Many domestic issues that were high on the agendas of Americans in 2006 were those in which the Urban Institute has developed deep expertise over the years—health care coverage and costs, taxes, immigration, the minimum wage, education, crime and prisons, government accountability, child welfare, and looming budget deficits. Our policy experts were both called on and listened to as debates crested before the mid-term elections in November and as policymakers regrouped afterward.

Some of our work in 2006 led to more direct and rapid results than policy researchers usually see. Our health policy team's analysis of the options and costs of extending health insurance coverage to nearly every resident of Massachusetts paved the way for the state's decision to almost universalize health care. We are now working with other states that want a clearer sense of what their options are as health care costs soar and more employers scale back their coverage.

Our work on tax policy reflected Congress's rekindled interest in reform and the fiscal challenges facing state and local governments. We produced fresh data, perspectives, and analyses as law-makers grappled with a metastasizing alternative minimum tax and began to reconsider the tax incentives for health care. We generated new estimates of the fiscal capacities and spending needs of the 50 states.

After Hurricane Katrina, we distilled what we knew about New Orleans before the storm and applied our experience to develop a picture of the challenges the city would face as it rebuilt its physical, social, and institutional infrastructure. In our 2006 report After Katrina: Building Opportunity and Equity into the New New Orleans, and in many related issue briefs, we examined options for rebuilding the city's housing and its education, health care, employment, social, and emergency services. We also focused on policies to preserve and enrich New Orleans' unique arts, culture, and nonprofit sectors. After receiving a warm response in New Orleans, our analysis and proposals have evolved into a continued effort to be useful to the many local groups that are struggling valiantly both to help Katrina's victims and to rebuild the city.

In 2006, we continued to address issues that are destined to loom large amid coming demographic and economic shifts. We issued reports on baby boomers' retirement prospects, challenges facing low-income working families, financial literacy, and the governance and performance of nonprofit institutions.

In our overseas projects, we provided technical assistance informed by our research. In countries in Eastern Europe, Asia, and Africa, we developed guidelines and training sessions on local taxation, procurement, property asset management, economic development, municipal revenue tracking and debt management, credit markets, decentralization, and other financial management issues.

As the narrowing federal budget deficit misled many into a state of complacency, Institute researchers continued to analyze the unsustainable deficits of the not-too-distant future. We brought evidence, historical knowledge, and possible fixes to the policy table. With three former Congressional Budget Office directors on staff, the Institute helped editorial writers and the broader media sort through the conflicting claims about the consequences of continuing current spending and tax policies.

If deficits affected Congress's every move in 2006, most state houses had enough in their coffers to launch promising new initiatives. We helped them explore their options—in some cases, working with individual states—and analyzed such policies as integrating child care and cash assistance and innovative programs that stamp out sexual violence in prisons.

Measured by productivity and relevance, 2006 was a good year at the Urban Institute. But our researchers know that the toughest policy challenges of recent decades lie ahead for our country. So the two of us set greater store than ever in the Institute's ability to renew itself continually and in our deep reserves of talent, knowledge, and expertise.

Robert D. Reischauer, President

Joel L. Fleishman, Chairman of the Board