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Is a new tax in City of Wichita- Government the right way to maintain streets and provide bus transit? What are some other possible solutions to the problem? 23 October event to learn more. http://www.kansas.com/news/politics-government/election/article2906173.html RSVP in first comment.


KPI to host forum on transit and street maintenance components of sales tax referendum
www.kansas.com
The Kansas Policy Institute, a conservative Wichita nonprofit organization, is hosting its final community forum on the components of the upcoming sales tax referendum.
Thu, 16 Oct 2014 15:13:54 +0000
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How will the upcoming elections impact Freedom in America and Kansas? Hear Scott Rasmussen's thoughts and predictions at the KPI annual dinner on October 28 in Wichita. Register today at www.KansasPolicy.org/Rasmussen2014


2014 Elections and America's Future
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Wed, 15 Oct 2014 14:47:50 +0000
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"Kansas and other states can reduce taxes by providing the same or better quality service at a better price. Legislators and media just need to remember that government is supposed to work for citizens, not the other way around." http://dailycaller.com/2014/10/13/role-of-government-not-tax-reform-driving-kansas-governors-race/


Role Of Government, Not Tax Reform, Driving Kansas Governor’s Race
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Much national attention has portrayed the upcoming election for Kansas governor as a referendum on the efficacy of tax reform, but that really isn’t the issue. The real issue is whether government s
Tue, 14 Oct 2014 14:46:54 +0000
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Posted by Dave Trabert on Monday, October 20, 2014

The executive directors of the Kansas Center for Economic Growth (Annie McKay) and the Kansas Economic Progress Council (Bernie Koch) are going around the state with a presentation entitled “The Impacts of Kansas’ Changing Tax Policy.”  School districts in Dodge City, Garden City and Clearwater hosted the events.  It was decidedly partisan and from the perspective of people opposed to income tax reform and the efficiently-operated system of government that is necessitated by placing a smaller tax burden on citizens.

As discussed in another blog post, recipients of taxpayer funds should not promote, arrange or participate in any type of one-sided policy discussions, and government facilities should also not be used for such purpose.  This post will address the most egregiously misleading claims made in the presentation.

Annie McKay (KCEG) showed this slide attributing a $700+ million reduction in state aid for property tax relief and city/county revenue sharing to tax cuts, which is a very deliberate fabrication.  The source on the slide references a paper published by KCEG, which says, “Cities and counties across the state have lost more than $700 million since 2008 from lawmakers defunding of two important sources of local support….”[1]  Since 2008?  Tax cuts didn’t go into effect until 2013.

They list the source for that claim as “Analysis of data from the Kansas Association of Counties Research Report, multiple years.”  A search of the archived reports at KAC (no specific report was identified and Ms. McKay refuses to make her data available) found a table showing the actual and projected amounts by fiscal year.[2]

As shown by this screen grab from the KAC report, the amounts projected for 2009 through 2013 total $714 million but the actual amount received was zero!  In fact, no funding has been provided since 2004 – but that doesn’t stop KCEG from falsely blaming the 2013 tax cuts for more than $700 million in reduced state aid to local government.  The projection calculated by KAC is merely an estimate of would have been received in funding had continued; former state budget director Steve Anderson reviewed state budget documents and confirmed that no funding has been provided for Local Ad Valorem Tax Relief (LAVTR) or City/County Revenue Sharing (CCRS) since 2004. 

KCEG’s claim that tax cuts are to blame for a $263 million reduction in state aid for education is also not true;, their (unsubstantiated) calculation pre-dates the implementation of tax reform: “Total state aid to school districts has been reduced by over $263 million since fiscal year 2008.”[3]  The truth, according to the Kansas Department of Education, is that state aid has increased by $249 million since income tax reduction was implemented in 2013. (The amount shown as state aid does not fully represent the state’s provision for finance of public education.  Total school funding for 2014-15 is estimated by KSDE at $6.15 billion, the vast majority of which is raised on state authority.  Federal funding is only estimated to be $510 million.)

KCEG also claimed that tax reform caused those earning less than $36,000 to pay more taxes while providing a large savings to those with high incomes; their claim is based on information from the Institute on Taxation and Economic Policy (ITEP).  As is often the case, no data is provided to substantiate the claim, and ITEP wouldn’t release their calculations.  Refusing to provide substantiating data is a common practice of KCEG, ITEP and other organizations with a big-government perspective; the Center on Budget and Policy Priorities has also repeatedly ignored our requests for data.

ITEP did, however, share some eye-opening information about their methodology.  They acknowledge that legislative fiscal analysts in most states use income definitions based on Adjusted Gross Income (AGI) but ITEP adds their own estimation of non-taxable and partially-taxable income from sources such as Social Security benefits, Worker’s Compensation benefits, unemployment compensation, VA benefits, child support, financial assistance, public assistance, and SSI in their measure of Total Income.[4]    They also make this astonishing claim: “It’s widely understood that taxpayers at all income levels tend to under-report certain income categories, especially capital gains, pass-through business income, rental income and farm income. For this reason, ITEP’s model makes estimates of the amount of unreported income of each type. This unreported income is included in our “total income” estimates for each state.”

Aside from accusing farmers and other entrepreneurs of being tax cheats, the folks at ITEP believe they can reasonably estimate the degree of ‘cheating’ by income class in Kansas!  By doing so, ITEP is able to assign a much higher value of tax savings for those in upper income brackets.  Imagine the media outrage if a free market organization was caught ‘cooking the books’ and refusing to disclose the ‘proprietary’ data upon which their allegations are based. 

It’s true that those with higher incomes received a larger percentage reduction in their tax liability, but that is merely a reflection of Kansas having a graduated income tax.  Prior to 2013 there were three income brackets; the first $30,000 on a joint return was taxed at 3.5%, the next $30,000 was taxed at 6.25% and income above $60,000 was taxed at 6.45%.  Those with higher incomes had a much larger portion of their income taxed at nearly double the rate of those earning less $30,000; the higher percentage reduction in their tax liability is merely a byproduct of Kansas’ graduated tax rates.

KCEG makes several other claims about “education cuts” that they attribute to tax cuts.  Two of the claims cite a survey they conducted of Kansas school districts, but Ms. McKay refuses to disclose the survey instrument, the number of districts that participated in the survey and any of the supporting data.  One image in their presentation says “nearly 50% of districts have seen average class size grow” and another says schools “gained more than 19,000 students but have 665 fewer teachers.”

As shown in Table 3, the facts refute the claim about student increase and teacher decline since the 2013 implementation of tax reform.  Comparing the 2012 school year to the 2014 school years, KSDE reports an increase of 5,088 students, an increase of 586 classroom teachers and an additional 112 other teachers (all full time equivalent per KSDE methodology).  One would have to go back to 2006 to claim an increase of 19,000 students.

There are many anecdotal reports of class sizes growing but that cannot be attributed to tax reform, as the classroom teacher / student ratio has actually declined since 2012.  If class sizes have significantly increased over the last few years it can only be attributed to management decisions at the district level, as there has been very little change in the teacher/pupil ratio.  Those same management decisions seem to have prioritized the hiring of management and other non-teaching positions over classroom teachers.  Table 4 shows that non-teaching positions grew by 11.5% since 2005, or nearly three times the rate of enrollment.  District management jumped 8.4% (on top of a 21% increase between 1993 and 2005).[5]  There simply is no data to support KCEG’s claim that tax reform caused class sizes to increase.

Ms. McKay also falsely represented per-pupil spending as having declined by $1,000 since 2009.  As clearly shown in Table 5, the Kansas Department of Education says per-pupil spending will be $609 higher this year and set a third-consecutive record.  It should also be noted that districts used $388.6 million in aid to increase carryover cash reserves between 2005 and 2014, or $843 per-pupil based on 2014 enrollment.  Aid used to increase cash reserves is not included in KSDE reports of district spending.

 

 

 

The Kansas Economic Progress Council is a statewide non-profit organization of businesses, trade organizations, chambers of commerce and other members that generally support higher government spending, The presentation from KEPC executive director Bernie Koch (pronounced “cook”) was generally designed to show that Kansas’ economic growth trails the region, downplay the importance of lower taxes to business and scare attendees with predictions of possible 5% to 6% state budget reductions.

To explain “How is Kansas Doing?” Mr. Koch showed just one slide, comparing Kansas to six regional states on non-farm employment growth over the last twelve months and median household income growth between 2008 and 2013.   Non-farm jobs includes government jobs, but that little detail is typically not disclosed by those who use that measure; a one-year comparison also conveniently avoids any perspective.  Yes, Kansas is still trailing on a number of economic measurements but that’s not a sign of failure…it’s the reason tax reform was implemented!  As shown in Table 6, Kansas was below the performance of its income-taxing peers in every category.  States with lower tax burdens have superior economic growth and Kansas often even trails states with high tax burdens.  It may seem intuitive to compare a state to its neighbors but those are not the only states with which Kansas competes.  It is especially important in today’s global economy that we understand how Kansas competes with all states.

But Kansas is showing progress even on a regional basis.  Table 7 lists the states KPEC used in their comparison, but here we compare private sector jobs (the point of tax reform was not to grow government) over two periods – the fourteen years preceding tax reform and the 20 months since.  KEPC is correct in saying that Kansas still trails several regional states (although Kansas fares much better when government jobs are excluded) but Kansas is much more competitive – 87% of the other states’ average -  than over the fourteen years preceding tax reform, where Kansas was only at 46% of their average.  The point here is not that tax reform is ‘working’; it’s far too early to make any declaration regarding the efficacy of tax reform.  Rather, it is to demonstrate the importance of trends analysis in honest evaluations of tax reform, which will take many years to be fairly evaluated.

Median household income growth is not a valid measurement because the median can grow or decline simply based on who leaves or enters a state.  Consider this simplistic example that demonstrates the math involved.  A state has nine households and the household incomes are spread in $10,000 increments from $10,000 to $90,000.  Total household income would be $450,000 and median household income would be $50,000.  Now let’s assume that the two lowest earners leave the state to seek better opportunities and the incomes of those remaining didn’t change over the year.  The state would have seven households remaining with total income of $420,000 (those making $10,000 and $20,000 left) so the median rises to $60,000.  It appears that median income jumped but those remaining are no better off.   Measurements of total growth rather than median or per capita eliminate such deceptive appearances.  

The Bureau of Economic Analysis just released Personal Income total growth results for the second quarter of 2014, listing Kansas as the 14th best in the nation.  Here are a few more encouraging signs that show how Kansas is doing (none of which are mentioned by KEPC):

  • Kansas beat the national average for real private sector GDP growth in 2013.
  • 7th best rate of proprietor income growth in the nation, 1Q 2013 to 1Q 2014.
  • #1 in Creighton University’s Mid-America Business Conditions Index, September 2014.
  • Private sector job growth in Kansas was only 70% of its income-taxing peers over the last fifteen years but has improved to 87% of the average between December 2012 and August 2014.

Finally, attempting to scare people by saying there could be large spending cuts coming as a result of tax reform is one of the favorite tactics of government and those who profit from government spending – implying that less spending means service reductions.   Higher taxes or fewer services is a false choice.  The KPI budget plan shows that the state budget can be balanced over the next five years without any service reductions or tax increases.  The plan includes new spending on education and Medicaid, and total spending would continue to set records.

All this is possible by making better use of existing resources – providing the same or better quality service at a better price.  Citizens do not have to make a false choice; they can have low taxes and good quality service.  But there will be fewer spoils to divide among those who profit from government…and that is what is really driving the opposition to tax reform.



[1] Kansas Center for Economic Growth, “Who Pays” page 2, http://realprosperityks.com/kac/wp-content/uploads/2013/12/KS-Center-for-Economic-Growth-Local-Impacts-Report.pdf

[2] Kansas Association of Counties Research Report, May 2013, Figure 6.  http://www.kansascounties.org/DocumentCenter/View/1206

[3] Ibid, page 3.

[4] Email from ITEP’s Meg Wiehe dated October 14, 2014

[5] “2014 Public Education Fact Book”, Kansas Policy Institute with data sourced to KSDE.  See Table 18.  The definition of classroom teachers comes from KSDE; Kansas Policy Institute decided which positions to include under management.

 

Posted by David Dorsey on Wednesday, October 15, 2014
Being an unabashed education reform advocate, I am always on the lookout for those in the education establishment who consider themselves reformers. Recently I came across an opinion published in Education Week titled "Getting Beyond One ‘Right Way’ of K-12 Reform." The essence of author Ted Kolderie’s thesis is that reform should be a two-pronged effort: work to improve the schools we have while being open to trying unconventional approaches to teaching and schools. He calls it a “Split Screen” strategy.

Kolderie writes that reform has not taken root because those involved work to find a consensus on “The Right Way,” as he calls it, and then “engineer a comprehensive transformation politically.” He is absolutely correct in recognizing how it happens when “reform” is driven from within the system. Consensus is a word educators like to use because a) it works to divert attention from the real issue, in this case education reform and b) it absolves everyone from responsibility. As Margaret Thatcher once said, “consensus is the absence of leadership.” Well, how many internal education leaders are true reformers?

The modern history of “reform” was borne from the seminal 1983 publication of "A Nation at Risk." That report came from President Reagan’s National Commission on Excellence in Education and sustained the concern that the nation’s schools were failing. Kolderie points out that problems addressed were tied to organizational performance while taking the traditional school organization as a given. Performance standards, measures and consequences were adopted, but not changes to the system itself.
He follows with a statement that shows just how blinded those are on the inside of the education establishment. It bears quotation:

 “Reform” today is still about driving change into an inert system, rather than changing what makes K-12 an inert system.

He’s correct about one thing: K-12 education is definitely an inert system. But the author implies that systemic change can only come from within the establishment itself. How depressing it is that someone who considers himself a reformer can’t see beyond the schoolyard fence.

He fails to recognize that external pressures to make systemic changes to the traditional public school structure did not exist 30 years ago. The concept of school choice was still in the embryonic stage. The nation’s first public charter school didn’t open until 1992. By 2011 there were over 5,700 public charter schools educating nearly 2 million students.

Kolderie does recognize public charter schools as a “platform for innovation.” But simultaneously (and somewhat curiously) dismisses them for being guilty of just doing what traditional public schools do with better outcomes starting “around 2004.” Huh? He says that there needs to be ways “to depart from the givens of conventional school: from whole-class teacher instruction; from age-grading; from the conventional academic day, week, and year; and from the one-dimensional notion of achievement.” Mr. Kolderie should recognize that public charter schools are not monolithic. He should research the methods utilized by successful public charter school brands, for what he prescribes is the approach followed by many of them.
The weakest part of his opinion piece is the failure to recognize the biggest hurdle to systemic changes in conventional schools: incentive. What is a district’s/school’s/teacher’s incentive to make fundamental system change?

If you guess, “There aren’t any” then you’re right! If you said: “Because it’s the right thing to do,” you need a refresher course in Remedial Bureaucracy.

In fact, there are many disincentives to systemic change. Teachers’ unions fight any attempt at reform. They fear their dam will break when there are recognized differentiations within their ranks. School boards fear community backlash from change or that their funding might take a hit, causing them to have to become more efficient. Competition for students would send shockwaves through the traditional system. Even the Feds provide disincentives for improvement. Through the School Improvement Grant program (SIG) there is the potential for big money to failing schools. (I will have a much more in-depth analysis on the SIG program in a future blog.)

Kolderie concludes with a statement that sums up the weakness that is inherent in making systemic changes from within the education bureaucracy. “And, remind those who resist: Nobody will be forced to change.” Sounds like that could have come from a board meeting of Blockbuster Video or Montgomery Ward. Of course the main difference between public schools and the private sector is that schools never go out of business. And when you are never in danger of going out of business, what’s your incentive to change?

Kolderie’s “Split Screen” approach will do nothing to change the system. What we need is a different channel.

Posted by Patrick Parkes on Tuesday, October 14, 2014

August’s private-sector jobs picture looked largely similar to and relatively unchanged from July’s. With another month of numbers in the books, states without an income tax maintained the same 3.11% growth pace they charted last month for 2014 thus far.

 

The income taxing states also did not budge from July and their 2014 pace of 1.59%.Kansas hovered near its income taxing peers with a pace of 1.36% for 2014 in August. This represented an ever so slight decline from the state’s 1.41% pace in July.

Check back soon for September’s update.

Posted by Patrick Parkes on Thursday, October 09, 2014
Updated state agency carryover cash balances are now available on KansasOpenGov for FY2014. We take the time to request and publish these balances based on our belief that they are important pieces of the state budget about which most Kansans are not given frequent information. When state agencies in Kansas spend less than is allocated to them in a given year, the leftover sums find their way into designated cash reserve accounts that operate much like the savings accounts many Kansas families use to save for future college expenses, retirement, and/or a “rainy day” of changing financial circumstances. But this is where the comparisons should end. Family savings signal wise financial stewardship. The ability of state agencies to accumulate leftover taxpayer money in their coffers (called carryover cash) is an entirely different matter. Typically, Kansas’ General Fund gets most of the attention in discussions on state budgetary matters. However, the state and its agencies actually operate 1,416 active funds (i.e. those with non-zero balances). Regardless of the controlling agency or fund in question, some savings are certainly necessary. Solid balances allow for sound cash management, are evaluated in some bonding scenarios, and protect against unforeseen budget changes. Furthermore, some balances may be earmarked for debt service and are thus inaccessible to movement or change. Still, in many areas, these balances have grown significantly over time and constitute a much higher percentage of the state’s operating budget than historical norms suggest they should. In short, these steadily mounting, higher-than-normal savings may point to places where—if able—Kansas legislators could look to reallocate unused surpluses back into the State General Fund to be used toward more pressing expenses. 

Despite a small 5% decline in the total dollar amount of statewide carryover cash funds compared to 2013, the FY2014 amount represents a growth of nearly 237% (from just over $918.5 million to almost $3.1 billion) in the eleven years since 2003 (the oldest available data via KPI’s open records requests). Beyond this total statewide growth, the State Court of Tax Appeals is an example of exceptionally whopping growth of more than 17,000% over the period (from just over $5,000 in 2003 to over $886,000 in 2014). By themselves, the two balances highlighted in this example may seem insignificant, but the growth trend from the balance in 2003 to the balance in 2014 is telling.

Kansas’ seven Board of Regents public universities are noteworthy pieces of this topic as well. Growth in their cash reserves ranged from almost 34% (Emporia State University, with an increase to nearly $17.8 million from roughly $13.2 million) to over 480% (University of Kansas, with an increase to nearly $237.5 million in 2014 from almost $40.9 million in 2003) during the 2003-2014 timeframe. The fact that these institutions are spending less than they are taking in even as their students are facing ever-growing tuition prices and mounds of debt is a curious one to say the least. KPI’s recently released 5-year budget plan envisions a reversal of this trend through the suggestion that universities make partial use of their General Fee Funds (representing tuition collected but not spent) to offer students a one-time tuition reduction.  

At the very least, the varied examples of carryover cash reserve growth presented underscore the importance of looking at state agency carryover cash reserve balances as part of any conversation about state budgeting. View these balances for yourself here to make your own conclusions.   
Posted by David Dorsey on Tuesday, October 07, 2014

Recent concerns have arisen regarding Kansas’ only school choice program (a tax credit scholarship program  for low income kids in our state’s lowest performing schools) as it relates to the ESEA waivers granted to the state by the U.S. Department of Education (most recently extended through the 2014-15 school year).

The “Tax Credit for Low Income Students Scholarship Program Act” was signed into law in April of this year. The law allows scholarships for a limited number of students to escape certain failing public schools and attend a private school. To be eligible, students must  meet two standards:

  • They must be at-risk students as defined in K.S.A. 72-6407. In other words, they must be low-income and be eligible for free school lunches.

  • They must attend a Title I school that has been identified as either a Focus school or Priority school pursuant to the ESEA waiver granted to Kansas from the U.S. Department of Education. 

It is the ESEA waiver process that has been the source for the concern, in particular as it relates to the Focus and Priority school designations. The worry among those looking to help the kids eligible for the program is that the ESEA waiver process could  neutralize the scholarship program by eliminating Focus and Priority school designations.

No need to worry.

Those designations are set by the U.S. Department of Education. Essentially, a Priority school is one that performs in the lowest 5% of statewide Title I schools. Focus schools are the next lowest 10% of all Title I schools. In Kansas, there are 33 Priority schools and 66 Focus schools. The full definitions can be found at www.ed.gov/sites/default/files/esea-flexibility.doc.

Those labels are a critical component to the waiver process. One of the principal assurances a state must make to receive and continue a waiver is the improvement of these schools by decreasing the achievement gaps between Focus and Priority schools and other schools in the state. Those particulars, including a time-line are outlined in the above-referenced document.

If that is the case, then the new scholarship program should be welcomed with open arms by those seeking to close achievement gaps. School choice has been shown to close the gaps and give the kids who need the help the most a chance at a better opportunity somewhere else. Florida’s tax scholarship program is a great example of how school choice can impact the achievement gaps of special needs and other traditionally underperforming populations. Black and Hispanic students made substantial gains in NAEP scores, and shrank the achievement gap with white students, as shown in the table below.

The tax credit scholarship program also “led to statistically significant improvements in Florida’s public schools.” According to Northwestern University’s Institute for Policy Research, “(c)ompetition placed on the Florida public schools system as a result of the voucher program led to improvements in the test scores of public school students.”

The impressive numbers in Florida are reason enough to get behind the Kansas program, but our border neighbor to the south, Oklahoma, shows where this sort of school choice has the greatest impact – the individual child. KPI visited Phylicia in Tulsa, a lower income child taking advantage of a scholarship program for special needs program. She was failing in a public school that wasn’t meeting her needs (she was even cutting herself in the school bathroom) until a new scholarship was created that allowed her to attend a private school specifically tailored to children on the Autism Spectrum. Incidentally, Alicia’s brother attends a KIPP public charter school proving that choice helps all types of kids.

The only concern we should have in Kansas is how to make choice available to all students.
 
 

 

 
Posted by Dave Trabert on Friday, October 03, 2014

Former state budget director Duane Goossen published a scathing review of the KPI 5-Year State Budget Plan a few days ago on his blog, so I wrote and asked if he would join Steve Anderson and me for a public discussion of the facts and issues.  He ignored our invitation for civil discussion, just as he did when we explained how he distorted the truth about education finance.

Goossen claims we made an $802 million math error and tries to fool unsuspecting readers by saying we didn’t account for all of what is purported to be a $1.3 billion shortfall.  We didn’t account for it because there is no $1.3 billion shortfall!

As we explained in How Budget Deficits are Fabricated in Kansas, Kansas Legislative Research Department (KLRD) counts budget changes multiple times in arriving at what they call a $1.3 billion shortfall.  Once money is cut from the base budget…it’s gone.  It doesn’t have to be cut again every year into the future.

According to KLRD, the spending adjustments needed to maintain a zero ending balance total $482.3 million over five years.  

In order to get to $1.3 billion, one must count the FY 2016 change FOUR times…the FY 2017 change is counted THREE times…the FY 2018 change is counted TWICE…and only the FY 2019 change is counted once.

Goossen also mischaracterizes several proposed uses of excess cash reserves as “cuts” to transportation and education.  As clearly explained in our Budget Plan, we are proposing that a KDOT surplus of $150 million be returned to the General Fund and that sales tax transfers to KDOT be reduced so that future surpluses are not created.  We suggest that school districts and universities be required to use a portion of excess cash reserves, allowing education funding to reduced one time while excess funds are spent down.

He also falsely claims we are recommending a $100 million cut to the Kansas Bioscience Authority, when our plan merely suggests funding KBA at the same amount it received in 2014.  The budget savings comes about by removing a statutory set-aside of $25 million per year that isn’t planned to be spent.

These are just some of the outlandish claims made by Goossen, which probably explains why he ignores invitations to have a civil public discussion of the facts.  He has nothing to gain and everything to lose.

Our budget plan shows multiple options to balance the budget without service reductions or tax increases…healthy ending balances…increased funding for education and Medicaid…and record-setting spending overall.  But media won’t even look at the plan and others are spreading false claims about it. 

Kansans are being inundated with the false choice of tax increases or service reductions…all for political gain.  

