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Posted by Patrick Parkes on Wednesday, July 1, 2015

 

We have always been at war with Eastasia. Oh, and an “Exchange established by the State[s]” can also mean an Exchange established by the federal government’s Secretary of Health and Human Services.

Chief Justice John Roberts channeled his best George Orwell last Thursday, authoring a 6-3 ruling in King v. Burwell allowing the distribution of Affordable Care Act subsidies to continue in all 50 states and Washington, D.C.

Prior to Thursday’s ruling, the Affordable Care Act (aka the ACA or Obamacare) faced the prospect of a far different future. Without subsidies to temper the high costs of Obamacare’s “guaranteed-issue,” “community-rated” health insurance plans, consumers in 34 states—including Kansas—would have been free from the law’s individual and employer mandates to buy health insurance based on insurance premiums exceeding a threshold amounting to eight percent of their incomes.  

Obamacare supporters—calling for the legislation’s subsidies to be upheld—viewed this consequence as something Congress couldn’t possibly have intended in drafting. Obamacare’s detractors disagreed, arguing that a series of choices made in the law’s drafting and implementation suggests that Congress got exactly what it wanted: a set of major circumstances enticing states to establish their own exchanges. Yet, the fact that so many states saw through this enticement presented a unique opportunity in conjunction with King v. Burwell. A ruling discontinuing Obamacare subsidies in 34 states would effectively discontinue Obamacare in these states as well.

Instead, Thursday’s ruling virtually severs any lines differentiating a federally-established exchange from a state-established one.

Specifically, Chief Justice Roberts hones in on Section 18041 of the legislation. It directs the federal Secretary of Health and Human Services (HHS) to establish a federal exchange in the states that decline to set up their own exchanges by dictating that “the secretary shall establish and operate such Exchange within the State.” Roberts argues that the use of the phrase “such Exchange” in the section covering federal exchanges after previously referring to “Exchange[s] established by the State” in prior sections must mean that state and federal exchanges are equivalent entities.  He then moves to Sections 18031 and 18032 dealing with the exchanges providing “qualified health plans to qualified individuals” within “State[s] that established Exchanges.” He points out that if the phrase “States that established Exchanges” were interpreted verbatim there would be no qualified individuals on federal exchanges. In his view, since “…the Act clearly contemplates that there will be qualified individuals on every Exchange, this must imply that “Exchanges established by the State” and federally-established exchanges are—again—equivalent.

In all, Roberts characterizes plain text interpretations contrary to such equivalence as “strong.” Yet, he signals a need to look past them in discerning Congress’ true intent when it comes to Obamacare. He chalks the law’s ambiguity up to “…more than a few examples of inartful drafting” and saves it from bringing about the insurance market “death spirals” that he doubts Congress intended.

This marks the second time Roberts’ reading of the law has rescued Obamacare from itself. He saved it first in 2012 by upholding its individual mandate as a tax and not a penalty. Yet, even then, he questioned the law’s construction. He wrote, “We do not consider whether the Act embodies sound policies.” He later continued, “It is not our job to protect the people from the consequences of their political choices.”   

If Roberts still believes this, his opinion in King v. Burwell is rife with irony. After all, if it is still not the Court’s job to protect the people from the consequences of their political choices, why must it protect them from the “inartful drafting” resulting from those choices?

Posted by Dave Trabert on Tuesday, June 30, 2015

Payout data obtained from the Kansas Public Employees Retirement System for 2014 shows there at least 1,477 state and local government retirees who will collect more than $1 million in taxpayer-funded pension benefits in their first twenty years of retirement.  This same analysis last year found 1,229 pension ‘millionaires.’ Kansas Policy Institute collects the data annually and makes it available to the public at KansasOpenGov.org. 

Twenty-one retirees will collect more than $2 million over their first twenty years of retirement.  Retirees can elect to take a one-time lump sum payment upon retirement and receive reduced annual payments thereafter.  KPERS retirees receive benefits for life and those payments are exempt from state income taxes, although retirees did pay income tax on their personal contributions to the plan; employer contributions and the earnings on all contributions are never subject to state income tax.

There certainly is a discussion of fairness to be had about LLCs not being taxed on pass through income, but if ‘fairness’ is the issue, then all fairness issues should be on the table.  State and local government pensions have been exempt for decades but private sector retiree pensions and 401(k) payments are fully taxable.  Even if taxable, government retirees receive benefits multiple times greater than those of the private sector.  Fairness aside, the latest KPERS valuation shows an unfunded liability of $9.8 billion.  The real unfunded liability could approach $15 billion if calculated on a more realistic rate of investment return.”

Some may think that a 2012 reform putting new hires in a cash-balance plan took care of the problem, but it didn't even come close.  Burgeoning pension costs will increasingly crowd out spending on other services until real reforms are implemented for current and future employees.  Another recession like 2008 could even jeopardize payments to existing retirees.

The Legislature will eventually have to stand up to the government unions and other special interests to deal with the serious pension crisis in Kansas and Kansas Policy Institute will be ready to help.  We’re developing options to deal with the funding and the fairness issues in ways that will reduce the long term cost to taxpayers and still provide a very good retirement benefit for employees.
Posted by Dave Trabert on Thursday, June 25, 2015

The latest jobs report from the Bureau of Labor Statistics showed private sector jobs in Kansas declined by 1,500 in May, to 1.144 million.  Kansas was not the only regional state, however, that lost jobs between April and May; Nebraska and Oklahoma also had declines and their declines were worse.  The May numbers are preliminary and will be revised next month.

Year-to-year comparisons show four states in this five-state region trailing the 50-state average.  But point-to-point comparisons, whether month-to-month or even year-to-year, can be significantly skewed if one or both points happen to contain unusual spikes or declines.

One must examine the underlying components of the BLS job estimates to fully understand the potential impact of such fluctuations, but supersector data is not currently available on a seasonally-adjusted basis.  Month-to-month supersector comparisons are invalid due to seasonal fluctuations so this examination can only be done on a year-to-year basis.  (Note also that Agriculture is not included in the BLS definition of Private Sector.)

Both Kansas and Missouri show small employment gains overall but there are some noticeable differences in several supersectors.   The starkest difference is in Mining and Logging, which includes Oil and Gas Extraction.  BLS doesn’t provide Kansas and Missouri breakouts of oil and gas employment but 2013 GDP data from the Bureau of Economic Analysis lists Oil and Gas as a $1.3 billion industry in Kansas but only $11 million in Missouri.  Kansas’ loss of 1,000 jobs in this supersector is therefore likely to be mostly attributable to changes within that industry.

Job growth is often used as an indicator of how well a state’s economy is performing, and in Kansas’ case, whether tax reform is creating jobs.  Oil and gas production declines certainly impact the Kansas economy but production is mostly influenced by fluctuations in global pricing and local supply.

There were also three manufacturing sectors with disproportionate change that are driven by factors other than the general economic conditions within Kansas and Missouri.  Kansas had 1,000 fewer aerospace jobs but Missouri either doesn’t compete in that category or has too few jobs to meet the BLS minimum reporting requirement.  A similar situation exists with motor vehicle manufacturing; Missouri added 3,800 jobs in a category in which Kansas has no reportable employment, and that estimated 47.5 percent increase could easily be adjusted downward next month.

Both states have reportable employment in Transportation Equipment Manufacturing but Missouri grew by 11.2 percent over the year while Kansas remained steady.  To understand the implications here, one needs to know whether the states produce different types of equipment and whether each is subject to greater degrees of national or global demand. One must also wonder how much of Missouri’s unusual 11.2 percent gain will be adjusted away next month.

These four small employment sectors significantly impacted overall private sector job growth in May.  Missouri grew by 0.7 percent overall but the other 98 percent of its job market only grew by 0.3 percent.  Kansas grew by 0.5 percent overall but absent those four small sectors, all other jobs collectively increased by 0.8 percent.

One game is no indication of a baseball team’s seasonal performance, let alone its long term prospects.  The same is true of a single month’s job numbers.  It may take as much as a decade’s worth of data for economists to sort out disparate industry-specific changes and many other factors (including urban versus rural) to determine the incremental impacts of tax reform.  In the meanwhile, it’s much more important to understand how all of the economic engine’s moving parts are working and look for movement in long term trends.

Posted by David Dorsey on Friday, June 19, 2015

Contrary to media reports and claims by many local education officials, data provided by the Kansas Department of Education shows that state aid to Kansas school districts will increase this year with the new block grants.  How can that be?  Well, when government talks about a ‘budget cut,’ that most often means that the rate of increased spending is less than it desires rather than an actual reduction in spending– and that is the case with block grants and state funding.

Excluding state funding for KPERS, special education, bond & interest and a few small aid programs (as described by Deputy Commissioner Dale Dennis), state aid to schools totaled $2.951 billion last year and will increase to $3.093 billion this year.  The total hits $3.114 billion in the 2017 school year, or 5.6% more than this year.  KPERS spending is expected to increase by $124.4 million over the period, so state aid including KPERS (but not the other exclusions noted herein) would increase by 8.8% over three years. 

Two of the three Lyon County districts will receive more state aid under the block grant approach. Southern Lyon (USD 252) will get 2% more and state aid to Emporia (USD 253), by far the largest of the three districts, will increase more than $1.4 million (4.7%). North Lyon (USD 251), a district that experienced a 6.2% decrease in enrollment in 2014-15 and whose enrollment is down 26.9% over the last ten years, will see a decrease in state aid by 9.3%. This enrollment decline effectively ended North Lyon’s LOB assistance from the state. A full explanation of the phenomenon in which small districts with decreasing enrollment do not receive LOB assistance, while districts like Blue Valley (USD 229) and Wichita (USD 259) receive help intended for “property poor” districts is available here.

A list of all Kansas school districts can be downloaded here.

Total aid to schools will also increase this year to $6.145 billion and set a record for the fourth consecutive year.  The per-pupil amount of $13,343 will set a record for the third consecutive year.  KDSE says the proposed block grants for the current school year total $3.408 billion (updated as of March 25 and including KPERS), but the block grants do not include state funding for Special Education or Bond & http://www.kansaspolicy.org/2015schoolfunding.pngInterest aid.  Including those amounts as listed in the Governor’s Budget Report puts total state aid at $3.982 billion.  A few months ago, KSDE Deputy Superintendent of Finance Dale Dennis estimated Local aid at $1.652 billion and Federal aid at $510 million.

Here is a historical perspective on per-pupil school funding, adjusted upward for KPERS in the years prior to 2005 when it wasn’t included in KSDE funding reports.  The solid blue line shows actual funding and the dashed red line show what funding would have if adjusted for inflation each year.  FYI, funding this year would be $1.541 billion less if it had just been increased for inflation and enrollment.

http://www.kansaspolicy.org/perpupil98-15.png

Posted by Dave Trabert on Monday, June 15, 2015

http://artimg.songfacts.com/ec6f82dab86dd3f7561107c72bf3a2c2-lg.pngThe beat goes on, The beat goes on

Drums keep pounding a rhythm to the brain

La de da de de, la de da de da

 

I’m reminded of this chorus from a Sonny and Cher song every year when new property tax data is released, with a slight variation.  Taxes keep pounding people to the ground.  La de da de de, la de da de da.

