Author: gary-watts@sbcglobal.net

Or Pooping in the OCPA’s Backyard

   ID’d by John Zachritz                         Saguaro National Park, Tucson, AZ

The impending confirmation hearing on the appointment of Oklahoma Attorney General Scott Pruitt to head the nation’s Environmental Protection Agency reminds me that I promised in my 12/3/2016 post O Regulation! My Regulation! to say more about the SBA study underlying OCPA President Small’s unqualified statement that federal regulations cost US businesses $1.75 trillion annually.  This from my post referring to his post on www.ocpathink.org:

It didn’t take long to find a post on October 14, 2016, “Free Market Friday:  A Simple Truth” by Jonathan Small, President of the OCPA.  He relays “According to a study by the Small Business Administration, federal regulations drain from $1.75 trillion to $2.02 trillion from our economy each year.” 

His statement is supported by the SBA study by Nicole V. Crain and W. Mark Crain commissioned by the Small Business Administration, Office of Advocacy, titled “The Impact of Regulatory Costs on Small Firms” dated September, 2010.  The report does estimate the annual cost of federal regulations at more than $1.75 trillion and that the burden is 36 percent greater on small businesses than on large firms (500 or more employees).  Their estimate of the total cost is broken into four categories:  economic (a catch-all of anti-trust, foreign trade, financial, etc., regulations); environmental (like clean air and clean water); tax compliance (like collection and payment of employment and income taxes); and occupational safety and health and homeland security (like mine safety inspections and airport security).  The largest category, according to their report, is economic so I focused first on it.

Defining and measuring the “costs” of complying with regulations is a challenging exercise that may on the surface appear easy to do.  One experience I had with this was when my employer school district acquired a site for the construction of a new elementary school from the city that had previously been used for the disposal of sludge, i.e. the sewage from housing additions that subsequently were placed on city sewer service.  When it became known that the site may also have been used for the disposal of street sweepings, including manufacturing areas that used heavy metals, the school district was required to incur the expense of having further environmental impact analysis performed.  My best memory is that the analysis led to the inclusion of some mitigation work, i.e. removal of sludge and covering with new dirt, as part of the site preparation prior to construction of the new school.  Those additional expenditures would be included in the costs of complying with federal regulations and increased the cost of the project.  Although we were inconvenienced by the process we recognized that it was needed to assure that a site to be used by children would not cause them to be exposed to heavy metals (think Flint, Michigan today).

While the authors of the SBA study were able to use similar costs aggregated by federal agencies for the last three categories of regulations they found no satisfactory source for the category of economic regulations, again the largest component of the stated $1.75 trillion total.  Instead they kind of backed into it by using what is called regression analysis to produce a model of different countries’ economic output per capita and using the World Bank’s Regulatory Quality Index as an independent variable.  If I followed their logic, and not certain I did, after obtaining a model that accurately predicted economic output per capita for 25 countries, including the United States, with the Regulatory Quality Index explaining 9.4% of each country’s economic output (higher quality means more output) they did a simple proration to conclude that if the United States had a perfect (according to the World Bank) regulatory environment its output would be 8.7% greater—according to their model—and that amounts to $1.24 trillion out of our $14+ trillion economy (2008 dollars).

This sounds really horrible, at least that would be the headline message Mr. Small and the other limited-thinkers at the OCPA would have you take away.  But here’s a couple of thoughts.  First we should learn more about the Regulatory Quality Index before depending on it as a basis for driving our discussion about the merits of federal regulations.  Here’s as far as I got, namely to find this from the World Bank, an “Ease of Doing Business” ranking of 190 countries based on their business friendly regulatory environment, showing the United States ranked number 8 out of 190 (http://www.doingbusiness.org/Rankings).  That certainly generates a very different headline and starting point for discussion than Mr. Small’s lament about $1.75 trillion.

Second we would need to learn more about the limitations of the methodology used by the report’s authors.  At one point in my life, a senior economics student with a minor in mathematics and statistics, I could have taken a crude stab at critiquing the report.  Now doing that would be way out of my league (and far, far beyond any of the “fellows” at the OCPA).  But thinking about it brought back memories of my part time job as a research assistant for two of my economics professors.  They were working with housing quality data from the U. S. Census and attempting to build a regression analysis model with that data (I wish my memory was more specific about their work).  My role was to transfer the data from the Census, and I think other sources, to computer punch cards (we’re talking 1968-1969 here), and then collate those data cards with the punch cards that specified the mathematical calculations for the regression analysis for submission to the university’s mainframe computer for processing.   Usually I would submit a stack of cards in the evening, after making changes/additions as directed by the professors, and then pick up the results the next morning for them to review.

One memory from that experience was a little amusement that the professors’ underlying theories for the model they were seeking to construct would change as they sought the magic combination of independent variables that would yield a statistically significant result, and in turn the basis of a publishable paper which, in the increasingly mathematical world of economics, was what was expected.  That experience makes me wonder about the selection of independent variables (i.e. “fixed broadband subscribers per 100 people”) by the Crains (authors of the report) and their choice of 25 countries (why not 190?); but I’m way out of my league here and will leave that to their peer reviewers.

Another memory was my amazement at how rapidly our nation’s housing quality had improved during the three decades of data available to us.  This excerpt from a recent article captures the underlying change:

The first Census of housing in 1940 labeled 45.4 percent of owner-occupied units as substandard, which was defined as housing which lacked complete plumbing facilities or was dilapidated. This share dropped sharply over the next several decades, falling all the way to 6.1 percent in 1970 according to Clemmer and Simonson’s analysis in a 1983 article in the AREUEA Journal.  (http://housingperspectives.blogspot.com/2013/02/the-return-of-substandard-housing.html)

Most of the “substandard” housing was classified as such because it lacked complete indoor plumbing.  I remember being a little befuddled by that because I knew my father had grown up in a perfectly fine small-town house in Oklahoma with an outhouse in lieu of an indoor bathroom.  To me then that was just different—not substandard like one that was “dilapidated”.  In fact, of our children’s four grandparents–two still alive as were all four to see in this new millennium–three grew up with outhouses and thus in housing that was likely part of that 45.4 percent in 1940.  To me today I quite agree that my father and my in-laws grew up in substandard housing, but no worse for the wear I’d also say, just lots of fun stories to hear about reading the Sears catalog cover to cover, tipping over outhouses on Halloween, and how every boy signed up for a school sport when the new school building included hot showers.

