Oklahoma Councilor for Public Accountability

Capitol Building in Jefferson City, MO.  ID’d by Dave Hansel

Having served as attorney for over a decade for two of Tulsa’s original charter schools (Deborah Brown and Dove Science Academy) and as CFO for a decade with the Sand Springs Public Schools, naturally the Tulsa World article last week announcing that the Oklahoma Charter Schools Association had filed suit against the Oklahoma State Department of Education to secure more equitable financing for charter schools caught my attention.  Here is the Charter Schools Lawsuit petition.  Additionally, my son Ethan and I were plaintiffs, he as a student and me as a school board member and taxpayer in Fair School Finance Council v State of Oklahoma, decided in 1987, which unsuccessfully challenged the then inequitable system used to finance Oklahoma’s school districts.  Even though the litigation was unsuccessful the legislature, beginning in the 1980s and culminating with House Bill 1017 25th Anniversary, see also Once Upon A Time, put in place our current State Aid Formula that I think works pretty well in equalizing state support for our school districts.  What follows is my attempt to provide information that will be helpful in any reconsideration of how Oklahoma’s public charter schools are financed.

The basic framework is in Title 70, specifically the Charter School Act, Section 3-142, which provides that the state revenue for charter schools is calculated the same way as it is for school districts, subject to as much as 5% being kept by a charter school sponsor for its services.  Additionally, charter schools can apply for all the same state and federal grant revenues that are available to school districts.  So what’s the lawsuit about?  Actually I don’t want to comment on the legal arguments set forth, but rather focus on financial facts.  The numerical examples given in opening paragraphs 11 and 12 are the only factual demonstration of inequality cited in the petition so most of this post focuses on that.  What is alluded to, but not demonstrated in the petition, is the fact that the State Aid Formula only seeks to address inequality among the General Fund revenues of school districts; it does not address inequality among school districts with respect to their Building Fund and Sinking Fund capacities and charter schools do not have access to these significant revenue sources that are provided for by the Oklahoma Constitution.  

Look at my Charter Smarter Chart way below.  The petition uses the State Department of Education’s Annual Report as its data source, which is shown in top section of the chart, for its allegation that for the 2013-2014 school year “the total revenues received by the Oklahoma City Public School District (OKCPS) less federal funds was $242,502,928.  The revenue per Capita by weighted ADM was $3,588 (e.g., per pupil funding).  Whereas, ASTEC charter school located within the boundaries of OKCPS has a total revenue received less federal funds of $661,095.  The revenue per Capita by weighted ADM was $501 (e.g., per pupil funding).  The charter school received approximately $3,087 less per student.”  It then goes on to state that the Tulsa Public Schools revenue per Capita that year was $3,827 whereas the per Capita revenue for Deborah Brown charter school in Tulsa was $3,126 which is $701 less.  The Annual Report numbers are clearly for only school districts’ and charter schools’ General Funds, not Building, Bond, Child Nutrition or Sinking Funds.

The TPS to Brown comparison is believable on its face but the OKCPS to ASTEC comparison doesn’t pass any test of believability so I went to the OCAS data for each of the four entities to compare with the Annual Audit data.  My Charter Smarter Chart below shows what I found.  OCAS reporting is done by code numbers for revenue sources.  1000s are local sources, 2000s are county sources, 3000s are state sources, 4000s are federal, 5000s are essentially in/out correcting entries, i.e. bookkeeping offsets that don’t represent actual new revenue, and 6000s for funds carried forward from prior years.  OKCPS, TPS and Brown all had two entries for 3200s, namely 3210 for state aid (the Formula) and 3250 for employee health insurance (revbrown, revtul, revokc); ASTEC had only the 3250 entry for health insurance and nothing for state aid, 3210 (revastec).  I looked at the ASTEC Formula state aid allocation sheet and it clearly shows they were to receive $4,000,693 that year.  So what happened to it?  Look at their entry for OCAS revenue code 5800 (defined in OCAS manual as “5800* CHARTER  SCHOOLS.  Revenue received for per capita costs as provided by the district.”) which is $3,974,411.41.  It doesn’t equal their prescribed allocation but is 99.3% and remember the school district may keep up to 5%; note that Brown’s 3210 entry is exactly 95% of their Brown Formulastate aid allocation which means their sponsor Langston University is retaining the full 5%.  After this adjustment is made the ASTEC per Capita amount becomes $3,513 and the difference with OKCPS melts away.

Now that we have apples to apples and believable numbers for all four we can proceed.  I fully agree with the lawsuit plaintiffs’ decision to exclude federal funds from the calculations since the state can’t control their allocation.  In my opinion there are other sources that should be excluded as well.  In the 1000s, local sources, I think it only makes sense to include local property taxes.  The other sources are categories like contributions (nice people giving money), sales of assets (old desks, buses, etc.), rental payments (private dance recital in the auditorium), interest earnings and much more that rise and fall year to year, are often associated with offsets, i.e. greater custodial expense to clean the auditorium after rental, and vary widely from district to district.  Including these in a discussion about inequality is very problematic.

In the 3000s, the 3300s are for child nutrition; some school districts and most charter schools report their school nutrition financials in their General Funds, but most school districts do not.  Every student has the same entitlement to federal and state support for the school nutrition programs so including anything related to it will distort the comparison the plaintiffs are seeking.  The 3500s to 3800s are for programs like Alternative Education, high school remediation (ACE) programs and Career Tech which have specific requirements and are almost all secondary level programs.  Secondary charter schools can avail their students of these services; comparing a TPS that includes these secondary programs to a Brown that is an elementary school is not apples to apples.  Therefore, my next section (subtractions) recalculates the per Capita or per WADM amounts using only the remaining revenue sources.

Finally, under “true state aid”, I remove all revenue sources for which both school districts and charter schools are either already entitled to receive based on some fair measure, like student population (3433 text books) and number of employees (3250 employee health insurance) or for which they can apply on an equal basis.  What is left are the revenue sources, property taxes and state dedicated revenues (1100s, 75% of 2100, 3110, 3120, 3130 and 3140) that are expressly accounted for in the formula, and a handful 2200 (county mortgage tax), 2300 (county repurchase fund) and 3150 (vehicle tax stamps) that are paid to school districts with no strings, or entitlement other than statute, attached.  Including only those revenue sources brings us to my final grouping a bottom line calculation that a more apples to apples comparison among the four entities listed in the Petition is OKCPS  , ASTEC  , TPS  , and Brown  .

This last part may make little sense if you have not learned how the state aid formula works, and if you haven’t you are not alone.  One statement I’ve run across on the Oklahoma Council of Public Affairs website, or in a publication referenced there, is by Martin Lueken of EdChoice   in his paper “Tax Credit Scholarship Audit” where he opines, “ These funding formulas are highly complex. In the school finance world there is an adage about individuals in each state who understand these formulas: You can count them on one hand.”

My experience with the House Bill 2244 fiasco which you can read about in these posts, A Turkish de Fright  and ‘Twas the Night Before Sine Die  , convinces me there are few if any in the legislature, or even their staffs, who understand it.  Otherwise why would they remain clueless for over a year and a half while some $20 million was shifted from over half the state’s school districts to the remaining 150 or so?  Then they completed the folly, wholly fixable and avoidable, this last session by changing motor vehicle collections allocations going forward without any compensating offset in the formula, assuring that “loser” districts will again fall way short next April while “winner” districts pocket a final month of gain.  You see those revenue sources that are included/charged in the formula are calculated not in actual collection amounts but by current valuation for property taxes and by prior year collections for the rest.  If there is a disconnect then school districts bear the win, more collected than predicted, or the loss, less collected than predicted.  Charter schools do not get to play this game, a fact that prevents them from being winners, but also protects them from losses like the motor vehicle collections fiasco which has cost TPS over $3 million. 

The revenues, 25% of 2100, and all of 2200, 2300 and 3150 source codes, that are without strings attached and available for any general fund purpose, are not available to charter schools.  Likewise, charter schools bear an up to 5% loss in state aid for their sponsor’s services.  The gap between TPS and Brown per WADM amounts largely disappears if the 5% is restored (it becomes $3032).

I doubt these discrepancies are sufficient to gain much interest regarding equity within the state aid formula among school districts and charter schools.  The real discrepancy in funding has to do with the lack of access by charter schools to financing like what school districts have through their Building and Sinking funds.  In effect most school districts can finance the costs of having and operating their schoolhouses without significant impact on their general funds, though those capacities vary widely among districts.  Charter schools on the other hand start with at least 5% less in operational funding through the formula and other sources and the first expense they bear is to rent or otherwise acquire a schoolhouse.  I think most charter schools do not have significant transportation costs which offsets some of the discrepancy caused by not having a building or sinking fund, but it doesn’t make up for all of it.  Those funds are established in our Constitution and are not really within the purview of the State Department of Education, the only defendant in the litigation, to affect.  Perhaps more about that in a later post.