The new county property tax data for 2014, which excludes cities, school districts and other jurisdictions, shows the beating definitely is going on.  Over the last seventeen years, 66 counties had population declines AND county property taxes increases that are greater than the rate of inflation.  That is the definition of an excessive tax burden increase on remaining residents, and one must wonder how much those tax burden increases act as a disincentive to population and economic growth in those counties.

The average county property tax increase is 124%.  Only 3 counties increased property taxes less than the rate of inflation. 

  • 31 counties increased taxes between 44% (inflation) and 100%.  
  • 56 counties increased between 100% and 200%. 
  • 14 counties increased between 200% and 300%. 
  • Osage county property taxes were the worst…at 340%, with a 7% population decline.

 A list of all 105 counties with property tax and population change can be downloaded here.  Additional information on large cities and property tax changes inclusive of all jurisdictions within each county is available at KansasOpenGov.org.

There are several reasons why property taxes have gotten so out of control.  For starters, Kansas has 32% more local government employees than the national average (employees per 10,000 residents) and is the 49th worst state in the nation on that basis.  That lousy ranking is mostly caused by having too many local government entities.  Kansas has 1,997 general purpose governments (cities, counties and townships) and therefore only 1,449 residents per general purpose government.  With the national average at 8,108 residents per GPG, Kansas has more than 5 times the national average of local governments on a residents-per-GPG basis!  See pages 15 through 18 in the 2014 Kansas Green Book for sourcing and more information.

Also, the process is heavily stacked in government’s favor.  Government decides the value of one’s property and then sets the tax rate based on what it wants to spend.  There is no consideration of the ability to pay and the appeals process is stacked in government’s favor (although last year’s legislative reforms were good improvements).

There simply is no incentive for local government to operate efficiently.  Cities and counties decide what they want to spend and send you the bill.  The Senate tried to prevent cities and counties from increasing property tax on existing construction by more than inflation without voter approval, but the House took government’s side and watered the proposal down with lots of exceptions.  The legislation that was finally approved is pretty weak and doesn’t even go into effect until 2018.

Cities and counties have taken advantage of citizens for far too long (and haven’t even been honest about the amount of increase).  At the very least, the Legislature should require a public vote for any tax increase that exceeds inflation.  No exceptions, all tax increases count (including from new construction) and no three-year delays.  Local government will fight hard but 2016 is an election year for the House and Senate, so maybe legislators will want to do something positive for citizens.

If not, the tax beating will go on…and cities and counties will be singing the same old song.

La de da de de, la de da de da
Posted by David Dorsey on Thursday, June 11, 2015

 

Auburn-Washburn USD 437 is in the midst of a Local Option Budget (LOB) election, asking district voters to approve an up-to three mill increase in their taxing authority. As part of the effort to convince us to support their request, I received, along with every other USD 437 resident, a propaganda card via USPS last week. The card (of which I have provided both front and back) includes virtually every deceptive tactic used by school districts to cajole voters into supporting a tax increase, including the implication that without this extra money, the futures of little Evan and Clare are in doubt.

I must preface the following remarks by saying that I have largely supported the district’s expansion in the past, having enthusiastically voted in favor of building a new elementary school (Farley) several years ago. I also recognize that as school districts go, USD 437 is well run. Their administrative costs are below the state per-pupil average and are 17th lowest among the 25 largest districts statewide. And undoubtedly the relative quality of USD 437 plays a role in increasing property values in the district. Having said that, it doesn’t detract from the fact that this election is just plain unwarranted. Below is the flip side of the card followed by eight reasons why the election is truly needless.

  1. They already have the money.  As the table shows, USD 437 has a consistent cash reserve balance of about $9 million each July 1. The card says they are going to use cash reserves to cover part of the "Block Grant reductions," but the $386k in taxes they tell us they need represents less than five percent of the district’s cash reserves. If they pulled the $386k from those reserves (taxes they received in prior years but didn't spend), they would still have several million more than in 2008 and prior years, and the district didn't say they lacked sufficient reserves during those years.

  2. They don’t spend the money they budget. In the 2013-14 school year, USD 437 spent nearly $2 million less than budgeted.  Do they really expect the voters to believe they need another $386 thousand (out of a total budget of over $65 million – roughly six-tenths of a percent) to “maintain our excellent schools?”

  3. They use misleading tactics to imply they have, and will continue to suffer budget cuts under the  block grant funding formula. They say (in bold, nonetheless) that the state reduced cash support by over $1.1 million for the current school year. Actually, the truth is under the three-year block grant funding law, USD 437 will get an increase in state aid of $1.4 million from $30.5 million to $31.9 million (4.3%).

  4. They act as if they have no authority over spending. According to the card “expenses are expected to rise next year by $1,252,000.” They speak of costs as if they are analogous to flood waters; that they are simply at their mercy and have no control over them. And this argument gets to the heart of the prevailing mentality that instead of trying to be more efficient with taxpayer money, school districts feel they are justly entitled to more taxpayer money.

  5. It’s simply a last-chance cash grab. Under block grant funding, districts must have LOB elections prior to July 1, 2015 or wait two years.

  6. It’s another false choice, right from the give-us-more-or-we’ll-have-to-cut playbook. The card itemizes six potential ways they “will consider” increasing fees/charges to students and five rather vague ways to reduce expenses. Do they really believe it will take a 1% increase in the LOB (again, that’s six-tenths of one percent of the total budget) to keep from increasing class sizes or from having to “Cut Programs (TBD)?”

  7. Kansas taxpayers are already overburdend and will experience yet another tax increase at the state level. School districts don’t operate in a vacuum. As USD 437 is asking their residents to pony up more money at a local level, the state legislature will be increasing taxes statewide by as much as $470 million. Those of us who will foot this bill can’t simply demand a pay raise to cover our increased food, insurance, transportation, or housing costs. So why should school districts be able to?

  8. It will not improve student outcomes. I saved the most important reason for last. Regardless of the dire implications, the result of this election will have exactly zero effect on the educational outcomes of little Evan and Clare when they enter kindergarten -  three years from now!

 

Posted by Dave Trabert on Thursday, June 4, 2015

At a time when many school districts are issuing misleading statements about school funding to parents, teachers and legislators, recent claims by USD 500 Kansas City set a new transparency low.  A story in the Kansas City Star outlined the district’s plans to reduce spending, which  Superintendent Cynthia Lane blamed on “…years of low state funding, rising costs and the loss this year of $2 million in state money because of a new block grant funding measure….”

Citizens are also dealing with rising costs, and school districts would like to inflict even higher costs on them – more taxes – to fund districts’ financial desires.  ‘Years of low state funding’ is a matter of opinion but data from the Kansas Department of Education and the Kansas Division of the Budget show that state funding and total funding of schools are setting new records this year.

Part of the 2015 increase in state aid ($522 million according to block grant files prepared by KSDE) is money that had been inappropriately recorded as Local aid in prior years (20 mills mandated by the Legislature for all districts) but State aid is still at an all-time high with that adjustment.  Total taxpayer support of public education will also set a new record this year. 

Contrary to Supt. Lane’s implication, however, USD 500 is not getting $2 million less in state aid with the block grant, it is gaining $12.8 million in state aid this year without counting any increases for KPERS, Bond & Interest or Special Education.  What she is really saying – but doesn’t want you to know – is that she wanted an even larger increase and says the district is being ‘cut’ because it didn’t get as much of an increase as it desired.

That is just the beginning of the district’s conscious efforts to mislead parents, teachers and legislators.  “We have cut more than $50 million,” Lane said. “There is no longer any fat left. … I frankly think there is very little left to cut that doesn’t dramatically impact what we do for our kids.” 

 

Budget cut claims don’t hold up

The district has definitely not reduced spending by more than $50 million as implied by Supt. Lane.  They may have budgeted for and spent less than they would like (which is what Supt. Lane is really saying) but they most certainly have not cut spending recently (as she wants you to think).  This comparison of the district’s budget and actual spending over the last ten years shows that spending less than the amount budgeted is rather common but doesn’t necessarily mean that spending was actually reduced; most often, it means that their plan to spend more was reduced.  Districts openly admit that they budget more than they plan to spend to avoid having to re-publish a budget…but conveniently forget to mention that fact when claiming that their budget was cut.

Operating budgets were at record-highs in Kansas City this year and the two previous years; actual spending on current operating costs set records the last two years and likely will do so again this year. 

Operating spending increases between 2005 and 2014 in the Kansas City district have been very large across all cost centers; capital spending also jumped but debt service has been stable.  Administration spending ‘only’ increased by 23 percent but it was well above average in 2005 and was the second highest spender among large districts last year (profligate USD 501 Topeka wins that prize at $1,568 per-pupil).  Shawnee Mission, by comparison, spends $942 per-pupil on administration; spending at that level would save $9.4 million in the Kansas City district, which could be spent on Instruction or returned to taxpayers.

Listening to administrators and media reports, one would think the district is suffering from extreme austerity but district financial reports show otherwise.  And these spending comparisons only reflect what has actually been spent.  USD 500 also boosted operating cash reserves by $26.7 million over the period, going from $25.1 million in 2005 to $51.8 million in 2014.  Operating reserves increase when more money is collected than is spent. 

 

“Very little left to cut” is a farce

Supt. Lane may claim that there is very little left to cut but a July 2013 Legislative Post Audit report on the district says differently; page after page lists recommendations to bring district spending in line with market conditions and reduce costs.   One recommendation was “Reduce Custodial and Maintenance Positions and Salaries” since some salaries were found to be more than 20% higher than paid in the private sector and the district had more staff than comparable districts.  The district response is listed in the audit: “The community and staff will resist any reduction in staff or salaries.  The custodians might unionize if staff positions or salaries are reduced.”

Here is a sampling of maintenance, custodian and bus driver pay taken from an Open Records request of the 2014 school year payroll.  This list reflects the highest paid in these positions and reflects total pay (wages, overtime, bonuses, etc.) but do not include any benefits.  The position titles are shown as provided by the district.

The simple solution would be to outsource this type of work to private sector companies as is done by some districts.  Private sector companies are fully capable of providing these services at the same or better quality and at a better price.

The LPA audit also recommended reducing administrative salaries to market wages through attrition; the district responded by saying “staff would resist any reduction in salaries.”  This table shows pay increases given to the highest paid district employees, all of whom are administrators who mostly received double-digit pay increases over the last two years. 

