2010/02/18

Read Cato, Watch Fox

A Severe Irony Deficiency
Posted by Andrew J. Coulson
Tomorrow night at 8:00pm, Fox Business News will air a John Stossel special on the failures of state-run schooling and the merits of parental choice and competition in education. I make an appearance, as do Jeanne Allen and James Tooley.

News of the show is already making the rounds, and over at DemocraticUnderground.com, one poster is very upset about it, writing:

When will these TRAITORS stop trying to ruin this country?

HOW can AMERICANS be AGAINST public education?

Stossel is throwing out every right-wing argument possible in his namby pamby singsong way while he “interviews” a “panel” of people (who I suspect are plants) saying things like preschool is a waste of money and why invest in an already-failing system….

I hate Stossel and I hate all of those who think the way he does.

This poster goes by the screen name “Live Love Laugh.” I guess there wasn’t enough space to tack “Hate” onto the end.
Harriet adds this to the "To do" list.

2010/02/12

Case, Djou, or Hanabusa

Harriet at one time regarded the three candidates for US Congress from the windward Oahu district (Neil Abercrombie's seat) as competent and qualified. Any of them would represent the people of Hawaii well. Senator Hanabusa fell in Harriet's estimation after introducing SB2007.
Measure Title: RELATING TO BUDGETARY POWERS.
Report Title: Budgetary Powers; Legislature; Governor
Description: Clarifies the budgetary powers of the legislature and the executive branches of government.
Companion:
Package: None
Current Referral: WAM
Introducer(s): HANABUSA
Underlined material is added.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 37-31, Hawaii Revised Statutes, is
amended to read as follows:
"137-31 Intent and policy. It is declared to be the policy and intent of the legislature that the total appropriations made by it, or the total of any budget approved by it, for any department or establishment, shall be deemed to be the maximum amount authorized to meet the requirements of the department or establishment for the period of the appropriation, excepting as may otherwise be provided by law, and that the governor and the director of finance should be given the powers granted by sections 37-32 to 37-41 in order that savings may be effected by careful supervision throughout each appropriation period with due regard to changing conditions; and by promoting more economic and efficient management of state departments and establishments[.];provided that the powers granted to the
governor and the director of finance by sections 37-32 to 37-41 17 shall not be construed to include the power to:
-(1) Restrict funding to a program to the extent that the program cannot adequately execute its intended purpose; or
-( 2 ) Suspend or abolish any existing program, if the program has been authorized bv the leaislature and moneys have been appropriated for the program, unless specifically authorized by the legislature by legislative act.
....
....
....
5. No modification or amendment shall reduce an allotment
below the amount required to adequately execute the intended purpose of an existing program authorized by the legislature and for which moneys have been appropriated unless specifically authorized by the legislature by legislative act.
....
....
....
no reduction shall reduce an allotment below the amount required to adequately execute the intended purpose of an existing program authorized by the legislature and for which moneys have been appropriated unless specifically
authorized by the legislature by legislative act.
....
....
....
The governor shall not utilize the powers granted under sections 37-32 to 37-41 to:
-(1) Restrict funding to a program to the extent that the program cannot adequately execute its intended purpose; or
-(2) Suspend or abolish any existing program, if the program is authorized by the legislature and moneys have been appropriated for the program, unless specifically
authorized by the legislature by legislative act.

Without the power of the single State-wide elected office to restrict expenditures, the State budget becomes a commons, which politicians will abuse. This is the argument for a line-item veto at the national level. Currently, the Hawaii Revised Statutes requires that the Governor balance the budget and gives her the power to do so. Senator Hanabusa's amendment to State law would deprive the Governor of that power. With this bill, Senator Hanabusa assures public-sector workers that she elevates their interests above the interests of taxpayers (and locks in a powerful constituency for the upcoming Congressional election).

2010/02/11

Basic Budget Arithmetic

What is the DOE per pupil budget? With three figures for total budget and two for enrollment, this question has six reasonable answers.

2005-2006 School Year
Total Revenues: a=$2,703,718,000
Total Expenditures: b=$2,026,254,000
Current Expenditures: c=$1,805,521,000
Fall enrollment: d=182,818
Average Daily Attendance: e=168,009

According to the online calculator, this gives...
a/d=$14,789
a/e=$16,092
b/d=$11,280
b/e=$12,060
c/d=$9,876
c/e=$10,746

Guestimating here, suppose the average classroom teacher makes, say, $40,000 before taxes. Suppose that pension and benefits add 50% or $20,000 to the cost of a classroom teacher's total compensation. How many students would the average teacher have to take into her home to earn her salary as a contractor to parents empowered to provide for their children's education?
$60,000/$16092=3.728; round up to four.
$60,000/$9,876=6.075; round down to six.

If your average DOE classroom contains 24 students, the average DOE teacher carries bewteen three (24/6-1) and five (24/4-1) out-of-classroom parasites on her back.

"What about special ed?", defenders of the NEA/AFSCME cartel will ask. The State Auditor has calculated that sp-ed students cost, on average, twice what regular ed kids cost, and the DOE reports that sp-ed enrollment amounts to about 11% of the population. Let the mean cost of a regular ed student be x. Then the mean cost of a sp-ed student is 2x. Special ed enrollment (fall, 2005) was .11(182,818) or 20,110. This gives a regular-ed population of 162,708.

Now, solve
2(p)(20,110)+(p)(162708)=$2,703,718,000 => p=$13,324
2(q)(20,110)+(q)(162708)=$2,026,254,000 => q=$9,985
2(r)(20,110)+(r)(162708)=$1,805,521,000 => r=$8,895

If we trust the DOE's accounting, regular-ed students cost, on average, between $8,895 and $13,324 per year. If the legislature were to mandate that the DOE allot 2/3 of the lower figure, $5930 to Parent Performance Contracting, rounding up to $6,000 (for convenience), the average classroom teacher could earn her current compensation by taking ten neighborhood kids into her house.

