Anti-Slavery International video produced for its “Cotton Crimes” campaign. From there, forced labor takes place in yarn and spinning mills, then garment factories—all in an effort to produce fast, inexpensive fashions for consumers in the U.S., Europe and elsewhere. Modern slavery laws—like the UK Modern Slavery Act passed last year or the 2010 California Transparency in Supply Chains Act will likely be joined by additional laws as nations around the world try to bring an end to practices that disproportionately impact the most vulnerable people: women, children and people displaced by war or poverty.
Not surprisingly, forced labor is also viewed as a potential indicator of other corrupt practices, such as bribery of government officials like health and safety inspectors, immigration authorities and others. This opens the door to potential Foreign Corrupt Practice Act (FCPA) investigations. But that’s not the only bribery and corruption risk. When it comes to gift-giving and hospitality in luxury fashion industry, even giving away free samples can be construed as a bribe. The financial fallout from such breaches are significant. Just two years ago, Avon entered a deferred prosecution agreement over FCPA violations by Avon China, paying a total of $135,013,013.00 in criminal and regulatory penalties. And the damage to reputations cannot be ignored either; in the age of social media, revelations about forced labor have prompted consumer protests and sweeping changes in how companies like Nike and H&M conduct third-party screenings to mitigate risk.
The tech industry hasn’t escaped third-party risk either. Components in smartphones, tablets and TVs, use materials that come from a well-documented, high-risk industry: mining. As a result, the potential for forced labor in the distant reaches of the tech supply chain is high. And the picture that is painted when bad actions come to light isn’t pretty. Amnesty International business & human rights researcher Mark Dummett says, “The glamourous shop displays and marketing of state of the art technologies are a stark contrast to the children carrying bags of rocks, and miners in narrow manmade tunnels risking permanent lung damage.” A comprehensive third-party compliance and risk management can make a huge difference, but it must be an ongoing effort.
Recently, Bloomberg reported, “Apple Inc. has reached what it’s calling a milestone in supply-chain transparency, saying it’s now auditing 100 percent of its suppliers for the use of conflict minerals linked to violent militia groups in the Democratic Republic of the Congo.” The process took five years—and a great deal of determination—to achieve results, which may be why “Only a handful, such as chipmaker Intel Corp. and tantalum capacitor maker Kemet Corp., have been able to say they sell conflict-free products,” said Bloomberg. Plus, as pointed out earlier, the presence of forced labor indicates a bribery and corruption risk as well. What’s the answer? It may not be simple, but companies must implement robust compliance programs—and use their economic muscle to enforce them—while also mitigating risk with deeper due diligence and ongoing monitoring to help ensure that bad actions aren’t taking place further along the supply chain.
New advances in the digital world impact the workspace of every industry on a daily basis. Emerging technology is changing the way people communicate, process information and use it to meet their bottom line. As a professional in public relations, the idea of introducing artificial intelligence into your workflow can be intimidating.
While technology can certainly take many of your normal daily tasks off of your hands, it's important to remember that your career thrives on building relationships with clients. As Ivan Ristic wrote for PR Week, artificial intelligence just can't replace that personal connection.
"A bot can't lay claim to emotional intelligence, a cornerstone of all PR work," he wrote. "Teams employing AI handling external communication would be wise to have plans to manage reputation should anything automated go awry. Humans build trust with humans—not bots."
Instead of getting intimidated by AI, embrace technology and use it to your advantage.
How communication is better with AI The digital universe can play a key role for PR professionals when used effectively. For example, Forbes reported that tools like BuzzSumo and others can be used to create insights and measure action and the impact of reach from company advertising that sets the tone for the future of business. LexisNexis Newsdesk® is a powerful tool for media monitoring and analyzing trends in traditional and social media which can help shape the tone and direction of communication. Tracking programs allow professionals to follow trends and act in real time to beat out competitors. All in all, AI shouldn't be viewed as a replacement, but rather an assistant that takes care of the time-consuming tasks that keep you from doing what you're best at: forming and maintaining strong relationships with customers.
Why AI can't replace public relations At its core, the role of a PR professional is defined as managing vital information between an individual or an organization and the public. That takes creativity and emotion to build a strong connection to spread the correct message to consumers. Artificial intelligence can track certain keywords and use them to develop insights, but context is most often left behind and can lead to creating the wrong message.
Humans work off of context and create impactful stories that hit home and spark interest with consumers. This means they know how to make humans care about something; a task that AI simply isn't designed for.
Essentially, AI cannot be mimicked nor can it replace the important relationships that you need to develop with your customers to meet success. It's nothing to fear - it's something that needs to be taken advantage of.
Sports betting and remote sales taxes have been getting a lot of attention in statehouses recently. The main reason for the surge of interest in the two issues is a pair of cases currently before the U.S. Supreme Court that could allow states to collect billions of dollars in new revenues from sports wagering and online sales.
Fourteen states have introduced more than 40 bills dealing with “sports betting” or “sports wagering” in 2018. One, West Virginia’s SB 415, has been enacted, according to LexisNexis State Net’s legislative tracking system. This year’s actions come on top of the 16 introductions and three enactments (Pennsylvania HB 271, Mississippi HB 967 and Connecticut HB 6948) related to sports betting in twelve states last year, according to the Legal Sports Report.
The majority of the measures, including SB 415 and HB 271, provide for the legalization of such gambling if there’s a change in federal law allowing it. States, with a few exceptions, are currently prohibited from licensing or authorizing sports gambling by the Professional and Amateur Sports Protection Act, or PASPA, passed by Congress in 1992.
