Is No Child Left Behind Unconstitutional, But Still Good?
Those who hold that the federal government has no constitutional role in K-12 education have good reason to oppose the NCLB (No Child Left Behind) law.

But Craig Westover notes a school choice advocate who favors NCLB anyway. It's unclear whether Jerry Ewing (one of Westover's readers) thinks NCLB is unconstitutional or not.

Sooner or later (perhaps it has already happened), someone is going to make the analogy between school reform, NCLB, the federal government, and the civil rights movement of the 1960s. In other words: yes, it may be that a series of laws and legal doctrines were enacted that on the face of it violate some principles of federalism. But still, the law is justified because the states themselves were violating the civil rights of a class of people--and if federalism includes a commitment to civil rights, who will stand up for them but the federal government if states are the very parties violating those rights?

Labels: Education, School choice

(permalink)

Health: Utah the Model for Medicaid Reform?
Since the former governor of Utah is now the cabinet official who oversees Medicaid, it may be worth looking at Utah's Medicaid system.

This New York Times article gives a brief overview:
Utah spreads out a lower, more basic level of care to more people, and reduces coverage for some traditional beneficiaries by imposing co-payments for services. And second, it relies on the generosity of doctors and hospitals to provide specialty services free of charge.

In the broad, Michael O. Leavitt, new HHS secretary, has it right:
"Wouldn't it be better to provide health insurance to more people, rather than comprehensive care to a smaller group Wouldn't it be better to give Chevies to everyone rather than Cadillacs to a few?"

A key part of any Medicaid reform is introducing people to the fact that health care is not free:
The plan is deliberately constructed with modest premiums and co-payment schedules, they say, to offer a lesson on how health insurance works to people who might never in their lives have carried a private policy.

But there is still a problem with the plan: it relies on generosity for catastrophic care. The ideal would be for people in the program to somehow obtain low-cost, high-deductible insurance policies (with accompanying health savings accounts) that would meet the gap. Together with the state's basic care package, people might actually have health insurance, rather than a package of prepaid health care services.

Labels: Health care, Medicaid

(permalink)

Education: School Funding Formulas in Kansas Critiqued
Kenneth Daniels analyzes three legislative proposals in Kansas, and finds them all wanting.

Among the problems cited by the publisher of KSSmallbiz: none make downward adjustment in funding for any reason, no attempt to increase the portion of funding that makes it to the classroom, and continued funding for 600 residents of neighboring states.

Labels: Education

(permalink)

Pop-Up Spyware: Another Reason to Ditch MSIE.
Says E-week: "Weblogs ... are beginning to propagate malicious software downloads that can alter browser settings, track users and serve pop-up ads."

Sounds like another reason to try an RSS reader, or switch to the Firefox browser. (permalink)

Education: Beware Comparisons of Numbers on Spending.
It's not unusual to hear in state X "We need to spend more on education because X is below the national average in spending numbers."

Some in California have come to that conclusion, but the Pacific Research Institute offers some reasons why that's not necessarily a problem.

The data sets used across states may not be comparable, for one thing. Some states allocate money to different funds, so the total money spent on a goal is not captured in the statistics. For example, $740 million in teacher training money spent by California governments do not show up in figures compiled by the National Education Association (NEA).

The state's Legislative Analyst?s Office, quoted by the Institute, has the priorities right: a state "should be concerned more with how its students perform rather than on how state spending compares with other states." (permalink)

Education: High-Performing Schools of Low-Income Families.
Can children from low-income families learn? Absolutely.

The Pacific Research Institute's 62-page report (PDF) They Have Overcome describes the "secrets" of superior academic achievement.

They include a phonics-based reading program; setting high standards and reflecting those in lesson plans, teacher-centered rather than student-centered learning; making use of frequent testing; discipline; and minimizing time required to deal with red tape.

If this all sounds rather unremarkable and unworthy of a lengthy report, you've got to remember that we're dealing with education policy, which is perhaps more than most fields of work prone to getting dragged away by fads. (permalink)

Medicaid for Millionaires.
It happens all the time: a government program starts out with a well-sounding premise, only to see its perverse incentives bring unintended consequences.

Such is the case with Medicaid. What was menat to help the poor has turned into, as the Wall Street Journal says in an editorial, Medicaid for Millionaires.

Medicaid, a program allegedly for the poor, has taken over paying for much more. From 1968 until 2001, for example, it has gone from paying (roughly) one-quarter of all nursing home bills to one half.



And the numbers will most likely creep up unless some reforms come along. A cottage industry helps people pick up five achievements: avoid buying long-term care insurance (a cost savings); rely on the taxpayers to pick up the tab for long-term care (a cost savings); avoid drawing down one's personal assets (a wealth-preservation tool); transfer assets to family members (an estate-planning tool) and pretend to be poor (a miracle), all at the same time.

Policy makers should consider a number of reforms, including:

Encourage the purchase of long-term care insurance
Eliminate the home equity exclusion currently in place for Medicaid eligibility
Otherwise push people towards using reverse mortages to pay for their own care

Labels: Medicaid

(permalink)

States to Feds: Catch Us If You Can.
The cynical view of federalism is that it's convenient for politicians at all level: there's always someone to shift the blame to.

That seems to be the case of Medicaid over the last few decades, with federal and state officials sparring over who should pay what, when, and how. Federal and state offices routinely play a game of cat and mouse, for example. States find ways to scam the federal government. The feds crack down. The states find new ways.

Says a Wall Street Journal news story, "When the nation's governors go to the White House on Monday, they are likely to deliver a blunt message to President Bush: Keep your hands off our Medicaid loopholes."

Carol Herrmann, with the State of Alabama, defends the practice, saying that states do "exactly what all of us do when we do our income taxes every year: We looked at the law and used the law to our advantage."

Here's how one scheme operates:

In one tactic, called intergovernmental transfers, government entities like county or city governments send money to the state that the state then uses to qualify for additional federal Medicaid payments. .... A county nursing home may submit a claim to a state, which the state sends on to the federal government to receive a matching payment. Then the state keeps some of the federal payment, rather than sending it back to the nursing home. In some cases, federal officials say, that federal payment may be recycled for another federal matching payment. The result: The federal government kicks in extra matching payments without comparable spending by the state or local government.

