Hudson Valley Business Review
Looking Forward 2013
empowering regionalism to an unanticipated extent
Competition for tangible state resources has changed the game
January 17, 2013 ● Ulster Publishing ● hudsonvalleybusinessreview.com
Going for the
gold
The unifying effects of the distribution of state money
carol zaloom
Empowering regionalism
W
hen our reporters recently asked people questions about regionalism, they — and we — were surprised by how much the conversation tended to come back to governor Andrew Cuomo’s new system of allocation of resources organized by region. The fact that tangible state resources are being competed for seems to have entirely changed the ball game of state political allocation. It has empowered regionalism to an unanticipated extent. To use one of the governor’s favorite buzzwords, there has been a transformation of regionalism. Rather than the traditional horse-trading among municipalities and counties for the division of spoils that it has been since time immemorial, regionalism is fast Continued on Page 2
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Empowering regionalism continued from Page 1 becoming a locally driven program to pursue measurable state revitalization objectives. How was this accomplished? Several principles are involved. First, a statewide annual competition for proposals has been established. The pot being competed for by non-profits and local governments contains hundreds of millions of dollars of state grants and loans available through Empire State Development. Secondly, other major state departments — where there’s a lot of money — are being asked to contribute out of their own budgets. This encourages a closer relationship between state budgets and local needs. Despite the rhetoric about bottom-up decision-making, the decisions about who gets the money are made in Albany. So far the process has favored applicants based on considerations other than intra-regional per-capita distribution. Thirdly, the regional pots of money are being augmented by significant bonuses awarded by the state to regions whose proposals are most likely to further the region’s stated goals. Powerful financial incentives (approximately one dollar of every three in this year’s go-round) reinforce regional participation. In the halls of regionalism, the availability of money tends to concentrate many a mind. There are weaknesses to the evolving plan, Nobody’s quite sure when the money that has been awarded will come, how it will be administered, and in what time frame projects will be completed. The regional economic advisory committees, which are very large, are composed almost entirely of the usual suspects unused to the new process. Might it be only a matter of time before political tradeoffs become more common in the setting of intra-regional priorities? Or will a new commitment to regional thinking take root? We shall see. Geddy Sveikauskas
Hudson Valley Business Review Looking Forward 2013 EDITORIAL managing editor: Geddy Sveikauskas copy editors: Dan Barton, Brian Hollander contributors: Phyllis McCabe, Paul Smart,
Susan Barnett, Violet Snow, Lauren Thomas, Hugh Reynolds ULSTER PUBLISHING publisher: Geddy Sveikauskas associate publisher: Dolores Giordano advertising director: Genia Wickwire advertising project manager: Sue Rogers display ads: Lynn Coraza, Pam Courselle,
Elizabeth K. W. Jackson, Ralph Longendyke, Linda Saccoman production manager: Joe Morgan production: Karin Evans, Josh Gilligan, Rick Holland classified ads: Amy Murphy, Tobi Watson circulation: Dominic Labate Hudson Valley Business Review: Looking Forward is an annual publication produced by Ulster Publishing, an independent media company in with offices in Kingston and New Paltz, NY. It is distributed in the company’s five weekly newspapers and separately at select locations. For more info on upcoming special sections, including how to place an ad, call 845-334-8200, fax 845-334-8202 or go to www.ulsterpublishing.com.
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January 17, 2013 Looking Forward
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Ready to compete SUNY New Paltz looks toward further evolution Geddy Sveikauskas
C
olleges have much longer maturation processes than the students they try to educate. It took 57 years for the New Paltz Classical School to become the New Paltz Training and Normal School. It took another 63 years before the teachers’ college became one of the 30 schools folded into the new public state university system. Now that 65 years have passed since that signal event, perhaps the institution will soon be ready to evolve another step. By many indicators of selectivity, SUNY New Paltz has been improving in recent years. Average SAT scores, higher than at most SUNY schools, have increased markedly. Entering students have to have higher grades in high school than they used to. Graduation rates are increasing rapidly, too. And national surveys of public universities show New Paltz improving its quality ranking steadily. Other metrics show the college remains in a competitive position. New faculty continues to replenish the teaching ranks. Although the number of New York high-school graduates is expected to decrease in the next few years, its applications show New Paltz in a good position to hold its own during the shortfall. There’s substantial further progress to be made, of course. In his State of the College address last year, college president Dr. Donald Christian noted that only one student among the high-school valedictorians and salutatorians in Ulster County last year planned on attending New Paltz. Some of the best students at the local community colleges also transfer to private colleges, “We must continue to combat the mystique that a private college education is better than anything New Paltz has to offer,” said Christian. Christian acknowledges that long-distance learning, colleges offering credits for experience, and massive on-line open web courses (MOOCs) are becoming ever more important trends in education. But he is convinced that SUNY New Paltz’s future will be as a liberal-arts college with an expanded presence in the community. He praises some new faculty members for possessing skills and expertise that are in great demand. What are the goals of a New Paltz education? It’s not just what a student learns in his or her major field. According to the Association of America’s Colleges and Universities, of which Christian is an active member, a well-rounded college education includes broad intellectual knowledge, critical thinking, creative problem-solving and technological and communications skills. Employers asked to rank what colleges should place more emphasis on stress the quality of written and oral communications above all else. Some 88 per cent of employers say that the challenges their employees face within their organizations are more complex today than they were in the past. Nearly two-thirds of employers say college graduates need both a broad range of skills and knowledge and in-depth knowledge and skills in a specific field. The importance of housing Concerned about remaining competitive in attracting transfer students, the institution has focused on expanding housing options in New Paltz, including the huge and controversial Park Point project. The college’s surveys, according to Christian, have shown that over half of the transfer students would live in apartments in or near the campus if these were available. Expanded housing options would let students “remain more connected with campus life than is currently possible,” in Christian’s words. Noncommuting students would become less transient and have a richer college experience. In the long run, that’s an important goal for the evolution of the college. But in his remarks on the subject,
LAUREN THOMAS
SUNY New Paltz President Donald Christian speaks at a September 11th memorial service on campus in 2011. Christian has not yet acknowledged the additional costs an expanded campus would cause for the provision of services by the community. That problem must be addressed if Park Point is to fly. The number of graduate students, particularly in education, has been dropping. New Paltz is planning to inaugurate a program in mechanical engineering. Christian thinks a certificate in 3D fabrication and other art-technology combinations would attract students. A partnership with Clarkson and others for a biotech program is possible. So is a fresh approach to education courses. The college offers 100 undergraduate degree programs and 50 graduate programs. A cultural hub The New Paltz college continues to evolve into the status of a broader university. As it does, its president believes, New Paltz will become more of a cultural hub in the Hudson Valley, attracting meetings, conferences and outside programs. The six community colleges make the structure of public college education in the region unique in the state, Christian believes. He says Dutchess currently boasts the biggest feeder community college to New Paltz. Enrollment director L. David Eaton provided data on the county of residence for approximately 22,375 New Paltz alumni/ae under 65 years who
reside in the Hudson Valley. The information showed 7625 graduates resident in Ulster County, 5125 in Dutchess, 5000 in Orange, 1940 in Westchester, 1310 in Rockland, 940 in Sullivan, and 435 in Putnam County. An additional 29,125 grads live elsewhere, mostly in New York City and on Long Island. Meanwhile, after several painful years of budget cuts and staff reductions, New Paltz is positioning itself for a shift in the basis for funding among SUNY campuses that might or might not be favorable to it. But there’s hope on the horizon. In last week’s gubernatorial state-of-the-state speech, Andrew Cuomo proposed a new round of state education funding that would offer public colleges the opportunity to compete for system-wide grants. Successful projects would be selected in a competitive manner based on economic impact, advancement of academic goals, innovation and collaboration, he said. New Paltz is ready to compete, Christian said. Meanwhile, the college has been preparing an update to its own strategic plan. A draft plan with revisions has been circulated to members of the committee shepherding it. It’s expected that the plan will be circulated to the campus community this spring. Members of that community will be invited to attend open forums to discuss the document.