Much of the recent legislation was likely spurred by Christie v. National Collegiate Athletic Association, a case the Supreme Court agreed to hear last June, began deliberating in December and could issue a ruling on as soon as this month. The case revolves around a law enacted by New Jersey in 2014, repealing provisions of the state’s existing laws and regulations prohibiting sports wagering at casinos and horse racetracks. Last year the U.S. Court of Appeals for the Third District struck down the New Jersey law on the grounds that it violated PASPA. The state contends that federal statute violates the 10th Amendment, which stipulates that any powers not granted by the Constitution to the federal government belong to the states or the people.
At a panel discussion on gaming at the National Association of Attorneys General (NAAG) Winter Meeting in February, Elbert Lin, a partner at Hunton & Williams LLC who early in his career clerked for Justice Clarence Thomas, predicted that five of the justices would vote in New Jersey’s favor, although he prefaced that prediction with the disclaimer that “it’s always dangerous to make predictions about” Supreme Court rulings. Having attended oral arguments in the case, he also said it seemed more likely that the majority would simply decide PASPA didn’t apply to repeals of sports-betting prohibitions like that enacted by New Jersey rather than rule on PASPA’s constitutionality, leaving open the “question as to whether or not PASPA prohibits any kind of regulatory scheme.”
“I think even if New Jersey wins I’m not sure that the ruling is going to be as far-reaching as people think it will be, as people hope it will be,” he said.
Many states have been hoping for a revenue jackpot from a favorable ruling. A study done last year for the American Gaming Association by Oxford Economics projected sports gambling would become a $41.2 billion industry that would generate $3.4 billion per year in tax revenue for state and local governments. But Marc Dunbar, a partner at Jones Walker LLP, said states shouldn’t expect a huge windfall from sports betting.
“There’s just not a lot of money to be made on sports betting,” he told Bloomberg Tax. “Even if the industry captures $100 billion in revenue, states would only be able to tax about 5 percent of that, so we’re talking about $5 billion of taxable revenue, which would then be spread across all the states that permitted sports betting.”
Lisa Soronen, executive director of the State & Local Legal Center, which assists state and local governments with Supreme Court litigation, however, told Bloomberg that while there may not be “much money on the table here,” sports wagering could still “really generate some tax revenue for states.”
And there are other reasons for states to take action on sports betting sooner rather than later. As Mississippi Attorney General Jim Hood (D) told the other attorneys general and officials attending the NAAG panel discussion, states that have casinos and statutory schemes that would allow sports betting to go into effect immediately if the Supreme Court reverses the 3rd Circuit “better get ready because your lawyers are going to be busy trying to establish a regulatory scheme for sports betting.” He added that “if you leave holes in it, believe me, there’s going to be some slick professional sports better that is going to find those holes and exploit them in your system.”
Indiana Rep. Alan Morrison (R), who sponsored a sports-betting bill in his chamber, meanwhile, told Stateline he’d like his state to be “proactive” on the issue “and be one of the first to be up and running rather than be lagging behind and see neighboring states get a jump on it.”
Another issue many states are seeking to get a jump on is the taxation of remote, or out-of-state, sales, including those involving Internet retailers. At least 14 states have introduced bills this year providing for the collection of sales or use taxes on such purchases, according to LexisNexis State Net’s legislation database. Those measures include Kansas HB 2756, approved by a House committee in February, which would require remote sellers that do at least $50,000 per year in business in the state to remit sales taxes; Oklahoma SB 337, passed by that state’s Senate last month, which would require remote sellers that don’t collect and remit sales taxes on purchases by Oklahoma residents to report information about those sales to the state; and Idaho HB 578, signed by Gov. C.L. “Butch” Otter (R) last month, requiring remote sellers to collect sales taxes if they do more than $10,000 in sales in that state.
This year’s bills follow legislation and regulations of a similar nature in about a dozen states in 2017, as Stateline reported.
All of that activity comes ahead of a major U.S. Supreme Court case on online sales taxes scheduled to begin this month, South Dakota v. Wayfair Inc. The case involves a law passed by South Dakota in 2016, requiring out-of-state retailers to collect sales taxes on purchases from customers located in the state. The law was actually intended to provoke a legal challenge with the ultimate aim of overturning the U.S. Supreme Court’s 1992 ruling in Quill Corp. v. North Dakota, barring states from requiring retailers without an in-state physical presence to collect and remit sales taxes.
According to an NCSL blog post in December, shortly before the Supreme Court agreed to hear South Dakota v. Wayfair, Soronen, of the State & Local Legal Center, said the general consensus was that if the court took the case, it would probably overturn Quill, although she also noted the court tended to avoid invalidating its own precedents. In another NCSL blog post, Soronen herself pointed out that Justice Kennedy had invited the challenge to Quill in 2015, writing in a concurring opinion in Direct Marketing Association v. Brohl that the “legal system should find an appropriate case for this Court to reexamine” that decision, particularly in light of the fact that e-commerce sales had grown dramatically in the 25 years since the case was decided. She also mentioned that Justice Gorsuch had “raised similar concerns” about Quill while serving on the U.S. Court of Appeals for the Tenth Circuit.
A reversal on Quill could result in a big windfall for states. Those that impose taxes on sales miss out on somewhere between $8 billion and $26 billion in revenue from e-commerce each year, according to separate estimates by the U.S. Government Accountability Office and the National Conference of State Legislatures and the International Council of Shopping Centers.
No industry is impervious to bribery and corruption risk, but companies linked to energy industries, in particular, face elevated risks in order to reap the equally high rewards. The PWC Global Crime Survey found that energy, utilities and mining saw a 6 percent increase in misdeeds related to bribery and corruption last year. If the survey results aren’t enough proof, then just check out recent headlines or even some of our blog posts on Unaoil and Petrobras. Why is the energy sector so vulnerable and how can you improve compliance? Find out in our free eBook, A Pipeline to Corruption: Why Energy Industries Need Enhanced Due Diligence.