 

Posted by David Dorsey on Thursday, October 02, 2014

In a recently published analysis of public education funding in Kansas, the Kansas Association of School Boards (KASB) used a bit of time-series trickery to make one believe that education funding has declined. In a recently published Tallman Education Reportblog KASB makes yet another case for increasing taxpayer money to schools. The gist of the argument is this: more money is needed because since 2009, education funding has not kept pace with inflation. This postulate begs two questions: (1) Why did KASB pick 2009 as the base year for their analysis?, and (2) Why do schools need more money, especially now that the Supreme Court has ruled that money is not the determining factor of providing adequate education?

 As to the first question KASB picked that year because it conveniently fits their argument, as in draw a conclusion then find some data to support it. In this case, court-ordered funding pursuant to the Montoy  decision helped elevate education dollars to record levels in FY 2009. The court used a deliberately inflated cost study to help drive that decision. It had nothing to do with what schools needed to achieve required outcomes while also making efficient use of taxpayer money. There is nothing special about 2009, other than it is when education funding peaked. Simply put, KASB cherry-picked the date to make their point.

If choosing 2005 as a baseline year, a much different picture emerges. Using KASB data back to 2005 and applying their methodology, the table and accompanying graph show that when applying 2005 as the baseline year, education program funding actually outpaces inflation. Note: KASB data excludes KPERS contributions as an expense, even the Supreme Court says funding for KPERS should be considered.

 

 

[D3] 

Now to the second question: Do schools actually need more money? This is a particularly relevant question at this time because the Kansas Supreme Court ruled in the Gannon case that money is not the determining factor an adequate education as directed in the constitution. Now is the time for the legislature to appropriate money based on what it will do to improve outcomes pursuant to the Rose standards directed by the court. The path has been cleared for outcome-based funding to replace more arbitrary methods such as those based on inflation or “restoring cuts to education,” as the education establishment likes to frame the discussion. The truth is no one knows how much schools need to meet Rose standards.

There is also a timely second reason for questioning the “need” for more money. The K-12 Student Performance and Efficiency Commission has received testimony from those in the education establishment admitting that they are spending their money inefficiently. Presentations from Legislative Post Audit confirm that. LPA has found inefficiencies in all their school audits, yet districts do little or nothing to address them. KPI has shown that school districts’ ending balances have increased by hundreds of millions of dollars since 2005, money left over at the end of the school year.

A common saying of teachers to students is this: Choices have consequences. More than ever, districts need to be aware of the same when it comes to financial decisions. When a school chooses to hire an additional administrator, or fails to consolidate administrative services across district lines, , or any number of other examples of wasting taxpayer money, it takes dollars out of the classroom and reduces opportunities for teachers to focus on improving student outcomes.

Those are consequences we simply cannot afford.

Posted by James Franko on Thursday, October 02, 2014
It turns out that everyone is an expert when it comes to pitching changes in playoff baseball and questions of public policy. Those questioning Ned Yost on Tuesday night may have been right but most often our ideas are not put to the test.

NO MORE!

At least when it comes to the state budget…

Put your budget skills to the test in KPI’s new interactive “Build Your Own Budget” portal. Use the latest revenue projections (read revenue as tax collections) and spending projections from Kansas’ bean counters (these are official projections from Consensus Revenue and KLRD) to find out how much more efficiently the state government needs to operate in order to align spending and tax receipts.

Most of us will never get to manage a MLB playoff game or structure the state budget but we hope this new tool will focus Kansans on a bi-partisan problem – a resistance to reducing spending to bring it in line with tax reform. We hear almost daily about Kansas’ supposed budget crisis but we often hear very little about ways to navigate the road ahead. You’ll get a chance to chart your own course based on the “5 Year Budget Plan for Kansas” that we released last week.

As Dave Trabert, plan author and KPI president said releasing the budget plan, “Our Budget Plan is designed to provide legislators with multiple options. Not every element is necessary to make the plan work; varying degrees of each element could be implemented and there are many other options that could be added.  …Even if future revenues are significantly less than currently projected, government would only have to operate about five percent more efficiently to avoid service reductions and tax increases.  And Kansas would still continue to set spending records!"

In the plan released last week we used the latest spending assumptions offered in the Build Your Own Budget (via KLRD) and retained the $215 million spending increase for K-12 education and $299 million more for an increase in Medicaid caseloads. Other key highlights of the plan include;
  • No less than a 3% ending balance moving to, and retaining thereafter, a 7.5% ending balance in FY 2017
  • Scheduled income tax rate reductions will remain
  • Full implementation of the plan still sets new spending records

Ned Yost won’t be calling us for advice on pitching or base running (a double steal thingy with Billy Butler?!) tonight but take a crack at the Build Your Own Budget so you’re prepared as the state’s fiscal future is debated in the months to come.

Oh yeah, GO ROYALS!


Posted by James Franko on Tuesday, September 23, 2014
I’ve never understood why proponents of a position can hardly deign to engage people with whom they disagree. Easier to stamp the opposition as “nonsense” or claim that public demands for accountability are “over the top” than actually treat others’ arguments as having any merit. Shouldn’t opposition, skepticism, or honest question be greeted as an opportunity to engage and persuade instead of ignore?

The latest confirmation of this near-maxim followed an event KPI hosted on the “jobs fund” portion of the Wichita sales tax proposal. One of the speakers at our event, Jeff Finkle, also spoke to the Wichita Business Journal and dismissed any pushback to the proposal as “nonsense.” A sentiment Mr. Finkle reiterated at our event on Friday. Further in the Business Journal, Mr. Finkle said he couldn’t think of one study saying incentives don’t work.

Mr. Finkle said the following at our event when discussing the transparency and accountability aspects of the “jobs fund” plan: “[The transparency piece of the jobs fund plan] is off the chart. I actually think it’s a little over the top but if that’s what it takes to be acceptable in Wichita, that’s what you should do.” Emphasis added.

He doesn’t say that Wichita shouldn’t be transparent but his belief is quite clear – “it’s over the top.” This mirrors the thrust of his “nonsense” dismissal.

Is it really nonsense that Wichitans want to make sure they understand the proposal? Or see if it offers the returns they’ve been promised? Is it nonsense that many opponents of the proposal can cite multiple studies saying incentives are, at best, a mixed bag? Is it nonsense that others may just have a different opinion than Mr. Finkle? Instead of engaging them on the substance of their arguments, he brushes them aside with a “let them eat cake” assertiveness.

To Mr. Finkle’s contention that he “[doesn’t] know of one study that says incentives don’t work,” I’d simply say he, again, needs to treat the opposition with the same amount of respect he would certainly demand for himself. Readers shouldn’t take this as an endorsement of the links below (KPI isn’t taking a position on the sales tax proposal), but numerous studies do, in fact, exist that rather clearly show incentives are not working.

One such study focuses specifically on Kansas and our statewide PEAK program, a flagship incentive program in our state, and was presented on Friday by Nathan Jensen, Ph.D.; sharing a stage with Mr. Finkle. The findings of Dr. Jensen’s paper are quite clear, “The paper’s main finding is that, when comparing firms receiving PEAK incentives to a similar set of ‘control’ firms, PEAK incentives recipients are statistically not more likely to generate new jobs than similar firms not receiving incentives.” It is completely acceptable that Mr. Finkle is unpersuaded by the findings. But, the Wichita Eagle saw fit to report on the study in July with a headline of “Business incentive packages may do more harm than good, economist says” and quoted from an equally skeptical professor of urban and regional planning at the University of Iowa. 

There’s more:
  • A 2012 article in International Tax and Public Finance cites two European economists as saying, “…there is little empirical evidence on the effectiveness of tax incentives to attract investment.”
  • On this side of the pond, a 2002 article focusing on Ohio manufacturing recipients of incentives in the Journal of Regional Science concludes, “Our analysis suggests that incentives do not substantially increase, and may even decrease slightly, the amount of employment change in the two years after an establishment launched an expansion. After controlling for other factors, we found that the effect of incentives on establishments that received incentives is a decrease of 10.5 jobs per establishment."
This is certainly not a comprehensive literature review, but proof nevertheless that studies do indeed exist.

Mr. Finkle brushed aside these sorts of studies as “nicks” in specific incentive packages  that do not amount to an actual refutation of the larger concept, again to the Business Journal. It isn’t that he disagrees with the findings, some in peer-reviewed academic journals, but that he refuses to acknowledge their very existence. Agree with the findings or not but it is impossible to argue that these studies do not exist.

We were happy to have one of the leading advocates for economic development incentives attend our event on Friday and make the case for why Wichitans should support the sales tax. We were equally happy to welcome other well-regarded experts covering differing aspects of what makes a local economy tick. However, reading Mr. Finkle’s remarks in the Business Journal and hearing his comments at our event, I have wonder if he views his trip to “flyover country” as more of an imposition than an opportunity to inform.
Posted by David Dorsey on Monday, September 15, 2014

In April of this year I posted a blog in which I made a case for supporting public charter schools and expanding them in Kansas as one way to address a troubling and unmoving achievement gap among our minority and low income students. After a few recent readings - a report supporting charters and an opinion opposing them - it’s time for a follow-up.

A recent analysis by the Mackinac (Michigan) Center for Public Policy found that charter schools outperform traditional public schools (TPS) when adjusted for students who qualify for free lunch. Specifically, Audrey Spalding, the author of the report, found that

if there are two schools of the same grade levels where both have the same percentage of students eligible for a free lunch — one a charter public school and the other a conventional public school — the charter would, on average, be ranked 5 percentage points higher on the state’s rankings.

It is worth noting that in Michigan 66.4% of charter school students qualify for free lunch, while only 39.2% of TPS students qualify for free lunch.

The Michigan study is another affirmation of public charter schools, especially when it comes to serving low-income and minority students. It is worth noting that the achievement levels and “gaps” of these subgroups in Michigan is typical of any given testing population on any given metric; meaning we would see similar results on national exams, ACT scores, state-level exams in Kansas or any other state. It is also worth pointing out that nothing in stating these scores should be read as a statement about low-income or minority populations being “unable to learn.” It is a statement, tragically so, that they haven’t  been given the right educational opportunities needed to succeed.

Here is more evidence that validates the public charter school movement.

CREDO 2013 Study

As I pointed out in that previous blog, Stanford University’s Center for Research on Education Outcomes (CREDO) 2013 report found success for low-income and minority students. To the point:

Looking back to the demographics of the charter school sector in the 27 states, charter school enrollment has expanded among students in poverty, black students, and Hispanic students. These are precisely the students that, on average, find better outcomes in charter schools. These findings lend support to the education and social policies that focus on education as the mechanism to improve life chances for historically underserved students. Charter schools are especially beneficial learning environments for these students.

Julia Lawrence, writing for Education Weeks about the CREDO findings in Boston states

What makes Boston special is that a large percentage of students who are enrolled in charters in the city are exactly of the demographic background that these types of schools were designed to reach – coming from lower-income, minority families.

CREDO director Margaret Raymond said in this interview: “the charter school sector is getting better on average and that charter schools are benefitting lower-income, disadvantaged, and special education students.”

US News Best High Schools in America

Three of the top five 2014 U.S. News Best High Schools in America are public charter schools. Each serves significant minority populations: BASIS – Scottsdale (46%), Gwinnett School of Mathematics, Science and Technology (Atlanta suburb Lawrenceville, Georgia) (75%), and BASIS – Tucson (47%).

Success Academy

Success Academy in New York is perhaps the highest profile charter school organization in the country, largely due to the controversy between founder and CEO Eva Moskowitz and new New York Mayor Bill de Blasio. Of the 9,000 students in Success Academy’s 32 schools 97% are minority and over 80% are low income. Their schools rank in the top 1% in math scores and the top 3% in English language scores city-wide.

IDEA and YES Prep Academies

IDEA and YES are two charter groups that operate preparatory high schools in Texas. IDEA’s three schools serve about 2,200 students; almost all students are minority and about 80% are low income. YES operates four prep schools in the Houston area; almost 100% minority and about 60% low income. Those seven high schools were in the top 17 in the state and top 117 nationally according to the U.S. News rankings.

KIPP

KIPP (Knowledge is Power Program) has 162 elementary, middle, and high school charters across the country serving 58,000 students. Nearly 90% of those students are low-income and 95% are African American or Latino. KIPP schools consistently outperform their traditional public schools counterparts.

Rocketship

Rocketship schools, a charter organization that started in the Silicon Valley and is spreading to other metro areas including Memphis, Milwaukee and Houston have outperformed similar schools in both the local area of San Jose and the state of California as a whole, while serving mostly low-income Hispanic students.

“Crab Mentality”

But the one-trick-pony naysayers continue. A recent Education Week opinion slammed charter schools and declared their supporters suffer from “truth deprivation.” The author, Gerald N. Tirozzi, cites the same CREDO study and comes to the conclusion that charters are no better. But for some unexplained reason, he spends 974 words without a single mention of the improvement of low-income and minority students CREDO itself reports. His attitude amounts to that of crabs in a bucket.

“Crab mentality” rules when one of the crabs tries to climb out of the bucket, but instead of the others assisting the escape, they pull the escapee back in. This “if I can’t have it, neither can you” attitude toward education is what is keeping far too many in the crab bucket that is traditional public education.

He even has the chutzpah to say that charter schools “play by a set of rules that is different from those of traditional public schools, which according to Mr. Tirozzi “have an unwavering commitment to equity for all students.”

“Equity for all students”? Is he serious? What does he consider equity – that every student has a desk and a textbook? Apparently Mr. Tirozzi has never heard of the achievement gap, the precise reason for the rise of charters like KIPP, BASIS, Success Academy, Rocketship , IDEA and YES.

Those in the education establishment try to frame the discussion as if public charter schools are peddled by modern-day versions of the old west’s magic elixir salesmen, preying upon the ignorant and hopeless. AFT’s president Randi Weingarten has chimed in by proclaiming that charter schools have failed to live up to “the leaps and bounds that were promised” in student performance. They fail to realize (or admit) that the charter movement didn’t grow from hollow, unrealistic promises. It rose from parents and visionaries.

Parents - those desperate, not for some magical cure, but for an opportunity for their children to escape the claws of an education system not fit for their needs.

Visionaries – those who see that the one-size-fits-all approach to public education no longer is relevant and are bold enough to try methods that are student-based, not institutional-based.

Charter schools were never meant to be the silver bullet that some have miscast them to be. There are no silver bullets in public education. The system has evolved over the past two centuries, both good and bad. Public charters should be seen as an evolutionary step in giving students and families more opportunities to succeed. Just as there are good traditional public schools, there are poor-performing public charter schools. The key is trying to find what makes the high-performers work and extend these opportunities available to more kids.

So, the next time someone asks you to describe what’s so special about public charter schools, start with a discussion of “crab mentality.”
Posted by David Dorsey on Thursday, August 28, 2014

Over the past few decades several movies have been produced in which the protagonist(s) has to relive a day over and over again until some unknown variable breaks the chain. The most famous is Bill Murray’s Groundhog Day (can it really be 20 years old?). Other movies that have followed suit include Source Code, The 12 Dates of Christmas, Repeaters (a little-known gem of a movie I highly recommend), and this summer’s acclaimed Tom Cruise adventure Edge of Tomorrow.

Composite Scores

After reading the ACT Profile Report for 2014 results I feel like Murray’s Phil Connors, only without I Got You Babe and Punxsutawney Phil. As Table 1 shows for both Kansas and the nation, the 2014 scores look like the 2013 scores that look like the 2012 scores that look like…

 

The good news, with a caveat, is that Kansas high school graduates continue to outperform the rest of the country. Here’s the caveat: 12 states require all high school graduates take the ACT, whether or not they plan to attend college. Predictably, Table 2 shows that those states rank in the bottom half of the nation and distort the performance of states like Kansas that do not require all graduates to take the ACT.

 Scores by Race/Ethnicity

There has also been a “Groundhog Day” effect when it comes to the performances of racial/ethnic subgroups.  Table 3 shows that there has been virtually no change in the past five years among all these subgroups. What is perhaps most troubling, however, is that this means the performance gap of African American and Hispanics persists statically. (Note: ACT does not report data by income level.)

  

College Readiness Scores

ACT provides College Readiness Benchmark Scores that indicate what percentage of students have “a 50% chance of obtaining a B or higher or about a 75% chance of obtaining a C or higher in the corresponding credit-bearing college courses which include English Composition, Algebra, Social Science and Biology.” Table 4 provides that data by racial/ethnic subgroup and the accompanying chart is a graphic representation of the same.

 

 

What first jumps off the screen is how few meet college readiness for all four courses. Only three in ten 2014 Kansas graduates have a 75% chance of getting a C or better in courses in the four core areas. Yikes. And a glance at the chart provides a quick visual of the predicted performance gaps of African Americans and Hispanics as this cohort goes on to post-secondary education. Only 7% of African Americans and 14% of Hispanics are college ready in the four core areas.

Education Funding and ACT Scores

Remember in Groundhog Day when Phil tries to win the affection of Rita (Andie McDowell)? He tries and tries too hard to be what he thinks Rita wants him to be, of course, to no avail. It’s not until Phil has an epiphany and changes his behavior that he succeeds in both getting the girl and moving to the next day.

I believe that parallels the relationship between education funding and ACT scores. More and more of the same will not garner a different result. More funding has not and will not increase ACT scores just like being more of what Phil thought Rita wanted didn’t improve his chances with her.  Whether it’s higher composite scores, reducing achievement gaps or students being more “college ready,” performance will be fated to an eternity of February 2 until the education establishment has a Phil Connors-type epiphany.

As I have presented in a previous blog post, getting serious about expanding public charter schools would be a good place to start, as would providing scholarships and other alternatives for at-risk students. An education system with accountability, transparency and individualized instruction that allows each child the best opportunity to succeed is crucial to moving the needle forward.

Then maybe we’ll wake up to February 3.
Posted by Patrick Parkes on Wednesday, August 27, 2014
The recent release of July’s private sector jobs numbers marks the seventh month of available data for 2014. Kansas continues to keep pace with its income taxing peer states despite a slower month in July than in June. The growth rate from July 2013 to July 2014 was 1.21% compared to June’s 1.35% rate.

This decline levels out when looking at Kansas’ first seven months of 2014 compared to the same period of time in 2013. The 1.41% growth rate Kansas posted is virtually unchanged from last month’s 1.43%. 

On the whole, the private sector jobs growth picture remains clear. States without an income tax maintain a substantial and steady job growth lead over Kansas and the rest of their income-taxing peers. 

 

 

Posted by David Dorsey on Monday, August 25, 2014

Buzzwords and catchphrases - what would education be without them. Here are a few examples of those catchy little language snippets currently in vogue: research-based, lifelong learner, brain break, differentiated instruction, scaffolding, standards aligned, brain-based learning (my personal favorite – as if there were an alternative?).  If I had a dollar for every time I heard someone in the education community mention collaboration at the K-12 Student Performance and Efficiency Commission meetings last week I could retire without worrying about the solvency of KPERS.

But now sitting atop education’s buzzword totem pole is data driven, as in “my differentiated instruction is data driven,” or “the decision to purchase that standards aligned curriculum was data driven.” Here’s a favorite derivative used by principals to teachers: “How did data drive your decision to use that re-teaching lesson?”

Now don’t get me wrong, I’m as big a supporter of using data as there is, when it is utilized correctly. Data analysis is a significant part of what I do with KPI. And data should be a driving force to improve the overall education of our students. Data analysis has exposed a lingering and significant achievement gap that burdens African American, Hispanic, and low-income students.

However, there is another side to the coin. There is danger in data when it is reduced to a buzzword or part of a buzz-phrase that not only diminishes its importance, but also can cause misuse and unintended consequences.  My experience in the Topeka Public Schools classrooms and recent reporting by the Topeka Capital-Journal validate that this is the case in USD 501.

The rush to embrace the use of data with eyes wide shut is not a new concern. Nearly six years ago Frederick Hess of the American Enterprise Institute wrote a piece published in Educational Leadership called The New Stupid. Hess, recognizing the strides educators are making in using data, cautioned that the zeal to use data to make sound decisions can actually lead to stupid decisions that rely on information in lieu of knowledge. He presents these three categories of pitfalls educators should avoid when climbing aboard the student achievement data bandwagon: using data in half-baked ways, translating research simplistically, and giving short shrift to management data (e.g., operations, hiring and financial practices).

The data-related controversy brewing at Topeka Public Schools could provide two more Hess-like categories to avoid: 1) an onerous data collection/retention system and 2) the potential for student confidentiality violations. The latter is described thoroughly in two stories in the Topeka Capital-Journal – an article posted on August 20 and then this updated article posted later the same day. The newspaper reports that potentially confidential information was posted on what the district called “data walls.” These walls, which all teachers helped create at every elementary and middle school, displayed a note card (sans student name) for each pupil in the building. That card was placed under their appropriate heading of achievement (i.e., all “Proficient” students grouped together). Unfortunately, it appears some of the schools had information on cards that disclosed student free or reduced lunch status. According to the USDA this is a violation of students’ privacy.

But what the newspaper didn’t report was how arduous the entire data collection process was on the teachers. The creation and updating of the data walls was just part of the burden put on teachers to keep, maintain, and update virtually all student data. This included formative and summative assessments, daily work, student behavior and anecdotal notes. Teachers were required to keep all that information in what was called a “data notebook.” By the end of the school year, the typical data notebook was a full 3 or 4 inch binder, and some teachers even had multiple notebooks of that size. Their main complaint, as you might expect, is that the time lost being a teacher in order to be a records clerk was actually an impediment to student achievement (not to mention teacher sanity). Of course, the underlying purpose of this effort was to help teachers make data driven instructional decisions. Unfortunately, the outcomes of this effort were decreased instructional time, alienated teachers and apparent violations of the law.

A line from Hess’s article is so appropriate here, it bears quoting.  “Data driven decision making does not simply require good data; it also requires good decisions.” 

Let’s hope from this point forward the administrators of Topeka Public Schools take heed of Hess’s cautioning and no longer fall victim to “The New Stupid.”
Posted by Dave Trabert on Friday, August 15, 2014

Former state budget director Duane Goossen’s recent blog post entitled “Woe to Education Finance” is yet another example of data being deliberately distorted or falsified for political gain.  Mr. Goossen served as budget director under governors Graves, Sebelius and Parkinson and has been a vocal critic of anything even hinting at efficient government…let alone lower tax burdens.  Indeed, his post concludes, “The fallout from the governor’s tax plan has made investment in Kansas public schools impossible.”  That false claim is completely debunked on page 60 of the Division of Budget’s FY 2015 Comparison Report, showing that state funding of schools will increase by $176 million this year (not counting property taxes that will finally be recorded properly as state aid). 

And that’s just the beginning of the false claims and distortions.

Goossen:  “Costs for supplies, electricity, transportation, and teachers’ salaries are all increasing. But for the coming academic year, schools must cover those growing expenses with $548 less for each student than they had 6 years ago.”

Table 1 shows the most recent estimate of per-pupil spending for the year just ended.  Even if the portion recorded as Federal and Local is unchanged this year, the addition of $176 million will take per-pupil expenditures to roughly $13,411.  That would be $751 more per-pupil than six years ago….not $548 less.  Mr. Goossen is only telling a partial story, as shown in the next section.


What’s more, to the extent that costs are increasing for schools, they are also increasing for individual families and businesses. Mr. Goossen is essentially demanding that taxpayers give government a raise when they have no such power with their own paychecks and are facing rising costs as well.   His demand for more money also presumes that districts are organized and operating efficiently, which we know is not true according to multiple Legislative Post Audit studies.

Note: The KSDE estimate for 2013-14 was provided before the addition of funding during the recent legislative session, so it is possible the actual spending will be higher than the estimate.  It should also be noted that KPI’s estimate of 2014-15 utilizes data from Budget and KSDE and that there could be reporting differences between those entities that would affect the Total.  This note also applies to Table 5.

Goossen: “In the 2008/2009 school year, school budgets were based on a per pupil amount of $4,400 — the high point for school finance in Kansas. For the upcoming 2014/2015 school year, lawmakers budgeted $3,852.”

Mr. Goossen writes this as though the amounts listed are all that is provided to schools.  In reality, he is talking only about Base State Aid Per Pupil, which is just the beginning point for a portion of school funding.  As shown above, total aid per-pupil is about three times greater than Base and that total state aid that is more than double the Base. He deliberately ignores funding that doesn’t suit his preferred narrative.

Goossen: “At its root, a school district’s budget is determined by an amount per pupil multiplied by the number of students. School districts can then add on a “local option budget” of up to 33 percent of the basic budget. Schools must run their classrooms and education programs within that total.”


