I'll Take Excessive Drinking for $1,000, Alex.
The latest place where liberties are being chipped away: Saint Paul, Minnesota, where a ban on smoking in bars and restaurants went into effect today.

The greater focus of the debate has been on bars, not restaurants. Many ban supporters (you can pick out a few of them in the comments section) say things along the lines of "Thank God! Now I can go out to a bar without getting all stinky!" And in response to the argument that a ban will cause economic damage, you sometimes hear the reply: but now all those non-smokers will show up.

Put aside the questions about freedom of association, property rights, the validity of the numbers surrounding "second-hand smoke," and the like.

I've got one question: nobody gets killed because he spends an evening sitting in the same bar as someone who is smoking. But plenty of people have gotten killed in car crashes because someone else had one too many at a bar.

Say you think that a ban on smoking in bars is good. It prevents death by second-hand smoke. OK, wouldn't it be odd to also make the argument that the smoking ban is good for business because it would bring in a new "round" of customers--thus contributing to the risk of deaths by impaired driving? (permalink)

I'll Drink to That.
Can you use a person's bar tab to infer his political views?

The Minneapolis Star-Tribune sent Jon Tevlin to the stereotypical native habitat of political reporters--a bar--to check in on the confluence of blogging, booze, and politics. Unfortunately, "With these social groups, the beer flows left and right" doesn't break much ground. Instead, it plays around with stereotypes.

When a group of diehard liberals gathers on Wednesday nights at the 331 Club, they all throw money into a kitty and share pitchers of beer. They talk about social issues, local political races, or if all else fails, football.

Stereotype 1: Liberals are more community minded.

When a group of diehard conservatives gathers at Keegan's on Thursdays, they pay their own tabs. And they drink Guinness or an expensive import. Rather than blather on about politics, they turn their attention to a game of trivia.

Stereotype 2: conservatives are rich and stupid. (Alternately, you might say that they have good taste.)

Sometimes one of the conservatives stops by on liberal night, or vice-versa, and they occasionally gather for a joint party they call "drinking moderately." They are so congenial to each other you are almost waiting for a chorus of "Kum Ba Yah."

Kum Bay Yah is overrated. Yet some people, of all persuasions, could stand to learn to hum a few bars--in, or outside bars.

In an age when politics often shows its fangs on both sides of the fence, dozens of Twin Cities residents with differing opinions seem to have found the great middle ground: Beer.

As long as everyone drinks responsibly, why not?

During recent visits to both camps, even this Star Tribune reporter felt the love. When introduced to Tracy Eberly, the guy who runs a website devoted to skewering my newspaper (www.anti-strib.blogspot.com), this is as rough as it got:

Me: "Let me guess, you drink Scotch, neat."

Eberly: (Laughing). "Yep. Guess I'm a living stereotype. I smoke cigars, too."

Perhaps playing to type, but smoking bans are a concern of conservative bloggers. Then again, one need not light up to see a threat to property rights, freedom of association, and so forth.

It was almost enough to make a hard-boiled reporter tear up. I did refrain from buying him a drink on the company credit card, however.

Is this supposed to be a humor piece? OK, let's have a rimshot.

Blue Night

Drinking Liberally, a nationwide organization that started offering venues for progressives to schmooze in 2004, came to Minneapolis last April. Its motto: "Promoting Democracy one pint at a time."

The idea, says local organizer Robin Marty, is "just for people who think alike to sit and chat about things going on in the world."

Implicit play to type: a nationwide organization is consistent with an approach to government that is often associated with national rather than state-level approaches. (Then again, there's "National Greatness" conservatism as endorsed by The Weekly Standard a few years ago, and endorsed, more or less by George W. Bush).

The gatherings started at Liquor Lyle's, then moved to the 331 Club in Northeast Minneapolis in November. There are about 15 core members, but the number swells to 40 or more for special occasions or when rumors circulate that a political "celebrity" might show; like one did recently when Al Franken was scheduled to appear (he didn't make it).

Many of those involved write blogs that lean left, like Marty's www.dflsenate.com and Mark Gisleson's www.norwegianity.com.

"We run the full lefty spectrum from atheists to Democrats for life," said Marty. "During dry spells [in public policy], we talk about the Vikings a lot. You can always fall back on the Vikings."

I think that should have been "Democrats for Life," as in a pro-life group. Then again, its analogue is not necessarily the local atheist chapter (there are few anyway), but members of, say, NARAL or NOW. Are they in the same room as Democrats for Life? By the way, I've not heard from Democrats for Life in a while.

Marty, who recently "came out" to her conservative parents and admitted she was a liberal, did take one solicited shot at her opposites: "We sometimes joke that the reason they have trivia is because they need something to keep the conversation going," she said.

Oh my, another stereotype: being a liberal is courageous. Perhaps Marty was merely being playful, and I suppose that in some circumstances in which declaring one's liberal leanings is a shock. But not always--say, in Minneapolis.

Red Night

The conservative gathering started more informally. Conservative bloggers including those behind Fraterslibertas.com and Freedomdogs.com started dropping references to their occasional nights out. Fraterslibertas then got Keegan's to sponsor their radio show on WWTC (1280 AM). Word spread, and readers began to drop in.

Two years ago they sponsored a blogger social, formed the Minnesota Organization of Bloggers (MOB) and it spread from there, according to Brian Ward, one of the founders of Fraterslibertas.

The only guiding principle of the evening is "no organization, no rules, no agenda," said Ward. "It's people socializing over beer and competition [trivia]."

Since politics can get overheated, talking about trivia isn't always a bad thing. Besides, it's not as if politics are ignored. Next:

On a recent Thursday, Keegan's was packed and tilting decidedly right. Barry Hickethier wore a T-shirt picturing Che Guevara that read: "Communism killed 100 million people and all I got was this lousy T-shirt."

The political is personal--sometimes, deadly personal, in the case of communism.

David Strom from the Minnesota Taxpayers League schmoozed in one corner with conservative writers from the St. Paul Pioneer Press.

I believe those would be editorial and op-ed writers, not straight-up news writers.

Where else do you go in the Twin Cities if you are conservative?" said Strom. "No one else will talk to you. Here, it's a ready-made peer group."

But Drinking Liberally's Marty was also there -- without gunplay.

Oh cute. See conservative and liberals talk. No gunplay. Haha. Or is this a stab at the state's still fairly new conceal-carry law?

Larry Colson, a regular, acknowledged that "it's easy to be angry sitting in your basement. That's part of the intent of [blogs]; it just flows out."

Face-to-face, however, there is respect, or at least tolerance, for other people's opinions, and recognition there are more important things in life than bickering.

"Me?" said Mark Gisleson of Drinking Liberally. "I'm mostly here for the beer."


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Well, I guess I didn't think too much of the article. Generalizations can be helpful, and they're inevitable. But they can also be tiring, tiresome, and uninteresting. What would make this piece more interesting is a discussion of whether blogging promotes community or polarization along political lines. It suggests the latter, at least if bloggers meet in person, but the topic could have been explored more deeply. Or does the growth of blogging lead to more grass-roots political activity along the lines of lit drops, writing letters to the editor, and so forth.

Then again, this is a feature article, and a fly-by one at that, not a paper for a sociology conference. Then again, that's one conference I may actually enjoy attending. (permalink)

Let's Hear it for George Mason.
Does March Madness have public policy implications? It might, if people learn something about George Mason--the man, not the university.

