Posts Tagged ‘Economic Issues’

The Federal Government’s Leap from Charters to Vouchers

February 26, 2015 Leave a comment

The reporting on the wrangling going on in Congress relative to the reauthorization of NCLB plays up the Republicans-vs-Obama meme but misses several overarching points, which is unsurprising given the obfuscatory nomenclature being used by the legislators. Two articles, one by Erin Richards of the Milwaukee Journal Sentinel and another by Emma Brown of the Washington Post are long on the Duncan/Obama vs. House Republicans theme.

The Post article looks at the reauthorization through the national lens, quoting Arne Duncan’s characterization of the cuts to impoverished urban school districts as “devastating” and providing a chart that shows how the reduction in spending would play out in 33 such districts. It focussed on how the passage of the law would provide “Title 1 portability” allowing federal funds to be used wherever a child is enrolled in school and “…strip the federal Education Department of much of its current power, giving states far more latitude to decide how to define and intervene in struggling schools.”

The Journal article covers the portability issue but has less emphasis on Duncan-vs-the-House and more on how the cuts would impact Milwaukee schools, who stand to lose $159 million over six years if the new legislation passes. It also included more detailed description of the latitude that States would get as a result of the shift of power away from Washington:

Measuring student performance in schools would be left up to the states, the Common Core State Standards would be explicitly voluntary, (though they already are in Wisconsin and many other states) and the education secretary would not be able to encourage states to adopt educational standards by offering grant money or friendly agreements on other matters.

The House bill would continue annual, statewide testing requirements but states would have more authority to decide how to intervene in struggling schools and how to assess teachers. The federal government’s authority would be more limited.

As noted in the opening paragraph of this post, these article missed several overarching points:

  • Duncan’s pro-charter policies laid the groundwork for the notion of “portability”. By encouraging the expansion of private-for-profit charters within districts he effectively encouraged intra-district portability undercutting the notion of community schools and complicating a means of providing coordinated social services based on the students’ residence.
  • The Duncan/Obama “power grab” was a consequence of Congress’ inability to reauthorize No Child Left Behind, whose problems could have been solved legislatively since 2007 but didn’t because of the Republicans’ desire to move in the direction this bill will take them.
  • The term “Title I Portability” is Newspeak for Vouchers. Both articles use caveats to describe the term. The Journal writes: “Critics say Republicans are trying to open the door for federal funding to eventually follow low-income children into private, religious schools” and the Post writes: “…many Democrats see it as a first step toward federal vouchers that would allow students to use federal funding for private school enrollment.” As noted above, the door was opened and the first step taken when Duncan encouraged the spread of charter schools that allow intra-district portability. The obvious next step that is intended by this new wording is to allow the funds to go wherever the student enrolls.
  • Giving STATES the authority to decide how to intervene in failing schools, set standards, design assessments, and determine how teachers are evaluated is a giant step backward. One way States will “intervene” in failing districts is to provide them with vouchers. Indeed, as the Journal article notes, the concept of portability is already in place in many states and with 31 Republican Governors the notion will spread quickly across the country. When States set standards expect to see a de-emphasis on “controversial issues” like global warming, wars, evolution, and AP History and an emphasis on American Exceptionalism and junk science. And when States are allowed to develop assessments and evaluate teachers expect an expansion of VAM and a decline in the number of unionized teachers.
  • Giving STATES more authority to determine how to allocate funds to disadvantaged students is irresponsible given the fact that all but five states have been sued at one time or another for having unfair funding formulas.
  • The Journal quotes Duncan as characterizing the House bill as being “ reverse Robin Hood. You’re stealing from the poor to give to the rich” and later adding “When you’re moving scarce resources from poor districts to wealthy districts, what problem is that trying to solve?“. Reporters need to point out to Mr. Duncan that by enabling the expansion of for-profit deregulated charters he was doing the same thing! “Robin Hood in Reverse” is when “CEOs” of low performing charter schools and their shareholders make more money than urban superintendents and the teachers in those schools.

