Sunday, July 31, 2011

Executive Pay Increases Require School Board Approval

An editorial by the Minneapolis Tribune properly criticized the "timing" of pay raises granted by the Minneapolis Superintendent, but the Editorial failed to understand the root causes for the problem.   If you haven't followed this story, the Strib reported that after the special session, the Superintendent approved  more than $270,000 in retroactive pay increases to executive school district staff, some of whom  had already resigned.   Now before I move along with this posting, let me say that this isn't an attack on the Superintendent or her board of education.    I'm sure the folks in Minneapolis could find fault with a number of things that we do up here in St. Cloud.  But I want to use this example to make a few points about an important issue in the area of school governance. Nor is it an attack on school leadership pay.  School leadership perform a valuable function, and they deserve to be paid appropriately. 

But the Superintendent approved these pay increases without board approval.   Her justification was that the Board of Education had recently accepted a pay study presented to the Board, and that the pay study argued that Minneapolis school leaders were underpaid as compared to similar positions in similar school districts elsewhere in the country.   She also noted that the Board Chair had been informed of the planned pay increases, although all other board members steadfastly say that they had no idea that the increases were going to be issued.

Now the Minneapolis Tribune's position is that the Superintendent should be able to approve pay increases for executive leadership, all on her own without Board approval.   This is what I call, the "Superintendent is the King (Queen) of the school district" approach to school district governance.  This is a deeply flawed, legally erroneous approach to school district governance. It arises from a mistaken belief that elected school board members should be relegated to sitting at board meetings and listening to endless reports, nodding their heads yes, and staying out of anything that really matters.  It arises from a mistaken understanding of what micromanagement really is, and what it is not.

There is a broad arena of operational details that belong to the province of the superintendent of schools and his or her cabinet. Indeed virtually all of the operational details of running a school district belong to the Superintendent or his or her delegates.   One of the great mistakes that a school board can make is to try to meddle in these daily operations.  School boards should govern on a policy basis, absolutely, but like it or not, the public regards  executive pay as a key policy issue.  Certainly, many superintendents are going to cultivate the concept that every decision that matters is the superintendent's decision, because of course, it seems easier to run a school district if nothing is policy and everything is operational.  When a board undertakes to disapprove or challenge any decision by the superintendent, some leaders try to respond by arguing that the board is committing the sin of micromanagement.   The question of where to draw the line between the board's policy role and the superintendent's operational domain is not always clear, and a superintendent will often try to push the boundaries as far as possible.

A school board approves pay increases for executive leadership because the leadership is just too close to the superintendent for the superintendent to dispassionately decide whether to provide an increase.  School board supervision is an important protection to the superintendent as well as the public.   School leaders come out of a union environment which builds a spirit of mutual self protection.   This same spirit can arise in a large business among management as well, but private business is not dealing with public funds.  Executive pay is a policy issue, because everyone looks at the leadership to get a sense of whether the leadership runs the district in an accountable way:  if the district promotes accountability at the highest level, it is much easier to develop respect for accountability throughout. 

We see in this example some of the warning signals that the boundaries have been expanded well into the Board's territory here.    The first warning sign is the statement that the Chair was informed but not the rest of the Board.     A board functions as a  whole.   Telling the Board chair that the superintendent is about to do something that could be very controversial is a danger sign that the Superintendent is looking for cover, but avoiding scrutiny by the entire board.    In these days of email, it is just as easy for the superintendent to inform the entire board as it is to inform the chair.

Minnesota school boards have an obligation to approve changes in salary before they are implemented.   Absolutely, they should listen carefully to the recommendations of the superintendent.  School boards approve all sorts of things on our consent agenda that we would never dream of disapproving.   We are required to approve every licensed teacher hired by the District.  But we don't interview teachers, we don't check their resumes, we don't ask questions or have a discussion about their merits.  Hiring teachers is an example of an area that belongs to the operational responsibility of the superintendent, but which the law allocates to the board of education  for final approval.  There are other areas where we exercise our approval with more caution.  We ask questions before we approve, but almost always we approve.

But the level of executive pay is a policy issue that should be reviewed by the school board, because that review is essential to developing public confidence that public money is being used wisely.   There is a grave danger that the public will come to believe that school leadership see themselves as part of a band of brothers and sisters who mutually need to protect their pay levels against unfair public hostility towards educational leaders.   Part of this results from the fact that these days, no matter what we pay educational leaders, there will be a gang of citizens who step forward and attack that pay, because they refuse to recognize that educational leaders are critical to the success of a school district.   But the solution doesn't lie in sweeping pay under the rug.  It lies in developing transparent procedures designed to subject these decisions to careful scrutiny by the board of education.  The Board needs to develop policies that value administrators, that create an atmosphere of fairness to the public and to the employees.   