The Wall Street Journal (link for subscribers) has a profile of the forgotten founding father.

Born in 1725, Mr. Mason was a gentleman farmer from northern Virginia who heavily influenced the Bill of Rights. Though few people realize it, he helped write Virginia's Declaration of Rights and Constitution, both of which served as models for America's Founding Fathers as they began crafting national versions.

"All men are born equally free and independent and have certain inherent natural rights...among which are the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety," Mr. Mason wrote in May 1776. Thomas Jefferson used similar language -- although with a good deal more elegance -- a few months later in the Declaration of Independence.

Mr. Mason was forgotten, historians say, because he committed a major Founding Father faux pas: At a gathering of the Federal Convention of 1787, he refused to sign the Constitution. He worried that the new federal government might be too powerful and believed a Bill of Rights should have been included in the document.

Don McAndrews, a resident of Manassas, Virginia, gets a lot of play in the article as the nation's leading, if not only, George Mason impersonator.

But back to policy: George Mason, the university, has an economics department that includes a Center for Public Choice. Public choice is an analytical approach to economics and politics that does a good job of explaining how public policy gets into the mess that it often is. The department at GMU is also home to some faculty members who blog, including one professor who includes links to recent articles about the department and university that have been spurred by the basketball tournament. The former department head, by the way, does a great job of explaining how the voluntary action of people through markets generally provide better results than the compulsory results brought through by politics.

So thank you, NCAA, for an excuse to introduce the world to George Mason, and "his" university. (permalink)

How Much Does Your State Spend on Education?
Probably more than you think.

From the Milton and Rose D. Friedman Foundation comes this story of education funding in Florida:

A recent poll indicates that Floridians underestimate how much money is spent on K-12 public education. In this poll of 1,200 Floridians, sponsored by the Collins Center for Public Policy, the James Madison Institute and the Milton and Rose D. Friedman Foundation, half (50 percent) of those polled think that Florida spends no more than $4,000 per student on the operating costs of K-12 schools, not including school construction.

The real number? Nearly $7,000, or 6,931 per student. And that was in 2003-04.

No wonder why schools don't get much scrutiny.

Labels: Education

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Maybe it's time to move.
Resort areas offer fantastic recreation for tourists with money, and housing troubles for those who serve them.

In Priced out of Paradise, the Sacramento Bee looks at how the low-wage workers in the Lake Tahoe area cope with soaring property prices. Sometimes it means long distance drives; at other times, it means stuffing multiple generation of a family into a small trailer.

Housing prices have risen throughout California in recent years; around Lake Tahoe they have exploded. In late 1998, the median price for a home in the Tahoe basin was $160,500. By late last year, it was $550,000. For the past several years, dot-com millionaires and retiring baby boomers from the Bay Area and Sacramento, encouraged by low interest rates, have snapped up available homes at unprecedented rates.

Now as the frenzy begins to calm, local workers have been priced out of the market.


There are several possible responses to this situation. One is government regulation, such as rent control, or requiring that a certain percentage of housing be "affordable." Another is for employers to raise wages enough to attract workers. Whether they can stay in business is another question. A third possibility is to diminish the role of labor, whether through technological and mechanical substitutions, or turning more and more business down the self-service route (think of ATMs, gas stations, airline check-in, etc.)

One factor at play: the price elasticity of demand for tourist accommodations. (permalink)

Rent-Control Follies.
Government laws that defy economic sense lead to some interesting human behavior.

One of the most obvious cases of government waging war on economic sense is rent control. Fortunately, it's practiced in only a few places, notably, New York City. The things that people do to maintain their rent-controlled units sound like something out of an episode of Seinfeld, I would guess (never having watched an entire episode).

New York magazine runs a short review of a workshop for landlords that gives a few glimpses of how tenants, and landlords, respond to the law. Eviction Boot Camp is merely anecdotal, but fascinating, and sometimes appalling, all the same. (permalink)

Less Money for Schools? Why Not?
Is spending less money on schools a stupid idea? Not necessarily.

The local teachers union is running a TV ad calling for more money for themselves and their employers. It goes like this:

A stereotypical politician (white man, suit, tie) knocks on the front door of a house. He is in full-campaign mode, dumping his stump speech to any set of ears around. In this case, he offers to spend less money on schools so that "we can have mediocre schools," or something like that. The young girl who answers the door gives him the "Not only are you uncool, but you are soooo stupid" look.

There are so many things that one could say about this ad, but let's keep it to one point: all other things equal, isn't spending less money on something, not more, a good thing? If you can find a product or service that costs less this year than it did the year before, shouldn't you happy?

Work smarter, make do with less, become more efficient--all that stuff that drives economic growth and progress in the private sector, doesn't exist in the world of public education. The goal there, at least according to the union, is not "how can we do so much better this time out that we improve our product while charging the same, or even less," but "How can we be sure to get more?"

You can spend more on schools. You can get more in student performance. But one does not necessarily flow from the other.

Labels: Education

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24 Percent of Families with Minor Children Move.
In a show of how our schooling system serves itself as much as it serves children, the federal government's NCES tells us "the parents of 24 percent of students reported that they moved to their current neighborhood so that their children could attend their current school."

We don't make people who use food stamps move. Those who receive housing vouchers are able to take them to any willing vendor, and tax credits for day care know no geographic restrictions. Yet we continue to tie education from the ages of 5-18 to geographic boundaries, and force disruptions in personal lives as those who can afford to move and want to, and despair in those who would like to but can't afford to.

Labels: Education

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More Teacher Facts
As long as we're on an roll with education today: more public school teachers are likely to have a masters degree than private school teachers: 41 percent to 30 percent, according to the latest numbers available.

Since public school teachers generally get on time-in-service plus number-of-credits scale, it's not surprising that they tend to have more graduate school work. Now how much good that work (often in education schools, one presume) is a question for another day.

Labels: Education

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Pupil-teacher ratio? Down.
From our friends at the NCES: public schools have a higher pupil-teacher ratio than public schools, and public school ratios have been declining for years.

So much for underfunded public schools and pampered private schools.

From the NCES Fast Facts page on teacher staffing:

During the 1970s and early 1980s, public school enrollment decreased, while the number of teachers rose. As a result, the public school pupil/teacher ratio declined from 22.3 in 1970 to 17.9 in 1985. After 1985, the number of pupils per teacher continued downward, reaching 17.2 in 1989. After a period of relative stability during the late 1980s through the mid 1990s, the ratio declined from 17.3 in 1995 to 16.1 in 1999. Small declines have continued since then, and the pupil/teacher ratio was 15.9 in 2002. The estimated pupil/teacher ratio for private schools for 2002 was 16.2. The pupil/teacher ratio includes teachers for disabled students and other special teachers, who generally are excluded from class size calculations. The average class size in 1999Â?2000 was 21.1 pupils for public elementary schools and 23.6 for public secondary schools.

Labels: Education

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Home schooling up 30 percent in 4 Years.
More fun facts from the National Center of Education Statistics: the number of home-schooled students was estimated to be 850,000 in 1999. Just four years later, the number had grown to 1.1 million. That's a growth of nearly 30 percent.

And I remember when I had friends who had to hide the existence of their children from the local school district ...

Labels: Education

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Education Fact: Spending Up. Achievement?
Current expenditure spending for schools in 1961-62: $393. In 2002-03: $8,044.