Supt. Lane told the Star “I absolutely believe if you have to cut people, you have got to start at the top.”  She was referring to the dismissal of Edwin Hudson, chief of Human Relations, and “…30 assessment managers hired three years ago to keep track of state assessment scores so teachers and principals could concentrate more on school instruction.”  Loading up on managers to track state assessment scores that are released once per year (except last year when no scores were released because of technical issues) is symptomatic of district hiring practices.

Over the last ten years, USD 500 increased its management staff by 18.8 percent; management is a KPI-defined label that includes superintendents, assistant superintendents, principals, assistant principals, directors, managers, supervisors and instruction specialists.  Maintenance, transportation and food workers jumped by 45.6 percent, teacher aides more than doubled and a variety of employment categories we lumped into All Other shot up by 42.7 percent.  Enrollment, meanwhile, increased by just 7.2 percent.

Non-teaching staff jumped by a third and total employment is 24.4 percent higher.  The district has one full time equivalent employee for every 5.9 students.

USD 500 has one manager for every 125 students, which is very inefficient compared to other districts.  Shawnee Mission, for example, had one manager for every 210 students last year and has since reduced its administrative footprint because Superintendent Jim Hinson felt it was too large.  If Kansas City had the same pupil / manager load as Shawnee Mission (before it was reduced), they would have 66 fewer managers…and those costs could be made available for instruction instead of suing citizens for more money.

Here’s another example of misleading information from USD 500.  The employee count in the above table comes from official KSDE personnel reports with data provided by each school district.  But USD 500 may have many more employees.  The LPA efficiency audit shows that the district was significantly under-reporting employment to KSDE.  Lest anyone suggest that the KSDE report doesn’t contain categories that capture all of the district’s staff, it should be noted that the Certified Personnel and Non-Certified Personnel reports each have an “Other” category for such purpose.  Consciously and consistently underreporting employment by more than 200 employees fits the district’s pattern of providing misleading information.

 

Misrepresentation by design

The district’s financial position is much different than represented by management, but it should be noted that staff, students and parents are likely experiencing legitimate resource issues.  Frankly, that’s part of a pattern across many school districts, which is intended to gain sympathy and support for higher spending at the expense of others.  USD 259 in Wichita, for example, is telling staff and media that they are suffering a $4.8 million ‘cut’ with the block grants this year when in reality, they plan to spend $87 million more this year. 

The Kansas City district even takes misrepresentation into the courtroom.  I was in the courtroom when Supt. Lane testified that lack of funding was the reason that many of the district’s students weren’t adequately prepared for college and career, but she is on record placing the blame elsewhere, months before she made her court appearance.

When the U.S. Department of Education denied a portion of the district’s proposal to raise standards in a requested waiver from the Kansas Approved Accountability Plan from USDOE, Supt. Lane responded by saying, “The Kansas assessment is not rigorous enough to guarantee that our students are on-track with where they need to be. We have asked to raise standards for our students by administering the MAP, which is a more rigorous assessment, and USDOE is telling us ‘No!’”

The district newsletter in which this quote appears makes no mention of funding; the blame for academic issues is placed solely on sub-standard assessment issues.  Supt. Lane may say that funding is also an issue but the point here is that the story routinely is crafted to maximize sympathy for the desired outcome.

That’s a disservice to staff, parents, legislators and most important, to students. 

Posted by David Dorsey on Thursday, June 4, 2015

We are what we repeatedly do. – Aristotle

The role of kindergarten in the public school landscape has changed dramatically in the past few decades. What began in Germany in the late eighteenth century as a way to transition small children from the home to school using developmentally appropriate learning practices based in play and social interaction has morphed dramatically. Play and social interaction have been replaced with a focus on academic skill building to the point that kindergarten is now commonly referred to as the new first grade.

Much has been researched about the changing face of kindergarten, but this recent article from the Washington Post is from the perspective of a parent of a kindergartener. She describes attending an open house in which the teacher tells the parents “this really isn’t kindergarten anymore.” The teacher goes on to tell them that their children are treated more like first graders because of the emphasis on academics. The article also includes a link to some kindergarten schedules from around the country to support the claim that kindergarten ‘just ain’t what it yoosta be.’

This practice of having an academic driven kindergarten is no stranger here in Topeka. Below is the kindergarten schedule from Lowman Hill elementary (Topeka 501) from the just completed 2014-15 school year:

 8:40 – 9:40 Math Block (calendar and lesson)

 9:45 – 10:30 PE/Music

10:35 – 11:00 Science/Social Studies

11:00 – 11:20 Whole group reading

11:20 – 11:55 Lunch/Lunch Recess

11:55 – 12:35 Wrap-up/Writing

12:35 – 2:15 Guided Reading

 2:15 – 2:30 Recess

 2:30 – 3:00 Math centers/math intervention 

 3:00 – 3:35 Reading intervention and read aloud

 

This schedule is not unique to Lowman Hill. USD 501 prescribes the number of minutes in each of the core academic areas to all the elementary schools. Notice that there is a 60-minute uninterrupted block of time for math in the morning and a 100-minute uninterrupted block of time for reading in the afternoon! Does that seem like it matches the collective attention span of a room full of six-year olds?

But perhaps what is even more telling than the total minutes spent on academics in kindergarten each day is the relative time compared to how the other grades spend their day. The table below shows the number of minutes that makes up the school day for each grade. Every USD 501 student regardless of grade gets the same amount of recess, physical education, music and lunch. And it is kindergarten that spends the most time daily in reading and language, a full half-hour more than fourth graders and fifteen minutes more than fifth grade!

Even just a few decades ago it would have been unthinkable that the daily schedule of a kindergarten class would mirror a first grade class, let alone upper elementary grades. So how did this happen and does it improve academic performance and promote social skills?

There is no question the focus on academics in kindergarten grew out of declining outcomes produced by the public school system. It stems from the perception that the younger one starts, the more successful one will be. (If we followed that philosophy when it comes to driving, nobody could afford car insurance!) However, there is research-based evidence to the contrary. A recent article in Psychology Today cites studies that show academic-based kindergarten models demonstrate no long term academic improvement and can actually harm social and emotional development. Research has shown that “children’s immediate scores on the specific tests” increase, “but these initial gains wash out within 1 to 3 years and, at least in some studies, are eventually reversed.  Perhaps more tragic than the lack of long-term academic advantage of early academic instruction is evidence that such instruction can produce long-term harm, especially in the realms of social and emotional development.”

But instead of taking this evidence and reversing the academic-based kindergarten approach, the movement, inexplicably, is to start children on an academic-based path even earlier, having downshifted to pre-school.  In President Obama’s State of the Union address in 2013, he outlined a plan for universal pre-school. And this idea is shared across partisan lines with many Republicans embracing pre-school, as well as the conservative business community. And when there is universal pre-school and it becomes the new kindergarten, undoubtedly there will rise some sort of  pre-pre-school.

Where will it stop? When will we let kids of that age just be kids and let them learn at more age appropriate levels? This brings to mind an exchange I overheard between a principal and a pre-school teacher (I taught in a school that has full-day pre-school.) As I was approaching them in the hallway, I couldn’t help but overhear a discussion they were having about a particular boy who was having some problems in the pre-school classroom. As I was passing, I heard the principal tell the teacher, and I swear I’m not making this up: “He obviously isn’t ready for pre-school.”

Not ready for pre-school? I didn’t know that was possible. But that statement sums up the all-enveloping attitude of the education establishment: let us have control of the kids a year earlier than now, and when that doesn’t work, give them to us a year earlier.

Perhaps someday we’ll come to our senses and return to the core values of when I was in half-day kindergarten inside the Methodist church in Redfield, South Dakota: how to stand in line, don’t hit the kid next to you, and don’t eat the paste. All that, of course, after we had a nap.

I think Aristotle would approve.
Posted by Dave Trabert on Tuesday, June 2, 2015

Imagine how your property tax bill would look if cities and counties were only permitted to increases taxes by inflation unless voters said taxes could go higher.  It’s not a fantasy; legislation pending in Topeka could make that happen shortly.

Had such a law been in place since 1998, property taxes levied by the 25 largest cities would have been $135 million lower last year and county property taxes (not including cities, schools, etc.) would have been $574 million lower.  That would equate to an average reduction of 29 percent for major cities and 36 percent for counties.  The savings over the entire period would have been $1.535 billion for taxpayers in those cities and $4.348 billion for county taxpayers; combined savings would have been $5.882 billion if citizens had not allowed taxes to increase beyond the rate of inflation.  A list of those cities and all 105 counties is available here.

Your property tax won’t be reduced if this legislation passes but we can estimate what it would be worth going forward.   The change in the annual Consumer Price Index for Midwest Urban Cities was 1.5 percent last year.  Those 25 cities increased taxes by 2.0 percent last year and the average county increase was 3.3 percent.  If we assume that cities and counties would continue to increase at those rates without your permission over the next ten years and inflation continues at 1.5 percent, the proposed legislation would result in total city and count savings of $1.546 billion (assuming citizens voted to hold property tax increases at inflation).  If we assume cities and counties would all increase by 4.0 percent and inflation is 2.0 percent, the combined savings would be $2.232 billion.

Stay tuned.

Posted by David Dorsey on Monday, June 1, 2015

The Lawrence Board of Education reviewed a proposal to cut and reallocate more than $1.2 million from next year’s budget as a response to the new block grant education funding law. Superintendent Rick Doll said in this USD 497 news release “the new [block grant] system decreases state aid revenue for Lawrence Public Schools…we would lose an estimated $2 million in LOB and capital outlay state aid.”(emphasis added).

“Lose” – that’s a typical, and very misleading, word choice Superintendent Doll used to describe the fiscal impact over the next two years under the new funding law. The fact is USD 497 received a 16% increase, from $3.68 million to $4.27 million, in LOB state aid this year. Capital outlay funding is the same, zero dollars, as it was prior. The $2 million ‘loss’ isn’t an actual reduction, but represents the increase the district anticipated getting – which is a pillar definition of a ‘cut’ when it comes to government spending. According to KSDE figures USD 497 will see an increase from $58.9 million to $61.7 million in state aid (excluding KPERS, special education, and bond and interest payments) with the new funding law. But even that doesn’t tell the whole story.

Two other considerations provide a clearer fiscal picture of USD 497.

Amounts Budgeted vs. Actual Spending

As the adjoining table exhibits, USD 497 has a history of spending millions less than actually budgeted. Perhaps closer scrutiny of the discrepancy between amounts budgeted and actual expenditures would mitigate the need for spending time and energy looking for places in the budget to cut.

 

 

Cash Reserves

Lawrence USD 497, like most other Kansas districts, has a consistent, healthy cash reserve available. Not only is it vigorous, but as the table shows, it has exploded in the past decade. Superintendent Doll recommended using “contingency reserves” to fund any shortfall for this year if tax collections were not as expected. However, he cautioned that “as the district uses reserves, we deplete funds that may be needed for emergencies or to bridge future funding gaps.” Well…doesn’t this fit his definition of a “future funding gap?” It’s pretty hard to work up a sweat over taking a couple million out of contingencies when there’s consistently over $35 million on hand.

