Closing the achievement gap

One of the the things No Child Left Behind has brought us is the idea of the achievement gap. Districts all across the country are trying to close it.

I found two interesting articles regarding this gap.

First is this article from Jay Matthews at the Washington Post about the whole concept of the achievement gap and why it is faulty. The title of the article is "Class Struggle" but it can be applied to socioeconomic status, income status, or even individual student achievement status. If everyone improves but the achievement gap between students still grows, why is that a bad thing?

The second article is from Berkeley, CA. In an effort to help their struggling students, Berkeley High School is contemplating cutting its science labs and the teachers who teach them. This would have the effect of dumbing down the highest-achieving students in order to close the achievement gap. From the article:

The proposal to put the science-lab cuts on the table was approved recently by Berkeley High's School Governance Council, a body of teachers, parents, and students who oversee a plan to change the structure of the high school to address Berkeley's dismal racial achievement gap, where white students are doing far better than the state average while black and Latino students are doing worse.

Paul Gibson, an alternate parent representative on the School Governance Council, said that information presented at council meetings suggests that the science labs were largely classes for white students. He said the decision to consider cutting the labs in order to redirect resources to underperforming students was virtually unanimous.

So there you have it. Not letting the best and brightest among us reach their potential is certainly one way to narrow an achievement gap.

James

CAC Documents Available Online

The District has made the CAC presentation available on the district website at:

http://www.mtlsd.org/highschoolrenovation/cacdocuments.asp

Please take some time to review these documents and tell the Board what you think.

I am taking a few more days to review and talk to people about the ideas to see where to take this from here. Please be sure to contact me and the Board with your thoughts.

James

On 21st Century Education

For a bit of a departure from the numbers and specifications we have collectively been viewing, I took a moment to read some material on 21st Century Education.

The Center for Public Education produced this report that details some of the trends in 21st century learning. What I like about this document is that much of it is based on Core Knowledge which is an idea that I first read about from E.D. Hirsch.

The report details not just education trends but describes how they fit into occupational trends in a increasingly globalized world.

It's rather long but very informative. Happy reading.

James

PSERS Rate Spike Set for 2010-2011

Hopefully the recently announced PSERS rates spike does not catch anyone by surprise. It's been a topic talked about on this blog many times and has been statewide news for the past two years.

Next year we can expect our PSERS contribution to increase by over 70%. However, that is not even the bad news. Please see the excerpt from this article below:

State and local education officials said the worst part is that next year's increase is just a fraction of an anticipated leap to record public contributions by 2012, when the state and local tab is projected to exceed $4 billion.

Tomorrow we are set to hear updated cost figures from our architects for the high school project. When deciding how much we have to spend on this project we must consider what the rate increases in PSERS will do to our overall budget.

I have said a number of times on this blog that we have not yet had to make tough decisions. I believe the tough decisions start now.

Thanks for reading.

James

Mammoth Monday Meeting

We had a bit of a lull there in November with a slow agenda. There will be no such lull in the foreseeable future. Starting on Monday, December 14th, we are jam packed.

Below are some of the agenda items from the upcoming meeting:

1) 2010 Mt Lebanon School Board meeting schedule- For the past two years I have asked about these meetings moving to the 1st and 3rd Monday's of each months so that we would a) not conflict with the commission, and b) have an extra week to get questions answered about information in our packets. I asked last week at the Reorganization meeting that we consider changing the meetings to the 2nd and 4th Mondays. I still like the extra week between discussion/regular meetings and now that the commission will start televising their meetings our residents will have the opportunity to view all local government meetings. Personally, I think the extra week will become extremely important as we begin to review numerous documents regarding the high school and contract negotiations. Any feedback from residents regarding this change in schedule would be appreciated at schoolboard@mtlsd.org.

2) Report from Community Advisory Committee- I posted about the formation of the CAB here. I have very high hopes for the CAB and think/hope that their work will become a huge contributor to the high school project. The Board received in its packet on Thursday some of the material that will be presented on Monday. The Board also received in its packet the latest Design Development cost updates. The CAB report could not have come at a better time. I will post more on their report after Monday's meeting.

3) Act 34 Material- Any time there is a large construction project like we are undertaking with out high school the State requires an Act 34 hearing for public comments. The Board will present to the public the information required by the State and there will be a public meeting to discuss it. I write up more on this after Mondays meeting. There is a certain significance to this meeting that I do not want to understate.