These overarching consequences are overlooked because they don’t fit neatly into a “Obama-vs-Republican” context… which is too bad because this oversight will lead to more inequality and less opportunity for children raised in poverty. Here’s hoping a voice outside of the Obama/Duncan sphere will speak up and point out the flaws in both the current RTTT and the proposed federal legislation.

Taxpayers Pay Ten Times Over for Schools… and Banks Love It!

February 25, 2015 Leave a comment

Taxpayers thrive on simplicity…. Banks thrive on complexity… and in the end those seeking simple solutions to complicated problems pay through the nose while those who understand complexity make money hand over fist.

Ellen Brown’s Truthdig blog post earlier this week explained how this chain of events played out in California… and how taxpayers “easy solution” to a complicated problem turned into “easy profits” for Goldman Sachs.

In the 1970s California voters passed a proposition that capped property taxes and made it extremely difficult for public schools to build new facilities. They did this because they wanted to save money. Over time, School Boards and parents needed to replace decaying and overcrowded facilities but couldn’t do so because of the caps on property taxes. The Governor at the time this confluence of events occurred didn’t want to raise taxes either… so when lobbyists for the banks approached him, the legislature, and key voters with a clever workaround in the form of a product called “Capital Appreciation Bonds” (CABs) everyone signed on… but as the second paragraph below indicates, paybacks on these CABs were daunting!

In 2009, the lenders’ lobbying group then proposed and promoted AB1388, a California bill eliminating the debt ceiling requirement on long-term debt for school districts. After it passed, bankers traveled all over the state pushing something called “capital appreciation bonds” (CABs) as a tool to vault over legal debt limits. (Think Greece again.) Also called payday loans for school districts, CABs have now been issued by more than 400 California districts, some with repayment obligations of up to 20 times the principal advanced (or 2000%).

The controversial bonds came under increased scrutiny in August 2012, following a report that San Diego County’s Poway Unified would have to pay $982 million for a $105 million CAB it issued. Goldman Sachs made $1.6 million on a single capital appreciation deal with the San Diego Unified School District.

Ellen Brown intimates that the sharks in the banking industry took advantage of the naiveté of school boards and administrators, but the real dupes in all of this were the voters who wanted to believe that there was a cheap, fast, and effective way to build new facilities and the politicians who never bothered to look closely at the too-good-to-be-true deal offered by banks. This naiveté on the part of voters and politicians was especially egregious given the melt-down caused by the banks promoting these “payday loans” one year prior it should have been a tip off that reading fine print was necessary. Nevertheless, Ms. Brown pulled no punches in assigning responsibility for these loans, in effect analogizing school districts with those who took out liar loans banks offered for McMansions:

Gullible school districts agreed to these payday-like loans because they needed the facilities, the voters would not agree to higher taxes, and state educational funding was exhausted. School districts wound up sporting shiny new gymnasiums and auditoriums while they were cutting back on teachers and increasing classroom sizes. (AB1388 covers only long-term capital improvements, not daily operating expenses.) The folly of the bonds was reminiscent of those boondoggles pushed on Third World countries by the World Bank and IMF, trapping them under a mountain of debt that continued to compound decades later.

She does offer two ways to solve this problem, noting that the Federal Reserve COULD have issued its own low interest loans to municipalities thereby cutting out the profiteering middlemen or California districts COULD learn a lesson from North Dakota, which is the only state with its own depository bank. In contrast to the legislative debacle that led to interest payments that were ten times more than the face value of the loan:

The state-owned Bank of North Dakota (BND) was making 1% loans to school districts even in December 2014, when global oil prices had dropped by half. That month, the BND granted a $10 million construction loan to McKenzie County Public School No. 1, at an interest rate of 1% payable over 20 years. Over the life of the loan, that works out to $.20 in simple interest or $.22 in compound interest for every $1 borrowed. Compare that to the $15 owed for every dollar borrowed by Anaheim’s Savanna School District or the $10 owed for every dollar borrowed by Santa Ana Unified.

