This post is courtesy of Cato Health Policy Director Michael Cannon and the Cato Institute's @ Liberty Blog

Today, the nation’s top health economists released a study that throws a huge “STOP” sign in front of ObamaCare’s Medicaid expansion.

The Oregon Health Insurance Experiment, or OHIE, may be the most important study ever conducted on health insurance. Oregon officials randomly assigned thousands of low-income Medicaid applicants – basically, the most vulnerable portion of the group that would receive coverage under ObamaCare’s Medicaid expansion – either to receive Medicaid coverage, or nothing. Health economists then compared the people who got Medicaid to the people who didn’t. The OHIE is the only randomized, controlled study ever conducted on the effects of having health insurance versus no health insurance. Randomized, controlled studies are the gold standard of such research.

Consistent with lackluster results from the first year, the OHIE’s second-year results found no evidence that Medicaid improves the physical health of enrollees. There were some modest improvements in depression and financial strain–but it is likely those gains could be achieved at a much lower cost than through an extremely expensive program like Medicaid. Here are the study’s results and conclusions:

We found no significant effect of Medicaid coverage on the prevalence or diagnosis of hypertension or high cholesterol levels or on the use of medication for these conditions. Medicaid coverage significantly increased the probability of a diagnosis of diabetes and the use of diabetes medication, but we observed no significant effect on average glycated hemoglobin levels or on the percentage of participants with levels of 6.5% or higher. Medicaid coverage decreased the probability of a positive screening for depression [by 30 percent], increased the use of many preventive services, and nearly eliminated catastrophic out-of-pocket medical expenditures… This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

As one of the study’s authors explained to me, it did not find any effect on mortality because the sample size is too small. Mortality rates among the targeted population – able-bodied adults 19-64 below 100 percent of poverty who aren’t already eligible for government health insurance programs – are already very low. So even if expanding Medicaid reduces mortality among this group, and there is ample room for doubt, the effect would be so small that this study would be unable to detect it. That too is reason not to implement the Medicaid expansion. This is not a population that is going to start dying in droves if states decline to participate.

There is no way to spin these results as anything but a rebuke to those who are pushing states to expand Medicaid. The Obama administration has been trying to convince states to throw more than a trillion additional taxpayer dollars at Medicaid by participating in the expansion, when the best-designed research available cannot find any evidence that it improves the physical health of enrollees. The OHIE even studied the most vulnerable part of the Medicaid-expansion population – those below 100 percent of the federal poverty level – yet still found no improvements in physical health.

If Medicaid partisans are still determined to do something, the only responsible route is to launch similar experiments in other states, with an even larger sample size, to determine if there is anything the OHIE might have missed. Or they could design smaller, lower-cost, more targeted efforts to reduce depression and financial strain among the poor. (I propose deregulating health care.) This study shows there is absolutely no warrant to expand Medicaid at all.

In today’s Wall Street Journal, Christina Corieri describes how not expanding Medicaid will benefit the country and each state.

As the battle over Medicaid expansion rages in the states, supporters of expansion have dusted off an age-old favorite in making the case for taking federal dollars. They say: If our state doesn't take the money, those dollars will go to some other state instead. Happily, in this instance that is not true. When a state declines to expand Medicaid coverage to more people, no other state will receive its share of funds and federal spending declines. Based on figures from the Congressional Budget Office and analysis by the Kaiser Family Foundation, Washington was expected to spend roughly $950 billion expanding Medicaid between 2014 and 2022. Each state that declines to expand Medicaid relieves strain on the overall federal budget for this entitlement.

It’s no drop in the bucket either:

Using figures compiled by Kaiser and our own research at the state level, the Goldwater Institute estimates that the federal tab for Medicaid expansion has been reduced by more than $424 billion in new federal spending over the next eight years thanks to the 18 states that have already opted out. If the 12 still-undecided states also decide to opt out, there will be an additional $185 billion in savings.

According to Christina, Kansas' share of that savings is $6,696,000,000.

It’s also very likely current cost projections are understated:

In addition to protecting the federal budget, states that decline to expand their Medicaid coverage will protect their own budgets as well. States such as Arizona that voluntarily expanded their Medicaid programs in the past have faced much higher costs than expected. In 2005 alone, the program originally was projected to cost Arizona $315 million, but the actual cost that year was over $1.3 billion.