4) Recommendation Regarding Replacement of Stadium Turf- We recently came into some unbudgeted money with the sale of a large property in Mt Lebanon and subsequent receipt of back taxes for that property. The result was over $2 million in revenues. At recent Audit/Finance Committee meetings, Mr. Kubit and I made the recommendation that we take some of those funds and direct them towards the replacement of our high school stadium turf. This turf has seen better days and has reached the end of its useful life. I look forward to the presentation scheduled to be given by our athletic department. This is another item on which I would like to get community feedback. Please view/ask about the presentation on Monday and let the board know your thoughts. Other than having played on artificial turf, I don't know much about it. I will rely heavily on the administration and public input when casting my vote.

I think that's it for Monday. It should be a bit of a long meeting but it is packed full of good information.

Thanks for reading.

James

Proud No More

Last night was the the reorganization meeting for your Mt Lebanon School Board. Typically, this type of meeting does not amount to much more than a procedural meeting with Board members simply casting their votes for who their want their next leadership team to be. Last night was different.

When I was younger and played sports in high school and then in college, it was always a given that every member of the team was to be on their best behavior at all times. When we traveled we would wear ties and when we stayed in hotels our coaches would even check our hotel rooms before we checked out to make sure we cleaned them up. We were part of a team and when you are part of your team your actions are a reflection of the entire team. When even a single teammate out of 40 would leave his hotel room a mess he is implying that the entire team is a mess. All the players understood this simple lesson. Unfortunately, last night we had far too many board members leave their hotel room a mess.

Its been kind of a running joke in my house the last two years that the first words out of my mouth when I would meet someone were, "Hi, I'm James Fraasch and I am on your Mt Lebanon School Board". And honestly, in some respects this is true. I do this because I have always been proud to be on the board and more than that, I have been proud of the trust that was given to me by the community when they voted me into office in 2007. Being a board member is not a responsibility I take lightly. Heck, I even changed jobs in 2008 to allow me more time for school board related activities. Every board member spends far too many nights away from kids and family while attending committee meetings, high school meetings, community forums, and regular and discussion meetings to not take this position seriously.

The Board is not a reality TV game show. It should not be a place where board members decide to publicly air their dirty laundry about their gripes and grievances against other board members. It should not be place where board members can publicly make up unfounded accusations and level them against other board members. It should not be a place where parents have to put their hands over their kids eyes and ears because some of the behavior that goes on is so reprehensible and distasteful that the parent just doesn't want their child to see that adults can behave this way.

Over the course of the last few weeks leading up to last night's meeting I have received phone calls and emails from just about every member of the board. These phone calls and emails always were invariably about how each of these individual members wanted to build trust amongst board members, how they wanted to reach across the divide, how they wanted to bring honesty and integrity to the board, and how they wanted to get the community to trust the board. There were literally dozens of emails and phone calls and hours and hours of conversation regarding these topics.

I ask you with all sincerity whether after watching that meeting you felt any of the ideas mentioned in the above paragraph actually were reflected in the meeting. Watch the meeting and see for yourself who and what is causing the divide.

I woke early this morning hoping that I would feel different about the meeting than I did six hours ago. But I don't. I am embarrassed that the meeting last night is a reflection on all of Mt Lebanon and that I was a member of a team that had individuals leave their room a mess.

The behavior displayed last night by your board is not what the voters of Mt Lebanon expect from their elected leaders.

James

December Update

Sorry about the long break between posts. Been a bit preoccupied with some other priorities. Hopefully this post will be an interesting one. In this post I will hit on three things; recent school board activities, economics, and curriculum. Hey, just because I haven't posted in a few weeks doesn't mean I have stopped trying to educate myself.

First, the Board itself has had a three week break between meetings. It's next meeting will be Monday December 7th at 7:30pm. This meeting is the Reorganization meeting where we will swear in the newly elected members of the Board and then elect the 2010 President and Vice-President. There are a few action items for the Board, one of which is to approve the Board meeting calendar for 2010.

As for the November meeting, one of the agenda items voted on was for the Districts graduation requirements. As many of you know, our students are required to do a project on a health topic in order to graduate. I suggested that we investigate what it would take to expand that project beyond just the health class. There are many reasons for this, not the least of which is that it would allow our students to shine with their creativity. I would not want to get rid of the health topic, but simply see what other possibilities there might be. Peter's Township recently approved a similar graduation requirement to what we have. See this article here from the Post-Gazette.