Put into inflation-adjusted dollars, we're talking about $2,382 for the 1961-62 school year, and $8,044 for 2002-03: a rise of 373 percent.

Did we see a corresponding rise in student performance?

(Source: National Center for Education Statistics)

Labels: Education

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So How Much Do We Spend on Education?
Lies, damned lies, and statistics. And schooling.

One theme of debates over education policy is that schools need more money. And, says one expert on the subject, if you don't like one set of numbers that serve the purpose, find another.

The Center on Budget and Policy Priorities laments that Colorado is 49th in the country in education spending.

Sounds horrible, doesn't it? It's amazing that anyone in that state knows how to read and write.

Except ... the ranking--as the CBPP page points out--calculates states the "percentage of personal income" spent on K-12 education.

The Independence Institute's Benjamin DeGrow provides some perspective with this 16-page report (PDF), Counting the Cash for K-12.

DeGrow starts out with a familiar topic: more money does not necessarily bring better results. "A comprehensive professional analysis by Dr. Eric Hanushek of Stanford University in the 1990s found that only 27 percent of 163 studies 'that conformed to basic social science methods' demonstrated 'a statistically significant relationship between increased per-pupil spending and student performance.' Two-thirds of the studies showed insignificant correlations, and the rest revealed a negative relationship."

Several regression line graphs reinforce the point. Four graphs compares per-pupil spending with NAEP scores. Two more compare increases in per-pupil spending with increases in NAEP scores. What do you see? Not the upward sloping line that would indicate a positive correlation. (If you remember econ 101, think of a supply curve.)

Where the paper really shines, though, is the discussion of the claim that "Colorado ranks 49th in education spending." It points out that the ranking includes not only education outlays, but personal income. If the state's personal income goes up but spending goes up not as much, the state will drop in the national rankings.

Is that a bad thing? Not necessarily. After all, some of the highest ranking states (New Mexico, for example) got there because they are poor, not because they spend a lot on schools. Should Colorado follow the New Mexico model and hope for lower income? Hey, that would put them higher on the list of state rankings when personal income is considered.

Like any government service, taxpayer funding of schools doesn't necessarily to go up just because income does. Given the weak relationship between funding and performance, maybe something else ought to happen--something like increased school choice.

But back to DeGrow. He finds that in 2004 or 2005, at least 10 states were "49th" in education funding. The states are as different as heavily populated, urban Illinois and lightly populated, rural Idaho; and fast-growing Nevada, and slow-growth Pennsylvania.

Clearly, you've got to ask "49th in terms of what," and then ask whether the comparison makes any sense.

Labels: Education, School choice

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Conceal-Carry States Now 45 with Kansas Override.
Catching up to its image as a conservative state, Kansas has enacted a conceal-carry gun law, with the legislature overriding a gubernatorial veto.

This Wichita Eagle article gets the familiar pro/con quotes on the law. It also points out that the expected flood of violence from the law has not materialized. Florida, for example, has had a similar law since 1987. Of 1.1 million permits issued since then, 2,976 have been revoked. That's less than one percent. Less than half a percent. It's 0.27 percent, to be more precise.

While tragedies often serve as the basis of bad laws, in this case, they lead to the enactment of a sensible law:

Rep. Candy Ruff, D-Leavenworth, who promoted the bill in the House, said she immediately made three phone calls after the vote on Thursday.

One to her husband, a Leavenworth police officer who supports the concealed-firearms bill. And the two other calls went to rape victims who had contacted Ruff saying they want to carry guns to feel safer.

"People now have the right to defend themselves if they want to," said Ruff, adding she doesn't plan to get a concealed-gun permit.

"I've never had a desire to carry a concealed gun," she said. "I pushed it because two rape victims in my district asked me to." (permalink)

Charter Schools: Less Money, More Success.
What would you think of a school that gets "at risk" kids to learn more--at a lower cost?

One kind of school that is good at this is the charter school, says the Center for Education Reform. Their 2005 survey of schools came out a while ago. Here's a link to the PDF file (18 pages total).

The press release below gives a glimpse of the report:
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Study Shows Charter Schools Succeeding Where Others Fail
Report details Charter Schools serving more at-risk
and minority students while increasing achievement.


Washington, DC, March 16, 2006 - Charter schools are serving considerably more "at-risk" children and doing so with $2,000 less per pupil than conventional public schools, according to a recent report by the Center for Education Reform (CER). The data refutes claims that conventional public schools serve more minority and at-risk students. The Annual Survey of Charter Schools reveals a migration towards the innovative public schools, which have experienced double-digit annual growth since the mid-to-late 1990’s. Currently, 3,617 charter schools serve over a million students in 40 states and the District of Columbia.

"Year after year this survey shows the depth of education charter schools provide to children most in need," said CER president Jeanne Allen. "They are doing so with fewer resources, longer days and school years, and through the use of more focused curricular approaches, such as college prep, math and science, and core knowledge programs."

With a 60 percent median minority population and a median 63 percent qualifying for free/reduced lunch, the survey shows that charter schools continue to serve students who have been failed by the "one-size-fits-all" educational system. Charter school growth can be attributed to multiple curriculum options, smaller class sizes, and more instructional time, according to the report. Of the schools surveyed, 56 percent reported significant waiting lists, with a median of 50 students on charter school waiting lists.

Charter schools are independent public schools, designed by educators, parents, community leaders, educational entrepreneurs, and others who are interested in providing a quality education to children in their community. Charters operate outside the educational bureaucracy that too often stifles innovation in traditional public schools. As public schools, charters do not charge tuition or select their students.

Since 1997, CER has regularly surveyed charter schools operating in the United States. The information in the report was pulled from surveys of the nation’s charter schools compiled throughout 2005. Click here to download the report.

The Annual Survey of Amerca’s Charter Schools is available in print to the media by contacting Jon Hussey at jon@edreform.com. Print copies are available to the public for $19.95. Click here for ordering information.

# # #

The Center for Education Reform (CER) creates opportunities for and challenges obstacles to better education for America's communities. Founded in 1993, CER combines education policy with grassroots advocacy to foster positive and bold education reforms. For more information, contact CER at (202) 822-9000 or visit www.edreform.com.

Labels: Charter schools, Education

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The Collapse of GM.
The creative destruction of General Motors continues, with news of a dramatic buyout offer to be extended to workers at GM and Delphi.

As you might expect, both the Detroit News and Detroit Free Press are running multiple articles on the recent developments.

What follows is a recap of the stories, with some commentary mixed in. There's not as much commentary as I would like, but here's the quick story: this has been a long-time coming. An oligopoly of employers (GM, Ford, Chrysler) and a monopoly of workers (the UAW) have, over the years, created a business climate that extracted superior returns (wages 69 percent higher than for the average for manufacturing jobs) that could not be sustained. A tax system that favors employer-paid health insurance and defined-benefit pension plans, along with environmental regulations (CAFE) pumped up industry costs. An inflexible labor policy delivered through a union contract lead to the absurdity of the "jobs bank," paying people to not work--and delaying the inevitable contraction of the labor force. Meanwhile, the rise of automotive manufacturing in Japan, Korea, and even Mexico have made the "good old days" of the 1950s unsustainable.

Create destructions, friends. The old regime is being destroyed, the new one is not yet created.


First, the Detroit News.

In Remaking GM: Plan is a bold step to solving Delphi puzzle, Daniel Howes offers praise for the company:

This poster child of automotive ineptitude, if the conventional wisdom is any guide, is doing anything but marking time.