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17, 2013 4 | January Looking Forward
Talking about progress New system for allocating state grants and loans undergoes a trial by fire Paul Smart with editorial support from Geddy Sveikauskas
I
couldn’t fathom what my wife was speaking about when she first started mentioning something I heard as “the Red Sea grants” last spring. It was a busy time in our lives. We were mixing end-of-school-year business for our six-year-old with a host of work projects on both our parts. Though up here in Greene County we have a Cairo, we knew ourselves to be distant from the city only a desert away from where Moses parted the Red Sea. I figured the state must mean someplace else. It turns out that my wife Fawn was talking about events affecting her position as gallery director at the Greene County Council for the Arts and director of Catskill’s Masters on Main Street program, which was trying to fill vacant storefronts with art-school art. Applications were being solicited for Governor Andrew Cuomo’s plan to replace the old Empire Zones with a weightier package of competitive regional economic development community grants, nicknamed for their acronym, RED-C. A July 16 state deadline was putting pressure on us. The grant cycle at hand involved some $738 million statewide, and we understood that there was going to be a new emphasis this year on the arts and tourism-related funding. The process included the granting of “tokens” to be used as password for the Consolidated Funding Application, or CFA system. There was a registration process for non-profits working directly with the state agencies. Involved were such weighty combinations of alphabet letters as Empire State Development (ESD), the state Canal Corporation, Energy Research and Development Authority (NYSERDA), Environmental Facilities Corporation (EFC), Homes and Community Renewal, New York Power Authority (NYPA), Department of Labor, Office of Parks, Recreation and Historic Preservation (OPRHC), the departments of State, Environmental Conservation (DOD and DEC), and Agriculture and Markets, and the state Council on the Arts (NYSCA). We were told there was a broad potpourri of priority categories, including direct assistance to businesses, community development, agricultural economic development, waterfront revitalization, energy improvements, environmental improvements, sustainability, workforce development and low-cost financing. In a bureaucratic sort of way, the instructions were meant to be encouraging. “Many changes have been made to make navigating through the
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The state contributed $1.2 million to the mile-long Hudson Landing promenade on both sides of the City of Kingston/Town of Ulster municipal boundary. Smiles abounded as county executive Mike Hein and then-Kingston mayor James Sottile cut the ribbon for the AVR housing project in 2010.
What’s the most effective way to get a slice of this huge pie of funding?
process of filling out an application easier,” explained the instructions my wife showed me early on in the process. “It is now easier for applicants to go back to questions already answered. Additionally, information is saved more frequently and applicants have the ability to directly upload attachments
into the system.” “Over 30 public workshops” would be held to aid the process. Review of proposals would be by “appropriate work group,” with final decisions by “the full council,” under the direction of lieutenant governor Robert Duffy. Applicants were asked to contact their regional councils, and local reps on each, for answers during their application process. The Catskills-area counties are divided among four regions. Questioning the process My wife started to talk with friends in other local arts organizations. What was the most effective way to get a slice of this huge pie of funding? “Regional councils are about making state government work better for businesses to create an environment that will put New Yorkers back to work,” read the directions. “Each council is staffed by representatives from a broad spectrum of state agencies who will help identify priority projects and potential funding sources within their agencies and then directly assist applicants throughout every step of the process.” By mid-June, the state first started announcing its new round of RED-C applications. The deadline was a month away. Fawn had worked up a project with a pair of cultural organizations in Prattsville, which was still reeling from the effects of Tropical Storm Irene nine months earlier,
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and in Hunter, where a private trust, the Catskill Mountain Foundation, runs a community development and arts organization. Similar efforts, we found, were under way on the part of the Thomas Cole House in Catskill, as well as by Village of Catskill (in tandem with Greene County) and several entities around Windham, another tourismbased community which had received economic development funding in 2011. I found out about many applications from further afield, too. A push was under way to complete land purchases and construction on a massive railtrail network in the eastern portion of Columbia County, hooking into similar efforts in Dutchess County to the south. There were a number of waterfront projects in Hudson. Agricultural industry efforts around the region seemed centered around the Farm To Table Co-Packers enterprise that’s been in Ulster County’s old Tech City complex for some years. There were significant community housing efforts in the Mid-Hudson region, a longexpected Kingston waterfront development along the Hudson, and a major high-tech web project out of Marist College based on the building of a new cloud computing center there. “Final attachments related to program specific requirements should be uploaded on the system,” said the instructions for the July 16 deadline. Though the deadline was concurrent with the first weeks of our son’s summer vacation, Fawn managed to complete the application on time. “Scoring by the appropriate regional councils and agencies is expected to be finalized by the end of August,” said the state. “The agencies that administer the program will exercise due diligence to determine relevant legal issues and potential disqualifying concerns, and assign a technical score to the CFA.” In early September, the promised public meetings started occurring, in most cases without much advance notice. The Hudson RegisterStar reported on a sparsely-attended September 7 meeting at the local library, announced only on the regional economic development agency’s website three days earlier. Those who showed up asked how to apply and were told it was too late. When they asked who had applied, they were told that information wasn’t available yet. When members of the Greene County audience asked how they were being represented, they were told that their man, Bank of Greene County president Don Gibson, had resigned from the regional advisory council earlier. My wife said she had heard he had quit out of frustration. How long can one expect to wait for final payment from the State? Chip Seamans, President and General Manager at Windham Mountain in Greene County, was granted $1.5 million in the first round of RED-C grants announced
January 17, 2013 Looking Forward
ferred to press people in the governor’s office. Third and finally, the CFA is about economic development only in the broadest sense of the phrase. Consisting of a mixed bag of ESD stimulus money and other-agency funding, its funding went to a broad-ranging list of community development projects. Though a mislabeling, this emphasis on “soft development’” is not necessarily a bad thing. Economic development often benefits from improvements in the physical, environmental, cultural and human infrastructures of the state. Whether an investment will eventually prove a wise or a foolish use of state funds isn’t always known when it is made.