The newsletter made reference to a possible increase in the mill levy to “prevent $2 million in budget cuts for the 2015-16 school year.” This was made by Doll at the April board meeting and parents were sent a letter to that effect.

I wonder if the letter included the particulars that the district spent $8.3 million less than budgeted last year and began this school year with more than $35 million in the bank.

Trying to comprehend their conduct reminds me of a Looney Tunes cartoon in which the bulldog, Marc Antony, is using an adding machine in an attempt to make sense of the strange behavior of the two mice, Hubie and Bertie, and Claude Cat.

Suppose he was trying to make sense of what USD 497 is proposing.

Marc Antony: Let’s see, the district spends about $8 million less than is budgeted (clicks on adding machine). And they have about $35 million in the bank (clicks on adding machine). They’re getting more money from the state next year (clicks on adding machine). And so they’re cutting out $1.2 million and may ask for $2 million more from the Lawrence taxpayers (clicks on adding machine, pulls up tape and stares in confused disbelief). IT JUST DON’T ADD UP!

I couldn’t have said it better.
Posted by Patrick Parkes on Friday, May 29, 2015

Much has been made of newly released Bureau of Labor Statistics (BLS) numbers pointing to a slight decline in private-sector job growth in Kansas from March to April. Kansas did experience a 0.3% decline, but the small decline is not unique to Kansas.  Regional neighbors Missouri and Nebraska faced similar monthly declines of 0.2%, and ten other states across the nation also had small declines in April, including job-powerhouse Texas. Oklahoma grew by 0.3%, and while Colorado posted growth of 0.1%, that small gain was a rebound from an unusual decline in March.  The Kansas decline is pretty clearly part of a national and regional slowdown.

Yet, as previous monthly jobs updates on this blog have highlighted, looking solely at job growth in month-to-month snapshots is problematic. The numbers released each month are preliminary and are thus subject to fluctuations and subsequent revisions months—and, in some cases, years—after the fact.

A more reliable and comprehensive picture of job growth comes from looking at a year-to-date average number of jobs in 2015 for each state and comparing it to that state’s 2014 average over the same period of time.  Kansas, for example, achieved private-sector job growth of 1.4% when comparing its average number of jobs from January-April 2015 to its average number of jobs from January to April 2014. This growth rate bested Nebraska (1.2%), tied Missouri (also 1.4%), nearly tied Oklahoma (1.5%), and trailed Colorado (3.3%).

Contrary to frequent “sky is falling” narratives tying tax reform in Kansas to lagging job growth, Kansas has actually become much more competitive with its income-taxing peers in the two years post-tax reform than it was prior to reform. Pre-tax reform, in the fourteen years from 1998 to 2012, private-sector job growth in Kansas was just 2.2%, or 61.01% of the growth its income-taxing peer states achieved in that timeframe. In the two years post tax-reform, from 2012 to 2014, comparisons of annual jobs averages from 2012 and 2014 show that Kansas has experienced private-sector job growth of 3.47%, or 86.21% of the growth of its income-taxing peers.

Check back for next month’s update.           

   

Posted by Patrick Parkes on Friday, May 22, 2015

Thumbtack.com has begun tapping its nationwide network of independent service providers and contractors to build a monthly survey—released for the first time Tuesday—tracking economic outlook sentiments and unique market challenges small business owners face across the 50 states. The survey has been two and a half years in the making and is a unique one given its targeted focus on a business-owning demographic cohort that is often too small and/or too mobile/seasonal (over half of the respondents are sole proprietors) to be represented reliably in more traditional surveys comprised of typically larger businesses. Some of the interesting findings for Kansas were as follows:

  • 53.8% of Kansas respondents in April 2015 believed business conditions in the state would be either “a little better” or “much better” in the next three months.
  • 77% of respondents expected their employee compensation to remain the same in three months, but a sizable 21.3% expected to offer their employees “a little” or “a lot” in terms of a pay increase.
  • In a section on “Top Problems” small business owners in Kansas face, concerns voiced about “uncertain economic conditions” dropped by 5% compared to last year.
  • Small business owners in Kansas shared the positive sentiment expressed by the majority of small business owners in each of the rest of the 50 states by reporting feeling “somewhat positive” about the state and local business climates they inhabited. For the business owners in Kansas, this represented a continued, steady improvement in sentiment over the past eighteen months.

You can track the monthly updates directly from Thumbtack.com and we’ll be sure to note any significant findings in this space.

Posted by Dave Trabert on Wednesday, May 20, 2015

The latest misleading claim on job growth from the Kansas Center for Economic Growth is loaded with misleading and irrelevant information; they don’t fully disclose their methodology and at this writing they have ignored our request to explain it.  Sadly, this is not the first, second or even third time that KCEG has published misleading information and declined to produce documentation.

Here are the questions we posed to Annie McKay, executive director at KCEG:

We received a ‘read’ receipt but no reply, so we attempted to replicate their methodology to arrive at what they call “private sector job growth since tax changes” which they measure between January 2013 and March 2015.  Based on tests of Kansas and national data, it appears that KCEG is using seasonally adjusted jobs but we couldn’t find a 6-state region including all of Kansas’ neighbors to match their number.

KCEG has the national average increasing 5.2% and Kansas 3.8%, so we assume they are comparing January 2013 to March 2015.  This is not a true measure of post-tax reform activity, however; the base month of a point-to-point comparison should be the last month of the old tax system, which was December 2012.  Comparing Kansas to the 5-state region does show that Kansas is slightly behind (4.0% vs. 4.2%) but by not showing the performance of individual states, KCEG hides the fact that Kansas beat three of its four neighbors.   

While Kansas is outperforming three of its neighboring states on this measurement, point-to-point comparisons are problematic; one or both points can be unusual spikes or declines, making the data less reliable.  The Bureau of Labor Statistics also publishes average annual employment, which minimizes the impact of any single data point.

The more stable comparisons of average annual employment show job growth trends for Kansas to be much more competitive since tax reform.  Private sector jobs grew just 2.2% between 1998 and 2012, which ranked Kansas at #38, but Kansas moved up to #27 in 2013 and last year moved up again to #21.  That’s still not good enough and it will take perhaps another decade to fully understand the impact of tax reform, but the early trend is very encouraging.  Kansas still trails Colorado, but has improved its competitive position.  The table below shows Kansas trailed Colorado by a factor of five (2.2% vs. 10.6%) between 1998 and 2012 but has since closed the gap to a factor of two.

KCEG noted that Utah and Idaho have higher taxes on “the wealthy” and better job growth than Kansas, but of course they don’t tell the whole story.  Kansas does have a lower marginal rate than both states but that is a recent development; Kansas was higher than Utah until 2013 and much closer to Idaho when the marginal was 6.45%.  Kansas’ lower rates are helping to reverse trends but it will take much more time to catch up to states that historically grew much faster – like Utah and Idaho.

Here’s the rest of the story that KCEG doesn’t want you to know.  According to the Tax Foundation, the corporate income tax rate in Kansas is 40% higher than Utah’s and just slightly below Idaho’s.  State sales tax rates are comparable but Kansas has much higher local sales tax rates. 

Utah and Idaho also have much lower property taxes on commercial and industrial real estate. Kansas has the 10th highest effective tax rate on urban property and the worst in the nation on rural property!   Part of the reason that Kansas has very high effective tax rates is baked into the State Constitution, where Commercial and Industrial property is assessed at 25% of appraised value but Residential is assessed at 11.5%.

The other major factor driving up property taxes is that Kansas has too much government.  Kansas and Utah have about the same population but Kansas has 1,997 cities, counties and townships whereas Utah has only 274.  Idaho has just 244.  Extra government means extra government employees (and higher taxes to pay for all of that government); Kansas is ranked #47 in government employees per 10,000 residents (i.e., the 3rd worst in the nation) but Utah is ranked #15 and Idaho is #9.

These truths about private sector job growth and relevant competitive issues with Utah and Idaho are typical of KCEG efforts to mislead citizens and legislators – and probably explain why they refuse to engage KPI in public debates on tax, spending and education issues.

Posted by David Dorsey on Monday, May 18, 2015

The USD 501 school board voted unanimously on April 29 to hold an election to increase the district’s local option budget (LOB). They claim the $3 million that could be raised with voter approval is necessary “in the face of state budget cuts.”  The district held three public meetings to discuss how to deal with what they called a $1.6 million cut in state funding this year and $2 million over the next two years. KPI has shown in this blog that Topeka Public Schools will actually get a total increase in state aid of 6.5% over the three years of the new block grant funding law.

But that’s not how a school district sees things. To the educrats, a cut means getting a smaller increase than they had planned.

If I were the suspicious type, I might think the meetings were just a ruse, using the implicit threat of cutting school programs in order to scare the public into supporting an override election to raise more money.

The purpose here is not to revisit the increase vs. decrease debate. The purpose here is to discuss the spending side of the equation and show just how easy it would be for USD 501 to meet their self-defined shortfalls – and without having any impact on students.

First, here’s a little perspective on the realities between what is budgeted and how much is actually  spent. The adjoining table shows the millions that have gone unexpended for the last four years. Given this recent history, it’s hard to imagine that a $1.6 million “cut” from the budgeted $203 million 2014-15 budget is even a concern, let alone cause for an election.

Even if one concedes the point of a revenue shortfall, should the taxpayers of USD 501 (in the name of full disclosure, I do not live in the district, so I don’t have a dog in this hunt) shell out more money to the district? Or could the district find ways to reduce spending and operate more efficiently (a concept foreign to any government organization)? As a former employee of USD 501 I can attest that finding a savings of what amounts to $114 per pupil should be pretty easy to accomplish.

I offer these three opportunities that would reduce spending far in excess of what the district calls a cut and save local taxpayers the burden of providing more financial support to a district that won’t look seriously at reducing spending.

Reduce a bloated administration

As the table shows, Topeka Public Schools has the highest per pupil administrative costs of the 25 largest districts in the state. A glance at their own budget document reveals the costs are trending significantly higher. The 2013-14 costs were a 14% increase from the previous year. The USD 501 2014-15 budget for administration and support of $28,301,407 is a whopping 25% higher than 2013-14! That’s an increase from two years ago of 41.8% when administration costs were just under $20 million.

Some of that increase can be explained by the decision made by the USD 501 school board to drastically increase salaries of the administrative staff by $435,400 in the summer of 2013 in the name of being competitive with other districts. Perhaps if USD 501 was “competitive” in terms of administrative costs per pupil, there would be no issue.

 I’m guessing these facts didn’t come up at the public meetings.

Put literacy and math coaches back in the classroom

Little-known to the public is that in every USD 501 school there are licensed teachers who do NOT teach students. They are known as math coaches and literacy coaches. Each school has at least one coach and most have more than one. What is their job, you ask? They are in the buildings to help classroom teachers do a better job. Furthermore, USD 501 forbids the coaches from directly teaching students, except in special circumstances. They are there to teach the teachers.