What has the company done right lately? Redo its lineup; sold stakes in foreign companies (presumably to get cash and refocus corporate energy); cut white collar staffing; closed superfluous plants; got the UAW to agree to historic (though modest) concessions on health care, and now, offer a sweeping buyout plan.

Not bad for a bureaucracy derided as congenitally incompetent, unable to change or grasp how quickly the world is moving away from it. These look as much like the actions of a distressed company selling everything that isn't nailed down as they do a stressed company doing what it should have done long ago to fix the business.

He warns that the most dramatic change has yet to occur: a drastic reduction in wages at Delphi, GM's former in-house supplier.

The next [deal] will be bigger, tougher and more wrenching for all sides because they won't be giving away money to go away. They'll be taking money away to stay and do the same work for fewer dollars per hour in a post-bankruptcy Delphi. Big difference.

Automaker's downsizing aims to ensure survival points us to the numbers:

by offering a wide range of retirement and buyout options to its 113,000 hourly workers, GM can now move in earnest toward its goal of cutting 30,000 manufacturing jobs and shutting six assembly plants by 2008.

The plan, which could cost up to $4.6 billion, is a way to reduce costs at GM directly, and indirectly. Directly, by reducing headcount. Indirectly, by freeing up slots that could go to workers at Delphi. GM spun Delphi off a few years ago, but still has some financial obligations as a result.

Delphi showdown threatens gives the backstory alluded to above: it's not just headcount at GM that is the problem, it's the financial situation of its parts supplier. Delphi is in bankruptcy, and wants to cut costs dramatically:

The Troy-based supplier, which filed for bankruptcy in October, contends that the $27-per-hour wages inherited in its 1999 spin-off from GM have put the company at a competitive disadvantage with other U.S. suppliers, where wages are $13-$14 an hour.

Sending some of those jobs back to GM--a possibility in the various agreements to date--would save the company some dough. The GM buyout offer is extended to 13,000 Delphi workers, and 5,000 Delphi workers could "float back" to GM.

Oh yes, be sure to catch the line worker who is holding out for a buyout package of $300,000.

Buyout a mixed deal for UAW looks at the financial and political fallout to the union from industry shrinkage. Active membership is at 600,000, down from a peak of 1.6 million. To borrow an old phrase, what's good for GM is good for the UAW, and union leaders have come to recognize that.

Praise, caution greet deal is a "what do the workers" think piece. It points out that a large buyout could help some laid-off workers regain their status as active workers--though given the huge oversupply of labor, that is a questionable statement.

This article points out that some workers who would retire soon anyway--within 3 years--are going to get a nice bonus:

The chance for workers, on average, to be paid $2,900 a month to stay home and do what they want until they reach the 30-year mark will be attractive to many.

About the offers on the table gives the details:
[The] Special Attrition Program offers $35,000 to anyone who retires with at least 30 years of service.

...

Mutually Satisfactory Retirement : This is for employees at least 50 years old with 10 years or more of credited service.

...
Pre-retirement: A sliding payment scale allows workers with 27, 28 or 29 years of service to retire now and receive a monthly salary (between $2,800 and $2,900) until hitting the 30-year mark, then retiring.

Workers who agree to give up any claim to health care benefits will receive cash payouts. Their pension rights will be unchanged.

10 or more years of service: $140,000
less than 10 years: $70,000

For some workers, this could be a very good deal.


To take the deal or not to take the deal: That is the question is a decent rundown of the choices that workers must face. The offer is very good for those close to retirement. But,

If you can't afford to quit working, you need to decide how much of a risk you're running by staying on the GM/Delphi payroll. If too few of your union brethren and sistren take the incentives to leave, your job could be cut and you'd end up in the jobs bank.

Oh yes, the infamous jobs bank. At least that is due for negotiation when the contract expires next year. Think it will be extended?

The article also points out that some people may have to move to less expensive digs to make the offer work for them. For some, that will be an acceptable choice. Others may take their chances.


Editorial: GM buyouts reduce costs, but more reforms needed says

Give the company credit for offering a generous program to convince workers to leave. ... The United Auto Workers should be grateful for this good-faith gesture by the world's largest automaker. GM and Delphi could have insisted on harsher measures.

The editorial points out that the long-term success of the company depends on adjusting to changes in customer tastes, and changes in the union contract--including, first of all, the jobs bank.


Meanwhile, here's the line up at the Detroit Free Press.

For GM, this is merely a first step, by Tom Walsh, runs with a "take your medicine" approach:

Expensive? Incredibly so. Billions of dollars so far, and the weary GM number crunchers are still counting.

Mind-boggling? Absolutely. Paying an army of healthy workers up to $140,000 apiece to just go away?

Yes, it's expensive, mind-boggling and absolutely necessary if GM, Delphi, the UAW and the rest of Michigan's traditional auto industry are to survive and be relevant.

Susan Tompor, a financial columnist for the paper, says that Choice could be risky:

"The loss of benefits, such as life insurance or health care in retirement, can be huge. Many workers may underestimate how much they're giving up."

True, GM wouldn't offer the deal they didn't think it was a way to save money. Then again, the alternative may be bankruptcy and the voiding of labor contracts. Either way, workers are taking a gamble: will the buy-out sums be good enough to tide them over to another job? Or should they hope that their own jobs will hold out long enough until retirement?

Oh yeah, don't forget that you're going to have to pay taxes on that lump sum--perhaps $40,000. She runs through some of the basics such as return on investment and asking questions about future expenses.

The people with the easiest decision to make may be those near retirement (take the money and run) and younger folks (take the money and retool). It's those with 15-20 years of service who face the most uncertainties. Will the job be there 10 years from now? How difficult will it be to find another job? (Forget getting a job that pays as much).

Worker Reactions: Offers look good takes us through a range of thoughts.

Willie Jenkins, 51, is ready to retire with 30 years of service. He says "This is fantastic. I can't wait to get out!"

Speaking of younger workers who aren't sure what to do, he says "" ... if I were them, I'd take it. Because we just don't know if this place will be here next week, or next year."

No, they certainly don't.

Another worker says "At 55, I'm not ready to retire." Perhaps not--especially with a huge tax bill waiting. Another says "It's hard to give up what you've been doing for a lifetime."

Meet "creative destruction," friends.

Timeline of GM, Delphi's travails offers what you'd expect: when Delphi was spun off from GM, when X number of jobs were eliminated, and so forth.

March 2001: 11,500 jobs.
October 2003: 8,500 jobs.
November 2005: 30,000 jobs.

June 2005: "There is no reason at the present time why Delphi has to seriously consider a bankruptcy." -- Delphi CEO Steve Miller.

October 2005: Delphi files for bankruptcy protection.

Questions and Answers offers a rehash of the details. It points out that the "jobs bank" will still go on. It has to; it's in the contract. If you think about it, buy-outs are also a way of paying people to not work. But they are more rational: they are a recognition that the company can no longer support such a large workforce.

Labels: American automakers, Health care, Pensions

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Public Radio: Taxpayer Money for the Listener in the Lexus.
If you’re concerned about government deficits, the size of government, or both, there are two major approaches: increases tax rates, or cut spending.

Let’s say I want something that costs money. I don’t want to pay for it. I want you to pay for it. I have (at least) two choices.

I can ask you to give me $100 so I can buy whatever it is. Sounds great, but of course you can say no.