for everyone. Important for Ulster County were the million dollars for advanced manufacturing awarded to The Solar Energy Consortium. The $1.5-millionto help convert a surplus Kingston school (Sophie Finn) for use by Ulster County Community College was significant. And that mile-long Hudson Landing promenade on both sides of the City of Kingston/Town of Ulster municipal boundary ($1.2 million) would be fun. The Mohonk Preserve got $500,000 for new land purchases between the village and the Shawangunk ridgeline in New Paltz. Also funded were a plethora of smaller projects throughout the Mid Hudson region. Of the $65 million in state money allocated by county in this funding round, about $23 million will be invested in Westchester County, $22 million in Orange, almost eight million in Dutchess, six in Ulster, four in Sullivan, almost two in Rockland, and $375,000 in Putnam. According to conventional thinking, government is not good at betting on market winner and losers. But governmental activities inescapably provide the social milieu, the incentives and the context in which markets operate. So these public investments continue. Why not shed light on them, therefore, so that the public can participate better in judging their effectiveness? In doing that, the Cuomo administration seems to have unearthed a suppressed hunger for public participation that has added to his political popularity.
Betting on winners and losers Announcement of the second round of grants came out on December 8. Greene County was awarded funding for nine projects that involved $1.584 million, plus $950,000 more split with other counties. The cultural tourism corridor project my wife wrote a grant proposal for got $150,000 in state arts money, about half of what was requested. Some $600,000 went to a Village of Catskill walking loop, and $250,000 to repair two hurricane-devastated parks in Prattsville. The Catskill Mountain Housing Development Corp. got $300,000 toward housing projects in Prattsville and Windham. Infrastructure engineering projects were awarded a total of $84,000 from DEC. Some $600,000 in NYSERDA money will be spent on schemes for heating with woodpellet boilers in the region. Albany tourism got $300,000 in ESD money for tourism planning, and the Cole House got $50,000 to further develop art trails. At first, all I heard were hosannahs in our household. A lot of good local projects had gotten funding. Just south of us the Mid Hudson region received $92.8 million for 84 projects — including some $25 million in bonus money. We thought the $775,000 for the food hub in Kingston was great, as was the three-million-dollar cloud computing center down in Poughkeepsie, with its local job training and cheaper web-storage possibilities
Who to call? Several weeks later, the new realities of contemporary economic development are settling in. My wife has to implement the arts tourism project she envisioned, coordinating meetings with cashstrapped cultural organizations. But there’s no one to answer questions regarding payments and reporting structures. “This all has bugs, and the bugs are significant,” she tells me. “There’s no timeline. The main office is unresponsive, as is the arts council, the agency we worked with. They have everybody sitting on the edges of their seats now. If I knew who to call I’d be able to relax.” Looking through all the pages of information available to date on these grants, I find that as far as I can tell funds won’t be made available until projects are completed. Presumably, matching grants and in-kind contributions will be charted somewhere. This is the modern way of public funding. You say something’s budgeted, you take bank loans or whatever, and then you wait to get paid back, hoping that nothing happens in the halls of government that results in your being overlooked. After-the-fact budget cutting for state cultural organizations is not unheard of. When I tell my wife what I’m suspecting, she sighs. But then she has to get back to the work she and so many others in the lower ends of the state’s new $738-million regional economic development sweepstakes have committed to. Talk about progress.