Does the term "Enron accounting" sound familiar?

Granted, Medicaid needs serious attention. But games like this merely delay inevitable reform, which requires not only political courage, but institutional creativity.

Labels: Medicaid

(permalink)

A Few New Publications at the Detroit News.
I've got a few new essays up at the Detroit News lately. One addresses a disturbing trend towards relying on the company doctor (and not enhanced consumer choice) to address rising health care costs.

A second notes that we would never have purposely designed Social Security if we started from scratch.

The third essay points to a new (or rather, old) vision for assisting low-income people , and the value of the War on the War on Poverty. (permalink)

Another Reason to Get Fat.
Overweight? Maybe it's the fault of ... McDonalds. Or now, the satellite TV dish on top of the car.

The February 24 edition of the Wall Street Journal discusses innovations in satellite receiving technology that can shrink the dish down to a size that will fit on top of an auto. It's now possible to watch over 100 channels of TV.

One man, owner of a dish-equipped vehicle, had this to say of his young sons' reaction: "They're in their on the weekends. It's like a treehouse for them."

No word on whether the boys ever play in a real treehouse. One hope so. (permalink)

Special Interests Win One Over Wal-Mart.
A self-interested crew of union officials, current businesses, and politicians have killed (at least for now) Wal-Mart's attempt to open a store in New York City (Queens, specifically).

Though the few news stories I have read emphasize the economic interests, read about Wal-Mart long enough and you'll see an element of snobbery. How downmarket! How redneck! How ... wrong to put in our area the same color scheme and building design that exists in thousands of other towns! We want to pay more for local character, and want to make sure that everyone else does, too!

Says Jay Nordlinger of National Review:
I just find it heartbreaking when Wal-Mart is defeated on the basis of economic ignorance and class snobbery. The activists — because they are activists — get their way. And the people who would benefit from Wal-Mart, both as employees and as shoppers: screwed. (permalink)

Pop a Top, Again.
Whenever government makes distinctions in the marketplace, it can lead to some odd result. In North Carolina, for example, you can buy a Bud, but not a Belgian ale. Why? Too high of an alcohol content.

Excessive consumption of alcoholic beverages is a personal and family problem for too many people across the country. But teetotaler John Hood argues against some recent assaults against consumer choice in North Carolina. (permalink)

A New Public Interest Law Firm for North Carolina.
From the mailbag: The North Carolina Institute for Constitutional Law "as formed to conduct research, educate and advise the general public, policy makers, and the Bar on rights of citizens." It will focus on economic issues.

Its first CLE event dealt with the constitutionality of economic development incentives.

Looks like a group to watch in the Southeast. (permalink)

I Owe My Health Care to the Company Store
If you hate your HMO now, just wait until your employer becomes your HMO.

Quad/Graphics, a large commercial printer in the Milwaukee area, made the front page of the February 11 Wall Street Journal with its approach to deal with rising costs in its health care budget (no link; paid subscription required). About 80 percent of the Quad’s employees get their primary health care at the company store, or more specifically, doctors and other medical professionals who are on the company payroll.

This is not simply the company doctor who attends to factory workers who suffer on-the-job injuries; this is a replacement for primary care. The company employs 26 doctors, including pediatricians and gynecologists. It even has its own facilities for offering X-rays and EKGs.

A number of “household name” companies, including Toyota, Spring, and Miller Brewing already do this, or are considering it.

While the arrangement does have its upside -- the company spends 30 percent less on health care than the average company in Wisconsin -- there are a number of risks for workers.

Consider privacy, for example. Your spouse is an alcoholic, your daughter is thinking about an abortion, and your son has HIV. Do you want to trust this information to your boss? There may be a “Chinese Wall” policy between the medical staff and the rest of the company. But even the best-designed safeguards may not work to avert corporate scandals.

Or what happens if your job gets cut in a corporate reorganization? Not only do you lose your place on the shop floor, or in the row of cubicals, your co-workers and your sense of something you do every day, you may also lose access to your doctor’s office.

To some extent, Quad’s actions are merely different in scope, not in kind, from what many companies already do. But it’s a dangerous step to tie not only one’s income, but one’s health, to a job.

The CEO of Briggs & Stratton, which now contract with Quad for its own employee health care program, says "There's only one way to avoid paying more and more for the health-care system” is “for corporations to get back into the health-care business."

Wrong. It’s time to unleash innovation in the health insurance market, and promote true consumer-directed, and consumer-controlled care and financing. Let insurance companies write policies across state lines. Relax mandated benefits that only drive up the cost of policies. Eliminate the bias in the tax code that favors employer-paid health insurance, and now, health care.

For most of us now, the Tennessee Ernie Ford song about owing your soul to the company store ("Sixteen Tons") is merely rhetorical. It would be a tragedy if something as personal as health care becomes even more tightly connected to the company store than it is now.

When it comes to health care, it's time to give cash, and do away with scrip that can be used only at the company store.

Labels: Health care

(permalink)

Tax Hike For Illinois?
Illinois is $2 billion in the red, prompting more calls for raising the personal and corporate income tax rates, as well as adding new taxes on services and retirement income.

The Illinois Policy Institute calculates that this will cost each state taxpayer $500 a year.

Take the Personal Income Tax (PIT) for instance. EFRA supporters are suggesting we raise it from a 3% flat rate to a 5% flat rate. But perhaps they would do better to tell Illinoisans that this rate increase will cost each Illinois taxpayer, on average, $500 dollars. This is even after considering the so called ?property tax relief? offered in the bill. If you don?t believe me, get out your calculator.

In 2003 the state of Illinois collected approximately $8 billion in taxes from about 5.6 million tax filers. If we assume that each individual?s tax burden grows by 66.6%, reflecting the shift from 3% to 5%, we can estimate that the PIT increase will create about $5.3 billion in new tax liability. This brings our projected 2005 tax bill to about $13.3 billion collectively.