All right, then what else can I do? I could get it included in the public budget. Your share of the increased budget is $100. Can you refuse to pay it? Not if you have taxable income, own a house, or buy anything. Oh yes, if you don’t pay taxes you owe, you could end up with some serious penalties, including jail.

I hope you’ll pardon this melodramatic introduction, but it leads to the question: do we really need to spend taxpayer money on public radio?

The March 17 edition of the Wall Street Journal runs an article, “As Sponsorship Sales Blossom, Public Radio Walks a Fine Line.” The story explains how public radio stations and networks are depending less on taxpayer funding and more on corporate funding. (Here’s a link to the article for subscribers)

Is having public radio so important that we would be willing to throw someone in prison for not paying for it? I don’t think so.

Consider, for example, that there is an explosion of information and entertainment out there. Newspapers. Magazines. Cable TV. Satellite radio. The Internet. Public libraries. Digital players such as the iPod. News, information, and entertainment are available in many ways, at low or no cost. Radio stations on the Internet. Podcasts on the Internet. Internet access at public libraries. Computers can be had for under $500, and an Internet connection can be found for as little as $10 a month. Even public access channels.

Now, you may be thinking, this is all well and good, but the poor, well, the poor aren’t served well by all this. After all, they can’t afford computers or iPods.

So is public radio necessary because it primarily benefits the poor? As it turns out, public radio is not exactly the home of people living hand-to-mouth. It serves an upscale audience.

According to the Journal article, the advertising executive of a public radio station in Pasadena, California … excuse me … the director of underwriting at the station … (we must not be so crass as to use the word advertising!) meets prospects with charts showing how her “listeners are more likely to drive a luxury foreign car than other radio fans in Los Angeles.”

I have some personal knowledge that this must be true. No, I don’t live in California, but on occasion I listen to a podcast that is produced by a public radio station there. The podcast (an already-recorded radio program that you can listen to at your leisure) is underwritten by … are you ready for this … “the Lexus dealers of Southern California.”

Nothing says “desperately needs taxpayer money” more than a station that disproportionately serves people who drive luxury cars, does it?

In case you’re wondering, the Pasadena station is not unusual. It’s the entire network that skews high-end. “NPR says its listeners have an annual median household income of $69,025, about $18,000 higher than the population as a whole. They also tend to travel, dine out, and own financial securities.”

So we have taxpayer money going to fund a service, for which there are plenty of alternatives that don’t require taxpayer money, to benefit a disproportionately wealthy audience.

One word: Why?

Pulling the plug on taxpayer funding won’t kill public radio. (And if it does, so what?) Public radio now gets one dollar out of 10 (actually, 11 percent) from the federal government. In 1980, it was one dollar in three. Over the last two decades, public radio stations—and here’s the point of the article—are becoming increasingly sophisticated in their use of adver … excuse me, sponsorships. It’s time to complete the evolution.

Some people complain about tax cuts, saying that they are “for the rich.” If doing anything that benefits “the rich” is your concern, how about cutting off the Lexus-driving listeners of public radio? (permalink)

Policy Geeks Speak Mp3.
The Independence Institute not only puts out some good papers on policy issues; now, they offer mp3 commentaries and interviews as well.

Check out ivoices.org, where you can get short interviews on a number of policy issues, including education, fiscal policy, and transportation. (permalink)

Social Programs Slashed? Not Quite.
USA Today has done a review of federal social spending, and finds that the time period of 2000 through 2005 has seen "the largest five-year expansion of the federal safety net since the Great Society created programs such as Medicare and Medicaid in the 1960s."

Why, how, and whether this is good are all questions for another time. But it certainly shows that social spending has not suffered under a nominally conservative government in Washington.

Meanwhile, states will need to find ways to impose some fiscal discipline on Medicaid. (Medicare is a national government program; Medicaid is actually 54 different programs run by the states. Washington DC kicks in some money and sets a floor upon which states can and do add more benefits and enrollees.)

Labels: Medicaid

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Unwrap Those Bundles: $15 for an Aisle Seat

Ever hear someone complain about cable TV service: "I ought to be able to pick which channels I want to watch, and pay only for those?" It's called a la carte pricing.

It looks like a la carte pricing is coming to airline service, with Northwest announcing that if you want an exit row seat, you will have to pay more. My only objection: you can pay your "premium" fee only 36 or 24 hours before the flight, depending on how many miles you have flown with the company. They ought to make it simpler by letting customers select and pay for the seats further in advance.

Of course, the days of "free" magazines, movies, and even meals are past, and some industry observers expect that travelers will have to fork over a buck for a can of Coca-Cola.

I can hear the cries of indignation already. Yet the moves by Northwest and other airlines make sense. After all, the primary service that you're paying for with an airline ticket is to be transported from point A to point B. Anything related to safety ought to be included in the price, so no "for another $10, you'll get an oxygen mask." But creature comforts? Why not an extra charge for people who want them? I can certainly bring my own beverage on the plane, and often do. The same for food.

Consumers want cheap tickets above all else, and people who don't care for the extra little things are subsidizing those who do. (I'd gladly give up that soggy, white bread sandwich if it saves me $3 on airfare--or keeps the airline in business.)

Some people think that airlines will start adding a per-bag fee as well. I can do that one better: charge people for all carry-on bags instead, and make checked baggage free. It might make sense for the airlines--quick turnaround times is a key to the success of Southwest, and baggage workers can probably get the goods out of checked baggage faster than customers can get carry-on items out.

If this whole discussion strikes you as beyond the pale, consider this: how would you like to have to buy, for a single price, a movie ticket and a bucket of popcorn and pop next time you head to the big screen? (permalink)

What's Wrong With Detroit?
Another chapter in the question "What's wrong with Detroit?" comes to us from the city's new mayor. Detroit News blogmate (and editorial cartoonist) Henry Payne comments. (permalink)

Competition is the Key to Good Education: 20/20 Special.
The benefits of competition and choice in education, in 40 minutes, brought to you by John Stossel and 20/20: watch it here.

(Thanks to Marketpowerblog) (permalink)

The Problem with the Minimum Wage.
Detroit News blogmate Henry Payne is also an editorial cartoonist. Click the above link for an illustration of the effects of raising the minimum wage. (permalink)

State Services at AAA? Why Not?
Would you like a driver's license with that auto insurance?

The Kansas Department of Revenue has been conducting a pilot project under which the Lawrence office of AAA issues driver's licenses.

Says the Topeka Capital-Journal,

Carmen Alldritt, director of the motor vehicles division within the revenue department, told senators the association with AAA in Lawrence saved the state money -- about $235,000 -- while improving service to people seeking a license.

[snip]

James Hanni, AAA executive vice president for the Kansas region, said the center in Lawrence had processed 2,044 license renewals. One-fourth occurred on Mondays and Saturdays when state motor vehicle offices are closed, he said.

Cost savings? Greater convenience? Wonderful! But there's got to be a catch, right?

Yes.

Both the Department of Insurance and other insurance companies oppose the deal.

Bad idea? Not necessarily. Like any contract, it depends on how the deal is structured. We aren't told this information by the news account, but here are some questions that might be asked:

• Is there in fact a contract between the state and AAA?
  
• Was it put up for competitive bidding?
  
• How long is the contract for?
  
• Does the contract offer appropriate incentives for cost savings and excellent service?
  
• Does the contract call for appropriate evaluation measures?