PHYLLIS MCCABE
MICHAEL NEIL O’DONNELL
Conversion of the surplus Sophie Finn Elementary The Mohonk Preserve got $500,000 for the land School in Kingston into a SUNY-Ulster satellite purchase that will keep the grand entranceway and campus received $1.5 million from the state. bucolic fields off Butterville Road intact forever. in December of 2011. His project, Destination Windham, is to be a revamping of the ski mountain as an all-season tourism destination. “We have yet to spend all the money and submit our receipts,” Seamans said this week. “We are hoping to finish the project this fall and be reimbursed next winter.” Even though 2011 was lambasted by many for having gotten started late, and been run in a confusing fashion, the Windham exec had nothing but kudos for the program...as did most folks in northern and western New York, which received the largest sums of RED-C grants its first year out. Robert Duffy defended what happened. “This process is transformational,” he said. “He [Cuomo] did not choose to pit upstate against downstate. It is an equal, fair process.” Yes and no. All ten economic development regions got roughly similar magnitudes of state CFA money in 2012, ranging from a high of $96.2 million for the Finger Lakes Region to a low of $50.3 million for the Capital Region. A big fuss was made over the fact that what turned out to be five regions, including the mid-Hudson, got to split an extra $200 million, $40 million for each. The populations and economic conditions in the ten regions are dramatically different from each other. In the most recent round of these allegedly jobcreating awards, New York City got $6 per capita, Long Island $21 per capita, and the Mid-Hudson Region $40 per capita. In contrast, the Mohawk Valley was awarded $120 per capita, the Southern Tier $149 per capita, and the North Country $208 per capita. The Capital Region was awarded $47 per capita. Secondly, the state government, proudly referring to the process as bottom-up rather than topdown, claimed that the regional advisory councils had made the funding recommendations. Though the regional advisory councils did indeed exercise their right of recommendation, the decisions were made in the governor’s office. The Mid-Hudson’s regional council was told, according to its co-chair Len Schleifer, that its priorities were given 20 per cent weight in the final project rankings. And calls made over recent weeks to those whom we know serving on advisory councils were invariably re-
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17, 2013 6 | January Looking Forward
The health of healthcare Federal legislation continues to have an enormous impact on the region Geddy Sveikauskas
T
he movement toward implementation of the federal Affordable Care Act will continue in 2013 as one of the very biggest issues in American society. It’s going to be as big an issue in 2014, and in 2015 as well. And every year beyond that for perhaps a decade. So we might as well be prepared to deal with it. Health insurers and most provider organizations are better prepared than they were a couple of years ago. The provisions of the federal legislation require them to come to terms with the subsidized healthcare benefit exchanges scheduled to go into business in every state of the nation less than a year from now. Other deadlines are looming, too. The players are scrambling to participate in a variety of experiments, figuring out how most effectively to find their niche in cooperation with other healthcare organizations. Most if not all are also wrestling with the implementation of electronic health records and other tools of information technology. By October 31 of this year, health insurers will be competing for New York customers in the state-run health benefit exchange. This is no small enterprise. New York, one of the most aggressive states in setting up its state-run health benefit exchange, is getting tens of millions of dollars in the
form of federal grants to fund implementation. According to the 2009 American Community Survey, some 121,000 of the medically uninsured in the seven counties of the mid-Hudson region (Westchester, Putnam, Rockland, Dutchess, Orange, Sullivan and Ulster counties) will gain coverage as a result of the ACA. With the state health benefit exchange in place, the uninsured in the region will decrease from 15 per cent to nine per cent of the population. How’re we doing? The national debate has finally changed. Just saying no to Obamacare no longer seems a viable
The national debate has finally changed. Just saying no to Obamacare no longer seems a viable solution for its opponents. solution for its opponents. “Just saying no and doing nothing in return is a recipe for disaster,” Forbes blogger Avik Roy (who also writes for National Review) advised a couple of months ago. “First of all, our healthcare entitlements continue to grow unabated, and solutions to this problem are even more urgent today than they were yesterday,” Roy wrote. “Second, the growing unaffordability of healthcare is one of the biggest challenges facing lower-and-middle-income Americans…The rising cost of health insurance is the reason that middleclass wages have been stagnant for a decade.”
With 15 per cent of Americans lacking health insurance and many more teetering on the edge of losing their coverage, voters with insecure health insurance are a huge political constituency. What Republican policies are directly targeted to this group? “If you are a voter who will get subsidized insurance under Obamacare in 2014,” Roy asked rhetorically, “will you vote for someone in 2016 who seeks to take those subsidies away without a better solution in their place?” In recent weeks, the RAND Corporation, which had previously published a study predicting great healthcare savings, issued an assessment which made the network television news. Digital health records won’t create the kind of cost savings predicted in the earlier RAND study until the technology is far more widespread and is being used to its full potential, a pair of RAND researchers concluded. “We’ve not achieved the productivity and quality benefits that are unquestionably there for the taking,” said Dr. Arthur Kellermann, one of the recent study’s authors. Late last month Brookings healthcare expert Henry J. Aaron wrote a piece warning that the political storms over healthcare reform were far from over. He claimed not to be the partisan of either the pessimistic or the optimistic view. “The major challenge will be to make sure that the system works in enough places and fast enough to permit supporters to point to the successes and explain that the inevitable glitches are reparable,” Aaron wrote. “It is also worth noting that were Congress not neck-deep in a swamp of partnership legislators could find ways to minimize the problems that remain.” It helps to have a long view. Remember all the economic studies of the 1970 and 1980s that failed to find productivity improvements due to investments in computers and in information technology? Most economists have attributed the unexpected spurt in the nation’s productivity growth rate in the 1990s to the investment of the previous decades. Assessing electronic records Well, do electronic health records (EHRs) improve healthcare performance or don’t they? Several early large studies of the effect of electronic records on ambulatory care have been inconclusive. A group of five researchers this past October published a thorough study of ambulatory practices in the Hudson Valley, comparing the performance for nine quality measures of 204 doctors using electronic records with that of 262 using paper systems. For five of the nine quality measures, they found a positive association between EHRs and ambulatory quality in a community-based setting. EHR use brought a higher quality of care. Though evaluation of single studies is always difficult, this one was sufficiently rigorous that it was published in the Journal of General Internal Medicine. Since the data was gathered, the proportion of Hudson Valley physicians to have adopted EHRs has increased to over 90 per cent. Information technology May 6 will be a big day for John Finch, chief information and community officer for HealthAlliance of the Hudson Valley (HAHV). It is the day he hopes to finish implementation of the McKesson computer software systems that will meet the first-stage “meaningful-use” standards of the federal government. July 1 is the actual deadline when the system “goes live.” Successful implementation of the new software will make HAHV eligible for $12 million in federal reimbursement, payable over the next four years. “We’ll get support if we do it right,” said Finch. The federal government has been spending tens of billions of dollars on the adoption of information technology by healthcare providers. Individual doctors were incentivized approximately $40,000 apiece to adopt information systems that could communicate electronic records to other providers (“interoperability”). The primary-care providers of the Hudson Valley have been among the most aggressive adopters of information tech-
January 17, 2013 Looking Forward
HealthAlliance's John Finch, left, seen here with Al Gruner. nology under this legislation. “People need to become aware,” said Kevin Dahill, president of the Suburban Hospital Alliance of New York State, a consortium of 51 not-forprofit and public hospitals on Long Island and in the Hudson Valley. “There’s massive transformation going on.” Already wrestling with implementation deadlines, the hospitals are also struggling to build secure, accurate and up-to-date electronic health records that will share data among patients, payers and providers. These are tasks not accomplished in a day. It takes years of preparation to build an information system worthy of a high degree of public confidence. One horror story can be enough to undermine years of careful preparation. The accurate sharing of critical information among healthcare providers is particularly important in so-called “transitions of care” such as a referral from a primary-care provider to a specialist or the discharge of a patient from a hospital. “Critical information is required for the next provider to appropriately care for the patient,” said Dr. Holly Miller, chief medical officer at MedAllies, a Fishkill-based organization specializing in the implementation of medical health records, “but today that doesn’t always happen.” Research shows, Miller added, that patients retain about half the information given them by healthcare providers. Early on, MedAllies has been involved with other providers and payers in building two of the foundation stones needed to safeguard and transmit medical records. John Finch said HAHV has participated in both. The Connect project is a state-led effort to assure the electronic communication of secure records. The Direct project defines protocols for sharing health information; in 2010, the Hudson Valley became one of seven pilot sites in the country chosen to demonstrate the use of Direct standards within health information exchanges. Building a more closely integrated system out of a series of disconnected, fragmented parts, like the American health system is struggling to do, will take a very long time. There unfortunately is no magic wand that will allow the work to go faster. The evolution of a series of tools over considerable time will eventually provide a more precise common language for American healthcare.