Lest we not forget the federal government’s track record on keeping promises:

States would be wise to remember that those who rely on assurances of federal dollars are often chasing fool's gold. A recent example is the Individuals with Disabilities Education Act, where Congress promised federal funding to the tune of 40% of program costs after 1982 but today funds only 17%.

The 2012 Workforce Development Report published by the Department of Administration shows that state-funded universities in Kansas have thousands more employees than the number of full time equivalent (FTE) employees authorized by the Kansas Legislature.  Even if this creates no statutory or budgetary issues, it certainly raises a number of transparency issues.  

Why isn't every position budgeted...and is this unique to universities or more widespread?  Do members of the Board of Regents know the exact employment level of each university (they certainly wouldn't know from the Databooks)?  Legislators and citizens should not be expected to piece together data from multiple reports to know how employees they are funding. 

The people whose job is to give money to corporations in return for promised new investment and jobs say that they give too much in too many deals, affirming what critics have been saying for a long time ~ “Giving Too Much With Too Little Scrutiny” (subscription required).

60.4% of the IEDC’s survey respondents feel there should be more transparency in financial incentive negotiations and 57% reported there are too many incentive deals in the U.S. It’s no surprise, considering state and local corporate giveaways top $80 billion each year, Kansas doles out over $1 billion. 

Images courtesy of Tax Analysts

Here's a little perspective on the current debate over state funding of Kansas universities.  The Senate is proposing a 2% reduction in state aid and the House is proposing a 4% reduction as part of the 2014-15 budget negotiations.  But reducing state aid by 2% or 4% is not the same as reducing universities' revenue by those percentages; universities also collect tuition, fees and have other income that supports their General Use Operating Expenditures.

State aid to universities (including the University of Kansas Med Center and the K-State Veterinary School) accounted for 48% of General Use Expenditures in 2012.  For the  sake of simplicity, let's say that state aid is half of General Use expenditures.

The impact on university expenditures of a reduction in state aid is therefore about half.  A 4% reduction in state aid would require a 2% reduction in expenditures; a 2% reduction in state aid would require a 1% reduction in expenditures.  

That assumes, of course, that universities would respond to a reduction in state aid by reducing expenditures.  As explained in our recent analysis, universities have a number of options to deal with potential changes in state aid without increasing tuition.

In the The Righteous Mind: Why Good People Differ on Politics and Religion, renowned psychologist Jonathan Haidt describes how the human mind is dual in nature: we live most of our lives in the ordinary world, but we achieve our greatest joys in those brief moments of transit to the sacred world, in which we become “simply a part of a whole.” 

A recent survey by the City of Wichita capitalized on this innate human tendency by equating community with government.  Our natural desire to become “simply a part of a whole” manifests itself in our jobs, churches, softball leagues, clubs, dinner parties and recently pride in WSU’s success in the NCAA tournament. Our citizenship in Wichita is one of many communities that define us as individuals, one of many communities we make sacrifices for, one of many communities we call upon to solve problems.

The survey respondents provide a list of wishes, all with the goal of improving our lives, many of which can and should be provided by city and county governments. Allowing businesses to openly compete to build water and street infrastructure, with competitive bidding for contracts, would strengthen the community by precluding any unfairness that weakens trust in the city.

Survey respondents showed a plea for business formation and young talent. The city could promote a sense of community by creating a welcoming culture for all businesses, one that does not pick favorites. 71.8% of respondents do not have faith that most people are willing to put community interests above personal interest—perhaps because so often city hall is called upon to hand out special tax treatment.

The survey also tries to identify challenges to the community; respondents were asked one question about Boeing and two questions about political divisions. Overwhelmingly respondents believe political divisions are negatively impacting our community’s ability to respond to global challenges.

In order to inform the debate KPI used the Beacon Hill Institute’s STAMP model to estimate the effects of making permanent Kansas’ once-temporary 6.3% sales tax. The STAMP model projects how the sales tax extension will affect economic and fiscal barriers relative to the baseline growth 

Further, any revenue gains from a higher sales tax rate would be partially offset by declining revenue elsewhere. Weakened job and income growth will cause nearly $40 million in reduced growth in personal income tax receipts each year through 2018. Growth in local sales and property tax collections will be $52.7 million lower in 2014 and $62.65 in 2018. According to the model the net tax revenue gain for state and local would be $125.04 million in fiscal year 2013 and $140.14 million in fiscal year 2018.

