Posts Tagged ‘Economic Issues’

More Than 1,250,000,000 Reasons to Tighten Regulations Affecting For-Profit Education

October 13, 2015 Leave a comment

The lead story in today’s NYTimes is the sorry tale of the ability of for-profit post secondary schools continued receipt of federal funds despite their fraudulent behavior. How much money went to the schools who fleeced students? Well one of the “bad actors”, Corinthian College, received $1,250,000,000 in federal funds last year…. $125,000,000 more than was budgeted for learning centers in public schools and more than four times the amount budgeted for SIG grants designed to help struggling K-12 schools. The article rehashes all of the wrongdoing on the part of these for profit entities, who defend themselves by claiming that no charges have been brought against them. My reaction to this report was summarized in the comment I left:

For profit deregulated schools… what could go wrong?
What we’re seeing at the post-secondary level is a larger scale of looting than we’ve witnessed in K-12 education, but the market-driven reforms in K-12 have encouraged the proliferation of for-profit deregulated charters and resulted in an increase in cheating behaviors at the administrative level as jobs are rated based on test scores.

We have now repeatedly witnessed what goes wrong when profit is introduced into public enterprise. When will we fix the problem? Maybe when money is as far removed from politics as possible.

Kansas’ Solution to a $42,500,000 Revenue Shortfall: An Efficiency Study by a Discredited Firm

October 11, 2015 Leave a comment

I’ve written earlier posts about Kansas budget woes that resulted from a misguided adoption of trickle down economics, the Governor’s exploration of the idea of replacing the members of the State Supreme Court because they ruled that education funding was unconstitutional, and their horrific curriculum. Today I’m checking in on the latest bad idea from Kansas: spending $2,600,000 on an efficiency study will help them close their budget gap by finding huge savings in the spending in schools. Here’s the summary description of the idea as reported by Peter Hancock of the Lawrence Journal Herald

Last week, state lawmakers finalized a contract with A&M; for nearly $2.6 million to conduct a government efficiency study for the state of Kansas.

The contract calls on A&M; to conduct a “diagnostic analysis” of the current budget, make recommendations for significant cost savings and efficiency, and evaluate the state’s budget process in general based on best practices in both the public and private sectors.

The contract is not clear about how much focus the firm will put on state funding for K-12 education, which accounts for roughly half of all state spending in Kansas.

But it does say that the firm is to develop recommendations that target “areas with large and substantial expenditures of state general funds and where the State can become more efficient and thereby provide cost savings to the State’s taxpayers.”

Hancock examined A&M’s previous contracts and found them wanting.

When A&M tried to apply business principles in St. Louis it saved money by closing 16 schools, privatizing custodial and food services, and using a computerized bus routing system that ignored highway crossings and known drug dens when it assigned bus stops. Oh, and the firm assumed that if costs were cut and taxes lowered more people would move into Saint Louis and the increase in student population would help improve the districts financial picture. One thing they overlooked was that in making their draconian cuts they eliminated programs to the extent that the district lost its accreditation.

The plan A&M developed and implemented to reduce the number of teachers in New Orleans was found to be flawed by the courts. The price tag for that error: $1,500,000,000. My hunch is that A&M needed to charge Kansas $2,600,000 for the study to cover its Errors and Omissions policy!

Every dollar A&M saved came at the expense of a job that paid a decent wage and when decent paying jobs are lost in a community on a large scale it hurts the local economy. The bottom line in all of this is that you cannot run an agency that provides human services the same way you run a business… and “gaining efficiency” often flies in the face of community interests.

What’s “stunning” about a Democrat hating unions?

October 10, 2015 Leave a comment

As readers of this blog probably realize, I am a great fan of Naked Capitalism blog edited by Yves Smith with help from fellow blogger Lambert Strether. Strether regularly coordinates afternoon posts under the heading “2:00 PM Water Cooler”offering links to articles that decry the corrosive effects of deregulated capitalism or links to articles that do the opposite with Strether offering pointed comments that undercut the premises of the writer. The “2:00 PM Water Cooler” is divided into segments whose headings often change as various news stories emerge… but one section called “Class Warfare” appear almost every day. Yesterday’s “Class Warfare” section is all about public education and Strether’s commentary– which concludes with the headline of this post— is excellent! The section appears in its entirety:

Class Warfare

“If a proposal for a massive expansion of charter schools in Los Angeles moves forward, the casualties probably would include thousands of teachers who currently work in the city’s traditional public schools” [Los Angeles Times]. Spurred by squillionaire Eli Broad, it’s the “Great Public [snort] Schools” program. Ka-ching.

“Democratic Governor Dannel Malloy’s administration has dropped a stunningly anti-union, anti-faculty, anti-Connecticut State University proposal on the table as it begins its contract negotiations with the CSU Chapter of the American Association of University Professors (AAUP), the union that represents faculty and a variety of education professionals at the four universities of CSU” [Jonathan Pelto].