One of the important functions of a board of education is to serve as an early warning function to tell the superintendent when he or she is about to do something that will raise a public firestorm.   When a coming decision is going to be unpopular, but correct, then it is the board of education's job to create an atmosphere of close scrutiny, so that the public knows that their representatives have carefully considered the merits.  And then, the board must step up to the plate and defend that decision with vigor.  A second important function is to say no, on occasion, when a decision doesn't make sense.

I agree with the Tribune that this decision appears to have been a mistake.  But the mistake was more systemic:  it lies in believing that public school leaders should be able to raise their own pay.

Friday, July 29, 2011

Balanced Budget Amendment Silliness

Since the founding of our current constitutional republican democracy, Americans have disagreed heartily over the proper role of the national government in using its fiscal and monetary powers to assure economic growth.  As a nation, we have disagreed over establishment of a national bank, over tight money policy and easy money policy, over the use of tax cuts and spending increases financed by borrowing as an instrument of national fiscal policy.    Throughout all of these debates, honest thoughtful statesmen and economists have disagreed mightily, and at different times in our history, different views have prevailed.   Now, the proponents of the Constitutional amendment seek to win this argument not just for today, but forever, by threatening to destroy our economy unless the rest of us agree permanently to lock their views in the United States Constitution.

Throughout most of our history, the voters have supported parties which believed in using the national government's fiscal powers to promote growth, to invest in infrastructure and development.  The predominant founding party, the party of George Washington, saw the federal government as a great engine of economic development and growth.  The federalists believed that the federal government should use its powers to create infrastructure, and they used the national government to promote economic development.  The party of Jefferson, the democrats, were skeptical of that power, although at times, they used it as aggressively as the Federalists.   The proponents of a constitutional amendment intend to take this national debate over the role of government in promoting economic development out of the hands of the voters and their representatives, and to resolve it for all times.

The proponents don't believe that the great problems of our nation should be resolved by the people:  they want to win the debate for all time.    They believe that they know better than the party of Lincoln, which during the second half of the 19th century used the powers of the federal government to create a great railroad infrastructure.  The Republicans won the civil war using debt to finance the effort, and would not likely have been able to prosecute the nation's defense if a 2/3 vote was required.  The proponents of a constitutional amendment believe that they know better than the party of Roosevelt, which used the federal government's  borrowing power to win World War II and pull our country out of the great depression   They believe that they know better than Ronald Reagen, who used the government's borrowing power to stimulate the economy and to spend the Soviets into the ground with massive defense spending. They think that they understand economics so well that they are willing to insert their position on macro economics into the United States Constitution for all time.

In truth, perhaps proponents are so sure that history may judge them wrong, that they lack the courage to win this argument on the merits.   They threaten instead to destroy the country's economy and its credit unless the rest of us who disagree not only bend to their will, but that we embody their position in the Constitution in the exact language that they propose, so that it will be virtually impossible for the people to change course, if history proves them wrong.  The political party  that is doing this is the same party that, when it came into power ten years ago, immediately cut taxes and vastly increased spending, ballooning the deficit and fighting a war without raising taxes to do it.  This is the party that took the Clinton surplus and converted it to the largest deficit in history.  A balanced budget amendment is silly, because it ties the hands of our democracy permanently and locks us into a position on the role of government that has been a minority position throughout the course of our history. 

A balanced budget amendment  is silly because it won't solve the problem that it is designed to solve.   It is silly, because it will tie the government's hands in times of crisis, and make us less powerful than our adversaries.  It is silly, because most of the greatest funding problems that our government faces are not even addressed by the amendment.  It's silly because it represents an attempt to allow a minority of Americans to dominate decisions of the majority. But it is silly also, because the language of proposed amendments is poorly conceived and poorly written. Let's take a look at the text of one of the popular versions of a balanced budget amendment.  Here is section 1 and section 8:

Section 1. Total outlays for any fiscal year shall not exceed total receipts for that fiscal year.  `Section 8. Total receipts shall include all receipts of the United States except those derived from borrowing. Total outlays shall include all outlays of the United States except those for repayment of debt principal..  