(Click image to enlarge)

While a sales tax increase is not as damaging as an increase in personal income taxes, any higher tax is associated with diminished economic growth. As Tax Foundation Chief Economist, Dr. William McBride, finds in his review of the academic literature: 

While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.

 

All the blood, sweat and tears you have poured into your job thus far this year went straight to Uncle Sam but you made it! April 9th is Kansas' 2013 Tax Freedom Day; from here on out the dollars you earn will be yours.

Each year the Tax Foundation calculates Tax Freedom Day, for the country and the each of the 50 states. The national average was April 18th, five days later than last year. Kansas' Tax Freedom Day arrived 6 days earlier than in 2012, thanks to last year’s income tax cuts. In spite of Kansas’ improvement our neighbors to the east and south still enjoy an earlier Tax Freedom Day.

 

 

 

This is a post by KPI Adjunct Fiscal Policy Fellow Barry Poulson, Ph.D.; Poulson is also Emeritus Professor at the University of Colorado - Boulder.

Public officials in Kansas have proposed using pension obligation bonds to solve the funding crisis in the Kansas Public Employee Pension System (KPERS). In my view this is not a solution to the funding problem and I will discuss what I perceive to be flaws in this proposal.

The rationale for using pension obligation bonds to pay off unfunded liabilities in the pension plan assumes that the state can borrow funds at a low interest rate and then earn a higher rate of return on the proceeds deposited with the pension fund. The flaw in this rationale is the assumption that KPERS will earn a higher rate of return on bond proceeds deposited in the KPERS fund. KPERS assumes an 8 percent return on assets accumulated in the fund. For a number of years, economists and actuaries have questioned this assumed rate of return and the use of this assumed rate to discount liabilities in the plan. The Government Accounting Standards Board has issued new standards, 67 and 68, to be implemented over the next two years, requiring state and local governments to use a lower interest rate, the mortgage bond rate, to discount liabilities in their financial statements.

If we assume that a lower rate of interest, such as the municipal bond rate, is the interest rate relevant in discounting unfunded liabilities in the pension plan then it is not clear that issuing pension obligation bonds will generate returns above the interest cost on those bonds. If the returns fall below the interest cost on the bonds then this introduces an additional risk and could in fact exacerbate the funding problem in KPERS.

A major flaw in the proposed issuance of pension obligation bonds is the lack of nexus between the investment of the bond proceeds and payments for unfunded liabilities in the plan. The experience in other states is that sometimes bond proceeds are earmarked for other state expenditures. The most egregious example of this problem is the state of Illinois which issued $10 billion in pension obligation bonds and then used the proceeds to meet current expenditures rather than to pay off unfunded liabilities in the pension plan.

Even if the state of Kansas would not commit this form of fraud on the taxpayers the fungible nature of state funding makes it impossible to guarantee the nexus between bond proceeds and the payment for unfunded liabilities in the pension plan. If legislators see that additional funds are available to pay off unfunded liabilities in the pension plan they may choose to allocate less general fund money to meet these pension obligations. The state has not allocated the annual required contribution (ARC) to KPERS for several decades and is not projected to do so for the foreseeable future. Legislators continue to promise pension benefits without allocating the funds required to meet these obligations. We should expect this moral hazard to be even greater with the issuance of pension obligation bonds.

Even if the proceeds of pension obligation bonds could be set aside in a lock box and earmarked to pay off unfunded liabilities in the pension plan the state must still address the accumulation of unfunded liabilities in the defined benefit plan. Without fundamental structural change, including shifting public employees to some form of defined contribution pension plan, these unfunded liabilities will continue to accumulate. Legislators should not be diverted from this difficult task by non-reforms, such as the issuance of pension obligation bonds.

Shifting the cost of pension obligations from one generation of employees and taxpayers to the next generation is not a solution to the funding crisis in KPERS. The defined benefit plan offered by KPERS is not sustainable.

I analyze the sources of unfunded liabilities in the plan and explore alternative reforms to solve this problem in an upcoming paper with KPI.