Deceptive’ would be a generous interpretation of Mr. Goossen’s representation in this regard.  As shown in Table 2, he is grossly understating total aid to school districts.  Multiplying Base State Aid Per Pupil times Weighted Enrollment produces an amount roughly equal to Base State Aid plus extra money provided through many weightings (At-Risk, Bilingual, Transportation, etc.); adding Local Option Budget money would lead on to believe that school funding for 2013 was about $3.2 billion.  The actual total, according to the Kansas Department of Education, was $5.8 billion.

Saying “schools must run their classrooms and education programs within that total” is the caveat that saves his representation from being an outright false claim.  There is no official definition of “education programs” but he later provides a few examples of what he may exclude from “education programs,” saying “…school districts also receive funds for to pay for other things:  the Kansas Public Employees Retirement System (KPERS), special education, school building construction, capital outlay, food service, etc. However, that funding must be used for its intended purpose.”

It is true that money for the listed spending categories must generally be used for those purposes, but his “etc.” contains a lot of unrestricted funding, the most notable of which, Supplemental General State Aid, was $339 million for 2013 and is budgeted to be $448.5 million this year.

Mr. Goossen and other “just spend more” proponents loudly proclaimed over the last few years that the Legislature should raise Base State Aid in accordance with the Supreme Court settlement over Montoy.  But now that the Supreme Court has effectively reversed that ruling and says that all funding, including State, Federal, Local and even KPERS must be counted toward adequacy, they have a decidedly different – and quite hypocritical – position.  They still cling to Base State Aid as their touchstone and refuse to acknowledge that, as the Supreme Court says, “….a stable retirement system is a factor in attracting and retaining quality educators—a key to providing an adequate education.”

It is also worth noting that school districts say nicer facilities lead to better student outcomes when they want more money for that purpose, but facilities suddenly don’t count when they want other money.  Spending more money on facilities also makes less available for other functions, as does having district employees perform functions that could be privatized, which forces more money to be spent on KPERS.

Goossen:  “Costs for supplies, electricity, transportation, and teachers’ salaries are all increasing. But for the coming academic year, schools must cover those growing expenses with $548 less for each student than they had 6 years ago.”

 The false claim about per-pupil spending being down was already debunked but Goossen also implies here that Base State Aid Per Pupil is all that schools receive to pay for supplies, electricity, transportation and teachers’ salaries, which of course is not true.  Table 3 highlights other major unrestricted funding sources that Mr. Goossen and others routinely ignore in their pursuit of more money. 


At-Risk funding does carry some restrictions but that funding is not required to be used for the exclusive benefit of students who generate the funding.  For example, the KSDE At-Risk Guidelines say “At-Risk funds can be used to support classroom teacher salaries to the proportional percent identified at-risk students.”  The guidelines merely require that at-risk students be present in the classroom. 

Table 4 shows spending from the K-12 At-Risk Fund in 2013 (another $19.8 million was spent from the At-Risk 4 year-old Fund, which can be used for K-12), including money spent on each category that Mr. Goossen implied could only be funded with Base State Aid dollars.   Most of the salary expenditure was for regular classroom teachers but money was also used to pay for custodians, support staff and administration.



Goossen:  “The per-pupil figure has dropped because state funding has dropped.”

Table 1 shows that per-pupil funding of schools has increased. Table 5 shows that state funding has also increased each year since 2011 and is budgeted to set a new record this year.  Again, Mr. Goossen does not allow the facts to get in the way of his political narrative.



Goossen: “Is the state in a position to add money to push the per-pupil amount up?

Set aside the fact that that just happened.  The real issue here is that Mr. Goossen is posing the wrong question.  “Just spend more” is simply about institutional demand for more money and completely disregards the educational needs of individual students.  Political demand for more money also ignores these realities:

  • Every Legislative Post Audit report says districts are not operating efficiently.
  • $430 million of education funding was used to increase district cash reserves since 2005.
  • Student achievement on independent national tests is relatively unchanged despite large funding increases over the last decade.

One must wonder how much of Kansas’ and the nation’s student achievement woes are attributable to political self-interest and putting a higher priority on institutions than on the needs of individual students.    

Posted by David Dorsey on Friday, August 15, 2014

This August 10, 2014 article from the Topeka Capital-Journal, is aptly titled “Topeka USD 501 teachers point to paperwork, micromanaging as stressors.” The article was triggered by the resignation letter of former 5th grade teacher Kris Rowan. A letter (which, according to the article, the district didn’t want to be made public) in which she outlines her reasons for retiring earlier than she had planned due to the aforementioned micromanaging and paperwork. This passage from her letter bears highlighting:

I can’t work any longer where I feel so untrusted, so on guard, so unable to be creative, where my individuality is not wanted, where everyone must be doing the same thing at every grade level.

I could not have said it better. I had the opportunity to spend time in her classroom as a math teacher with her for a year at Randolph Elementary. I know Kris to be a very bright, dedicated and conscientious teacher.  So it doesn’t surprise me that she joined the scores of us who also left, disappointed and frustrated with the direction of USD 501.

“The district is a sinking ship,” described another fellow teacher to me as to why she resigned at the end of last year from USD 501. She took her exceptional teaching talents to another district. I am one of several Lowman Hill teachers who parted ways with USD 501 at the end of last school year. Some are teaching in other districts, others retired earlier than expected. And I know others who wanted to leave but were unable to find other teaching positions or are simply riding into the retirement sunset.

Dissatisfactions that are leading teachers to move on are not limited to USD 501. Unrealistic demands are taking their toll across the state. I know of a now former Johnson County teacher who, after getting her degree to teach in her 40s, said five years ago that she would “teach until they fire me.” She retired out of frustration last May. These quotes are indicative of sentiments heard in districts across the state:

  • “This is not why I got into teaching.”

  • “I can’t possibly do everything they want us to do this year.”

  • “I can’t be creative anymore.”

  • “I have a life (outside of teaching).”

  • “They don’t want teachers, they want curriculum delivery robots.”

This paragraph from the article pinpoints the source of the frustration for many:

She and other teachers at the district who spoke to The Topeka Capital-Journal described dramatic changes in the past year to the district’s teaching initiatives and requirements for its elementary schools. The new approach, they say, resulted in unprecedented micromanaging of their daily activities, and long hours spent on paperwork. Some directed their criticism toward Diane Cox, who joined the district one year ago and oversees instruction.

Although I agree that last year did bring “unprecedented micromanaging,” the trend toward centralized authority at the expense of building autonomy and individual discretion preceded Diane Cox. I noticed a distinct move toward central office control and a “cookie cutter” approach to teaching about five years ago under her predecessor.

But what brought this to a head last year is the district’s unrealistic and counterproductive approach to the collection and use of data, which I will discuss in my next blog.

Posted by Dave Trabert on Friday, August 15, 2014

A July 13 New York Times editorial made several false and misleading claims about school funding and economic performance in Kansas, so we submitted a response to set the record straight.  Predictably, the Times ignored our request but you can read about The New York Times Assault on the Truth in the Commentary section of our site.

As noted in our response, this isn't the first time the Times has ignored our submissions.  We have no burning desire to have our name in their paper; it's simply about getting the truth published.

It's bad enough when politicians make false and misleading statements, but our freedom is at stake when media is leading the propaganda parade.

 

Posted by David Dorsey on Tuesday, August 12, 2014

The KNEA made good on its promise to file a lawsuit pursuant to the passage of HB2506, which was signed into law during the 2014 legislative session and was the legislative response to the Gannon v. Kansas school finance lawsuit.  Specifically, the suit challenges the provision of the law that essentially eliminates state-mandated teacher tenure (although the law allows local districts to put tenure rights into teacher contracts).

The suit states on page 2 that “KNEA has standing to sue on behalf of its members, many of whom are non-probationary teachers who have lost valuable rights due to the passage of the (law).” As a former teacher, I say it’s time for a group of parents AND independent-minded teachers somewhere in the state to stand up to the union and claim some of their “valuable rights” that have been lost to their children’s education for years. Rights that have been lost due to ineffectual teachers who are protected by laws and procedures that make it nearly impossible to dismiss a teacher for incompetence.

As I have written previously in this venue, I know of many teachers who are also fed up with tenure-protected incompetent teachers. As a classroom teacher, I could tell early in the year which of my students had that teacher the previous year. As teachers, parents and even from our own student experience, we all remember who the underperforming teachers were. It took considerable time trying to catch those unfortunate ones up with the other kids. And in my capacity as a specialty math teacher, I witnessed gross incompetence of teachers on a daily basis. It’s sad to say that in my 20 years as an elementary level teacher, I witnessed only one teacher who was fired for incompetence and it took the district two years to get it done. That meant two more classes of elementary students were subjected to an ineffective teacher; two more classes that fell behind the others in their grade. And two more years the proceeding teachers had to spend needless time reteaching.

The truth is, KNEA should be advocating for a quality education for all students instead of protecting those who impede it.

That’s not happening now, nor is it ever going to happen, so the time has come for the parents and teachers willing to buck the union to take a stand.

They did it in California in the Vergara case, and it worked. And buoyed by the success in the Golden State parents are following suit in New York as reported in this Wall Street Journal article. Similar suits can be expected in other states across the country, according to WSJ. It’s time Kansas becomes one of those states.

If Kansas decides to seriously address the achievement gap endured by minority groups and low-income students, removing incompetent teachers from classrooms has to be the place to start. In the recent Gannon decision, the Kansas Supreme Court deemed that adequacy of education is defined by standards, the so-called Rose standards, as opposed to total money spent. Students are not going to have an equal opportunity to meet those standards unless districts across the state minimize the number of low performing teachers.

Speaking for all the good teachers across the state, when the poor teachers are gone we can spend more time taking our students forward instead of making up for lost time.

Now, if only KNEA shared the same concern.

Posted by Patrick Parkes on Friday, August 08, 2014

A Recent Graduate Entering the Workforce:

Thus far, we have examined Wichita’s proposed sales tax increase through the very distinct lenses of family life and retirement. Yet, the financial impacts of the increase are certainly not limited to these important life phases. Consider the financial obligations of a recent college graduate with an engineering degree working in Wichita’s aerospace sector. Research from the popular compensation website Salary.com notes that entry-level engineers in the area can expect to earn almost $62,000 annually. This may seem like a healthy starting salary at which sales tax changes are hardly noticeable—especially for a young person without the commitments of a family, children, a mortgage, etc. However, like many of her fellow graduates, she juggles her current living expenses on top of her student debt load of $29,000 (i.e. the current national average). The extra $253 she could owe next year under a sales tax increase would certainly be put to better use as one of the loan payments she dreads each month. Or, better yet, she could use the money to make an extra payment against her loan’s principal and get herself out of debt sooner.


A Stable, Two-Income Family:

For a final scenario, consider a relatively comfortable family of four living on $111,000 annually. This family is on solid financial footing and may even manage to save up enough for a nice vacation each summer. However, with both kids nearing high school age, the mother and father are very worried about how they will meet the demands of college tuition costs in the coming years from universities that seem determined to continue increasing their prices. As such, these parents getting serious about putting money away in the 529 plans they started years ago but haven’t given much attention until now. To help jump-start these plans, the mother has just begun a new job as a paraprofessional at the local elementary school. She likes that the position will allow her to keep working hours similar to her kids’ schedules, and the idea of being able to contribute to the family’s savings plans motivates her. With that said though, she often gets discouraged in thinking that her meager salary will fall well short of providing for even the mounting expenses of her kids’ high school years; let alone the college savings needed. The extra $329 this family could owe annually under a new sales tax may seem minuscule. Yet, this family could undoubtedly think of a whole host of better uses for it in light of the aforementioned major financial decisions and sacrifices looming on the horizon.     

Note: This blog has been updated from its original posting on August 5th, 2014 

Click here for Part I in this series.

Posted by Patrick Parkes on Friday, August 08, 2014

Introduction:

A sales tax in Wichita will matter. I know this because states with low overall tax burdens are proving every day that taxes do matter. These states continually outpace their high-burden peers in private sector job growth, private sector GDP growth, as well as growth in wages and salaries—to name a few. But, to be sure, these developments are by no means just esoteric statistical phenomena. Individuals and families are taking notice and “voting with their feet” by leaving high-burden states and moving to low-burden ones. These low-burden states are far from being carbon copies of each other by nature, but they have each managed to embrace a simple recipe. They have found ways to spend less per resident, operate more efficiently, and provide better public services at better prices. This commitment allows citizens to keep more of what they earn, save and invest, start new businesses, and/or support existing ones. Contrarily, high taxes and added taxes disrupt the natural flow of otherwise strong state economies by taking money that could have been spent within them to finance oftentimes inefficient and wasteful governments.  This is how we ought to examine the proposed 1% sales tax in Wichita: by putting the tax’s impact in perspective not based on what it will mean for city government in Wichita but instead based on what it will mean financially for individuals and families living therein. The same could be said at the local level as well. Why not go to Andover or Derby to buy groceries and save a little coin rather than pay a higher sales tax in Wichita? 

We must keep in mind from the outset that new tax obligations are especially burdensome on all types of individuals and families because they must be met in addition to taxes that these individuals and families are already paying. Thus, coming up with roughly an extra $160-$350 in added sales tax payments each year may not seem like an incredible sacrifice in its own right. However, doing so when one is already feeling both pinched financially and overburdened by the existing tax code is an entirely different matter. As a starting point, consider that the average adjusted gross income (AGI) per household in Wichita is $59,382. This figure is based on 2012 IRS tax filing data for Sedgwick County as well as Consumer Expenditure Survey (CES) data. At this average income level, a household would face an additional tax burden of $240 annually under a new 1% sales tax in Wichita. In an effort to illuminate the broader impact of such a tax, we expanded upon this methodology and created four unique household scenarios representing a broad swath of the Wichita community. We selected a diverse group of four tax brackets that would inform the “financial pictures” underlying each of our four scenarios. We created the “financial pictures” using adjusted gross income (AGI) averages for each tax bracket chosen. Next, we considered the estimated percentage of income subject to sales tax for each bracket. Finally, we multiplied these pieces of income by the 8.15% total sales tax rate in Wichita that consumers will face if a 1% increase goes into effect.  Due to national AGI and CES averages, our tax burden calculations inherently assume an average family size of 2.6 consumers per household. Family sizes in the stories below vary slightly from this average baseline. Nevertheless, the baseline still provides an appropriately safe estimate of the added tax burden that a few “example” households may face if the 1% sales tax increase is enacted.

Retirement and Living on a Fixed income:

First, think about a 65 year-old recent retiree living in Wichita. The American Association of Retired Persons (AARP) estimates that an average retiree of this age lives on just over $31,000 annually. Add a small pension and/or some other small investments to this fixed income stream that is largely reliant on Social Security benefit payments, and our retiree likely brings in close to $35,000 annually. If the City of Wichita enacts its proposed 1% sales tax, our retiree could pay $161 in additional sales taxes per year. This sum may seem small and inconsequential by itself, but—as we discussed above—sums like these are never paid in a vacuum. They are sacrificed in addition to and on top of existing financial obligations. If our retiree is like the majority of recent retirees in this country, he is counting on every dollar he can save to cover the rising costs of the healthcare he and his wife will need as they age. According, to a recent article from Fidelity Investments, a 65-year-old couple retiring this year will face an average of $220,000 in healthcare costs throughout retirement. Facing this daunting sum, a $161 sales tax hike is the last thing Wichita retirees need added to their financial plates.         

Job Loss in the Manufacturing Sector:

Next, consider a family of three earning $55,000 per year (slightly above the median income reported for Wichita). This family’s groceries, gas, cable, insurance premiums, and two car payments are becoming impossible to meet due to recent job loss and the drastically altered finances the family now has at its disposal. The husband was laid off recently from his previously steady manufacturing job. While he has been able to pick up some part-time and temporary work, he is certainly among the 15% of Americans who report themselves as underemployed. As such, his wife has re-entered the workforce as a freelance graphic artist. Still, this family has had to tap into its already modest and fast depleting savings to make ends meet. The $228 in additional sales taxes this family could owe annually if Wichita’s rate increase passes is the last thing it can afford to think about given its already dire financial straits.

Note: This blog has been updated from its original posting on August 4th, 2014 

Posted by Steve Anderson on Thursday, August 07, 2014
Direct transfers of taxpayer money sent to a specific business or industry is always a tough sell to politicians, let alone the voting public. But, that is why some corporations pay lots of money to lobbyists. If we can’t get a company more revenue (via a taxpayer-funded payment) why don’t we lower their expenses via a tax loophole that lowers how much they pay in taxes?

These sort of special interest tax breaks come in a variety of different forms but the net effect of each is the same - revenues are diverted from the appropriation process and instead sent to some “special” group.   A shrewd lobbyist will often make sure the program is funded in a way that their client(s) will receive their funding even if the statute is changed in the future.  However, that should not preclude bringing these special interest deals to an end.  This is especially important given that the reduction in tax rates will increase the impact of these programs on the revenue stream even as the state continues along the path to eliminating the individual income tax.     


These transfer schemes are funded in a number of different ways that obscure the transaction from both the public and the appropriation process.  For example, there are a number of these special deals that are funded by payroll withholding taxes. The payroll withholding exemptions are programs where the state abates collection of state income tax withheld on employee’s wages.  The state then provides either a program or directly funds some benefit for the employer.   These programs come in many forms and often are nearly impossible to find within the very complex tax and revenue reporting statements.   In general these programs require relatively long commitments by the state of taxpayer funds.  The discontinuance of these type of programs will not generally eliminate the programs immediately but it will create savings going forward that could be substantial to the maintenance of a stable fiscal environment and a more transparent tax code. It would also be a breach of trust, on some level, to yank away a promise made by the state to an entity or individual. But, that doesn’t mean we have to let these program exist into perpetuity.

Investments in Major Projects and Comprehensive Training (IMPACT)
IMPACT provides for major project investment to provide financial assistance to defray business costs.  IMPACT uses withholding revenue for a direct funding source to pay for bonds issued by the state for projects.  In fiscal year 2013 that percentage was 2% and the program expended $25,420,654 of funds that otherwise would have gone to the state coffers.   The good news is that Kansas stopped issuing bonds in the IMPACT program effective Dec. 31, 2011. The bad news was it was replaced with other programs that are very similar.   The IMPACT payments will extend on for a number of years in to the future because of the bond’s that funded those projects.   This ability to bind future legislators and taxpayers to these sort of “deals” is, in and of itself, problematic but there is more damage done to the state of Kansas than just the direct cost of these bonds.    

Bad policy like the type of special interest payment that IMPACT represents often have negative impacts in the future that are not foreseen at the time of their passage.  For example, the IMPACT bonds were at the heart of the recent Moody’s down grade of the Kansas state bond rating.  The IMPACT bond’s ratings were reviewed by Moody’s rating agency because the funding source to pay off the bonds - withholding taxes - was being reduced by a cut in the tax on wage earners in the state income tax rates.  The media, which generally is not comprised of individuals with a financial background, reported that the change in the IMPACT bond ratings were caused by the broad tax cuts, which is only partially true.   What the media in general did not report, at least not with the same enthusiasm as their portrayal of the impact of the income tax cuts, was that Moody’s noted the long running unfunded liabilities of the Kansas Public Employees Retirement System (KPERS) and the lack of spending cuts as key elements of their downgrade. 

However, analysis of the IMPACT bond rating issues bring to light another important problem with these type of give a ways.  Future legislators have their hands tied because their predecessors have committed future tax revenues in a manner that precludes the ability to bring an immediate cessation, or even partial reduction, in the special interest funding source without repercussions such as the recent bond rating issue.   

Promoting Employment Across Kansas (PEAK)  
The PEAK program allows companies that create 100 new jobs within a specified two-year period to retain 95% of employee withholding taxes for up to 10 years.  Not surprisingly with such a generous incentive companies have grown its use rapidly going from $2.7 million in expenditures in 2010 to an estimated $12.5 million in 2012 years.   The “cap” on this program going forward is: In FY 2014, the cap is $12 million. In FY 2015, the cap is $18 million, $24 million in FY 2016, $30 million in FY 2017, $36 million in FY 2018, and $42 million 2019.    Immediately freezing the cap at the current level and eliminating the program going forward to prevent new obligations generates significant savings going forward for the state. This is giveaway is even more troubling when considering that a recent analysis from Kansas City’s Kauffman Foundation found that, “PEAK incentives recipients are statistically not more likely to generate new jobs than similar firms not receiving incentives.”  

Kansas Bioscience Authority (KBA)
The KBA’s short lifespan is a microcosm of what can go wrong with the concept of dedicated directed funding.   The lack of transparency created by bypassing the scrutiny of the appropriation process often leads to expenditures that generate headlines but don’t create economic growth.  

The legislation that created the KBA produced a number of programs and funding streams. It also set the total funding limit to the authority over 15 years at almost $582 million.  The funding was to be for a period of 15 years from the effective date of the establishment of the KBA and required the State Treasurer to annually pay 95% of withholding above the certified base, as certified by the Secretary of Revenue, on Kansas wages paid by bioscience employees to the bioscience development (code categories from NAISC) and investment fund of the KBA. 

The amount of funding transferred to the KBA grew from almost $20 million in 2006 to nearly $36 million by 2008 before the creation of the annual funding cap of $35 million in 2009.   Issues with operations and management emerged in 2011 which led to a forensic audit by an outside CPA firm.  The audit pointed to a number of issues that led subsequent legislatures to reduce the Authority’s funding to $11.3 million in 2012, $6.3 million in 2013, and $4.0 million in 2014 (KBA funding history here). It is doubtful that the current Administration or legislatures would increase funding above current levels but the $35 million is still the statutory cap leaving open that possibility.   

There is a secondary issue with KBA’s statutory cap caused by the treatment of these type of dedicated directed funding in the budgeting process.   These statutory caps for entities like KBA are considered to be at their cap amount when forecasting future budgets.  The $35 million of KBA statutory cap, for example, creates an illusion in fiscal impact statements issued by the Kansas Legislative Research Department (KLRD) because those statements show the full statutory amount of $35 million being spent every year for the five years they project.   Based on the current trend line of KBA funding this will not happen and, instead, creates a significant overstatement of expenditures and helps create fiscal deficits where none may exist.   These projections are used by legislators and the media and should strive to present as accurate a picture as possible of current and possible future realities. A more proper and accurate display of these type of funded programs for five year projections like KLRD produces would consider whether spending could be altered or removed completely. This should be reflected in either the actual amount shown, if there was a history of partial funding, or, at the very least, in a separate line item with a notation that the sum could be arbitrarily reduced or eliminated.   

Job Creation Fund
Another of those dedicated directed funds is the Job Creation Fund (JCF).  The Job Creation Program Fund or the “deal closing” fund, its more press-friendly moniker, lets the state, led by the Office of the Governor, make investments and extend incentives aimed at attracting or retaining businesses within a range of statutory guidelines.  The funding for the JCF was from the elimination of three other credits:  Kansas Enterprise Zone, Job Expansion and Investment Credit Act and a refundable credit for property taxes paid on machinery and equipment.  This sort of reallocation of funding sources carry the coveted title of “revenue neutral” and hence have no fiscal impact statement for legislators to worry about when the funding was created.   This allowed elected officials to be able to say on one hand they eliminated special interest funding while creating another special interest fund out of the “elimination” of those entities.  The annual cap on JCF funds is $10 million  which is how much could be immediately saved by letting JCF join its now-defunct predecessors in state history. 

Transfers Out of the State General Fund
There is another area where what would be State General Funds are diverted from the appropriation process.   There are a number of transfers out of the State General Fund with the largest and most notorious being the $135 million School District Improvements Fund.  Not only does this amount not get counted in the school formula, the recent Gannon ruling on school funding pointed directly to this fund as an example of inequity in funding.  This “inducement” to issue bonds for new buildings was a bad idea both from a policy and process aspect.   Policy-wise the Kansas Supreme Court’s Gannon ruling was correct in pointing out that only the growing school districts could use this fund with a few big school districts garnering most of the monies.   Process-wise the choice to use a transfer as the funding mechanism not only bypassed the school finance formula but also ensured that these funds are not counted by the National Center for Education Statistics; NCES is the “go to” place for comparing education-related data from across the country and is run by the U.S. Dept. of Education. 

There is also another series of transfers that have their own particular issues.  The adjacent list shows the recipient and the amount for FY-2015 (available at link above).  The picking of winners and losers by government is never a good idea and the direct transfer of taxpayer funding to companies is a suspect type of economic development.   