How can the BND afford to make these very low interest loans and still turn a profit? The answer is that its costs are very low. It has no exorbitantly-paid executives; pays no bonuses, fees, or commissions; pays no dividends to private shareholders; and has low borrowing costs. It does not need to advertise for depositors (it has a captive deposit base in the state itself) or for borrowers (it is a wholesale bank that partners with local banks, which find the borrowers). The BND also has no losses from derivative trades gone wrong. It engages in old-fashioned conservative banking and does not speculate in derivatives. Unlike the vampire squids of Wall Street, it is not motivated to maximize its bottom line in a predatory way. Its mandate is simply to serve the public interest.

A bank that is required to “simply serve the public interest” is an idea whose time has arrived. I know that some progressive economists have advocated such a plan… but this article by Ellen Brown explains how this idea would help public schools relieve their debts and thereby free up more funds to help children in the classroom.


Citizens United, Medical Report Cards, and VAM

February 25, 2015 Leave a comment

Today’s Taking Note blog post in the NYTimes reports on Governor Cuomo’s decision to close down the State’s “Doctor Report Card” web site because ” it costs too much at $1.2 million a year“. Well going into the new Common Core New York was spending over $10 million per year on standardized tests and the new testing program that is required to provide Value Added Measures will require an even greater outlay of state funds.

So… at the same time Cuomo is closing a relatively inexpensive web page that provides worthwhile and helpful information about doctors he is promoting a costly and statistically flawed method for assessing the performance of teachers whose information is worthless. I suspect in both cases his political donors might be influencing his thinking.

The Manufactured Education Crisis and the Bogus Solution

February 23, 2015 Leave a comment

“Knowledge Isn’t Power”, Paul Krugman’s op ed column today, takes on the canard that businessmen cannot find enough skilled laborers because of a skills gap. After several paragraphs describing how this “skills gap” notion has become an accepted truth, he counters with this paragraph:

(T)here’s no evidence that a skills gap is holding back employment. After all, if businesses were desperate for workers with certain skills, they would presumably be offering premium wages to attract such workers. So where are these fortunate professions? You can find some examples here and there. Interestingly, some of the biggest recent wage gains are for skilled manual labor — sewing machine operatorsboilermakers — as some manufacturing production moves back to America. But the notion that highly skilled workers are generally in demand is just false.

After debunking the notion that the “skills gap” is the reason we have inequality, he concludes with these paragraphs:

Now, there’s a lot we could do to redress this inequality of power. We could levy higher taxes on corporations and the wealthy, and invest the proceeds in programs that help working families. We could raise the minimum wage and make it easier for workers to organize. It’s not hard to imagine a truly serious effort to make America less unequal.

But given the determination of one major party to move policy in exactly the opposite direction, advocating such an effort makes you sound partisan. Hence the desire to see the whole thing as an education problem instead. But we should recognize that popular evasion for what it is: a deeply unserious fantasy.

But as I noted in my comment, Krugman doesn’t acknowledge another reason the billionaires are promoting the “skills gap”:

Here’s what is happening right now, Dr. Krugman.
The investors have created a “crisis in education” and simultaneously introduced a solution: markets! You see if the monopolistic public schools are expensive, inefficient, and ineffective the solution is to subject public schools to the free market where they will become less costly to taxpayers, far more efficient in the delivery of services, and, yes, miraculously egalitarian. The folks who offer this as the solution to closing the gap between students in affluent districts and students in high-poverty districts conveniently overlook the fact that the “market” has not provided residents in the Bronx with the same array of choices in shopping as the residents in Scarsdale…. But no matter! Even if the market fails to provide equal opportunity for all at least the “wasteful spending” on education will no longer go to those greedy teachers… it will go to the shareholders of the privatized companies who operate the deregulated for-profit charters. As your article implies, those who have the power are not seriously interested in addressing inequality; they are more interested in keeping the power structure just the way it is.