Some of my other work for KPI on KPERS is here and a legal analysis of what can, and cannot, be changed in KPERS is here; the latter piece was done by another scholar.

The New York Times reports:

A growing number of lawmakers across the country are taking steps to redefine public education, shifting the debate from the classroom to the pocketbook. Instead of simply financing a traditional system of neighborhood schools, legislators and some governors are headed toward funneling public money directly to families, who would be free to choose the kind of schooling they believe is best for their children, be it public, charter, private, religious, online or at home.

The article goes on to tell the story of Nydia Salazar:

Some parents of modest means are surprised to discover that the education savings accounts put private school within reach. When Nydia Salazar first dreamed of attending St. Mary’s Catholic High School in Phoenix, for example, her mother, Maria Salazar, a medical receptionist, figured there was no way she could afford it. The family had always struggled financially, and Nydia, 14, had always attended public school.  But then Ms. Salazar, 37, a single mother who holds two side jobs to make ends meet, heard of a scholarship fund that would allow her to use public dollars to pay the tuition. She is now trying to coax other parents into signing up for similar scholarships. “When I tell them about private school, they say I’m crazy,” she said. “They think that’s only for rich people.”

It is truly unfortunate that the Kansas House of Representatives recently refused to expand educational opportunities for Kansas families.

The Mercatus Center at George Mason University just released their 2013 Freedom in the 50 States report. The report, authored by Professors William Ruger and Jason Sorens, analyzes over 200 policy variables to score the level of freedom in each state. A dismal showing for Kansas, whose score has fallen 33.7 points since 2001 causing the state's rank to fall from 7th in 2001 to 26th in 2011. 

 

The increasingly high burden of government spending was the chief among the reasons for Kansas tumble:

Fiscal policy is the dimension in which Kansas does worst. Its public payroll is extremely large, at 15.8 percent of the private workforce. Taxes are about average, but the debt burden is very high: 26.2 percent of income. The areas of spending that could most stand to be cut are education, hospitals, and highways, while the taxes that should have priority for cutting are individual and business income, sales, and property taxes. In fact, since the closing date for this study, Kansas has cut income taxes and the overall tax burden significantly.

The public employee largess, a product of an archaic county boundary system, has been a constant source of higher government spending. Debt will only worsen as $1.5 billion in pension obligation bonds are likely to be issued. In spite of these negatives the study's author had praise for Kansas and expects to see Kansas jump in the next edition:

The $800 million tax cut in 2012 would alone raise Kansas from #26 to #12 on overall freedom if all other states remained exactly the same. Trimming government debt, consumption, and employment to national averages would raise the state one more notch, to #11. ~ Jason Sorens, author of Freedom in the 50 States

Pair the 2012 tax cuts with the study's other recommendations and Kansas has the potential to be the freest state in the country. Regrettably, Kansas had the opportunity to provide tax credits for private school tuition, further advancing freedom in Kansas, but failed to do so.

Bloomberg news reports:

Several states including California and Maryland raised taxes on high earners last year, and Congress boosted federal levies on them. Families who look to change their domicile to a state with no income taxes such as Florida or Nevada open themselves up to years of scrutiny and possible litigation as local governments search for revenue.  “I look at some of these domicile audits almost as an archeological dig and a full physical including MRIs and CAT scans,” said David Scott Sloan, a partner who advises high net worth families at Boston-based Holland & Knight LLP. “What we’re seeing at least in Massachusetts is the tax authorities are not going quietly into the night.”

It’s disturbing to see governments go to such lengths to extract wealth from hard working individuals. Luckily, in Kansas, moves have been made to slow the growth of spending and alleviate the burden of taxation.

A few newspapers argued a bill in the legislature seeking to clarify Kansas’ 2006 exemption of business machinery and equipment from tangible personal property taxes would aid businesses at the expense of citizens. The editorial writers failed to understand who actually bears the burden of this tax. Business machinery and equipment taxes are chiefly borne by both Kansas workers and consumers, through lower paying jobs and higher prices for goods.

By increasing the cost of machinery, the tax discourages investments in Kansas’ worker productivity – in turn hindering growth in wages. Because machinery and equipment is mobile, firms can shift production to lower tax districts, meaning less production and fewer jobs in Kansas.