As always lunch is on me for the first to ID the photo location.  ID’d by Dave Hansel

Huck Finn and Tom Sawyer in Hannibal, MO.  ID’d first by Shannon Meeks.

Much of the confusion surrounding what to do about financing our health care system in the United States results from not understanding how our health care markets differ from others.  Would you purchase insurance to protect you against the expense of having to purchase an airline ticket unexpectedly?  I hope not, but hope you have purchased insurance to protect you against the expenses of having an unexpected serious illness.  The former would be an irrational use of your money both because the cost of an airline ticket is affordable and it is hard to imagine being forced to purchase one in any case.  Contrast that with having an unexpected serious illness which you now cannot avoid and can cost tens of thousands of dollars to treat; it is irrational not to have insurance in place to protect against this loss.

In selecting a voice/data transmission provider for your home and mobile devices, do you need the assistance of a professional who has received eight years of post-secondary education and charges $400 per hour to recommend the right provider?  It might help but it really doesn’t make sense to expend that kind of money for advice making a decision that most people are comfortable making on their own after a little comparison shopping.  Contrast that with having an unexpected serious illness and your life depends on the right choices being made about your medical treatments going forward; likely the rational way to proceed is to rely on the recommendations of a trained physician whom you trust—if you even get to choose your physician.  Dennis Not The Menace.

Our health care markets are radically different from other markets in our economy, like airline transportation and voice/data transmission services, in that parties other than the consumer, such as insurance companies and physicians, are often the actual deciders about both the services provided and their cost, and often the consumer doesn’t have a real choice about the services provided.

To this point in my March 3, 2017 post A Spoonful of Sugar I attempted to explain why Oklahoma Council of Public Affairs Limited Thinker Mark Perry is misguided if he thinks relying on competitive markets alone, without public or collective intervention in health care insurance and services markets, is going to curb health care inflation and assure that we have a healthy workforce so our economy remains internationally competitive.  Simply stated there is a fundamental disconnect between individual consumers and the health care market place due to the respective roles of insurance companies and health care providers which are the true price setters, not consumers.  He tried to generalize from the beneficial results of market forces on pricing for elective cosmetic surgery procedures where individual consumers are the sole deciders about how much they are willing to pay for what quantities of these services, i.e. I don’t have to have a tummy tuck at all so I have the time to shop around for the best deal without any consideration of insurance since most elective procedures are not covered by major medical insurance. 

By contrast, if I am transported to the hospital while experiencing a stroke or heart attack, or even in the event of a less urgent illness, I do not have the practical opportunity to shop around, nor the ability to second guess the procedures and devices ordered on my behalf by the medical team working to save my life.  In any event the bulk of the costs will be borne by my insurer so it has the immediate motivation to control costs/negotiate prices, not me.  Anyhow you can read my post which reflects the kind of analysis most economists would say is a starting point to understanding health care price inflation and why health care markets do not follow the same dynamics that more competitive markets where consumers are informed buyers and insurers are not dominant.

All this went through my head on Wednesday morning this last week, July 26, listening to CNN host Chris Cuomo interview Anthony Scaramucci, a/k/a “the Mooch” and the new White House Communications Director, about the efforts by the President and Congress to repeal and replace Obamacare.  Mr. Scaramucci, referring to himself as trained in economics, argued that what will fix our health care system and control its inflation, is taking action like was done by the federal government in the airline and telecommunications industries.  In the early years of the airline industry the numbers and pricing of flights was regulated by the Civil Aeronautics Board.  Perhaps initially this regulation made sense in developing this new industry in an orderly way.  In 1978, with President Carter’s leadership, the industry was deregulated and most observers believe this resulted in more choices for consumers and lower prices about which the Mooch and I would agree.  But to believe the same can easily be accomplished with market forces in our health care system simply ignores the reality of the role played by health insurance companies and fact that consumers too often are not the real deciders. 

In the early years of the development of voice communications in the United States, AT&T became a regulated monopoly.  Like airline transportation perhaps this was initially necessary for the orderly development of nationwide communications.  In 1974 the U. S. Department of Justice filed anti-trust litigation to end AT&T’s national monopoly which led to its break-up in 1984.  Now we have a more competitive voice/data communications market with amazing technological innovation and many consumer choices, a market where consumers are the actual deciders without third-party intermediaries such as insurance companies and the health care providers.  A consumer can walk into any mobile phone service store and learn what services will be provided and for what price.   Try doing the same at a hospital, especially when you are under anesthesia. 

The Mooch may have the charm, but he’s no economist and doesn’t have the answers.  Comparing our health care markets to airlines or voice/data communications markets is not like comparing apples to oranges, it’s like comparing apples to baseballs.

As always lunch is on me to the first to ID the photo location.         

State Capitol of Illinois in Springfield, ID’d by Bruce Niemi

The short answer is that I am smarter than a bed bug and the Limited Thinkers at the Oklahoma Council of Public Affairs and their echo tank, the 1889 Institute, are not.  It is the confluence of recent occurrences that have led to this post.  First, we are in San Diego where a little over a year ago I posted my first blog while we were enjoying respite from our first month of battling bed bugs in our house.  Second, Roger Federer just won his ninth Wimbledon title.  And third, the Tulsa World reported recently that, as we do for reductions in state funding for K-12 education, Oklahoma now leads the nation in reductions in state funding for higher education.  These three seemingly unconnected happenings I will now connect.

Around 2004 I developed a fascination with tennis pro Roger Federer that I think remained within the bounds of normalcy, but will let you judge.  In addition to subscribing to more channels than the number of used tennis balls in my garage to get The Tennis Channel, I learned the time zone differences for each major, i.e. add 7 or subtract 17 for the Australian Open, subtract 6 for Wimbledon and 7 for the French Open, so I could faithfully watch as many of his matches as possible in real time.  In 2006 spring vacation timing allowed us watch him win the title at Indian Wells, defeating James Blake who, the night before, we cheered on to defeat Rafael Nadal.  We returned in 2007 but he had been knocked out in the first round so settled for a Nadal/Djokovic final.  In 2008 we traveled to the US Open and saw him defeat Gilles Muller in the quarterfinals en route to winning the title.  We were fortunate to again see him play, this time in the 2009 Montreal quarterfinals being his first tournament after the birth of his twin girls, but he was defeated by Jo Wilfred Tsonga.  In 2010 we traveled to Cincinnati and witnessed two victories, though the first was an early walkover due to injury by Isotomin and the second an outright default before the match began, also due to injury, by Kohlschreiber.  We returned to Indian Wells seeing him defeat both Nadal and John Isner for the title in 2012 and win a match in 2015.  He was there but not in action for our sessions at Wimbledon in 2006 and at Miami in 2013; we even held tickets to the men’s championship final at Wimbledon in 2005 when he defeated Andy Roddick, but could not make the trip.

The Cincinnati tournament was our only road trip and I remember hearing on National Public Radio while driving there that August that the United States was experiencing an explosion of bed bugs and Cincinnati was the epicenter of the infestation.  When we checked into our tournament motel and saw bugs climbing the walls inexplicably I did not think “bed bugs”, only that we were moving first thing the next morning, which we did and enjoyed sleeping without bugs and another day of tennis, though no more Federer due to the default.  We drove back home and gave no thought to bed bugs for almost six years till discovering that our bedroom was very infested.  With hindsight I realize I had seen one from time to time but disposed of each and thought each was just a small bug that had come in from the cold, until in May, 2016 I killed one close to our bed, saw the resulting bloodstain, and made a tentative internet identification.

After a thorough search of our room we found they were nesting in our mattresses and in multiple crevices near our bed, particularly those created by a built-in wardrobe (the bane of older homes is limited closet space).  I read all I could find until I thought I understood the critters with whom we had been sharing our bedroom.   The best information was a brochure Bed Bugs by the Illinois Department of Health.  Bed bugs, unlike other parasitic critters, thrive by keeping their hosts alive, near and unaware.  They operate in the dead of night; they inject an anesthetic when biting to avoid detection; many humans, including us, do not exhibit bite marks; and they do not transmit disease.   All of those characteristics made it possible that our bugs came from Cincinnati almost six years earlier, though I suspect they were more recent travelers from some other destination.  It’s just that the Cincinnati room was the only one where I’m sure we had bugs.