The U.S. Department of Homeland Security notes, for example, that our energy infrastructure “fuels the economy of the 21st century.” It goes on to say that “Without a stable energy supply, health and welfare and threatened, and the U.S. economy cannot function.” And the same could be said about energy infrastructures around the globe. Clearly, there’s a lot at stake. Beyond the energy sector’s crucial role keeping the lights on, transportation running and data transmitting (even if that data is the latest episode of Game of Thrones), you also have to contend with other risk factors:
If you want to help your company stay out of the headlines, make sure your due diligence and ongoing monitoring drills deep enough. Otherwise, you could find yourself facing an unforeseen corruption scandal—and enforcement actions that seriously harm your reputation and your bottom line.
Whether you’re a data scientistor an insurance industry analyst, data is a critical part of your life. There are more and more data sources to choose from; simultaneously, organizations are demanding more from their data. It’s not enough to provide individual statistics. Today, businesses that lead are using data in innovative ways to truly know their customers, drive organizational change and exploit trends that are shaping behaviors globally.
According to smartinsights.com, “70% of business executives say analytics is already very or even extremely important. This in contrast to 2% that say they have achieved broad, positive impact.” If you’re responsible for your company’s strategy or research initiatives, how can you be sure you’re getting the most out of your data, transforming it from ordinary into insightful?
With so many data sources available, it’s easy to focus on either the wrong things or details that don’t really matter. Be sure you’re tracking what’s meaningful to your organization by working with vetted data sources that can pull a multitude of disparate data points together and aggregate findings based on search terms, topics and criteria that are important to your business. This way, you’ll spend less time sifting through endless data sands and more time focusing on what you’ve uncovered.
One of the barriers to actionable insights is often the siloed structure of departments. If teams aren’t integrated and sharing insights across groups, their full impact is minimized or even lost. Become a true agent of change and foster collaboration among teams through research that is sharable and engaging. By creating reports in formats that are visual, you’ll be sure you’re getting the most out of your insights and encouraging multiple teams to use your findings for real change within your business. While words and numbers matter, a picture can often convey the benefit more clearly and with emotion, encouraging teams to discuss the insights and use them cross-functionally.
For many, the power of data lies in the present and in using it for the future. And while this is helpful, don’t ignore looking backwards to give your data real-world context. Historical data will help you to fully form trends that are based on extended periods of time, parts of the world or within certain demographics or populations. It’s this 360-degree focus that allows you to gauge how oil prices impact the real estate market or how weather patterns impact the stock market. Using the lens of history can help you to connect seemingly unrelated patterns, giving you powerful insights that make a real difference.
Even if you’re an insights wizard, the insights won’t mean anything if they aren’t tied to the goals of your business. By working with leadership to understand strategic goals and operational imperatives, you can tie your work to the objectives of your company, helping teams to reach goals through what you analyze and deliver.
Ready to learn even more about transforming data into insights that matter? Check out these solutions and resources developed specifically for you.
States have struggled for six years to reach revenue and spending levels they attained before the Great Recession of 2008-09 brought shortfalls and layoffs. They’re still struggling. The recession cut so deeply and recovery has been so slow that states still haven’t matched pre-recession peaks, according to the annual year-end fiscal survey of states by the National Association of State Budget Officers (NASBO). What’s more, states anticipate “a significantly slower growth rate,” in fiscal 2016, the NASBO report said. Revenue collections are expected to increase only 2.5 percent compared to 4.8 percent growth in fiscal 2015.
State Net Capitol Journal at this season peeks into the rearview mirror and then looks ahead. My colleagues Rich Ehisen and Korey Clark have in the past two issues examined the major issues in statehouses throughout the land. This essay focuses on the economies and politics of the states heading into an election year.
States approach 2016 with a mix of optimism and uncertainty. The economy has added thousands of jobs, but wage growth has been slow. “After more than six years of economic recovery from the devastating financial crisis, the labor market is well below its pre-recession levels and pockets of economic weakness remain,” The New York Times reported. In the states, most budgets for fiscal 2016 “remain mostly cautious with limited spending growth,” according to the NASBO report. “Long-term spending pressures in…health care, education, infrastructure and pensions continue to pose challenges for many states that will require difficult budgetary decisions,” the report said.
The biggest challenge for states is the exponential growth of Medicaid, the federal-state program that provides health care for low-income persons and the disabled. Medicaid added 6.3 million people in 2015, bringing enrollment to 15.3 million, about one in 20 Americans. Total Medicaid spending in fiscal 2015 was $512.3 billion, an annual increase of 15 percent, the NASBO report said. Medicaid accounted for 27.4 percent of total state spending in 2015 and 19.3 percent of general fund expenditures.
“Medicaid is crowding out spending for other important programs,” said Scott Pattison, chief operating officer for the National Governors Association. He said this crowding-out is occurring in states that have expanded Medicaid to include those making up to 138 percent above the poverty line, as envisioned by the Affordable Care Act, as well as in states that have chosen not to expand.
Nonetheless, Pattison sees opportunities for the states in the year ahead. Recent transportation and education bills enacted by Congress have given states more latitude in building infrastructure and designing suitable education systems. “These are good challenges to have,” he said.
The challenges facing oil and gas producing states are less good. In these states, the depressed oil economy caused by a global glut have cost jobs and reduced state revenues from severance and other taxes. Texas alone, says economist Karr Ingham, has lost 56,000 jobs in the oil and natural gas industries. The impact on state revenues has been so severe in Alaska that Gov. Bill Walker (I) is proposing that the state adopt a personal income tax for the first time in 35 years.