Businesses that do locate in Kansas can clandestinely offload the tax onto consumers. The Tax Foundation explains:

[Tangible Personal Property] tax is a business expense that must be offset by business revenues in order for the business to be profitable. The tax therefore is at least partly passed on to consumers through higher product and service prices, but this additional cost cannot be shown on receipts, such as with a retail sales tax. As a result, the impact of these non-transparent TPP taxes is hidden to most consumers and an invisible issue to most voters.

The 2006 legislature and governor were wise to pass this pro-growth and common reform. Unfortunately there is some confusion as to what defines real property verse personal property. For instance, Legislative Post Audit reports heating, ventilation and air conditioning (HVAC) is considered real property in Anderson County while Phillips County considers HVAC to be personal property. 

Montgomery County saw property taxes spike after 2006 and found itself in court over the issue. Further clarifying this reform will ensure the playing field is not arbitrarily determined by county appraisers.

Here are the highlights for Kansas:

The debate about whether Kansas should expand Medicaid only now seems to be heating up and reaching the public consciousness (here and here). Better late than never, I guess.

Amidst this debate are different (competing?) studies of what it may cost to expand Medicaid. We released a study after the Affordable Care Act (aka Obamacare) was signed into law but before the U.S. Supreme Court determined the individual mandate was a tax and allowed states the choice of expanding Medicaid, the Kansas Health Institute released a study last December, and the Kansas Department of Health and Environment did likewise earlier this month.

The authors of those studies gathered last week to discuss their findings and compare methodologies, projections, etc. The event was sponsored by KPI and KHI and also included a representative from KDHE.

The best moment of the event  may have been when the author of our study, Jagadeesh Gokhale, Ph.D., offered his projection of what could happen when the ACA is fully implemented with a simple, "Utter chaos!"

Aside from that, there was a lot of discussion regarding how much of an impact the different health care/Medicaid cost-drivers would impact Medicaid costs for Kansas. Keep in mind there is the choice of expanding Medicaid and estimated increases now that most Kansans will be subject to the individual mandate...some people were eligible for Medicaid pre-ACA but didn't sign up while in the future they'll likely join Medicaid to avoid paying the tax, er, fine.

Jagadeesh has written a bit more about how he arrived at his estimate and how this was driven by historical cost increases - it will be published shortly in a follow-up analysis - but check out a sneak preview below.

In the meantime, it is important to examine any gov't program in light of the benefits AND costs. More people may have access to gov't-run health care in the form of Medicaid (if eligibility is expanded) but the costs are staggering - $4.1 billion in extra costs to Kansas under the ACA in the next 10 years and $625 million if the decision is made to expand. These issues must be viewed for their impact, not simply good intentions.

It should be noted that other private and public agencies have also estimated the financial impact of the Mandate Effect and Medicaid Expansion Effect on the Kansas General Budget. Examples are those by the Kansas Health Institute, the Lewin Group, Urban Institute, Center for Budget and Policy Priorities, and the Kansas Department of Health and Environment. Estimates for the number of currently eligible but not Medicaid-enrolled individuals range from 30,000 (Kansas Health Institute, December, 2012) to 162,000 (also KHI, December 2012, alternative study). The KPI estimate of this group of potential new enrollees into Medicaid is 102,000 individuals—well within the range of other estimates. In terms of new enrollments from Medicaid Expansion, most estimates fall within the range of 100,000 (Kansas Health Institute, December 2012) to 200,000 (Center for Budget and Policy Priorities, latest available but undated). The KPI study’s estimate of newly eligible enrollees is 130,000 by 2023, also well within the range of other estimates. However, the KPI study’s total annual dollar cost projections from the two effects of ACA are larger than those of other studies. The key reason for this is that other studies’ cost estimates are calibrated based on a per-person cost from a given year in the past; it is a global estimate—applied to all new enrollees regardless of their demographic (gender/age/income/health) attributes—and it is either kept constant or increased at a fixed, relatively low growth rate. The KPI study does not “flat-line” the cost per person to be used to calculate future expenditure increments from Mandate Effect or the Medicaid Expansion Effect. Rather, historical trends in Medicaid costs per person are (a) differentiated by demographic/age/income group and (b) future years’ costs are based on extrapolating the historical trend for each separate category of enrollees. This is a methodologically sounder approach to making projections of future Medicaid expenditure increments from the two types of new enrollees that the ACA’s individual mandate and Medicaid expansion (if adopted) would trigger. It’s key advantages are, first, the implicit assumption that the same forces that escalated (or reduced) costs per person for particular categories of enrollees in the past would continue to influence cost growth in the future. Second, those cost rates per enrollee are appropriately weighted by the trend-determined shares of future enrollees by demographic (gender/age/income/health) type. A brief perusal of the historical data suggests that per-person costs have been growing at a rapid rate in Kansas for most categories of enrollees. Non-incorporation of historical information on the rate of cost growth (assuming, instead, a lower cost rate per person) and not weighting the cost rate according to the size of the projected new-enrollee group by the other studies cited above is the most likely explanation of why those projections of future Kansas Medicaid expenditure increases from both types of new enrollees are considerably smaller than KPI’s projections.