Today I suspect there are few locations in the United States where one could construct a new house without complete indoor plumbing facilities.  The first requirements one would face, if one preferred to have an outhouse, would be local zoning and building code regulations.  If such were not in place where OCPA President Small resides, and I purchased a lot next to his and constructed a house with no indoor plumbing to remove my wastewater, i.e. put an outhouse in the back yard next to his back yard, I suspect he would quickly become a fan of government regulation.  He could regale the local authorities with all kinds of arguments about health, water quality, odor, etc. as reasons why my freedom to choose how I eliminate my wastes and wastewater, imposes costs upon him, his family and our neighbors.  By impinging on my economic freedom, i.e. by passing laws that regulate disposal of my poop, Mr. Small and our neighbors would reap significant benefits.  But now my new house will cost tens of thousands more dollars because I’m required to send my poop and wastewater into a proper disposal system.  Translated if we look at this scenario and only ask is it right for government to impose tens of thousands of dollars of regulatory costs on me, without considering the benefits bestowed on my neighbors, then we are not seeing the full picture.

That is why President Small of the OCPA is a limited-thinker—he only wants you to think of regulations as “draining” production from the economy—without giving any consideration to the benefits received from those regulations.  Fortunately, the authors of the report, the Crains, are not so limited or cynical.  Here is what they say in their report:

Government regulations pervade modern life in America and other nations with few exceptions. Regulations are needed to provide the rules and structure for societies to properly function. This research, while mindful of this fact, does not consider the benefits of federal regulations, but looks at the overall costs imposed by them.  Little stock is taken of the cumulative effects.

By “cumulative effects” they mean comparing the benefits to the costs.  And this also from their report:

This report does not address the benefits of regulation, an important challenge that would be a logical next step toward achieving a rational regulatory system. The annual accounting statements compiled by OMB move toward such a system by presenting partial estimates of benefits as well as costs. This report, thus, should be seen as a building block toward a broader understanding of the costs of regulation, much of which creates important and substantial benefits. Like data on federal budgetary outcomes, the regulatory cost estimates inform the discussion about the balance between public and private sector control over resources. 

When the Arkansas poultry industry was shown to be using the Illinois River as its outhouse next to Oklahoma’s backyard (my attempt at a metaphor for the deterioration of water quality in the Illinois River which when I floated it in the 70’s was clear to the river bottom) former Attorney General Drew Edmondson took action to stop the obvious harm.  Unfortunately, his successor has not shown the same concern.  However hope springs eternal (too bad clean water doesn’t) so perhaps we can rely on Scott Pruitt as head of the EPA to assure that the benefits, not just the costs, of environmental regulations are considered before moving to eliminate or weaken them.  I won’t hold my breath–but perhaps I should, or at least acquire a face mask like many in China’s cities now do.

I conclude by sharing with you a couple of excerpts from the book Progressive Oklahoma, written by my now deceased former colleague at Tulsa Junior College, and as fine a softball second baseman as I was left fielder, Danney Goble.  I used to read these passages to my students at TJC when discussing the economics of government regulations.  Excerpts from Progressive Oklahoma by Dr. Danney Goble

Lunch is on me for the first to identify the location of the photo above, which is not of me pooping but rather avoiding a prickly seat while thinking in one of America’s fine national back yards.

These days when Tulsans hear the term “crybaby” many will think about the bicycle race day of Tulsa Tough that includes an ascent from Riverside Drive up Lawton Ave. (this is the Hill) to 13^th Street and back to Riverside on Galveston Ave. 

The same hill, except ascending on Houston Ave., greeted those of us who were early Tulsa Run participants a little over a mile from the finish line.  My father and I were among those who ran the first Tulsa Run in 1978.  We ran together at the same pace for most of the race and passed many who were walking up what we called “Houston Hill”.  For the record, that first year I ran my personal best of the approximately 25 Runs I participated in over the next 30 years till hanging up my shoes after the 30^th Run in 2007—also the year my father passed away.   That first year I outpaced my father by only 15 seconds even though he was 25 years my senior.  His example of disciplined cardio training and exercise begun in his late forties, after a diagnosis of nearly fatal angina, inspired me to do the same beginning in my late twenties and continuing today.  After 10 years Houston Hill was retired and the course re-oriented to a gentler ascent along Boulder Ave.

While Houston Hill never made me a crybaby or a walker—I always enjoyed passing many other runners on the Hill—I must confess to being a crybaby about the Electoral College.  Regardless I still read through the gloating messages on the OCPA site, like Jonathan Small’s post on 11/17/2016 “Policymaking Vindication” in which he congratulates the Oklahoma Legislature for rejecting efforts to elect our President by a national majority vote and Trent England’s post on 11/13/2016 “Trump result is a victory for the Electoral College” wherein he makes a tortured argument to rationalize why it is a good thing for our democratic process to have the winner of the popular vote be the loser. 

Then my eyes turned to the Education Policy piece by Greg Forster “Why Government governs Its Schools Wrong (And How to Fix It)”, November 1, 2016.   He offers five recommendations about how to improve “government schools” by improving their governance.  His first recommendation is that school district elections should be held at the same time as presidential elections so that the election of school board members won’t be controlled by the teachers’ unions and others whose interests are primarily financial and selfish.  His point is that when an election is stand-alone only those voters who are really interested in subject of the election will turn out to vote and therefore must be bad for our economy and democracy. 