Your legislators would rather bankrupt the State.

When You're In A Hole...

Jay Greene linked to "Out of Chalk", by RiShawn Biddle. Teacher pensions contribute to the difference between "Total Revenues", and "Current Expenditures". The Digest of Education Statistics gives a "Total Revenues" figure of $520,643,954,000 nationally and $2,703,718,000 in Hawaii over the 2005-2006 school year (Table 172), and a "Current Expenditures" figure of $449,594,924,000 nationally and $1,805,521,000 in Hawaii over the 2005-2006 school year (Table 177). This, for a total US "public" (i.e., government) school enrollment of 49,113,298 nationally and 182,818 in Hawaii, according to table 35.

2010/02/05

Read Megan

Please read Megan McArdle's recent post on unions, pay schedules, and merit pay.

Hawaii's charter school legislation binds charter schools to the Hawaii State Teachers' Association.

2010/02/03

SB 2437

Testimony. SB 2437
DATE: Monday, February 01, 2010
TIME: 1:15PM
PLACE: Conference Room 225


To: Senate and House Education Committee members
From: Malcolm Kirkpatrick
In re: SB 2437
2010-02--1

Please DO NOT support SB 2437 as written.

This bill proposes to address a shortfall in tax receipts with an increase in the rate at which the State taxes commercial activity. An implicit assumption behind this bill is that the proposed rate increase will generate increased revenues. A further assumption behind this bill is that the State will spend the generated revenues wisely.

Both assumptions are probably false.

Across the US, tax receipts declined as commercial activity declined. Tax receipts will recover when commercial activity recovers. Taxes have the same effect as fines. You can without mistake consider a tax as a fine on the taxed activity. Taxes reduce the entrepreneur's incentive to start a business, the investor's incentive to lend, and the tradesman's incentive to practice his trade.

Hawaii is not the only State under financial stress. Look to California to see Hawaii's future. California faces a $10 billion per year projected budget shortfall where ever-increasing demands by an unrestrained public sector have caused a collapse in real estate prices and new business start-ups. Anyone who buys land in California paints a target on his back. Anyone who opens a business in that State volunteers to be bled white. Investors and productive workers have fled. They will flee Hawaii, also.

SB 2437 lacks any indication that Hawaii's legislature intends to reduce the demands made upon the productive private sector by this State's bloated public sector. Hawaii's tax-subsidized K-Ph.D. education industry exhibits the defects of tax-subsidized State-monopoly industries elsewhere. Across industries, across countries, monopolies deliver wretched goods and services at high cost and subsidized goods are over-consumed.

The people of Hawaii are among the highest taxed in the US, as measured by total State and local expenditures per capita. Hawaii's State-monopoly school system cost taxpayers nearly $15,000 per pupil to operate in the 2005-2006 school year, when the DOE (2008 Digest of Education Statistics) reported total revenues over $2,703,718,000(table 172) and total enrollment of 180,728 (table 34). $2,703,718,000/180728= $14,960

The nearly $3 billion per year DOE budget total does not include two large additional costs of this system. The cost of the State-monopoly school system includes the opportunity cost to students of the time they spend in school and the cost to society of the lost innovation in instructional methods which a competitive market would generate. The lost opportunity cost appears as reduced lifetime earnings, reduced longevity, losses due to crime, and the cost of prison for the poor kids whose lives we trash.

For all this cost to the people of Hawaii, the tax-subsidized State-monopoly education industry delivers a level of performance which puts Hawaii in the national cellar. By some measures we are dead last. The 1996 TIMSS placed Singapore at the top of international rankings and the US among the laggards among the world's industrial democracies. The Singapore fifth (5th) percentile score (TIMSS 8th grade Math) was higher than the US fiftieth (50th) percentile score. With Hawaii's DOE delivering instruction which puts Hawaii students in the national cellar, Hawaii's valedictorians will be shining Singapore's janitors' shoes.

Will higher tax rates repair Hawaii's dysfunctional school system?

Arthur Laffer summarized the relation between tax rates and tax revenues with the notorious Laffer Curve, the inverted parabola. Critics who ridicule the Laffer Curve reveal more about themselves than about Dr. Laffer. Charles L. Schultze, who served as chairman of the United States Council of Economic Advisers during the Carter Administration and as director of the U.S. Bureau of the Budget from 1965-67 during the Johnson Administration and as President of the American Economic Association, called the Laffer curve a straightforeward consequence of standard economic analysis.

Increased tax rates will not generate increased revenue, and the Hawaii's K-PhD State-monopoly education industry will not improve with more money.

Across the US, between 1920 and 2006, total expenditure per pupil in average daily attendance increased from $685 to $11,643 and current expenditure per pupil in average daily attendance increased from $571 to $10,041, in constant 2007 dollars, according to table 181 of the 2008 Digest of Education Statistics.

In Hawaii, current expenditure per pupil in fall enrollment has increased from $4,280 in 1970 to $10,131 in inflation-adjusted dollars, according to table 184 of the 2008 Digest of Education Statistics.

It does not take 12 years at $10,758 (table 182, current expenditures per pupil in Fall enrollment, 2005-2006), or $14,960 to teach a normal child to read and compute. Most vocational training occurs more effectively on the job than in a classroom. State provision of History, Civics, Economics, or other "social studies" is a threat to democracy, just as State operation of news media would be (is, in totalitarian countries).

Until Hawaii's politicians reject the demands of Hawaii's predatory public sector, investors will shun this State and entrepreneurs will take their business overseas or underground.

Thank you for this opportunity to speak.