There are several reasons the practice of having licensed teachers be coaches should end.

  • “Teaching the teachers” is what professional development is supposed to do.
  • Dealing with ineffective teachers should be the job of the principals, not other teachers.
  • Since coaches have no contractual authority over teachers, teachers do not have to utilize coaches. In practice, that means teachers who are least effective don’t solicit assistance from the coaches, so the coaches end up spending most of their time with the most effective teachers.
  • Many coaches use the position as a stepping-stone toward getting into administration.
  • Most of the coaches are among the best teachers in the district and should be with students, not other teachers.

To be fair to USD 501, math and literacy coaches are an educational trend and most districts now employ them. However, it doesn’t stray from the fact that money spent on coaches doesn’t directly benefit students. In fact, students lose out anytime a quality teacher chooses to become a coach and leaves the classroom.

Putting just one coach per building back in the classroom through attrition would go a long way toward dealing with the budget “cut.”

Cash reserves

The district could easily deal with any short-term budget issue simply by using their current operating cash reserves. The following table shows USD 501’s cash reserves for the past ten years. The table not only shows the district had in excess of $24 million from which to draw at the beginning of this school year, but that is 56.2% more than a decade ago. I doubt they explained that fact to the patrons at the public meetings.

 

I now present a rather conservative approach to dealing with the “budget cut.”  A 5% reduction in administration, returning just one coach in each building to the classroom, and tapping 10% from the operating cash reserves, hardly Draconian measures, would generate nearly twice as much as they could take from the voters.

Savings Category

Spending reduction

5% reduction in administration costs

$1.41 million

Returning 1 coach to the classroom (through attrition) in each traditional public school building – 26 X $60,000 (salary/benefits)

 

$1.56 million

10% from operating cash reserves

$2.47 million

Total reduction

 $5.44 million

Board member Patrick Woods was quoted as saying K-12 funding is a “state responsibility.” Maybe it’s time the state starts taking responsibility for how the money gets managed.

Posted by David Dorsey on Thursday, May 14, 2015

Note: Since the undertaking of this at-risk project, the school funding formula has changed to what’s commonly referenced as the block grant system. At-risk funding as a distinct pot of money technically has expired although the money  still goes to the schools. The block grant approach is scheduled to sunset after the next two years when the legislature rolls out a new funding formula. It is highly likely at-risk funding will re-emerge in some form. This blog describes the at-risk program status immediately prior to the change in the law.

In the first two blogs I detailed what at-risk funding is and the philosophy/research/politics behind the justification for additional funding to adequately educate low-income students. In this blog I will describe the history of at-risk funding in the Sunflower State and how it is we are where we are today.

Although Article 6 of the Kansas constitution gives the responsibility for funding public education to the state legislature, which would include the at-risk program, the force behind the present level of state education funding came from the judicial branch. In particular, two court cases have shaped the current state of the Kansas at-risk program.

Mock v. State of Kansas (1991)

This case challenged the constitutionality of the existing school funding formula – the 1973 School District Equalization Act. Without getting into the depths of the opinion, Judge Terry Bullock’s ruling included a directive to spend more money on those “pupils of low socioeconomic status (who) need compensatory education to offset the natural disadvantages of their environment.” Judge Bullock’s decision spawned at-risk funding as part of the new education finance law in 1992 - the School District Finance and Quality Performance Act (SDFQPA).

Beginning in 1992 a 5% weighting over and above base state aid per pupil (BSAPP) was provided for each student who qualified for a free lunch under the Department of Agriculture’s National School Lunch Program (NSLP). In the first year of the new law approximately 72,000 (16.8%) Kansas students qualified for at-risk funding, generating just over $13 million. The weighting stayed at 5% until the 1997-98 school year, when it was increased to 6.5%. By the 2001-02 school year, the weighting had increased to 10% (with 1% targeted toward 3rd grade mastery reading). It remained at that level for four years. By the 2004-05 school year, about 135,000 students state-wide (30%) were receiving free lunch which generated about $52 million in at-risk money.

Then came the next court case.

Montoy v. State of Kansas (1999 – 2006)

The SDFQPA faced a legal challenge beginning in 1999 which worked its way through the court system until fully resolved in 2006. Much has been written and discussed about the Montoy decision and the profound impact it has had on education financing in Kansas, including where the state currently stands with regard to at-risk funding.

The starting point of this progression began in 2001. The legislature commissioned the firm of Augenblick & Myers (A&M) to do a cost study analysis of providing an adequate education to the students of Kansas. The study was supposed to be based on efficiency, but A&M deliberately deviated from their methodology to produce inflated numbers. In its final analysis, A&M recommended an increase of a minimum of $773 million to suitably fund public K-12 education.

The legislature attempted to preempt Supreme Court intrusion by expanding the pot by $141.1 million in 2005, which included an increase in the at-risk weighting from .10 to .193. Additionally, the legislature directed Legislative Post Audit (LPA) to “conduct a professional cost study analysis to determine the costs of delivering the kindergarten and grades one through 12 curriculum, related services, and other programs mandated by State statute in accredited schools.” The LPA study, presented in January 2006, recommended an additional $316 million using an input-based approach or an increase of $399 million using an output-based approach. These recommendations notwithstanding, LPA specified the findings were made to help the legislature decide “appropriate funding levels” and that the recommendations weren’t “intended to dictate any specific funding level, and shouldn’t be viewed that way.”  

Ultimately, the court used the A&M study and made the unprecedented decision of ordering the legislature to increase school funding by $853 million (adjusting the A&M findings for inflation). Note: former KPI scholar and current Supreme Court Justice Caleb Stegall describes in detail the methodological shortcomings of both the A&M and LPA studies in “Analysis of Montoy vs. State of Kansas.”

Although the Court did not specifically address particular funding categories, such as at-risk, much of its opinion addressed their concerns with the various student weightings, including at-risk. The Court concluded that the current weightings (.193 for at-risk) did not reflect an actual cost basis, but were rather increased merely as a “good faith effort toward compliance.”

The legislature responded to the court order by significantly increasing the at-risk weighting, but there is no evidence it was done on an actual cost basis, as referenced by the Supreme Court.  That conclusion is based upon a review of the two cost studies.

Cost basis for at-risk funding – two viewpoints.

Augenblick & Myers. The A&M study included a method to calculate the additional cost of serving at-risk students. It differed from the existing weighting system because A&M considered the size of school a function of the cost, while the current system weighted students the same regardless of school size. A&M created a sliding formula giving the students attending the state’s smallest schools a weighting of .20, while students at the largest schools were weighted at .60, employing an assumption that it is more expensive to educate at-risk students in the larger schools.

Legislative Post Audit (LPA). LPA’s cost model changed the current weighting (2005) from .193 to .484. They also created a new at-risk category called “Urban Poverty” with an additional weighting of .726 to the four districts of Kansas City (USD 500), Kansas City-Turner (USD 202), Topeka (USD 501), and Wichita (USD 259) citing “significantly higher costs incurred in high-poverty, inner-city school districts” that experience “a variety of more serious social problems including drugs and violent crime.”

The legislature’s response.

 The legislature complied with the Court, phasing in the directive over a three-year period. Although they satisfied the $853 million order the Court based on the A&M report, the legislature did not utilize the A&M at-risk method. A review of committee meeting minutes and various documents/plans that were proposed to increase at-risk dollars during the 2006 legislative session did not reveal any discussion of using an “A&M-style” sliding scale or any cost-based funding scheme. The legislative compromise forged a new funding formula that included elevating the at-risk weighting to .278 in 2006-07, .378 in 2007-08, and .456 beginning in 2008-09. The legislature also created a compound category called “high-density at-risk” that gave additional weighting to students in some districts based in factoring a high rate of at-risk students and the per-square mile density of the student population. See this blog for the exact definition. (Also the new law established a small at-risk category for those who were not eligible for free lunch but were not proficient on state assessments. This category was eliminated in 2014.)

The adjoining table shows how much more it would have cost the state, had the legislature chosen either cost study. This year alone, the A&M approach is almost a half billion dollars more than current level. The LPA method would have cost taxpayers nearly $150 million in increased at-risk spending.

 

 

The following table summarizes the at-risk weighting percentages by year since its inception in 1992.

 

 

Please note that since 2001, a weighting of 1.0 is dedicated to mastery of 3rd grade reading skills and these weightings since 2006 do not include the high-density category(ies).

So, this is where we are and how we got there.

Up next: A review of how schools districts spend at-risk money.

Posted by Patrick Parkes on Thursday, May 14, 2015

The U.S. Supreme Court will rule in June on King v. Burwell: a case that could spell the end of the Affordable Care Act (aka the ACA or Obamacare) as we know it if the Court disallows the ACA’s federal health insurance subsidies in 34 states (68% of the country) and thus prevents the law’s individual and employer mandates from taking effect in those states.

The ACA called for the creation of health insurance marketplaces (aka health exchanges), or online portals allowing individuals lacking insurance coverage through their employers to purchase ACA-approved coverage with the help of federal subsidies. To date, 34 states declined to assume the administrative and financial burdens of building and running their own exchanges: burdens that—as the Washington Post reported on May 1, 2015—continue to mount. They opted instead for the federal government to run exchanges for their states.

To date, only 16 states and Washington, D.C. have established and are running their own, purely state-based exchanges without federal managerial support. The distinction between state and federal management of exchanges is important given the ACA’s explicit text dealing with distribution of federal subsidies to consumers purchasing health insurance coverage on exchanges. Specifically, the ACA notes the availability of federal subsidies in “Exchange[s] established by the State.” Thus, if one reads and interprets the legislation verbatim, individuals operating in the 34 federally managed exchanges NOT “established by the State” would be ineligible to receive federal subsidies when purchasing their coverage. The federal subsidies are designed to offset the higher costs associated with the highly-standardized, ACA-approved plans, but they are also the key triggers to the ACA’s individual and employer mandates to purchase coverage. So, if these subsidies are non-existent in any state, the mandates cease to take effect in that state. This is the core issue at the heart of King v. Burwell. If the Court rules in favor of the plaintiffs in the case, Obamacare—for all intents and practical purposes—will be inoperable in the 34 states with federal exchanges while continuing to operate in 16 states (and Washington, D.C.) with state-run exchanges.

The federal government—arguing for full preservation of the ACA—has tried to downplay the “Exchange established by the State” phrasing as simply a “term of art” applying to all exchanges—both state-run and federally-run. It argues that this interpretation has to be correct and that the phrasing cannot possibly be interpreted literally given the legislative intent of the act to provide everyone in every state with affordable health insurance. But there are problems.