 Transfers out of the State General Fund
Spirit Aerosystems Incentive($3,500,000) 
Eaton MDH Spec. Qual. Indus. Mfg. Fund ($30,000) 
 Siemens Manufacturing Incentive($650,000) 
 Learjet Incentive ($6,000,000)
 TIF Replacement Fund ($900,000)
 Learning Quest Match ($500,000)
 Total ($11,580,000)
It is also troubling when local communities enter into Tax Increment Finance (TIF) arrangements, not to mention other subsidy giveaways, which are basically an agreement between a company or individual and the city to suspend property tax payments for that company or individual.  State taxpayers as a whole have to make up for lost revenues to the governing body of each such city from the TIF arrangement.  This means that a TIF issued in Johnson County is, at least in part, paid for by residents of Bourbon County and Elkhart. This distribution of funds from taxpayers across the state to individual “redevelopment areas” that were created by local governments in a manner that is basically hidden from the citizens is another great example of why these “off the tops” are bad policy.  Requiring these TIF subsidies to be debated in the light of the full appropriation process would no doubt lead to questions by legislators whose districts did not include cities who receive this subsidy. 

A general thought for legislators, citizens and industry on these economic subsidies.   The reduction in income tax rates by the state on withholding rates has already provided a huge incentive for these companies in addition to the direct largess they receive from these dedicated funds.  The rate cut on withholding taxes increased the take home pay of their employees without those companies having to give a pay raise to their employees out of company funds. Note that the “incentive” of lower withholding taxes is applied to EVERY wage earner in the state and does not go about picking favored businesses, industries, or individuals. This type of transparent, rules-based, and equally-applied policy is the correct way to encourage economic growth and allow the free market to dictate outcomes not politicians or bureaucrats.
  
Conclusion
Every program that spends the funds of the taxpayer should be examined regularly and the nature of these “off the tops” suggests that is not happening. The need for transparency and accountability is especially true of programs that benefit any specific individual, company or sector of the economy at the expense of another.  Because of the contractual type of arrangement some of these represent we do not advocate for the state breaking existing contracts in regards to incentives.  But, the creation of new or expansion of existing economic development handouts that are direct redistributions from taxpayers to other sectors of the economy needs to be halted and those still in existence need to be reviewed.   

A complete review of every agreement entered into by the state to ascertain if that agreement is contractual in nature or are not legally binding going forward should proceed this next legislative session.   The state should review those that are not legally binding and current renewals that can be foregone and put this “off the top” funding back in the appropriation process going forward.   How much could the state expect to realize would be determined by that review. Even a preliminary, informed estimate would be in the neighborhood of $50 million annually without breaking any contractual arrangements.   The following chart gives an estimate of just three programs with statutory flexibility.  

 Total Dollars Returned to the State Coffers
 $s in Millions FY16 FY17 FY18FY18 
 Freeze PEAK at Current Levels $6$12$18$24
Kansas Bioscience Authority $25$25$25$35
Cease Job Creation Fund $10$10$10$10
 Totals$41$47$53$69
The issue of transparency is front and center in all of these programs and it would be appropriate for every “off the top” to be displayed on both Consensus Revenue Estimates and Appropriation profiles so that legislators and citizens can see that a significant amount of funds have already been appropriated by these arrangements.  

Posted by David Dorsey on Friday, August 01, 2014

The updated version of the formula that will be used by the Kansas State Department of Education to determine student weighting in the coming school year is presented below. This complex formula is the basis to adjust (increase) the number of “students” in a school district for state funding purposes.

Dissecting this complicated formula reveals those factors the state recognizes that require additional money.

Highlights include:

  • Up to 13 different factors decide what the “real” student count will be for a particular district*.

  • Seven factors (at-risk, vocational ed, bilingual ed, high-density at-risk, new facilities, high enrollment, and virtual students weighting) are calculated using percentages of student enrollment.

  • Four factors apply to all 286 districts. They include:

    • at-risk students (those who qualify for free lunch)

    • low or high student enrollment

    • special education weighting

    • transportation

  • The others vary in applicability from the vocational education weighting (267 districts in 2013-14) to declining enrollment weighting (2 districts in 2013-14).

Once all applicable factors are determined, the total weighted number of students is multiplied by the Base State Aid Per Pupil (BSAPP - $3,838 in 2013-14 and $3,852 in 2014-15) to calculate that part of the amount of state aid a district receives.

These weightings are no small affair. For example, in the Elkhart School District (USD218) last year, the weighting factors increased the student count from 502.6 (actual enrollment) to 1,668. 2, a 231.9% increase. In dollar terms, that increased Elkhart’s BSAPP funding by $4,473,573 from $1,928,979 to $6,402,552. That's an effective BSAPP of $12,739! And that’s not an isolated case. Nearly half of Kansas’s 286 school districts realized at least a doubling of the effective BSAPP due to weighting.

People in the education establishment are quick to lament that BSAPP is down from the pre-recession figure of $4,400 in 2008-09 to the current $3,852 for the 2015 fiscal year. However, you never hear them speak of the all the weightings that significantly add to the dollars actually received. In fact, when all students statewide are included, the real BSAPP for 2013-14 was $6,640. In a recent Lawrence Journal-World article it was reported that Lawrence Superintendent Rick Doll said the district is still suffering from cuts in base state aid. According to Doll, “We are operating basically at about 1999 school funding levels.” That’s not even close to being accurate. According to KSDE, state funding per pupil in 1999 was $4,533. That figure rose to an estimated $7,052 per pupil for last school year. Local support has more than doubled since ’99 (from $2,238 to $4,809 per pupil). Likewise for federal support.

It is important to understand what a difference in the level of funding the weighting of students adds. Last school year, the weightings provided $1.3 billion over and above BSAPP to the state’s 286 districts. But some Kansas politicians, particularly those more interested in protecting institutions than serving children, and the education establishment don’t like to talk about that part of state aid to education. Instead, they like to focus only on the BSAPP figure. That’s why we hear statements made like Superintendent Doll’s.

If I were still a math teacher and they were my students, their homework assignment would be learn and understand this formula. And yes, it would be on the test.

*There is one change in the formula from the 2013-14 school year. The low-proficient, non-at-risk factor was removed during the 2014 legislative session.

Posted by David Dorsey on Wednesday, July 30, 2014

There has been a marked increase in the attention given to teacher evaluations in recent years. Most of that attention surrounds the results of those evaluations; how it is teachers are scored or rated. But what is missing from most of those reports is the actual process of how a teacher is evaluated. How is that rating determined? Or even more fundamental: How is a teacher evaluated?

To those outside education it would seem reasonable that an evaluation would go something like this: the principal and teacher meet to review what the teacher has done over the past school year, maybe include goals/objectives previously identified. They discuss what worked and what didn’t. The principal might review what he/she found during a few classroom visits. The teacher would get some kind of overall score/grade and the principal would determine if the teacher should be rehired for the next year.

That’s not even close.

Remember that first date? The one when you were really out to impress that special someone – you know, hide the real you? While concurrently having unrealistic expectations of the other person? Teacher evaluations are a lot like that.

One dirty little secret of public education is that teachers aren’t really evaluated, not in a sense that other professionals are. Teachers are observed, mostly on their terms, and it’s their behavior that is judged.

Here’s how they generally work. For a tenured teacher, the principal comes into the classroom for what is termed a “formal observation,” which is typically a 30 – 40 minute visit. A probationary teacher usually gets two such visits. And those are times determined by the teacher. (In my experience it wasn’t unusual for the principal to leave early, attending to some emergency, so the observation timed was actually shorter.) Naturally, the teacher is going to pick a subject or a class that will make him or her look the best. The classroom visits are followed by a meeting to discuss what the principal observed and put in writing. Of course, most of what the principal recorded is positive, because the teacher cherry-picked the setting. The process is concluded when the principal rates the teacher using a rubric based matrix (this is the one used in Topeka Public Schools) – a tool that attempts to turn the subjective into the objective. This is a key component because the matrix/rubric is used to place the teacher in a performance category.

And there’s one more very important point that I’m sure most Kansans don’t realize. Our state is one of 22 states that does NOT require tenured teachers get evaluated annually.  After only four years in the classroom, Kansas teachers are evaluated every three years. Indeed, that’s two full years with no formal appraisal. In what other profession do you get two years off for good behavior?

You may be wondering how our public school educators get such a sweetheart deal. Two words: collective bargaining. As I will detail in Part 2, the unions have played and continue to play a key role in the evaluation process and the inflated ratings teachers are getting around the country.

Ratings that are as inflated as your expectations of that first date.
Posted by Dave Trabert on Monday, July 28, 2014

It’s far too early to call tax reform a success in Kansas but claims of its failure are based on a number of factual distortions.   Tax reform opponents understand that controlling spending is the key to tax reform – and they will not let facts get in the way of their disdain for limited government principles.  The only real problem with Kansas tax reform is that Governor Brownback and most legislators have been squeamish about spending controls.  In fact, FY 2015 is scheduled to set a new spending record!

This Wall Street Journal article explains how states that spend less, tax less…and grow more.  New spending data shows states that tax income spent 49% more per-resident in 2012 providing essentially the same services as those that do not tax income. 

Paul Krugman made a number of unfounded allegations in the New York Times.  The data clearly show the superior economic performance of states that do not tax income and/or have a low overall tax burden, as well as how Kansas has trailed its income-taxing peers.  Trailing national economic averages is not evidence that tax reform is failing; it’s the reason tax reform was implemented! 

The economic performance disparity for states that don’t tax income has a significant impact on the 50-state average.  For example, the 50-state average for private sector job growth between 1998 and 2013 was 8 percent, but states that don’t tax income grew by 18.3 percent compared to 5.6 percent for states that tax income.  Kansas grew by only 3.9 percent.  Kansas’ long-term stagnation can’t be reversed overnight.  Comparing Kansas to its income taxing-peers and the states that don’t tax income may be more telling, as Kansas must first catch its peers before taking on the high-performing states.

It will be years before an honest analysis of tax reform can be made, but there are some early positive signs.  Kansas averaged 70% of the private sector job growth over the last fifteen years but is running neck-and-neck with its income-taxing peers so far in 2014.  That is not enough to say the trend has been broken, but still encouraging.  Kansas’ private sector GDP growth in 2013 was ahead of the national average and also ahead of its income-taxing peer group.  Kansas’ rate of Private Sector GDP growth increased in 2013 while most states saw declining growth.  Granted, 2012 was a pretty rough year for Kansas, but it’s noteworthy that Kansas bucked the national trend in 2013.  Again, this is only one year but nonetheless encouraging.

Kansas has also seen two consecutive years of record-setting New Business Filings.  Research conducted by Dr. Arthur Hall at the Center for Applied Economics at the University of Kansas found that, if not for jobs created by new startups in their first year of existence, Kansas would have only had two years of net job growth between 1977 and 2010.

Finally, claims that Kansas is facing large budget deficits are complete fabrications by politicians who know better. Current revenue projections show that a modest $315 million / 5% spending adjustment in FY 2016 will balance the budget.   We think current revenue projections are a bit low but will not be an issue.  We are developing a plan that has already identified $1.6 billion that can be made available over the next five years without any reduction in services or tax increases. 

Bottom line: Kansas will have no problems with tax reform once legislators abandon the “just spend more” mentality and adopt a “better service, better price” mindset.

Posted by Patrick Parkes on Thursday, July 24, 2014
June’s private sector jobs numbers show minimal changes from last month’s numbers. Kansas’ income-taxing peer states did post some slight growth (registering a rate of 1.66%) over the period, bringing this group’s year-to-date growth rate to 1.57% (up from 1.55% last month).  Nevertheless, these states continue to lag significantly behind states that don’t tax income.  The job growth in states without an income tax did slow slightly (down to 3.25% from 3.27% last month), but the year-to-date growth rate in these states continued trending upward (to 3.08% from 3.04% last month).


Kansas’ growth rate inched up ever so slightly (from 1.33% last month), but its year to date growth rate remained unchanged. Thus, Kansas grew a bit slower than its peer group of states that tax income but still kept pace (achieving 91% of the group’s year-to-date growth compared to 92% last month).

 

Check back next month for July’s update.

Posted by David Dorsey on Tuesday, July 22, 2014

Much has been written and spoken in the national media recently about the dire economic conditions that are perceived to exist in Kansas with an outlook even more dismal.  The New York Times and MSNBC have taken a rather curious interest in the affairs of the Sunflower State; a curiosity driven by a significant reduction in the state income tax that was passed by the legislature and signed into law in 2012.

Buoyed by a report from the Center on Budget and Policy Priorities (CBPP)  and some questionable local revenue forecasting, the Times and MSNBC say the Kansas economy is about to fall off a fiscal cliff because tax revenues are falling and it is going to get much worse in the next few years.

But that’s not the reality. Kansas’ economy is growing. In 2013, the first full year of the tax cuts, real GDP for the private sector grew at a rate of 2.4%, compared to the national average of 2.2%. And this followed a year in which private sector GDP in Kansas rose only 0.5%. To date, the tax cuts have returned nearly a billion dollars to the taxpayers.

And contrary to the doomsayers, the tax cuts have not led to a reduction in essential services such as education. CBPP reports that spending on K-12 education has been reduced by 2% since the income tax cuts.

Really? Apparently they didn’t communicate with the Kanas State Department of Education.

In a document published in November of last year, KSDE reports that in the year previous to when the income tax cut went into effect (2010-11 school year) expenditures per pupil were $12,282. In the most recent school year reported (2012-13) expenditures increased to $12,776, roughly 4%. That’s a total dollar increase of more than $263 million or $574 per pupil.

And there’s more. In the last legislative session, Governor Brownback signed into a law a $129 million increase to education and an increase in the base state aid that will translate into an additional $6 - $7 million.

Doesn’t sound like a reduction to me.

One of the favorite talking points among the pessimists is the cut of base state aid by $550, as Kansas State Senator Anthony Hensley told MSNBC. Senator Hensley likes to use the per pupil base state aid rate, which was enacted under the previous governor, to show how education support has been “cut.” If he were correct, again using KSDE figures, a decrease of $550 per pupil would have translated into a decrease in spending of over $250 million for the 2012-13 school year.  That didn’t happen. Senator Hensley is being fast and loose with the numbers.

So the truth is the income tax cut hasn’t led to a cutback in education spending, in fact it continues to increase. And support for education will continue to be strong. I am confident of that because for the past 17 years I taught in two Kansas districts, one rural and one urban, under leadership of all sides of the political spectrum. I taught when funding increased during good economic times and funding decreased during the two recessions.  Funding levels were never a real concern for those of us in the classroom. That was a subject left to administrators and a few die-hard union members (both who, naturally, always complained there wasn’t enough money). Regardless of funding debates on the outside, teachers focused on engaging students inside the classroom where the real impact of education resides.

Posted by David Dorsey on Tuesday, July 22, 2014

At the regular July meeting the State Board of Education voted unanimously not to release the scores attained from the newly revamped 2014 state assessments, assessments that were transitioned to meet the new Common Core standards. Instead, the board decided to allow KSDE to provide families and schools with a verbal descriptive report of the results focusing on overall strengths and weaknesses.

Although it’s almost always better to have access to test data, especially “high stakes” testing as state assessments have been called, the uniqueness to the overall circumstances make this the rare case when it is better off not to know.

This was the right decision, given the events that unfolded before and during the testing period.

I say that, because as a math teacher at Lowman Hill elementary in Topeka, I was in a position to witness first-hand those events.

At the beginning of the school year, we were cognizant that the state assessment to be given in the spring would be much different from previous years as we transitioned to Common Core (more on Common Core later). We were told that the coming test would be the new “Smarter Balanced” test, no longer created by KU’s Center for Educational Testing and Evaluation (CETE).   We at Lowman Hill spent professional development time, as I’m sure other schools did, to familiarize ourselves with the new test.

Then a funny thing happened on the way to testing: the State Board of Education voted in December to withdraw from the Smarter Balanced consortium and continue with CETE. Needless to say, this put schools all across the state in a bind. In our case at Lowman Hill, we were particularly distressed, having been designated a focus school by the KSDE in its No Child Left Behind waiver agreement with the U.S. Department of Education. And the only way off this list is a predetermined improvement in state assessment test scores.

So this was our situation as we headed toward the testing window that was to begin in February. If this were an episode of the Batman TV series, it would have at this point the announcer would say: But wait! The worst is yet to come!

How prophetic.

Immediately after testing got underway the computer system got hacked, which led the whole testing process to be called off and then on again. Once testing resumed other technical problems surfaced. It was a mess. The problems ultimately brought into question the reliability of the test results statewide. So it was indeed a wise decision on the part of the State Board to use this as “a learning experience,” as one board member put it.

However, the State Board must assure that the 2015 assessments have reportable data to ensure that accountability doesn’t fall through the cracks. I have felt from the outset of Common Core that the way the standards were hastily adopted and forced upon states by the feds, similar to ObamaCare, is not only bad policy, but would lead to an opening to avoid accountability.  Eric Hanushek, writing recently in the Wall Street Journal echoes my concern warning that Common Core standards are being used to shield teachers from accountability. He says “teachers unions are working behind the scenes across the nation to gut teacher evaluations and to "suspend" school test accountability under No Child Left Behind so that teachers can prepare for the new tests—however long that might take.”

My worry is that KNEA will try to do exactly that and convince the State Board to hide behind the new standards to suspend accountability for years. Let’s hope the State Board doesn’t fall for it. We can’t afford more than one year of not knowing exactly how our students are performing and the accountability that accompanies. Because, as Hanushek offers,  educational improvement “requires strong accountability systems, rewarding teachers who are effective, eliminating teachers who are harming students, and providing added choice to parents about where their children go to school.”
Posted by Dave Trabert on Thursday, July 10, 2014

Local and national media are reporting that Kansas will have a $1.2 billion deficit for FY 2019, quoting legislators who reference information prepared by the Kansas Legislative Research Department (KLRD).  Media is accurately quoting those legislators and there is a report from KLRD showing the numbers that legislators are citing, but Kansas will not have a budget deficit in FY 2019 or any other year.  How can that be? 

Budget deficits are constitutionally and statutorily prohibited.  KLRD confirms Kansas cannot have budget deficits and we believe it is a misrepresentation of their work to say there will be deficits.

This is how budget deficits are fabricated in Kansas.

Table 1 shows the May 30, 2014 profile prepared by KLRD using their standard methodology (except as noted below the table).  According to KLRD Director Raney Gilliland, “The out-year projections for revenue are based on historical trends adjusted for legislation.  Expenditures for the out-years are based on the previous year expenditures adjusted for human services caseloads, school finance payments and KPERS increases.”  If expenditures exceed the amount of predicted available revenue, KLRD shows the expenditure reduction needed to maintain a zero ending fund balance.

 

For example, KLRD lists a reduction of $211.2 million for FY 2016 so that expenditures are equal to total available revenue.  Their standard methodology shows the annual legislative action necessary to adjust expenditures, maintain a zero ending balance and have no deficits.  If legislators chose to balance the budget by annually adjusting expenditures, a total of $482.3 million in reductions would be required over four years.  (As explained below, Director Gilliland says the reductions would total $1.258 billion instead of the sum of the four years’ of expense reductions.)

The KLRD profile being used by legislators to make false claims about deficits was produced “at the request and direction of a legislator and does not follow standard KLRD methodology.”  Gilliland attributes this profile to Senator Laura Kelly and contacted her “…to ask for permission to release the profile we had done for her.…she requested that you contact her to get the profile you are requesting.”  Senator Kelly has not responded to that request.

The profile designed at Senator Kelly’s request is likely the same or similar as the one shown in Table 2.  The negative ending balances shown for FY 2018 and FY 2019 very closely match multiple media reports.  Also, Table 2 was built using a former KLRD methodology that was dropped – partly, they say, because leaving negative ending balances gave a false, albeit unintended, impression of deficits in the outlying years.

The only change in Table 2 is the elimination of $482 million in annual reductions needed to maintain a zero ending balance.  This gives the appearance of a $1.258 billion deficit because the expenditure base is not being reset in accordance with balanced budget requirements.

While KLRD agrees there can be no budget deficits, Director Gilliland maintains that the required expenditure reductions are not the $482.3 million sum of the annual changes in their May 30 profile, but the larger amount of $1.258 billion.  To get there, he counts the annual reductions in Table 1 not just in the year made, but every year thereafter.

Spending changes that reduce the base don’t magically re-appear once eliminated but that’s the assumption required to say that $1.258 billion in adjustments are needed in this scenario.  Agencies might ask for more money but once cut, the money is gone unless legislators put it back.

KLRD agrees that there are many possible solutions beyond the one in their standard methodology.  Two other solutions prepared by Kansas Policy Institute are shown in Table 4 and Table 5 to demonstrate the action needed if the changes were all made in FY 2016.

Table 4 shows that, instead of $482.3 million in annual adjustments, a one-time expense reduction of $315 million in FY 2016 would provide higher ending balances in the first three years and still be slightly positive in FY 2019.  Table 5 leaves expenditures alone, increases base revenue by $305 million in FY 2016 and allows the adjusted base to grow by the same percentages as assumed by KLRD in Table 1.  

 

Understanding that budget deficits are being fabricated in Kansas is one thing, but House and Senate leadership should take action to prevent future fabrications being presented to citizens.  Any KLRD report prepared at the request and direction of a legislator and gives the appearance of deficits should have a disclaimer along the lines of “The State of Kansas will not have deficits and this report should not be used to claim or infer anything of that nature.”  We also suggest that once a legislator-directed profile or other report is publicly used or referenced, it should be immediately subject to Open Records requests and made available by KLRD.

There are many options to balance the state budget going forward that would not require any tax increases or service reductions.  State spending can and should be reduced but it can be accomplished by providing existing services at a better price.  Kansas Policy Institute is compiling a list of such options as well as several ways to boost General Fund revenue without increasing taxes.  We expect to publish the results in the fall.

In the meanwhile, know that any claims of future deficits are deliberate fabrications.

 

P.S.  KLRD was asked to review this prior to publication and identify any inaccuracies.  They suggested no changes to the data as presented other than to stipulate a difference of opinion on the total amount of reductions needed relative to Table 1 as we have noted above.  KLRD does not endorse any portion of this blog.


Posted by David Dorsey on Thursday, July 03, 2014

It was reported Tuesday in the Lawrence Journal-World that the KNEA still plans to file a lawsuit challenging the new Kansas law that, among other things, restricts teacher tenure rights. According to the article the lawsuit could come as soon as sometime this week.

KNEA is buoyed by a recent judge’s decision in North Carolina that found a new law that eliminated teacher tenure in that state unconstitutional. However, the North Carolina law is as different from the Kansas law as Roy Williams and Bill Self.  As reported by the Charlotte Observer, tenure in North Carolina would have been eliminated in exchange for multi-year teacher contracts and teachers would lose the right to administrative hearings to challenge a dismissal. In other words, it would have been easier to fire teachers. The Kansas law differs in that it allows local districts to negotiate tenure and administrative hearing rights into teacher contracts (a point often not reported by media outlets). And according to that Lawrence Journal-World article, the new contract between Lawrence Education Association and the Lawrence school board contains a modified form of tenure.

Meanwhile, legal developments in California and New York provide a stark contrast to the concept of protecting teacher tenure and job protection rights.  On June 10, a Los Angeles County Superior Court judge ruled in Vergara v. California that five teacher job protection laws were unconstitutional. Yes, that’s correct: a California judge ruled that teachers have too much job protection. The suit was brought by nine students who contended that California’s teacher protection laws saddled them with teachers who shouldn’t be in the classroom. Superior Court Judge Rolf Treu agreed, including in his opinion that the negative impact ineffective teachers have on students is so powerful that it “shocks the conscience.” Judge Treu applied the concept of the state providing students an adequate education to include the quality of the teachers as part of adequacy. (It should be noted that the judge‘s ruling included a stay of the five statutes overturned, meaning the laws are still in effect pending appeals.)

Spurred by the California case, a similar lawsuit will be filed in New York. Lead by former NBC and CNN anchor Campbell Brown, who founded the education reform group Partnership for Educational Justice, six New York state families announced last week they intend to sue the state this summer. According to Brown, “at its core, the suit seeks to end laws that keep ineffective teachers in the classroom, restrict schools from dismissing them and prioritize seniority over quality when teachers are laid off.”