There are two main methods of extermination, one is to hire a professional exterminator and the other is a do it yourself “mechanical disruption” which involves intense cleaning, repeated vacuuming and removing the hosts.  I decided on the latter because we could easily relocate to a different bedroom in our house and we have hardwood floors which makes the cleaning and disruption much easier than with carpets.  Of course we disposed of the mattresses and bedding, and purchased mattress covers for all others in our house.  I taped off the many crevices and removed all items from areas where I knew they hid out.  I sprayed the known areas with a retail product and vacuumed daily for several days and then only when a bug was detected. 

Working against me was the fact that bed bugs have been known to survive up to six months without feeding; working for me was the fact that they generally will not travel more than twenty feet in search of a host, being more inclined to stay put for a host to return.  We never found evidence of bugs spreading outside our bedroom so we remained secure in the bedroom where we relocated.  At two months I decided to try sleeping on an air mattress, easy to vacuum, in our infested bedroom.  Unfortunately, I detected a presence.  At about five months we purchased a new bed and mattress that could be placed on bug traps (they’re like a round plastic maze) and away from previously infested areas.  We successfully slept in our own bedroom, with the bed backwards, for three months with no sign of bugs.  We then were able to restore and use our bedroom as we had seven months earlier, sans bugs, our battle ending in total victory for the humans, proving I am smarter than a bed bug.

Now enter the limited thinkers at the Oklahoma Council of Public Affairs, and their echo tank the 1889 Institute.  They have mindlessly argued for cutting Oklahoma’s public education expenditures for twenty-five years and it looks like their advocacy has succeeded as described in these posts from the Oklahoma Policy Institute:  OK Policy K12 Cuts  and  OK Policy Higher Ed Cuts.  The OCPA has never met a tax cut or service reduction they don’t like.  Their mission, based on the whims of their donors, is to always advocate for less government spending and taxation regardless of the facts, sound policy or common sense.  One has to wonder if they have ever pondered the economic success stories of places that have little in natural resources to extract and sell, like Silicon Valley, the Boston/Cambridge metro area, Hong Kong, London and the list can go on.  What distinguishes these economic engines is not low taxes and skimpy public services, but rather a coming together of a highly educated workforce coupled with access to world-class research institutions and smart public services, like public transportation, airports, harbors, schools, etc., that facilitate their economic success. 

Like bed bugs, leaders of these successful economic engines understand that for them to thrive their hosts, i.e. public education and infrastructure, must maintain vitality.  Unfortunately, the Limited Thinkers at the OCPA and 1889 Institute are not as smart as bed bugs.  They view taxes and government spending as a zero sum game and prefer to starve their host communities of essential collective services failing to recognize that smart investments can be made by public, as well as private, entities.  If they had their way there would be no Cal Berkley, no interstate highway system, no public health research (like that produced by Illinois that I used to defeat bed bugs), and no “Greatest Generation” educated through the G. I. Bill.  Where they do want to direct public funds is to their private donor companies promoting virtual charter schools without accountability and individualized retirement savings for public employees with higher fees and lower returns.

Enough of that; you get the point.  It’s my birthday (I’m a 70 year old Geezer, Not An Old Geezer Yet) and I’m taking a break from doing real research to brag about my success conquering bed bugs and vent a little–like the OCPA/1889 limited thinkers regularly do.  As always lunch on me to the first to ID the photo location.   

 

 

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Oklahoma’s Capitol Building (taken by a kind construction worker)

It’s been about a year since I began this Blog for my own mental exercise and to engage in the public dialog afforded by our democracy.  I intended to do a kind of year in review and decided, after listening to the reading of our Declaration of Independence on National Public Radio as I have on many past Independence Days, to do so in the style of that most sacred document of our collective journey in democracy.   So here it is.

Declaration of Intelligence

When in the course of human events it becomes necessary for one Thinker to dissolve any respect which may have connected him with others and to assume going forward an expectation that such other thinkers will consistently fail to meet even minimal standards of research and reasoning,  losing respect among the populace of Oklahoma, the better and higher station to which the Laws of Economics and of Fact-Based Research entitle him, a decent respect to the opinion of his fellow Okies requires that he should declare the causes which impel him to the separation.

I hold these truths to be self-evident, that all thinkers are created equal, that they are endowed by their Creator with certain unalienable intellectual abilities, that among these are Empathy, Reasoning and the pursuit of Knowledge. That to develop these abilities, Governmental and other schools are instituted to educate thinkers, deriving their purpose from the consent of the governed.

That whenever any thinkers about Government become destructive of its just ends, it is the Right of the People to ignore or to ridicule them, and to support new thinkers about Government, laying their foundation on such reason and understanding about its function in the economy and state, as to them shall seem most likely to effect their Prosperity and Happiness. Prudence, indeed, will dictate that thinkers about Government long established should not be challenged for light and transient causes; and accordingly all experience hath shewn that people are more disposed to suffer, while evils are sufferable than to right themselves by ignoring the thinkers to which they are accustomed. But when a long train of abuses and willful neglect of reason, pursuing invariably the same Object evinces a design to seduce them under a spell of false Economics and Public Policy, it is their right, it is their duty, to throw off such limited thinkers about Government, and to support new Guides for their future prosperity. Such has been the patient sufferance of these Okies; and such is now the necessity which constrains them to discard their former Limited Thinkers about Government. The history of the present Tanks of Limited Thinkers, the Oklahoma Council of Public Affairs and its echo tank The 1889 Institute, is a history of repeated injuries, shoddy research and fallacious reasoning, all having in direct object the establishment of false Economics and Policy over our State. To prove this, let Facts be submitted to a candid world.

They have distorted facts and logic to deprive state and education workers of a dependable retirement income at greater expense to taxpayers (Hello World, A Turkish de Fright, Fouling Our Nest….Egg, What’s Up Doc? or Should Teachers Eat A Carrot? and When Two Wrongs Make A Right);

They disparage our children’s teachers, publish inconsistent and exaggerated per pupil expenditure data and, while advocating accessing the public purse for private school education, do not ascertain the number of pupils to be so financed and their cost, thus demonstrating their inability to do even the most basic research (This is too much fun, In A Flash);

They advocate the abrogation of contracts, fiscal profligacy and violation of state law in order to deceive the public about the financial status of its various school districts, demonstrating their utter void of understanding about the constitutional and statutory framework by which said school districts must abide (Where to begin);

They fail to understand and apply simple concepts of economic logic presented to introductory students for decades such as the avoidance of double counting and the Paradox of Thrift (Paradox, Double, Double, Toil and Trouble);

They use baseless assumptions and misleading calculations to misinform taxpayers about the true cost of public pensions, all in a likely effort to increase the fee and management income of their benefactors while damaging the financial security of state and education employees (Lies, Damn lies);

They have denied the adverse impact on the State’s revenues and services caused by their advocacy of demonstrably false “Supply Side” tax cuts for the wealthy using distorted and uninformed financial data (Waiting for Dave);

They have falsely represented on statewide television inconsequential legislation as a source of “$100 million in savings on employee health insurance” that could be used to finance pay raises for Oklahoma teachers when in fact health insurance costs have increased (Waiting , Something Special, Done Waiting for Mr. Bond);

They advocate the wasteful and nonsensical imposition of sales taxes on purchases by the state and its political subdivisions, demonstrating their maniacal commitment to the reduction of all publicly financed activities and improvements (lighthouses, The 64 Million Dollar Question);

They consistently advocate the use of one-time funding for recurring expenses of our state’s school districts, thus encouraging fiscally irresponsible action (done waiting);

They advocate increasing teacher compensation by laying off other school employees, deceptively labeled as administrators, without making any reasonable inquiry or conducting any meaningful research about the purpose and necessity of the work they perform for the children of our state, demonstrating their disregard for informed public policy (A dirge for a surge; Purging the Surge, The Ugly Step-Thinker);

They have falsely and relentlessly peddled misinformation assuring the public that school districts have sufficient funding to increase their teachers’ compensation (the glib, the bad, and the ugly);

They have advocated the removal of regulations to permit private companies to pollute the air we breathe, spoil our sources of drinking water, damage the health and safety of our children, and monopolize the provision of essential products and services without constraint of price, by selectively citing only the costs of implementing said regulations without citing the offsetting and exceeding benefits to our state and its people (o regulation, Onward to the Past);

They hypocritically extol the virtues of a national electoral system that can anoint the choice of a minority of voters as the winner while bemoaning the results of local school elections because only a minority exercise their right to vote (crybabies);