Ok. That seems simple doesn't it.   Let's see if we can figure out how this is gonna work.   The first issue that we have to address is whether the United States is going to be run on the cash basis or the accrual basis, or on the modified accrual basis, or some other accounting basis.   The answer is found in section 7.  Section 7 tells us that "The Congress shall have the power to enforce this article by appropriate legislation."   Now if you are a tea party patriot, I suppose right away, you are going to tell me, banging your fist on the table, that of course we should account for our outlays and our receipts on a  cash basis.  But frankly, a lot of accountants are going to tell us that running the books of any complicated business, and certainly the government, on an accrual basis will actually give you a far more accurate picture of the financial picture.    Running on a cash basis allows for all sorts of manipulation, and as our experience in Minnesota shows, manipulation is the first thing Republicans and Democrats run to when they want to evade an amendment like this.   And, accountants will tell you that you can do a whole lot of manipulation under either system especially if you are allowed to switch back and forth from one accounting method to another.

If you are on the cash basis, you can manipulate things by changing the timing of when taxes are due, for example.  And, you can manipulate things by delaying payment on bills into the next year.   So, if the legislature wants to spend a bit more this year, it can decide to pay all of its December bills in January.   There are all sorts of accounting nightmares presented by this attempt to make a very complicate problem simple

We've not begun to discuss, however, the incentives under this amendment to use "cooperative federalism" to create government obligations that don't count against outlays.   A simple example is special education.   Right now, federal special education requirements mandate state and local expenditures in Minnesota of two billion per year.   Federal and state reimbursement for those mandated expenditures total about 700 million less per year.    The federal government funds only about 20 percent of these mandated expenditures, passing the burden on to the state, and then the state underfunds the remainder, passing the burden on to the local government. Under this amendment, we will see all sorts of hijinks of this kind, pushing unfunded burdens down to local government, so that federal and state legislators can comply with their respective balanced budget amendments.  Medicaid, Medicare, social security, all of these are possible venues for creative cooperative federalism. 

Revenue shifts will become more common like the education revenue shift that Republicans and Democrats jointly introduced in Minnesota.   But still we haven't even scratched the surface. There is nothing in this constitutional amendment that prohibits the federal government from creating entitlements but deferring payment for these entitlements.  Entitlements such as veterans benefits, social security commitments, medicare benefits, all of these benefits are building up future expectations, and the constitutional amendment does nothing directly about this problem.  Instead, it essentially creates a situation where entitlements drive out all other expenditures.

Who is going to resolve issues like this?  The Congress gets to interpret it, according to the amendment.  But if a group of Congressmen disagrees, they can challenge the decision of the majority by taking it to the federal courts, which now become sort of the federal board of debt review.  Section 6 says. "Any Member of Congress shall have standing and a cause of action to seek judicial enforcement of this article, when authorized to do so by a petition signed by one-third of the Members of either House of Congress. No court of the United States or of any State shall order any increase in revenue to enforce this article."  So, the Courts can lower taxes but they cannot eliminate loopholes.  Can they cancel debts if they exceed the ceiling?  Which ones do they cancel?  Who would buy American debt obligations with an amendment  like this in force, anyway, without a significant surcharge for the new risk that a debt instrument is going to be declared illegal by the Constitutional debt court.

Could the courts cancel social security?  If the economy is running at full steam, and one Congress wants to cut taxes because we're running a surplus, can the next Congress restore that tax cut without a 2/3 vote?  Can Congress evade this problem by cutting taxes only for two years, or would a Court adopt the Norquist position and say that at the end of the two year period, its a tax cut?   Can a Congress evade the amendment entirely by voting in a large permanent tax increase by a 2/3 vote and then implementing a temporary tax cut?   Suppose a group of liberals refuses to vote to increase the debt limit in a time of war unless the Constitutional Amendment is repealed? Would that be called economic blackmail?!.  And would the response be, what goes around comes around:  you got the amendment in this way; now we're going to get it out the same way?

Section 4. says that any bill to levy a new tax or increase the rate of any tax shall not become law unless approved by two-thirds of the whole number of each House of Congress by a roll call vote.  What is a new tax?   Can the government substitute a flat tax for the income tax without a 2/3 vote?  Suppose the Congress gives a big tax break to a special interest group (by a majority vote).  Can the next Congress remove that tax break by a majority vote, or does it require a 2/3 vote?   Can we eliminate the interest deduction for home mortgages by a majority vote?  Is that a tax increase or not?    Suppose Congress declares war by a majority vote, but a significant number of Congressmen are opposed to the war.   Can 1/3 of the Senate stop us from funding our troops?  Really?

If the government wants to build a a major hydroelectric system, as for example the Hoover Dam project, does that count against the national debt.  It would not count under a state constitution, because capital budget expenditures that build wealth are not subject to the balanced budget amendment?  Is it really wise to prevent national borrowing for infrastructure projects.? And, when are we going to have a meaningful dialogue about these issues?  How can we have that dialog, when the the amendment is being rammed down our throats by threatening to create a national financial calamity lest we adopt the amendment right now.