on benefits, prices, service quality and costs. Smith last month submitted a short article identifying the state’s healthcare benefit exchange as the key vehicle for ACA implementation. He also recommended a governmental website (healthbenefitexchange.ny.gov). Here’s Smith synopsis of what he sees as the highlights of the exchange structure in New York State: Serve as a facilitator to enroll the purchase and sale of qualified healthcare plans to small businesses and individuals and enable them to receive tax credits and LAUREN THOMAS cost-sharing subsidies. New Paltz Chamber of Commerce President Michael A. Smith. Small businesses with less than 25 full-time employees may be eligible to receive tax credits for those having average annual wages below $50,000 and patients. The payments, which began this month, pay half the cost of their healthcare coverage. mark the federal government’s most extensive efSmall businesses will have the choice to purchase fort to hold hospitals financially accountable for insurance through the Small Business Health Opwhat happens to patients. Medicare said it was tion Program (SHOP) Exchange or continue to rewarding 1557 hospitals with more money and buy insurance through the marketplace. reducing payments to 1427 others. NYS will have the option to define small busiThe assessment used two vastly different quality nesses either as one to 50 employees or one to 100 standards. One dealt with whether hospitals utifull-time employees. lized value-based purchasing strategies. The other In 2016, all businesses having 100 or more fullwas based on the ratio of hospital readmissions. time employees can buy insurance through the The federal program will expand each year for SHOP Exchange. at least the next four years. Businesses having 50 or less full-time employThe payment change was created by the federal ees will be exempt from penalties; those with 51 or health law. more full-time workers, excluding the first 30, will Some states fared well. Others, like New York face fines of $2000 per employees if no healthcare State, came out the worst. insurance coverage is offered for those averaging Harold Miller, a healthcare expert in Pittsburgh, 30 or more hours per week as of 2014. doubted the money would be enough to change the A user fee of 3.5% will be added to premiums, way hospitals function. “It’s better than nothing, through the exchange, for administrative costs. but it’s not what is necessary,” Miller said. “It doesn’t A non-deductible 40% excise tax will be imfix the underlying problem, which is fee for service.” posed to employers who offer high value or preOne local hospital, Northern Dutchess, received mium health benefit plans that cost more than a bonus of 0.09 per cent. The other results, in de$10,200 for single or $27,500 for family. scending order, were Benedictine Hospital (-0.27 per cent), Columbia Memorial (-0.37), St. Francis Individuals pay 2.9% Medicare tax on their wag(-0.46 per cent), Vassar Brothers (-0.92 per cent), es will have another 3.8% added on investment Saint Luke’s Cornwall (-1.02 per cent), Kingston income, including profits from home sales, for inHospital (-1.22 per cent), and Orange Regional dividuals making more than $200,000 or married Medical Center (-1.27 per cent). couples above $250,000. An added Medicare paySome local hospital administrators claimed that roll tax of 0.9% on wage income above these same differences in coding practices and in patient load thresholds, starting this January. accounted for many of the discrepancies in perforHealth insurers will be paying an annual fee to mance among hospitals and among states. offset a portion of the cost to the insurance plan premium subsidies and tax credits starting in 2014. Health benefit exchange Exchanges need to be financially self-sustaining Michael A. Smith, president of the New Paltz by January 1, 2015. Area Chamber of Commerce, is a certified healthcare compliance professional and a member of the governor’s recently established regional advisory committee for the Mid-Hudson, Capital and Northern New York region of the state health benefit exchange recently provisionally approved by the federal government. Smith takes a business perspective. He quotes governor Andrew Cuomo in espousing the goal of health exchanges bringing true competition to the healthcare market, driving down costs by organizing a competitive marketplace in which consumwww.ulsterchamber.org ers will shop for coverage by comparing choices
Medicare reimbursement Medicare last month took a shot across the bow of America’s hospitals. It disclosed that it was giving bonuses and penalties of almost a billion dollars tied to the quality of care provided to hospital
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17, 2013 8 | January Looking Forward
Regionalism as opportunity Leaders of regional nonprofits see the virtues of exchanging views and learning to collaborate Susan Barnett
R
egionalism went a little bit mainstream in New York two years ago, when governor Andrew Cuomo’s state-of-the-state message unveiled a new approach to state funding for economic development. In this year’s state-of-the-state speech, the governor proposed promoting training and innovation within colleges and encouraging collaboration among academics, private firms and investors. Cuomo announced a series of marketing plans to encourage more regional thinking, including the Taste-NY initiative to promote New York products and a $5-million advertising competition for the best regional plan. He also proposed three casinos for upstate New York and a whitewater rafting competition for the Adirondacks. What is a region, anyway? What is our region? We asked Jonathan Drapkin, president and CEO
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of Hudson Valley Pattern for Progress. We talked with Alan White, executive director of the Catskill Center for Conservation and Development. We contacted Melissa Everett, executive director of Sustainable Hudson Valley, a non-profit with the goal of working collaboratively to “speed up the shift to a low-carbon economy.” We solicited the views of Rik Flynn, co-founder and outgoing president of UlsterCorps, a non-profit organization that seeks to coordinate communication among social-service organizations within Ulster County. And finally we interviewed Ned Sullivan, president of Scenic Hudson. Boundaries of a region Drapkin heads a collaborative effort begun in 1965 by the educational and business communities to explore sustainable growth for the Hudson Valley. “How you define a region depends on the issue,” Drapkin said. “It isn’t always neatly defined. Government boundaries, like geographic boundaries, can sometimes be a hindrance. If you’re talking about agriculture, the Hudson Valley goes all the way past Albany to Washington County. But if you’re talking about economic development or tourism, the Hudson Valley is more centrally located. I define a region as a group of communities that share a collective vision, a commonality of interest on an issue.” Drapkin admitted that the Hudson Valley has its peculiar challenges as it tries to fit itself together as a region. He lives in Sullivan County, considered the Hudson Valley for economic development purposes but the Catskills for New York State tourism.