They employ simplistic and deceptive graphing techniques to obscure the underlying data relationships and to provide false support for their preconceived conclusions, demonstrating either their inability to analyze data or their intent to mislead the public (short and not the point);

They use selective and elective medical procedures market outcomes to generalize the impact their unrealistic, short-sighted and parsimonious policies would have on the provision of and payment for essential health care services needed to maintain the health and productivity of our nation’s workforce (Spoonful, Dennis Not The Menace, Not An Old Geezer Yet, Looking for Mr. James);

They consistently present ill-researched, glib and incomplete analyses of the effectiveness of governmental services at all levels to further their agenda of delivering tax reduction for their benefactors (they made it look, Shooting Fish in a Tank, Who Wants to be a Billionaire?, Freedom From Want, There’s No Such Thing as a Free Lunch);

They present data and policy recommendations concerning Oklahoma teachers’ compensation that are bereft of reason, accuracy and understanding of fundamental school district finance and public pension actuarial analysis (miserable);

When their rantings are challenged based on facts and reason they resort to baseless threats and name-calling (you’re not in);

They claim intelligent thought based on their doctoral credentials but produce clearly erroneous data grossly exaggerating the level of teacher compensation in Oklahoma, inflated calculations to support their fantasy of diseconomies of scale among school districts and an incorrect description of the growth in per pupil expenditures, demonstrating either ignorance of economics and statistics or an intent to deceive (double, A Rise By Any Other Name); and

 They copy and present graphic data that is clearly erroneous, in excess of one billion dollars, in support of their conclusions, and show no curiosity, or perhaps ability, to understand a billion dollar deviation (unbelievable, There You Go Again).

In every stage of these Transgressions I have Posted my Correction in the simplest terms: My repeated Posts have been answered only by repeated injury. A Tank, whose character is thus marked by every act which may define a Limited Thinker, is unfit to be an advisor to a free people.

Nor have I been wanting in attentions to our Policy-Makers. I have warned them from time to time of attempts by these Tanks to extend an unwarrantable influence over them. I have reminded them of the circumstances of our progress and improvement here. I have appealed to their native justice and magnanimity, and I have conjured them by the ties of common sense to disavow these usurpations, which would inevitably interrupt our progress as a state. They too often have been deaf to the voice of justice and of reason. We must, therefore, acquiesce in the necessity of our improvement as a state, and hold them, as we hold the rest of mankind, accountable for their intentional and glib acts, but still as Friends.

I, therefore, the Oklahoma Councilor for Public Accountability, a Thinker, appealing to the Readers of this Blog for the rectitude of my intentions, do, in the Name, and by Authority of the good reason and fact-based research, solemnly publish and declare, That all Oklahomans of Right ought to be Free and Independent of the unreasoned and harmful Tank-based Limited Thinkers of the Oklahoma Council of Public Affairs and its echo tank The 1889 Institute; and that as Free and Independent Thinkers, we have full Power to ignore their Limited Thinking which Independent Thinkers may of right do. — And for the support of this Declaration, with a firm reliance on the protection of rational thought and sound research, do pledge to hold them accountable for another year—though maybe not as often.

Oklahoma Councilor for Public Accountability

As always lunch is on me for the first to ID the introductory photo location.  ID’d by Peg Gotthold.

 

It’s been almost a year since I commented on anything written by Oklahoma Council of Public Affairs contributor Greg Forster who is a fellow with the Friedman Foundation for Educational Choice.  He’s the one who early on eased my conscience about referring to these fellows as Limited Thinkers when he used the oh so clever term “Blob” to refer to Oklahoma’s school teachers, bus drivers, classroom assistants, cafeteria workers, custodians and building principals who work hard to educate over 650,000 children in our state.  In his latest “contribution” to the Oklahoma Council of Public Affairs website, Does School Choice Expand the Welfare State?, June 1, 2017, he doubles down on his name calling, but argues so shallowly that “in a flash” we will see how he is so enamored with his own rhetoric that he misses the point entirely.

But first to another flash, the Green Flash, the second of my Pacific Beach trifecta sightings (see A Rise By Any Other Name for the first).  Don’t you love the segue?  It may have been our second visit to San Diego–first was with children so no romance–in the late eighties, but was at least early nineties, when we enjoyed a dinner for two at the Marine Room in the La Jolla Shores area.  Linda and I were watching a beautiful sunset through the picture window on a perfectly clear evening and when the sun finally disappeared beneath the ocean we turned to each other and said, simultaneously, “Did you see that?”  Right at the moment the sun disappeared, its yellow falling behind the ocean’s blue, a brief green flash of light appeared and then was gone.  It was memorable for us, but I don’t think we were able to substantiate our vision until a few years later when an internet search confirmed that our experience was a real phenomenon.

As we became regular semiannual visitors to San Diego in the years that followed our son’s permanent relocation there in 1998, we became well acquainted with the Pacific Beach and Mission Beach neighborhoods, including a restaurant named the Green Flash right on the beach promenade where Pacific Beach becomes Mission Beach (it closed a couple of years ago).  We have watched many sunsets over the years from these beaches and mostly due to cloudy skies have usually failed to see the green flash; but at least twice, and maybe more, we have again enjoyed the brief pleasure of a green flash sighting.  It is a phenomenon, according to internet postings, that can occur with a sunset over any body of water under the right conditions, though we have not experienced it elsewhere.  To my simple understanding it is just the effect of the color wheel, blue and yellow briefly mixing to create the green flash.

Here is a photo something like what we’ve seen I found on the internet, followed by a photo we took when we tried, but failed, to see the flash at PB.

Now to Limited Thinker Forster.  It’s hard to wade through his language like “omnipotent and omnibenevolent state”, “ever-expanding technocratic state”, “bureaucratically bloated, lethargic, and incompetent”, “leeches who suck money out of the school bureaucracy without contributing to education”, and “greed and sloth”, and get directly to his point, which centers around this quote by State Superintendent Joy Hofmeister who, concerned about the state’s revenue shortfall, opposed legislation that would establish Education Savings Accounts (ESAs) in Oklahoma, “Is this the right year, is this the right time to start a new government program?”  In Forster’s one size fits all little mind this marks Superintendent Hofmeister’s concern as disingenuous “anti-government rhetoric”.  You see Forster is employed by a foundation whose mission is to promote the expansion of “school choice” legislation like Education Savings Accounts, so Hofmeister’s opposition is messing with his livelihood which includes trying to deliver access to tax dollars to those businesses that make financial contributions to his employer (just guessing here, but bet it’s true).  You see public education in this country spends a lot of money and shifting control of those expenditures to individual parents, whose only responsibility is to their family, not to the public who has provided the funding through taxation, will open up new markets to businesses seeking to profit.  That’s not necessarily bad, though I doubt Forster’s claim that such will always “improve educational outcomes”, and suspect his vision will lead to more TV Ads for the latest and greatest sure fire educational programs than we now have for prescription drugs, though absent the warnings.

Anyhow I digress.  My “in a flash” point is that Forster misses the point of Superintendent Hofmeister’s concern.  She is responsible for following the laws of this state and to supervise the provision of educational services to over 650,000 students; Forster is apparently only responsible for regurgitating the same anti-government rhetoric over and over.  I think “Is this the right year, is this the right time…” clearly is referring to the flat, at best, and uncertain budget she faces for FY 2018.  As a prudent public servant she is right to be concerned about any new program that could add to costs in the short run when, as Forster acknowledges, the state “can’t pay its bills”.  You see despite Forster’s generalized statements like “a well-designed school choice program won’t cost money, but merely redirect existing levels of spending.  Most choice programs actually save money for state budgets,” etc., thoughtful analysis concerning the short run impact suggests otherwise.

Here is how one researcher puts it:  “What can complicate the task of calculating potential voucher savings are other factors that can affect the results:  First and foremost, eligibility for a voucher program may include some students who would have enrolled in a private school even without the vouchers’ financial assistance.  This “private school propensity” effect is an incremental public cost that must be taken into account.”  Translated, what Hofmeister must be concerned about is that a new ESA program could draw in students who, without the ESA program, would have cost the state of Oklahoma nothing, but now become an additional cost.  According to the Oklahoma Council of Public Affairs there are some 100,000 private school students in Oklahoma (I show why the number is more like 45,000 in my post This Is Too Much Fun) so it is not a concern she can ignore.  I don’t know if anyone attempted to estimate this additional cost with respect to the Education Savings Account legislation Forster is mourning, but a good resource in making that effort would be to check out the work of the researcher I quote above, namely Jeff Spalding whose paper “The-School-Voucher-Audit:  Do Publicly Funded Private School Choice Programs Save Money?” was published by, wait for the drum roll, The Friedman Foundation for Educational Choice, Forster’s employer, in 2014.

