Thursday, June 30, 2011

Trying to find the missing six percent Minnesota budget increase

 Republican ads on television keep claiming that the Republican legislative budget proposes a six percent increase, which "is enough" according to the ads.   Democrats deny absolutely that there is a six percent increase.    The six percent increase claim has really bothered me, because supposedly K-12 education is being protected in the legislative budget, and it looks to me like in education, we are getting cut.   Where could the six percent be going, if not to Education.  So, every time I hear the six percent claim, it seems like it just can't be true.

Listen, the spending and revenue issue can be argued a number of ways.   But its pretty hard to think clearly about it, if we don't even know whether we are increasing spending or keeping it the same.   A six percent increase is a pretty big increase, if there really is one.Its really hard work to trace down the real numbers, because in a political war, truth is the first casualty.   Here is the best information I can find. If somebody out there has better numbers than mine, I should would appreciate hearing from you.

What was last year's budget?  
Last year's budget was $34.5 billion.  Not $30 billion as some Republicans are claiming.   If last year's budget really was $30 billion, a six percent increase, would bring it to about $32 billion.  If, it was 34.5 billion, then a six percent increase would bring it to about $36.5 billion.   But never mind the six percent:  its a fiction of somebody's advertising agency.

Why are Republicans claiming that last year's budget was $30 billion?   Because the Pawlenty budget last year was funded with some tricks that allowed him to spend $34.5 billion, but "balance" the budget with only $30 billion in revenues.  The Pawlenty Budget was partially funded by $2.3 billion in federal stimulus money.   Without the Stimulus money, (and the K-12 shift) the Governor would have had to implement $2.3 billion in cuts, or $2.3 billion in tax increases.   By taking the stimulus money, the Governor was able to keep on spending while keeping his no new taxes pledge.  He kicked the can down to the next year, which is this year.

Ok, I get that, but 30 billion plus 2.3 billion is only 32.3 billion.  I thought you said that last year's budget was 34.5 billion?!    The rest of the difference was made up by a $1.89 billion K-12 aid shift.   The State shorted school districts in the 2010-2011 fiscal year, deciding to pay the last $1.89 billion out of this years revenues.  That allowed the State to authorize school districts to spend a billion - eight more last year than the state had in revenues, sort of a constitutional evasion of the balanced budget requirement.  The result is that the Pawlenty budget of 2010-2011 called for more than 4 billion in spending than revenues.   The Governor and legislature was running the State at a bigtime deficit, but they papered it over with shifts and stimulus money.

So is the budget 6% higher or not.  Who is right?  The Republican budget is NOT six percent higher than last year's budget.  It's just not.   The problem is that this is a year of reckoning.  Merely keeping the budget flat, required the governor and legislature to come up with 4 billion in revenues.   Dayton and the legislature agreed to cover some of the shortfall by pulling another aid shift.  They decided to kick school aid shift down the road another year.  But they still had to deal with the fact that the one-time stimulus money is gone.  

So, are you saying that the real problem is how to confront the loss of $2.3 billion in stimulus?  Well,  there are parts of the budget that are going up because of inflation, so its higher than that.    Part of the shortfall is made up because we are taking in more revenue this year, than last, because of a partial recovery from the Bush recession.   The Republicans wanted us to make up the rest of the difference entirely with cuts.  The Governor wants to make up the difference with a combination of cuts and tax increases on top earners.  The issue isn't whether we are going to increase the budget by six percent, the issue whether to slash the spending in the Pawlenty budget that was accomplished with stimulus and school aid shifts.

So,  the 6 percent we hear about on television is a fiction, or a wee bit of a prevarication......  It would be more accurate to say that the Obama stimulus package and the aid shift allowed Pawlenty to keep on spending without raising revenues, and that left us with a question of whether to cut the budget big time or raise some revenues to avoid those major cuts.

Tuesday, June 28, 2011

America Needs More College Graduates....and a sermon in economics

Do we really need more college graduates?    Is college going overrated?  In my last post, I wrote about our work with the Minnesota College Access Network,  which is promoting efforts to increase dramatically the number of students who go to college.  Their idea is that K-12 education should inculcate a "college going culture."   Historically, we have created college-going opportunity -- that says that we provide opportunities for young people who choose to take advantage of it.   The College going culture idea says, let's run our school as though college (or other post secondary education) is the first choice for everyone:  "going to college is what we do here", we say in a college going culture.

