"The most notable historical difference between the Massachusetts economy and the Rhode Island economy is that Massachusetts focused on its strongest value and assets by successfully reforming and leveraging its K-12 and higher education systems."
John C. Simmons is executive director of the Rhode Island Public Expenditure Council, a position he has held since 2008. He was previously chief of administration for the city of Providence. Prior to that, he was chief finance officer for the city of Boston. His career also includes positions as executive vice president and chief operating officer for Associated Industries of Massachusetts and as Rhode Island’s deputy general treasurer.
Simmons has a bachelor’s degree in political science from Central Connecticut State University and a master’s degree in public administration from the University of Hartford.
PBN: Your extensive experience in finance, particularly in the public sector, gives you a broad perspective on state financial issues. While there are many particulars, do you have one overriding description or phrase to describe what’s ailing the Rhode Island economy, in your opinion?
SIMMONS: In many ways, Rhode Island’s currently anemic economic recovery is the result of trends that began decades ago. Rhode Island, like many other former industrial states across New England, experienced notable declines in its manufacturing industry over the past two decades. The failure to adequately and strategically diversify the state’s economy leading up to, during, and after this decline has contributed to the state’s relatively weak current economic position. Rhode Island did not leverage its existing workforce and assets to create alternative opportunities to transition from its manufacturing base, nor did it successfully identify other strategic economic advantages and align economic development policy accordingly. We have, therefore, become more aligned with the regional economy without adding structural value in the state.
PBN: The Bryant University-RIPEC economic indicator for the fourth quarter of 2013, which you co-published, showed Rhode Island’s slow growth far short of the robust growth just across the border in Massachusetts. This is a consistent topic of concern and discussion. Since you’ve worked extensively in both states, do you see an essential element that leads to this difference?
SIMMONS: The most notable historical difference between the Massachusetts economy and the Rhode Island economy is that Massachusetts focused on its strongest value and assets by successfully reforming and leveraging its K-12 and higher education systems. In terms of K-12 education, Massachusetts pursued rigorous education reform several years ago, whereas Rhode Island is still debating whether to use standardized testing. In terms of higher education, Massachusetts has done a better job leveraging the intellectual capital of its major research institutions by creating an environment of growth, aligning its various economic strengths with state support and direction.
PBN: You’ve described the overall labor force trends in Rhode Island as “anemic.” You’ve pointed out that according to the most recent data from the RI Department of Labor and Training, since the recession began in 2007, the state’s labor force has declined by about 19,157 people, or about 3.3 percent, and the number of people employed in the state has declined by about 33,373 people, or about 6.2 percent. Yet the working age population, ages 20-64, has increased by 1.7 percent since 2007. What are the implications of this dilemma?
SIMMONS: This is a fundamental economic issue, in which we have a working age population increase, a declining overall labor force and declining employment opportunities. Not only are Rhode Island’s employment and labor force levels declining, but the type of employment is shifting for the worse. According to the New England Economic Partnership, Rhode Island is losing both middle-wage jobs, which is(those that require less than a bachelor’s degree, but more than a high school diploma, and high wage jobs. In the short-term, the state and business community must do a better job matching those who are unemployed, or have dropped out of the labor force entirely, with available openings. However, meanwhile, Rhode Island must develop and implement a data-driven economic development strategy focused on growing our base and employment opportunities.
PBN: In what ways do you see the long- and short-term fiscal challenges such as casino gaming in Massachusetts and the financial strategy of HealthSource RI as impacting the local and state economies?
SIMMONS: Those two issues will both have an out-year fiscal impact on Rhode Island. The order of magnitude of the impact of casino gaming will depend upon the timeframe of construction and ultimate license location. We do know that Massachusetts has already announced its one slots license will go to Plainridge, a site 20 miles north of Rhode Island’s Twin River facility, which, as many have indicated, was part of the “worst-case scenario” for Rhode Island, given its location. The governor’s fiscal 2015 budget estimates that over a five-year period, the state could lose a total of $422.1 million. The impact of Massachusetts entering the gaming business will occur faster than anticipated and have a fiscal impact on Rhode Island that requires responsive action from the state in the near future to address the impending loss of revenue.
The impact of implementation of the Affordable Care Act in Rhode Island is also of concern, as the exchange’s broad purpose or outcome has not been established. Basic policy choices related to the exchange have not been fully discussed or answered, nor has it been codified into statute. This makes the question of long-term exchange funding more difficult. Funding options range from general revenue, to claims-based, to premiums-based funding. We must also consider the implications in the decline of the federal Medicaid match by 2020, which will inevitably increase the state’s Medicaid expenditures.
PBN: The quality of K-12 education in Rhode Island, with pockets of excellence and many areas of concern, is frequently pointed out as a key element underlying the state’s employment and economic challenges. Training a generation, or two or three generations that need to be retrained, is a complex, expensive and long-term process. What’s your view on what can be done in this area, considering that some other states are moving rapidly ahead in workforce training and business development?
SIMMONS: We need to stay on the strategic plan set by the commissioner and approved by the board of education in 2010, which aims to raise the bar, not lower it. The state’s educators and leaders must be allowed to continue to fulfill this plan, as the R.I. Department of Education and local districts have made important progress over the past few years setting and implementing high educational standards. Unfortunately, because this reform movement is difficult, it has been met with considerable opposition and regular attempts to undo the progress that has been made. We must continue to stay the course with education reform. Moreover, Rhode Island has an opportunity to fundamentally alter the way it approaches career and technical education, which is of critical importance to training and re-training the state’s current and future workforce to meet the contemporary demands of employers.