Having stood for election eleven times (more including primaries) in Tulsa as a candidate for school board and city offices, always on a date well removed from the presidential election, I have some perspective on his proposition.  Most voters in my elections seemed to fall in one of three categories:  they were employees of the school district or the city, they were personally interested as parents, contractors or neighborhood/issue activists, or they were just good citizens who took the time to inform themselves and vote.  Regardless of their primary motivation at least they were making a reasonably informed decision.  Under Mr. Forster’s plan many, if not most, voters would make decisions about our schools and cities as an afterthought, i.e. they would show up to vote for their presidential candidate and find they are also asked to choose among local candidates about whom they’re not informed.  It also would become quite expensive to compete for voters’ attention as a school board or city council candidate when advertising media are dominated by the presidential and other higher profile contests.

More importantly why isn’t it enough for Mr. Forster that every registered voter has had the same opportunity to vote?  I think it is obvious that he is just another crybaby, namely that he doesn’t like the schools run by locally elected school boards so he wants to blame the school board election dates for thwarting what he believes is the true will of the majority, i.e. to get rid of government schools, just like I want to blame the Electoral College for giving us two presidents, out of the five most recent elections, who lost the popular vote.  I’ll believe he is not a crybaby when he also advocates getting rid of midterm elections for all federal and state-wide offices (and while we’re changing the Constitution(s) to do that we can get rid of the Electoral College as well!), because if voting for school boards is important enough to coincide with presidential elections then so too must he want all senators, representatives, governors, etc. to be selected at the same time when maybe at least half of the electorate shows up to vote. 

Election Turnout

In the future I’ll say more about Mr. Forster’s other recommendations, but here’s a comment on this one:   “Transparency is another area of major need, especially in finances. Our government school system is enormous, and almost totally opaque. Its finances are kept in outrageously Byzantine ways. If you doubt it, go try to find out even a simple piece of information, like how much money your state spends per student on special education.”  Mr. Forster, someone connected with the OCPA has created a “Data Tool” using Oklahoma’s OCAS data reported by all school districts to the State Department of Education.  The Tool captures expenditure detail by Function and Object codes.  Oklahoma school district expenditures are also coded by Program code.  The program code for special education expenditures is 239.  The ‘someone” who created the Data Tool can surely provide you with the statewide total for program code 239 expenditures and then show you how to divide by the number of students (all students or special education students, whichever you mean).  That will give you “how much money your state spends per student on special education”.  You don’t have to go to Istanbul, or even Constantinople, for that.

Lunch is on me for the first to identify the location of this blog’s “thinker” photo.

 May 8, 1990

Monday I attended the swearing-in ceremony for new Tulsa Mayor G T Bynum, City Auditor Criswell and our nine City Councilors.  It brought back memories of the swearing-in ceremony for Mayor Rodger Randle and the first Tulsa City Council on May 8, 1990, implementing the new city charter, overwhelmingly approved by Tulsa voters the year before, that changed city government from a five member City Commission elected at large, to a mayor and city council elected by districts.  My favorite memory from that day was the private lunch attended by just the eleven elected officials—Mayor Randle, Auditor Wood, Councilors Roberts, Hall, DeWitty, Nelson, Hogue, Benjamin, Polishuk, Bartlett and myself.  The event was mostly about developing camaraderie among the group but also to mildly tease the media since we would never again be able to gather together in private without violating the Open Meeting Act. 

Toward the end of the lunch, and not long before the scheduled public event was to commence, Mayor Randle addressed the group and at the end of his remarks proposed that we all agree to participate in a kind of Tontine whereby we would all agree to put in a certain sum of money that would be invested and made available to the last of us to survive, or according to other conditions we may all agree upon.  There was quick consensus that we should pledge to come together again in twenty-five years to see the status of our Tontine, and that Auditor Phil Wood, electing not to participate, would hold and invest the funds.  There was also consensus that all participating would put up their first month’s officeholder salary, being $1,000 for each of us nine councilors. 

At that point Mayor Randle, being a good Democrat who was liberal with other people’s money but conservative with his own, dropped out when he realized his required contribution would be near $6000.  After some discussion about the likelihood that only one of us would still be living in twenty-five years Mayor Randle offered a second criteria that might accelerate the determination of a winner.  Each councilor would make a prediction that the whole group had to agree could happen in the next twenty-five years; and if a councilor’s prediction in fact did happen, then that councilor would be eliminated from receiving the Tontine investment.  It was also agreed that the twenty-fifth anniversary lunch when we would gather again would be paid for by the winner.

Those twenty-five years passed all too quickly and on May 7, 2015 at a luncheon to celebrate the 25^th anniversary we had the opportunity to determine if there was a winner of the Tontine.  All current and former elected officials who had served under the Mayor/Council form of government that began in 1990 were invited and most were in attendance.  When the time came to consider the status of the Tontine it fell to me as the Chair of the first City Council, and obviously one of the surviving charter members, to announce the results in council district order:

Council District 1, Rev. B. S. Roberts, respected minister, civil rights leader and a true gentle giant, was deceased;

Council District 2, Darla Hall, lifelong West Tulsan and owner of a successful insurance agency, was deceased;

Council District 3, Dorothy DeWitty, gifted educator, retired school principal and community advocate, was deceased;

Council District 4, Gary Watts, whose prediction was “An African American will be elected President of the United States”, so I was disqualified;

Council District 5, Robert Nelson, small business owner who often displayed his gift for timely humor, was deceased;

Council District 6, James Hogue, attorney who was subsequently elected to a District Judge post, was deceased;

Council District 7, John Benjamin, whose prediction was “It will be legal for two men to marry in the State of Oklahoma”, delivered with a wink in my direction, so he was disqualified;

Council District 8, Richard Polishuk, whose prediction, resisted by the rest of us until we relented due to time constraints, was “The Vice President of the United States will shoot a man in the face and still remain in office”, so he was disqualified;

Council District 9, then current Mayor Dewey Bartlett, whose prediction, made after he consulted Terry Simonson outside our luncheon room, was “The elected officials of the City of Tulsa and County of Tulsa will work harmoniously together for the consolidation and efficiency of all local government services and betterment of the lives of their citizens in the metropolitan Tulsa region”, which clearly has not happened, so he was effectively the last one standing and winner of the Tontine.