This gets me back to my primary gripe about the Oklahoma Council of Public Affairs and its brother The 1889 Institute.  Hofmeister’s comment was reacting to actual legislation that had been filed.  She was right to be concerned about its impact on the state’s budget and needed to look no further than The Friedman Foundation to find support for her concern.  What a good think tank would do, one that is serious about real research, is to produce an analysis of the incremental cost to implement the ESA legislation, perhaps using Spalding’s work as a framework for that analysis.  I haven’t asked, but I doubt either one took the time and, sadly, doubt that either one has the thinker power to do such work.  They aren’t even curious enough about the underlying facts to figure out how many children are educated at home and by private schools, the necessary starting point.  What the OCPA has given us is just Forster’s misguided and warmed over sour grapes.  By the way, Mr. Forster, I’m still involved in government and I use email all the time.  When I do I keep it professional and to the point—you should try that, it works.

As always lunch is on me for the first to ID the location of the photo.

 

 

Nelson-Atkins Museum of Art, Kansas City.  ID’d by Greg Morris and John Gammie.

We just returned from a six-day road trip through a lot of farm land and a few small cities in five other states—a real

The day before we left I had lunch with one of the “fellows” at the Oklahoma Council of Public Affairs, yes one I have referred to as a limited thinker in a couple of posts, and B J Ryan, CFO for Moore Public Schools who had ID’d my Thinker photo from Roswell, New Mexico.  It is a burden of thinking about all things economic that I realize my Social Security income is dependent on the ongoing productivity and good graces of those currently employed as well as many, I hope, not yet even born.  For that reason, I try to share my good fortune by buying lunch on occasion for those who are paying into the Social Security Trust Fund and supporting public and private programs that help children become productive adults.  You see, unlike the Oklahoma Teachers Retirement System Trust Fund that is as real as much of Warren Buffet’s investments, the Social Security Trust Fund is mostly a creative accounting entry on the books of the United States Treasury so that the future security of my “entitlement” income depends less on the amount in the Trust Fund than on the ability and willingness of current workers to keep paying in.

The father of American conservative economic thought Milton Friedman used the phrase “There’s No Such Thing as a Free Lunch” to remind us that government programs that provide free services, such as SNAP or food stamp benefits, to individuals, no matter how deserving, may appear “free” to the recipients, but to society or the economy represent a diversion of resources from some, through taxation or public debt, to others, and often result in perverse incentives that lower overall productivity and welfare, possibly even for those receiving the “free” benefit.  One of his many books even bears that title.

The economic principle behind the phrase is “opportunity cost” which refers to the fact that using a resource to do one thing precludes it being used to do something else which (the “something else”) is in effect the real “cost” of the choice that has been made.  The lunch we enjoyed was not free to me because, obviously, the money I spent on it is now not available for my preferred “something else”, such as theater tickets.  And truly the lunch was not free to my guests because they lost the opportunity to use their time doing something else and instead had to listen to my old man stories.  It can be fairly stressful to think like an economist.

It would be helpful though if more of our political leaders in Oklahoma would think like economists.  A Tulsa World article on June 2, 2017 quoted several Oklahoma lawmakers who have come to the realization that there are essential services provided by the state that should be funded and that recent tax cuts have deprived our state of sufficient revenue to provide those services, i.e. we have a revenue problem.  But one legislator from Broken Arrow, showing his disagreement with the obvious, “repeated a favorite quote from Winston Churchill about a state trying to tax itself into prosperity and said, ‘Government does not produce wealth. Government consumes wealth. You as taxpayers, you as business owners, create wealth. That’s what we need more of — not more government.’”

I don’t know if Winston Churchill really said that, but if he did it was likely taken out of context.  Here are a couple of excerpts from Wikipedia about Churchill:

“In 1909, he set up Labour Exchanges to help unemployed people find work.[79] He helped draft the first unemployment pension legislation, the National Insurance Act of 1911.[80]…Churchill also assisted in passing the People’s Budget,[82] becoming President of the Budget League, an organisation set up in response to the opposition’s Budget Protest League.[83] The budget included the introduction of new taxes on the wealthy to allow for the creation of new social welfare programmes. After the budget bill was passed by the Commons in 1909 it was vetoed by the House of Lords. The Liberals then fought and won two general elections in January and December 1910 to gain a mandate for their reforms. The budget was passed after the first election, and after the second election the Parliament Act 1911, for which Churchill also campaigned, was passed. In 1910, he was promoted to Home Secretary…The People’s Budget attempted to introduce a heavy tax on land value, inspired by the economist and philosopher Henry George.[84]  In 1909, Churchill made several speeches with strong Georgist rhetoric,[85] stating that land ownership is at the source of all monopoly.[86] Furthermore, Churchill emphasises the difference between productive investment in capital (which he supports) and land speculation which gains an unearned income and has only negative consequences to society at large (“an evil”).[87]”

I realize later Churchill may have had different views on such domestic policy matters than did early Churchill, but still I suspect Churchill’s views on government’s role in the economy were always much more nuanced than the simple quote “Government does not produce wealth; Government consumes wealth” suggests.  Wealth, as economists understand the term, refers to productive resources regardless of how they are owned.  Having just driven almost 2,000 miles on federal and state highways it is apparent that our economic prosperity is enhanced by the real wealth that is our highway system for vehicular transportation.  Yet these roads, which are an important component of our national wealth, are owned by governments—does that make them inherently wasteful or unproductive?  At the same time cigarette packaging machines and equipment are owned by private companies and are also part of our national wealth—does that make them inherently superior to government owned wealth like school buildings?

Examples of government owned and produced wealth that has enhanced our prosperity throughout history abound and refute an over-simplified understanding of Churchill’s quote.  Successful economies rely on smart production of wealth by government, whether it’s a national interstate highway system, Tulsa’s Spavinaw water project, the production of hydro-electric power in the northwest, or an aircraft carrier that maintains open commercial transit throughout the world’s oceans.  These are all examples of physical capital that are part of our nation’s wealth.  We also enjoy enormous human capital in the form of an educated, healthy and productive population, which further adds to our nation’s prosperity.  The quality of our human capital is partly due to smart government investments in education (public schools, G.I. Bill, etc.), food production (research at state universities), health care (medical research and various health insurance programs), and many other areas.

Because there’s no such thing as a free lunch when we choose to have government owned wealth and make smart government investment in education, health care, food and water supplies, energy production, etc., we must give up something else and we most often do so by paying taxes—duh.  Or we could do without those smart government investments and live in a country that would resemble any one of several nations on our planet that do not enjoy functioning governments able to produce the collective infrastructure wealth necessary for our economic prosperity.

As always lunch on me to the first to ID the location of the thinker in training photo above.

 

 

 

I began my summer “job” last week being chauffeur and companion for two 12 year olds so struggle for quality blog time.  That’s my excuse for opting to do a fairly superficial post with a summer theme.  One of our pleasures the past twenty years has been semiannual visits to San Diego, always including outings to the Pacific/Mission Beach area.  Our most fun visits include any of my “beach sightings trifecta” of grunion, the green flash and Slomo.  More about grunion and the green flash in later posts, we’ll focus on Slomo in this one.

Slomo is Dr. John Kitchin, a retired neurologist, who for many years has enjoyed inline skating up and down the Pacific/Mission Beach “boardwalk” in a graceful slow motion style, often accompanied by music.  He “dropped out” of the rat race for a very early retirement, pursuing his passion and bringing pleasure to many.  We have enjoyed a few sightings over the years and always keep an eye out while we are at the beach.  He is also a Geezer.  Here is a video link.

Slomo

(At the end of this post are photos from our last Slomo sighting on South Mission Beach in San Diego, December 30, 2017.  First is the actual photo, then below it is blown up to show Slomo in white hat, skating away from me.  I’m slow also.  And added is photo from January, 2020 when we actually met Slomo and visited with him at Pacific Beach.)

 

Intending no disrespect to Dr. Kitchin, or to “Dr.” Schlomach, I’m designating Byron Schlomach, Director of the 1889 Institute, as “Schlomo” because, even though he purports to have a PhD in Economics from Texas A & M, he has dropped out of using his training, to pursue something—maybe his passion, but not real economic analysis, more likely a steady income—while bringing pleasure and enlightenment only to himself and his donors.  I’ve critiqued Byron Schomach’s sloppy work before in Double, Double, Toil and Trouble, Later, Sooner and Miserables Love Company, some of which he has acknowledged to me, but he doesn’t correct his published “research” so until he shows himself worthy of the PhD he touts, in this and future posts he is Schlomo.