Now as we promote this idea, more kids by far going to college, there has been a counter argument that suggests that college is over-rated, that we are pushing too many kids to go to college.   Now a new report, Under-Educated American by  Anthony P. Carnevale and Stephen J. Rose and the Georgetown University Center on Education and the Workforce, argues that actually we are in grave danger of producing way too few college graduates.     These labor economists argue that
  • The United States has been under producing college-going workers since 1980. Supply has failed to keep pace with growing demand, and as a result, income inequality has grown
  • If we continue to under produce college educated workers, the large and growing gap between the earnings of Americans of different educational attainment will
    grow even wider.  
  • The wage premium (for college degrees) currently stands at 74 percent, a historically high rate that implies the economy would benefit substantially from additional workers with a Bachelor’s degree.
They argue, based on persuasive data, that the income gap between college graduates and persons without college degrees is rising to historic proportions.   That wage gap, they explain is a symptom that there is a relative oversupply of non-college graduates as compared to college graduates.  The law of supply and demand says just that:  wages are rising for one, because there is an under supply as compared to the other.  They write:
Our analysis of wage and employment data shows that the United States has been under producing college-educated workers for decades. Post secondary education is in high demand among employers—and as the recovery takes hold and hiring resumes, it will continue to be in high demand. The under supply of post secondary-educated workers has led to two distinct problems: a problem of efficiency and a problem of equity. Without enough talent to meet demand, we are losing out on the productivity that more post secondary-educated workers contribute to our economy. Moreover, scarcity has driven up the cost of post secondary talent precipitously, exacerbating inequality.
See also an article in the New York Times:  Even for Cashiers, College Pays Off  As the Times reports:

Using an economic growth model pioneered by noted labor economists, the study finds that if we are to make up for lost ground in post secondary attainment and respond to future economic requirements, we will need to add an additional 20 million post secondary-educated workers to the economy by 2025. This includes 15 million new Bachelor’s degree holders, 4 million workers with non-degree post secondary credentials, and 1 million Associate’s degree holders. In the new report, The Undereducated American, the Center demonstrates that adding these workers will boost GDP by $500 billion, add over $100 billion in additional tax revenues, and stop and begin to reverse the growth of income inequality. Many of these additional graduates could come from the half a million students per year who graduate in the top half of their high school class but do not go on to college.
Now, I want to pause to point out that we must distinguish a separate economic issue -- the question whether the cost of a college education is appropriate to the reward.   There are many who argue that the cost of college education is rising too fast in comparison to the return on a college degree.   The issue that is discussed in the "Undereducated American" is somewhat different.  The authors are claiming that there is an under supply of college graduates, that this under supply is growing more serious and that under supply is destined to increase the wage gap between college graduates between college grads and others:
The relative wages of college-educated workers have been rising much faster than the wages of people with a high school diploma. The laws of supply and demand are the best single indicator of whether the United States is producing enough, too few, or too many college graduates.  
We need to be far more proactive in assuring that more students enter college and graduate successfully:
A clear trend has emerged: The United States is losing ground in post secondary education relative to our competitors. President Obama and other leaders are rightly alarmed at our current position and have called on the nation to redouble its post secondary education efforts to regain a competitive edge. The significance of these rankings goes beyond mere bragging rights— increasing our supply of skilled labor is central to the vitality of the U.S. economy. It is no coincidence that the expansion of American higher education occurred as the nation was enjoying economic growth and global economic domination. Education was a primary driver of that growth.
What must we do.  The report argues that : "Any strategy to increase the number of college graduates must be based on improving the quality of graduating high school seniors; otherwise, we cannot produce the additional college graduates needed to meet the desired goal."  the cost of highly qualified teachers is going to rise as well.   Why?  Not because of unions or incompetent school board members, but because there is an under supply of well educated people, and that under supply is is going to increase the price of educators.  