Overall, 11 states, some energy producers and some not, project negative revenue growth for fiscal 2016. They are Alaska, Arizona, Delaware, Maine, Missouri, New Mexico, North Carolina, Rhode Island, Tennessee, Utah and Wyoming.
Turning to politics, Republicans in 2016 will try to maintain the momentum that has seen them gain 900 legislative seats in the last three elections on President Obama’s watch. Elections will be held for 88 of the nation’s 99 state legislative chambers and a dozen governorships. Despite a recent loss in Louisiana, the GOP holds a 30-19 edge in governorships with one independent. Republicans control both legislative chambers in 30 states; Democrats in eight. Control is divided in 11 states. (Nebraska, with a non-partisan unicameral legislature, is Republican in all but name.)
Since the GOP controls so many states it will necessarily be playing more defense than offense, said Tim Storey, a political analyst for the National Association of State Legislators. Storey said that Republican legislators are anxious because they don’t know who the party’s presidential nominee will be. He added that there is “anxiety on steroids” among GOP candidates at the thought it might be Donald Trump.
It won’t be a walk in the park for Democrats, however. Republican national groups and GOP donors have focused more attention and spent more money on legislative elections than their Democratic counterparts. Both parties have chambers that are at risk. Storey said that all eight chambers are up for grabs in Colorado, Iowa, Maine and Minnesota, states that now have divided legislatures.
A wild card in the 2016 legislative elections is a Texas lawsuit, Evenwel v. Abbott, on which the U.S. Supreme Court is expected to rule by June. The conservative plaintiffs in this case are seeking to have legislative districts drawn on the basis of eligible voters rather than the total population of the district, the present standard. Voting experts say a decision for the plaintiffs would shift power from urban to rural areas, damaging Democrats in the process.
When it comes to gubernatorial races, it is Democrats who will be playing defense because they hold eight of the 12 governorships for which elections will be held. Political analyst Charles Cook rates Democratic-held governorships in Missouri, New Hampshire and West Virginia as toss-ups. He puts only North Carolina among the four Republican-held governorships in the tossup category.
It’s too early to know what issues will matter most in state elections in 2016, but Storey believes that in a year with no presidential incumbent they will inevitably reflect the national campaign. That’s especially likely in the case of the Affordable Care Act, often called Obamacare, which is under pressure from rising insurance costs and higher deductibles as well as persistent Republican criticism.
As a political issue, Obamacare poses problems for advocates and critics alike. A majority of Americans disapprove of the ACA, according to Gallup surveys, and especially dislike a provision that imposes a tax penalty on those without health insurance. But a Kaiser Family Foundation survey found that most of those fortunate enough to qualify for subsidized health plans are satisfied with them. The rub comes among the millions of Americans who have slightly too much income to receive subsidies. A study by three economists at the University of Pennsylvania’s Wharton School found that a typical person who lacks medical insurance and earns about $40,000 a year is worse off by $2,000 to $3,000 under Obamacare.
Immigration is another probable issue. It’s a federal responsibility, but Storey thinks it will be raised in state campaigns, as demonstrated by the recent controversy about the admission of Syrian refugees. Pattison said that security issues, particularly cyber-security, are also likely to figure in state campaigns. Security is also primarily a federal responsibility, but states have a role in protecting on-line data and in assuring that law enforcement agencies share information. A recent Gallup survey found that terrorism had supplanted the economy as the No. 1 concern of Americans.
Justice Louis Brandeis famously observed that states are laboratories of democracy that can “if its citizens choose, try novel social and economic experiments without risk to the rest of the country.” These words were written in 1932 but are relevant now when divided government prevails in Washington while one party or the other exercises unified control in 31 of the 50 states. These unified states – 24 Republican and seven Democratic – where one party holds the governorship and both chambers of the legislature that have done the most experimenting. GOP-run states have reduced regulations, eased gun laws, tightened ballot access and imposed curbs on abortion. Democratic-controlled states have taken steps to deal with climate change and made it easier to vote.
But not every experiment is conducted along party lines. Massachusetts used to be a national leader in multi-state educational testing based on the Common Core standards. Last month the Bay State abandoned the national formula in favor of a new one written just for Massachusetts. Meanwhile, Texas, known for its oil wells, has encouraged alternative energy in the form of wind power. There are now so many vast wind farms in the western part of the state that some utilities are giving power away.
These are scores of other examples in virtually every state. Well below the radar of the national political campaigns, the experimentation will surely continue in 2016 as states continue their long struggle to regain the economic well-being they knew before the Great Recession.
In the last bill signing session of his long and historic career, California Gov. Jerry Brown (D) endorsed a measure last month that overrides federal rules and gives the Golden State the toughest net neutrality statute in the nation. But with multiple lawsuits now in play, Brown may well be retired to his Colusa ranch property before we know if the law will ever go into effect.
The legislation Brown signed actually takes net neutrality rules even further than those the Federal Communications Commission tossed aside last year. Under SB 822, Internet providers would not only be barred from blocking or slowing down websites and services, they would be prohibited from charging new fees and engaging in “zero rating,” the practice of exempting favored sites and services from customer data caps.
Brown’s signature on the bill was barely dry when the U.S. Department of Justice filed a lawsuit seeking to block it. In a statement, U.S. Attorney General Jeff Sessions accused the state of overstepping its authority and vowing to fight “with vigor” to have the new law tossed aside.
“Under the Constitution, states do not regulate interstate commerce — the federal government does,” he said, adding “We are confident that we will prevail in this case because the facts are on our side.”
The facts, as Sessions sees it, bar California or any state from enacting its own laws regulating the Internet. In the eyes of the Trump administration, that power is reserved only for the federal government. It is an opinion shared by large broadband and wireless companies like AT&T, Verizon and Charter Communications.