Cato Institute scholar Michael Cannon, speaking at an event sponsored by the Show-Me Institute in Kansas City in March, identified several holes in and outright evidence contrary to the government’s line of reasoning and broader case.  To begin, Cannon noted that the U.S. Congress chose the ACA and its omission of reference to subsidy availability (read: unavailability) on federal exchanges over other bills that explicitly provided subsidies on federal exchanges. Furthermore, rather than being highlighted as an unfortunate feature of the ACA and corrected, the omission survived several rounds of revisions to the ACA’s text and reference sections.    

A second curious omission that—as Cannon contended—signals true legislative intent occurs in the way the ACA defines a “State” as the 50 recognized states of the United States plus Washington, D.C. The inclusion of Washington, D.C. — which is not a U.S. state —as a “State” for the ACA’s purposes suggests that Congress could have defined the federal government as a “State” for the ACA’s purposes as well if it intended for federally-run exchanges to be eligible for subsidy distribution as “Exchange[s] established by the State.” So, the fact that it did not define the federal government as such is telling.

Outside of the ACA’s pure textual construction, MIT economist Johnathan Gruber, who was a key architect of both Obamacare and similar state legislation predating it in Massachusetts (aka Romneycare), verified exactly what the plaintiffs are arguing about the ACA. Gruber said in a 2012 video, speaking to an audience at the Nobilis Innovation and Collaboration Center, “I think what’s important to remember politically about this is if you’re a state, and you don’t set up an exchange, that means your citizens don’t get their tax credits.”    

Additional evidence from both Department of Health and Human Services (HHS) and the Internal Revenue Services (IRS) efforts to implement the ACA also point to a broader administrative understanding that subsidies were to be distributed only to state-run exchanges. See Scot K. Vorse’s work on ACA-related administrative action timelines and correspondence for further reading on this topic.

 Looking beyond the evidence undergirding the plaintiffs’ argument and looking specifically at the dynamics of the case before the Court, Cannon characterized the case as an uphill battle for the plaintiffs given that they are challenging a federal agency. However, in light of the fact that the U.S. judicial system has been largely deferential to federal agencies and their decision-making prerogatives over time, King v. Burwell’s ascension to the U.S. Supreme Court could speak to the strength of the plaintiffs’ challenge.

In their own readings of the proverbial tea leafs, supporters of the government’s “legislative intent” argument zeroed in on a particular statement from Justice Anthony Kennedy as a sign that the Court couldn’t possibly interpret the ACA as written due to the dire consequences such an interpretation would bring. In a statement addressing the attorney for the plaintiffs Kennedy opined:

 “From the standpoint of the dynamics of Federalism ... there is something very powerful to the point that if your argument is accepted, the States are being told either create your own Exchange, or we’ll send your insurance market into a death spiral.”

Yet, Cannon offered a different take. Perhaps Justice Kennedy's comment provides a window into a line of thinking that the ACA's explicit "Exchange established by the State" language regarding subsidy distribution was designed deliberately to coerce states into setting up their own health exchanges. If Kennedy and four other justices needed for a majority do indeed settle on a ruling that classifies the ACA's subsidy provisions as coercive, the ruling could have implications beyond the ACA as precedent from which other federal-state agency relationships and mandates deemed coercive could be challenged.

In any case, Kennedy's vote and influences on the Court's decision overall are sure to be followed particularly closely given his role as the proverbial "swing vote" on a Court that has the potential to otherwise split evenly across liberal and conservative ideological fault lines.

Check back in June for a post-decision update and analysis.       

 

 

   

 
Posted by Dave Trabert on Wednesday, May 13, 2015

While some school districts and special interests claim state aid to schools is declining this year, KSDE Deputy Commissioner for Finance Dale Dennis confirms that state aid to schools is increasing.

 

KSDE published spreadsheets comparing block grant equivalent funding for the 2013-14 school year with block grant funding for this year and the next two school years.  SF15-092 shows total funding last year was $3.263 billion including KPERS and $2.951 billion without KPERS.  SF15-109 shows total funding this year of $3.408 billion including KPERS and $3.093 billion without.  Even excluding KPERS, state aid to schools under the block grants will increase by $142 million. 

 

Posted by Patrick Parkes on Monday, May 11, 2015

Bureau of Labor Statistics private-sector jobs numbers through Q1 2015 show Kansas continuing to become increasingly competitive with its income-taxing peers post-tax reform of 2012. First quarter job growth was a little less than the full year of 2014 (1.9%) but still more competitive than before tax reform.  Kansas’ job growth was at 67% (1.52% vs. 2.27%) of the rate of its income-taxing peer states. It was at 61% of this rate prior to tax reform.


Private sector job growth is more meaningful than non-farm growth, which includes government.  The point of tax reform was to grow the private sector, not government.  After all, the health of an economy is best measured by growth in the private sector because the private sector provides the vast majority of funding to run government.

The Bureau of Labor Statistics updates prior years’ data in the first quarter of each year, and the revised numbers show that Kansas did much better in two years following tax reform than in the fourteen years preceding.  Kansas was much more competitive with its income taxing peers (86% of their growth since tax reform but only 61% prior) and with the states without an income tax (55% versus 15%).


 Check back for next month’s update.

Posted by Patrick Parkes on Monday, May 4, 2015

The following guest post is written by Michael LaFaive  of the Mackinac Center For Public Policy and Todd Nesbit, Ph.D., of Ohio State University.

Various proposals would raise excise taxes on cigarettes, one by as much as $1.50 per pack among other items. This is a bad — if not irrational — choice for Kansas given the large raft of unintended consequences associated with it for little in the way of public health advances.

Raising cigarette excise taxes by almost 190 percent would mean Kansas would be surrounded by states with lower — sometimes dramatically lower — excise taxes. The tax-driven price difference between cigarettes in Kansas and nearby states will represent an opportunity by both casual and organized smugglers to profit handsomely from tax avoidance and evasion.

The Michigan-based Mackinac Center for Public Policy annually estimates the degree to which cigarettes are smuggled in most states. Its statistical model tells us that through 2013 Kansas had a smuggling rate of 15 percent, ranking the Sunflower state 19th among the 47 in the study.

But that estimate reflects a tax rate of 79 cents, not $2.29 per pack. At the higher rate, however, the model tells us that Kansas’ smuggling rate will leap to a stunning 46.5 percent of the market. That is, of all the cigarettes consumed in Kansas after this excise tax increase nearly 45 percent will be a function of tax avoidance or evasion. At this rate Kansas will sport the third highest smuggling rate in the nation, behind New York and Arizona.

It is not hard to see why. In addition to being surrounded by lower tax states Kansas is located next door to the lowest tax state in the union, Missouri, at just 17 cents per pack. This is probably why the model also tells us that 26.5 percent of total smuggling will be of the “casual” variety, such as individuals grabbing a carton while in other areas of KCMO.

Lest the reader believe that these estimates are outrageously high consider that the Mackinac Center is not the only institution attempting to measure smuggling rates among states. On February 19 of this year the Institute of Medicine and National Research Council published a study on tax evasion and tax avoidance and pegged Kansas’ 2011 smuggling rate at 21 percent, far higher than the Mackinac Center’s own estimates.

The study, titled, “Understanding the U.S. Illicit Tobacco Market: Characteristics, Policy Context, and Lessons from International Experiences” pegs the national market for illicit smokes at between 8.5 percent and 21 percent. The latter figure is cited from others scholars’ “plausible estimates” published in 2013 and based on data from 2009 and 2010.

These smuggling numbers are why lawmakers should never confuse changes in legal paid sales of cigarettes with quitting. Time and again burgeoning illicit markets undermine the health goals of very well-intentioned public officials.

In his 2004 study titled “Cigarette Tax Avoidance and Evasion,” economist Mark Stehr reports that up to 85 percent of the after tax change in legal paid sales can be attributed to avoidance or evasion. That is, official sales are declining, but people aren’t necessarily quitting.

The authors of a 2014 study in the academic Journal of Economic Inquiry titled “Do Higher Taxes Reduce Adult Smoking?” argue that “considering all the evidence, we conclude that there is insufficient justification for the widespread belief that raising cigarette taxes will significantly reduce cigarette consumption among adults, even young adults.”

The reason is probably fairly straight forward. People like to smoke and are willing to turn to less expensive roll-your-own products or to the illicit market or both to acquire tobacco.

Of course, smuggling is not the only unintended consequence of higher tobacco taxes. High tax states like New York or Michigan have also seen violence against people, police and property as well as thefts at the retail and wholesale levels.

Lastly, Kansas doesn’t need to raise taxes on this or any other activity. The Kansas Policy Institute informs us that the state is planning to spend nearly $1 billion more (adjusted for inflation) than it did in 2004.

The budget must be balanced but perhaps lawmakers should kick the spending habit before taxing those with a smoking habit.

 

 

 

Posted by Dave Trabert on Friday, May 1, 2015

Some of the push to raise tax revenue in Kansas is being couched in terms of fairness, as in, ‘why should one group be exempt from income tax but others must pay tax.’ The focus of those discussions are the businesses organized as Limited Liability Corporations (LLCs), partnerships and other business entities that are taxed as Individuals instead of Corporations.

There is another group that has been exempt from state income tax for decades – state and local government retirees’ pensions - but legislators and other tax-equity proponents have been oddly silent about the inequity of having private sector retirees pay income tax on their retirement benefits.

As explained in our 2011 publication of A Comprehensive Reform of the Kansas Public Employees’ Retirement System …

“KPERS benefits are not taxable for state income tax purposes. Employee contributions to the plan are after tax, so it’s appropriate that distributions from employee contributions would be not be taxable to avoid double taxation. However, KPERS members never have to pay state income tax on the majority of their pension benefits, which come from employer contributions and earnings on employer contributions.

The cost to taxpayers of providing government retirees with these tax-free benefits is substantial. The exact amount of pension distributions from employer contributions and the applicable tax rate for each recipient would have to be identified to accurately calculate the benefit, but we can make a reasonable estimate. As noted in Table 4, in order to fully fund the state/school plan based on the market value of plan assets, the employer contribution rate would be 15.26% and the total employer and employee contribution rate would be 19.33%; the employer rate is therefore 78.9% of the total. For the KP&F plan, the employer rate would be 75% of the total (19.8% for the employer, 26.32% in total). The following estimate of a $52 million income tax benefit to KPERS retirees is based on the lower employer rate of 75%.”

Then-KPERS executive director Glenn Deck said our estimation of the tax benefit was reasonable. The current tax benefit should be similar; marginal tax rates have declined but pension distributions were $1.329 billion in 2013.  But regardless of the actual amount, state and local government retirees are exempt from paying income tax on the portion of their pensions funded by taxpayers.

There is certainly a discussion to be had about fairness in taxation, but anyone proposing to increase or charge a tax based on fairness should be supportive of taxing government retirees the same as private sector retirees.

Posted by Dave Trabert on Sunday, April 26, 2015

A recent Kansas City Star editorial says that In the Kansas City area, jobs aren’t fleeing Missouri after Kansas tax cuts, but as is often the case, they set up a straw man argument (e.g., “fleeing” isn’t the issue) and make selective use of data to make their point. A conclusive analysis of the efficacy of tax reform will require many more years of data but there a number of encouraging early signs that the Star overlooks.