Thursday, July 28, 2011

Board approves Health Insurance renewal lowering rates by 9 percent

Thursday night, the school board approved a two year proposal for health insurance rates for District employees from Blue Cross.   The new proposal contains several elements.  It reduces the number of our insurance carriers down to one -- the lowest bidder, of course.   There are several reasons for doing this.   We have been concerned that when we award bids to the two lowest bidders, there is less incentive for any of the bidders to bid as low as they can.  If all bidders can succeed by coming in second, all bidders may may try to come in second place.

Also when there are multiple carriers, each carrier worries that there will be an adverse selection process that sends higher risk employees over to one of the two carriers, and that risk causes actuaries to raise prices.  We have also phased out the District's highest cost insurance policy, leaving us with only two policies from the one carrier.  Phasing out that richer costlier policy has again improved the actuarial performance of the remaining policies.  We are left with two policies, one of which is a high deductible lower cost policy that is attractive to employees who cannot afford higher premiums.

The result of all of this is that our premium cost for next year will go down nine percent.    That will result in a significant savings to both employees and the district.   Depending on the particular coverage, premiums (district and employee combined) will be reduced anywhere from $50 to $167 per month.  The bid included a rate increase cap for the second year of not more than 5%, so that we are guaranteed rate reductions for the next two years.

These changes required collaboration between the District and representatives of its employees.  It required the agreement of our employee unions to reduce from two carriers to one and it required the agreement of our employee unions to reduce from three policy choices to two.   The rate declines we realized result in part from the changes we made in our approach to health insurance over the last several years combined with a favorable insurance market this year. 

Tuesday, July 26, 2011

We have a revenue problem and a spending problem!

I'm tired of hearing the facile slogan, "we have a spending problem, we don't have a revenue problem."   Its a marketing statement unworthy of serious discussion.  We heard it during the Minnesota shutdown, despite the fact that Minnesota's structural deficit grew after the State cut taxes at the same time that it increased spending.  We hear it now from Congressmen, Senators and pundits, with regard to to the federal structural deficit despite indisputable evidence to the contrary.    Listen, you can believe that we should solve our problems with spending cuts only if you want.  But don't deceive yourself into believing the canard that spending increases are the sole cause of our problem.  It's just not true.  We have a spending problem and we have a revenue problem.

 
 During the Clinton administration, the President and Congress cut the deficit by increasing taxes and cutting the growth in spending.   They eliminated the deficit entirely and began to run a surplus.   At the same time, the economy boomed, unemployment fell, and Americans, including the wealth, improved their incomes.  

Under the Bush administration, the Congress and the President implemented  massive tax cuts while spending increased massively.   The Bush administration paid for the war off budget.   Even today, when Republicans talk about the size of the deficit, they do not acknowledge the off-budget Iraq war spending.  What did the Bush tax cuts accomplish:  they preceded the greatest recession since the Great Depression of the 1930's.  They coincided with a great change in the division in wealth in America, with more and more wealth concentrated in the hands of a few.    Why does a policy which promotes a transfer of wealth to the rich destroy employment?  The answer is very simple.   When the middle class does not do well, people stop buying.  Middle class consumption is the driver of the American economy.   When a country promotes wealth transfer towards its wealthy by tax policy, it is killing off consumer demand.  Higher wages, higher middle incomes, drive consumption.    Transferring wealth through tax policy to the rich at the expense of middle income taxpayers is a job killing policy.

As often as the sloganeers claim otherwise, they cannot deny that our economy went in the tank at the same time that we lowered taxes massively, and lowered them especially on the rich.   This is not a class warfare issue.  Look at the evidence.    Where in these charts do you see the justification for the claim that "taxing the rich is job-killing," or "we don't have a revenue problem, we have a spending problem. 
Charts courtesy of MSNBC.  Click on link to reach the source.

Saturday, July 23, 2011

Education Bill Requires New Educator Evaluation Program

I'm going to discuss some of the new Education legislation that  was passed this past session over the next few postings.  The omnibus education bill contains amendments which require more effective teacher evaluation and peer coaching.   In Minnesota, a teacher is a probationary teacher during the first three years of service.  While previous law has required an evaluation system for probationary teachers, the new law creates a default system of evaluation and peer coaching which is mandatory, unless the school district and the teachers union agree to a different system and it requires evaluation with significant consequences for all teachers, whether they are on probation or have tenure.