But of course, we mustn?t forget to factor in the $2.4 billion in property tax relief promised by proponents of the EFRA. Residential property taxes account for only about 60% of all property taxes though, so individuals will probably only see about 60% of that relief, about $1.5 billion. Finally, we have to take into account another $900 million being given back as a tax credit for lower income families. So all in all we?re still looking at about $2.4 billion in tax relief (of course there are plenty of real people who won?t see any of it). The new income tax bill is approximately $10.9 billion ? an increase of $2.9 billion. Now divide $2.9 billion by 5.6 million, the number of tax filers, and you should get something in the neighborhood of $517 per tax filer.

More details with a link to the full-length (PDF format) report here. (permalink)

Attack the System = Attack on those in It?
"Blame the victim" has a new twist these days: any critique of the status quo system of K-12 education is an assault on kind-hearted teachers who dry the tears of little tykes.

So says Nina Brook, a newspaper editor in South Carolina. Ms. Brook objects to a plan to promote tax credits for use at a variety of schools.

What is an insult to teachers, though, is not a new arrangement that enhances consumer choice, but a pay system that rewards everyone the same, regardless of merit. (permalink)

Arizona Senate Passes Business Tax Credit for Scholarships.
Good enough, in that anything to foster competition in education is a good thing. But politically, it just looks bad: "another break for big business." How about some more credits for individual taxpayers? (permalink)

All-Day Kindergarten May Lead to Enhanced School Choice in Arizona.
Arizona's governor wants to expand all-day kindergarten. Some legislators see this as a way to enhance school choice through vouchers or tax credits.

Kids attend enough school as it is (with what results?), but this may be a fair trade to make.

Labels: Education, School choice

(permalink)

Want to Stop Sprawl? Fix Cities First.
While people have been moving out of cities for a long time, failed policies accelerate the trend, resulting in calls for yet more attempts to stop "sprawl." Yet, says the Commonwealth Foundation of Pennsylvania, a good place to start would be to address the factors that push people out of cities.

This isn't to say that perverse incentives may be pulling people out as well. But a good place to start to deal with regional planning is to look at how governments in already densely populated regions can improve their performance.

*****************************************************************************

Taking Us Back -- But Not to Prosperity
Matthew J. Brouillette

Few people are against preserving and protecting Pennsylvania?s farmland and open space. And fortunately for us, between 86 and 94 percent of our state is undeveloped, depending on who you ask. But some well-intentioned activists think that when our neighbors decide to leave our urban centers for suburban or rural life, they are somehow contributing to our commonwealth?s economic demise.

So says the 2003 report, Back to Prosperity: A Competitive Agenda for Renewing Pennsylvania, from the Washington, D.C.-based Brookings Institution. Unlike some think tank reports that tend to collect dust on shelves, Back to Prosperity has spawned a number of efforts to lobby for the policy recommendations in the report.

There is a serious problem, however; the Brookings report?s recommendations are in fact ?solutions in search of a problem.?

While the report accurately identifies many of the symptoms of Pennsylvania?s economic decline -- low population, income and job growth, an aging population, and the out-migration of well-paying jobs and young families -- its diagnosis of the cause is factually unsupported.

Brookings offers no evidence to support its conclusion that the lack of economic prosperity in Pennsylvania is the result of poor land-use planning and government giving citizens too much freedom in their ?pursuit of happiness.?

Furthermore, the Brookings report failed to ask the obvious: Why are Pennsylvanians choosing to leave urban cities and older towns? But that should come as no surprise, because the answers would not have fit the shared agenda of the organizations that purchased the million dollar report.

With the financial largesse of the Heinz Endowments and William Penn Foundation, and the prominent role of the environmental group 10,000 Friends of Pennsylvania, the policy recommendations for bigger, more intrusive government and less individual freedom are predictable. But the participation of a respected national think tank has given new life to these tired ideas of centralized government planning and intervention.

While it is obvious to most observers why families are fleeing our urban centers -- unsafe neighborhoods, poorly performing schools, oppressive taxes, and unnecessary regulatory barriers -- at least some elected officials are embracing the non-sequitur conclusions of Back to Prosperity to advance their own agendas.

Gov. Rendell has hauled around his copy of B to P from public appearance to public appearance. Despite being the only study of its kind to contend that ?urban sprawl? is the leading factor in explaining Pennsylvania?s economic woes, our governor is using it to advance an environmental and economic agenda of higher taxes, restrictive regulations, and bigger government.

The revival of the dormant State Planning Commission and the governor?s push for nearly a billion dollars to fund Growing Greener II are just two examples of his B to P agenda. Gov. Rendell is attempting to make the case that a better business climate will result from the higher business taxes and fees and deeper taxpayer debt needed to pay for his initiatives. To most job creators that prescription for economic growth doesn?t make much sense.

What does make sense, however, is for policymakers to directly and adequately address the real reasons families are fleeing urban cities: public schools that fail to educate their children, taxes that undermine job creation and discourage investment, regulations that ensnare entrepreneurs with costly red tape, and epidemic levels of crime that make neighborhoods unlivable.

Restricting the ability of families to escape these kinds of environments for a better quality of life is hardly a formula for a more prosperous Pennsylvania. In fact, the prosperity we all seek would only be hindered if the Brookings policy recommendations were implemented.

Erecting growth boundaries around cities, expanding corporate welfare programs, increasing government?s power to halt building projects, discouraging new industrial and business development, restricting residential housing choice, raising taxes to purchase private lands, and artificially increasing the costs of suburbanization will only unnecessarily accelerate Pennsylvania?s economic decline.

Restricting citizens? lifestyle choices is not a viable alternative for saving Pennsylvania?s land and towns. The best way to reverse the ?hollowing out? of our cities and historic communities is to make them more attractive. Therefore, the only option left is for policymakers to address the real reasons people are fleeing our urban centers. Until they do, families will continue to leave not just our cities, but our state as well. (permalink)

Use Smart Spending Cuts; Don't Gut Tax Limitation Measures.
The bipartisan effort to weaken Colorado's Taxpayer Bill of Rights is wrong-headed. There are some ways to make smart cuts to the state's spending.

The Independence Institute and the Reason Public Policy Institute have together identified ways to alleviate the pressure on the state budget. Here's their (PDF) report, called "Priority Colorado."