Now I promised a bit of an economics sermonette and here it comes.    We can't produce significantly more college graduates...we can't produce significantly more college-ready high school graduates, without more resources and a more accountability too :  If we want to increase more well educated students, we need to assure that our schools are accountable, true.  We need to reform what needs to reform.  But the people who argue that schools can be reformed and starved to death financially are ignoring the fact that it takes value to create value.  The more we reform our schools, the more productive that they are the more its going to cost to produce that extra value; that is market economics.  Economics rewards productivity with additional revenue, and if you want to reap those rewards at the outset, you need to invest more resources to reap that reward.   If you believe that we can starve schools financially while making them far more productive, then you don't really believe in market economics and you don't understand what causes wages to go up and to go down.  Value comes from productivity, and productivity is rewarded with higher wages and more resources.  The two go hand in hand.  If we want to produce more high paid workers, we are going to have to insist on accountability and greater investment in the people who we hire to accomplish the mission.

Saturday, June 25, 2011

College Connections Team works to Create "College Going Culture"

Last fall, I was invited to join a local group selected to work with the Minnesota College Access Network.   Our goal was to develop recommendations that would lead to a stronger "college going culture" in our school district.  Our group consists of  educators, two school board members, counselors, representatives from St. Cloud State University and the Technical College, a high school student among others.  One of the motivations of the "College Connections" project is to significantly increase the number of "first generation" students in our community who graduate and enter post-high school programs that lead to a successful career.   It could be a four year traditional college program, but it might be a technical college program leading to careers in a health profession, technology, manufacturing or a trade.   As Minnesota's population diversifies, we need to recognize that the number of minority students, for example, who are graduating from high school and then enroll in a college or other post-secondary program that prepares them for a career is unacceptably low.

The Minnesota College Access Network tells us that of the ninth grade students enrolled today in Minnesota high schools, only 3 percent of American Indian students, 5% of Hispanic students, and 3% of black students will get a bachelor's degree in Minnesota within 10 years.   We can work to address this problem, in part, by  working more effectively to increase the number of students in elementary school who reach proficiency, and all across the State there are efforts underway to achieve that goal.   We are spending more time on core subjects; raising standards; intervening earlier to challenge students who get behind.  We are monitoring performance in the classroom more effectively and asking more of teachers, students and parents.  College Access Network says According to the Committee for Economic Development in their document, Cracks in the Education Pipeline: A Business Leaders Guide to Higher Education Reform,” demographic changes will make it increasingly difficult to maintain a skilled workforce without engaging more students in higher education.

The idea behind "college going culture" however is to connect these efforts to a sense of purpose -- that high standards aren't just to make our teachers and schools look better, but that they are part of an effort that leads to college and career.   College Access Network says that in education, we've been in the business of providing college going opportunities, but now we need to be in the business of providing a college going culture.   If we want Minnesota to remain a leader in technology, the health professions, and many other fields, we need to continue to produce highly educated career ready young people, and part of doing that is creating a sense that school is about learning for a purpose that leads to a rewarding career.

For the last six months, our college connections team has been taking a full day each month, to get training on strategies and skills that we can bring back to St. Cloud on what works to increase our capacity to graduate more students to college and career.    We spent time as well, studying what we are currently doing in St. Cloud, and what is being done successfully in other communities.  We learned about programs in some elementary schools, for example, that create a college and career oriented atmosphere in the early grades.  For example, in elementary school, on Fridays teachers may wear their college sweatshirt to celebrate their own colleges.   On bulletin boards, teachers provide information about their own educational background, where they went to college, and other career oriented personal stories.    In the early grades, students are encouraged to talk about their career goals and learn about the educational requirements for those careers.  Elementary school students take a field trip to a college, meet college students, explore the kinds of career preparation available.   In the junior high grades, students work with the PLAN and EXPLORE testing inventories that tell them whether they are on-track to be accepted to post secondary education, and set goals for their remaining education to reach their career goals.

On Thursday, June 30, our college connections team, from St. Cloud, will make a presentation to the College Access annual meeting, on recommendations for improvements here in St. Cloud to create a more effective "college going culture."   Our team believes that we have already a number of quality programs that are seeking to increase the number of our students who graduate college and career ready.   But we can do more.  We are proposing that we begin next year to examine ways to significantly improve our efforts in this regard.   We know, for example, that more students graduate college and career ready when they get early college readiness counseling.    It's too late to discover in 11th grade that one hasn't got the reading, math, or study skills necessary for success.  Yet, budget cuts are reducing significantly the available counseling resources in many school districts, making it difficult for counselors to provide individual attention to students who are not on track.  