The old statutory language provided that the teachers union and the school board were to jointly agree on a peer review process through joint agreement.  The new legislation continues to encourage the board and teachers to agree on both a teacher evaluation and peer review process.   However, if the union and the board cannot agree, then the school board and union must implement the default plan that is provided for under the legislation.   The law now requires, for the first time, that the evaluation and peer review process "Must include having trained observers serve as peer coaches or having teachers serve in professional learning communities."   The plan "must establish a three-year professional review cycle for each teacher that includes an individual growth and development plan, a peer review process, the opportunity to participate in a professional learning community, and at least one summative evaluation performed by a qualified and trained evaluator, such as school administrator."  In any year that the teacher is not evaluated by a trained evaluator, then the teacher must be evaluated by a peer review process, so that means that each year, some form of formal evaluation is required.  A summative evaluation means an evaluation that rates or describes performance.  All of this takes effect beginning in the 2014-15 school year.

Under the new evaluation process, student outcomes are an important part of the evaluation.  The evaluation process must used "an agreed upon teacher value-added assessment model for grade levels and subject areas for which value-added data are available and establish state or local measures of student growth for which value added data are not available."  This information must constitute 35% of the teacher evaluation results.

Implementing all of this will be easier said than done. Those of you who think implementing a major transformation in personnel evaluation is a snap, think again.   Where a system like this does not yet exist, it requires lots of hard work in creating the appropriate systems and structures.   It requires training people to use the system that has been devised.  It demands signficant personnel resources must be devoted to evaluation.    In a building that has, say, 30 teachers and one principal, implementing a first class evaluation system along these lines is a major undertaking for the principal, unless teachers are utilized to assist in the evaluation and coaching process.   It requires observation time, data review, meetings with evaluated staff, and significant efforts to assure that the requirements are being fulfilled consistently, professionally and fairly.   Most educators have simply not been trained in their teacher and administrator training to implement a program of this kind.  And before you make a negative comment about educators, let me just emphasize that most lawyers, most doctors, most accountants, indeed most professionals of every kind, receive no training in conducting quality evaluations.   Creating and implementing an outstanding evaluation process is a very demanding task, and its going to take lots of hard work on the part of school boards, administrators and teachers to get this job done fairly and effectively.

The new law requires teachers "not meeting professional teaching standards....to improve through a teacher improvement process that includes established goals and timelines."   It mandates that the evaluative process must "discipline a teacher for not making adequate progress in the teacher improvement process that may include a last chance warning, termination, discharge, nonrenewal, transfer....leave of absence or other discipline a school administrator determines is appropriate."   In other words, the evaluation process has significant impact on teacher careers, and so this whole process needs to be done professionally and competently.

The legislation envisons a process to be developed  by the Minnesota Department of Education that will create more detail in the default process that is used, if the union and district do not agree to their own process.  The new law becomes effective the beginning of the 2014-2015 school year, so that is three years hence.  In the meantime, there is a lot of work that will have to be done to prepare.

Saturday, July 16, 2011

How much money is enough, Mr. Von Korff

During the shutdown, I wrote furiously to legislators and the Governor, urging them them to provide more revenues to education.    I appreciate the careful consideration given to these letters and emails by many, of course.  But near the end, one of the key legislators in the education fray wrote, as if frustrated with my pleas, "Mr. Von Korff, how much of an increase would be enough."   It felt as though I was being told, no matter how much we send you, it's never enough?  

My answer is more complicated than the legislators want to hear.     My answer is that the amount of money we need depends a lot on the legislators themselves.  One of the great problems in St. Paul and Washington, D.C. is that legislators don't seem to make a connection between the policy bills and mandates  they pass and the answer to the question "how much is enough."   Over the last ten years, the governor's office and the legislature has piled on new responsibilities and mandates for local school districts.   And, the State has created a costly structure of labor policies, benefits, licensing, and prohibitions that together speak loudly:  "let's make public education more expensive in Minnesota."   Many of these policies have good reasons behind them, but St. Paul doesn't have enough discipline and policy coherence to cost out these policies and connect them to revenues.

In the last decade, total special education costs in the State of Minnesota has skyrocketed.    These costs are driven by intentional, and well-meaning,  policies in the executive and legislative branch designed to provide more and more services, and more costly services, in special education.    But never do these policies come with money needed to pay for the new policies attached to them.   Nobody estimates the implementation costs, let alone, passes funding legislation.   The result has been that the annual deficit in special education in Minnesota, the difference between total spending and total revenues for special education, has risen from about $350 million per year to about $740 million projected for 2013.
 