On October 3rd, four industry associations - American Cable Association, the Wireless Association, the Internet & Television Association and the Broadband Association - filed their own suit, calling the law a “classic example of unconstitutional state regulation.” In a statement, the group said the law “threatens to negatively affect services for millions of consumers and harm new investment and economic growth.”
But while the feds and big telecoms were unhappy, consumer advocates and small business groups were thrilled. In a statement, Mark Herbert, California Director for Small Business Majority, said that without the return of net neutrality, “California’s small businesses would have been at a disadvantage when trying to compete with large corporations that have the resources to ensure their websites receive special prioritization from internet service providers.”
The debate over net neutrality has been building for years, sparked by complaints that carriers like AT&T and others were blocking cell phone users from making Skype calls or throttling the speed of services like Hulu or Netflix in an effort to coerce customers into paying for their services instead. That led in 2015 to the Federal Communications Commission adopting sweeping new rules that barred providers from blocking, throttling down or otherwise discriminating against lawful Internet content.
Those rules barely lasted two years. In December 2017, the FCC voted to do away with net neutrality guarantees, a move FCC Chairman Ajit Pai hailed as a boon to consumers, saying it would spur innovation, competition and investment from broadband providers.
Consumer advocacy groups disagreed, arguing that allowing telecoms to suppress competitors would actually stifle competition and innovation by preventing smaller startups from gaining headway in the marketplace. Civil rights groups also complained, citing the power of the Internet companies to limit free speech if they so desired.
Those rules officially expired in June of this year. In January, 21 states and the District of Columbia filed a petition for review seeking to block that action. The suit called the FCC decision to end net neutrality “arbitrary” and “capricious” and done without regard to the harm it could do to consumers. It further contends that the FCC was unlawfully pre-empting state authority by barring states from enacting their own net neutrality laws. A hearing on that litigation is scheduled in the Appeals Court for the District of Columbia next February.
At the heart of the battle is whether a government agency – in this case the FCC – has the power to make such rules, or whether that is the domain of Congress.
“The FCC ruling has an explicit provision forbidding states from adopting their own net neutrality laws,” says University of California law professor Ash Bhagwat. “It’s not ambiguous. It’s not unclear. The fight is over whether the FCC has the power to do that.”
There is no easy reading of the tea leaves on which way that battle will go. Bhagwat says there is no federal law that clearly lays out when, where or even if federal agencies have the power to preempt state laws. To make matters worse, there is no clear precedent from previous court rulings, which he says are all “all over the place.”
Some opponents of the California law point to a 1978 law by Congress that deregulated the airline industry while also prohibiting states from enacting their own regulations. But supporters bark back that those rules were enacted by Congress, not issued arbitrarily by a federal agency.
“If Congress had specifically authorized the FCC to preempt state law, I’m pretty confident the FCC would win this case,” Bhagwat says. “But they didn’t do that, so now everything is in question.”
The California law goes into effect on Jan. 1 2019. The federal lawsuit seeks to block that from happening until the D.C. Circuit Court has made its ruling. If the court rules against the FCC action to dispose of its own net neutrality regulations, most of California’s new law could basically become moot because the FCC’s original net neutrality rules would again be in place. Those rules, however, did not include the ban on zero rating contained in California SB 822.
The Golden State may not be the only one with such a provision, either. According to the National Conference of State Legislatures, 32 states introduced over 100 net neutrality measures this year. Measures were enacted in Washington, Oregon and Vermont as well, although all were narrower in scope than California’s pending measure. Governors in Montana, Hawaii, New Jersey, New York, Rhode Island and Vermont also issued executive orders imposing net neutrality requirements on companies doing business with state government.
A federal judge has set a hearing for Monday Nov. 14 in Sacramento on the DOJ lawsuit. That effort as of now is directed only at California, but at least one other governor sounds like he is spoiling for a fight as well.
“Bring it on,” Washington Gov. Jay Inslee (D) told Seattle radio station KEXP last week. “If the president sues us, we’ll be ready.”
Soaring premiums and declining insurer participation in the health insurance marketplaces states set up in accordance with the Affordable Care Act have been among the most common complaints about the federal healthcare law. To address those issues states are turning or, to be more precise, returning to reinsurance programs, similar to the federal program provided temporarily under the ACA.
The programs, which allow insurers to insure themselves against major claims and thereby reduce the pressure to raise premiums for all enrollees, have so far been more than modestly successful. But not all states can afford to set them up without substantial assistance from the federal government, which has generally shown little inclination to support the ACA.
The ACA included a “transitional” reinsurance program from 2014 to 2016 to help stabilize premiums until healthcare costs became more predictable. Funded by a flat fee paid by insurers for each enrollee in their individual and group plans, the program reimbursed insurers 80 percent of any enrollee’s costs that exceeded $45,000 in 2014, up to a maximum of $250,000. The coverage rate dropped to 50 percent in 2015, and the lower coverage threshold rose to $90,000 in 2016.
Insurance premium increases appear to have tracked right along with the year-to-year changes in the reinsurance program. For example, monthly premiums for a 27-year-old under the second lowest cost Silver Plan in states with federally-run marketplaces increased by an average of about 3 percent in 2015 and about 8 percent in 2016, according to analysis of federal data by the Sycamore Institute, a nonpartisan public policy research center based in Nashville, Tennessee. Those same premiums shot up by an average of nearly 25 percent in 2017, after the federal reinsurance program ended, the analysis showed.