This development comes on top of the news that Malloy’s political appointees on the University of Connecticut’s Board of Trustees have authorized a contract with an extremely controversial, high profile, anti-union, Governor Chris Christie affiliated New Jersey law firm to lead the negotiations against the UConn Chapter of the AAUP. That contract could cost taxpayers and students as much as $500,000 or more.

What’s “stunning” about a Democrat hating unions?


Duncan’s Charter School Legacy: Money for Nothing

October 9, 2015 Leave a comment

As Jeff Bryant’s well researched article for Education Opportunity Network suggests that Arne Duncan’s last actions as Secretary of Education serve as an apt metaphor for his entire tenure. Three days before announcing he was stepping down,

…Duncan rattled the education policy world with news of a controversial grant of $249 million ($157 the first year) to the charter school industry. This announcement was controversial because, as The Washington Post reports, an audit by his department’s own inspector general found “that the agency has done a poor job of overseeing federal dollars sent to charter schools.”

Astonishingly, $71 million of these funds were earmarked for Ohio, a state whose record of charter corruption is among the worst in the United States, a decision that befuddled Ohio politicians in both political parties. Bryant makes a compelling case that links the issuance of the federal dollars to the State’s decision to take over the Youngstown public schools and turn them over to deregulated for profit charters, a ploy the “market based” Duncan champions.

One paragraph in Bryant’s article jumped out for me:

recent report from the Center for Media and Democracy found that over the past 20 years the federal government has sent over $3.3 billion to the charter school industry with virtually no accountability. That report notes “the federal government maintains no comprehensive list of the charter schools that have received and spent these funds or even a full list of the private or quasi-public entities that have been approved by states to ‘authorize’ charters that receive federal funds.”

As one who worked as a Superintendent for 16 of those 20 years, it is discouraging to realize that $3,300,000,000 was given to charter schools while the federal government continued it’s practice of underfunding special education and mandated reams of paperwork fro public schools to obtain federal funds. Indeed, the paperwork was so daunting for e-rate that it was not feasible for many districts to even seek those funds. And any superintendent, special education director, Title fund director, ELL Director, or School Lunch Director anywhere in the United States can tell you how much time they spend documenting their time and expenditures. And at the same time the government mandates this paperwork for public education, politicians decry the “bloated bureaucracies” that result from them and crow about the efficiently operated charters who don’t need as much administrative overhead. Of course the charters can operate with less administrative overhead!

Bryant’s article describing the $249 million dollar giveaway was titled “The Ugly Charter Mess Duncan Left Behind”. Duncan left behind more than one mess: he left behind a system that gives money away to charter organizations that have no accountability and no evidence of success rates that exceed those of their publicly funded counterparts. Money for nothing for students… but lots of shareholders… and probably a good boost to the political campaigns of charter supporters.


Complicated State Funding Formula Explained Effectively… OBVIOUS Reasons For It’s Failure to Achieve Equity Overlooked

October 5, 2015 Leave a comment

Google’s feed sent me an excellent article written by Dale Singer of Saint Louis Public Radio that explains with cartoons how the schools are funded now and how the funding formula evolved over time. The overview reminds me how little has changed in the 25 years since I served on Maryland’s Blue Ribbon Task Force and ongoing struggles to provide equitable funding for schools in the 42 states who have been sued over the past several decades.

The MO legislature used two approaches to achieve equal funding for all students: one based on an equity formula that was ultimately scrapped and one based on an adequacy formula the has been in place for several years. In the end, though, it matter less HOW the money is distributed. What counts is HOW MUCH money is applied to the formula. MO State Board of Education chair Charlie Shields provided a good synopsis of why the new adequacy formula doesn’t work:

A formula based on adequacy, he added, would work better, with one big condition: The state has to have the money to fund it fully.

The same thing could have been said about a formula based on equity… but it seems that whenever a legislature sets a goal for schools and money gets tight, the solution is to short-change the funding formula which, in turn, exacerbates the disparities. That’s what happened in MO:

The adequacy formula was set to be phased in over seven years, but the efforts smacked into the 2008 recession, when Missouri’s revenue took a big hit. It’s beginning to recover, but (State Education Department official) Lankford estimated that the state is still $450 million short of what the formula would call for. That translates to $6,110 per student, instead of the $6,716 the formula would call for.

The article quotes others as saying that until the formula is fully funded there is no way to know whether it works or not… and because fully funding seems improbable it is likely that another lawsuit will be in the offing and another generation of students will be shortchanged.