However, it then fell to me to inform Dewey Bartlett that our beloved Auditor Phil Wood, who was deceased, in a weak moment during the late 1990s had sought investment advice from then Councilor Sam Roop who recommended he put it all in WorldCom stock.  Therefore, at the conclusion of the 25^th Anniversary luncheon, Dewey received no payoff but was given the invoice for the cost of the luncheon.

If you are still reading and still believing, be careful when you start walking—you may find one leg longer than the other.

Lunch is on me if you are the first to identify with some specificity the location of the photo above of the first eleven elected officials under the new city charter.

 

 

 

 

 

I have a little personal story to share about how government regulations have rescued me from my own lapse into limited-thinker status while vacationing this summer and so was determined to link my story to some silliness put out by the Oklahoma Council of Public Affairs.  It didn’t take long to find a post on October 14, 2016, “Free Market Friday:  A Simple Truth” by Jonathan Small, President of the OCPA.  He relays “According to a study by the Small Business Administration, federal regulations drain from $1.75 trillion to $2.02 trillion from our economy each year.”  When I searched for the study here is part of an official statement of clarification about the study that appears on the SBA website, “However, since the latest iteration of the study was released, the findings of the study have been taken out of context and certain theoretical estimates of costs have been presented publicly as verifiable facts.”  Say it isn’t so; surely the President of the OCPA wouldn’t take findings of a government study out of context and present them as verifiable facts.

I can’t wait to read the entire report, something I doubt anyone at the OCPA has done, because they would have noticed the part where the authors say, “This report does not address the benefits of regulation, an important challenge that would be a logical next step toward achieving a rational regulatory system.”  It’s like if Mr. Small told us that Amazon took $5,000 from him on Cyber Monday—shocking that a big bad corporation would rob an individual of his hard earned cash—leaving out the part about the big screen TV, new computer and other gadgets soon to be delivered to his house.  And I bet no sales taxes were collected.  After I read the report I’ll have more to say in a later post.

Now for my story of shame and redemption.  Over the last 35 years Linda and I have enjoyed many interesting travels to all 50 states and a few foreign countries.  Most of our trips involved flying to a destination and then renting a car.  Being a good econ, a rational decision-maker, or as my Italian daughter-in-law describes me, a pidocchioso (Italian slang for “stingy or cheapskate”), I always look for a low cost rental.  Knowing that the comprehensive and collision coverage through my auto insurance, as well as using a credit card that promised the same, would cover any damage to the rental car, I always decline the “full coverage” they try to frighten you into when picking up your car.  Their scare tactics did succeed in making me focus on the part of the routine where you carefully document existing scratches and dents to the vehicle—quite common with the rentals we used.

I’m guessing we have experienced at least 100 rentals over those years, including a couple of broken windows and flat tires, but the only times I paid more than the contract price were once when I returned a car inside the Chicago loop with a mostly empty tank after an out and back day trip to the highpoint of Illinois, then learned the contract estimated gallons used based on miles driven so I bought a couple of tanks at inflated prices, and again when I thought a parking ticket wouldn’t catch up with me in San Diego—lessons learned.

Now for my sad story beginning with our visit to see our son and his sposa in San Diego this past June.  We have usually rented a car when in San Diego, both for convenience and to take side trips to near attractions like Julian and Palm Springs during the work, from a variety of discount agencies like Fox, ACE, Payless, etc.  This visit the best deal was with Payless which we had used often enough that the agent didn’t even press me when I declined the insurance coverage.  This was my first time at the new multi-story shared facility that has replaced the many scattered rental locations near the airport.  I checked in on the first floor then went with the paperwork to the third floor to collect our car.  The attendant there handed me the key and told me the car’s location.  I found the Hyundai Accent, drove to their check-out line for the inspection, and then left.  After a nice week with our children just hanging out close to their house we returned the car to catch our flight, replacing all the fuel we used that week on the way for $13.23 at California prices and paying exactly the amount agreed, $142.95, for the week rental.

Mid July I was checking my Discover card activity online; this is a card I have used regularly, most years as my primary card, since 1987.  The econ in me likes their business model—easy to claim cash back with no overbearing promotion of confusing points, etc.  What I found, in addition to confirming the $142.95 for the rental, were two charges on July 11, more than two weeks after we had left San Diego, by Payless for $55.56 and $472.48.  I called Payless for an explanation.  The manager informed me that my rental car, on the Friday evening before we left on Sunday, had been identified by FasTrak, California’s equivalent of PikePass, for violating a 75 cents toll outside of San Francisco.  I informed them that there must be some obvious mistake because we had driven less than 150 miles total and never left San Diego with the car.  I asked for the documentation they had and, remembering their check-out procedure, asked that they review their records to see if they had our vehicle’s paperwork switched with a different Hyundai Accent.

After that unpleasant phone conversation I immediately went online to dispute both transactions.  The $55.56 was for their “administrative cost” in handling the notice of the toll violation.  The $472.48 was an assessment for miles driven outside the rental area of Southern California.  I had not paid attention to that or to the 150 miles per day (1050 total) restrictions because we were not going to drive much and were staying in the city.  If the car was driven outside Southern California the contract provided that all miles driven would be assessed at 35 cents per mile.  Their version of the final contract showed the car driven 1101 miles, 51 in excess of the allowed miles, and not enough to support $472.48 at 35 cents per mile.  They never explained how the amount was calculated or why I wasn’t charged for the 51 excess miles when I returned the car.

  Me and the car at the base of Mount Soledad

The disputes I filed with Discover were pursuant to the Fair Credit Billing Act and attendant regulations of the Federal Trade Commission which is responsible for its enforcement.  Upon filing the disputes, the two charges were immediately credited back to my account pending investigation of the matter.  I submitted what documents I could find:  the gas purchase receipt and a Friday evening restaurant meal signed receipt, both with my Discover card, the photo above of our car which was blue contrary to the contract which said gray, and my Friday golf green fee receipt; and offered eye witness testimony from the four of us that the car never left San Diego.