The businessmen promoting the “skills gap” are the same group who are bending the ears of governors and state legislators… and those of us who want to see public education as the means of achieving equity are fighting an uphill battle because the siren song of “free, unregulated markets” resonates with many voters and the idea of using vouchers to attend ANY school resonates with parents who are currently paying out of pocket to attend private schools. In fighting this uphill battle it would be helpful if columnists like Krugman saw what is happening and called out the politicians on it now… before it is too late.


Money For Stadiums, Money for Corporations… but NO Money for Public Services

February 21, 2015 Leave a comment

Joe Nocera’s column in today’ NYTimes bemoans the fact that billionaire owners of football teams are employing “The LA Gambit” to extort funds from local taxpayers to build stadia in their communities. How does this gambit work? Well it seems that Los Angeles, the second most populous city in the US, lacks a professional football team. Billionaire owners whose teams are housed in “outdated” stadiums and want to make as much profit as possible tell the town fathers that they need some kind of tax breaks or outright subsidies to build a brand new stadium or they might just move their team to another venue. The threat is clearly NOT an idle one as several owners over the decades have done just that.

But as I noted in a comment I left on Nocera’s article,

The “LA gambit” has been played out in the states, cities, and communities for decades… and the taxpayers and public sector has paid the price. When a corporation announces it’s plans to open a new facility, states, cities and counties across the country open their wallets to lure them offering taxpayer subsidized incentives and infrastructure upgrades on the pretext that the new warehouse/factory/office will bring jobs and money to the community. And it’s even worse when an existing business threatens to leave a community… all kinds of incentives and tax breaks are made available! And who ends up suffering? The publicly funded services who are told there is no money left in the budget for them! Virtually every Republican governor has this gambit in their playbook…

For example, Scott Walker managed to find money in the WI state budget for a basketball arena and to offer a tax cut while cutting funds for schools and colleges. But Walker is not alone and, alas, as noted in earlier blog posts, this is nothing new. Why write again about it? Because until the public is aware of this misleading shell game they will continue to believe that governors have “no choice” but to cut budgets for schools and services, to defer major maintenance projects, and to pony up money for “investments” that do not pay off in the long run. If won see this happening in your community or state, please let your elected officials know you are wise to their game.

Empathy Interventions Far More Effective Than Expulsions in Preschool

February 21, 2015 Leave a comment

What should be self-evident is often seen as counter-intuitive because we are seemingly conditioned to seek fast, cheap, and easy solutions to problems. As an article in today’s NYTimes suggests, it’s possible that there is a way to address the problem of pre-school misbehavior that require times and complex coordinated efforts but, in the long run, would cost no more than what we are spending now. In “Empathy, Not Explusion, for Preschoolers at Risk, Sara Neufield reports on the positive impact “early childhood mental health consultants” have on the expulsion rates in schools and, more importantly, how they train and support adults surrounding the child instead of blaming the child for his or her misconduct.

In the article Neufield shadows early childhood mental health consultant Lauren Wiley as she works with teachers and parents to help them see that their assumptions, interactions, and behaviors contribute to the misbehavior of at risk children. In effect, Ms. Wiley is developing self-awareness in the adults in the life of the child in an effort to help the adults develop self-awareness in the child, self-awareness that will cause the child’s behavior to change. While some will likely view this as a form of “cultural imperialism”, it is evident that Ms. Wiley and the early childhood mental health consultants do NOT intend to brainwash children or adults but rather to help them deal with mental health issues.

While this program has proven to be effective, it operates on a shoe string and is not widely known:

The partnership receives $200,000 a year in state money to provide early childhood mental health consultation free to any agency that requests it, as capacity allows, along with $270,000 in federal funds to consult in home visitation programs. The partnership says last fiscal year it provided consultation to 59 programs and assisted 139 home visitors and supervisors reaching 1,490 families. A little money goes a long way. But with resources few and needs great, the work is not heavily promoted, and many who could benefit don’t know it exists.