Among the techniques (numbers are approximate or maximum estimate returns)

• sell assets ($150 million)
  
• return to core functions ($32 million)
  
• consolidate agencies ($219 million)
  
• sentencing reform ($41 million)
  
• Medicaid reform ($90 million)
  
• change education funding ($4 million)
  
• reform procurement practices ($30 million)
  
• competitive sourcing ($48 million)

Total savings: $347 million to $615 million.

Labels: Medicaid

(permalink)

Arizona on My Mind.
Communications, economists, and designers wanted by an Arizona think tank.

Over the transom comes the following item from the Goldwater Institute. Apply as you feel moved. Tips appreciated (see "E-mail me" for instructions) if you take one of these jobs.

Communications Assistant
The Goldwater Institute seeks an enthusiastic, articulate, detail-oriented assistant for its strategic communications program. Candidates should have a bachelor's degree, possess excellent writing and editing skills, and share a firm commitment to the principles of individual liberty. The successful candidate will have strong organizational skills and an eagerness to participate in public policy communications. Proficiency in Quark and Photoshop, and experience with computer network systems is an advantage. Responsibilities include managing the Goldwater Institute website, tracking media impact, preparing informational packages and press kits, maintaining a media contact database, and assisting with the publication of Institute materials. Address cover letter, resume, and two relevant writing samples to Kristin Dorn, Goldwater Institute, 500 E. Coronado Road, Phoenix, Arizona 85004, or send materials via email to kdorn@goldwaterinstitute.org. No phone calls please.

Publications Assistant
The Goldwater Institute seeks an enthusiastic and detail-oriented Publications Assistant for its growing communications department. The successful candidate will have experience and an interest in publication production, and share a firm commitment to the principles of individual liberty. Candidates should have a bachelor's degree and possess excellent writing and copyediting skills. Candidates should also have an interest in publication layout and in working with outside printers to ensure the professional look and design and efficient production of the Institute's policy reports, policy briefs, and annual report. Proficiency in Quark and Photoshop is an advantage. Address cover letter, resume, and two relevant writing samples to Kristin Dorn, Goldwater Institute, 500 E. Coronado Road, Phoenix, Arizona 85004, or send materials via email to kdorn@goldwaterinstitute.org. No phone calls please.

Communications Director
The Goldwater Institute seeks a director for its growing communications department. Candidates should share a commitment to the Goldwater Institute’s guiding principles and mission, and have solid public relations experience in a public policy setting. Strong writing and editing skills are required, and familiarity with news organizations and media relations is preferred. The director will oversee the Institute’s strategic marketing and communications programs, manage the publication of Goldwater Institute materials, and work to expand the Goldwater Institute’s presence in the public arena. Address cover letter, resume, and two relevant writing samples to Kristin Dorn, Goldwater Institute, 500 E. Coronado Road, Phoenix, Arizona 85004, or send materials via email to kdorn@goldwaterinstitute.org. No phone calls please.

Director, Center for Economic Prosperity
The Goldwater Institute seeks an economist to direct its Center for Economic Prosperity. The director will be responsible for the strategic vision, research, and operations of the center. Specific tasks include researching and writing studies and articles on tax and budget issues, planning and hosting forums and conferences, initiating research projects with outside scholars, editing papers, public speaking, and supervising new analysts. Competitive candidates will have a master's or higher degree in economics, a background in political theory, and related experience. Candidates should be enthusiastic about public policy and share a commitment to individual liberty. Address cover letter, resume, and two relevant writing samples to Damon Chetson, Vice President, Goldwater Institute, 500 E. Coronado Road, Phoenix, Arizona 85004, or send materials via email to dchetson@goldwaterinstitute.org. No phone calls please. (permalink)

Blogger Employee Fired for Blogging ... About Blogger.
Be careful about which you blog: an employee of Google (which owns Blogger) was fired, probably for blogging about life at Google.

It shouldn't be remarkable, aside from the irony. The right to "free speech" extends (or ought to) to claims against government, not against private employers. (permalink)

Saving the World From ... Sweet Cigarettes?
As if the state isn't doing enough to engage in "public health" crusade, Gov. Tim Pawlenty wants Minnesota to ban the sale of ... flavored cigarettes.

"My reaction is, what is the governor smoking?" said Sarah Janecek, publisher of Politics in Minnesota and a Republican activist. "This is a great example of how Republicans bash government for doing too much and then when they get elected, they do the same thing." (permalink)

Virtual Charter School Shows Demand for Competition in Schooling.
How popular is the demand for competition in schooling? The demand for one new school exceeded the estimated demand by a factor of vie.

The Lawrence, Kansas school district set up a charter school, using materials from K12, an operator of virtual schools. It expected that about 30 students would sign up. Over 150 did.

The school is drawing students throughout northeast Kansas including Manhattan, Wichita, and Kansas City.

Thanks to the combination of charter school, virtual school model, and in-person supplemental education, parents get a combination of home schooling and public schooling, at minimal cost.

Labels: Charter schools, Education

(permalink)

New Public Policy Group Planned for Missouri.
Missouri is getting a new policy research organization sometime later this year.

From the St. Louis Business Journal, February 11:
A small group of Missourians are forming a nonpartisan, free-market think tank based in St. Louis to focus on Missouri issues.

The group is being led by R. Crosby Kemper III, former chairman and chief executive of Kansas City-based UMB Financial Corp. and interim chief executive of the Kansas City Public Library, and Rex Sinquefield, Missouri native and co-founder of California-based Dimensional Fund Advisors Inc., an investment management company with $66 billion under management.

[snip]
Kemper, 54, serves as the board chairman and Sinquefield, 60, as vice chairman of the organization, which does not have a name yet but is expected to open offices in St. Louis about Sept. 1, Kemper said

The think tank will be research-based and focus on taxation, education policy and business regulation, Sinquefield said.

[snip]
Kemper said the think tank hopes to examine Gov. Matt Blunt's State Government Review Commission, which is expected to overhaul and examine how the state currently conducts business. "It's possible we may need to staff up for that right out of the box," he said. (permalink)

The Usefulness, and Limits, of Reinventing Government
One of the hottest trends in public administration and policy these days is reinventing government, a 1990s fad that has been reinvigorated by the publication of The Price of Government, by David Osborne and Peter Hutchinson.