One approach to this problem is to build college readiness skills into the regular curriculum, so that teachers become counselor extenders.   Another approach would be to develop a network of volunteer mentors who can work with students in the middle grades, to make sure that they understand what they have career objectives, and that they are developing the skills and work habits that are necessary to succeed.

 Our district is participating now in a four year long partnership with St. Cloud State University and the Technical College, called "Access and Opportunity."   

We spend a lot of time pushing children to get proficient, testing and retesting, and urging them to study harder so that they can past tests.   The college going culture idea says, maybe we can be more successful if young people are studying hard not merely because their parents and teachers exhort them to pass proficiency tests, but because they are internally motivated to graduate career and college ready.

Saturday, June 11, 2011

School Board Members express grave concerns regarding K-12 Finance Bill

Over the last few weeks, I've received a number of explanatory communications from Republican representatives and senators trying to reassure me that the House-Senate education finance bill that Governor Dayton vetoed is, well, a great financial boon to school districts.   The fact the bill represented an effort to inflict significant reductions on districts with growing poverty and growing special education costs, in order to transfer funding to a select group of districts with lesser needs.    Across the State, school leadership is rebelling against this idea, that we can solve our education budget problems by moving money from some districts to others.    The fact is that over the last four years, school districts have struggled with the worst funding in a long long time, and this new proposal is significantly worse than the legislation passed in the last two bienniums.  

The most frustrating thing about all of this is that those of us who live with education budgets day in and day out know that the proposed House-Senate legislation is going to be devastating to school districts, and especially those districts with the most educational challenges.   At some point, we'd like to feel that our legislators would give us a bit more credit and recognize that when we say that a proposal is going to inflict significant pain, that it would give pause.  

Earlier this week, a group of school board members, most of them in the metro area joined together to express their grave concern at the approach that the House and Senate have taken.  I've copied the letter here.

The Honorable Pat Garofalo, Chair The Honorable Gen Olson, Chair
Honse Education Finance Committee Senate Education Committee

Dear Chairs Garofolo and Olson,
The forty two signers of this letter are elected by our communities to assure that our children have access to outstanding public education. We do this so that all of  Minnesota's children will have the capability to be successful, contributing members of  our state.
The K-12 Education funding bill that was vetoed hurt our school districts' ability to educate children. It is that simple.  Key elements of the bill including reductions in special education funding and eliminating integration aid effectively cut funding for all districts in the state. The  elimination of integration aid cuts millions in the next two years affecting three large school districts with uniquely needy student populations.
By cutting integration aid and reducing funding for special education and de-linking compensatory aid, the budget effectively transfers funding from those who need more attention to those children who are already succeeding.
This will make it much more difficult to intervene and educate children with special needs, children from families in poverty and children of color. will increase the achievement gap that the legislature aims to close .
As school board members, we ask you, the leadership of our state legislature, to find another way to maintain funding for the education of Minnesota's children. Balancing the budget on the backs of special education students, students in poverty and students of color will make it that much more difficult to close the achievement gap and that much more difficult to educate the people who will make Minnesota's future.
We would welcome an opportunity to talk with you in greater detail. We can be reached through John Hoffman, Vice Chair, Anoka Hennepin School Board.