As I read this article, I felt that at least four other states I know of (MD, PA, NH, and VT) continue to struggle to find the “magic formula” for funding schools… and in each state they invariably find that in order to make ANY formula work more money is needed. Former MO State Supreme Justice Mike Wolff provides the best response to the rejoinder that “throwing money at the problem won’t work”:

“If money were unimportant, then people who live in the wealthier districts wouldn’t be so concerned about it, would they? But they’re sure interested in keeping the level of spending for their children at a higher level. I’m not faulting them for that …

“There’s no substitute for money. You can distribute it all you want to, but you have to have more of it.”


Lower Prices for TVs and Lower Wages Are Moving Us Away From Democracy

October 3, 2015 Leave a comment

Paul Theroux’s blistering op ed article that will appear in tomorrows NYTimes contrasts the billionaire’s magnanimous desire to “help the poor” in economically deprived nations with their practice of off-shoring jobs and neglecting the problems created here at home. He offers this blunt description of globalization:

To me, globalization is the search for a new plantation, and cheaper labor; globalization means that, by outsourcing, it is possible to impoverish an American community to the point where it is indistinguishable from a hard-up town in the dusty heartland of a third world country.

Mr. Theroux could have written this article about New England mill towns a couple of decades ago when corporations decided to relocate their factories to the south in an effort to avoid paying union wages. There are communities in New England where most people made their living working in factories and now scramble to make ends meet…. and there are urban areas and Rustbelt communities that have the same third-world feel to them.

The problem is two-fold: shareholders and CEOs want to maximize profit and consumers want low prices. The deregulated capitalism and free trade advocated by political candidates in both parties reinforces this and the anti-government mantra of the right makes it even worse. Shareholders need to look at the effects of maximizing profits by moving jobs abroad and taking advantage of tax loopholes… and consumers need to ask themselves if they are willing to save money at the expense of their fellow Americans jobs… and we have to face the fact that the consequence of this will mean substantially lower incomes for the billionaires, higher corporate taxes, and a trade-off for rank and file workers of higher taxes and higher costs for goods in order to earn higher wages.

Here’s the bottom line: If everyone dug a little deeper to pay taxes and spend more on consumer goods we COULD restore the economy in our country. Otherwise, we will continue devolving into a plutocratic oligarchy. I’m willing to pay higher taxes and pay higher prices on my “fixed income” to help my neighbors in Arkansas, Detroit, California, and New England earn a decent living and have an opportunity to advance. Is anyone else ready to do the same?

“Philanthrocapitalism”: Giving Away Seed Money that Yields Profits

October 2, 2015 Leave a comment

Truthout article by Cynthia Liu describes Eli Broad’s plan to create charter schools to house 130,000 Los Angeles students as an act of “philanthrocapitalism”, which she defines in this sentence:

“Philanthrocapitalism describes a certain kind of “weaponized generosity” where donors offer their self-interested charitable giving to remedy the very lack they create elsewhere.

Liu offers this description of how philanthrocapitalism served Eli Broad in another venture in LA:

For example: originally, Broad wanted to lease the expensive downtown Los Angeles parcel the Museum sits on for $1 a year over 99 years. Said one county supervisor, “Instead of a project that generates sales and property taxes, we’ll now have an art museum that generates no property or sales taxes and Mr. Broad will get the land for free.” It’s now leased for $7.7 million a year for 99 years, and the 501c3 Broad Foundation housed inside the museum still doesn’t put much by way of revenue back into the city.

Liu shows how Broad, like many “philanthrocapitalists”, funds opposition to initiatives that are intended to provide additional funds for public education and funds support for initiatives that are designed to undercut unions. The ultimate goal in this case is to ensure that their taxes are minimal so that their profits can be maximized.

I look at philanthrocapitalism as a means of giving away seed money to garner profit… in some cases the money goes to political leaders to pave the way to enable for-profit charter schools to thrive and in other cases giving away technology that is on the cusp of being obsolete to prime the pump for future acquisitions. Eva Moskovitz’ benefactors made large campaign contributions to Governor Cuomo and the apparent quid pro quo was assurance that Ms. Moskovitz’ schools would continue receiving rent-free space in NYC public schools and Mayor de Blasio’s control would be limited to one year at a time. The bait-and-switch with computer donations is also a way for technology companies to reap multiple benefits. They get a tax deduction for the giveaway; a de facto tax deduction because the school district budgets in their community do not require the district to spend on the initial acquisition of computers, and the added benefit of effective dictating the operating system and software a school district will be using for years to come, providing them with a new revenue stream.

As Liu suggests, “(t)he cure for oligarchy is more democracy“, which means that parents need to get engaged in the governance of schools. When parents stay home on election day, opportunistic oligarchs will seize the opportunity created by apathy to gain control of the local school board and open the doors for profit-making charters to move in. And school boards, PTAs, and administrators should beware of corporations bearing gifts or grants that require the use of technology: the strings attached will likely cost more money in the long run than the size of the gift. The ink purchases for your printer might be a guide for this reality!