David L. Littman, recently retired economist for one of Michigan's largest banks, and newly minted senior economist for the Mackinac Center for Public Policy, reviews Osborne and Hutchinson's work, and gives it one cheer.

Their answer to these monumental [fiscal] problems is "budgeting for outcomes." They propose that governments at all levels first attach price tags to every service being rendered. This price tag should include not just direct spending on the service within the agency that provides it, but ancillary spending in other departments that provide necessary support for the service.

From there, government officials must determine how far existing or expected revenues will go in funding these functions. If the costs exceed the revenues, it means triage: picking functions with the greatest priority.

Which raises the question: What priorities? And who determines them, and how?

Littman finds the proposed methods less than satisfying:
Using focus groups of taxpayers, bureaucrats and politicians to establish government spending priorities is, at best, a dangerous proposition. As reasonable as this premise for budgeting may sound, it cannot withstand logic, the actual practice of public administration or (no trifling matter) the American tradition of constitutional law.

On the other hand, he appreciates their emphasis on competition, even within the provision of government-financed services:

This section on competitive incentives is very important to underscoring the importance of what I refer to as the "Equal Threat Theory." "Equal Threat Theory" in this context comes down to this: You do the work you?re paid to do at least as well and as consistently as your competition, or you lose your job. Whether you?re a private or public employee, such threats invariably raise accountability and performance.

Services provided under an Equal Threat regime raise the expectations of consumers (or taxpayers) concerning the return they receive for the dollars they spend. The increase in both performance and expectations sure beats the perennial government shuffling of underperforming employees to other government agencies. Such reassignment is standard operating procedure in government, enabling an agency director or a consultant to claim that their "rightsizing" reforms for a particular agency have succeeded, while the entire operation of government services hasn?t improved a bit. My hat is off to the authors for these pages, because this is where their perspective on government budgeting meets reality.

Too bad this wonderful portion of the book is too little, too late. (permalink)

Sanity in School Finance Requires Redefining Benefits.
In state after state, school finances are in "crisis," regardless of this or that patch that is applied. Michigan, for example, reconfigured its tax mix during the 1990s in an attempt to fix its school finance system.

But methods to find the "right" school financing system in the present environment are likely to fail. Why? Because they lack the typical economic mechanisms--prices determined in a competitive marketplace of buyers and sellers--that exist throughout the normal economy.

The Mackinac Center, an observer of Michigan policy, points to one other thing that happens without a normal market: the tension between management and labor, common in industry, doesn't exist.

Those who complain about a "broken school finance "talk as if these health and pension liabilities are an act of God. But they aren’t: They did not descend upon the public school system like a plague of locusts. Instead, they are the product of school boards that have been either too cozy with employee unions or too timid to stand up to tough union bargaining tactics. Michigan’s school boards have given away the store in contract negotiations over the years, and union representatives on the other side of the table have happily carted it off. This is the management that is broken.

Labels: Education

(permalink)

Beware the Cabal.
Wal-Mart wants to open a new store in Queens, New York. A collection of small businesses (who fear competition), union workers (who, again fear competition), and some environmentalists (who apparently fear, well, commerce).

Yet even though the New York Times inserts a bit of editorializing ("it is so anti-union"), it also points out "one not inconsequential group seems largely forgotten: New York's consumers. Many of them love Wal-Mart's low prices."

As Steven Malanga points out, the campaign against Wal-Mart is harmful primarily because it restricts the power of competition to help the poor.

"Mark Green always did studies showing that stores in New York were ripping off the poor, and then the City Council tries stopping big-box stores. So why do people get ripped off? Because we're restricting competition."

Meanwhile, congressman Anthony D. Weiner, a would-be mayoral candidate, shows just how out of touch some people can be when he issued this observation: "Wal-Mart has blazed a path of economic and social destruction in towns throughout the U.S." (Destructive in the sense of "creative destruction" articulated Joseph Schumpeter, but I have a feeling that's not what he has in mind.)

The worst possible outcome for free enterprise would not be that Wal-Mart's attempt is stymied, but that it heeds the call of one city council member, who put the company on warning that a bit of democratic socialism may be in order: "I've said to them, they are the biggest daddy of all, and if they want to do big things, if they want to do work in our Big Apple, their policies absolutely need to be reviewed. They have to put something in place that's a little different from what they have now." (permalink)

A Diversified Economy is Great, But is This the Way to Get There?
Michigan has long endured a boom-and-bust cycle, with private and public fortunes tied to the auto industry. Anecdotal evidence suggests that some amount of diversification has taken hold.

But Governor Granholm is dissatisfied with the pace of diversification. She's floating a plan to sell $2 billion in state bonds so that the state can engage in industrial policy.

Bad move. (permalink)

If You Want To Eliminate Influence-Peddling, Pull Back the Regulatory State and Promote Competition..
In Michigan, the distribution and sale of alcoholic beverages is strictly controlled by the state. The existing set of wholesalers have a oligopoly, granted and protected by law.

Is it any surprise, then, that beer and wine wholesalers regularly supply free vacations, golf outings, and campaign cash to legislators?

The Detroit Free Press reports.

Labels: Golf

(permalink)

Eminent Domain Abuse
Eminent domain has gone from the old-school definition of being used to acquire land for roads or city halls, to being an economic development tool. So we have the prospect of, say a mom-and-pop retail establishment being seized by a local government, and the land turned over to Wal-Mart, all in the name of economic development.

But as the Reason Public Policy Institute (PDF) reports in a new study, "using eminent domain often fails to help achieve economic development goals." It suggest several alternatives to eminent domain. (permalink)

Education: Are Schools Playing Loose with Free Lunch Guidelines?
For some school children, at least, there is such a thing as a free lunch, after all. But are schools too quick to certify their students as eligible?

Kenneth Daniel, publisher of KSSmallbiz.com, writes that 55 percent of students in the Topeka city schools are considered are eligible for free school meals.