During a life growing up in Kansas, and getting a public education’s worth of state history, I remember hearing somewhere that Kansas counties were carved up so a one day horse ride could get citizens to a county courthouse.  Those boundaries, some dating to 1855, still determine who will be providing fire, police, judicial, and other services to Kansas citizens to this day.  Because of the ancient county lines and numerous municipalities, Kansas has one general purpose government for every 1,445.1 residents, according to data from the Census Bureau.  Only the Dakotas have fewer residents per government entities.  

Kansas consistently performs poorly in tax rankings due to high property tax burdens.  The 2012 Tax Foundation study Location Matters, found Kansas has the 3rd highest tax burden for mature businesses and the 2nd highest tax burden for new businesses.  The study cited high property taxes for Kansas’ poor showing.  A 2011 study by the Minnesota Taxpayers Association found Iola, Kansas had the highest effective tax rate on rural commercial property taxes and the 2nd highest rural industrial property taxes of all the rural communities examined.

Over 150 years of innovation would now allow Kansas to redraw the map and take advantage of enormous economies of scale.  This doesn't necessarily mean the State should force consolidation. While that option is worthy of serious consideration, shared services or even unified governments (e.g. Wyandotte and Kansas City) offer ways to increase efficiency, lower the burden of government and make Kansas more competitive.

 

State		2012 Population		General Purpose Governments		Citizens Per General Purpose Government
North Dakota		699,628		1,724		405.8
South Dakota		833,354		1,284		649.0
Kansas		2,885,905		1,997		1,445.1
Nebraska		1,855,525		1,042		1,780.7
Minnesota		5,379,139		2,726		1,973.3
Vermont		626,011		294		2,129.3
Maine		1,329,192		504		2,637.3
Iowa		3,074,186		1,046		2,939.0
Wisconsin		5,726,398		1,922		2,979.4
Indiana		6,537,334		1,666		3,924.0
Missouri		6,021,988		1,381		4,360.6
Alaska		731,449		162		4,515.1
Illinois		12,875,255		2,831		4,548.0
Wyoming		576,412		122		4,724.7
Pennsylvania		12,763,536		2,627		4,858.6
Ohio		11,544,225		2,334		4,946.1
Arkansas		2,949,131		577		5,111.1
Michigan		9,883,360		1,856		5,325.1
New Hampshire		1,320,718		244		5,412.8
Montana		1,005,141		183		5,492.6
Oklahoma		3,814,820		667		5,719.4
West Virginia		1,855,413		287		6,464.9
Idaho		1,595,728		244		6,539.9
Mississippi		2,984,926		379		7,875.8
Kentucky		4,380,415		536		8,172.4
Alabama		4,822,023		528		9,132.6
Utah		2,855,287		274		10,420.8
New York		19,570,261		1,603		12,208.5
Louisiana		4,601,893		364		12,642.6
Oregon		3,899,353		277		14,077.1
Georgia		9,919,945		688		14,418.5
Tennessee		6,456,243		437		14,774.0
North Carolina		9,752,073		653		14,934.3
South Carolina		4,723,723		315		14,995.9
New Jersey		8,864,590		587		15,101.5
Delaware		917,092		60		15,284.9
New Mexico		2,085,538		136		15,334.8
Colorado		5,187,582		333		15,578.3
Texas		26,059,203		1,468		17,751.5
Massachusetts		6,646,144		356		18,668.9
Connecticut		3,590,347		179		20,057.8
Washington		6,897,012		320		21,553.2
Virginia		8,185,867		324		25,265.0
Rhode Island		1,050,292		39		26,930.6
Maryland		5,884,563		180		32,692.0
Florida		19,317,568		476		40,583.1
Arizona		6,553,255		106		61,823.2
California		38,041,430		539		70,577.8
Nevada		2,758,931		35		78,826.6
Hawaii		1,392,313		4		348,078.3
District of Columbia		632,323		1		632,323.0
Sources:
Population:		http://www.census.gov/popest/data/state/totals/2012/index.html
Governments:		http://www.census.gov/govs/go/