First of all, the Star doesn’t disclose that nonfarm jobs is the basis of their editorial, which is the total of government and private sector jobs.  Another Star editorial calling out Kansas Policy Institute a few days ago said it is “utter nonsense” to measure the health of an economy by growth in the private sector rather than government.  The Star hasn’t said whether they will allow a response at this writing, but we disagree with their position.  The money to fund government comes from the private sector; further, government can grow by overtaxing and suppressing private sector growth. 

It is hard to imagine that their failure to disclose the inclusion of government is a coincidence, but let’s keep the focus on nonfarm jobs for now in order to demonstrate another issue with their analysis.

The Star uses point-to-point comparisons of January 2014 and January 2015 to make their case that the Missouri side of the Kansas City Metro is growing faster than the Kansas side.  The problem with point-to-point comparisons is that one or both points can be unusual spikes or declines.  The Bureau of Labor Statistics also publishes average annual employment, which minimizes the impact of any single data point.

Shifting the analysis by one month and comparing December employment for 2013 and 2014 shows that Kansas outperformed Missouri 3.4 percent to 2.3 percent, the opposite of their position.  The Star says Missouri did better than Kansas since tax reform was enacted but they compare January 2013 and January 2015; December 2012 is the last month before tax reform was implemented and with that as the base, Kansas beat Missouri.

Kansas nonfarm jobs grew by 2.4 percent between December 2012 and January 2015 whereas Missouri increased by 1.9 percent. 

It’s also interesting that the Star used January data for their post-tax reform comparison rather than the most current March data; the Kansas margin is even wider, at 3.8 percent compared to 2.9 percent for Missouri.

The more stable comparisons of average annual employment also show Kansas to be the clear winner, whether using nonfarm jobs or the more pertinent measure of private sector employment.  Using nonfarm jobs, Kansas beat Missouri in 2013 by a margin of 2.1 percent to 0.2 percent and won again in 2014 by a margin of 2.7 percent to 1.3 percent.  Using private sector jobs, Kansas beat Missouri in 2013 by a margin of 2.5 percent to 0.5 percent and won again in 2014 by a margin of 3.0 percent to 1.7 percent. 

Moving now to private sector job growth, Kansas outperformed Missouri in the first two years since tax reform, 5.6 percent versus 2.2 percent.  Missouri is doing better than Kansas in the first quarter of 2015, with a preliminary lead of 3.8 percent to 2.7 percent but comparing average annual jobs for the first quarter of 2015 with the 2012 average still favors Kansas, 4.9 percent to 3.3 percent.

Kansas is showing even better progress on statewide job growth.  Private sector jobs only increased by 2.2% between 1998 and 2012 (average annual jobs for 1998 and 2012, seasonally adjusted); that growth rate put Kansas at #38 among the fifty states.  In 2013, private sector employment grew 1.6% and Kansas was ranked #27 in the nation. Last year Kansas moved up to #21 with growth of 1.9%.  

Kansas almost reached parity with its income-taxing peers last year, which is also a significant improvement in competitiveness.  Kansas private sector jobs grew at just 61% of its income-taxing peers’ 3.6% growth rate between 1998 and 2012, but 2013 and 2014 growth was at 78% and 95%, respectively.   Kansas job growth was also better in 2014 than the neighboring states of Missouri, Oklahoma and Nebraska.

Job growth isn’t the only measure by which Kansas is outperforming Missouri.  The extent to which tax reform should be credited for the improvement cannot be determined but the shift in performance is quite noteworthy.

Private sector GDP isn’t available yet for 2014 but Kansas outperformed the 50-state average in 2013, as well as its income-taxing peers and the ten states with the highest state and local tax burden (as ranked by The Tax Foundation).  Kansas trailed each group in the fourteen years preceding tax reform. 

Rankings among neighboring states didn’t change; Kansas widened its lead over Missouri but was less competitive with other neighboring states in 2013.    One year certainly doesn’t qualify as a trend but it’s encouraging to see Kansas more competitive on a national scale.

Data on Personal Income growth is available for 2014, however, and Kansas has improved in the two years since tax reform was enacted on several measures.

Total personal income in Kansas (which includes dividends, interest, rent, wage and salary earnings, proprietor earnings, employer payments for payroll taxes, health care and retirement plus government transfer payments for government and the private sector) increased by 5.67% between 2012 and 2014, ranking #24 in the nation and much better than its #33 ranking between 1998 and 2012.   Kansas did slightly better than the states that tax income and was closer to the performance of the 50-state average.  Kansas outperformed Missouri and Nebraska and was more competitive with Oklahoma.

Kansas also shows improvement in Nonfarm Private Earnings, which includes all nonfarm private sector components of Personal Income.  Kansas trailed the 50-state average in the fourteen years prior to tax reform but its 9.5 percent growth over the last two years exceeds the 8.7 percent average of all states.  Kansas also outperformed Missouri, and while not unusual, the margin of victory has widened.   Kansas trailed Nebraska and Oklahoma in the past but has pulled ahead in the last two years.

None of this means that tax reform can be declared a success yet as one or two years is not near enough time to make such a judgement, but the early signs are encouraging.

Posted by Dave Trabert on Wednesday, April 22, 2015

Despite ‘sky is falling’ claims from high tax / big government proponents, the new Kansas revenue estimates show that tax revenue will continue to be well ahead of the inflation-adjusted historic trend.   

Tax revenue increased by 28.4 percent over the last ten year, or 4 points more than the increase in inflation (Midwest Urban Cities calculated on a fiscal year basis).  The April 2015 Consensus Revenue Estimates put total General Fund tax revenue at $5.743 billion this year and growing to $6.025 billion over the next two years.

Inflation would be 29.2 percent higher in FY 2017 than in FY 2004 if it continues at last year’s pace, but tax revenue would be 37.3 percent higher.   

The new revenue estimates are slightly lower but the reasons are perfectly understandable.  Corporate income tax receipts are 6.2 percent higher for the first nine month of the current year but estimates were reduced because the November estimate predicted even higher growth.  Retail sales tax receipts were also higher than the previous year but not as much as hoped and the severance tax estimate was lowered since collections are off as a result of lower oil prices.

Tax revenue might not be growing fast enough to keep up with legislators’ desire to increase spending but the gap between actual growth and inflation continues to widen.  That is a spending problem…not a revenue problem.

Posted by Dave Trabert on Wednesday, April 15, 2015

“Where the Buffaloed Roam – An Ode to the Kansas Budget,” a film by Louisburg High School student Carson Tappan, is being featured at the Kansas City Film Festival.  It is billed as a ‘documentary’ but in reality, it merely presents a political viewpoint that doesn’t let facts get in the way of the story it wants to tell.

Mr. Tappan is to be commended for tackling the project and it is heartening to see a high school student take an interest in state budget issues.  He deserves an “A” for initiative and creativity but he fails in his goal to “make the problem clean and simple.”  I agreed to be interviewed for the film and provided Mr. Tappan with a great deal of data, some of which contradicts claims made by other participants but he chose not to use it.

I recently asked Mr. Tappan why he excluded pertinent facts I provided and he wrote back saying, “I did not exclude any facts that you provided, the interview was too long to keep it in its entirety.”  But as explained later in this piece, he did indeed exclude facts that contradict one of his own contentions.

Mr. Tappan and other participants in the film are certainly entitled to their opinion, and healthy discussions of alternate views are productive.  Different opinions can be evenly presented in a documentary format but “Where the Buffaloed Roam” goes out of its way to ridicule those who don’t agree with its premise that reducing taxes is a bad idea.

The film takes the position that states like Texas and Florida can manage without an income tax because they have oil and tourism revenue, but that is not the reason.  Texas, for example, could have all of the oil revenue in the nation and still have a high tax burden if it spent more.  Every state provides the same basket of basic services (education, social service, etc.) but some states do so at a much lower cost and pass the savings on in the form of lower taxes.

In 2012, the states that tax income spent 49 percent more per-resident providing services than the states without an income tax, and they don’t do it by pushing spending to local government; the ten states with the highest combined state and local tax burden spent 43 percent more per resident than the ten states with the lowest burdens.  Kansas, by the way, spent 37 percent more per resident than the states without an income tax.

While Kansas spent $3,409 per resident, Texas only spent $2,293 and Florida spent just $1,862 per resident.  Small states also spent less; New Hampshire (which doesn’t have an income tax or a state sales tax) spent just $2,455 per resident.  States that spend less, tax less.

The ‘oil and tourism’ objection is common so I gave this information to Mr. Tappan and discussed it in the interview.  He didn’t just ignore those facts…he actually made the ‘oil and tourism’ argument.

The ‘clean and simple’ explanation of the Kansas budget is that spending wasn’t adjusted when taxes were reduced.  Regardless of whether legislators agreed with tax reform, they and Governor Brownback should have reduced the cost of government.  Instead, they succumbed to pressure from the bureaucracy and special interests and continue to increase spending.  General Fund spending will set a new record this year and is proposed to rise even higher over the next two years.

Let’s put that in perspective.  Kansas’ 2012 spending of $6.098 billion was 37 percent higher than the per-resident spending of states without an income tax.  This year Kansas is expected to spend $191.5 million more than in 2012 and the budgets under consideration in the Legislature will add another $210.1 million in the next two years.

Kansas doesn’t need to be as efficient as states with low taxes to balance the budget…the state just needs to operate a few percentage points better.  Ask legislators or Governor Brownback if government operates efficiently and they will say, “of course not.”  Then ask what they are going to do about it.  This year, as in the past, the majority would rather raise taxes unnecessarily than stand up to the bureaucracy and special interests that profit from excess government spending.  That is the clean and simple explanation of what is wrong with the Kansas budget.

Former state budget director Duane Goossen tells a different story (but still won’t debate us in public where he can be called out).  He said revenue dropped three straight years during the recent recession and it appeared that revenue would decline for a fourth year, which prompted a sales tax increase that he attributes for the revenue turnaround.  But that’s not exactly true.  Mr. Goossen talked about tax revenue declines before carefully shifting to a discussion of revenue declines. Most people, and probably Mr. Tappan, wouldn’t catch that nuance but Mr. Goossen knows exactly what he was doing.

As shown in the above table, tax revenue only declined two years during the recession, in 2009 and 2010.  Total revenue did decline a third year and was projected down a fourth year but that was because of conscious decisions made by legislators to transfer tax money out of the General Fund.  The November 2009 Consensus Revenue Estimate predicted that tax revenues would increase for 2011, from $5.192 billion to $5.324 billion, and that estimate did not consider any sales tax increase.  Mr. Gossen is simply pushing a notion that tax increases are necessary.  Or, maybe tax increases are Mr. Gossen's preference but he would rather distract his interlocutor with obfuscation than simply state his true goal.