But, he does some extrapolation of census bureau numbers and concludes that the percentage in the population is only 21 percent.

"This leads to his question: If only 21 percent of USD 501 students are in families with incomes less than 1.3 times the poverty level, how and why can USD 501 certify 54.9 percent as eligible for free meals?"

His concern is not that some children are getting a free plate of mass-produced food, but that schools, which receive extra money based on the number of free-lunch children, may be juicing the numbers.

Labels: Education

(permalink)

Public School for 3-Year Olds?
Universities in America outperform those in the rest of the world. And high school students score at the bottom of international tests. Yet U.S. schooling for early education outperforms that of the rest of the world.

This strange combination of circumstances is the setting for a new report on early childhood education.

************* Press Release **********
PHOENIX?In a report released today on early education programs, Goldwater Institute president Darcy Olsen shows that U.S. elementary students outperform their international peers in reading, math, and science. The findings call into question the advisability of Arizona Governor Napolitano?s plans to increase government involvement in early education, including kindergarten.

The report, Assessing Proposals for Preschool and Kindergarten: Essential Information for Parents, Taxpayers and Policymakers, examines the results of model early education programs including Perry Preschool, Abecedarian, and Head Start, and Arizona programs including Reading First and kindergarten in the Chino and Alhambra districts, and finds the widespread adoption of preschool and full-day kindergarten is unlikely to improve student achievement.

History is telling. Since 1965, enrollment of four-year-olds in early education programs has increased from 16 to 66 percent, yet test scores are virtually unchanged. However, U.S. students routinely outperform their international peers in the early years, indicating that American students are well served by a flexible approach to early education where parents choose the setting, including home care, that is best for their children.

While U.S. children are "A" students in fourth grade, they are "D" students by 12th grade. "The good news is America?s early education system is among the best in the world. The bad news is the secondary system is among the worst. There are solutions, but trading sippy cups for school desks is not one of them," Olsen said.

Nonetheless, advocates for government preschool perpetuate the myth that poor school performance is the result of inadequate early preparation. According to American Federation of Teachers president emeritus Sandra Feldman, the United States ?can?t afford not to? adopt a preprimary program sculpted after the French system that enrolls nearly all 3- and 4-year-olds in government schools. Yet, U.S. fourth-graders routinely outperform their European peers in reading, math and science, and are more literate than the French.

Conservative estimates show Arizona spends over $400 million on early education programs, but little information is collected on program impact. Olsen recommends measures for transparency, program assessment, and improved flexibility through individual student funding.

"This report provides an invaluable review of existing early childhood research," Heritage Foundation senior education policy analyst Krista Kafer said. "It separates rhetoric from fact at a time when policymakers need to know the truth." Among other findings, the report examines Georgia?s recent experience with universal preschool. After ten years, the program has served over 300,000 children at a cost of $1.15 billion and children?s test scores are unchanged.

"Fundamentally, the early education discussion is not about the effectiveness or cost of the programs. At heart is the question of in whose hands the responsibility for young children rests," Olsen said. ?Further entrenching the state into the lives of young children cannot be squared with a free society that cherishes the primacy of the family over the state."

Labels: Education

(permalink)

Education: High-Performing, High-Poverty Schools
"More funding! More funding!" That's often the mantra when education policy is discussed. Expectations are often lower for low-income families, as well as low(er)-budget schools.

Yet some high-poverty schools do better than others. The Prichard Committee for Academic Excellence wanted to find out why. They compared high-performing and low-performing schools in Kentucky.

Among the qualities commonly found in high-performing schools (PDF): high expectations (for both students and staff); a strong focus on academics (surprisingly weak these days); and using student assessments to design curricula.

The conclusion: "the background of the student body does not have to determine achievement results."

Or as the Heritage Foundation says, No Excuses. (permalink)

Taxes: Returns Inside, and Outside Social Security.
It's a busy day, so I'm simply going to link to a new essay I wrote for the Detroit News, explaining one reason why allowing individual investments within Social Security is a good thing: the power of compounding returns means that a balanced stock/bond portfolio will give you at least twice as much money in your retirement as the status quo Social Security system will.

Some might say that in an ideal world, we wouldn't have Social Security at all, and that people would be able to get wealthy, or live in poverty, as their freely chosen actions lead them. But like it or not, we're going to have some form of government-required retirement savings program for a long time. The question is whether people will benefit from a true savings program that delivers solid returns over time, or the shell game that we currently have. I opt for the former. (permalink)

Business Burdens for the Sake of Government Curiosity.
The city council of Aspen, Colorado is exploring ways to get daily sales numbers from local businesses.

The idea is understandable: the council wants to know how much effect local events have on the economy. (The Winter X games recently drew 70,000 people to the area).

Yet the burden to business of filing tax reports every day is enormous. Which brings up the question: does government exist to provide an environment for business to work, or does business exist to satisfy the curiosity of government officials? (permalink)

Health: States, Feds Spar Over Medicaid. Again.
HHS Secretary Mike Leavitt chides governors and legislatures in a speech on the "seven harmful habits of highly desperate states."

This put-down comes as the Bush Administration wants to encourage experimentation among states as a way to bring Medicaid costs (currently 22 percent of the average state's budget) under control. But most governor want simply to keep the cash flowing in, though the National Governors Association has said it wants reform.

This article in the Christian Science Monitor presents a few interesting stats about Medicaid:

• The "$120 billion states spend annually on Medicaid is already more than they spend for K-12 education."
• "While the elderly and nursing home residents make up only 6.5 million of the 50 million people Medicaid serves, they account for 42 percent of the program's $300 billion annual price tag."
• 70 percent of the elderly in nursing homes are in Medicaid.

You might get the impression that it's a fairly well program from this article. "While private health-insurance premiums went up more than 12 percent, Medicaid's annual spending per capita was up only 4.5 percent." Yet the first number reflects a (somewhat) free market in spending, while the latter number is comparatively low because states have employed various ways (cutting benefits or the rolls, mostly) to keep costs from going up even more. That doesn't mean that the program is doing well. Far from it. Significant reform is needed, not only for reasons of cost control, but to improve quality of patient care.