The following is a representative sample of recommendations submitted to the Governor's School Efficiency Task Force.  Submissions were made by school employees, parents and involved members of the community. The recommendations do not necessarily represent the views of Kansas Policy Institute.

Athletics

• The last priority in our district is educating kids. It’s all about sports and fun. Our scores are some of the worst in the state. When it comes to educating the kids, it’s nickel and dime. When it comes to sports, money is no object. 
• Focus the money on education and not on sports! Cut back on the types of sports. Leave most of the sports programs to the communities! Have intramural sports as part of Physical Education and improve those programs. The kids that need to move and exercise are not going out for sports. 
• No study of our school system’s inefficiencies can be complete without a top-to-bottom analysis of how sports programs have come to dominate our curriculum and spending priorities. Sports are the curriculum and school work is the extra-curricular activity. Last week in our school involved about 30 hours devoted to traveling or attending sporting events. In small schools, this effectively shuts down the school for up to half of the day on any day involving away games. This needs to be addressed at the state level so as to mandate limits on the number of games per week, per year, etc. A cost-benefit analysis should be completed regarding what is being spent on sports versus what our “payoff” is toward educating students. 
• When new funds became available after the lawsuit settlement some years ago, the local district spent a large amount of money to totally renew athletic facilities. The next two years, they added more sports programs. When funds were reduced the following year, the district discussed reducing spending on arts and music. No mention was ever made of cutting any of the new sports. 

Contracting/Purchasing

• Contrary to state law, our district does not seek competitive bids for capital projects. They have a standing agreement with professional firms that design facilities (such as libraries and schools). The district contends that these services do not require competitive bidding since the work is not part of a “capital project” but is instead a “professional service.” The district has on multiple occasions entered into lease-purchase agreements with a private developer absent competitive bidding. These contracts include construction of new buildings and a multi-school contract for expansions. 
• Roofing projects in Kansas should be open for alternate materials. In several districts, administrations use single source material suppliers masquerading as roofing consultants. 
• Our district remodeled a school for a large sum of money. The district now heats/cools the entire building for a single police officer because there are no students there anymore. 
• The district in my area conducts a mandatory spend-down every year on routine supplies (markers, erasers, pens, pencils, etc.). The justification? “If we don't spend it, we will lose the money.” 

Organization/ Logistics

• We have too many school districts with overlapping functions. This is partly due to having so many jurisdictions. Especially where school districts are close to each other, services and administration can be consolidated. This does not have to mean closing the schools—just sharing things like specialists, principles, and other administrative staff. 
• I feel that there are too many counties that have a number of small school districts. I feel that a county “central office” with a superintendent and district-level support personnel could save money. The various towns could still have their buildings with building-level personnel, but each district would not be top heavy with central office personnel. My small county is a perfect example of this inefficiency. There are too many school districts here! I was a teacher for 30 years teaching in 6 different districts, and I saw the same inefficiency in other counties. 
• Our school district has been very efficient with spending. When the cuts first began we had community meetings to lay out all the spending within the district. The pubic had the opportunity to prioritize areas of wasteful spending. Things that were cut/reduced/postponed from the budget were staff (teachers, aides, cooks, coaches, administrative assistants, etc.); supplemental contracts; purchasing of school vehicles, buses, and curriculum; salaries; 5 days from the school calendar; summer school weeks; after school at-risk programs; field trips; classroom supply spending; educational spending that wasn’t benefiting all students; building maintenance projects; utility costs; sports programs (changed to a pay-to-play activity where parents had to foot the total bill). 
• KSDE should consider a single statewide student information management system. Now, every district must submit data annually for funding. Those districts each are spending between $4.50 and $12.50+ annually for these SIS systems. Plus, KSDE is using another large database to collect all of the information sent by the districts. Several districts have employees dedicated all year or a large part of the year to accomplish the checking and uploading of information. Other states have proven that a single system provides the districts with a way to save by having the state pay for a single system and take that money out of the per student amount assigned to the district. Plus, KSDE could get information much more frequently than once a year. Statewide systems have proven to save money. The argument that the districts would not approve is no longer true as every district is looking to be more efficient and save money. 