In light of lawsuits in New York and California, is the pending KNEA lawsuit a case of a Kansas union swimming against the stream? Maybe, but Kansans should welcome the debate they had in California where children ultimately prevailed. Keeping incompetent teachers in the classroom is a violation of the fundamental right to equality of education by forcing children to (try to) learn from someone who can’t – and shouldn’t – teach.

Stay tuned.

Posted by Patrick Parkes on Thursday, June 26, 2014
As a follow up to last month’s post on private sector job growth, May’s private sector jobs numbers from the Bureau of Labor Statistics tell a similar story: Kansas is growing near the rate of its peer group of income-taxing states. Yet, states without an income tax continue to lead the pack in private sector job growth.

Kansas still trails its income-taxing peers but is doing better this year than in the past.  Over the past fifteen years, Kansas’ job growth rate was about 70% of its peer group; so far in 2014, Kansas has achieved 92% of its peer group's growth (1.43% vs. 1.55%).

We will continue to update these numbers monthly as they become available.

Posted by David Dorsey on Thursday, June 19, 2014

Every student deserves an excellent teacher.

A line often quoted, but what does it really mean? The National Council on Teacher Quality (NCTQ) believes that how a teacher is prepared to teach prior to entering the profession is a critical factor. In 2013 NCTQ took on the arduous (and, according to them, a sometimes contentious) task at judging teacher preparation programs across the country. As an encore, they have just released its 2014 Teacher Prep Review in which NCTQ reviewed and ranked 1,668 teacher preparation programs across the United States.

Kudos to Fort Hays State University, which ranked third nationally in its undergraduate secondary education program (and only one of 81 programs across the country that earned a Top Ranked status) and 12th in the nation in the undergraduate elementary category (one of only 26 with a Top Ranked status).

In assessing the quality of a teacher prep program, NCTQ focused on these key standards:

  • the selection criteria an institution uses to allow teacher candidates into a program
  • content knowledge (in the elementary programs this included the foundation to teach reading and math)
  • student teaching

In addition to FHSU, four other Kansas elementary programs received national rankings: KU (63), K-State (144), Emporia State (165) and Pitt State (327). Six are ranked in secondary programs: K-State and Pitt State (127), Bethany College and Newman University (193), Emporia State (285), and Benedictine (394).

Heretofore, teacher prep programs have not been part of the landscape in the teacher quality debate. But things are starting to change. As NCTQ points out, “(e)ver so slowly, the United States is taking a harder look at how its teacher preparation schools are improving the quality of the teachers they produce.”

That is good news for a nationwide “industry of mediocrity,” a term coined by NCTQ. As the map shows, 33 states are moving to get better by having passed “significant new oversight laws or regulations.” Kansas is not one of those but is in the group of seven states described as making steps in the right direction. Recently passed legislation targeted to improve teacher quality is evidence that Kansas is committed to the cause. 

 

 

Reflecting on this report, I couldn’t agree more with the key standards NCTQ measured. Colleges and universities need to be pickier about who they let enter their education programs. Speaking as a former elementary teacher, they are spot-on focusing on the importance of being able to teach reading and math, especially in the primary grades. And the student teaching component is paramount.

Reading this report brought back memories of my student teaching assignment some 20 years ago.  My experience cut both ways. My cooperating teacher (as we called them) was truly an outstanding educator and I learned a lot by observing and participating. However, she was very reluctant to give up control of the classroom, which had an effect on my ability to be ready to manage a classroom when I entered the profession.

My hope is NCTQ keeps it foot on the pedal and Kansas jumps on board to improve the quality of teachers before they enter classroom.

It’s time to start using this line: Every student deserves an excellently prepared teacher.

Posted by David Dorsey on Thursday, June 19, 2014
My most recent post on teacher compensation expressed skepticism of the salary schedule (matrix) system of paying teachers. I dropped a teaser for outlining a more effective way to pay teachers that includes raises based on merit. The concept of a merit-based component  for teacher salaries has been around for decades, but in the past few years the idea has gotten more traction, especially the concept of wedding performance pay with student test scores. According to the Center for Education Compensation Reform (CECR) most states have adopted some kind of compensation reform  for teachers. (Notice which state in the middle of the country is conspicuously absent. Hmm….)

But merit pay based only on test scores is a lightning rod of controversy. Rightfully so.  A significant percentage of teachers out there are not directly involved in students’ test scores. How would the band instructor impact reading scores? I understand full well this concern, because in only four of my 20 years as a teacher was I directly involved with administering a standardized test or No Child Left Behind- type assessment.

Perhaps the highest profile effort at merit pay is in Newark, New Jersey. A performance bonus system supported Mayor Corey Booker (now Senator and prominent Democrat), Governor Chris Christie (of national Republican repute) and Facebook founder Mark Zuckerberg (with a $100 million pledge to fund it!) was approved by the local teacher’s union in late 2012. This, despite bitter opposition from many union members who saw it as pitting teachers against teachers and thus undermining union solidarity. Notwithstanding the hullaballoo, only 5% of Newark teachers got bonuses in the program’s first year.  A mere one hundred ninety teachers (0.3 of 1%) earned the maximum allowable amount of $12,500.

The National Education Association (NEA) is even on board, sort of, for merit pay. But like every other plan it believes in the matrix as the core. According to the NEA, merit should be based on “experience, knowledge and skills…and you should move through the salary system for things that actually improve teaching and student learning.” Really? Should a mechanic get a raise just for getting a new set of tools?

If we are to move toward a true merit/performance-based pay system for teachers instead of just nibbling around the edges like now, the first step is to recognize that not all teaching assignments are the same. You cannot work within the status quo salary schedule and have effective merit pay system. Can’t happen.

 Considering all these factors, here is an alternate way to define how to compensate teachers.

  •  Foremost, scrap the salary matrix. Research shows the two premises of that system, years of experience and educational attainment, have no positive impact on student performance, and in some cases those with Master’s degrees can be less effective. Each teaching assignment (e.g., 2nd grade, middle school math, physics) should have its own base pay range because not all teaching assignments are the same. Let the market decide the economic values of each position.
  • Schools should also have a pay differential for teaching at targeted schools within the district. The Newark approach got that one right. Teachers should be rewarded for teaching in failing schools or others that are tough to staff.
  •  The last component in this trifecta is the performance of the teacher. Performance should be judged on goals set by the teacher and the principal. They must reflect the needs of the students and the individual teacher’s place in meeting those needs. Inherent in effectively judging performance means the current way teachers are evaluated must go.

The way teachers are evaluated is a joke. Bulky and bloated rubric-based evaluations like this appear to provide an exhaustive judgment of a teacher’s ability (just look at its intimidating size!). But alas, like the dirigible of a bygone era, its girth is packed with empty space.  Look closely and you’ll see the rubric attempts to be a one-size-fits-all approach that fails to recognize differences among teachers and fails to address student outcomes. Without question, the deck is stacked in favor of the teacher. That’s all I am going to say here because I will be writing a piece just on how nonsensical the entire teacher evaluation process is.

If evaluations are going to determine merit pay, they have to be flexible enough to reflect what individual teachers are doing to improve student achievement at every level. There is no one-size­-fits-all for evaluating teachers.

But…and I can’t emphasize this enough, before this can happen, the crop of principals needs to be drastically improved. If principals are going to be responsible for determining merit pay, they have to know what it means to be an effective educator. In my stint as a teacher, I worked under 11 different principals. Upon reflection, I would have trusted only two of them to be able to evaluate my performance as it related to my impact on student performance. The other nine…no way.

Graphically, this approach would resemble a scalene triangle like the one below. The base, the longest side of the triangle, represents the market-based base salary. The shortest segment is the amount a district would have to pay for a difficult to fill position. The third leg symbolizes raises/bonus based on performance.


Paying teachers in this manner reflects the uniqueness of individual school districts and recognizes differences among schools within larger, more diverse districts. The key is responsibility and accountability, with both teachers and principals, and even extended to district administrations and BOEs. Teachers should be judged on their ability to help students by their direct supervisors – principals – who will in turn be evaluated on their ability to run a school by administrators who will be held to account by officials – local board members - directly accountable to the public. We often pay lip service to this idea but a matrix-based pay schedule (which is negotiated in an us-versus-them environment by a union that drives a wedge between the players) is a ready example where platitudes don’t match the incentives actually influencing the behavior of teachers, principals, et al.

Is it naïve to think this or something similar could actually happen?  Even up to just a few weeks ago this may have been considered far-fetched. Then came the Vergara  decision in California, a ruling that has the potential to relieve the stranglehold of the teachers unions and fundamentally change the rudiments of teacher employment, including how they are compensated.

Stay tuned.

Posted by David Dorsey on Friday, June 13, 2014

Someone stops you on the street and asks this question: “Of all the public high schools in the U.S. where do you think the highest ranking school in Kansas would fall?

What would you answer? Somewhere in the top fifty? Top one hundred? Five hundred? Thousand?

If your answer is 1,235th you should buy a lottery ticket.

That’s correct, according to the just released U.S. News & World Report ranking of 19,411 public high schools across the country, Wichita East High is the 2014 top performing school in the Sunflower State. The Blue Aces trailed only 1,234 other high schools across the country in getting students prepared for college. U.S. News used this three-step process to determine the rankings:

The first two steps looked at overall student performance on state-mandated assessments, as well as how effectively schools educated their black, Hispanic and economically disadvantaged students. We then used participation in and performance on AP (advanced placement) and IB (international baccalaureate) exams to evaluate how well schools prepared students for college-level course work. (emphasis added)

Just as it isn’t fair to compare Blue Valley North High School to Dodge City High School in this state, U.S. News controlled for demographic differences among high schools across the nation.

U.S. News analyzed high schools with these steps to numerically rank the top 2,019 public high schools in America. The top 500 were awarded gold medals and the next 1,509 were honored with silver medals. (An additional 2,688 schools earned bronze medals without being numerically ranked.)

One thousand two hundred thirty fifth! How can that be? Great things are happening in Kansas, right?

 

Well….not compared to the rest of the country when it comes to preparing low-income and minority students for college. 

OK. But Kansas must have tons of other silver medals schools, don’t we?

Not exactly. In fact, the only other silver medal school in the state is the Liberal Redskins (which has to be the most ironic name in a politically correct world gone ‘round the bend) who checked in at 1,457. Thirty Kansas high schools received bronze medals.

To put us in perspective, the following table shows how Kansas compares to the other 49 states and the District of Columbia. It’s not good. Only two states, Mississippi and North Dakota – not exactly known as education juggernauts - have their top-ranked high schools rated lower than Kansas. And likewise, those are the only states that have fewer than two medal winners.

 KBIBestHighSchholsInAmerica

Yikes. (I’ll bet this doesn’t come up as a “success” at the next KSDE ice breaker!)

So what do the best schools in the country look like? The table below is a summary of the top 10 ranked public high schools in the country. Nine have significant minority populations. Four are Title I schools which means they have many low-income students. And half are non-traditional charter or magnet schools, a concept largely foreign to this state. 

UsNewsWorldReportTop10USAHighSchools

This should be a wake-up call. The Kansas education establishment needs to reject its everything’s-just-fine complacency stance. 

WichitaEastStateAssessmentResults2013 Because obviously everything isn’t just fine. Data clearly shows that Kansas has an achievement gap between students who are economically disadvantaged and those who are not. And it is growing. The U.S. News rankings are a grim reminder of that. Even Wichita East, our highest ranking high school has a substantial achievement gap as shown in this table.

Although getting students adequately prepared for college isn’t a singular goal of secondary education, it is certainly paramount that all students who want to attend college be prepared to the best of our collective abilities. And when our best lags behind 1,234 other schools in the nation, we aren’t doing that. Our high school students deserve better, a better opportunity to get ready for the next step in their lives regardless of what that may be.

This isn’t meant to say that Kansas High Schools aren’t adequately preparing students for higher education or that we have disproportionately low performing students. It’s just that it is time for the education establishment to join the rest of the country and offer more non-traditional settings in which our students can thrive.

It’s time this state starts offering alternatives (real charter schools, anyone?) to the 150-plus years of status quo that is Kansas education.

Then, great things really will be happening.

Posted by Dave Trabert on Thursday, June 12, 2014

Real (inflation-adjusted) GDP data just published by the Bureau of Economic Analysis shows the Kansas private sector did much better in 2013 than in 2012.

Kansas’ rate of Private Sector GDP growth increased in 2013 while most states saw declining growth.  Granted, 2012 was a pretty rough year for Kansas, but it’s noteworthy that Kansas bucked the national trend in 2013.  One year does not a trend make, but this is still encouraging.

Kansas grew faster than the fifty-state average in 2013 and also grew faster than the states that tax income and the states with the highest state-and-local tax burden (as ranked by the Tax Foundation).

This is also a good reminder that states with lower tax burdens have superior economic growth, which was the primary reason driving tax reform in Kansas.  Like most high-burden states, Kansas suffered economic stagnation over the last fifteen years with slower job growth and wage and salary disbursements. The trends won’t change overnight, but these new GDP numbers are certainly good indicators that Kansas is going in the right direction.

 

Posted by Steve Anderson on Thursday, June 12, 2014
Sound budgeting is not just about the current year’s issues but should consider long term structural issues.  Kansas Public Employees Retirement System (KPERS) is a structural issue that has not been properly addressed even as it has become more problematic financially both in the current fiscal year and in the long term. KPERS consists of several different pension systems but the two that the citizens should be most concerned about, from a state budgeting standpoint, are the State and the School systems.   The following table shows their status as of the last actuarial report.
 
The $7.6 billion of unfunded debt in the School and State plans is understated for a number of reasons. The assumptions used in the calculations to arrive at the estimate of future payments include optimistic estimates of asset growth. The assumptions used for estimated life expectancy cannot predict breakthroughs in modern science that may extend life past the current projection. And since benefit improvements for each system’s retirees are voted on by the legislature, the systems can only estimate what they believe may happen with future benefit increases.  The actuaries for KPERS admitted as much when they noted in the latest actuarial report that: “Changes in actuarial assumptions and methods, coupled with investment returns below the assumed rate and contributions below the actuarial rate have significantly reduced the funded ratio.

The graph below shows an estimate of the dedicated additional appropriated funding it will take to fund these two systems in KPERS in the future (details in Appendix A here).   These debt payments siphoned off $402 million in FY-2014 from important tasks like locking up prisoners, fixing roads and bridges, reducing the tax burden on hardworking citizens, or increasing teacher pay. They’ll approach $2 billion in FY-2033.  
 
Reforming the pension systems benefits state and school employees too.   Currently their KPERS’ plan limits the ability to change employers because of long ‘vesting’ period employees before they even have a right to any benefits.   But even when vested the employee cannot leave the service of that employer and take their benefits with them.  The benefits have issues beyond the “golden handcuffs” as the fixed retirement payments are very susceptible to being eroded significantly during periods of inflation.  
The effect of KPERS problems on the budget is felt in other areas that are not as readily apparent.  Moody’s bond rating entity warned states it was giving more weight to pension liabilities and other long-term debts in its overall scorecards for rating general obligation (GO) bonds. The agency indicated they would increase the weight to 20 percent from 10 percent.  That warning went unheeded and Moody’s lowered Kansas’ bond rating noting the pension debt as a major factor.**   

The Legislature created a study commission in 2011 to find a ‘fix’ for the pension crisis but the solution they ultimately enacted is called a Cash Balance plan.  This plan had two major flaws: 1) the ability for the state/schools to incur unfunded liabilities was not eliminated, and 2) according to the Kansas Division of the Budget the new plan did nothing to address the unfunded liability of the system.   Moody’s agreed and discounted the ‘fix’ in coming to their ratings reduction recommendation.

However, the good news is there is a real ‘fix’ and the actuarial study has already been done.    The Division of the Budget contracted a study of a conversion for new members to a true Defined Contribution system – like a 401(k) in the private sector – in FY-2013.  The conversion addressed the long term debt issue while eliminating the annual increase to the KPERS dedicated payment but additionally found there was an opportunity to provide State General Funds an additional $75 million immediately while "cash flowing" the benefit payments through an accelerated financing structure.  Freezing the contribution at the current level eliminates the need for the annual increase over the prior year of $40+ million through FY-2017 and the $50+ million required from FY-2018 on.   

There is one more area where KPERS can be a budget solution instead of a budget problem.   The School systems do not account for the state’s KPERS contribution in their payroll.   By not including this amount the schools fail to bill the various federal programs that fund salaried position for their share of the KPERS payment.   During my last year as Budget Director, the amount foregone was approximately $21 million.   If the federal programs for employee benefits had been properly billed, a common practice of most states, the state could have made that money available for other purposes.  

** Moody’s also noted that Kansas hasn’t made appropriate spending adjustments relative to tax reform, but discussions with other state budget directors indicate that the pension liability was the primary factor driving the downgrade.

Posted by Patrick Parkes on Wednesday, June 11, 2014
“Actually, high corporate taxes are great mechanisms in helping to socialize entrepreneurial risk.”

Were my ears deceiving me? Did I just hear socialism invoked at a conference on entrepreneurship?

The conference I attended recently was a diverse gathering of academics, state policymakers, and economic development officers from around the country. Even my initial reading of the event announcement got me excited imagining the diversity of minds and experiences that would converge around a single purpose: thinking about how states and localities could create ideal environments to foster market-driven entrepreneurship. These types of open, multifaceted discussions are oftentimes the best catalysts for broad coalition building leading to truly positive and substantive change. As such, the Ewing Marion Kauffman Foundation ought to be commended for its leadership in getting this particular discussion started in the name of entrepreneurship.        

This discussion—as good ones often do—challenged me to evaluate even my own understandings and convictions on the subject. I was hearing all of these hip, glossy buzzwords and catchphrases about how state and local governments could use taxpayer money to advance the nebulously defined goal of “economic development.” Heck, even well-established businesses could benefit from strategic handouts designed to help them “scale-up” and contribute to a broader local “entrepreneurial ecosystem.” One thing became clear to me very quickly: this wasn't my “grandma’s” idea of entrepreneurship! 

I have always thought of entrepreneurship as a “may the best man win” sort of scenario. Governments can maintain the playing field with strong property rights, intellectual property provisions, and other key legal protections. However, businesses’ successes and failures ought to be self-determined by their own abilities to attract customers and keep them coming back. This largely hands-off approach is akin to how my grandma used to deal with living room wrestling matches. She would depart with a single admonishing ground rule: “Loser vacuums.” It was her subtle way of maintaining the playing field without influencing the outcomes of anything that took place on it.      
State and local governments may think their use of taxpayer money to fund entrepreneurship is simply about creating and maintaining a playing field. Yet, this practice looks more like influencing outcomes by picking winners and losers. It’s no longer just about scoring points (i.e. profits, community admiration) on the field; it’s also about winning the government eye tests and popularity contests (i.e. subsidies) off of it. The issue is even more fundamental than that though. Put simply, entrepreneurship doesn't and should never discriminate. Ideas for new businesses can strike anyone at any time. But, when governments take money from countless potential entrepreneurs and hardworking families and use it to subsidize a few politically connected firms, these governments start to— perhaps unknowingly but inherently—discriminate. The game becomes rigged, and entrepreneurship ceases to be entrepreneurship. It’s only a government-sponsored former shell of itself.

New York Times columnist David Brooks mused about this changing nature of entrepreneurship long before I did here. His analogy focused on the statue in front of the Federal Trade Commission building. It depicts a muscular man restraining an unruly horse. Brooks notes how the horse and rider used to epitomize modern-day liberalism. The horse was capitalism, and the rider was government. The rider kept the horse in line much like (liberals believed) government harnessed capitalism and made it work for the masses. Today, Brooks laments, the relationship has changed. Government wants to be the horse…not just reining in business and job growth…but driving and being the sole purveyor of such growth. To be clear, this is not an endorsement of Brooks’ view on what constitutes appropriate liberalism amidst the changing nature thereof. The essence of liberalism—regardless of its scope—still tends to work against the all-important power of consumers to engage in free markets in order to best meet their needs via voluntary exchange.  

Brooks’ analogy is instructive though because it depicts the same Orwellian morphing of entrepreneurship I observed a number of attendees celebrating and advancing at the Kauffman conference. 

One conference bright spot was a presentation of research by Dr. Nathan Jensen on the Promoting Employment Across Kansas (PEAK) incentive program. Jensen’s main findings (I will blog more in-depth about them soon.) point to the fact that firms receiving government subsidies through the PEAK program do not add any more jobs than non-subsidized firms do.  These findings call into question not only the efficacy of the PEAK program but also the need for its existence at all.     

Outside of this presentation, however, I came away the conference largely disappointed. I attended hoping to be energized, hoping to help nurture a broader sense of understanding that entrepreneurs can lead this country’s cities and states to great new heights if only city and state governments will stand back and let them innovate freely. Instead, I left the conference alarmed by the expansive role even these smallest of governmental units felt they could play in not only regulating but also generating “free” enterprise.

What ever happened to “loser vacuums” in entrepreneurship?

Posted by Dave Trabert on Wednesday, June 04, 2014

A June 4 press release from Johnson County once again demonstrates county officials’ propensity to stick it to residents. 

“The county manager’s proposed budget includes what would be the first mill levy increase since 2006.”  This pull-the-wool-over-taxpayers’-eyes attitude is how local government has tried to pretend that they weren’t raising property taxes.  The truth is that Johnson County property taxes increased 132 percent between 1997 and 2013 according to the Kansas Department of Revenue.  That’s just the county portion of property tax; cities and schools districts are not included.

People pay their taxes with dollars, not mill rates.  Government should be honest with taxpayers and talk about how much tax dollars are increasing each year but they are loathe to do so.  (FYI, thanks to new legislation just passed, beginning July 1 local governments will have to take a public vote to increase tax dollars by more than inflation.)

Now here’s the ‘again’ part. 

County Manager Hannes Zacharias is quoted in the release saying that the partial loss of mortgage registration tax “creates a structural imbalance in our on-going budget and, therefore, needs to be addressed with a commensurate increase in property tax revenue.”  No, Mr. Zacharias, it doesn’t need to be addressed with a property tax increase…that’s just what you are choosing to do according to your own budget documents.

Here’s a hat tip to my eagle-eyed friend Luke Bell at the Kansas Association of Realtors for pointing this out in the Johnson County budget.  He says, “…ad valorem property tax revenues are projected to increase from $169.7 million in 2014 to $186.5 million in 2015, which is a 9.9% increase. In dollars, this is an increase of $16.8 million.

According to the Kansas Legislative Research Department, Johnson County is only supposed to lose $1.7 million in mortgage registration tax revenue. Even by Johnson County’s own flawed analysis of the bill, they are only budgeted to lose $3.9 million in mortgage tax revenue in 2015.”

The county even admits in its press release that $10.3 million of the property tax increase comes  from increased valuation in property.  Johnson County could more than cover the decline in mortgage registration tax without raising the mill levy, but government is not about to pass up an opportunity to blame legislators for something they are choosing to do.  (Another new piece of legislation is phasing out a discriminatory tax on people who take out mortgages to buy a house; those who can afford to pay cash pay no tax.)

Johnson County could choose to operate more efficiently.  After all, it’s hard to imagine that a 132 percent property tax increase was really necessary.  But quite the opposite, county officials are hiring more staff for the Parks & Recreation District, the Library District and the County Taxing District.

That’s a whole lot of entitlement mentality.

Posted by Patrick Parkes on Thursday, May 29, 2014

States without income taxes add jobs at rate far superior to that of their income-taxing counterparts. Put differently, if there were an income tax-themed version of the 1989 baseball film Field of Dreams, its mantra might read as follows: If states eliminate their income taxes, private sector jobs will come. That’s the takeaway from Bureau of Labor Statistics data comparing private sector job growth of states with and without an income tax.  States that don’t tax income saw their private sector jobs grow by 18.3 percent between 1998 and 2013 while states with an income tax saw growth of only 5.6 percent.  Kansas’ private sector job growth was only 3.9 percent. The average growth rate for all fifty states was 8.0 percent.

Kansas has historically gone into recessions later than most states and is also slower to come out of them. Kansas’ private sector jobs growth rate, which has consistently trailed even that of the income-taxing states, got closer to these states in 2001 and again in 2008 at the beginning of these respective recessions. However, the growth gaps widened again as the timing difference resolved. In short, all states are impacted by recessions, but the states that don’t tax income have fared much better even in tough times.