Labels: Health care, Medicaid

(permalink)

Taxes: Moral Posturing on Social Security Reform
A common defense of maintaining the bureaucratic status quo is to invoke the moral high ground against plans to use competitive contracting, the private sector, civil society, and the profit motive.

Currently, this attempt is underway in the debate over Social Security reform. I've got a response in today's Detroit News weblog. (permalink)

Health Care: Washington Auditor Disclaims State's Medicaid Program.
Just how poorly managed is Medicaid, one of the country's biggest government-run health care programs? In Washington, the state's auditor has said in effect "We can't tell you the fiscal condition of the Medicaid system, but we know it's very bad."

Said the auditor's report: "we cannot conclude, based on documentation and other evidence we were provided, whether all of these costs were allowable or whether all clients were eligible for services given to them and all providers were eligible for payments made to them."

Labels: Medicaid

(permalink)

Budget Deficits Persist.
Despite a rising economy, states still deal with budget deficits. Too little revenue? Too much spending? That's a question for another day. For now, here's a collection of stories about the gaps that were projected as of 1/17/05. Some links may be dead by now.

Projected Deficits in State Government Budgets

• Alabama - $255 million (1-year)
  
• Arizona - $477 million (1-year)
  
• California - $9.1 billion (1-year)
  
• Colorado - $450 million (2-year)
  
• Connecticut - $1.2 billion (1-year)
  
• Illinois - $2.1 billion (1-year)
  
• Indiana - $600 million (2-year)
  
• Louisiana - $1.9 billion (1-year)
  
• Massachusetts - $600 million (1-year)
  
• Michigan - $1 billion (2-year)
  
• Minnesota - $700 million (2-year)
  
• Mississippi - $300 million (1-year)
  
• New Hampshire -$300 million (1-year)
  
• New Jersey - $4 billion (1-year)
  
• New York - $4 billion (1-year)
  
• North Carolina - $1.2 billion (1-year)
  
• Oklahoma - $500 million (2-year)
  
• Oregon - $1 billion (2-year)
  
• Washington - $1.9 billion (2-year)
  
• Wisconsin - $1.6 billion (1-year)

Hat tip: Evergreen Freedom Foundation. (permalink)

Education: Standard and Poor's Tool Shows Where the Money Is.
Standard and Poor's--the firm best known for evaluating the financial health of large companies--has set up School Evaluation Services (SES) to look at how effectively schools spend taxpayer dollars.

As I write in an article published in the newsletter of the Wichita Independent Business Association Newsletter, "Data about school performance has been lost in a pile of statistics about inputs, such as teacher salaries, student-teacher ratios, and overall funding levels. If the past performance of the Standard and Poor?s service is any indication, Kansans will learn a lot from the report."

SES products have been delivered to only two states so far: Michigan and Pennsylvania. Kansas is next on the list, and efforts are underway elsewhere.

Labels: Education

(permalink)

Education: Spending Increases Double Inflation Rate.
"We're not spending enough on education." Really? In the most recent 6 year period for which data are available, per-pupil spending in Kansas increased 35 percent, even as inflation was held to 16 percent in that time. And these numbers don't even include money put into teacher retirement funds, money that are as every bit an education expense as salaries.

When all the figures are added in, per-pupil spending in the Sunflower State--not exactly known as a high-spending state--nears $10,000 per pupil. Even so, nearly one quarter of all students in the state scored below basic in math and reading. (permalink)

Education: Beware Tax Swaps that Give Temporary Relief, Long-Term Pain.
Illinois is looking yet again at a tax swap: increase the income tax rates and provide some relief on property taxes. It's all in the name of education funding.

But as the Illinois Policy Institute warns, the relief is likely to be temporary, leaving local taxpayers responsible for even higher taxes.

In exchange for an increase in the income tax rate by 2 percentage points, the state will, under a bill in the legislature, rebate a portion of property taxes back to the public.

But the history of other states is not encouraging:

New Jersey stands as a quintessential example of the illusory nature of property tax relief. In 1976, it instituted a state income tax for the first time. The new income tax was sold to the citizens on the same rationale as HB 750: as property tax relief.

New Jersey currently has the highest per-capita property tax collection in the nation and its citizens still face rebate reductions on a regular basis. (permalink)

Will the Courts Take Over K-12 Funding Decisions?
In a number of states, lawsuits over funding equity have brought schools under the watch of the judicial system. Lance T. Izumi fears that judicial budgeting may be in the future for California--and other states as well.

"What is troubling about many of these court decisions," Izumi writes, "is the use of amorphous yardsticks to measure how much more extra spending should be devoted to education."

It's easy for the yardsticks to be amorphous; thinking about education among the public, and even among some policy makers, tends not to think about questions of cost-effectiveness when it comes to education funding. More is better, right? (permalink)

More Medicaid Reform: Proposals in North Carolina, Kansas.
Medicaid is finally getting the attention it deserves as a policy challenge. The latest evidence: The John Locke Foundation offers several proposals for getting Medicaid costs under control.

One option: get a handle on enrollment. "If North Carolina’s percentage of residents enrolled in Medicaid (15 percent) fell over time to Virginia’s percentage (10 percent), that would represent a savings of $800 million in the state budget when fully implemented."

Another: limit services. "If, instead, North Carolina focused on matching Georgia’s more limited benefits package and reduced its cost per enrollee to Georgia’s average, that would represent a state-budget savings of $630 million."

The view from Kansas is just as bleak: "Right now, the program is the fastest growing portion of the Kansas budget, with the cost of state health care coverage for the poor rising 121 percent in the last five years," say my colleagues at the Flint Hills Center for Public Policy.

One way to make health coverage more affordable: follow the lead of Colorado, Florida, Montana, North Dakota and Utah and pull back on state mandates on private-sector insurance plans.

Labels: Health care, Medicaid

(permalink)

Table Napkin Scrawling on the State of the Union.
My live-blogging review of tonight's State of the Union address is now up at the Detroit News blog. (permalink)

Medicaid Reform: Good for the Public, Good for the Poor.
Today's lead editorial in the Wall Street Journal (subscription required) praises a Medicaid reform plan in Florida.