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“The Tappan Zee Bridge is a good example of an asset which needs to be considered regionally,” Drapkin said. “It’s thought of as the connector for Rockland and Westchester counties. But it impacts the Hudson Valley, New York City, parts of New Jersey and other areas as well. It affects the movement of commuters and goods between all those areas. So any discussion of the future of the bridge needed to consider those areas as well.” Drapkin thought that the regional approach to economic development has, overall, been working. “I think it’s helping us finally understand that not every issue can be handled in our own back yard.” Drapkin pointed out that a lot of us don’t stay in our back yard. We’re part of many communities. “On any given day 35 per cent of people in the Mid-Hudson Valley get up and go to work outside their home county. And in Putnam County, that jumps to 70 percent. So we’re all impacting each other’s goods and services.” That understanding, he said, is creating a new attitude, one that he said he has not seen before. “For the first time in six years, I see counties looking to make sure other members benefit from something which benefits them,” Drapkin said. “And a minority of them are saying up front that they see there’s a benefit to them, even when a project goes elsewhere. There’s a growing sense that even if we don’t get it, it could still be good for us.” Catskill in the background Alan White, of the Catskill Center for Conservation and Development, was fresh from reviewing the latest gubernatorial message. He saw some general initiatives he liked, like raising the minimum wage (“Who can live on $7.25 an hour?”) and the emphasis on equality for women. But he didn’t detect much that specifically benefited the Catskills. “We’re not well represented on the regional economic development councils,” White observed. “We are, in fact, in the back yard of four councils. The Mid-Hudson region is focused on the Hudson Valley, and there’s not much representation from the mountains.” White called the situation an artifact of artificial boundaries. “The biggest problem for the Catskills as a region is there is no common acceptance of what that means, geographically and economically. Is it the Catskill Park and New York City watershed? Is it the legislative definition, which includes six and a half counties? So the state economic development councils were drawn by economic development regions, but they didn’t see the Catskills as a distinct region with very specific issues. We’re in four councils and we’re the lowest priority on all four.” With a million acres, a forest preserve, a ski resort, watershed lands and villages that are struggling economically, White said, the Catskills have more in common with the Adirondacks than with the other regional councils with which they’re linked. “We took some members of our board to visit the Adirondack North Country Association this past fall,” he said. “They’ve got one selfcontained economic development council, and they’ve fared fairly well.” White thought the Catskills could do a better job of self-promotion. “Right now, Delaware promotes itself as the Great Western Catskills. Greene County is promoting itself as the Great Northern Catskill Mountains. We’re splintering the region. We should be looking at Pennsylvania and the
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January 17, 2013 Looking Forward Pennsylvania Wilds tourism promotion.” The Catskills have to work on submitting more applications for state funding, White said, and it needs to get more representation. “We need to get more people on board.” Negotiations and patience The breadth of the region has been a challenge for Sustainable Hudson Valley. Executive director Melissa Everett said the wide geographical and economic diversity of the Hudson Valley, an area that, for her organization, consists of the area south of Albany and north of New York City, has always presented difficulties. “Because of that diversity, we have never been able to accomplish as much as we wished, but we have gotten a variety of people with a deep understanding of their local needs, people who are locally grounded but regionally savvy. Working regionally requires a level of back and forth — negotiation and plenty of patience. You can’t impose a regional outlook. Instead, you have to draw out the opportunities, the themes all communities have in common.” She pointed to two initiatives as examples. She said Local First, an economic development concept of interest to all communities, has found broad support. So has the effort to create climate change awareness, building a Climate Action Plan and the political will to act on it. “We aren’t doing this alone,” Everett said. “There have been a couple of years to education and inspiration on Local First, with a small business network, a strategy for northern Dutchess, a regional rollout of Michael Shuman’s Going Local, showings of Independent America. Now there is a new organization, Re-Think Local, approaching the same agenda with a purely business membership base.” Everett sees leadership from Albany as adding momentum. “What the governor has done with his emphasis on regionalism is to establish a necessity for rapid consensus. County planning partnerships were being passed over for federal funds because there was no effective regional governing plan. Now we’re getting our collective arms around a set of common principles and metrics on which we can agree.” Everett likens the working method to an artist’s initial sketch, a quick outline of the issue so everyone can agree on its basic composition. “Interest in regionalism is heating up with the realization that with the large and diverse number of organizations in the Hudson Valley it’s difficult to agree on one voice for the valley,” she said. UlsterCorps offers a central location to learn about volunteer opportunities. It has coordinated transporting crops after local harvests to local
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soup kitchens and food pantries. Its annual Service Summit invites local leaders and organizations to gather and share information and opportunities for collaboration. “In spite of this particular time of economic and social hardship, there remains an abundance of resources in the region to address the county’s needs,” Rik Flynn said. “We all have to find new and creative ways to employ these resources. There’s the inclination, I think, to sometimes feel paralyzed: where to begin or how to prioritize? The answer, I think, is to assess what we can do realistically in our own region and get to it. Smaller, defined objectives can lead to demonstrable results. Those can then be replicated and built upon.” Dividing the environmental labor Ned Sullivan said he meets regularly with the leaders of Riverkeeper and Clearwater to discuss how they can work together to meet challenges facing the Hudson River. There’s a division of labor. “Riverkeeper takes the lead in enforcing laws which protect the river,” he explained. “Clearwater focuses on educating the next generation of the river’s stewards. And Scenic Hudson is preserving the land that matters most, the land which protects the river. We come together when we’re addressing major threats to the river, threats like
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pollution, or discharges from power plants.” Sullivan, like Drapkin a member of the governor’s Mid-Hudson economic development advisory council, thinks the initiative is on the right track. “They’ve done a fabulous job of identifying the region’s assets,” he said. “A national survey showed that the number-one asset of this region is its natural beauty. The regional economic development council has done a terrific job of integrating business needs and values while advancing tourism and appropriate waterfront development. They recognize that the parks and the natural beauty here are assets that attract business.” Sullivan detects that the area’s agriculture is enjoying “an explosion of interest and enthusiasm.” Scenic Hudson has permanently protected 67 working farms in five counties and plans to do more. But the Scenic Hudson executive has also seeing an improved recognition in New York City of the relationship between the city and the farms just up the river. “There’s this incredible breadbasket right outside New York City,” he said, “and I’m seeing a lot of people from the city now taking an interest.” Regionalism, though an imperfect system, is getting local leaders talking to each other in new ways. And that’s something.