Schlomo’s latest is a May 2017 Policy Analysis titled “Public Education Spending In a Historical Context”.  I’ll try to find the time this summer to do more analysis of his “analysis” but for now just want to make a general comment and a pedantic correction to it.  The general comment is the bottom line of Schlomo’s “analysis” is that plenty of money has gone into K-12 education over the years (love it when he starts with 1920, a year that has so much relevance for us today) but that it isn’t getting to the classrooms or the teachers, rather it’s gone to employ “non-instructional staffing” who, we must conclude, do nothing to benefit students.  His “analysis” is simply an echo-chamber for the work, actual research, done by Benjamin Scafidi shown on the website of the Oklahoma Council of Public Affairs which I’ve commented on in A Dirge for a Surge, Purging the Surge and The Glib, The Bad and The Ugly.

Scafidi’s work raises a useful question, one that real follow up research using Oklahoma data might provide some insights helpful to Oklahoma policy makers, namely what do all these “non-instructional” workers do?  Every school employee in Oklahoma has a job code associated with their cost/pay (I actually had three), so it is very knowable with real research.  In one of my posts critiquing Scafidi I point out that the largest “non-instructional” work groups at my school district are teacher assistants, child nutrition workers and bus drivers.  From my 60+ years observing public schools in Oklahoma the growth in these jobs has been driven by the IDEA (special education services), expansion of early childhood education, increased student participation in school lunch and breakfast (didn’t exist in my day) programs, and concerns about student safety (walking/biking to schools).

Until Schlomo does the analysis of these impacts on employment, for which data is available, then his generalized whining about the cost of schooling is not worth considering.  It drives me crazy that he, and his kindred spirits at the Oklahoma Council of Public Affairs, actually get paid for just repeating the same generalities when they are supposedly doing “research”.   It is also fun to note that Schlomo uses his own data when he transitions to Oklahoma, not data from the National Center for Education Statistics which I think is available for each state.  And notice that his Oklahoma data cuts off at FY 2009, not FY 2013 as for the national data–we sure don’t want to remind his readers of what has happened in Oklahoma the last eight years.  Schlomo is as shameless as he is careless.

Now here’s the pedantic part.  In painting the picture of unrelenting new money pouring into our public schools nationally, yet nothing to show for it, he describes it this way,

“Given the continued geometric rise in spending per student from 1990 to 2009, it is apparent that little of the additional money was used to hire more teachers.”

I don’t have a PhD in economics like Scholmo, but I took enough college and graduate level economics courses to know you can’t survive economics study if you don’t understand basic mathematics and statistics.  These disciplines inform us, actually in high school, that there are two basic kinds of formulaic growth or increase or “rise” definitions:  arithmetic and geometric.  Simply stated arithmetic growth projects a subsequent year (Y2) by adding a constant amount (A) to the current or earlier year (Y1), so an example of an equation generating arithmetic growth is:  Y2 = Y1 + A.  A simple arithmetic growth series is 6000, 8000, 10000, 12000, 14000; see here his Figure 1 and the $2,000 per decade increase he describes, beginning FY 1970.

By contrast geometric growth projects a subsequent year (Y2) by multiplying a constant amount (A) (which is greater than one) times the current year (Y1), so an example of an equation generating geometric growth is Y2 = A times Y1.  Here’s what geometric growth, starting with 6000 and the first decade increase of 2000 would look like; it’s a factor (A) of 1.333:  6000, 8000, 10667, 14222, 18963.  My Chart is a graph showing close to his Figure 1 numbers (series 2 in red), growing ARITHMETICALLY, contrasted with the numbers if growth truly had been “geometric” as Schlomo claims (series 1 in blue).

The blue line is what geometric growth looks like.  I guess arithmetic just isn’t as scary as geometric.  Is Schlomo’s intent to inform or to deceive or does he just not know any better.

As always lunch on me to the first to ID the photo location.

 

• 

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Photo at Lanier Elementary School, Tulsa, ID’d by Gini Fox.

As the leader of a nation on the verge of entering World War II, President Franklin Roosevelt articulated a vision of what our human lives together on this planet should include.

“In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression—everywhere in the world.

The second is freedom of every person to worship God in his own way—everywhere in the world.

The third is freedom from want—which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants—everywhere in the world.

The fourth is freedom from fear—which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor—anywhere in the world.

That is no vision of a distant millennium. It is a definite basis for a kind of world attainable in our own time and generation. That kind of world is the very antithesis of the so-called new order of tyranny which the dictators seek to create with the crash of a bomb.”—Franklin D. Roosevelt, excerpted from the State of the Union Address to the Congress, January 6, 1941

I devote this blog site primarily to pointing out the witting and unwitting inaccuracies, half-truths and deceptions perpetrated by the Oklahoma Council of Public Affairs and their partner Limited Thinkers at the 1889 Institute, being my effort to help elevate the public dialog about public policy matters that affect Oklahoma—my state of birth and residence.  I suspect the limited thinkers and I have many common thoughts about the first, second and fourth freedoms outlined by President Roosevelt.  It is mostly about the third freedom, Freedom From Want, that we differ.

This difference, and the penchant the Oklahoma Council of Public Affairs has for using thinly veiled misleading graphics to drive home their predetermined conclusion, “government bad, private business good”, is illustrated by a recent post “Oklahoma State Budget Crisis?  I Should Say So” by “research fellows” J. Scott Moody and Wendy Warcholik.  This post in the final days of Oklahoma’s legislative session identified the real budget crisis not as the lack of funding for basic state services or as the need to raise teacher pay to head off the loss of our best and brightest to surrounding states, but rather they say our budget crisis is that government spending in Oklahoma is too large.  They recommend a hiring and pay freeze on teachers, local police and fire departments, and all the other bad state and local government workers in Oklahoma.  They also recommend eliminating the state income tax with no suggestion of how to replace the lost revenue.

Even sillier are their graphs they believe support their positions.  Here’s the first that compares the change in the index for “state and local government worker compensation” since the grand old year when all was right with the world, 1929, to the index for private sector income over the same period.

While they don’t say it, the way they present the graph one might think that state and local workers in Oklahoma have more total income than the private sector.  Of course that is not true and not what they say; rather their point is that state and local government worker compensation, the total, not average income, has grown much faster over the past century than has total income for the private sector.  They make no effort to explain why that might be so, apparently believing their readers will accept it as further evidence that “government is bad”.

Here’s their second graph, which compares the same, though greatly flattened by the revised scaling, private sector income data to “personal current transfer receipts” which they have the fleeting integrity to acknowledge “mostly consists of Social Security, Medicare, Medicaid, and welfare”.

Graph

It’s so shocking and we see how those “welfare queens” are squeezing out our blessed private sector (I am truly grateful for our private sector—love my car, my house, my food, my heat, my tennis balls, etc.).

Well I made a graph also.  It’s a comparison of the physical growth index between two humans, J and G, from 2004 to 2017.

Above J is blue line; G is red line.

Of course here I think we should be concerned with the physical well-being of J and G, that we want both to be healthy and thriving.  But look at the difference, clearly J is thriving and healthy while G is not.  And that would most certainly be a valid conclusion IF J and G are the same age.  But they are not; J is my healthy 12-year-old grandson who was born in 2004 and G is me, a healthy Geezer (who defeated J in tennis, before he defeated me).  Without that background the graph really doesn’t tell us much except that children grow and adults do not.

So what’s the background for the two graphs above from the Oklahoma Council of Public Affairs?  I’ve asked for their specific data sources which might reveal more silliness but haven’t heard back.  Here’s my somewhat informed thoughts about graph 1.  The largest, by far, component of state and local government worker compensation is K-12 education workers, i.e. teachers, teacher assistants, school bus drivers, etc. (notice how I leave out “administrators” which the OCPA would lead off with—games we play).  Since 1929 high school graduation rates have risen significantly, our country had to ramp up K-12 hiring to educate the post war baby boom generation beginning in the early 1950s, the passage of the Individuals with Disabilities Education Act in 1975 increased the need for teachers and other school personnel, and the expansion of early childhood education opportunities over the last twenty years has done the same.  These are just some of the factors that would explain rapid employment growth among state and local government workers.  I think you can also throw in the rapid expansion of post high school education, which likely has been a major driver of our nation’s increase in private sector income, particularly our system of state supported universities and career tech centers.  Yet Moody and Warcholik mention none of this because, I suspect, it would distract from their preconceived, and paid for, conclusion that “government is bad.”