This year, the Republicans tried to dial back the amount of revenues provided to special education, but they refused to advance legislation that would help local districts reduces special education costs.   And so I say to the esteemed legislative leadership:   "The answer to your question, how much is enough, is partly in your hands.  In St. Cloud, we are doing everything we can -- everything the law allows -- to keep our costs down, and the deficit in special education funding  has risen from $5 million to about $9 million."  We'd like the State to wipe out our special education deficit.   We need legislative authority to control costs.   And, we need the legislature to fund what it forces us to spend.
This year, advocates for school districts urged the legislature to repeal the bargaining penalty, which penalizes districts and taxpayers if their school board refuses to increase labor costs faster than state revenues rise.     If the bargaining penalty repeal is one of those policy items that Dayton forces the legislature to remove from the education bill, that will substantially increase the cost of public education next year, because many school boards simply will not risk paying that penalty, even if they have to pay out higher labor costs many times greater than the penalty itself. If the legislature wants to penalize local districts that refuse to increase compensation more than they can afford, then it ought to have the courage to pay the cost of that policy.   

Last year, the legislature raised the assessments against school districts for state employee retirement benefits, an assessment that will increase our costs by $1 million over the next four years here in St. Cloud.  But not a dime of revenues was provided to cover these increases.  

These are three examples of the connection between what folks in St. Paul do on the policy side and the cost of education.   One of the remarkable facts of state governance is that our state legislature writes policy bills and school financing bills virtually without making any serious effort to hold hearings on the answer to the question that the legislator asked me:  "how much should it cost to deliver the education we need in Minnesota."    Some time look at the hearing schedule of the education committees.  You will see precious little on the hearing schedule seeking to answer this fundamental question.

This year, the Governor convened a committee to discuss education finance reform.   But the committee didn't study what public education should cost, it studied possible changes in who gets the money we already have.   The question of what it costs to do what the legislature requires was basically removed from the table.   Nobody wants to know the answer any more, because frankly, they already know that the answer they get won't be popular.  The State of Minnesota is forcing school districts to spend 1.5 billion per biennium more in special education alone than total federal and state revenues combined.    If we tried to solve this problem by reducing the mandate, a long line of advocates for the disabled would, understandably, descend on the State Capitol and demand protection of these important initiatives.  If we tried to solve this problem by increasing revenues, a group of legislators would say that they promised the tea party crowd that they won't raise taxes.   Its easy to keep the no new taxes pledge if you wash your hands of the real problem: providing revenues to fund the good things that you want to take credit for.

Minnesota's school finance "system" is no longer a system. It consists of a set of mandates and policy prohibitions completely disconnected from costs and revenues.   It is symptomatic of this total disconnect between the cost of programs and the revenues that we collect, that school districts have now become the official banker for the State of Minnesota, essentially lending the State billions of dollars to do what the Constitution was designed to prohibit:  to spend more than we collect in revenues.

Tuesday, July 12, 2011

Pass a Clean Bi-partisan Lights on Bill Now

On Tuesday, July 12, 2011, I had the privilege of appearing on the dais with Governor Dayton for a discussion of education finance and the budget deadlock.   The audience was mostly friendly to Dayton, but everyone also urged Governor and the legislators present to get government working again.    It would be fabulous if the House, Senate and Governor could come together and break the deadlock immediately.  But frankly, listening to both sides on Tuesday, it sounds like we have a long long way to go.

For this reason, I say, lets get government working again with a clean bi-partisan lights-on bill.    Not a Republican version of a lights-on bill. Not a Democratic version of a lights-on bill. But one that is fair to both sides and above all, fair to all Minnesotans.

Republicans have been pressing for a lights-on bill, of course, but what they have in mind is a bill that they craft to provide only the taxes and spending that they favor.  Democrats naturally fear that their purpose is not bipartisan.  Democrats believe that Republicans want the Governor to approve a lights on bill that spends exactly what Republicans want-- and taxes exactly what Republicans want to tax, and approves the revenue only that Republicans want to approve.  Once a lights-on-bill is passed, the Republicans could stop negotiating and essentially turn the lights on bill into permanent legislation.  Neither party should have to support a lights-on bill that's a ruse.  