The Discover representatives said none of that was relevant; all they could consider was the contract with my signature and the same tag number as the car that violated the toll.  But, I argued, if the problem began because Payless gave me the keys to the wrong Hyundai Accent there is no way I can prove otherwise if all you consider is the contract that identifies the wrong car.  My lawyer brain spun several times over the realization that eyewitness testimony has been accepted for over two hundred years in this country to send people to prison and their deaths, too many times in error, but Discover would not consider it concerning a $525 billing dispute.

The two charges were then re-posted to my account and I was left to consider my options.  One was to sue Payless but the venue would be San Diego County and, even though my son is a lawyer, the expense of travel, cost of litigation and time involved are all reasons not to do that and reasons why the Fair Credit Billing Act was enacted to regulate resolution of these kinds of disputes where the consumer otherwise has little practical recourse.  Another was to let Discover try to collect from me, an option that would probably work for someone like me who could withstand the little damage it would do to my credit rating because I have no need to borrow money and already have other credit cards to use for convenience.  I chose the latter but also decided to avail myself of one more regulatory option—the Consumer Financial Protection Bureau that is one legacy of the Great Recession.

I went on the CFPB website and filed a complaint against Discover for failing to conduct a “reasonable investigation” concerning my dispute with Payless as required by the Fair Credit Billing Act.  That resulted in both charges being reversed again pending investigation of my CFPB complaint by Discover’s “executive offices” which also gave me a single point of contact with Discover.  I don’t know if this new investigation would have yielded a different result because at this same time something completely different happened—I got notice from FasTrak that the 75 cents was still due.

I had wrongly assumed that part of the $55.56 was 75 cents that Payless paid to FasTrak to clear the toll violation.  While pondering my response to FasTrak, I noticed something huge—the car tag on the Payless contract and FasTrak notice is 7E JE933, but the photo image used by FasTrak shows 7F JE933.  I filed an online dispute with FasTrak about that discrepancy (when I pointed this out to Discover they said the photo was not clear) and about two weeks later FasTrak expunged the violation.  I provided copies of the expunging email to both Discover and Payless because this unpaid toll was their “proof” the car I rented from Payless was driven outside of the permitted area.  I heard nothing from Payless but, about four and a half months after this all began, received notification from Discover that both charges were removed.

Without the FCBA and the CFPB I would probably be waiting for Discover to sue me or, a choice most consumers would not have, using my parental influence to have my son sue Payless in San Diego.  But what about the huge cost to our economy that worries Mr. Small and the OCPA?  The regulations are a burden or cost to Discover.  Revenue to pay that burden comes from merchants, like Payless, who give Discover a percentage of the transactions it processes.  Standard business practice among rental car companies encourages customers to use a credit card rather than cash or debit card for the simple reason that it offers easy protection, up to the customer’s credit limit, for damage to the rental car.  Seems one could almost argue that the regulatory environment works to the advantage of the rental companies, as well as consumers, by providing each with protections around a transaction that is fraught with risk.

It’s like Amazon taking that money from Mr. Small on Cyber Monday—he’s not complaining because he got value in exchange.  Maybe Discover would like to do away with the FCBA and the CFPB, but Discover passes the regulatory cost on to Payless that in turn passes it on to its customers who in turn should be damn glad to have the protections that facilitate commerce throughout our country which benefits Discover and Payless as well.  And when you rent a car confirm the license plate because it could be different than what is on your contract.

Lunch is on me if you are the first to ID the location of the top photo.  In honor of Jonathan Small and the OCPA a clue is the word Liberty.

 

 

  Fort Mackinac, Mackinac Island, MI

Actually I am not sure what this title means except that I hope to clean up some of the possible misinformation coming from Benjamin Scafidi’s work that is heavily cited by the OCPA.  I tackled his Surge 1 in my October 17, 2016 “Dirge for a Surge” so now will tackle his Surge 2.  This work built on the first by providing state by state information; specifically, he points out that from FY 1992 to FY 2009 Oklahoma’s “Change in Students” was 10% compared to a “Change in Administrators and other Non-Teaching Staff” of 28%.  His source is the U S Dept of Ed’s National Center for Education Statistics.  He goes on to do the math that at $40,000 each, if the growth in administrators and other non-teaching staff had only been 10%, then there would have been enough funding, about $230,000,000 each year, for teachers to get a $5,000 pay raise.

My critique of Surge 1 was that using the terminology “Administrators and Other Non-Teaching Staff” was intentional on his part to lead the reader to believe that the primary growth has been in administrators when I suspect it has been among the major support personnel categories of teacher assistants, food service workers, bus drivers, etc.  I argued that unless you pinpoint what job categories make up the growth and examine what laws, policies, and other factors have caused the increases, his Surge research merely crunches numbers without providing thoughtful policy direction.  I also disputed his use, which I think was in the spring presentation to OCPA, of $50,000 per non-teaching employee to come up with a $7,000 raise for teachers (lay off TA’s, bus drivers and food service workers and give teachers a raise!).  He uses $40,000 in Surge 2. 

Others have critiqued his work for similar reasons.  At the end of Surge 2 is his rendition of five categories of critiques that he received, it’s supposedly an academic paper, and his responses.

To put more of a face on this data, which deserves consideration by policy-makers, I tallied the current full time staff, numbering 603, at Sand Springs Public Schools by general job category.  Here’s the list:

317 Teachers (includes all certified personnel defined as teachers by law and OCAS coding, i.e. classroom teachers, counselors, therapists, nurses, librarians, etc.)                 

286 Administrators and Non-Teaching Personnel, specifically:

27 Administrators (serving 11 separate instructional sites)

82 Teacher Assistants (in the classroom)                                     

54 Food Service Workers                                                                 

36 Bus Drivers                                                                          

35 Building Custodians                                                                      

32 Office Workers (school sites and central administration)              

12 Maintenance, Warehouse and Mechanics  

4 Information Technology

4 Security Guards                

The total of the “bad” employees is 286; less than 10% of that number are administrators.  Why does Scafidi lead off that category with Administrators unless he is trying to bias the reader?

Most of these support personnel are employed only when students are in school, like teachers, on 180 day contracts.  While their hourly wages may be competitive in the marketplace, their total compensation is reduced significantly as a result.  If Scafidi would do the work he would find, at least in Oklahoma, that support personnel compensation (I mean total cost) is likely more in the range of $25,000, not $40,000.  Throw in 10% of administrators at $75,000 each and you end up with an average of $30,000, well under his $40,000 figure he uses to say we could give teachers the $5,000 raise.