Insurer participation in the health insurance marketplaces seems to have followed a similar pattern. When the reinsurance program kicked in, the average number of insurers in the individual insurance marketplaces rose from five to six. But as the reinsurance coverage was phased out, the insurer average dropped, to 5.6 in 2016, 4.3 in 2017 and 3.5 in 2018, according to analysis of insurer rate filings by the Kaiser Family Foundation.
The insurer exodus has left people in some states, including Iowa and Oklahoma, with only one provider. It also had the Center for Medicare and Medicaid Services (CMS) predicting last June that 47 counties would have no participating insurers in 2018, although the agency’s final projection in October indicated that no counties would face that predicament. Still, while Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, said having just one provider in a market wasn’t “catastrophic,” Caroline Pearson, senior vice president for policy and strategy at Avalere Health, said it’s a problem that definitely “needs fixing,” according to a report last year by National Public Radio.
“The ACA exchange markets are very fragile at this point,” she said.
To try to remedy that situation, states are turning again to reinsurance. In the past few years, at least 19 have introduced and nine have enacted legislation establishing a state reinsurance program or authorizing their state to apply for an ACA Section 1332 State Innovation Waiver for such a program, according to the National Conference of State Legislatures and LexisNexis State Net’s legislative information system. Only a handful of states have actually applied for 1332 waivers specifically for reinsurance programs, and so far they’ve only been approved for Alaska, Minnesota and Oregon, according to the State Health Access Data Assistance Center. (For more see Bird’s eye view).
The waivers not only allow states to bypass certain requirements of the federal healthcare law but also finance a portion of their programs’ costs with federal “pass-through” funding in the amount of the federal savings generated from their lower premiums. Alaska will only have to pay $2 million of the $60 million total cost of its reinsurance program this year, with the other 97 percent coming from federal pass-through dollars, according to a report from Manatt Health. The federal government won’t pick up quite as much of the tab in Oregon and Minnesota but still a not inconsequential 61 percent of the $90 million overall cost and 48 percent of the $271 million total cost, respectively.
What’s more, the early indications are that the reinsurance programs are effective. Before Minnesota launched its program last year, premiums in its health insurance marketplace had shot up 67 percent, and insurers were fleeing the market. This year premiums actually dropped 15 percent and, according to Annette O’Toole, CEO of MNsure, the state’s health insurance exchange, no insurers have left the market since the program took effect, as Stateline reported.
“We were taking it on the chin. We were really in crisis,” O’Toole said. “This has provided immediate and positive results.”
In Alaska, which approved its reinsurance program in 2016, premium increases dropped from 42 percent to just 7 percent after the program began, according to a report from the Center for American Progress.
The cost of implementing a reinsurance program, however, is a major concern for states. Even with a 1332 waiver, states still have to cover the program’s entire expense up front and then wait to be reimbursed by the federal government. Not every state can afford to do that. Even Minnesota, which committed to paying the $271 million price tag for its program this year, only approved funding for the program for two years. And according to MNsure’s O’Toole, additional funding may not be authorized because the state isn’t in the same fiscal position it was in when the program was approved.
“Minnesota had a significant budget reserve a year ago, so we had money for it,” she told Stateline. “We won’t have that going forward.”
O’Toole and other state officials want the federal government to do more to help them fund their programs. An overwhelming majority of Americans -- 70 percent -- support that idea, according to a recent poll by the Alliance of Community Health Plans. Reinsurance proposals, including a bill enacted in Wisconsin in March (SB 770) and a measure introduced in the U.S. Senate in September (SB 1835) by Sens. Susan Collins (R-Maine) and Bill Nelson (D-Florida) that would provide $5 billion a year to help states fund their reinsurance programs, have also drawn support from the insurance industry, due at least in part to their potential for boosting plan enrollment by lowering premiums, according to reports by the Chicago Tribune and the Christian Science Monitor.
The Trump administration initially seemed receptive to the idea of state reinsurance programs. The Department of Health and Human Services sent a letter to governors in March of last year encouraging them to apply for Section 1332 Waivers for such programs. And the administration approved three of those waivers. But Iowa and Oklahoma withdrew their waiver applications last fall when they weren’t approved in a timely manner. And the Washington Post reported that President Trump personally directed CMS to deny Iowa’s waiver request. Supporters of the ACA see that incident and other recent developments, particularly the elimination of the ACA’s so-called individual mandate in the federal tax overhaul passed by Congress in December, as indications that the Republicans are trying to bring about the collapse of the ACA after failing to repeal and replace it.
The elimination of the individual mandate will hurt the ACA far more than reinsurance is likely to help it, Aviva Aron-Dine, vice president for health policy at the Center on Budget and Policy Priorities, stated in a blog post last year. She said U.S. Sens. Collins’ and Nelson’s reinsurance funding proposal, if approved, could provide $10 billion per year for states in 2019 and 2020, potentially enough to “temporarily reverse the individual market premium increases that repealing the mandate will generate.” But she said the funding would end after two years, “while the estimated 10 percent premium increase from mandate repeal would be permanent.” She added that even if the reinsurance funding was made permanent, it “would barely make a dent in the coverage losses from repealing the mandate” -- projected to be 13 million by 2027 -- “and would do little to counter the uncertainty and instability that mandate repeal would create in the individual market.”
Clearly state reinsurance programs aren’t going to solve all of the ACA’s problems. But the programs may very well help stabilize the insurance marketplaces. And that’s likely to be enough of an incentive to keep states pushing for them.
In a unanimous ruling last week, California’s Supreme Court blocked an initiative aimed at splitting California into three separate states (Proposition 9) from appearing on the state’s general election ballot this year, pending a future decision by the court about the measure’s constitutionality. The action was an unusual one for the court, which has generally waited until after elections to consider ballot measure challenges.