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17, 2013 10 | January Looking Forward
Machine maker “Those guys up in Saugerties know how to build a machine like that,” paraphrases Kevin Brady
New York State. As a businessman in a complex and rapidly changing technological field, however, he’s uncomfortable with employment projections. One can never guarantee what will happen. For Ceres to succeed, Brady knows, it must attract bright, well-educated technical specialists to work for it. But such people are offered other, often more attractive job choices. “The governor doesn’t talk about how we can’t get people to move here, that could all change with the recent activities in the Capital Region,” he said. Despite the state’s government’s recent efforts at creating a more business-friendly environment, he says, New York’s cost structure is in many cases not competitive with other places. Its regulatory structure is notoriously difficult and slow-moving. Making the optimistic rhetoric about the transformation of New York State into a can-do innovation economy come true, Brady says bluntly, is a daunting task that will not be accomplished easily.
Geddy Sveikauskas
I
t sometimes takes a kind of person who likes to build machines. Kevin Brady likes to build machines. Very big machines, complex machines often containing thousands of parts worth millions of dollars. Machines that can make very small things, handling incredibly complex materials in almost impossibly intricate ways. Machines that require skills and competencies of which not many machine-builders can boast. “We know how to build things,” said Brady. Brady’s company, Ceres Technologies, is deeply immersed in the nanotechnology segment of the innovation network that governor Andrew Cuomo outlined last Wednesday in his third stateof-the-state message. Back in September, it was announced that the state had designated Ceres, which describes itself as “a global provider stateof-the-art process equipment for the world’s leading semiconductor and photovoltaic equipment suppliers,” as one of the first official suppliers of manufacturing equipment to the Photovoltaic Manufacturing Consortium (PVMC), headquartered at the College of Nanoscale Science and Engineering’s (CNSE) in the Albany area. Since then, two giant machines created and assembled at the Ceres plant on Kings Highway is Saugerties have been shipped up to Clifton Park and are undergoing startup tests. The two systems were sold to CNSE at a price favorable to the consortium with the intention that the Ceres engineering team will be engaged with the Clifton Park team to advance the process efficiencies of the tools over the next two to five years, which could lead to future orders and industry relationships for the company. The PVMC is a collaborative effort by semiconductor companies to overcome common hurdles they face in developing the technology to produce ever-smaller and more sophisticated circuitry. It is a proving ground for advanced manufacturing
Ceres Technologies’ Kevin Brady. and innovative technologies and Ceres does contract manufacturing in this industry sector. It designs and engineers molecular delivery systems, like ultra-high-purity specialty gas and chemical-handling products, and it also has particular competences in advanced systems development such as thin-film solar photovoltaic and metrology and measurement systems. In October 2011, Ceres Technologies was awarded via the inaugural Consolidated Funding Application (CFA) process a million-dollar tax credit via the Excelsior Job Creation program managed by Empire State Development Corporation. Brady commented, “The tax credit is attainable and specific to job-creation targets that must be met, and in this uncertain market we appreciate the help, but like anything it’s unpredictable.” Brady projects that Ceres, which now has about 80 employees at its Saugerties plant plus those in two subsidiaries elsewhere (Solar Metrology on Long Island and Mega Fluid Systems in Oregon), can create 125 direct or indirect jobs, those defined as supply-chain-oriented, over the next fivers in
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ers, who were shipping their systems into Asia, were now being required to source systems built in Asia, not the United States. With this requirement came a change in ownership structure and Brady and the Ceres team had an opportunity to split away from PFT and form a company focused on the other products that PFT no longer wanted to manage. Those were essentially the legacy molecular delivery systems that PFT, now Ceres, started manufacturing in 1997. As far as the ebb and flow at PFT, at its peak, PFT employed 425 workers in Ulster County. It’s now down to between 80 and 100. The story of technology is never over, as every tested entrepreneur like Kevin Brady knows. Sure winning investments turn into losers, and some losers turn into winners again. Some sure-fire strategies fail, and some long shots succeed. As the twentieth-century economist Joseph Schumpeter realized when he coined the term “creative destruction,” risk is an inevitable part of the nature of business. But the alternative, always avoiding risk for fear of failure, is a recipe for stagnation.