The lights on bill I'm calling for would be a true bipartisan lights on bill.    It would have the following elements:
  • Starting next Monday, spending and taxation would occur at a compromise level, half way between Dayton's position and the legislative position, until the light's on bill terminates.  
  • That would mean that on a temporary basis there would be a temporary 1 percent tax on millionaires, half of Dayton's demand, only for the duration of the lights on bill.   This would mean that if the lights on bill lasted one month, millionaires would be taxed 1/12 of one percent, because the tax would be in effect for only 1/12 of a year.  The Governor would get half of what he wants, but only for 1/12 of a year. 
  • As part of the permanent agreement, the Republicans would be free to insist that the temporary millionaire tax would be rebated.   Indeed, any of the temporary spending and taxing could be altered in a final deal.They could support the lights on bill, knowing that the permanent bill could repair what they don't want to agree to permanently.
  • Finally, to provide an incentive to honest negotiation, either party could unilaterally terminate the operation of the temporary light's on bill.   
This lights on bill could put Minnesota government back in operation on Friday this week without requiring either party to capitulate.  The clean Bi-Partisan lights-on bill involves minor concessions by each side, but neither side is forced to capitulate.  And the agreement is only temporary.   The bi-partisan lights on bill would restore child care for Minnesota low income workers.  It would immediately start up construction projects and, yes, even get horse racing going again.   The beauty of the bi-partisan lights on bill is that both parties can agree to it without capitulating to the other.

Now I believe that a bi-partisan lights-on bill has to have increased revenues and it has to provide some cost controls, because there is no question that Minnesota has a massive structural deficit that is cost by spending more than we must, and taxing less than we must.   Mainline real republicans and and mainline real democrats, the experts in both parties know this.     (See my blogpost from  December 2009).  The two great bipartisan budget commissions, 2009 and 2005, both warned that Minnesota will be facing a huge financial crisis, because our taxation was reduced below a sustainable level and because our spending-- especially health care spending has been maintained at an unsustainably high level.

Wednesday, July 6, 2011

What lesson from Atlanta school testing scandals?

An article in the Atlanta Journal Constitution by Michael Casserly, executive director of the Council of the Great City Schools,  and an expert on the National Assessment of Educational Progress, one year ago touted the fantastic gains being made in the Atlanta Public Schools:
 Atlanta’s public schools have made the fastest reading gains of any major city school district in the country. They also have made significant progress in math. Those are the facts.   Between 2002 and 2009, Atlanta’s fourth- and eighth-graders increased their reading scores on the National Assessment of Education Progress — the “Nation’s Report Card” — by 14 points. The next fastest-improving city school systems, the District of Columbia and New York, saw their fourth-graders gaining 12 and 11 points, respectively. No other city’s eighth-graders improved their reading skills by more than seven points.
The article goes on to explain that experts came to Atlanta to learn how other cities could replicate Atlanta's amazing success.    
Earlier this year, a team of national reading, math and science experts who have examined instructional programs in scores of cities nationwide came into Atlanta to investigate the reasons behind the district’s gains, especially in reading.
What was the reason?   Vision; proper use of data; accountability and great leadership in the Superintendent's chair:
The results of the examination — based on extensive interviews, data analysis and document review — attributed the improvements to a number of organizational and instructional factors: strong community support; an increasingly cohesive school board; a visionary and skilled superintendent; a clearly articulated strategy for reform that was sustained over a prolonged period; a strong mechanism for holding adults accountable for student results; good data with which to monitor progress and inform classroom practice; and other factors.
By the time the article was written, already troubling rumors had begun to circulate that at least some of Atlanta's test scores were the product of fraud.   Yet plaudits for Atlanta persisted.  The education establishment, pundits from all sides, desperate for proof that great gains in education can occur on the cheap, had seized on districts like Atlanta and Washington, D.C., looking as education always does for that magic bullet, that free ride to transformation. 

The AASA, the school administrator's journal, in February of 2010 touted Atlanta's success as proof that use of the so-called "Balanced Scorecard" and strategic planning could transform a troubled school district.:
Ten years ago, the Atlanta Public Schools had low and declining student achievement, demoralized teachers, crumbling buildings, high turnover among superintendents (average tenure of two years) and disaffected parents pulling their children out of the system. More than 60 percent of the city’s high school students missed at least two weeks of school per year, and the district had more than 700 teaching vacancies. The system was failing its students and stakeholders. Fast forward 10 years, and Atlanta has reversed its dismal numbers. Fourth graders’ reading and math scores are nearly on a par with their Georgia peers, chronic absences have plummeted, and 91 percent of the district’s elementary schools made adequate yearly progress in 2009. Last June, the New Schools at Carver had a 94 percent graduation rate. Superintendent Beverly Hall said of the transformation, “Atlanta Public Schools is becoming a model urban school district.”
Meanwhile, in Washington, D.C., USA Today began a series of stories suggesting that success under reform minded Superintendent Michelle Rhee, might likewise be the product of test alterations.  Rhee had created a performance pay and bonus system that provided substantial financial rewards to principals who met district goals.  One hundred three schools in the District displayed remarkably high erasure rates, often a sign of cheating:
USA TODAY examined testing irregularities in the District of Columbia's public schools because, under Rhee, the system became a national symbol of what high expectations and effective teaching could accomplish. Federal money also was at play: Last year, D.C. won an extra $75 million for public and charter schools in the U.S. government's Race to the Top competition. Test scores were a factor.
In Atlanta, a recently released report alleges that at least 100 school employees are implicated in a massive systemic cheating scandal.  Allegedly, 38 principals, were involved in facilitating the cheating, cheating on a massive scale.