“Because significant questions have been raised regarding the proposition’s validity, and because we conclude that the potential harm in permitting the measure to remain on the ballot outweighs the potential harm in delaying the proposition to a future election, respondent Alex Padilla, as Secretary of State of the State of California, is directed to refrain from placing Proposition 9 on the November 6, 2018, ballot,” the court stated in its order.
Opponents of the initiative were naturally pleased with the court’s decision.
“Proposition 9 was a costly, flawed scheme that will waste billions of California taxpayer dollars, create chaos in public services including safeguarding our environment and literally eliminate the state of California — all to satisfy the whims of one billionaire,” said Howard Penn, executive director of the Planning and Conservation League, which brought the legal challenge to the measure.
The billionaire Penn was referring to was Silicon Valley venture capitalist Tim Draper, who spent $1.2 million of his own money on qualifying the measure for the ballot. He said the court’s decision was the result of the state’s “insiders” being “in cahoots.”
“Whether you agree or not with this initiative, this is not the way democracies are supposed to work,” he said. “This kind of corruption is what happens in Third World countries.”
But Vikram Amar, dean of the University of Illinois’ law school and a former law professor at the University of California, Davis, said the justices wouldn’t have excluded the initiative from the ballot “unless it was their considered judgment that it is very likely not a valid measure that can go to the voters.”
It wasn’t Draper’s first unsuccessful attempt to get such a measure on the state’s ballot. Four years ago, he spent $5.2 million on another initiative that would have split the state into six jurisdictions.
That fact prompted a dig from Fabian Nunez (D), chair of OneCalifornia, the official No on Prop. 9 committee, and a former speaker of the state’s Assembly.
“We are hopeful that Tim Draper will end his attempts to split up our state and use his resources to help California meet its challenges and become an even better place to live and work,” he said. (LOS ANGELES TIMES)
In some ways, the non-profit sector faces similar challenges every year: How do we find the internal staffing, the right research tools and adequate financial resources to launch the initiatives we have in mind so we can more aggressively pursue our mission this year? Furthermore, a number of currently accelerating trends right could impact a wide range of non-profits over the course of the next several months. These developments will create both challenges and opportunities for non-profits seeking to move forward.
Below we briefly describe the seven predictions outlined in our 2016 Non Profit Industry Report according to a survey of industry experts. Download a copy of the report today.
1.) Flexible Funding—Funding sources are recognizing that non-profits often need more flexible funding models, such as unrestricted dollars and capacity capital.
2.) ROI Metrics—James Toscano, principal at Toscano Advisors, predicts that non-profits will need to develop better, more systematic ways to measure an acceptable return on investment.
3.) Text to Donate—With the ability for donors to make a secure donation in less than 10 seconds and more than 90 percent of American adults owning a cell phone, the ‘Text to Donate’ will reign supreme in 2016.
4.) Employee Activism—Non-profits can tap their employees and volunteers to be an active part of their organizations’ social media strategy to further amplify their voices and missions.
5.) Public Accountability—Non-profits are likely to improve on their impact storytelling— by investing more resources into communications and messaging—specifically using data visualization and graphics to demonstrate public accountability.
6.) Capital Challenges— Experts foresee that campaigns by mid-sized and smaller organizations will run into more difficulty primarily due to a scarcity of top development professionals.
7.) To Buy is to Give— “Buy” will be the new donate in the non-profit world this year and it is likely that most major social media brands will feature some kind of buy button as an element of their advertising campaigns.
In conclusion, while most non-profits are regularly challenged with locating enough staffing and financial resources to manage the programs they seek to implement, some noteworthy trends in play this year will create unique challenges and opportunities. Those organizations that identify and adapt to these trends strategically will be best-positioned for success.
Andy Morris didn’t set out to upend the hotel industry. Or to get involved in a huge fight with the city of Seattle.
He and his wife just happened to have a tenant move out of the one rental property they owned a few years ago, just as companies like Airbnb were taking off, providing an online method for homeowners to rent their homes out as lodging.
Morris and his wife Lynne, passionate travelers themselves, thought they’d try out the short-term vacation rental market, thinking it would be a fun way to help travelers have a cool experience in Seattle, a city they love and enjoy showing off.
“We were really keen on providing visitors to Seattle with an exceptional experience,” Morris said. “It was something we’re both passionate about as travelers.”
Still, it might have been something they did just while waiting for the right long-term tenant. “It was very much just a side hobby,” Morris said in a recent interview with the State Net Capitol Journal.
But renting the home out to tourists proved more successful than expected – and enjoyable. It occurred to Morris that if they had more properties they might be able to make a living doing something they enjoyed that allowed them more time with their young child. They dipped into savings and found some partners to invest in a few more properties. Soon, Morris quit his old job.
The couple now own, partly own or manage 32 properties, rented out to tourists through sites like Airbnb, HomeAway and Expedia.
“It became a full-time job for me, and subsequently a full-time job for my wife,” Morris said. He’s also proud that he’s providing high wage contracts to housekeepers and maintenance workers.
But to some in Seattle – and in cities and towns across the country – Morris and his wife are part of a problem, not a solution.
The complaints against home share operators nationwide range from how their properties affect the character of neighborhoods, to whether they’re adequately regulated. Some say they’re a nuisance, and even when not they’re essentially businesses, which people didn’t expect to live next to when they bought their residential homes.
In some places the debate goes beyond annoyance with noisy strangers who may not clean up. The fight in many places is fundamentally about housing supply: if too many homes are bought only to be rented to travelers, can regular residents, particularly those with limited incomes, find places to live?
Though it’s playing out around the nation, few states have waded into the battle – leaving it to be fought out on city and town councils coast to coast.