The state has long ago established an interest in licensing drivers. But that in itself does not require that the state actually be the agency to do that work. Objections to the deal--and we say this without knowing the particulars, which could make a big difference--seem to stem not from the defense of some lofty constitutional principle, but from self-interested, self-protective behavior on the part of other insurance companies as well as the insurance department of the state. (permalink)

Left By the Side of the Road.
What does the parable of the Good Samaritan have to tell us about education? Plenty, says the group Clergy for Educational Options Options.

Here's a story from Richard L. Davis, the group's leader:

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When I first got involved with School choice, I was introduced to the concept of Social Justice in the arena of education by Dr. W. Raymond Bryant, Pastor of Greater AME Worship Center of Austin, Texas. He had us to look at the story found in Luke 10:25-37.

It is a very familiar story but Dr. Bryant had us to look at it in a new and very different way. Let’s look through his eyes, at the implication of this text as it relates to the household of faith, and more specifically Pastors leading congregations. First, we see the person who is beat up robbed and left on the side of the road. This paints a very vivid picture of what is happening to our children, who go to school day after day and are being beat up and robbed of a quality education. In fact, they are being beaten so bad that they are being left along life’s highway and if we are honest about it, the corrections departments are picking up more of them than our churches. We have a real disaster on our hands and it is time for us to step up to the plate and do something.

Many of our churches have realized this travesty and have started programs that tutor and help a few kids along the way. And some churches have gone even further and started schools, which is no small undertaking. CEO applauds all of you who are attempting to stand in the gap and walk in the spirit of the Good Samaritan. You are picking up the beat up and robbed and trying to nurse them back to health.

But during that discussion Dr. Bryant threw us a curve ball. He stated that “While we are doing so much with tutoring and with starting a few schools here and there, we have not addressed the issues of social justice for our children. I know you are saying “wait a minute... I’m doing all I can!” Well, maybe, and maybe not.”

As we investigated the text he showed us something the text did not address: “There is one major issue that Luke does not address in the parable, and it is that nothing was done about the robbers.” As you study the text you will notice the victimized man was taken to the inn and provided for, but nothing was done about the robbers out on the road. They are still out there beating up others and robbing them. "And they are left for dead as well." And if no one comes along to help them, they will die on the side of the road.

We were challenge by being confronted with issue of doing something about the robbers on the road. The question for us today is what do we do? We can either build a new road trying to avoid them, or place protection all along the current road. We have some decisions to make about how we are going to protect out children from the robbers. It is no longer enough to pick them up after they are beat up and left for dead. We definitely need to be proactive and do something before we get to that point, such as:

• Education and empower black parents about "Choice" in education.
  
• Empower them with new ways to communicate to Teachers.
  
• Show them how to help their children be successful in school and life.
  
• Educate your congregations so they can educate parents they touch.
  
• Help build coalitions with like-minded individuals.
  

The challenge we face is how to provide social justice in education. It may be different in different places, but we have a serious challenge and it is time for us to rise and meet it! The focus of our time together is to meet this challenge! God bless each of you, Parent, Pastor, Teacher, Community Leader, and Concerned Citizen, as we undertake this task.
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Now, the Good Samaritan parable has been used to justify any manner of bureaucratic, institutional-focused social welfare programs that have fallen short of the promise. But in this case, the emphasis is not on creating new institutions as much as it is helping families use existing, private and public institutions.

Labels: Education, School choice

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Taxpayers Bill of Rights in Maine.
The Taxpayers Bill of Rights is being proposed in Maine. As you'd might expect from the state with the highest tax burden, there's some opposition. This AP wire story explains. In short, opponents warn of impending doom.

A ballot petition for the fall has been certified, meaning that the proposal will be on the ballot in November.

In this story, meanwhile, an opponent says that TABOR is bad because the rate of inflation for government services is higher than that of consumer goods in general.

That government services increase in cost higher than the rate of the general economy cannot be denied. But perhaps the reason that these services are purchased by government is part of the reason why. (permalink)

Are Bigger School Districts Better?
If buying in bulk at Sam's Club is smart shopping, is consolidating school districts smart governance?

The Texas Public Policy Foundation looks at the question in a short report (PDF) School District Consolidation and Public School Efficiency.

Between 1930 and 1980, author Chris Patterson says, the number of districts in the country dropped from 120,000 to 15,000. The number of schools dropped from 225,000 to 100,000 during that time as well. (Yet costs soared, and achievement, to put it kindly, did not.)

The number of school administrators increased 500 percent, reflecting an increased professionalization of overhead, but hardly the increased efficiency promised by consolidation.

Patterson says that research suggests an optimal district size of 6,000, and school size of 400-600 students. This suggests that there is a point of diminishing returns in consolidation. Consolidation of rural districts doesn't save much, since these districts must necessarily (under the current model of schooling) spend a proportionately larger share of funds on transportation. A consolidation that sends kids to a school 30 miles away instead of only 15 miles away is hardly the way to reduce transportation costs.

Labels: Education

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If There are No Papers, Is it an Archive?
Keep your eyes out for a new source of papers on education reform: the Education Working Paper Archive. The archive has been announced, but as of today, there are no papers in it.

The EWPA is housed at the University of Arkansas, whose new Department of Education Reform is headed by Dr. Jay P. Greene, author of many papers on school choice and competition, as well as the recently published book Education Myths.

Here's a description of the archive:
All articles published by Education Working Paper Archive are subject to a double-blind peer review process to ensure quality. All submitted articles that meet editorial standards for quality and relevance to EWPA’s mission are sent to referees for review.

A paper must meet three criteria in order to be considered for publication by EWPA:

1. Empirical work. EWPA is a forum for empirical research on education policy. While qualitative research and general literature reviews are important to the field of education policy, they are not within the scope of EWPA’s mission.

2. Relevance. The paper must speak to an ongoing public education policy debate. EWPA seeks to be relevant to policymakers and the public by focusing on issues that are of immediate interest or by introducing new issues that should be considered in the policy discussion. Papers that discuss purely technical research problems in public policy are unlikely to be relevant to EWPA’s mission.

3. Professional standards. The paper must meet professional research standards. This standard is ensured by a) the Research Editor’s initial review of the paper and b) the peer review process.

Though papers appearing in EWPA go through a peer review process and are posted by EWPA, they are considered to be working papers in progress. Therefore, authors may feel free to submit their article to other journals while the paper is being considered by EWPA and also after it has appeared on the Archive website.


What's the new department about?
The Department of Education Reform (EDRE / DER) is the newest department in the College of Education and Health Professions at the University of Arkansas, established on July 1, 2005. The creation of the Department of Education Reform was made possible through a $10,000,000 private gift and an additional $10,000,000 from the University’s Matching Gift Program. This gift is one of the largest ever received by a college of education in the country. With these resources the department has six endowed professorships, ten doctoral fellowships, and funds for research and projects.

The mission of the Department of Education Reform is to advance education and economic development in Arkansas and nationwide by focusing on the improvement of K-12 schools. The Department of Education Reform is committed to producing and disseminating high-quality research that will inform policymakers, scholars, parents, teachers, administrators and the general public about policies and practices that could improve the performance of schools in Arkansas and nationwide. By gathering a critical mass of leading researchers focused on education reform, the Department of Education Reform will be uniquely positioned to have a meaningful impact on education policy research and the quality of schools.