The plan, which requires a waiver from the federal Department of Health and Human Services, is a large step towards consumer-centered care. Participants get a risk-adjusted amount of money (meaning the sicker you are, the more money you get) which they can use for various forms of care or insurance (HMOs, for example). In other words, it actively involves the patient in selecting the treatment.

It also gives each person in the plan a financial incentive for smart shopping and healthy living. Patients who follow the recommendations of their doctors receive bonus money that can be used (through Flexible Spending Accounts) on eyeglasses or other expenses not normally covered in Medicaid.

And even better for those who are or can become healthy enough to rise to economic self-sufficiency, the money in the FSA belongs to the person who leaves Medicaid.

As the Journal notes, "This emphasis on personal responsibility will encourage healthy outcomes by providing incentives for patients to comply with their doctor's orders. And since a huge share of Medicaid budgets go to managing chronic conditions that often can be ameliorated by personal behavior, the potential to save money is enormous."

The plan may not be the model that every state follows, but clearly something must be done to both bring fiscal soundness to the system and improve the quality of care that people receive. Roughly one-quarter of Florida's budget goes to Medicaid, and similarly high figures can be found elsewhere. Nationally, states spend more money on Medicaid than they spend on K-12 education.

Labels: Health care, Medicaid

(permalink)

A Wish List for Texas-Sized Price-Driven Reform.
To finish up posts about Texas, the Texas Public Policy Foundation unveils its handbook (warning: 100+ page PDF file) for policy reform.

legendary architect Daniel Burnham once said "Make no small plans," and the TPPF has heeded that advice, offering suggestions on fiscal policy, education, health care, transportation, insurance, telecommunications, water supplies, and legal liability reform.

Labels: Health care

(permalink)

Soak the Rich, and Everyone Gets Wet.
The Texas Public Policy Foundation details how state taxes work their way through the economy (PDF file). Conclusion: taxes often adversely affect people other than those on whom the tax is putatively levied. The report is notable for some state-level numbers.

As an adjunct publication, the Foundation offers (PDF) a recommendation for a "Fair Tax" system, which increases reliance on the state's sales tax and decreases use of other taxes. (permalink)

10 Easy Reforms for Health Care.
John Goodman, president of the National Center for Policy Analysis, and long-time health care policy analyst, offers 10 easy reforms for health care.

Four of the ten involve health savings accounts (HSAs) or their ugly sister, flexible spending accounts (FSAs).
1. Encourage innovation in HSAs
2. Permit funds in FSAs to rollover from year to year.
3. Channel Medicaid funds into HSAs.
4. Change the rules for Roth IRAs to encourage their use for health care expense.

Three involve changes to employer based plans:
1. Use current Medicaid dollars to subsidize the purchase of employer-based plans.
2. Allow employers to include the cost of insurance plans in wage calculations for minimum wage purposes (this is an easy reform?)
3. Allow employers to purchase individual insurance plans for employees (currently, all employer-purchased plans must have group coverage).
4 and 5 Allow employers to substitute cash for insurance coverage, a choice that currently jeopardizes the tax status of an employer plan.

Labels: Health care, Medicaid

(permalink)

How Much Do We Actually Spend on K-12 Education?
It's easy to think that opponents of increased funding for today's school systems are cranks. After all, how could one oppose education? How about another question: Do you actually know how much money we spend on schools?

The Goldwater Institute helps Arizona residents understand how much state taxpayers spend on schooling, through a new report and online database.

Among the findings: the "average" school district spends anywhere from $8,500 to $9,000 per pupil. As Goldwater fellow Clint Bolick says, "we are spending far more than almost anyone thinks."

Any important reform in public policy management requires a solid understanding of the numbers. Thanks to the Goldwater Institute, Arizona residents and officials have an easily accessible source of numbers.

Labels: Education

(permalink)

A 20 Percent Increase in School Funding Brings ... What?
California has increased K-12 funding by 20 percent since 1998. What has it received in return? Not much, says the San Francisco-based Pacific Research Foundation.

"While there were some gains in fourth- and eighth-grade math, reading and writing scores, as well as average SAT scores, all stagnated."

Labels: Education

(permalink)

Illinois Institute Calls for State-Based Health Care Reform.
The Illinois Policy Institute (to which I am an advisor) has a new report calling for health care reform, which they call "Promoting the Patient Power Paradigm."

The sheer numbers show that reform is necessary. Per-person spending tops $5,600 per person. That is not in itself a good or bad thing, but a number that large deserves some examination, in light of the old economic problem of limited resources and unlimited wants.

More serious for anyone concerned with state policy--which should include every taxpayer--is the soaring cost of taxpayer-provided health care. In Illinois, for example, Medicaid spending grew at an 8 percent annual clip during the last decade, far outpacing income growth. Whatever government program you are interested in, or whether you prefer tax cuts to spending growth, you're going to have to confront health care spending by state governments sooner or later.

Making the task of reform more difficult: while states can and should take action, much remains to be done at the level of the federal government.

Labels: Medicaid

(permalink)

Ban Smoking Bans.
One of the latest adventures in government these days is to ban smoking in "public" places, with the definition of "public" growing ever larger.

Craig Westover has been on the beat of smoking-ban attempts in Minnesota generally, and the Twin Cities specifically.

The Dark Side of a Smoking Ban, for example, is a letter Westover received from a physician.

An excerpt:

Although it is not proper for government to legislate against smoking on private property such as restaurants, it is completely just to do so for truly public places. Such places would be municipal buildings and courthouses because these places are truly public in that they are owned by all and therefore the will of the majority should be manifest above the wishes of a minority.

As a patron of local restaurants, I would never return to one that does not provide me with a non-smoking section and would actually be more likely to go to a restaurant that is entirely smoke-free. The management of such a facility will be obligated to voluntarily comply with the wishes of a free market or suffer the consequences of going out of business.

There's also some material on the science of second-hand smoke, as well as a reader response.

While I have a strong preference for smoke-free establishments, the question of whether or not a privately owned building ought to be smoke-free or not is best left up to the interaction of private actors, not the political and bureaucratic process. (permalink)