Graph number 2 gets us back to the third of Franklin Roosevelt’s “Four Freedoms”—the freedom from want.  Just as local education workers dominate the state and local worker compensation data in their first graph, programs for the elderly—Social Security, Medicare and two-thirds of Medicaid—dominate the “personal current transfer receipts”.  These politically popular social programs were each instituted in response to the high rate of poverty among our nation’s older population as aging persons’ health failed and ability to work ended.  Here’s a graph and a paper, Social Security and Poverty, that support both the fact of high poverty rates before these programs came about, and their success in greatly reducing poverty among us geezers.

You can see now that all the Oklahoma Council of Public Affairs second graph above really shows is the successful implementation of these programs in the years following 1940 with the “First monthly benefit check issued to Ida May Fuller for $22.54”.  For millions of Americans, including those for whom President Roosevelt was their Commander in Chief, these programs have helped realize his vision of Freedom from Want.  But when Limited Thinkers Moody and Warcholik exercise their Freedom of Speech they conveniently leave out that part, not I suspect because they don’t know any better, but rather because their individual freedom from want depends on continually pushing their benefactors’ message that “government is bad.”

There are significant long term financial challenges to these programs for the elderly, and “think tanks” like the Oklahoma Council of Public Affairs and the 1889 Institute could play a helpful role in building political consensus about how to reform them.  However, doing so means “touching the third rail of American politics” and that’s probably not what many of their Geezer and near-geezer benefactors want to hear about.

As always lunch on me for the first to ID the photo location.

Train at Tulsa Fairgrounds, by Greg Morris–again.

My real intent with this post is not to whine again, see House Bill 2244 and A Turkish de Fright, about the Motor Vehicle Collections debacle that has shifted over $20 million to date from more than half of Oklahoma’s independent school districts to the remaining somewhat less than half.  Here’s a list of all districts, MVC Gain & (Loss).  For most districts this event has not been nearly as significant as the other revenue disruptions over the last two fiscal years caused in no small part by the “starve the beast” advocacy of the Oklahoma Council of Public Affairs, but for many in FY 2016 it was a greater financial hit than their other cuts in state aid.  The only saving grace of this gross distortion is that the funds lost by school districts went to other school districts so are still being used to education children.  My real intent is that recounting what happened two years ago will serve as a caution to the legislature and others about passing laws in the final hours of this year’s session because the culprit House Bill 2244 was passed on the last day of the 2015 session and it did not make clear how the OTC was to apportion to school districts in months when collections were less than the same month the previous year.

A little history (or skip on down to the poem):  Like many other school finance officers during the early months of FY 2016, I knew that the legislature by passing HB 2244 had capped the total amount that could be paid to school districts at the FY 2015 level, thus ending any future growth in that source of revenue.  For the previous twenty years each district’s collections were expressly based on the amount each received the year before and that part of the law, we thought, had remained unchanged.  I had never paid much attention to monthly fluctuations because in my ten years of experience motor vehicle collections had always been steady by the end of the year.  However, in preparing my midyear budget revision I noticed collections were down substantially and began comparing collections experiences with colleagues in other districts.  We quickly learned that while some were well behind, others were well ahead.  We asked our CCOSA leadership to find out what was going on.

The wholly unsatisfactory explanation by the Oklahoma Tax Commission came in February.  I sent a letter contesting the apportionment method being used to the Commissioners which resulted in a meeting with their Executive Director Tony Mastin; Tulsa Public Schools CFO Trish Williams (now CFO for Union Public Schools) went with me.  We had a brief discussion; Tony Mastin explained their method which was, in under-collection months, to ignore the requirement to apportion based on the amount received the same month the prior year, and instead apportion based on ADA (average daily attendance).  I explained my position that the OTC, in under-collection months, should apportion each district the proportion of its prior year’s amount that was available, i.e. if collections are 95% then every district gets 95% of the same month the year before.  My position would allow every district to come close to collecting the amount they were projected to collect, or “charged” with, according to the state aid formula.  He declined to consider my recommendation because he “can’t just make something up.”  I asked Tony Mastin if he understood the impact his method was having on the state aid formula and he said he did.  I asked him if he had consulted with anyone, and he said he had talked with Senator Jolley who was the senate author of HB 2244.

Superintendent Rick Cobb of Mid Del Schools went with me a few days later to see State Superintendent Joy Hofmeister.  We did our best to explain what was happening and why, as state superintendent, she should advocate with the Tax Commission for a correct application of the statute.  I believe she did meet with Tony Mastin about the matter but she never responded further to our requests.  We also learned that our CCOSA representatives Steven Crawford and Ryan Owens were promoting legislation at that time to “fix” the situation by having MVC apportionments done by ADA; they wrongly believed that such a change would not hurt any districts because “the formula would make districts whole the following year.”  When they were shown that is not correct, that their legislative proposal would assure the permanent loss of over $22 million by about half of their client districts, they backed off and said no more about it.

Gaining no traction with those who should have helped us, including many legislators, and believing it best to be fixed before the end of the fiscal year, four districts (Sand Springs, Mid Del, Muskogee and Ponca City) petitioned the Oklahoma Supreme Court to assume original jurisdiction and correct the matter; they declined.   After that decision, as a kind of therapy, I plagiarized the poetic style of “’Twas the Night Before Christmas” and wrote this:

‘Twas the Night Before Sine Die

‘Twas the night before Sine Die, and all through the House,

Not a brain wave was stirring, except that of a mouse.

The bill, drawn by Casey ‘n Spears without care,

So in hopes that Sly Jolley soon would be there.

The orphans were lying all scared in their beds,

While visions of coal lumps rose up in their heads;

Their dorm matron Jolie was near them on tap

While counselors Stefan and Shane were taking a nap;

When out on the floor the bill passed with no chatter

Because the aye voters had no clue ‘bout the matter.

Away from the floor Sly Jolley flew in a flash,

To his little elf Tony who started counting the cash;

But the amount they counted was way, way too low

Meaning the orphans would get less than their much promised dough.

So in each of their thirty-two eyes came a tear

As they awaited their fate with some hope but more fear.

The little elf Tony made something up quick

To apportion the shares in the way Jolley picked.

The elf promised Sly Jolley he’d take all the blame

For tricking their dim lackeys now listed by name:

Stanislawski, Holt, Fry, Crain, Fields, Newberry and Ford,

With Barrington now their orphans would be gored.

‘Cause the elf’s plan was when there’s too little for all

Just give more to Jolley’s faves and let the rest take the fall.

Orphans Eddy, Musty, Unie, Moor, Norm, Bix and Jenk

Were each favored though none more than DeCreek.

So up to the house-top the lackeys they flew

With little elf Tony and Sly Jolley too.

Then in a twinkling they distributed the loot

Most to the faves with insouciance to boot.

The other orphans got only the crumbs from the ground,

So to Jolie, Stefan and Shane they went with a bound.

Jolie was stressed about else from her head to her foot

And couldn’t be bothered to redirect the orphans’ loot.

Stefan, thinking one equals two, said they shouldn’t be hacked,

If they’d just wait a year they’d recoup what they lacked.

Shane would not wake from his nap with dreams so merry

‘Bout being a hero to all by handling nothing so hairy.

So the poor orphans went away with nothing to show

From asking their guardians to help recover their dough.

Poor Tulsey, Lawt, Putney and Bart cringed and wept

Hoping all would be much better after they slept.

But Sandy, Ponca, Musky and Midelly

Knew of this folly they’d had a full belly.

Next door they went to the family Supreme

For help to make things right with the orphan team.

They were met by one at the door who just shook his head

Saying “those lackeys who caused it should fix things instead”.

He closed the door and went straight back to his work

Leaving those poor orphans in their world of hurt.

Feeling now like everyone’s second-hand roses

They still hoped one of the lackeys might be their Moses.

Then Jolley sprung to the floor, to his lackeys gave a whistle

And away they all flew, like the down of a thistle;

But they heard him exclaim, ere he slunk out of sight,

“Sine Die to all, and to all a good night”.

 

Epilogue:

Joined by four other districts, the original four plaintiffs sued the Tax Commission in Oklahoma County District Court where Judge Parrish ruled, “The Court finds that the Plaintiffs presented the correct construction of (the statute)…”, namely that in under-collection months the OTC should apportion in proportion to the prior year’s apportionment amount, NOT in proportion to ADA.  Here is a chart that shows the impact on the sixteen districts I refer to in the poem.