One of Ceres Technologies’ massive products. gy industries. There are still a lot of unknowns in solar technology, and many unknowables about the marketplace for it. Its proponents hope that in the long term solar cells made of new materials, manufactured with new tools and equipment and utilizing new techniques of storing energy more efficiently, can make the cost of solar power more competitive. At present only 14 per cent of energy in solar panels is converted to usable energy. If new process technology under development will bring that ratio up to 18 to 24 per cent, solar panels will become competitive. The rise of PFT remains a cautionary tale in the annals of local economic development. According to Brady, there were two primary companies, one in the United States and the other in Germany, were competing in equipment for making lightemitting diodes (LEDs, widely used, especially in electronic devices, to emit light when a voltage is applied to it). The state energy authority, NYSERDA, in July 2010 announced a $1.5 million grant to PFT to expand its capacity to build thin-film and LED equipment and improve its materials handling at Tech City in Ulster. Funding was subject to successful agreement on a final contract. Both job creation and NYS based content sourcing were the incentives that PFT had to meet in order to attain the funding, which they did in early 2011. “This support from NYSERDA will enable Precision Flow to accelerate our growth,” Brady was quoted as saying in a press release at that time. “The markets for our products are growing at breakneck speed, and New York State’s investment in our growth will help ensure that we can
grow fast enough to meet the demand.” According to Brady, the American assembly, which PFT was handling, was being done locally at that time in a competent and cost-efficient way. But serious trouble was brewing. Most LEDs production systems were being sold to Asia, and some customers there were asking for a greater manufacturing presence in Asia. Taxes and flexibility were issues, Brady said, but not labor costs, technology or shipping. “There was nothing I could do to change that,” said Brady. He negotiated an offshore presence for PFT in Singapore as their American custom-
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17, 2013 12 | January Looking Forward
Levels of government Inaction, division impedes regional progress Hugh Reynolds
T
he two percent property tax cap mandated by New York State three years ago will encourage consolidation concepts advocated by goodgovernment groups but resisted on the local level. “It’s a sort of starve-the-beast mentality that could force people into decisions they might not have considered otherwise,” assemblyman Kevin Cahill said. In local education, the combination of rising built-in contractual obligations, healthcare commitments, declining student enrollment and eroding property values is leading to wholesale closing of elementary schools and massive staff reductions. But so far there has been only isolated talk of consolidation of school districts. Ulster County has eight school districts with about 22,000 students, according to Ulster BOCES (the Board of Cooperative Educational Services). Kingston’s 7000 students comprise almost a third. “Regionalism as a concept is going to be getting more airtime,” predicted BOCES superintendent Charles Khoury. He echoed Cahill’s view that the tax cap would eventually drive debate in that direction. BOCES provides educational services to the various districts. As outlined in preliminary discussions and based on models of county school districts in other parts of the country, Ulster could have as few as four regional high schools, with current school
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districts retaining administration through the eighth grade. There would, of course, be considerable initial capital construction costs and ongoing transportation issues in such an organizational change. The state has been on record as being willing to support these efforts toward consolidation. Gerald Benjamin, a professor at SUNY New Paltz and author of a widely respected book on regionalism some 20 years ago, said that localities will not easily give up autonomy. “What often might make sense on one level can mean something entirely different on another,” he said. “Take regional development in the seven-county area the state has designated. It might be more feasible to put five projects in, say, Dutchess County, but that won’t fly.” It sometimes does fly. The recent state allocations to each of the ten statewide regional economic development regions have been of a similar magnitude irrespective of their population. And within regions per-capita project funds allocated to some counties have been more numerous and larger than those allocated to other counties. Landfills and jails Clear definition of political boundaries is a factor in advancing regionalism. The Hudson Valley doesn’t boast that kind of clarity. Each of the various state departments has its own administrative clustering of counties within a region. Intermunicipal agreements, such as the one between Dutchess and Ulster counties to swap “conflict attorneys,” are sometimes a more common mechanism for sharing services and reducing costs than groups of counties setting up a regional structure. But there are examples of multicounty sharing for such things as transportation programs and housing studies. Efforts to reach county executives in Ulster and Dutchess for their views on regionalism were unsuccessful. The SUNY-based regional think tank Benjamin heads in New Paltz called the Center for Research, Regional Education and Outreach (CRREO) has identified several areas where a regional approach could work — regional jails and regional landfills being but two sectors. Ulster County planning director Dennis Doyle noted that every county in the region exports its garbage. Congressman Chris Gibson mentioned the con-
RUSK, WADLIN, HEPPNER & MARTUSCELLO, LLP “Helping Injured People for Generations” t $atastrophiD InjurieT t TraumatiD BraiO Injuries t $onstruction Accidents t $BS $rasheT anE Injuries t SliQ anE Fall t MedicaM Malpractice t DangerouT Premises t DoH Bites/Vicious Animal
John G. Rusk, above and Daniel G. Heppner, right
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flict involved in getting natural competitors to cooperate for the greater good. They don’t cooperate in Washington. In the end, “the refusal to resolve issues reinforces the status quo,” he said. Previous attempts The region has rarely spoken with one voice on the state legislative level. Though dozens of state legislators represent the seven counties of the Mid-Hudson regional area, they don’t aggregate their clout the way politicos clustered around central cities do. By and large, they tend to limit their activities to state issues in Albany and those arising in their respective districts. This absence of common approach speaks to a peculiar parochialism. Cahill said he’d like to reorient the office he has held for almost 20 years toward a more regional approach. Shortly after the first of the year, he convened a luncheon with regional leaders in education, business, healthcare and finance to explore common issues and approaches. Mid-Hudson Pattern for Progress, the regional planning and policy entity, has been preaching regionalism for decades. Repeated efforts to connect to a spokesperson there were unsuccessful. Former congressman Maurice Hinchey of Saugerties helped establish a federal designation of the Hudson Valley heritage region almost two decades ago. Other than some signage and a web site, its impact after 18 years has been limited. The Hudson Valley Greenway, another Hinchey initiative in cooperation with Steve Saland, has been successful in promoting environmental responsibility through grants and advocacy. One stop shopping Defining a region is sometimes in the eye of the beholder. From the town level, the county represents a region. For county officials, clusters of adjacent counties seem the logical building blocks. Traditionally, the mid-Hudson has been centered in Dutchess, Orange and Ulster counties, sometimes buttressed by a few adjacent counties. The Catskills, anchored by Ulster, Greene, Sullivan and Delaware counties, often see themselves as a region. For purposes of marketing, Ulster has long advertised itself as the place where the Catskills and the Hudson meet. The recently formed Mid-Hudson Regional Advisory Development Council approaches regionalism from what a spokesman called the ground level. “We’ve stressed very hard the public participation part of it,” council spokesman Jason Conwall. In theory, the council will act as a onestop shopping center for the myriad of state programs available to localities, schools and business. “We’ve turned the process on its head from when Albany made the decisions,” the spokesman said. In its goal to coordinate competition within a region, the council structure creates competition for limited state resources among regions.
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