Labels: Education, School choice

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Something is Very Wrong Here ...
Children abandoned to the state they get institutional care?

From the Wichita Eagle:

Cutoff puts paying for high-needs kids on state
BY STEVE PAINTER
Eagle Topeka bureau

TOPEKA - Four years ago, Terry and Boyd Perry made one of the toughest decisions parents can make.

Unable to afford the care their autistic son, Eric, needed, they gave up custody to the state so that Medicaid -- a federal and state program that provides health care for low-income residents -- would cover his treatment.

The article then describes a federal-versus-state debate over which set of taxpayers will pay. Right now, the federal Centers for Medicare and Medicaid Services pays a residential facility $121.50 per patient per day. The boy's parents "pay [the state] $600 a month in child support to help cover his expenses."

Labels: Medicaid

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Pennsylvania's Pension Problems Could Be Yours.
Both corporate officials (see: GM, airlines, etc.) and public officials have made pension promises that they can't keep. Here's the latest example of problems with a public plan, from the Keystone state. (The text comes in an e-mail from the Commonwealth Foundation. Emphasis added. In short, it looks like long-term improvements can be made, but short-term pain is unavoidable. The only question is whose ox will be gored.)

Getting Out of the Pension Dilemma
Richard C. Dreyfuss
03.08.06

Pennsylvania’s public employee pension plans are facing a looming financial crisis. Regardless of how one looks at the current situation, our policymakers must confront a serious dilemma.

Taxpayer costs to fund the State Employees Retirement System (SERS) and the Public School Employees Retirement System (PSERS) are expected to increase in six years from about $1 Billion next year to close to $4.2 Billion in 2012 – and that’s only if the actuarial value of assets earns 8.5% annually. Returns that are more favorable, of course, would decrease future costs just as the reverse holds true.

So what can policymakers do to avert this coming financial crisis – other than hope for superior financial performance to continue into the foreseeable future?

The first step is to remind our state policymakers (those who designed these taxpayer-funded pension plans) to go back to the basics of Pension 101. There are only three ways to grow assets: 1) Increase employee contributions, 2) Increase taxpayer contributions, or 3) Increase investment earnings. Significant increases in any of these inputs could solve the looming pension crisis.

The first option lawmakers could consider is to increase employee contributions, as well as prohibit employees from withdrawing all of their accumulated contributions from the plans at retirement (which virtually everyone does). Employee contributions are reasonably significant, relative to the total pension plan assets, and every little bit would help.

However, according to PSERS Board Member and State Rep. Steve Nickol, the pension problem in Pennsylvania cannot be averted by raising employee contributions, or by reducing pension benefits, because courts have ruled both of those measures illegal.

The second option is to increase taxpayer contributions significantly. This tends to be the universal solution to many problems within government – and it is the likely solution to the coming crisis if nothing is done to avert it. In fact, even as property tax reform bills bounce around the Capitol, many lawmakers are working to ensure that pension costs are excluded from any taxpayer control. Doing so would allow unlimited property tax increases to pay for these pension liabilities.

Another related alternative is to start increasing the taxpayer contributions now so that the sticker shock of the taxpayer contribution amount in 2012 is muted. This seems to be the preferred approach of many in state government. In other words, start paying more now instead of waiting until later. Of course, this only spreads out the pain, it doesn’t relieve it.

The third option is to increase investment earnings. It’s simple: Harrisburg passes a law mandating the PSERS and SERS must earn at least 20 percent return on investment per year, every year. This, of course, is nonsense.

What, then, should state government do when all three options are unreasonable, impractical, or prohibited?

Gov. Rendell’s budget secretary, Michael Masch, proposed a fourth way; one that actually has some promise. He said he supports caps on employer (taxpayer) contributions that would prevent the state and school districts from paying exorbitant amounts toward pensions. This would keep the state’s pension promises to employees, but also start to protect the taxpayers from skyrocketing taxes.

Additionally, Masch said he would require taxpayers to continue contributing at constant rates even when PSERS and SERS’s assets performed well. Not necessarily a bad thing. But where would that leave us? Actually, it would do exactly what nearly every major corporation in America is starting do – move toward a “defined contribution” retirement plan where employer (taxpayer) costs are capped and predictable.

Unfortunately, this doesn’t solve the looming crisis, but it would certainly put Pennsylvania on the path toward good financial health. Now all Mr. Masch has to do is sell the solution to his boss.

# # #
Richard C. Dreyfuss is a Senior Fellow with the Commonwealth Foundation (www.CommonwealthFoundation.org), a public policy research and educational institute located at the foot of the Capitol in Harrisburg. For more information on this topic, see Dreyfuss's policy report Beneath the Surface: Pennsylvania's Looming Pension & Healthcare Benefits Crisis.


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Earlier, Commonwealth Foundation president Matthew Brouillette explained how the state got into this mess:

Pennsylvania Pensions: Man-Made Financial Disasters
Matthew J. Brouillette
03.07.06


The “Process Improvement Theory” relates to the timing in a process when errors are diagnosed and fixed. As the theory goes, at each ensuing interval in which a problem is not detected the potential damage increases exponentially.

The current design of Pennsylvania’s taxpayer-funded pension is a case study of what happens when problems are either not detected or detected and not addressed. The result: Man-made financial disasters.

Unfortunately, these disasters are not limited to state government in Harrisburg, but also extend to the pension plans sponsored by county and municipal governments across Pennsylvania.

The financial calamity facing taxpayers is not in the administration of Pennsylvania’s Public School Employees Retirement System (PSERS) and the State Employees Retirement System (SERS) plan, but the result of failing to correct plan design decisions that occurred almost on an annual basis beginning in 2001 with the passage of Act 9.

Following favorable investment returns in the 1990s, the costs to taxpayers to fund retirement benefits were lowered significantly. But rather than maintaining these low costs to taxpayers, policymakers decided to increase pension benefits for employees by essentially tapping the surplus.

Act 9 of 2001, part of a political tradeoff with the Pennsylvania State Education Association (PSEA) by then-Governor Ridge, dramatically increased both pension benefits. The plan was to draw down the surplus over 10 years and cover the Act 9 costs over that same period. Later that year, the financial downturn following the terrorist attacks of September 11th negatively affected the asset returns of both PSERS and SERS.

In 2002, Act 38 increased benefits for retirees who were left out of the 2001 pension enhancements. However, another poor year of investment returns further increased the pensions’ unfunded liabilities.

To be clear, the investment losses were likely as significant as the Act 9 and Act 38 changes. The surpluses were such that the plans were financially positioned to cover either the benefit improvements or significant investment losses such as those incurred – but not both.

Therefore, with the economic downturn, the plan to use the surplus to pay for the additional costs of Act 9 and 38 was no longer feasible. In response, Governor Rendell signed Act 40 of 2003, which among other changes effectively refinanced the additional liabilities incurred from Act 9 from 10 years to 30 years.

With this financial engineering, the expected taxpayer contributions were projected to be lower in the near term then rise and spike in the year 2012-13. The strategy was that the economy of Pennsylvania would be so robust in the years leading up to 2012 that this action would prove more affordable to the taxpayers.

While the projected 2012 pension costs have diminished from the original 2003 projections due principally to asset returns, the expected taxpayer contributions will nonetheless jump from $1.376 billion in 2011-12 to $4.176 billion in 2012-13, according to PSERS and SERS latest estimates projections. As such, it remains a looming fiscal crisis.

