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Top Ten Most Corrupt States in the U.S.

Most Corrupt States

A new study from researchers at Indiana University and City University of Hong Kong on the most and least corrupt states in America calculates that government corruption costs American taxpayers tens of billions of dollars a year. In the 10 most corrupt states, for example, simply reducing corruption to an average level would lower annual state spending by $1,308 per person, or 5.2 percent of state expenditures.

In “The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending,” Cheol Liu, assistant professor in the Department of Public Policy at City University of Hong Kong, and John Mikesell, Chancellor’s Professor in the School of Public and Environmental Affairs at Indiana University Bloomington, found that corruption is directly linked to excessive state spending, and noted that corrupt states particularly spend more on construction and capital projects and less on services, including education.

The researchers used data from more than 25,000 convictions for violations of federal anti-corruption laws between 1976 and 2008 to create a “corruption index,” then compared convictions with the number of government employees. This method, they explained, avoids the issue of state differences in police, prosecution and court resources, making the results a reflection of the extent of corruption, not of law enforcement effort.

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 Defining corruption as the “misuse of public office for private gain,” the authors found that public and private corruption can have a range of negative effects, including lower-quality work, reduced economic productivity and higher levels of income inequality and poverty.

According to the study, the top 10 most corrupt states are:

  1. Mississippi
  2. Louisiana
  3. Tennessee
  4. Illinois
  5. Pennsylvania
  6. Alabama
  7. Alaska
  8. South Dakota
  9. Kentucky
  10. Florida

“The results of this article suggest that preventing public officials’ corruption and restraining spending induced by public corruption should accompany other efforts at fiscal constraint. Increases in states’ expenditures on capital, construction, highways and borrowing are not problematic in themselves,” the researchers concluded.

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“However, policymakers should pay close attention that public resources are not used for private gains of the few, but rather distributed effectively and fairly.”

U.S. Insurers Gearing up For Tech Growth

A study by Xchanging plc found that technology was the highest priority for 60% of respondents and an overwhelming majority, 86%, ranked it as their first or second priority.

The survey also found that 67% of insurers believe their company’s IT budget will increase this year, with 44% saying it would increase significantly.

The study, conducted at the Acord Loma Forum in May, found that 36% of respondents said it was most likely that big data would see an increase.

EEOC’s Role: Enforcing Law or Making New Law?

I recently had the privilege of attending the 6th Annual Forum on Defending Employment Discrimination Litigation hosted by the American Conference Institute in New York, New York (I spoke on defense strategies for defending high stakes, multi-party age discrimination lawsuits).

Constance Barker, one of the five commissioners at the Equal Employment Opportunity Commission, gave the keynote address at the program. Her presentation was fascinating, and focused largely on the swirling controversy relative to the EEOC’s recent issuance of new enforcement guidance on the Pregnancy Discrimination Act (which we blogged on previously here). Commissioner Barker made public statements about the PDA Guidance—immediately after the EEOC posted the Guidance on its website—questioning the wisdom of the EEOC’s action on procedural and substantive grounds. She asserted that in adopting the new Guidance, the commission sought to legislate changes to, rather than interpret, Title VII (her written comments dated July 14, 2014, are here.

In broader terms, this squarely raises the issue of the proper role and responsibility of the EEOC. Should it enforce the law or expand the law to maximize the reach and public policies within employment discrimination prohibitions? Many critics of the EEOC have cited the new Guidance as further evidence that the commission is an activist agency that is result-oriented and willing to do whatever it takes to pursue litigation enforcement strategies it deems appropriate.

In response to questions from the floor at the program in New York, Commission Barker agreed that there is some truth to the criticism that the EEOC has sought to use its enforcement power and enforcement litigation to, in a sense, “legislate” behavior in the employer community.

She agreed that while societal goals and aspirations might counsel that a law like the PDA should be interpreted in the manner the new Guidance advocates, the role of the EEOC is not to engage in “social engineering.

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” Instead, the role of the EEOC is to enforce the law as written, and leave policy decisions about the expansion of the law to Congress. In this respect, she reiterated her position that the new PDA Guidance represented an effort by the commission to “jump ahead” of Congress and the courts in fashioning the contours of employer obligations and employee rights under the law.

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Commissioner Barker predicted that the EEOC’s action may become “an embarrassment” for the commission depending on how the U.S. Supreme Court adjudicates certain issues in Young v. United Parcel Serv. (4th Cir. 2013), in its next term (and may well grant the new Guidance no deference or criticize how the EEOC went about issuing the Guidance).

The issue is sure to heat up further. Stay tuned.

This blog was previously posted on the Seyfarth Shaw website.

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You can find it here.

Reputational Risk Draws Increased Board Awareness, But Not Action

In its fifth annual board of directors survey, “Concerns About Risks Confronting Boards,” EisnerAmper surveyed directors serving on the boards of more than 250 publicly traded, private, not-for-profit, and private equity-owned companies to find out what is being discussed in American boardrooms and, in turn, what those boards are accomplishing as a result.

According to the report, reputation remains the top concern across a range of industries:

Most Important Risks

“The financial cost and damage to reputation from a cyber/privacy breach is growing exponentially,” said Nancy Brady, EisnerAmper’s director of IT risk services. “Directors have recognized the increasing risk companies face related to cyber/data security.

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Now they need to roll up their sleeves and, with the companies, address these risks.”

While reputational risk remained the top concern of respondents, the survey found that companies are not necessarily translating awareness into action. In fact, only 31% said they were concerned about crisis management.

“There were a surprising amount—close to a quarter of respondents—who had no plans, and others just informally ‘doing their best.

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‘ This lack of formality to address the most significant risk identified existed across all organizations,” the report said.

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“When plans existed, they included both everyday operations—such as to keep a positive reputation and reduce the risk—and strategies to address a crisis affecting reputation.”

Despite the minimal plans in place, the directors surveyed seem to hold themselves and other company executives primarily responsible for the response to a reputational crisis. When asked who is responsible for executing such a plan, they reported:

responding to reputational risk crises

Respondents also showed improving confidence in the performance of the board, committees, external auditors and accounting departments.

How well is board addressing risks

Click here for the full report from EisnerAmper.