In addition to its comparative lagging in private sector job growth, Kansas has also trailed in private sector GDP, wage and salary distribution, as well as domestic migration for quite some time.  This long period of economic stagnation will take time to overcome, but as evidenced by the superior economic performance of states with low tax burdens, Kansas’ tax reform holds promise for better things to come.

Given the remarkable difference in performance of states that do not tax income and/or have lower tax burdens, it may provide more perspective on Kansas’ economic progress to compare to states that tax income rather than the national average.  The goal is to match the superior performance of low-burden states, but Kansas must first catch up to its income-taxing peers.

The first four months of 2014 may be showing the beginnings of the turnaround. Kansas’ private sector job growth is within rounding difference of its income-taxing peer group (1.54 percent vs. 1.49 percent).  That is significantly better than the first four months of 2013 when, compared to 2012,the income-taxing states grew by 1.9 percent and Kansas grew by 1.1 percent.


Kansas has been very close to its peer group every month and even did a little better than the group in March.  We’ll continue to track the data and provide monthly updates.


Note: Comparisons for the two groups of states come from the sum of jobs data reported for each state under the Bureau of Labor Statistics’ State and Local Employment at http://www.bls.gov/sae/ downloaded on May 28, 2014. The sum of the fifty states data varies from the BLS National Employment data, which includes the District of Columbia and is developed independently of the State and Local Employment data.  BLS does not force the sum of the state estimates to equal the national total.  See page 10 of the BLS technical note at http://www.bls.gov/news.release/pdf/laus.pdf

Posted by Steve Anderson on Wednesday, May 21, 2014
The Kansas Turnpike Authority (KTA) is one of those quasi state agencies that tend to fly under the radar with citizens and legislators. Despite being a component unit of the state, KTA is not included in the All Funds Budget of the state. Meaning the KTA budget is not reviewed and approved by the Legislature. Effective and efficient government will only exist when politicians and citizen begin to examine ALL state spending.

Reductions in spending are too often associated with service reductions (which government unfortunately often promulgates) but it doesn’t have to be that way. A ‘better service, better price’ mentality finds ways to provide essential services at a better cost to taxpayers, and that’s exactly what can be done by examining overlaps or synergies in the operations of KTA and KDOT.

Good stewardship of citizen’s dollars requires that wasteful spending be controlled in ALL state operated or sanctioned operations. This task is best accomplished by taking an approach that views government as a ‘whole’ instead of viewing state agencies as individual stand-alone entities. The long standing approach to government where each function is considered a ‘silo’ has created difficulties in identifying potential savings, synergy or unnecessary functions between agencies and other state entities.

The most recent comparisons show that KTA was operating238 miles of highway versus 9,503 miles of KDOT highways . KTA operated with approximately 500 employees while KDOT employed 2917 meaning every KDOT mile of road is ‘covered’ by .3 employees while at KTA seven times as many per mile were required. Toll booth operators were the only different requirement in the work force and didn’t explain the size of the disparity. Similar large inequities in spending were found with maintenance at about 3 times the cost per mile for KTA versus KDOT (here and here).

These large cost differences coupled with visual examples such as identical maintenance yards just a few miles apart near Emporia showed that taking a bigger picture approach to the Kansas road system could generate savings.

After the legislature reacted to these red flags for waste by designating the Secretary of Transportation as Executive Director of KTA, more understanding of those disparities in maintenance costs came to light. An audit of KTA (Page 25) found that “In prior years, the Turnpike’s capitalization policy did not conform with generally accepted accounting principles for the following reasons: 1) cost of major repairs, replacements and improvements not financed by or expected to be financed in part by bond proceeds were paid by the replacement reserve fund and were not capitalized, 2) depreciation was not provided on capital assets, 3) the modified approach for reporting infrastructure assets had not been utilized in the absence of recording depreciation and certain capitalized costs, 4) interest costs were not capitalized, and 5) amortization was not applied to the other costs capitalized” . This required the unusual step of having to restate prior year’s KTA financial statements. In other words the ‘information’ that citizens and legislators had been receiving to judge KTA operations all these years has been incorrect.

There are opportunities for significant savings for taxpayers and toll road users from a more coordinated approach to KTA and KDOT operations. A properly coordinated strategy does not require the loss of autonomy of either entity or major changes in operations. Here are a just a few examples:
  1. Coordination in planning to meet future needs. The ongoing expansion of Johnson County suburbs to the west and south could increase even further the congestion on I-435. Toll roads have filled the role in OKC and DFW of offering alternatives to congestion and been well received by citizens. A KTA loop which delivered faster access in the Johnson County and surrounding areas would allow KDOT to focus on keeping its roadways maintained rather than big bond issues for new road building. 
  2. Coordination of resources. Both KTA and KDOT have significant physical resources. Re-purposing for short term projects, emergencies or major work would only require that each entity be fairly compensated as ‘renter or contractor’ when providing those assets for use by the other.
  3. Coordinate of purchasing. Bulk purchases of insurance, equipment, and supplies can reduce cost per mile of construction costs of both entities. Engineering software and shared research expenditures are just two examples of many opportunities of possible administrative function savings.
  4. Cooperative operations. KTA could pursue an aggressive path towards driving customers to their toll roads through cooperative maintenance and new construction of key KDOT feeder roads to KTA toll roads.
The ability to find savings in cooperation between KTA and KDOT operations has many possibilities but it is just one of many examples where savings and service gains can be found by rejecting the ‘silo’ approach to government. Citizens and legislators need to continue to press for a more comprehensive approach that provides the state’s financier---the taxpayer----a delivery of “better services, at better prices”.
Posted by David Dorsey on Tuesday, May 20, 2014

I don’t have idols.

 Years ago I learned idolizing can lead to great disappointment. The more you learn about people, the greater the chance that, as this guy would say in his unique style, “sthumpin’s a misth.” A case in point is Michelle Rhee. If I did have an idol in education reform, it would be her.  She’s even married to one of my favorite NBA players of all time who is also an education reformer.

For those of you not familiar with Michelle Rhee, in 2007 she was appointed the first chancellor of the Washington, D.C. school district vowing to make real reform in one of the nation’s lowest performing school districts. In her first year she closed 23 schools, dismissed 36 principals and reduced central office staff by 15%.  Two years later Rhee fired 241 teachers based on poor performance and took on the teachers’ union to make significant changes in order to improve student outcomes. Saying she was controversial would be a colossal understatement.

She was a Muhammed Ali in the square circle of education reform.

But, not surprisingly, she became the victim of politics. The 2010 mayoral election in D.C. was considered a referendum on Rhee. The new guy won and she was out. She went on to start a school reform organization called StudentsFirst, and her overarching approach is to put students ahead of adults.

What could be better than that? I hadn’t heard much about her in the past few years; that is until a few Mondays ago. I was on the treadmill (seriously), trying to get through a grueling walk aided by Bret Baier’s Special Report on the Fox News Channel. He had just floated a teaser that his in-studio guest was going to be none other than Michelle Rhee and she was going to discuss Common Core Standards and charter schools. You can imagine my excitement. I even took the treadmill from 3- to 3.5 mph!

Then I was reminded why I don’t have idols.

Much to my chagrin (and also Bret’s), I learned in the interview that Michelle Rhee is a supporter of Common Core standards. Say it ain’t so, Joe! When pressed by Baier, she proclaimed, “unless we increase the standards and expectations of our kids, we will continue to fall further and further behind [other countries].” She expressed concern that the U.S. is now lagging behind the Slovak Republic. When Baier quoted a Brookings Institute study that Common Core standards have not yet produced significant gains Rhee challenged that postulate by saying that in 2013 Tennessee “blew the other states out of the water,” by “(1), implementing a rigorous teacher evaluation system and (2) they’ve been doing a very good job of investing in Common Core.”

It’s a good thing the treadmill has handles or I would have been on the floor.

That last quote brings me to why I’m writing this and underscores one of several of my issues with Common Core standards.  Why does anyone, especially one as brilliant as Michelle Rhee, believe that changing standards will improve outcomes?  What about that “implementing a rigorous teacher evaluation system” thing? You think that had anything to do with it? 

Outcomes are not going to change just because you change standards, whether it’s in business, sports, education or any other walk of life. Could the Royals win the World Series this year simply because it becomes their standard?

Baier questioned her about the “push-back” from many who complain that the standards are too tough. She brushed away those concerns with a logic that left me thinking “This is an education reformer?”

Her dismissal of the standards as being too difficult at the elementary level reminded me of a recent article in the Salina News. Soon-to-be former Education Commissioner Diane DeBacker, while defending Common Core standards at a Salina Rotary Club luncheon, cited a standard for kindergartners that requires them to count to 100 by ones and tens. She followed that with this statement. "I don't think there's anything sinister about that."

Well, here’s one of the other 21 kindergarten standards (from Topeka Public Schools) she left out:

Compose and decompose numbers from 11 to 31 into groups of ten ones and some further ones, e.g., by using objects or drawings, and record each composition or decomposition by a drawing or equation (such as 18=10+8); understand that these numbers are composed of groups of ten ones and one, two, three, four, five, six, seven, eight, or nine ones.

Everybody got that? Perhaps not sinister, but certainly something from which nightmares could spring. When I was in kindergarten (and the U.S. was number 1 in the world) our most challenging standard was don’t eat the paste

What’s frightening is that many influential individuals and organizations outside education are on the same page. Potential presidential candidate Jeb Bush is a big supporter. The US Chamber of Commerce released this video last month. They all miss the fundamental point. If you don’t have an improvement in the quality of teachers and even more importantly, better managed public schools, along with more school choice for parents, standards aren’t going to matter one bit. Period.

Rhee believes Common Core will work at producing better outcomes “as long as the adults stay strong and firm and know our kids can do this.” Huh? As an elementary teacher in a school that desperately needs marked improvement, I know I stayed strong and firm and I also know it’s going to take a lot more than that.

If that’s the best defense an education reformer like Michelle Rhee can come up with to defend Common Core standards, it’s yet another reason to dump them.

 And let me get back to the treadmill in peace.

Posted by Dave Trabert on Saturday, May 17, 2014

We continue our debunking of the Center on Budget and Policy Priorities (CBPP) latest report entitled "Lessons for Other States from Kansas' Massive Tax Cuts."  Part 1 dealt with state revenues. Part 2 covered state spending in general and school funding in particular.  Part 3 addressed claims that that tax reform hasn't boosted the economy.  Today we tackle their assertion that tax cuts won’t lead to economic growth.

CBPP claim #4 - Little Evidence to Suggest That Tax Cuts Will Improve Kansas’ Economy in the Future

Actually, there is a lot of evidence; CBPP just conveniently avoids it.  Instead, they substitute their opinion and employ their standard tactic of making claims without disclosing supporting data; they also reference predictions that Kansas will trail the nation next year in some economic indicators.

We’ll start the debunking with a brief history lesson.  Private sector job growth in Kansas trailed the national average in ten of the last fifteen years (1998-2013).  Kansas’ private sector gross domestic product trailed eight times (1997-2012) and personal income trailed eleven of the last fifteen years (1998-2013).  Indeed, Kanas’ history of economic stagnation was the impetus for tax reform.   As we explained in Part 3, the full economic impact of tax reform will take years to unfold.  It’s intellectually dishonest of CBPP to imply that tax reform isn’t working because a long term negative trend hasn’t suddenly created tremendous gains.

Now let’s look at the evidence.  The adjacent table compares the performance of the ten states with the lowest state and local tax burdens with the ten states with the highest burdens, based on the most recent rankings from the Tax Foundation.  The low-burden states are Wyoming, Alaska, South Dakota, Texas, Louisiana, Tennessee, New Hampshire, Nevada, South Carolina and Alabama.  The high-burden states are New York, New Jersey, Connecticut, California, Wisconsin, Minnesota, Maryland, Rhode Island, Vermont and Pennsylvania.

The low-burden states increased jobs at twice the rate of high-burden states.  Low-burden states have superior growth in Wages & Salaries and Private Sector Gross Domestic Product.  Low-burden states have positive domestic migration while high-burden states have negative domestic migration.  In other words, US residents are choosing to move to low-burden states and choosing to leave high-burden states. 

 

Tax reform critics like to attribute the superior economic performance of low-burden states to weather and access to ports and natural resources.  But you’ll notice that both groups have states with good weather, bad weather, coastal, land-locked and natural resources.  But there is one category which really separates the two groups of states – spending.  High-burden states spend 40 percent more per-resident to provide the same basket of essential services.  States with an income tax spend 49 percent more than those without an income tax. 

The key to having low taxes is to keep spending under control by providing services at a better price.  A state could be awash in oil revenue and still have a high tax burden if it spent more.  Texas, by the way, gets less than 3 percent of revenue from oil; they have a low tax burden because they only spent $2,293 per-resident to provide the same basic basket of services on which Kansas spent $3,409 (2012 actual per NASBO).

 

The moral of the story is pretty clear: states that spend less, tax less – and grow more.     

Posted by James Franko on Tuesday, May 13, 2014
This piece originally appeared in the Oberlin Herald newspaper. It is authored by Kansas State Representative Ward Cassidy and is republished here with the author's permission.

Letter from Topeka
By State Rep. Ward Cassidy

Every year at this time, the news from Topeka is about education funding. It was March 7 when the Legislature received the Supreme Court’s Gannon decision. The task was before us – a requirement to establish equity and adequacy – and only a short time to get it done.

Building consensus between the House and the Senate on any topic is difficult. The House passed a bipartisan bill that would have met the Gannon equalization mandate. The Senate leadership wanted policy changes attached to the bill, however, so back and forth we went.

My biggest concern was money. I saw problems developing that could have resulted in the layoff of at least two teachers in each of my districts. When the debate was on to reduce transportation expenses, I received information from most of the 120th District superintendents as to how much that would affect each district. The message was to do my best to not let that happen.

When all was done, our districts received property tax relief and more money for their classrooms. For that to happen, the House had to agree to teacher tenure being revoked and to a tax credit for corporations to grant scholarships to pay for low-income students to attend private schools.

The corporate scholarship program is capped at $10 million – not a real high price compared to the $6 billion that will be spent on K-12 education in Kansas this year. I have learned a lot about diversity of education in Kansas and how the achievement gap keeps widening between poor students and those who are better off.

Legislators are looking for ways to diversify our education. Right now, the only real school choice in Kansas is our virtual schools. These are growing rapidly, and we now have 93 approved virtual programs.

I had no problem voting for the tenure change, as I have always been opposed to that provision. What the tenure piece does is to eliminate the requirement that school districts provide a due-process hearing upon termination or no-renewal of a teacher contract – simply because the teacher has been with the district for more than three years.

Due-process hearings will remain intact for any teacher who feels they were terminated because they were exercising a constitutionally protected right in the course of their job duties. School districts can still choose to grant due-process hearings based on longevity; the bill just removes the state requirement to do so.

Teacher unions are not strong in northwest Kansas. Teachers realize their school boards and administrators are trying to provide a quality education for students and to put teachers in a position to succeed. I know all of the 120th District superintendents, and they would never give up a quality teacher just to save money by hiring a lower-paid teacher.

What I am most proud of this session dealt with higher education. I was again able to help Colby Community College and Northwest Kansas Technical College get decent funding and to curtail some proposals that would have hurt both.

What I like best of all is helping constituents with state agencies. I have good contacts, in every agency, and have helped solve many problems for people in the district this year.

The Legislature returns for the veto session on Wednesday, April 30, and I will have a wrap-up column at that time.

Posted by David Dorsey on Friday, May 09, 2014

In my last post regarding teacher pay, the focus was on the question of whether teachers are over- or underpaid. The theme of this piece is HOW teacher pay is determined and ultimately the negative impact it has on education.

Typically, the salary schedule for teachers takes the form (and name) of a matrix. Here is the current salary schedule from Topeka Public Schools. The matrix is structured with columns representing the educational attainment of the teacher while the rows sort of stand for the number of years of teaching experience.  Where the column and the row intersect is how much a particular teacher is compensated.

Seems sensible, right? Just kidding. It’s a terrible way to pay teachers and there are several reasons why.

One reason this system needs be put on the scrap heap is that it is strictly an INPUT model.  To put it simply, no consideration is given to the performance or the ability of a teacher.  That just doesn’t matter when it comes to paying teachers. Furthermore, there is substantial research evidence that educational attainment of the teacher does not impact student outcomes. A research synthesis paper by the Center for Education Compensation Reform (CECR) concluded: “The preponderance of evidence suggests that teachers who have completed graduate degrees are not significantly more effective at increasing student learning than those with no more than a bachelor’s degree.”

Another rationale for running the matrix through the paper shredder is that it is not market-based. It assumes all teachers across all grades levels and all disciplines have equal value.  In other words, an elementary school P.E. teacher is valued the same as a high school physics teacher. Does anyone really believe those two positions would be considered economic equals in a free market? That is emblematic of the overarching theme that has polluted virtually every aspect of public education: egalitarianism.  And the supporting argument goes something like this: “Well, the P.E. teacher has a very important function in the physical well-being of the child. And we all know a healthy body is necessary for a healthy mind.”

True…but there is NEVER a discussion of the RELATIVE value of teachers within the system. That, of course, would violate the egalitarian canon.  If we were all making widgets on an assembly line, it would make sense that we all get essentially the same pay. But regardless of what teachers’ unions like to convey, not all teaching subjects are equal. Much has been written and discussed in recent years about the difficulty public education has in attracting and keeping quality teachers in the fields of math and science. The salary matrix is Exhibit A in that concern.

A third reason the matrix needs to go the way of the 8-track tape player is that it serves to restrict the amount of money a teacher can make.  It’s metaphoric that a matrix is designed in the shape of a net because, speaking as a teacher, working under the salary matrix is like being caught in a net. So, what happens when a teacher wants to make more money in the organization? He or she can only escape the constraints of the net by getting into administration, principally as a principal. And that’s why most teachers become principals: to make more money – not to manage a school effectively.

So, the salary matrix approach rewards mediocrity while failing to recognize teachers monetarily for good performance, doesn’t promote improved student outcomes, keeps schools from attracting quality teachers in STEM (science, technology, engineering and math) subjects, and forces people out of the classroom to make more money.

How does such an ineffective system endure?  Because it is easy. It’s easy for the parties on both sides of the bargaining table to have a Three Musketeers approach. Coupled with the lack of accountability that has shielded public education, there is no internal incentive to change.

Reformers outside education have been trying for years to inject merit pay for teachers into the system without much success. Does that mean we are stuck with the matrix for eternity?

It doesn’t have to be that way, and in my next piece on teacher pay, I will outline a comprehensive approach that can lead teacher pay to be market driven and merit based.
Posted by Patrick Parkes on Friday, May 09, 2014

Ever since Kansas officially ushered in its momentous January 2013 tax reforms, local governments and media have persisted in claiming that Kansas’ state tax reforms will cause local tax rates to increase. For example, at a University of Kansas gathering last year, Johnson County administrator Hannes Zacharias lamented that state tax changes put Johnson County in a pickle. “Indeed, we are at the end of the food chain, and we’re the ones who have to clean up the mess,” Zacharias said.

In order to gauge the validity of these and other related claims, we invited all 105 Kansas counties to substantiate them by participating in a survey. Seven counties responded, but not a single one cited tax reform as their reason for raising property taxes. Several, in fact, offered no explanation. 

KPI President Dave Trabert offers a different perspective on the idea of a state-local taxation “food chain.”  “It is taxpayers, not local governments, who are at the end of the food chain,” Trabert points out. “In fact, it’s Johnson County that has really been cleaning up on taxpayers. Johnson County increased property taxes by 132% between 1997 and 2013, while inflation was 42% and county-wide population increased by about a third. Cities in Johnson County also dramatically increased their taxes (Overland Park +162%, Olathe +153%, Leawood +147%). Local government is simply using tax reform as an excuse to continually raise taxes unnecessarily.”

While most counties declined to go on record, it was noteworthy that all eight respondents answered “Yes” to the question: “Do you believe your county made efficient and effective use of all taxpayer money in 2013?”  It would be interesting to know if the citizens of these counties would answer the same way. 

There is, however, evidence that tax reform is beginning to boost local government revenues. Sales tax payments to local governments from the Kansas Department of Revenue show a 6.25 percent increase for the first four months of 2014. (Note: KDOR collects all sales tax and remits local governments’ allocation on a two-month time lag, so the 2014 payments reflect retail activity from November 2013 to February 2014.) KDOR reports no change in tax rates during the activity period. As we predicted in “Tax Reform gears Kansas for Growth,” lower state income tax rates allow individuals to keep more of their hard-earned money. This money flows through local economies in the form of new purchases, savings, and/or investments. In turn, this influx of new cash spurs new demand for products and labor (i.e. employees), which helps make up a broader tax base capable of producing higher revenues despite lower tax rates. 

 It will take several years to be able to assess the full effects of Kansas’ tax reform package, but one thing is already clear: there is no evidence that state tax reform is hurting local governments. Contrarily, tax reform is, as expected, providing local governments with increased sales tax revenue.


Posted by Dave Trabert on Tuesday, May 06, 2014

We continue our debunking of the Center on Budget and Policy Priorities (CBPP) latest report entitled "Lessons for Other States from Kansas' Massive Tax Cuts."  Part 1 dealt with state revenues and Part 2 covered state spending in general and school funding in particular Today we debunk their claims that tax reform hasn't boosted the economy.

CBPP claim #3 – Kansas’ tax cuts haven’t boosted its economy.

While tax reform hasn’t produced the “shot of adrenaline” predicted by Governor Brownback, the problem is one of political enthusiasm rather than economics.  Most elected officials are prone to effusive optimism for their ideas, just as opponents to their ideas can often be counted upon to distort and deliberately misstate information in pursuit of their own beliefs.   

The data pretty clearly shows that states with lower tax burdens have much stronger economic growth and job creation over time; we’ll review the facts in Part 4.  Today’s post covers some of the reasons why the benefits of Kansas’ tax reform will unfold over several years rather than overnight  and explain a number of misleading claims by the Center on Budget and Policy Priorities (CBPP). 

First of all, tax reform was implemented while coming out of a recession.  It’s impossible to know the extent to which this impacts employers’ decision-making on adding jobs or relocating, but having run a few businesses, I can appreciate how the initial benefits of tax reform might be used to shore up the business while continuing to work through the recession.

Concurrent federal changes are also a factor.  Pass-through income on LLCs, Subchapter S corps, partnerships and proprietorships was not subject to state income tax in 2013 but those employers were simultaneously hit with higher federal income taxes (marginal rates and on capital gains) and multiple changes related to Obamacare.   

Predictability is an important element of tax policy, and some of the mixed signals coming out of Topeka over the last two years may also be prompting taxpayers to proceed cautiously.  The 2012 tax reform legislation would have reduced income taxes by $4.5 billion over the first five years but changes implemented in 2013 took back about $700 million.  While still a very positive net effect, the 2013 changes sent a number of mixed signals.

Many employers are also well aware that a majority of legislators and Governor Brownback have not yet made the necessary (and quite feasible) spending reductions that will be required to fully implement tax reform.   Kansas’ General Fund budget in 2012 was 25 percent more per-resident than states with no income tax; total budgeted spending was 39 percent higher on a per-resident basis.  Every state provides the same basic services - public education, highways, social services programs, etc. – but some states provide those services at a much better price and keep taxes low.

The FY 2015 General Fund budget of $6.273 billion is a new record for Kansas and is 2.9 percent higher than the 2012 budget.  Until government is made to operate more efficiently, taxpayers must consider the possibility of further modifications to the tax plan – and that uncertainty will continue to impact economic growth. 

Relocating a business is also not something that happens quickly.  For starters, leases might have several years to run before a move is feasible. 

CBPP uses a combination of unsubstantiated claims, fails to put a lot of information in context and exploits the unrealistic notion that tax reform would have an immediate, explosive impact on the state’s economy.  “Data from” is not how intellectually honest people substantiate a position; they show you all their data or at least tell you exactly what data they used and where to find it.  Claiming that a one-year change in jobs or earnings is proof that something as complex as major tax reform failed is just a political statement; it is certainly not an intellectually honest economic analysis.

Yes, private sector job grew a little slower in 2013 than in 2012, but that was not a Kansas phenomenon.  In fact, private sector job growth nationwide in 2012 was 2.2% but dipped to 2.1% in 2013.[1]  This is a good example of CBPP ignoring context.