In 2004, a Joint State Government Commission report on PSERS and SERS recognized this looming financial crisis. However, the report noted that while full funding – or having current assets meet liabilities – “may be a necessary standard for a private plan … it is not necessary for a public plan because a public entity can assume perpetual life” [emphasis added]. This operating premise, although astonishing, is nevertheless clearly reflected in the plan funding of both PSERS and SERS.

Although assets returns by PSERS and SERS have exceeded expectations in recent years, the taxpayers’ contribution continues to escalate. PSERS alone expects an increase of over $200 million, with the state paying more than its traditional share. Apparently, the taxpayer can now pay at the state level what they presumably could not afford at the school district level.

PSERS costs are currently projected to increase by another $100 million in 2007. Unless the state continues to assume these added pension costs in future years, property tax increases school districts to fund these liabilities will be inevitable.

To make fiscal matters worse, two PSEA labor union-backed bills in the House of Representatives (HB 2268 and HB 2339) would further increase the costs of pensions to taxpayers by providing current beneficiaries another cost of living enhancement.

As policymakers prepare to return to Harrisburg to address pressing issues, it is time they pay attention to the “Process Improvement Theory” and attend to problems in the pension systems. Although there is plenty of blame to go around for past mistakes, proposed actions by Governor Rendell and the public school lobby will only assure that Pennsylvania’s man-made financial disasters will continue in perpetuity.

# # #
Matthew J. Brouillette is president & CEO of the Commonwealth Foundation (www.CommonwealthFoundation.org), a public policy research and educational institute located at the foot of the Capitol in Harrisburg. For more information on this topic, see the Commonwealth Foundation's policy report Beneath the Surface: Pennsylvania's Looming Pension & Healthcare Benefits Crisis by Senior Fellow Rick Dreyfuss.

Labels: Education, Public employee pensions

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expensive, Worthless Early Childhood Initiative in California.
Rob Reiner is touting a plan for universal preschool for 4-year olds in California. Lance Izumi counters that there are cheaper alternatives to the $2.4 billion per year plan.

Further, it's not clear that universal programs do much good: "a recent UC-Santa Barbara study found that the positive effects of preschool fade away by the middle of elementary school, and even RAND admits that there is no long-term evidence that preschool has any benefits for middle- and upper-income children."

Labels: Education

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Does Higher Teacher Pay Bring Better Student Achievement?
Pay teachers more and you get better education. Right? Not right now.

Pay for performance is a great idea. We ought to find ways to find out which teachers do a better job than others in boosting student achievement, and reward them accordingly.

Unfortunately, that's pretty much out of the question today, in which pay is determined on the union scale: time in service. Oh, add in the number of college credits too--as if "taking classes," rather than "teaching classes," is what being a teacher is about.

Since individual salaries are not based on student performance, it's no wonder that "high paying states" and "high achieving states" are not strongly correlated.

Back in 2001, Eric A. Hanushek looked at scores on the National Assessment of Educational Progress (NAEP) and inputs such as teacher salaries. He writes that there have been ...

... more than 400 studies that have searched for a connection between spending and achievement in particular schools, districts, and, occasionally, states. In general, these studies have been unable to detect any consistent, positive relationship between increased resources and student learning.

E. Frank Stephenson revisited the question recently, when Diane Ravitch and Chester E. Finn, Jr. wrote about the discrepancy between state scores on the NAEP (a national assessment) and state tests.

After digging out some data on NAEP scores and teacher pay, he came to this conclusion:

I was curious about a simple question: Is there any correlation between teacher pay and student performance on the NAEP? There sure is--it's negative. Specifically, the correlations between real teacher pay and student performance on the math and reading NAEP for fourth and eighth grades ranges from -0.226 to -0.30.

In other words, states that pay teachers more score worse on the assessment called "the nation's report card."

I'm not sure what this means, but it certainly doesn't support the idea that higher teacher pay is in itself brings higher performance.

(Thanks to SCSU Scholars for the tip.) (permalink)

My Obligatory Post on Kirby Puckett.
Not being much of a baseball fan, I don't have a store of fond memories of the late Kirby Puckett to draw upon.

But a lot of my friends in the Minnesota Organization of Blogs have made comments about the former member of the Minnesota Twins baseball club, so here's my contribution:

Puckett died at the age of 45. That's long by the standards of human history, and indeed of much of today's planet as well. Thank indoor plumbing, medical advances, and wealth-and-health generating capitalism for the fact that 45 is considered a short life today.

Since 45 is a short life by what we have come to expect, this might be a time for sober reflection. Even 90 years is, in the scope of things, not that long. So live well. (permalink)

Power to the People? Another Third Party for Health Care.
Consumer-directed health care, meet HR outsourcing.

Many employers have long since outsourced mundane tasks such as running employee cafeterias, if they ever had one. They are also taking steps away from the role of health care supervisor. That's a good thing: "if my wife is an alcoholic and my daughter wants an abortion, my employer is the last person I would want to know."

So we're seeing the development of consumer-driven health care, in which employers are more likely to give employees a chunk of money and say "there you go, find your own way through the health care market." (Of course this is grossly simplified, but let's keep things short.)

The health care market, of course, is horribly complicated and unlike almost every market out there. An article in Fortune magazine clues us into A New Guide to the Medical Maze. Companies such as Health Advocate, Care Counsel, and Patient Care, which as a Milwaukee Journal-Sentinel profile mentions, "is hired by companies to serve as a patient advocate for employees on health insurance issues." They charge employers up to $4 a month per employee--peanuts, compared with the costs of premiums. The upside to employers? HR staff can distance themselves from employee-insurer disputes.

Good first step. Since these companies are often hired by employers, the financial incentives still favor the employer. Still, the development of companies such as Health Advocate, Care Counsel, and Patient Care is a good move away from the HMO model, with all of its conflicts-of-interest.

While these companies can be compatible with employer-paid and selected health insurance plans, the health care advocacy companies could be useful in a system of consumer-driven health care, which requires greater patient involvement. The advocacy companies can serve as a Consumers Report, a law firm, or both, for consumers.

Labels: Health care

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Before We Kill All the Lawyers.
Sonnenschein Nath & Rosenthal decided that one way to celebrate its 100th anniversary as a law firm was to open a charter school in Chicago's North Lawndale Neighborhood.

They need for something new is obvious: 46 percent of students in the public schools in the area drop out. (Actually, that's the official rate; the real number could be higher.) The firm will donate $1 million, professional talent and office equipment over 5 years.

The school is in its first year, so we don't know how well this experiment will turn out. They've made it this far past bureaucratic obstacles, including the objections of the local alderman (if you're not from Chicago, trust me: this can be a big deal). There was also a little matter of right hand-left hand coordination of programs:

Stone and Kenner originally wanted Legacy to hold full-day pre-K classes, a curriculum that can be funded in Illinois by one federal (Head Start) and two state government programs. Stone worked for months trying to reconcile the different requirements each program had for families as well as the school, before throwing his hands up and deciding instead to offer two half-day pre-K classes.

When a law firm can't cut through the red tape .... Read more at Forbes.com (registration may be required.)

Labels: Charter schools, Education

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Look for the Union Label in the Classroom?
Is the NEA going to become part of the AFL-CIO? Americans for Tax Reform tells us that the process is underway.

As the American workforce's unionization rate continues to fall, the AFL-CIO and the National Education Association (NEA) announced a partnership last week that fo