Posts Tagged ‘economic benefit’

Another forgotten cost of closing developmental centers

October 14, 2011 1 comment

One of the costs of closing developmental centers for the intellectually disabled, which rarely gets considered in budgetary “savings” analyses, is the cost to affected communities in lost economic activity, jobs, and tax revenues.

Two studies done in Kansas and Illinois have each projected economic impacts of tens of millions of dollars annually on local communities in closing a developmental center in each state.  We have yet to locate such a study in Massachusetts, even though the Patrick administration has targeted the Fernald Developmental Center in Waltham, the Glavin Regional Center in Shrewsbury, the Templeton Developmental Center, and the Monson Developmental Center in Palmer for closure by the end of the coming fiscal year.

Developmental centers provide both direct economic benefits to their surounding communities from employee salaries and so-called ripple or multiplier effects.  Ripple effects include “indirect” sales and jobs in area businesses such as food distributors and office supply firms that provide goods and services to the developmental centers.  And those ripple effects include “induced” sales and jobs supported by the developmental center employees when they patronize restaurants, gas stations, banks, grocery stores, computer stores, convenience stores and much more.

An August 2011 report to the Illinois Department of Human Services by the Institute of Government and Public Affairs at the University of Illinois concluded that closing the Jacksonville Developmental Center in Jacksonville, Ill., would affect 591 jobs and have a ripple effect on $47 million of economic activity in Morgan County and $17 million in the city of Jacksonville. 

In addition, according to the University of Illinois report, the closure of the Jacksonville Center would result in $590,000 in lost state sales and income taxes paid by employees who were laid off and by suppliers to the facilities.

A September 2009 report prepared for the Greater Topeka Chamber of Commerce  on the impact of the Kansas Neurological Institute on the economy of the Topeka area during Fiscal Year 2010 found a direct economic impact of $28 million from the developmental center and an additional ripple effect of $37 million.  Taking into account the KNI’s 570 workers, the developmental center supports a total of 1,311 jobs in the local community, the report said.

The KNI report, written by Impact DataSource, a Texas-based economic consulting and research firm, added that the Kansas developmental center generates some $447,000 a year in local sales taxes and $3.3 million in local property taxes.

In testimony last February to a Kansas legislative committee,  Christy Caldwell, a spokeswoman for the Topeka Chamber of Commerce stated:

If the motive for closing KNI is saving the state dollars, we respectfully ask your very careful consideration of whether there will be real cost savings.  We ask that you consider the economic impact on Topeka; a significant loss for this community, should there be closure.

In Massachusetts, a Department of Developmental Services working group recommended in 2002 that prior to closing any developmental centers, DDS undertake an analysis of the multiplier effect of the closures on the local economies.  The working group also recommended consideration of other factors, such as the community use of the facility and the grounds, cost implications of the use of facility space by other government agencies, projected mothballing costs, and projected “ramp-up” costs for new community programs. 

We’ve checked with state legislators in whose districts the Fernald, Templeton, Glavin, and Monson developmental centers are located, and with local chambers of commerce, and haven’t yet found any such economic impact studies done of  the potential closures of the facilities.  We’ve filed a Public Records request with DDS, asking for any such analyses that may have been done.

The University of Illinois study noted that in additional to quantifiable economic impacts of the Jacksonville center’s closure, there are many less quantitative impacts such as the effect on charitable contributions – both time and money – by the facility employees and the impact of the re-location of facility employees and their families on school district enrollments.  “All of these more qualitative impacts contribute to the fabric of the local community and may be valued just as highly – even if they are more difficult to measure,” the report stated.

There is, of course, the question whether the loss of economic benefits from the closures of the developmental centers might be outweighed by the potential for reuse of the properties.  But those benefits in reusing the properties are largely speculative compared with the concrete benefits provided by the developmental centers themselves.  Caldwell stated in her testimony that the previous closure of the Topeka State Hospital “did not garner the private interest and investment (in the former hospital land) that many believed could be gained when the facility closed.”

In addition to undertaking economic impact analyses prior to closing the four developmental centers in Massachusetts, policy makers in this state should reassess the value of the properties involved and what they could reasonably expect to receive for those properties, given the current state of the economy.

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