This tax revenue chart that appears in the film clearly attributes tax revenue growth between 2010 and 2012 to the 1 cent sales tax that began July 1, 2010 (it’s unknown whether Mr. Goossen or Mr. Tappan prepared it because there is no sourcing).  But this chart is yet another misrepresentation of the facts.

Data readily available from the Kansas Legislative Research Department shows that income taxes and other tax sources also increased in 2011 and 2012.  Income tax revenue increased by $560 million over the two years while retail sales taxes grew by $490 million and all other General Fund taxes increased by $125 million. 

Kansas certainly has a spending problem but tax revenue is actually running well ahead of inflation…even after income taxes were reduced.  General Fund tax revenue increased 28 percent between 2004 and 2014 while inflation was only 24 percent.  The November 2014 Consensus Revenue Estimate shows that tax revenue will continue to stay well ahead of inflation (assuming inflation continues at its current pace.  Tax revenue in 2017 would be 39 percent higher than 2004 but inflation would be 29 percent higher (again, assuming inflation maintains its current pace.)

The film also contains a number of false claims about school funding.  Heather Ousley, who is a member of an organization that actively campaigns for the defeat of legislative candidates who do not subscribe to the ‘just spend more’ philosophy of school funding, repeatedly claimed that schools are being defunded.  She also repeats the mantra that schools are being defunded so that public education can be privatized; she may believe that but having spent a lot of time working with legislators, I know that to be a false assumption.  Defenders of the status quo are fond of repeating the mantra, but it is nothing more than a scare tactic.

Schools are not being defunded and Mr. Tappan was provided with data from the Kansas Department of Revenue that contradicts claims made in the film.  Again, he chose not to use that information.  In reality, school funding will set a fourth consecutive record this year at $6.145 billion.  On a per-pupil basis, it’s $13,343 and will be the third consecutive record.   The facts are explained in greater detail in another blog post, which also shows that state funding is increasing this year under the new block grants.

There are other examples of factual inaccuracy in the film, but hopefully those set forth here sufficiently demonstrate that “Where the Buffaloed Roam” is not the documentary it purports to be but an artfully designed political statement.

Those who agree with the film’s position are certainly entitled to their view.  They should just be honest and say that they prefer higher taxes and the high spending that goes with it.

Note: KPI staff members Patrick Parkes and David Dorsey deserve credit for much of the research in this blog post.

Posted by David Dorsey on Wednesday, April 15, 2015
 

Contrary to media reports and claims by many local education officials, data provided by the Kansas Department of Education shows that state aid to Kansas school districts will increase this year with the new block grants.  How can that be?  Well, when government talks about a ‘budget cut,’ that most often means that the rate of increased spending is less than it desires rather than an actual reduction in spending– and that is the case with block grants and state funding.

Excluding state funding for KPERS, special education, bond & interest and a few small aid programs (as described by Deputy Commissioner Dale Dennis), state aid to schools totaled $2.951 billion last year and will increase to $3.093 billion this year.  The total hits $3.114 billion in the 2017 school year, or 5.6% more than this year.  KPERS spending is expected to increase by $124.4 million over the period, so state aid including KPERS (but not the other exclusions noted herein) would increase by 8.8% over three years. 

All ten districts in Ottawa, Saline and McPherson counties will get more money through the block grants. Ottawa County schools will see a 5.7% increase during the three years of the program. North Ottawa’s increase will be 7.3% and Twin Valley will get 4.1% more. Saline County schools will get 6.4%, with Salina, by far the county’s largest district, set to receive 6.8% higher support. A collective 2.6% increase under block grants will go to the five McPherson County districts. Smoky Valley (4.2%) and Inman (3.9%) will get the biggest increases.

 A list of all Kansas school districts can be downloaded here.

Total aid to schools will also increase this year to $6.145 billion and set a record for the fourth consecutive year.  The per-pupil amount of $13,343 will set a record for the third consecutive year.  KDSE says the proposed block grants for the current school year total $3.408 billion (updated as of March 25 and including KPERS), but the block grants do not include state funding for Special Education or Bond & http://www.kansaspolicy.org/2015schoolfunding.pngInterest aid.  Including those amounts as listed in the Governor’s Budget Report puts total state aid at $3.982 billion.  A few months ago, KSDE Deputy Superintendent of Finance Dale Dennis estimated Local aid at $1.652 billion and Federal aid at $510 million.

Here is a historical perspective on per-pupil school funding, adjusted upward for KPERS in the years prior to 2005 when it wasn’t included in KSDE funding reports.  The solid blue line shows actual funding and the dashed red line show what funding would have if adjusted for inflation each year.  FYI, funding this year would be $1.541 billion less if it had just been increased for inflation and enrollment.

http://www.kansaspolicy.org/perpupil98-15.png

 

Posted by David Dorsey on Tuesday, April 14, 2015

 

Contestant: “Alex, I’ll take ‘Media Bias’ for 200.”

Alex: “It’s what the news media calls a ‘snow day’ in Kansas.”

Contestant: “What is a budget cut?”

Alex: “Correct!”

 

Although to my knowledge that answer/question combination has never been on Jeopardy!, it certainly would be appropriate the way the media continues to misrepresent the state of education funding in the Sunflower State.

An article in Education Week and this similar one in the Huffington Post, both of which were published April 3, used sensationalized headlines and irresponsible reporting to contrive a false financial crisis for the state’s public schools. Both headlines, the Huffington Posts “Kansas Schools Will Close Early This Spring For Lack Of Funds” and Education Week’s “Funding Cuts Force Kansas Districts to End School Year Early,” even make it appear that all 286 school districts will be starting summer vacation early this year. The reality is that there are only two: Concordia (USD 333) and Twin Valley (USD 240) and the headlines are false.  It’s not a disastrous a financial picture that is precipitating a shorter school year, the districts are merely forgoing some unused snow days.

The Education Week piece cited this Salina Journal article to support their assertion that it is Governor Brownback’s late year funding cuts and the new block grant funding law (which restored those cuts) that have precipitated the early dismissal. But regardless of the misleading headline, the Salina Journal story gives a much different picture of the real reasons those districts chose to end their schools years ahead of the original schedule.

Concordia has chosen to cut six days from the current school calendar. Their buildings will close four days early and there will be no school two other days. However, contrary to the article’s premise, the Salina Journal piece did not quote Concordia Superintendent Bev Mortimer as using budget constraints as a reason, although both Education Week and the Huffington Post chose to make that inference in relying heavily from that article. Specifically, Superintendent Mortimer cited one reason for the decision is to provide a perk to the teachers. “We haven’t been able to give raises to teachers like we like. One thing we could give them is some time…It was one positive thing we could do for our staff.” And they are able to give teachers that time by cashing in their unused snow days. “We would have done some of these [snow]days anyway,” the superintendent said. “We might not have chosen to do all six of them.”

Mortimer did state, however, that the decision would save USD 333 about $30,000. To put that dollar figure in perspective, the district’s total budget for the current school year is in excess of $18 million, putting the savings at 0.2%. Furthermore, Concordia’s cash reserves at the beginning of the last two schools years have exceeded $800,000.

So much for a financial crisis.

Twin Valley’s situation is not unlike that of Concordia. That district decided to forgo 7.5 “discretionary days” as they call them and end the year on May 8 instead of May 20. As an example of sensationalistic reporting, Huffington Post implies the students are missing 12 days of schools. (Maybe they think kids in Kansas go to school on the weekends?)

“Discretionary days?” Sounds like more unused snow days schools build into their calendar. Although the Salina Journal quoted Twin Valley Superintendent Jan Neufeld as saying, “Twin Valley’s ‘financial status’ was among the reasons” for the decision, she “declined to guess how much the district would save” by ending the school year earlier. Again, it sounds like much more than just financial considerations. How can you blame a funding cut for ending the school early if you don’t know how much money it will save? Twin Valley also had healthy cash reserves in excess of half a million dollars each of the last two years.

These financial conditions provide a reality that is a far cry from Education Week’s claim that “education funding cuts are forcing two Kansas districts to end the school year early.” What the media outlets failed to report is that both districts will still meet state law requirements for the number of days or hours students will be in school for the year.

Also, the media has been spewing misinformation that the new block grant funding approach will result in a cut of dollars to education. As the table below shows, both districts are receiving increases this school year, not decreases. Concordia will get nearly $200,000 more than 2013-14 and Twin Valley will receive over $170,000 more. The impact statewide is similar. Record state aid to education will continue under the block grants to the tune of 5.6% additional money allocated to schools over a three year period.

 

So, is there any evidence that schools in Kansas are teetering on the edge of a fiscal cliff?

As Alex Trebek would say: “No, sorry.”
Posted by David Dorsey on Tuesday, April 14, 2015

Contrary to media reports and claims by many local education officials, data provided by the Kansas Department of Education shows that state aid to Kansas school districts will increase this year with the new block grants.  How can that be?  Well, when government talks about a ‘budget cut,’ that most often means that the rate of increased spending is less than it desires rather than an actual reduction in spending– and that is the case with block grants and state funding.

Excluding state funding for KPERS, special education, bond & interest and a few small aid programs (as described by Deputy Commissioner Dale Dennis), state aid to schools totaled $2.951 billion last year and will increase to $3.093 billion this year.  The total hits $3.114 billion in the 2017 school year, or 5.6% more than this year.  KPERS spending is expected to increase by $124.4 million over the period, so state aid including KPERS (but not the other exclusions noted herein) would increase by 8.8% over three years. 

 

Finney and Ford counties will both get significant increases from the block grant approach. The two Finney districts will get a combined increase of 6.5%. Garden City will gain 6.8% and Holcomb will get 4.4% more. Ford County schools will collectively get a 10.4% increase. Dodge City, by far the largest district will see an 11.4% raise, while Bucklin will get a small increase (0.5%) and Spearville’s funding will slightly decrease 1.4%.

A list of all Kansas school districts can be downloaded here.

Total aid to schools will also increase this year to $6.145 billion and set a record for the fourth consecutive year.  The per-pupil amount of $13,343 will set a record for the third consecutive year.  KDSE says the proposed block grants for the current school year total $3.408 billion (updated as of March 25 and including KPERS), but the block grants do not include state funding for Special Education or Bond & http://www.kansaspolicy.org/2015schoolfunding.pngInterest aid.  Including those amounts as listed in the Governor’s Budget Report puts total state aid at $3.982 billion.  A few months ago, KSDE Deputy Superintendent of Finance Dale Dennis estimated Local aid at $1.652 billion and Federal aid at $510 million.

Here is a historical perspective on per-pupil school funding, adjusted upward for KPERS in the years prior to 2005 when it wasn’t included in KSDE funding reports.  The solid blue line shows actual funding and the dashed red line show what funding would have if adjusted for inflation each year.  FYI, funding this year would be $1.541 billion less if it had just been increased for inflation and enrollment.