Joel Albright Apple Valley-Eagen School Board
Carol Bomben Eden Prairie School Board
Mark Bomchill Robbinsdale School Board
Ann Bremer Westonka School Board
John Brodrick Saint Paul School Board
Kathy Buchholz Stillwater Area School Board
Anne Carroll Saint Paul School Board
Deborah Clark South Saint Paul School Board
Ann Counihan South SI. Paul School Board
Mary Jo Deters Mahtomedi School Board,
Shari Dion Roseville School Board
Kirby Ekstrom North Branch Area School Board
Rita Ericson South Saint Paul School Board
John Estall Eden Prairie School Board
Natalie Fedie Stillwater Area School Board
Natasha Fleischman Stillwater Area School Board
Marilynn Forsberg Spring Lake Park School Board
John Fossum Northfield School Board
Rebecca Gagnon Minneapolis School Board
Jim Gelbmann South Washington County School Board,
Cristina Gillette West Saint Paul School Board
Kitty Gogins Roseville School Board
Patsy Green Robbinsdale School Board
Peter Hamerlinck Saint Cloud School Board
Bruce Hentges Saint Cloud School Board
George R. Hoeppner Stillwater School Board
John Hoffman Anoka Hennepin School Board
Cheryl Jechorek Brooklyn Center School Board
Linda Johnson Robbinsdale School Board
Richard Mammen Minneapolis School Board
Paul Mandell Inver Grove Heights School Board
Jean O'Connell Saint Paul School Board
Bruce Richardson SI. Louis Park School Board
Thomas E. Ring Roseville School Board
Jeff Risberg Saint Paul School Board
Peyton Robb Edina School Board
Vicki Roy Intermediate District 917
Hussein Samatar Minneapolis School Board
Sherry Tyrrell Robbinsdale School Board
Dick Tirk Eastern Carver County School Board
Tom Walsh Robbinsdale School Board
Melissa Halvorson Wiklund Bloomington School Board

Thursday, June 2, 2011

I explain to a skeptic why laying off teachers can make the economy boom.....

The other day, I had an opportunity to help a skeptic understand economics better.   The world is full of people who don't understand economics, and I was happy to do my part.    My argument was so persuasive, that I thought you might benefit just like my friend the skeptic.

Skeptic:    Jerry, I know you are a student of economics.  I've been struggling with a question I can't seem to answer to my satisfaction.   Mind if I ask you a few questions.

Jerry:  Always happy to help a skeptic gain understanding.  Go ahead.

Skeptic:  So here is I what I don't understand.    Pundits on TV, and lots of people in a certain political party keep saying that the best jobs plan is to cut government jobs.  How would cutting the jobs of teachers and other government employees improve the jobs picture?  How would cutting government purchasing for highway projects and other government projects improve the jobs picture?  Wouldn't that reduce jobs and create more unemployment?

Jerry:   I know that seems logical.  Sure, if you lay off teachers or cut highway projects, its going to put some people out of work.  That's true.  But you don't understand how economics works.   There's a lot of economics that's, well counter-intuitive.   That's why we call economics the dismal science.

Skeptic:   But look, suppose you cut government spending by a million dollars and cut government employment and payroll by a million dollars, won't that put a million dollars of employees on the unemployment line and won't they stop paying their mortgages, stop buying things, and won't the stores that they buy from also suffer losses?

Jerry:   You're just looking at the downside of cutting government spending.   You have to think of the person who lives next door to the laid off teacher who gets a tax break .   She has more money to spend, and that helps the economy.

Skeptic:   Ok.  So far, we have a teacher without a job, some kids who have larger class sizes and a neighbor next door with some extra money.   I'm waiting for the part where we get back as many jobs as we lose, by laying off all of those government workers.

Jerry:  We're almost there.    So the neighbor, goes out to Walmart, or Best Buy, bringing her tax cut with her, and buys a new television.  See?

Skeptic:   I'm not following you.  How does that help the economy?   What if the television is made in China or Japan?   So we have an unemployed teacher, with a neighbor next door with a new television, and some more jobs in Japan.  I still don't see how that helps the economy?

Jerry:   It's not just teachers.  It might be a bridge inspector, or a park attendant, or the guy who manages the motor pool?  They are out of work too, so nobody really is trying to just lay of teachers.   Besides, the people who get the tax cut, might spend some of it on American products.

Skeptic:  That's fine, but so far, you have a bunch of Americans laid off, how long will it take before the tax cuts actually bring back as many jobs as we lose from laying off all those government employees?

Jerry:   Well, you know, it works a whole lot faster, if you don't give the tax cuts to average people like the teacher's neighbor.  Giving it to high income people who know how to make jobs works a whole lot better.

Skeptic:  Now I see why economics is the dismal science.  It teaches us to lay off  teachers and other public servants and use the money to give tax breaks to the wealthy.    Count me still as a skeptic.