In Seattle, which has seen an influx of tech employees and Amazon workers, the shortage of affordable housing – not necessarily for the poorest of residents, but for the middle class – drove the city council to put new limits on short-term vacation rentals that go into effect next January. If it stands, the law will limit hosts to just a couple of properties in addition to the home they live in. There are some areas with carve outs for more, but not in the attractive neighborhood where Andy Morris rents homes.
The law would put Morris out of the vacation rental business, which is why he’s the plaintiff in a lawsuit seeking to overturn it, backed by the libertarian Goldwater Institute.
Airbnb has also pushed back against efforts to regulate home shares by touting its local economic impact. It claims that in in Seattle it puts more than $175 million into the economy and supports 1,700 jobs.
A similarly intense battle is waging in California’s world famous Lake Tahoe resort community, where voters this November will decide whether to limit rental properties to a concentrated tourist area. The issue dominates local conversation.
“It really has ripped the town apart,” said Carl Ribaudo, the owner of a tourism consulting firm, who also writes a column in the local Tahoe Daily Tribune. Many locals resent the way rentals have crowded out long-term residents, he said.
“It’s intertwined with the overall lack of housing in California,” Ribaudo said in an interview. “We’re undersupplied… And there appears to be a lot of housing units that were long-term rentals that now have been taken out of the market.”
The debate has been going on in the region for decades, but has ramped up since home share companies have made it easy to rent out a home.
“There’s no question that Airbnb was a catalyst for this,” Ribaudo said.
In 2016 a Seattle-based local advocacy group called Puget Sound Sage published an analysis that claimed that by 2019, without some sort of control like the one going into effect next year, the city would lose more than 1,600 rental properties that residents would normally occupy. At the time, about 6,500 short-term rentals were listed in Seattle, just on the Airbnb site.
Andy Morris agrees Seattle has an affordable housing shortage. But he argues short-term rentals are a tiny percentage of the overall rental market. Moreover, the homes many Airbnb hosts rent out are higher-end homes that likely wouldn’t help with the affordable housing problem much anyway. Morris said he is also perfectly happy to pay more taxes to help tackle the overall housing shortage, and he even asked the city council to consider upping the tax on rentals (which the new law does.)
The free-market advocacy group R Street Institute, which opposes heavy regulations on short-term rentals, shares Morris’ view of the effect of short-term rentals on the overall housing market.
“There’s little evidence the current or near-term-future scale of short-term rentals is sufficiently large to have a significant impact on housing affordability,” R Street wrote in a March 2016 policy study. “To take one example, Airbnb units comprise just 0.6 percent of Los Angeles’ total number of housing units and just 1 percent of its rental market.”
Morris argues the affordability issue has overshadowed what he believes much of the fight is really about: competition. The hotel industry was in the background during the debate over the home share law in Seattle, but “they were definitely present,” he said.
The hotel industry argues that home shares do the same thing as hotels, but sometimes don’t have to play by the same rules. Short-term rentals frequently don’t have the same regulations, and may not pay the same heavy bed taxes, giving home sharers an unfair leg up, the industry says.
“We believe if it walks like a duck and quacks like a duck, it is one,” says Carol Dover, president and CEO of the Florida Restaurant and Lodging Association, which represents thousands of hotels. “You’re a public lodging establishment and you should be regulated the same way we are.”
Florida’s hotel industry has supported regulating home shares, but lawmakers so far have declined. Dover said the industry wants basic regulations on big vacation home renters who buy up multiple properties, not individuals renting out their place from time to time.
“This association has never said we’re after the independent homeowner whose husband is deployed who is renting a bedroom to make ends meet,” Dover said. “But when you own three, four, five units and you’re advertising availability on a weekly basis, you’re a lodging establishment.”
Many jurisdictions are fastidious about collecting rental taxes from vacation rental homes, but in Florida, the right amount of local taxes are sometimes paid, sometimes not.
“They remit their taxes to the local government with a ‘Trust me, this is what I rented and this is what I owe,’” Dover says. “Don’t you wish you could pay your taxes like that?”
Morris says hotels are reacting to having been upended by innovation.
“They’ve been outfoxed by a very disruptive industry,” he said. “Someone figured out a way to use technology to provide better service to consumers for less.”
The third pillar of the debate is the most obvious: complaints about what transient “neighbors,” do to locals’ quality of life. Some local regulations aren’t aimed at fixing the housing market – but dealing with issues that come with vacationers spending time in otherwise residential neighborhoods.
“There have been a lot of complaints about crowding, late-night noise, traffic,” Ribaudo said of South Lake Tahoe. “And trash.” The tourists leave it out. “And bears come and strew it all over the place.”
Matt Miller, an attorney for the Goldwater Institute working on lawsuits challenging home share restrictions, argues those problems aren’t that common and should be addressed separately.
“Nobody wants to live next door to a nuisance,” Miller said in a statement. “But cities across the country are unfairly penalizing responsible home-sharers to eliminate the problem of a few bad actors. If they are genuinely concerned with nuisances, city officials should focus on enforcing reasonable rules that protect quiet, clean, and safe neighborhoods, instead of limiting choices, hindering the city’s tourism industry, and depriving people of their rights.”
By David Royse
Texas and twenty-five other states have filed suit to block President Obama’s executive actions in November shielding undocumented immigrants from deportation for three years, according to the Pew Research Center. Twelve states have filed an amicus, or “friend of the court,” brief in support of the executive actions.
Source: Pew Research Center, MSNBC
Sued to block Obama’s executive actions last year on immigration: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maine, Michigan, Mississippi, Montana, Nebraska, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia and Wisconsin
Filed amicus brief in support of executive actions: Washington, California, Connecticut, Hawaii, Illinois, Iowa, Maryland, Massachusetts, New Mexico, New York, Oregon, Vermont