Notice how stable amounts were from FY 14 to FY 15.  Also understand that the prior year amount is the amount each district is “charged” under the formula.  So if a district collects less than the charged amount, it loses permanently, but if a district collects more it gains permanently.  Switching to ADA would be simple and cause no unfair losses and gains IF the chargeable amount in the formula were also projected by ADA—but few, and none able to affect change, apparently ever understood this.

The Tax Commission has appealed the case to the Oklahoma Court of Appeals, where it waits with an automatic stay of the lower court’s order in place.  Meanwhile the passage of SB 476, unless saved by the appellate court’s action, assures the eventual gain/loss of about $23 million will be permanent.  Be careful this week.

As always lunch on me for the first to ID the photo location.

Newblock Park, Tulsa.  ID’d by Greg Morris

That famous line uttered by then candidate Ronald Reagan during the final debate of the 1980 campaign with President Jimmy Carter supposedly helped propel him to victory a week later.  President Carter had just made an eloquent argument for the expansion of Medicare (downward in age) to the nation’s working population as the best way to control rising medical costs and assure a more productive workforce–almost as eloquent as the letter by E Carlton James I reprinted in Looking for Mr. James.  Carter concluded his statement by pointing out that Reagan had campaigned widely against the passage of Medicare in 1965, which history was what Reagan deflected with his charm and by saying he was for it but still against it, meaning that Carter was misrepresenting him.  Reagan won; providing a sensible system of heath care for working Americans continues to flounder now 37 years later.  Here is a video link to that famous exchange:  https://www.bing.com/videos/search?q=there+you+go+again&view=detail&mid=63B1F7C10E283A14363363B1F7C10E283A143633&FORM=VIRE

I’m using the phrase not as a cute deflection but as a direct scolding to Limited Thinker Trent England for repeating errors that I’ve previously taken the time to demonstrate for him in Unbelievable!  In that post I took England to task for showing, without footnotes, and relying upon an obviously misleading/erroneous table produced by the Oklahoma Senate in its publication at Page 17, FY 17 Appropriations Report.  Now, in his post The Bogus Budget: Medicaid Expanded Anyway, May 11, 2017, he wants to convince us that, despite Oklahoma’s refusal to accept Medicaid expansion under the Affordable Care Act, we have one of the fastest growing Medicaid programs around and the budgetary implications would be even worse if we hadn’t followed the Oklahoma Council of Public Affairs’ advice so aren’t we glad we did.  Here’s the table he shows, again from the Senate’s publication Appropriations FY ’17:

While to his credit he doesn’t make a lot of hay about it, look at the increase shown from FY ’16 to FY ’17, which visually supports his argument that even without Medicaid expansion Oklahoma’s program is now growing rapidly.  If the Oklahoma Council of Public Affairs is going to call itself a think tank, and enjoy a tax exempt status because they are supposedly doing real research in the public interest, then England shouldn’t display this Table that begs for an explanation about the $1 billion roller coaster ride in “Total Expenditures” from FY ’15 through FY ’17, without showing enough curiosity himself, and respect for his readers, to inquire whether the Table accurately describes what happened.  Here’s the Table with footnotes included.

I am not as familiar with Health Care Authority budgets as I am with the State Department of Education which was the topic in Unbelievable!, so I can’t speculate, except to say the footnotes don’t explain the $1 billion down then back up as far as I can tell.   So I looked at the same report for FY ’16 and found this Table:

Note there is not the up/down.  True there was a revenue failure in FY ’16 that lowered appropriations by a net $64 million, but that doesn’t explain a $1 billion decline.  Also look at this Table from the Governor’s Budget Book for development of the FY ’18 budget:

It also shows actual total FY ’16 expenditures for the Health Care Authority and there is no decline from FY ’15 by $1 billion, then back up in FY ’17 by $1 billion.  I think this demonstrates, coupled with what I showed in Unbelievable! where the Senate FY ’17 Appropriations report has an $800 million error for FY ’16 total K – 12 expenditures, that the Senate Appropriations reports are inconsistently and sloppily prepared and can’t be relied upon for longitudinal comparisons.  This is not a petty critique of England’s work; if you are going to produce real “research” then you need to be able to recognize when data is obviously wrong.  How can we get to smart government policies if we base decisions on data that clearly is inaccurate.

So his clueless use of another erroneous Table produced by the Oklahoma Senate is the basis of my “There you go again” scolding.  But he doesn’t stop there; he goes on to cherry pick data from national sources which, assuming the data is correct, appears to support his argument, but also can be easily debunked with fairly simple thinking.  Here is his statement:

“A higher percentage of Oklahomans are covered by either Medicaid or the related Children’s Health Insurance Program than in Texas, Kansas, Missouri, and a dozen other states. Looking at data from all states between 2000 and 2014, The Pew Charitable Trusts found Oklahoma had the 11th largest increase in state spending as a share of the total state budget.”

These two sentences read casually together make it sound like Oklahoma is some kind of national leader in providing Medicaid coverage for working families—were that it is so.  My not-researched guess is that two major determinants of the rate of Medicaid coverage within a state are whether the state accepted Medicaid Expansion (yes = more coverage) and the incidence of low-income families in a state (higher percentage of low income = more Medicaid coverage).  When I read the first sentence I immediately speculated that Texas, Kansas and Missouri are also states that declined Medicaid expansion because only states with a very low incidence of poverty would have less Medicaid coverage than Oklahoma if they had accepted Medicaid expansion.  Here is the Medicaid Expansion list that confirms my speculation; England’s three state example was intentionally cherry-picked.

So all his first sentence really says is that Oklahoma has a greater incidence of poverty/low income families than do Kansas, Texas and Missouri, which proves nothing about our state’s decision to avoid Medicaid expansion except our people were hurt more proportionately than the people in those three states.

The second sentence also says nothing in support of his argument, rather it is a simplistic statistical slight of hand.  It is like arguing that Mighty Casey should be named 1927 home run champion of the league over Babe Ruth because his share of Mudville’s home runs increased from 25% in 1926 (10 of 40) to 50% in 1927 (10 of 20), while the Babe’s percentage of his Yankees’ home runs actually declined from 39% (47 of 121) in 1926 to 38% (60 of 158) in 1927—what a loser the Babe was.  You see, the two largest components, and only billionaires, of the Governor’s FY ’18 proposed appropriation budget are K-12 education ($2.55 billion) and the Health Care Authority ($1.10 billion).  So in our Nation’s league of state budgets where Oklahoma leads the pack for decline in appropriations to K-12 education, you’ve seen this before:

We become Mudville and our Medicaid spending, having changed hardly at all I suspect, is like Casey’s home run output—basically flat.  But with a budget base (Mudville’s home runs) that’s declining compared to the rest of our league, our percentage of Medicaid of our state budget, which is the statistic he cites from Pew, shows a nice increase.  Whoop de do!  Don’t read much about Casey being the 1927 home run champ either.  Nice try Limited Thinker England.

Two last words.  Remember that the larger component of Medicaid spending is for old folks in nursing homes, see Not An Old Geezer Yet, a fact the Oklahoma Council of Public Affairs won’t remind you of.  What they will say, and is quite misleading, is this by their President Jonathan Small in his 2013 drivel Oklahoma Health Care Authority should stop expanding Medicaid:  “Not all of these Oklahomans are poor. (Did you realize that a person can have up to $500,000 of equity in a home and still qualify for Medicaid?)”.  What he is referring to is the provision to prevent “spousal impoverishment”.  If old Geezer Adam requires skilled nursing assistance and is single then his income must be low enough and his assets cannot exceed $2,000 in order for Medicaid to pay the difference between his income and the nursing home expenses.  But if Adam is married and his wife Eve lives in their house they own jointly, the spousal impoverishment protection that Small deplores allows her to keep the house (I’ll accept Small’s $500,000 limit in equity) and additional assets and a share of the income, clearly as a matter of public policy to allow her the opportunity to continue living independently and without assistance.

Apparently if the Oklahoma Council of Public Affairs had its way then Eve would be required to divest of all her assets, applying everything to Adam’s care, and live where and how our limited thinker Small doesn’t say.  In reality, even with the spousal impoverishment protections, Adam’s nursing home stay can easily leave his Eve in a financially precarious position.  In my law practice, especially when counseling couples about late in life second marriages, I often pointed out the better financial choice would be to live in sin rather than to marry.  As a measure of the human spirit, in short supply at the Oklahoma Council of Public Affairs, none ever heeded my advice.

As always, lunch on me for the first to ID the photo location.