The Huffington Post writes:

The report paints a vivid picture of a culture where teachers were publicly humiliated or fired for underperformance, and whistleblowers faced more consternation than cheaters. For example, a group of teachers at Gideons Elementary School held a weekend "changing party" at a teacher's home, where they systematically altered test answers to boost results.  The report describes the case of Michael Milstead, who, upon beginning his tenure as principal of the Harper Archer Middle School, noticed an incredible gap between students' elementary school scores and the scores they were achieving at his school. After he raised the issue of inflated scores at a May 2008 meeting, an education official confronted him -- and he was soon told his services were no longer needed.

This is a blog, and so I should end with an opinion.   I know that I should be able to discern a deep lesson here, but all I have to say is, oh dear, what a disappointment.   Next time a pundit tells me that he or she has discovered a super star school district with a great visionary leader whose reforms have magically transformed a school district,  what am I supposed to believe?

Saturday, July 2, 2011

The Hidden Tax Shift Neither Party Wants to Discuss

In my last post, I wrote about the fiscal tricks that Pawlenty and the DFL used in the last budget to allow the State to spend 34.5 billion dollars with only about 30 billion dollars in taxes.   They used 2.3 billion in federal stimulus money -- which was the purpose of that stimulus in the first place, to avoid the layoff of state employees and especially teachers in the midst of the massive recession that began in 2007.   Then, they forced school districts to borrow about 1.8 billion dollars so that the state could shift aid payments for the current year into the next year.   These numbers are widely discussed.   The 1.8 billion dollar figure is a one-time shift, and each year, the folks in St. Paul can avoid reckoning with the Pawlenty budget shift, by just shifting the 1.8 billion on to the next year again.   That's what Dayton and the Republican legislative majorities are proposing to do -- the shift isn't even in dispute.   In fact, the discussions just before the shutdown contemplated an even bigger shift.

But there's a much larger shift in the education budget that neither party talks about, but its used year after year, and that's the special education aid shift that shifts the State's special education mandate onto local districts, forcing them to raise local property taxes.   For 8 years governor Pawlenty and the legislature shifted larger and larger special education costs onto local districts, and the total of these shifts make the 1.8 billion shift that everyone talks about look like spare change.   Every biennium, the governor and legislature wink at each other, give a shout  out to the Federal government, and intentionally underfund special education by at least 600 million dollars for the biennium, but unlike the smaller shift that we talk about, the State never reimburses local districts for the special education shift.  They just keep larding the deficit onto local districts year after year.

This biennium, the legislature and Governor have served up the largest special education deficit in history, just about 1.3 billion for the biennium.   If this practice continues, the total deficit for the next decade will exceed 7 billion dollars.   Local district have no revenue source to cover this deficit, and the size of the deficit varies greatly from district to district.  The special education deficit, along with unrestrained labor cost increases, represents the major cause of class size increases, of teacher layoffs and of other program cuts, but our policy makers in St. Paul refuse to address the problem.   They are making the problem worse.

The folks in St. Paul love to blame the federal government for this problem, but that is a prevarication.  Minnesota has a higher special education requirement than the Federal Government.  If the Federal Government repealed the special education law tomorrow, we'd still have the same special ed spending in Minnesota.   A few legislators proposed a bill to reduce our special education cost mandate down to the federal level, and the bill couldn't even get a committee hearing in the Republican legislature.   Republicans are big fans of the special education deficit, just like their DFL colleagues.

How do local districts cover this gigantic deficit.  They have to go to the voters and get an operating referendum.  In the vast majority of school districts in Minnesota, excepting some of the wealthy suburban districts, the special education deficit for the district is larger than the voter passed operating referendum.  That's right, in many districts, if the state fully funded special education, the districts could function without an operating referendum.  

When you hear a Republican or Democrat rail against unfunded mandates, its time to chuckle.  They're just pretending.  The 700 million unfunded mandate, the great special education deficit shift, is passed every biennium by both parties with a wink and a nod, and nary a concern for by far the most significant unfunded mandate ever conceived in education.