Programs like the one described in this article will be expanding because under the nation’s newly reauthorized child care funding legislation, states must develop plans to reduce preschool expulsions and proven, cost effective programs like the provision of mental health consultants should be replicated. But for this program to really make a difference, much more funding is needed:

If the consultation approach is going to spread, proponents say it’s necessary to standardize and monitor quality. There is also a need to build a workforce with skills and knowledge in mental health, child development, cultural awareness, family dynamics and trauma. The biggest barrier, researchers say, is simply the shortage of government funding.

From my perspective, the colleges should incorporate “… skills and knowledge in mental health, child development, cultural awareness, family dynamics and trauma” in their mandated curriculum for all those enrolled in teaching programs and state departments should be more robust so that the standardization and quality control can be done at that level as opposed to the federal level. Incorporating mental health skills and knowledge in undergraduate and graduate curricula will not have any direct costs to schools and the cost to increase state department staffing is minimal. The cost to provide support to all of the families and children who need mental health services IS substantial… but it could be obtained by redirecting the funds being spent to provide annual assessments that ultimately prove what we already know: children who come from dysfunctional and/or poverty stricken backgrounds perform worse on standardized tests than children who come from highly functional and/or affluent homes. Why continue proving a well known fact when we could use those funds to provide mental health services to children who need it?

The Third Way’s Preposterous College Accountability Proposal

February 19, 2015 Leave a comment

Today’s NYTimes features an op ed article by Jon Cowan and Jim Kessler, two administrators from “The Third Way” which the Times identifies as “a centrist institute”. “How to Hold Colleges Accountable” the Third Way’s solution to “the well known” problems with college is wrong in many ways:

  • It overlooks the fact that college tuitions have skyrocketed in large measure because virtually every states in the union has trimmed their funding for post secondary education forcing those institutions to either increase tuitions or cut programs.
  • It overlooks the fact that more and more colleges are relying on low paid adjunct staff instead of tenure track teachers, a factor that contributes to the lack of solid teaching in colleges.
  • It overlooks the fact that colleges are offering “luxurious dormitories (and) lavish student activity centers” because students and parents expect those to be a part of the college experience… not because they want to spend money foolishly.
  • It advocates that colleges be measured based on the earnings of graduates ten years later… thereby reinforcing the notion that the mission of college should be career preparation and not the development of thoughtfulness as Frank Bruni rightly advocated in yesterday’s newspaper.
  • It oversells the value of data reporting. Cowan and Kessler assert that “More informed student choice would put pressure on colleges to focus on academic outcomes rather than on student amenities and athletics. This data could be broken down by gender, race, income and major.” As noted above, “student amenities” are an important consideration for most middle class parents and if they don’t know the impact of NCAA championships in major sports they need to read ESPN.

They are right on one point: Congress should take taxpayers off the hook for student loans. As Cowan and Kessler note:

Right now, no matter how high tuition climbs, there is always a federal loan to make up the difference between price and aid.

Just as new mortgage laws require banks to hold on to some of the mortgages they issue before bundling and selling the loans — so that they have an incentive to avoid making bad loans — so too should colleges be held responsible for a portion of student-loan defaults, which stood just shy of 14 percent in 2013.

When students default, colleges should have to cover some portion — maybe 5 percent of the yearly principal and interest — to share some of the burden; right now, the taxpayers are on the hook for 100 percent. Colleges that genuinely focus on educating low-income students should not be punished for doing so, but high-turnover schools that consistently enroll students while failing to graduate them should be pushed out of business.

So from this non-centrist’s perspective, the best way to hold colleges accountable is to regulate for-profit schools that “consistently enroll students while failing to graduate them”, forgive the loans those colleges gave to misled students, and seize all their assets before they are “pushed out of business”. At the same time, the federal government should institute some kind of hold-harmless funding requirement to states whereby the amount allocated for state schools would have to remain constant in order for the state funded colleges to offer student loans. Finally, colleges who employ a majority of their staff as adjuncts should not be eligible for loans. Those actions would restore funding accountability to state governments, implement staffing accountability to colleges, and end the usurious loan practices for-profit colleges put in place.