Personal/Human Resources

• We now have two teacher leaders and one assessment manager. This used to be one job! Our district is very administrative-heavy, with little teacher support. Teachers have too many administrators that require extra reporting, email-answering, and additional duties! Cut these positions before cutting any classroom teachers. Some administrators leave at 3:30 or before every day. Most teachers have so much to do that they have to come in early and stay late just to stay afloat. Even the principal rarely works an 8-hour day! This lack of leadership (do as I say, but not as I do) hurts our school and causes a hostile environment for all. Our district is way too top-heavy. For example, we have an administrative employee of the district who stops in at our school to check in on his son, sit in with teachers, and offer advice. There are so many hard-working employees, but our principal (and teacher leader) do not lead by example, which is sad.
• Our district has maximized efficiency. We extended the school day by 30 minutes and shortened the school year by 14 days. We moved from two building-level media specialists to one district media specialist. We eliminated a maintenance staff position, a custodial staff position, and a food service staff position. We eliminated a rural bus route and after-school activity routes. We eliminated the in-town bus route. We reduced three counselor positions to two counselor positions. We moved from a block schedule to a traditional schedule. We blended middle school and high school. We have changed staffing, done fuel contracting (for our SPED cooperative), used TEEN video teaching network, changed SPED, reduced transportation, and optimized HVAC controls. We used EPM for business operations like payroll, leave, overtime, mandatory direct deposit, transportation, etc. We did an ESG feasibility study. We use ESSDACK for health insurance, PD, state bid list, etc. We also use paperless board meetings (via Blackboard).
• We are strongly encouraged to send our paperwork to the central office to be copied. This costs us time and we pay this person a full time wage to do something that most teachers would rather do ourselves. Vocational money is also not spent on classroom/supplies/field trips but is mostly spent on salaries.
• Administrators do not make teachers modify, take attendance, do their jobs, etc. Then they turn around and put more students in the good teacher’s class, therefore making her job harder. Let’s start having the same expectations for all teachers. Administrators need to speak up and start holding all teachers to the same standard. I'm also tired of coaches coming in for sports—they should be teachers first, coaches second. 

Tax Myths Debunked, a rigorous study by economists Dr. Randall Pozdena and Dr. Eric Fruits, was published by the American Legislative Exchange Council (ALEC) today.  The report takes a deep theoretical and empirical dive into both state and national tax policy debunking several myths along the way.

While drinking my morning coffee and perusing through the Wichita Eagle’s Business Today section I noticed a common theme: The feds are in the way.

On page C1 you’ll find Employers in limbo amid health care law’s changes:

To a large degree, a lot of business owners still don’t understand the changes, and I don’t think they clearly understand what it means for them in terms of things like the individual mandate,” said Tim Witsman, Wichita Independent Business Association president.  ... “People have a little bit of information but don’t have enough to really start making decisions,” said Janet Hamous, interim executive director for the Wichita Business Coalition on Health Care. ... [Karen] Vines suggests that employers start now to prepare for changes next year, trying to educate themselves about the financial implications for their company and looking at options for coverage.

On top of the Affordable Care Act provisions lies a tax code of ‘biblical proportions’ see page 7C for Tax filers struggle with complex laws:

Too intimidated to fill out your tax return without help? Join the club. At nearly 4 million words, the U.S. tax law is so thick and complicated that businesses and individuals spend more than 6 billion hours a year complying with filing requirements, according to a report Wednesday by an independent government watchdog.

With the level of regulatory kludge imposed by the federal government it truly amazes me that entrepreneurs and business still find time to serve their customers and earn a decent living.