Still it would be something.  Yet another way to look at this, using SDE Annual Report numbers shows ADA grew from 1992 at 556,608 to 603,409, an 8.4% increase (Scafidi’s figure is 10%) while “certified staff” (not FTE) increased from 44,164 to 52,167, an 18.1% increase.  This seems consistent with his central thesis that more and more adults are not getting the job done, if you believe the job is not getting done.  It also says that the student to certified staffing ratio fell from 12.6 to 11.6 over that 17-year period—should we expect that to be a game-changer?

In an earlier blog post I point out that part of the HB 1017 reforms of the early 90s was to expand early childhood education, which requires teacher assistants, and to lower class sizes, for which teacher assistants can be used as a safety valve.  If policy makers think there are too many adults, don’t whine about it, do the hard work and tell school districts what services to reduce, like school meals that are mostly paid for with federal funds that would disappear with the workers, early childhood education, or maybe convenient school bus service that working parents rely on.

Remember lunch is on me if you identify the photo location.  ID’d by Gretchen Hannefield.

    

  Wisconsin State Capitol in Madison

My experiences with Oklahoma charter schools began the first year (2000 I think) that charters were granted when, as an attorney with the Riggs Abney firm, I began providing services to Dove Science Academy.  For several years working with successive executive directors/principals who were immigrants from Turkey I just thought these leaders were clever men who had found a way to make a living and stay in the United States after completing their college education at places like Oklahoma State.  Some years into my work with Dove Science Academy I became aware of the fact that Dove was part of a loose network of schools, including the Harmony charter schools in Texas, that were inspired by the work of a Turkish cleric named Fethullah Gulen.  Nothing I learned caused me any concern, rather it made me curious to learn more about him when I could find the time.  All my interactions with the leadership of Dove, and later Discovery Schools of Tulsa, were with men and women who were wholly committed to educating the children of Tulsa parents who chose to send them to these charter schools.  I ended my legal representation of Dove, Discovery and another charter school in 2013 partly to free up more time for other activities, including learning more about the Gulen Movement or Hizmet as it is also called. 

Last Thursday Linda and I attended a lecture “Turkey Democracy in Peril” given by Dr. James C. Harrington, founder of the Texas Civil Rights Project, and hosted by The Dialogue Institute, a part of the Gulen Movement.  The President of Turkey Tayyip Erdogan has blamed the Gulen Movement for the unsuccessful and violent coup attempt in July, which the Movement has denied.  President Erdogan has also demanded the extradition of Fethullah Gulen back to Turkey from Pennsylvania where he has been in self-imposed exile since 1999; to date the U. S. Government has insisted that Turkey must show proof that Gulen was involved in the coup attempt and is following the standards of American due process that protect legal residents as well as citizens in our country.  In the aftermath of the coup attempt thousands of police, teachers, military and even judges who are suspected of being Gulen Movement sympathizers have been removed from their jobs and in some cases even jailed.  If you are interested in all of this I encourage you to look at websites connected to the Gulen Movement and also to read the October 17, 2016 New Yorker article “The Thirty-Year Coup”.

The following day, Friday the 14^th, I was in the courtroom of Oklahoma County District Judge Patricia Parrish to participate in a hearing on motions filed by both sides in the OTC Motor Vehicle Collections lawsuit I described in my 6/22/2016 Post “HB 2244”.  It was a pleasure to watch Judge Parrish work through her motion docket; she was well-prepared and respectful of all parties.  I couldn’t help but reflect on how valuable it is to all of us, and especially for those who have enjoyed the greatest economic success in our country, to have matters of controversy decided by judges who generally are unbiased and committed to fair treatment of all parties, even the least among us.  Unlike the remaining judges in Turkey who have not lost their positions for being supposed Gulen sympathizers, I doubt that Judge Parrish had any concern Friday that her decisions, or private beliefs, could cause her to lose her job the following week.  She ruled in favor of the eight plaintiff districts; I will post more documents on my “HB 2244” post and you can go to this link to see as well:  http://www.oscn.net/dockets/GetCaseInformation.aspx?db=oklahoma&number=CV-2016-1249

Saying nice things about a judiciary that just decided a case in favor of my clients may seem a little gratuitous, however it was not a fully successful week.  It had also been my pleasure early on to collaborate with the attorneys who represented the plaintiffs on behalf of the coalition Keeping Oklahoma’s Promises in litigation challenging the 2014 Legislature’s HB 2630 that places all new state workers into a defined contribution plan and phases out over time the defined benefit plan for state workers referred to as OPERS.  The plaintiffs alleged that the legislature had ignored its own law, the Oklahoma Pension Legislation Actuarial Analysis Act (OPLAAA), that requires a two-year process and serious actuarial analysis before making such a significant change to an Oklahoma pension plan.  The defendants maintained, and the Oklahoma Supreme Court agreed, that the Legislature, as a body, doesn’t have to follow its own laws.  You can read for yourself here:  http://www.oscn.net/dockets/GetCaseInformation.aspx?db=appellate&number=SD-114676&cmid=118391

Though obviously frustrating it is a fair decision and all the nice things I say above about Judge Parrish apply as well to our state supreme court.  The decision does not say that moving state workers to a defined contribution system is a good thing, rather it, not so simply, says that it is the Legislature’s choice.  For the reasons I point out in my August 24, 2016 Post “Lies, Damned Lies and Statistics” the Legislature made a bad choice.  It’s not that moving workers to a defined contribution system is bad in and of itself, rather by moving them away from a collective/group plan that has lower costs and higher investment yields they have assured that Oklahoma’s taxpayers will get less bang for our bucks invested in state workers’ retirement which remains an important means of recruiting quality employees to do the important work we expect from our state government.  The beneficiaries of the Legislature’s action are the local financial planners (some who are legislators) and Wall Street firms that will reap more fees and commissions from state workers who are now left to figure it all out on their own.