It’s also important to examine the underlying factors that contribute to a state average.  The adjacent table shows that Kansas did better than all but one adjacent state in 2013.  Colorado did better, but then Colorado has historically had a better tax structure than Kansas and also did a better job of controlling spending.  Less favorable tax and spending policy has been introduced in Colorado over the last few years but, just as it takes time for upward momentum to build, it does as well for the full measure of bad policy to be seen.

Digging deeper, we find that the Kansas City, Kansas metro area not only outperformed the national average but also grew at five times the rate of the Kansas City, Missouri metro area.[2]  The Wichita metro lost jobs in aerospace but that is a reflection of the global economy; the balance of the Wichita metro was almost at the national average.

CBPP dismisses the increase in new business filings but if history is any guide, these gains are quite significant.  Research conducted by the Center for Applied Economics at the University of Kansas found that, if not for jobs created by new startups in their first year of existence, Kansas would have only had two years of net job growth between 1977 and 2010.

Dr. Arthur Hall, who conducted the research at KU, says "Economic development is a numbers game.  The more that an economic environment motivates entrepreneurs to try new business ideas, the more likely a gazelle will be born." Dr. Hall cites Garmin Industries as an example of what he calls a 'gazelle' - a company founded by two people in Lenexa, Kansas in 1989 that is now a multi-billion dollar company.

Hall's views are similar to those of Carl Schramm, former CEO of the Ewing Marion Kauffman Foundation, a leading entrepreneurial think tank in Kansas City.  In 2010, Schramm told Forbes Magazine “The single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars in revenue within 20 years.”[3]

The initial economic signs are encouraging but the true economic impact of tax reform won’t be known for several years.  Snap judgments based on partial one-year data are the hallmark of politicians and special interest groups looking for justification to support their beliefs – whether in support of or opposition to tax reform.


[1] Bureau of Labor Statistics, average annual private sector employment not seasonally adjusted.

[2] The Kansas City, Kansas metro is comprised of Franklin, Johnson, Leavenworth, Linn, Miami and Wyandotte counties.  The Kansas City, Missouri metro is comprised of Bates, Caldwell, Cass, Clay, Clinton, Jackson, Lafayette, Platte and Ray counties.

[3] "What Grows an Economy," Forbes Magazine.  

Posted by Patrick Parkes on Monday, May 05, 2014
 “Of course, I want people to have healthcare; I just didn’t realize I would be the one who was going to pay for it personally.” 

     That’s what Cindy Vinson—a retired California teacher and proud supporter of President Barack Obama—told the San Jose Mercury News when she learned of the insurance plan substitution and corresponding premium hike she would face under the Affordable Care Act (aka Obamacare). Kansas legislators ought to commit Vinson’s realization to memory.  This year’s legislative session has ended without having to address murmurs calling for Medicaid expansion in the Sunflower State. However, this does not mean that the issue is a dead one in Kansas. With the 2014 elections on the horizon and Governor Brownback on the ballot, proponents of Medicaid expansion could very well attempt to revive the issue by thrusting it into the election season policy spotlight. Thus, an understanding of the true fiscal implications of Medicaid expansion in Kansas remains of the upmost importance to Kansans.

  At is core, expanding Medicaid eligibility to those living at 138% of the federal poverty level is Obamacare’s answer to the rising tide of healthcare costs that often go uncompensated when uninsured individuals visit emergency rooms for treatment. In turn, when medical facilities cannot count on compensation for these costs, they must resort to driving up the costs of both emergency and non-emergency care for all individuals (both insured and uninsured) to cover potential shortfalls. Place Medicaid expansion alongside Obamacare’s “individual mandate,” and it becomes obvious that the law “bets” heavily on closing the uncompensated care gap to bring down overall healthcare costs.

     Enter the June 2012 Supreme Court ruling on Obamacare, which gave states autonomy over whether or not to expand their existing Medicaid programs as envisioned above, and the Medicaid expansion question Kansas faces begins to crystallize. Nationally, the split between states choosing expansion and forgoing expansion to this point remains even (with Kansas still in the non-expansion camp). Proponents of expansion in Kansas have been enticed by the federal government’s offer to fund the full costs of expansion until 2016 and 90% of the costs thereafter. They are touting it as a “win-win,” “no-brainer” scenario tantamount to “free money.”  Yet, anyone familiar with the old adage about a purported “free lunch” can probably guess that there is no such thing as free money or free healthcare either for that matter. 

Even if a healthcare provider serves a patient “free of charge,” the services rendered are never truly “free.” Instead, the associated costs (time, supplies, etc.) are simply assumed or absorbed by an entity other than the patient. The concept of “free money” is a similar illusion. As the old sayings go, money never truly appears spontaneously by “growing on trees” or “falling out of the sky.” Some person or entity must earn it through work, production, and value creation. This fact makes the idea of “free federal money” doubly illusory because the federal government cannot create value or wealth on its own. Rather, it can only confiscate wealth already earned by U.S. taxpayers to pay its bills. Thus, even the federally funded portion of a potential Medicaid expansion in Kansas cannot be thought of as cost-free to Kansans. It is simply a redistribution of tax money Kansans and others across the country have already sent to Washington.                 

  Setting aside this logical fallacy that is “free federal money” for the moment, let’s look at the work of current Social Security Advisory Board Member Dr. Jagadeesh Gokhale—who is also KPI’s own Adjunct Health Policy Fellow and a Senior Fellow at the Cato Institute in Washington, D.C. Dr. Gokhale has explored the fiscal implications of Medicaid expansion in Kansas specifically. His results (in the table below) show that the enrollment dynamic Obamacare’s “individual mandate” creates is already costing Kansas more than $4 billion in added healthcare expenses over the next ten years. That equates to almost $1,400 per Kansan  in new healthcare costs over the period. Add in the Medicaid expansion element if Kansas choses that path, and our state will add another $624.5 million to its Obamacare debt tab. This brings the tally of new healthcare costs per Kansan to more than $1,600 over the aforementioned ten-year period.

     

     And that’s assuming the federal government makes good on its offer to use federal revenue to foot the rest of the bill as promised! For just Kansas’ expansion alone, the “rest of the bill,” will amount to more than $12.4 billion (or nearly $4,287 in new healthcare costs per Kansan). Admittedly, some Kansans may be inclined to dismiss this possibility of the federal government reneging on its funding promise as purely hypothetical. However, recent history proves that this possibility is in fact closer to reality than to conjecture at this point. 

     During the U.S. Congress’ now infamous “Supercommittee” deficit reduction talks of 2011, President Obama proposed simplifying and streamlining the funding formulas that determine how much federal money states receive to administer their Medicaid programs. He touted his “blended rate” idea as a cost-saving measure poised to reduce federal Medicaid spending by $100 billion over the next decade.  Yet, even the left-leaning Center on Budget and Policy Priorities in Washington, D.C. decried the measure as one that would shift significant costs to states; exacerbate barriers to specialist care that Medicaid recipients already face; and create few—if any—of the administrative cost-efficiency  savings it advertised. 

     Aside from these obvious flaws though, perhaps the most fundamental lesson of relevance to this blog post is that the federal government already has a penchant for cutting Medicaid funding to states.  What’s more, it hasn’t exactly displayed an identical penchant concerning Medicare cuts to healthcare providers serving seniors, but its involvement in that process features a similar ominous sense of uncertainty.   

     In 1997, the Congress passed the Medicare Sustainable Growth Rate Program (SGRP) as a federal cost control mechanism designed to cut Medicare reimbursements to participating doctors if per-patient treatment costs exceeded federal spending targets for any given year. Yet, as the AARP points out in a recent blog post on the issue, Congress has ultimately delayed these cuts seventeen times in the last eleven years in a process known cheekily around D.C. as the “doc fix.”  This year, Congress waited until March 31, 2014 (just one day before a 24% cut in reimbursement rates was set to take effect) to pass its annual fix. The AARP laments the legislative reticence and procrastination constantly surfacing around this issue and considers these elements to be chief drivers of uncertainty for seniors about whether their trusted treatment professionals will be able to continue seeing them.  Indeed, the organization cannot help but to point out the striking resemblance the dynamic bears to the repetitive time warp on display in Bill Murray’s 1993 comedy Groundhog Day. Each year, Congress promises to revisit the “doc fix” issue in a deeper, more permanent, and bipartisan way to no avail. 

     Taken together, the above anecdotes from both Medicaid and Medicare are not just obligatory history lessons to be tossed aside later into the proverbial “ash heap” or “dustbin” where such lessons often go. Rather, they should cause Kansans to wonder why our same federal government that seems to crave financial uncertainty when it comes to healthcare costs should be trusted to act any differently when it comes to Medicaid expansion in Kansas under Obamacare.

     Kansans beware: This offer of a Medicaid expansion-themed “free lunch” invitation from an already cash-strapped Uncle Sam will more likely turn into a federal “dine and dash.”

[1] “Cost Per Kansan” figures calculated using 2013 U.S. Census Bureau Population Estimates for Kansas

 




Posted by Dave Trabert on Tuesday, April 29, 2014

We continue our debunking of the Center on Budget and Policy Priorities (CBPP) latest report entitled "Lessons for Other States from Kansas' Massive Tax Cuts."  Part 1 dealt with state revenues.  Today we debunk their claims on school funding and other state services.

CBPP claim #2 – School funding is 17 percent below pre-recession levels and funding for other services is way down and declining.

This is simply an outright fabrication – and not the first time that CBPP has done so.  CBPP shows a graph of how they calculate what they claim is a reduction in school funding but, true to form, they provide no supporting data.  The only source provided says “CBPP analysis of state budget documents and Kansas Governor’s Budget Reports.”  CBPP routinely plays this game and they have refused to give us their data every time we requested it.   I’ll get to school funding shortly but let’s start debunking this claim with a total spending review.

Here are the facts from the Governor’s Budget Reports cited by CBPP.[1]  General Fund spending would decline a mere 1.8 percent this year (FY 2014) but it is still 6.3% higher than just three years ago.  Next year, Kansas will set a new record for General Fund spending without even counting the education money that was just added to next year’s budget.  FY 2013 was the highest level of General Fund spending on record.

 

The next table breaks total spending down into the primary functions listed in the Governor’s Budget Reports.  

Of course, Kansas should have reduced spending last year and this year rather than spend down reserves but the fact remains that spending is not ‘way down and declining’ as claimed by CBPP. 

Their bogus claim on school funding may be grounded in an earlier collection of falsehoods published last year – and thoroughly debunked on this blog.  CBPP often makes unsubstantiated claims which they attribute to their “analysis of data” but the data is not made available for review – even when requested.

 The first thing to understand is that CBPP deliberately misleads readers by only talking about state funding of schools while ignoring the fact that Kansas, like many states, has a foundational funding formula that provides multiple funding sources, including local money that does not flow through the state budget. 

But that is just the beginning of the deception.  Their statement that “Kansas is still cutting school funding” on page four of their report is an outright lie. 


This data provided by the Kansas Department of Education shows that State funding of public education has increased for four consecutive years.[2]  As CBPP is fully aware, one cannot get the full picture of school funding in state budget documents; the money reported as Local funding is provided on state authority but doesn’t run through the state budget.[3]  Property taxes (including the 20 mills mandated by the Legislature) are sent directly to school districts by county treasurers.[4]  Even the Kansas Supreme Court acknowledged (three weeks before CBPP’s report) that “…funds from all available resources, including grants and federal assistance, should be considered” when evaluating school funding.[5]

The following inflation comparisons are based on total school funding from the adjacent chart and shown on a per-pupil basis to also account for enrollment changes.  The first comparison shows that actual school funding continues to run well ahead of inflation.  Per-pupil funding increased from $6,985 per-pupil in 1998 to $12,781 in 2013; 1998 funding adjusted for inflation would be only $9,768.  (Funding for the Kansas Public Employees Retirement System was not included in KSDE calculations of school funding until 2005; they provided the data for prior years and we adjusted spending accordingly.)

 

CBPP claims that school funding has not kept up with inflation since 2008 but that is misleading at best.  Again, they provided no data to support their claim but we’ll lay it all out here.

Note that every chart shown above references ‘spending’ instead of ‘funding’.  KSDE arrives at their Local number each by subtracting State and Federal aid from districts’ reports of total expenditures. Total expenditures is different from total funding because districts report on a cash-basis fund accounting method and those figures do not reflect any aid received that was not spent.  That information can be obtained by comparing the change in ending unencumbered cash balances of districts’ operating funds (excluding capital and debt).[6]

The above table shows that total inflation-adjusted spending between 2008 and 2013 was $85.3 million greater than actual spending, but districts could have spent $345.9 million more if they had used all of the aid provided during those years. 

It should also be noted that school spending is not based on what schools need to meet required outcomes while also making efficient use of taxpayer money.  To this day, not a single superintendent, legislator, KSDE employee, policy analyst or judge can identify that amount because no such analysis has been performed in Kansas.  The cost study upon which previous court rulings were made was found to be deliberately skewed so as to provide the courts with inflated numbers.[7] The Kansas Supreme Court also recently abandoned the ‘actual cost’ method of determining adequate funding in Gannon and substituted new standards (Rose), against which no cost or funding measurement has been conducted.[8]

In conclusion, CBPP’s claims about school funding in particular and state funding of services in general are merely a collection of false, misleading and inconsequential statements. 

Kansas does need to reduce spending a bit in the coming years in preparation for the next tranche of tax reduction but there is ample ability to do so without reducing current services.  There are tax transfers out of the General Fund that should be reconsidered and there are also multiple opportunities to significantly reduce the cost of providing current services.

The opportunities are there, and we’ll cover them separately in the coming months.  The only question is whether Governor Brownback and a majority of legislators will stand up to the bureaucracy and special interests.  

Stay tuned for Part 3.

 


[1] Kansas Division of the Budget, Governor’s Budget Report for FY 2015 published January, 2014, page 22 http://budget.ks.gov/publications/FY2015/FY2015_GBR_Vol1--UPDATED--01-28-2014.pdf

[2] Kansas Department of Education; school years 2003-04 through 2012-13 located at http://www.ksde.org/Portals/0/School%20Finance/data_warehouse/total_expenditures/d0Stateexp.pdf. All other years provided by KSDE via email; copies in author’s possession.

[3] CBPP published a response to my September 13, 2013 blog post that provided this explanation. http://www.offthechartsblog.org/the-price-of-kansas-costly-tax-cuts/

[4] Explanation of property tax distribution with a quote from Dale Dennis at http://www.kansaspolicy.org/KPIBlog/Default.aspx?min=2013-01-01&max=2014-01-01.

[5] Gannon v. State of Kansas, page 77 at http://www.kscourts.org/Cases-and-Opinions/opinions/SupCt/2014/20140307/109335.pdf

[6] See KSDE explanation at the link for Endnote #2.

[7] Caleb Stegall, “Analysis of Montoy v. State of Kansas” published by Kansas Policy Institute in 2009 at http://www.kansaspolicy.org/ResearchCenters/Education/Studies/d65168.aspx?type=view

[8] Ibid, pages 76 and 77.

Posted by Dave Trabert on Monday, April 28, 2014

If Ronald Reagan were alive and saw the latest piece from the Center on Budget and Policy Priorities (CBPP), he would say, “Well, there they go again…not letting the facts get in the way of the story they want you to believe.”

The premise of their March 27 piece is that “Kansas’ huge cuts have left…schools and other public services stuck in the recession, and declining further – a serious threat to the state’s long-term economic vitality.”  That’s not true, of course, but it’s what the way-left-leaning CBPP wants you to believe….and what the big-government interests in Kansas are only too happy to repeat.

CBPP and their allies seem to believe that government needs an unlimited supply of taxpayer money and could not possibly operate with a penny less.  It’s a classic entitlement mentality and the premise is laughably false.

The volume of falsehoods and misleading statements in “Lessons for other States from Kansas’ Massive Tax Cuts is so great that we will address each of their five ‘lessons’ in separate blog posts this week.  Today's post will focus on their claim about state revenues.

This isn’t the first time we’ve debunked CBPP tales about Kansas and sadly, probably won’t be the last.  

 

CBPP claim #1 – Kansas’ revenue loss will rise to 16 percent in five years if the tax cuts are not reversed.

As is typical for CBPP, they don’t explain how they arrive at their 16 percent figure but it probably has something to do with their entitlement focus (what government could/should have rather that what it needs).  Regardless, the facts from Kansas Legislative Research (KLRD) show otherwise.

KLRD estimates that General Fund revenue will be 9.6 percent higher in five years.[i]  FY 2014 is the first full year of income tax reform; revenue is 7.1 percent lower this year than the record-setting level of 2012 but it is actually 1.3 percent higher than three years ago!  Even more remarkable, a new revenue record is predicted to be set in FY 2018 – just four years after historic tax reform was fully implemented.

I dare you to find one media outlet in Kansas reporting these remarkable facts.  To the contrary, most media and their big-government allies cling to versions of CBPP’s ‘sky is falling’ mentality.

CBPP is flat out lying when they say Legislative Research “…estimates that Kansas received $803 million less revenue this year because of the 2012 tax cuts….”  It should be noted here that CBPP provides no citation for their outrageously false claim.  Here’s the truth.  KLRD did predict that much of a loss in personal income tax revenue (not total revenue as claimed by CBPP) two years ago when tax reform was being discussed but they did so on a static basis using the parameters of a particular proposal.  Changes to that proposal have since been implemented and consensus revenue estimates have dramatically improved.   CBPP wants you to believe that an outdated, static estimate is current despite having access to information that contradicts their claim.

The November 2013 Consensus Revenue estimate for FY 2014 was $5.857 billion or just $484 million below last year’s total revenue.[ii]  Tax revenue (which comprises the vast majority of General Fund revenue) was predicted to be down $466 million and Other Revenue was projected to be $18 million lower. 

But tax revenue has been running well ahead of November projections so official revenue estimates were increased in April (after the CBPP publication) by $103.3 million for FY 2014 and $74.3 million for FY 2015.[iii]  Later years were not adjusted upward but that's just a function of the Consensus Revenue process; we will hopefully see an even brighter revenue forecast soon from Legislative Research.

Whenever you see CBPP’s false claims repeated by media, legislators or others who are opposed to tax reform, ask them why they are spreading false claims in light of these facts from Kansas Legislative Research:

  • FY 2014 revenue will be 1.3 percent greater than just three years ago.
  • Revenues will hit an all-time high in FY 2018, just four years after full implementation of tax reform (and maybe sooner, if revenues continue to run ahead of projection).
Tomorrow's post will deal with their fairy tales about education and other state spending.

Editor’s Note: Three days after this blog was posted, the State of Kansas announced a shortfall in April tax receipts attributed to ‘balance due’ payments.  In their press release, the Kansas Department of Revenue (KDOR) said balance due payments declined 45 percent from April 2013, when those payments increased by 53 percent.  The swing is believed to result from an increase in the capital gains rate for 2013 that was implemented in December 2012, prompting taxpayers to pull gains forward into 2012 to avoid the tax increase.  As cited in the KDOR press release, similar declines are happening in many other states.

While FY 2014 revenues will likely now be lower than official revenue estimates, the April drop is a national phenomenon and not attributed to Kansas’ tax reform efforts.  Kansas revenues are still expected to be very close to the 2011 levels and on track to set a new record within the next five years.




[i] Kansas Legislative Research, General Fund Profile published by KLRD on April 6, copy in author’s possession. Actual revenue for FY 2011 and FY 2012 and estimated revenue for FY 2016 through FY 2019; FY 2014 and FY 2015 revised per April Consensus Revenue at   http://skyways.lib.ks.us/ksleg/KLRD/Publications/2014_CRE_ShortMemo-4-17-14.pdf

[ii] Kansas Legislative Research, http://skyways.lib.ks.us/ksleg/KLRD/Publications/2013_CRE_ShortMemo-11-6-13.pdf

 

Posted by David Dorsey on Saturday, April 26, 2014

In a recent post, I wrote a reaction to the Gannon v. Kansas decision by the Supreme Court. I built on the Court’s statement that “total spending is not the touchstone for adequacy” by concluding the need to change the education perspective from the focus on dollars to the focus on outcomes.

Now, in the shadow of Gannon, how can that happen?

Don’t hold your breath waiting for the educational establishment/bureaucracy to have an outcomes epiphany. That’s about as likely as KU agreeing to play Wichita State in a basketball game. The entire public school system is preoccupied trying to satisfy the common core standards gods. And, as Mr. Saturday Night (Billy Crystal) would say: Don’t get me started on that! 

But what if there were public schools out there that followed a different set of standards, schools that could provide an alternate look at adequacy? Charter schools could do that.

True charter schools do NOT exist now in Kansas. Oh sure, the law provides for “charter schools,” but ours must be sponsored and approved by a local school board. That’s why, according to the Kansas Department of Education, there are currently only eleven charter schools across the state.  Putting school boards in charge of charter schools is like putting Gregg Marshall in charge of Bill Self’s schedule.

The law should be changed, either through statute or constitutional provision, to allow the creation of an independent board to sponsor and govern charter schools, a board independent from local school districts. According to the National Alliance for Public Charter Schools (NAPCS) in the 2012-13 school year there were 32 states plus the District of Columbia that had charter school authorizers other than local school boards. Kansas is one of only eight states that has a charter law but restricts charter school authorizers to local school boards. According to the NAPCS, the Kansas law ranked 42nd out of the 43 states that have charter school laws.

How different might the court have decided if Kansas had charter schools like Carpe Diem in Yuma, Arizona, for instance. Carpe Diem is an example of a school that outperforms most other public schools in the state while doing it significantly cheaper. The 22 Success Academy schools in New York have received national attention regarding how at-risk students can thrive when given an alternative learning model. These examples are not anomalies.  Nationwide results are presented in a 2013 study by Stanford University’s Center for Research on Education Outcomes, which shows low-income students across ethnic lines “gained a substantial advantage in charter schools compared to their twins in TPS (traditional public schools).”

Now that the Supreme Court has remanded the case to the lower court to revisit the adequacy issue , how that court will rule in the Gannon case is anyone’s guess. The same holds true of any court in funding-based lawsuits that are almost certain to follow, but pointing to Kansas versions of Carpe Diem or Success Academy may very well bolster the case for an outcomes-based model.

But the case for charter schools should not be viewed through a legislative or legal prism.  Nor should it be about institutions. It should be about opportunities- opportunities for Kansas students and families to get the best possible education. The charter school movement was borne of a desire for better opportunities. And they continue to represent a beacon for families who feel trapped in low-performing schools with no hope for improvement.  In fact, according to a recent Wall Street Journal article, half of all students in Harlem attend charter schools. Our research right here in Kansas shows significant learning gaps rooted in socio-economic status. Shouldn’t our students get the same chance?

 It’s time to shine that beacon on the sunflower state.

Posted by David Dorsey on Monday, April 21, 2014
It would be hard to find a more divisive and splintered education issue than teacher salaries. Everyone seems to have a fervent opinion that either (a) teachers are vastly underpaid, (b) teachers are actually overpaid, or (c) teachers are getting paid about what they should. And the reasons for this triad of stances are numerous. It is not my purpose to delve into those in this essay, nor is it to make a case for any of them. (You thought I was going to pick (a) since I teach!)  This is the first of several op-eds I will present on this rather complex, layered issue.  In the first piece, the perspective will be one you rarely hear from: an individual teacher.

 Me.

A funny thing about the issue of teacher compensation is the group that is most impacted – teachers – really seem to care the least. Having taught for 20 years, one thing I can say with certainty: rarely does the issue of how much we are paid get brought up in conversation.  Oh, sure, you may see teachers on television rallying for more money, but that is always union driven.  The media is also complicit in keeping teacher salaries on the front burner. A recent article in the Topeka Capital-Journal is an example of the bind between the media and the unions. It proclaims teacher pay has actually gone down 1.1% over the last decade when adjusted for inflation (yawn). Here’s a news bulletin: so has virtually everybody’s. Ever hear of that economic sinkhole now referred to as the Great Recession? According to the Census Bureau, inflation-adjusted median family income in Kansas for the same time period is down 7.6%.

I know it has been said countless times before, but it bears repeating: People don’t get into the teaching profession for the money. Duh. That’s why we don’t talk about pay among ourselves. In fact, when money is discussed, most teachers would rather see it go to improved working conditions (e.g., more/better materials, updated technology, improved facilities). A much more important issue to us is time, especially given the current teaching environment that each year sees an increased demand on ours. 

