When I was Superintendent in Dutchess County NY the union president at the time lamented the fact that the younger members of the union had no appreciation for the battles she and her generation fought to secure the wages, benefits and working conditions that were a “given” in the late 1990s and early 2000s. The grassroots political activism of the unions was nascent and the sound economy at that time made it relatively easy to achieve collective bargaining agreements that both the taxpayers and the unions found acceptable. As a result parents, taxpayers, and teachers unions experienced a relatively positive relationship and public education was viewed in a generally positive light.
Since that time, and especially since the implementation of universal standardized testing that resulted from the passage of No Child Left Behind, the public has been fed a steady diet of reports that “public schools are failing” and the only solution is to close them down and turn them over to the states. The “failing schools” meme was not enough for some politicians, however. Governors like Scott Walker and Andrew Cuomo assigned blame for the “failing schools” on “incompetent teachers” who are protected by “union contracts”… and instead of advocating the passage of laws that would streamline dismissal procedures for administrators or enable local school boards to remove arguably excessive and complicated procedural protections, Mr. Walker and Mr. Cuomo sought to eliminate unions altogether and impose invalid means of evaluations that would presumably identify the “incompetent teachers” whose performance was responsible for the low standardized test scores.
This tactic worked for Scott Walker in Wisconsin: he’s eviscerated the public employee unions in his state and imposed irrational and irresponsible teacher evaluation methods with the full support of the legislature and yesterday used that “crushing victory” as evidence that he can take on ISIS. Andrew Cuomo is about to see if he can pull off a similar tactic in NYS… but in doing so he is awaking two sleeping giants: the teachers unions and public school parents.
Those union members who have been inactive for decades are seeing that their jobs threatened and their existence challenged and they are getting aroused. And, as noted in an earlier post, without prompting from the unions the parents organizations in schools across NYC and the state are getting aroused as well. And as videos like the one I linked to earlier today are circulated more and more parents will see how Mr. Cuomo’s “reforms” designed to address a “crisis” ultimately undermine local control and local schools.
Both Governor Walker and Governor Cuomo are arousing progressive-minded voters to realize that they need to find candidates to challenge the conservative and neoliberal leaders who are stripping unions of their contractual rights, parents and board members of control of their schools, and voters of their opportunity to weigh in on the direction their states are headed…. and democracy is taking a beating as a result.
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.
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.
Last week ProPublica blogger Marian Wang posted an essay on Truthdig with the provocative title “When a Wildlife Rehab Center Regulates Charter Schools: Inside the Wild World of Charter Regulation”. The article described the convoluted accountability models used to “regulate” charter schools in MN, MI, IN, PA, and OH, models that allow nonprofit institutions like the Audubon Center of the North Woods to become the largest charter school overseer in Minnesota— responsible for 32 schools! The article cites examples of the consequences of lax oversight, ranging from ‘lavish executive salaries (and) conflicts of interest” in Philadelphia charters, the “considerable loss of State funds” in OH, and widespread miseducation in ALL states where oversight was lax. While it is hard to single out any one State’s flaws, I found the example of Indiana charters “shopping” for the most permissive regulators the most troubling. The idea that a school can seek out the regulatory body is analogous to the idea that a bank can shop for an auditor who will give them a favorable rating… and we’ve seen how that form of “self-regulation” worked out in the banking industry.
After reading the article I came away more convinced than ever that every state needs a robust Department of Education with sufficient staff to oversee not only public schools but also charter schools that use public funds…. and also came away more convinced than ever that the State legislatures’ decisions to de-fund State Departments has de-clawed their ability to regulate and the majority of legislatures want it that way.
Last week Eduardo Porter’s column, “The Promise and Failure of Community College” highlighted the conundrum community colleges face: because so many students who enroll are unprepared for the coursework they drop out before completing the coursework. For decades I have offered a straightforward cost-effective solution to this problem: require high school sophomores to take the community college placement examination before making their course selections for 11th and 12th grade. These test results could be used as a diagnostic and vocational tool illustrating to students the specific gaps they need to fill in their remaining years in high school if they wish to pursue post secondary schooling. By alerting the students to those gaps with two years left in high school it would be possible for a larger number of them to avoid paying for non-credit-bearing courses when the enroll in the community college in their state. More importantly, the results could be used to begin a conversation between the guidance counselors and students about how the final two years of high school could help prepare them for the future.
Why wouldn’t this idea work? One of the realities that Porter and other columnists fail to mention is that community colleges and similar two-year institutes would lose large sums of money if they didn’t offer remedial courses…. and for that reason the post-secondary schools might push back if legislators insisted that they standardize their placement examinations and allow them to be administered in the 10th grade. Administering diagnostic preparation tests in 10th grade would be far more beneficial than administering summative standardized tests in 11th grade and would cost states far less than the standardized assessments required today. So… what are we waiting for!