If the Legislature in 2014 had, in good faith and of its own volition, followed OPLAAA then it would have informed itself about the perils I discuss in “Lies, Damned Lies and Statistics” and perhaps it would have moved to a hybrid defined contribution plan that would retain the benefits to taxpayers and workers of being big and perpetual.  But it did not and instead it followed the simplistic game plan handed to them by the limited thinkers at OCPA.  See my first Post “Hello World” from June 20, 2016.

Cindy Kerr ID’d the photo.

 

    

Some weeks ago I promised to take a closer look at the work by Benjamin Scafidi with the Education Economics Center at Kennesaw State University in Georgia that was referenced in OCPA blogs on August 31 and March 4, 2016 by Brandon Dutcher.  You can find the Scafidi work by searching “The School Staffing Surge”—there are two reports and I’ve only looked at the first dated October 2012.

His reports document that over recent decades, going back to 1950, the growth in student population has been dwarfed by the growth in the numbers of teachers and even more so by the growth in the numbers of “Administrators and Other Staff”.  Those were the categories he referenced in his presentation to the OCPA last spring but I thought surely his academic work would show more detail.  It doesn’t.

That fact alone betrays Scafidi as something other than an academic scholar; rather he is in good company with the other limited thinkers at OCPA so likely they will tout his work again and again in the future.  The clear message he intended, probably before even starting his “research” was to produce a marketable piece showing how there’s plenty of money for teacher raises if only school districts would get rid of administrators (note how his category description is Administrators and Other Staff).

Having said that, the Surge in adult employment in our public school system certainly merits research and understanding.  However, throughout his first report the only external factor he refers to, and argues is not the cause, is No Child Left Behind.  What he doesn’t discuss is what makes up that “Other Staff”.

I’ll share exact numbers/percentages in the future about the Sand Springs Public Schools (will be interesting to check my memory), but here is the gist of what it will show.  During my ten years as its CFO the district employed between 600 and 650 full time employees.  The largest work group was certified teachers being about 350 I think; this number includes counselors, media specialists, nurses, etc. as defined in state law.  The second largest was classroom teacher assistants being about 100—that’s adults working with students assisting with classroom instruction Mr. Scafidi.  Then we had no more than 150 divided among three other work groups:  bus drivers, child nutrition workers, and maintenance and custodial personnel.  Administrators totaled about 25.

I was an elementary school student through most of the 1950’s in Tulsa.  I remember very large class sizes, especially library and gym class.  Breakfast was not served and seemed like more of us packed a lunch.  I never rode a school bus till I became an administrator at Sand Springs.  There were no students with disabilities in my schools and Kindergarten was half day—no four-year-old classes.

Without looking at each service now mandated for our public schools and the staff required to provide each service we can’t begin to understand why the overall numbers have increased.  Scafidi’s work poses a useful question, while implying an uninformed solution–get rid of all the unnecessary administrators.  As you can see from my estimates for Sand Springs, assuming a longitudinal look at its data would be similar to Scafidi’s numbers, getting rid of all administrators would not affect the trends appreciably.  The growth in “Other Staff”, the people who wipe noses, show flash cards, move children in their wheelchairs, clean the buildings at night, count the football game receipts, drive children safely to school, maintain the wifi, cook and serve meals, and other work needed to operate schools as expected and required, is what has given Scafidi and Dutcher their heartburn.  At least I’d be willing to bet my next state income tax cut that’s what real research would show.

If policy makers had that information, then we could thoughtfully consider our priorities for what we should expect of our public schools.  But no, that’s not why Scafidi and Dutcher are paid, to help improve government services; rather their mission is simply to bash anything government regardless of its value or service to our economy and democracy.  It’s a lot easier to do “research” when you already know your results.

More to come.  And as always lunch on me if you are the first to identify the photo location (in honor of our Presidential Election season).

Royals Stadium, Kansas City.  Oakland Athletics 16 – 4 victory.

My friend, colleague and extraordinary blogger (http://www.viewfromtheedge.net/) Rob Miller alerted me to content in a post by another friend, colleague and extraordinary blogger (https://okeducationtruths.wordpress.com/) Rick Cobb concerning Dave Bond, the OCPA fellow who told Scott Thompson on his fine program “Educate Oklahoma” that the legislature had made $100 million available for teacher raises through legislation sponsored by OCPA in 2015.  This time Mr. Bond was using a transaction at the Catoosa school district to demonstrate how there is lots of money available for teacher raises if boards and administrators would just make the right decisions.

But first that $100 million Mr. Bond promised.  I emailed him last week just to check in since we’d been away a couple of weeks and hoping to avoid more painful reading on the OCPA site.  So far no answer but today I notice this post from September 26:

Teachers Now Benefiting from OCPA Healthcare Proposal Thanks to the efforts of OCPA and some very capable lawmakers, many Oklahoma teachers and state employees will now see significant savings in out-of-pocket medical charges—while also saving money for taxpayers. Read now >> – See more at: http://www.ocpathink.org/post/freedom-flash-sept-26#sthash.UXGz5VOU.dpuf

And when you go to see more, drum roll please, here is what I found:

In 2015, OCPA pushed for the state to create HealthChoice Select, a program that could help teachers and other state employees save up to $30 million annually in out-of-pocket medical charges. Thanks to Rep. Mulready and Sen. Treat, this program is now a reality for 180,000 Oklahomans.

Which does seem to tie back to the House Bill 1567 Mr. Bond referenced in his email to me, see my Post “Something Special”.  However, I’m not seeing the $100 million for teacher pay increases.  Seems like Mr. Bond just made up “something special” just for Scott Thompson and the people of Oklahoma.

Move forward to Wednesday the 28^th and Mr. Bond along with Shawn Hime of OSSBA and a couple of others appeared on the local FOX station in OKC for a forum on SQ 779—the penny sales tax for education/teacher raises.  You can access it at Rick Cobb’s October 2 post; I’m not savvy enough to link here.  The fun part is at about 1:05 I think.  The OCPA’s tact is that absolutely teachers need a $5,000 raise (they’ll forget all about that after November 8), but a tax increase is not needed because the money is already there.