We understand the relationship between time and money. That’s another reason you don’t hear individual teachers complain much about salaries. We realize a shorter work year means less money. And it’s true that many are drawn to teaching because it is not a year-round profession.  That in itself is attractive to many, enough so to recruit and enough so to keep them. It would be naïve not to recognize that.  Consider this: Those who became teachers right out of college probably have never worked year-round. Just last week a teacher friend of mine said she didn’t think she could work a twelve-month job. 

Twenty years ago I changed careers to become a teacher. Why? I was drawn to being around kids to help shape their lives. I also have a very creative side, and I saw teaching, in part, as a way to express myself creatively. And I knowingly took a pay cut to do so.

So next time you read an article that “definitively” proves teachers are underpaid (or overpaid) remember this: We knew what we were getting into.

But having said all this, would I like to see teacher salaries increase? That depends. It will be the subject of my next piece.

Coming next: it’s time to remove the shackles of the salary matrix.
Posted by Steve Anderson on Monday, April 21, 2014
In January 2011, when I was first appointed State Budget Director, the state was on the verge of what appeared to be a financial meltdown. Under the previous administration, the first negative ending balance in state history had been allowed exist. Kansas was $27.6 million ‘in the hole’ and this headline was on the front page of the Wichita EagleShortfall for ’11 State Budget Tops $500 million." Much of the first six months was spent trying to not bounce checks and finding areas to cut spending immediately. We also spent considerable time giving agencies more flexibility to spend down unencumbered funds as agencies had previously been allowed to overspend available funding, a typical policy of Gov. Mark Parkinson and his Budget Director Duane Goosen.  However, even as I was using the power the Budget Director holds to operationally limit spending I realized the media’s claim of a $500 million shortfall was an exaggeration.  

At the end of the first six months Kansas had $188 million in the bank and within eighteen months the state ended FY-2012 with a $502.9 million ending balance. This would have been lost to citizens who weren’t doing their own research. They never would have known that the “budget” crisis had passed because the media had moved onto their next “crisis” without revisiting the initial headlines and, in the process, calling into question their first reports.  

The media’s next “crisis” was centered on the individual income tax cuts that were passed in 2012. The bill to reduce the tax burden on citizens “would slash income taxes and is expected to produce a $2 billion deficit within five years” according to the Wichita Eagle’s article. The Kansas City Star led with this quote of “state fiscal analysts projecting budget deficits reaching $2.5 billion in 2018." Just to further emphasize the dire situation the Star added this scare from a representative of a special interest group with no known expertise on the economic impact of lower tax burdens by saying that the tax cuts, “have an enormous impact on everything from public education to public health coverage to infrastructure to other vital social safety-net services.” 

Who are these “state fiscal analysts” that the media used to fan the flames and from where did this version of a looming fiscal crisis arise? The state fiscal analysts are staff of the Kansas Legislative Research Division (KLRD) which presents their projection of the impact on the state’s finances of any change in tax regulations. Here are the numbers from KLRD’s analysis of Senate Bill Substitute for House Bill 2117 - the tax cut bill – and the impact on the state’s budget:***



The approach used by KLRD to generate these numbers is not consistent with the realities of state finances. There are three fundamental problems with KLRD’s analytical techniques which create these illusions of fiscal crises where none exists. 
  1. It is impossible for the state to have a negative ending balance of this size because the state cannot print money (unlike Washington) which precludes the ability to carry such huge imbalances forward year after year. 
  2. The projection of spending growth the KLRD staff uses ignores the reality of the first issue.  Spending cannot continue at a rate that exceeds revenue once the first negative balance occurs. KLRD’s analysis ignores options to control spending that are available to the state’s elected officials and instead shows increasing negative balances. In reality, shortfalls, and surpluses, are dealt with each year through a multitude of available options.
  3. KLRD uses a static view of what will happen to revenues when money is returned to the state’s citizens. For example, the assumption is that if the Smith Family pays $100 less in taxes then Kansas will receive $100 less in revenue (same with a $500 million tax cut package). To believe that one of two things would have to happen, 1) either the money would be buried in a jar in the back yard, or 2) every dollar would have to be spent out of state. In reality, that $100 tax cut means that the Smith Family will reinvest some part of that money in their business and wage earners will spend some of it in the local economy.    

A more realistic view of Senate Bill Substitute for House Bill 2117 puts things in perspective. The following chart shows what has transpired, to date, based on the effects of the tax cuts. It is very good example of why citizens should take media accounts based on KLRD’s numbers with a full shaker of salt.  

Kansas Division of the Budget

 

Actual

Actual

Actual to Date

 

FY 2012

FY 2013

FY 2014

Beginning Balance

$    188.3

$    502.9

$    709.3

Revenues

$ 6,412.7

$ 6,341.2

$ 5,846.8

Excess Revenue over Estimates

$         ---

$         ---

$    140.7

Total Available Revenue

$ 6,601.0

$ 6,844.1

$ 6,696.8

 

Total Expenditures

$ 6,098.1

$ 6,134.8

$ 6,025.6

Ending Balance

$    502.9

$    709.3

$    671.2

The net difference between KRLD’s ending balance and what the current actual receipts show is $913.4 million. The crisis of the “enormous impact on everything from public education to public health coverage to infrastructure to other vital social safety-net services” that the Kansas City Star’s ‘expert’ on the tax cuts predicted hasn’t occurred. But, we have not yet heard the Eagle or the Star report these facts.

Kansans simply haven’t heard that, after returning $231.2 million to taxpayers in FY-2013 and ANOTHER $802.8 million in FY-2014, ending balances were actually up nearly a billion dollars over the estimates! Estimates that directly led to some dire headlines upon their initial release. Returning nearly a billion dollars to Kansans’ pocket books while ending balances have been steady or increasing is an incredible story of success that media would want to share with readers.

Citizens of Kansas have a right to hear forecasts of disasters but they also deserve to be told by those same media outlets that those forecasts didn’t match what actually took place and that things are going well. Citizen should insist that their legislators request that KLRD begin a policy of only producing projections for a reasonable number of future years based on the realities of the Kansas Constitution. This would limit the use of statistically flawed data being used to fuel for the fire of those who are playing politics under the guise of “news reporting.”

I will follow up shortly with part two of this story on where the state’s finances are headed including commentary and possible adjustments to April 2014 Consensus Revenue Estimates.    

*** Kansas Legislative Research Division Senate Tax Plan with Adjusted Severance Tax Receipts 2/15/2012 -  full version on file.   Expenditures and Revenues Totaled in order to fit the page

Posted by David Dorsey on Friday, April 18, 2014

If the legislative session had a theme regarding education policy, it would be the title of Dr. Leo Marvin’s book Baby Steps from the movie What About Bob?. Because even though great strides at improving education fell short, at least it’s a beginning.

The lawmakers in Topeka wrapped up a lengthy, contentious weekend session last week, but then again,  aren’t all marathon sessions led by the sleep-deprived contentious? The highest profile, most controversial piece of legislation to move on to the Governor is House Bill 2506, a law that contains several education policy provisions.  The most controversial section is the provision that, in some cases, allows school districts to more easily terminate teachers.  This, of course, got KNEA to rally teachers to the statehouse. At least the legislature got their attention. Typically, teachers are about as interested in the legislative session as casual fans are interested in college basketball after their March Madness brackets go bust.

The irony is, regardless of the ballyhoo raised by KNEA and the gauntlet of teachers lining the hallways of the capitol clad in their red unification t-shirts, most of us good, enlightened teachers are also opposed to teacher tenure. And many I know would be tougher on incompetent teachers than this new legislation allows. Believe me, there is nothing more frustrating and indefensible as watching groups of students, year in and year out, being deprived of a solid education because of a weak teacher. This is especially true for those teachers who inherit the students the following year. It’s one of the reasons I don’t belong to the union. It expends too much energy shielding incompetent teachers. So, in my opinion, the teacher tenure provision of House Bill 2506 is a good start.

There are a few other sections of the bill worth noting. One is the alternate teacher licensure provision that will allow some to qualify to teach without going through a traditional licensure program. This is targeted to math and science in the middle and high schools. In its current form, it won’t have much of an impact on alternate licensure at a macro level, but it is a step in the right direction toward getting additional qualified people in the teaching profession.

Another proviso that made the final cut is the creation of a tax credit for corporations to give scholarships to at-risk students from low achieving public schools to attend private schools. This means some families will have a choice to leave low performing schools.  Full disclosure here, I am finishing my teaching career at one of those schools and I welcome the opportunity for some of our students to get a better chance. I would have liked to have seen even more students and families get the opportunity, but maybe next session.

After all, “baby steps,” right?


Posted by Dave Trabert on Tuesday, April 15, 2014

The 2014 edition of Rich States, Poor States released today ranks Kansas at #15 for Economic Outlook and #32 for Economic Performance.  Economic Outlook is a forward-looking forecast based on each state’s standing in 15 important state policy variables, whereas Economic Performance is a ten-year backward-looking measure of performance.  The variables and rankings for each are shown at the bottom of this report.

The #15 rank in Economic Outlook is Kansas’ second-best in the seven-year history of Rich States, Poor States.  Kansas was ranked #11 last year.  Less-competitive positions on the top marginal corporate tax rate, personal income tax progressivity, sales tax burden and recently legislated tax changes led to the decline.  In each case, Kansas has the same or better data than last year but improvements by other states caused the decline in rankings.

The #32 rank in Economic Performance is Kansas’ best.  As shown in the ten-year history below, sub-standard performance in 2003 through 2005 creates a very negative drag on historic performance in state GDP, domestic migration and non-farm payroll employment.


 

The ALEC-Laffer Economic Competitive Index is published by the American Legislative Exchange Council.  Dr. Art Laffer, Heritage Chief Economist Stephen Moore and ALEC’s Jonathan Williams are the authors. 

P.S. Jonathan Williams is also an Adjunct Fiscal Policy Fellow at Kansas Policy Institute and Steve Moore has spoken at several KPI events.  We’re proud of our association with both gentlemen. 


 

Posted by Dave Trabert on Tuesday, April 08, 2014

Two Kansas school superintendents today asked the State Board of Education to approve their applications to become Innovative School Districts.  According to a report in the Topeka Capital-JournalMcPherson superintendent Randy Watson and Concordia superintendent Bev Mortimer want to take advantage of legislation passed last year to improve educational offerings.  

"We want to focus on students, and we want to focus on collaboration,” Watson said, adding that concern about the new law is understandable, but ultimately it holds the potential to improve schools. 

The story says board members Ken Willard and Steve Roberts voiced strong support. Willard said the state board hadn’t moved fast enough to fix cumbersome regulations, such as certain teacher licensure rules, and the innovative districts program would finally give schools more flexibility.

"These issues of more freedom to innovate have been before us for the 12 years I've been here," he said. 

But CJ reports that five board members expressed skepticism.  One board member, Sally Cauble, perhaps unintentionally got to the root of the issue.  "“I feel a little slapped in the face,” she said. “I'm not going to give up what I was voted in to do.”

And there you have it.  As I've said here many times, one of the primary problems with public education is that it's all about money and politics.  Institutional demands take priority over student needs.

Read the story.  Of all the objections posed by state board of education members, not one was about students.  Just turf.

Posted by Dave Trabert on Thursday, April 03, 2014

Senator Steve Abrams introduced an elegant resolution for the equity issues related to the Gannon school finance case this week.  The State could fully fund equity without making any changes to the school finance formula and also not have to spend any ‘new’ money.  Now that’s eating your cake and having it, too!

The plan is to use a portion of school districts’ unencumbered cash balances – representing state and local taxes that districts received in prior years but didn’t spend – as additional ‘local effort’ that is deducted from next year’s state aid.  This concept is already applied to any remaining balance in districts’ general fund; and it also applied to a few other funds until 2005.  Senator Abrams’ plan, however, would only count the amount by which each of twelve specific funds increased between July 1, 2005 and July 1, 2013.

Three years ago, the Kansas Department of Education determined that balances in the funds under consideration can be transferred to districts’ general fund as described in SB 111.  These ‘SB 111’ funds are At Risk pre-school, At Risk K-12, Bilingual, Virtual, Driver Training, Professional Training, Parents-As-Teachers, Summer School, Special Education, Vocational Education, Textbooks & Materials and Contingency.  Only one-third of the Special Education balance can be transferred.

Senator Abrams excluded districts from his analysis that were newly created through consolidation since 2005, as those districts had no beginning balance and would therefore lose all of their money otherwise.  As shown in the adjacent table, this concept would make at least $141.8 million available and as much as $258.5 million, depending upon whether Contingency increases are included and whether the base year is 2005 or 2006.  Schedules showing the impact by district for each year are here and here.  Total carryover operating cash remaining will still be substantial under any scenario.

If a school district doesn’t spend all of the aid received in one year, it makes perfect sense to reduce the following year’s aid by the amount not spent, especially if Contingency funds are excluded from consideration.  School districts are not bashful about saying they want more money, and there is no record of a district saying they didn’t have enough carryover cash in 2005…or 2006…or 2007…or 2008.  In fact, unencumbered cash balances weren’t even an issue until we discovered the existence of large carryover balances in 2009.  At that point, cash balances in districts’ operating funds had grown from $458 million in 2005 to $699 million; the total continued to grow and reached $888 million as of July 1, 2013.

Senator Abrams’ plan is exactly the type of thinking needed in Topeka, but his amendment lost on a 6-5 vote in Ways & Means. It could still be offered as a floor amendment in the House or the Senate and it will be interesting to see if this bold, taxpayer-focused idea sees new life.

Posted by James Franko on Wednesday, April 02, 2014
Yesterday will likely be remembered as a sad day for parents and kids seeking more educational choice in Kansas. Two proposals in the House Appropriations Committee died a quiet death; the committee was considering their funding “fix” to the recently decided Gannon lawsuit and the choice pieces were offered as amendments to the larger package.

However, while proponents of choice were gnashing their teeth in the House, the Senate Ways and Means Committee (working on their response to Gannon) added a property tax credit for private and homeschoolers. The concept of a tax credit for private school education has been implemented around the country but the idea of extending a credit to property taxes is new. As it stands right now, the Senate provision is a good step but it may be fleeting (fleeting defined here about halfway down the page).

But, why choice? Why not spend more money on public schools?

Well, too many kids are being left behind in the current system (starting at slide 25). Low-income and minority students consistently, and tragically, lag behind their higher income and white counterparts on state, national, college prep., and just about any other test you can name. This stubborn fact remains the case despite billions more being dumped into educational programs aimed at these very same populations. More here, here, and here.

By whatever form, school choice would provide an escape valve for students who can’t find the right fit in their zip-code-directed school. It places the focus on each student’s individual need rather than creating a system that forces each child in a specified slot…a slot determined by where that child happens to live.

The Senate property tax credit gives property owners (e.g. homeowners) a $1,000 credit on their property taxes if they document to the county that their child(ren) attend a private school or are homeschooled. It is capped at $2,500 per family (2.5 kids worth of credits) and only applies if ALL children in the home don’t attend a public school. This is a step in the right direction of providing relief to families whose kids need a different educational opportunity.

Back to the House, a public charter school program that was based on best practices from around the country failed to win enough support to be considered by the full chamber. A corporate tax credit scholarship program faced a similarly gruesome end shortly thereafter. Both of these programs would have been targeted to students in the lowest performing schools in the state (Title 1 Focus and/or Priority), as defined by KSDE, and low income kids. By way of reminder, just the sorts of kids who are being left behind their counterparts as mentioned above.

In the event anyone needed it, the past month has been a stark reminder that Kansas runs our school system as just that – a system. A system that demands for the individualized needs of each child to be subordinated to the needs of adults and their institutions.


Posted by Patrick Parkes on Tuesday, April 01, 2014
KPI has just released a “2014 County Property Tax Survey.” This survey has been e-mailed to county officials throughout Kansas. These individuals represent a broad cross-section of multiple officials in each Kansas county (i.e. treasurers, commissioners, clerks, and managers) to ensure widespread availability and awareness surrounding the survey. The survey’s purpose is to determine how individual counties altered property taxes in 2013.  There has been much speculation in the media and elsewhere regarding these changes and the underlying reasons for them but few verifiable facts.  According to data from the Kansas Department of Revenue, the average property tax increase for 2013 was 3.4 percent. Eighty five counties increased their property taxes in 2013 while only 20 counties instituted property tax decreases. Click here to view the survey and its contents in hard copy.
Posted by Dave Trabert on Friday, March 28, 2014

I’d like to clarify a few things I meant in a recent commentary about resolving the equity issues in the Supreme Court ruling on Gannon v. State of Kansas.   Here’s the part that has apparently caused some misunderstanding, which is my fault for not being more specific.

“The equity issues should be swiftly and cleanly resolved.  (We encourage legislators to avoid temptation to ‘tinker’ with the current formula to find the equity money, even though the Supreme Court says that that is one option available.)”

This statement was not intended to imply that Kansas Policy Institute supports spending ‘new’ money to resolve the equity issues.  Spending more money is one way of resolving equity, but the source of that money can be found in a variety of places in the state general fund- including within the education budget.  So even if the Legislature chooses to put ‘new’ money into equity, we encourage the Legislature to make other changes so that total spending does not increase by the same (or any) amount.

I should also have been more specific in encouraging legislators not to ‘tinker’ with the formula.  We do not believe that one aspect of funding should be arbitrarily reduced simply to make more money available to fund equity, but my use of ‘tinker’ was not intended to imply that no education funding adjustments should be considered.

For example, transportation weighting has been over-funded for several years due to a mathematical error discovered by Legislative Post Audit; correcting that error is an appropriate action to take.  It would also be quite appropriate to make education funding adjustments based on a determination that more funding is being provided in an area than is needed.  These are just two examples.  Such adjustments are entirely different from an arbitrary change for no purpose other than to reduce funding in one area simply to raise it in another (i.e., satisfy the equity piece).

The main point of the original commentary was that the equity issues should be quickly dispatched because there is an enormous amount of work that must be done on determining adequacy.  School administrators and their lawyers insist that school districts are underfunded even though funding continues to set new records,  districts have not spent all of the money they received in prior years and no funding decisions in the courts or the Legislature have ever been predicated upon efficient use of taxpayer money.  Unfortunately, I added some confusion in my haste to move forward and for that, I apologize. 

Posted by James Franko on Thursday, March 27, 2014
This post is a reprint of an e-mail sent to members of the legislature by Dr. Bart Goering of USD 230 - Spring Hill (Johnson and Miami counties). It is republished with the author's permission.

Representatives and Senators of Kansas,

I know you are extremely busy, however, the reduction in funding for virtual school students that is being discussed would have a catastrophic impact on many students across the state. KSVA/Insight is a virtual public charter school under the Spring Hill Board of Education that has offered a choice to thousands of students over the last seven years. The last four years we have partnered with K-12 to provide an excellent educational option to families across Kansas. Below are some real life situations where parents and students chose our school.

Numerous students are here because they faced ridicule in their local schools, for whatever reason, which was distracting from their education and damaging their spirits. At KSVA and Insight they are able to receive a great education in a comfortable environment.

A senior this year was hospitalized in the fall and had emergency surgery. We (teachers and administration) were able to work with the facility, the student, and her parents to allow her to continue schooling as her health allowed and she was able to complete graduation requirements at the end of the fall semester. Her parents sent this note: “We just wanted to send you and [student’s] teachers a huge thank you for all you have done for her over the last two years. We appreciate all the support, patience, and understanding and the ways you made it possible for [student] to graduate. Blessings!”

We have had students who play sports/are involved in outside activities at high levels. If not for an online option, these students would most likely not have been able to graduate from high school and continue in their sports/activities. They would have had to choose one, at least for the time being, but because they had options, they could do both and be successful.

We recently had a family join us at KSVA because they’d heard about us from another KSVA family. Their student was being bullied at the local school and they needed to get her in a safer environment. The LC reports her student loves schooling with KSVA and she cannot get her off the computer. J LC emailed, “We want to preregister [student]. She’s loving this we will be re-upping every year until she graduates!”

There was a family this year which began the year with two students at KSVA. They loved the program so much, they enrolled their older students at Insight later in the year because their local school was too big and not a comfortable environment for their students to school.

An Insight student decided to return to her local school in fall 2013. However, soon became overcome with anxiety and was missing many school days to the point she was facing truancy. LC transferred student to Insight in the fall semester and student has been attending classes and has not had to deal with anxiety in regards to schooling.

Reducing the virtual school funding could force programs to close. This would actually cost the state more money because Kansas spends an average of $5,500 per virtual student and $12,885 per brick and mortar student. Virtual schools save the State of Kansas over $50,000,000 annually (click here for details).

We are providing an actual school with curricular and co-curricular activities, advanced placement classes, counselors, advisers, and top flight Kansas certified teachers who have high expectations regarding student success. This is far different than providing one class to a student to supplement their education (click here for details).

Thanks for your consideration and all you do for our great state, Bart Goering

Posted by Dave Trabert on Wednesday, March 26, 2014

There are rumors going around the statehouse in Topeka that funding for online education may be reduced to pay part of the cost of fulfilling the equity provisions of the Gannon court ruling.  The hall talk we’ve heard is that online schools are funded at a little over $5,000 per-pupil but only cost about $2,000 per-pupil to operate, so it would seem that funding could be reduced without impacting service.   But whoever is telling legislators that online schools only cost $2,000 per-pupil to operate is either misinformed or being deliberately deceptive.

The $2,000 figure comes from multiplying the $350 cost of a single course times six.  (Some courses cost closer to $500.)  But that is only the cost of courses…there are other costs associated with operating an online (also called ‘virtual’) school.  Virtual schools must also hire teachers and purchase computers and other supplies; there are also some non-instruction costs of operating these schools.  The all-in cost of operating these schools is actually between $5,000 and $6,000 per-pupil.  By comparison, the Kansas Department of Education estimates average spending for traditional public schools this year at $12,885 per-pupil. 

Cutting funding for virtual schools could seriously jeopardize their existence (one must wonder if this is the real motive of those encouraging legislators to cut funding for virtual schools).  Online schools are the only school choice option available to Kansas parents and it would be a tragedy to take this option away from families.

And if online schools are forced to close, legislators could end up spending even more than would be saved by cutting funding for virtual education.  Many students who would be forced back into the traditional public school may qualify for many more school funding weightings; basically, these students may be worth more money to school districts in the traditional setting than in on online school.

The legislators I’ve spoken to have no interest in shutting down virtual schools.  They are only looking for ways to save money.  Fortunately, there are a great many options to do so without disrupting quality. 

Kansas parents need more school choice options.  We cannot allow their only current option to be shut down.

Posted by Dave Trabert on Tuesday, March 25, 2014

No, I’m not talking about any federal tax subsidies or mandates to buy high-cost wind energy that have forced higher taxes and electricity prices on every citizen.  This billion-dollar gift comes in the form of local property tax exemptions.  In some ways, this handout is even more insidious because the cost is borne by a relatively small number of Kansas homeowners and employers in the rural counties where wind farms exist.

Under current law, renewable energy producers enjoy a lifetime exemption from property taxes in Kansas.  I testified last week in support of SB 435 to limit their property tax exemption to ten years.  As shown on an attachment to my testimony, the Kansas Legislative Research Department says there is a $108.4 million annual difference between the small fees paid in lieu of taxes and the taxes that would be due if taxed at the regular rates within each county.  So technically, the legislation would only ‘limit’ the property tax gift to $1.1 billion over ten years on existing wind farms; more tax gifts would still be done on new wind farms and other renewable energy facilities. 

And while renewable energy producers were basically getting a free ride, property taxes on everyone else where going through the roof!  

Giving property tax exemptions to private companies, regardless of the rationale, only increases everyone else’s property tax.  Local government spending is not curtailed to absorb the exemption; cities and counties just raise taxes on everyone else.  We encouraged the Legislature to also require that local mill rates be reduced proportionately if these property tax gifts are limited to ten years so that the new revenue from renewable energy producers’ property tax is used to reduce the burden on everyone else.  (You should have seen the stink-eye this produced from the tax-and-spend crowd.)

Predictably, wind farm lobbyists lined up to protest that this legislation would increase their property taxes and send a bad message to the wind industry.  Even local governments are opposed to taking away the exemption – after all, they can get their money from everyone else and take credit for bringing jobs and investment to their communities.  They refuse to acknowledge that any economic benefit enjoyed by the green energy industry (and their own political benefit) comes out of the pockets of everyone else.

P.S. Remember this billion-dollar gift the next time you’re angered by cronyism in Washington, DC.  Bad players in Washington often learn their craft at the state level; fending off bad policy at the state level has many long term benefits.