I sure can’t find Mr. Bond’s $100 million and looks like neither can he.  But then there’s the grand study I referred to in my “Once Upon a Time” Post that I’m definitely going to get to soon that says school districts have hired bunches of staff, not teachers, over the last 30+ years and all that money could have gone to teacher raises.  My informed hunch is that when we examine the data we’ll see that the largest “non-teacher” employee growth has been with teacher assistants—who work directly in classrooms with children.

Back to the FOX forum, Mr. Bond, to show how money is readily available for teacher pay raises, used Catoosa as an example.  I’m not fact checking any of this but from his and Shawn Hime’s comments it seems this happened:

1. Catoosa sold land for $700,000 and put it in the building fund.
2. Catoosa in 2013 voted $900,000 of bonds to erect a press box at the football stadium which they planned to combine with the $700,000 for a $1.6 million project.
3. It would cost $700,000 to give Catoosa teachers a $5,000 raise. Or maybe to restore a 5-day week since the 4 day week is only saving $200,000.

So Mr. Bond suggested Catoosa should do that and live with a $900,000 press box.  Mr. Hime came back at him saying it’s unconstitutional to use building fund money for teacher raises.  And Mr. Bond retorted he didn’t think anyone would sue over that.  Wow.

Food for thought:

I can’t cite this off the cuff but if the land sale was of land bought with bonds still outstanding then I believe the sale proceeds would first have to be used to retire the bonds.  However, from the comments I don’t think that applies.

Here’s the language in Title 70, Okla. Statutes, Section 1-117:

School districts which receive monies from rental, sale, or lease of buildings, impact aid monies, or grants, gifts or donations for capital purposes, whether from state, federal, or other sources, may place such monies in the building fund authorized by Section 1-118 of this title or the general fund authorized by this section.

So candidly it is not clear to me that Mr. Bond was proposing an “unconstitutional” act.  Even if the funds were restricted to building fund uses there is enough overlap in uses between the general and building funds (see Title 70, Okla. Statutes, Section 1-118) that for most school districts the $700,000 could be used to offset teacher pay increases from the general fund.

However, being legal doesn’t necessarily make it a good idea and certainly these facts are unique to Catoosa and cannot readily be applied to all districts.  The worst part about his proposal is to use one-time funds to finance a permanent teacher pay raise.  Any prudent superintendent and board would ask the question, OK Mr. Bond, your idea may get it done this year, but what about next?  Do we then sell the elementary school to keep the raises in place?

Rather it’s just more drivel from the OCPA, an imaginary $100 million here, an unneeded stadium press box there, and just lay off all the teacher assistants, then presto there’s your $5,000 teacher pay raise.

 

This post photo above is from our vacation through Oklahoma, Kansas, Missouri, Iowa, Wisconsin, Michigan, Indiana, Illinois, and back to Oklahoma through Missouri.  It’s a great country.  The event I was watching was as painful as an OCPA blog.  Lunch on me if you are the first to guess.

My good friend Jim Brown nailed the photo.  Heard today on NPR a state produced story linking recent and tragic Tulsa police shootings with memories of the 1921 Tulsa Race Riot.  Even though I attended Tulsa schools K-12 I did not learn about the riot until I taught at Wilson Junior High where Jim taught Oklahoma History to 9th graders and courageously included a unit on the Tulsa Race Riot.  He brought into his classroom riot survivors to share their memories with his students.

Eagle Bluff Lighthouse, Door County, WI

Linda and I returned over the weekend from a very enjoyable two-week car trip around Lake Michigan so even though I’m not quite caught up with other matters I have to post a quick blog so I can use one of the new photos.  While traveling I forced myself to read “Sales Tax for Education Would Generate Millions” by OCPA fellow Steve Anderson.  He and others at OCPA seem resigned to the passage of State Question 779 which is somewhat surprising and must frustrate them to no end—imagine citizens choosing to finance more government.  His post proposes ending the sales tax exemption for public schools in Oklahoma.  His only reasoning is:  “As conservatives, we believe that disincentivizing government spending is a good thing, not a bad thing.”  In other words if we just make public schools pay sales taxes then what they do will cost more and we’ll have less of it.

He later says:  “Moreover, private-sector companies pay these sales taxes.  Making the government pay them would help level the playing field.”  Sound economic theory informs us that it is important to “level the playing field” among competitors in the same market, but that it makes no sense when talking about the interaction of private sector companies with the government.  Milton Friedman must be turning over in his grave—though he has better use of his eternity than reading OCPA drivel.

The right way to approach government services in a market economy is to first determine what services are appropriate for government to provide, i.e. public education, then determine how much, i.e. what ages and academic standards, and finally determine how to do that most efficiently.  Public education is too complicated for a short or even one blog post so let’s look at another government service—lighthouses.

We spent a little time in Door County Wisconsin which has that name because the entrance to Green Bay was called the “doors of death” by the Native Americans and trappers in that area.  To make passage into Green Bay safer lighthouses were erected to orient sailors and warn of dangerous areas.  Lighthouses are a classic example of a service best provided by government for the simple reason that, unlike a movie in an indoor theater, it can be seen by all whether they have paid for it or not.    No one shipping company might have the resources to fund all the lighthouses needed for safety, and certainly would resist others benefitting without paying, so it has long been a natural for government to provide.

Having decided that government should erect lighthouses, then it must be decided where they will be located and how designed, constructed, etc.  Once those decisions are made then it makes sense to erect, operate and maintain the lighthouses as efficiently as possible so the fees and taxes needed are as low as possible.  Where in this scenario does it make sense to then impose a sales tax on the materials needed to construct them?  That would simply increase the cost and in turn increase the fees and taxes required for their construction.  I don’t get it.  I guess Mr. Anderson just wants fewer lighthouses, period, just because.

Remember lunch is on me if you are first to identify the photo location.  And by the way Dave Bond has still not explained where the $100 million for teacher raises he promised to Channel Six’s Scott Thompson and viewers—see my Something Special post.

***Gretchen Hannefield identified the photo***