Now, on to economics. At last Thursday's Audit/Finance Committee meeting we talked a bit about the ARRA (ie, stimulus) and what it means for our district. The committee was unanimous in saying that we did not want any of this funding directed towards activities that might become perpetual in nature. It would be a mistake to take that money, start new programs or hire new staff, only to have that funding not be available to us a year from now. That would only result in a need to raise taxes or cut programs/staff down the road when the stimulus funding ended. What I found most interesting was a conversation regarding how the District was counting the "Jobs Saved/Jobs Created" numbers with regard to the ARRA. My understanding was that if we used the money to pay for staff raises, then that counts as a job saved. It is somewhat more complicated than that, but essentially, it boils down to being comical. Mind you, this is nothing that has to do with how WE do this, it has to do with how the federal government is asking us how to report the numbers. See the Wall Street Journal article on this ridiculousness here. Jobs saved is a number that does not and cannot exist. It reminded me of an essay written by an economist sometime back.

Frederic Bastiat was a French Economist in the 1800's. He wrote an essay called "That Which is Seen, and That Which Is Not Seen". He is the one that came up with the "Broken Glass" theory that explores whether breaking glass to create work for the person who repairs the glass is good for the economy. His conclusion is that if the shopkeeper whose glass was broken has to pay money to fix the glass, that is money that he cannot deploy elsewhere. It destroys economic activity that is not seen and cannot be measured. He further goes on to write:

"When an official spends for his own profit an extra hundred sous, it implies that a taxpayer spends for his profit a hundred sous less. But the expense of the official is seen, because the act is performed, while that of the tax-payer is not seen, because, alas! he is prevented from performing it...The State opens a road, builds a palace, straightens a street, cuts a canal; and so gives work to certain workmen - this is what is seen: but it deprives certain other workmen of work, and this is what is not seen."

This is very much in accordance with the idea I espoused on my blog earlier when I wrote about the Aftermath of Financial Crises. The government wants to appear as if it is helping even when doing so results in the delaying of true economic recovery. Call it Bond Illusion or whatever you like, the fact is, the money we borrow today has to be paid back and it has to be paid back with interest. The hope of the politicians that keep borrowing this money is that by stimulating the economy we will simply grow by more than what we owe-that our revenues will continually expand beyond our expenses. At some point (Japan has been here for 30 years), the debt becomes so burdensome and so much of your budget goes to pay debt that there can be no more stimulating. So yes, while we can see the big highway signs that say "This Project Brought To You By ARRA Funds", we should wonder what economic activity and what other jobs were destroyed because our politicians decided to deploy capital in this manner.

Finally, I wanted to share an article I read on curriculum. This doesn't have to do specifically with Mt Lebanon but it was something that gave me a bit of perspective on how curriculum is done on a national level. Please see this article from the City Journal titled, "Who Needs Mathematicians for Math, Anyway?" I don't know how much I agree with the conclusions of the article (that we have purposely dumbed down our math for PC reasons) but I very much enjoyed the passion of the author and thought the article gave a ton of good information on things outside of just the curriculum process.

Happy Holiday, Merry Christmas, and thanks for reading.

James

Who Needs Math Anyway?

I ran across what I found to be a interesting article not just on math curriculum, but on the problem of nationalized standards. With the recent passage of the Keystone Exams, this might be a glimpse into our future.

Please see the article titled "Who Needs Mathematicians for Math Anyway" from the City Journal published by the Manhattan Institute.

Here is a quick excerpt that should catch your attention:

As part of his education-reform plan, President Obama wants to “make math and science education a top priority” and ensure that children have access to strong math and science curricula “at all grade levels.” But the president’s worthy aims won’t be reached so long as assessment experts, technology salesmen, and math educators—the professors, usually with education degrees, who teach prospective teachers of math from K–12—dominate the development of the content of school curricula and determine the pedagogy used, into which they’ve brought theories lacking any evidence of success and that emphasize political and social ends, not mastery of mathematics.

Understand that this is not a hit-piece on Obama, the author is simply critical of a process that was started before the current administration was in place. The article takes a general look at some of the current curriculum out there and how it came to pass. She suggests that a study done by the National Council of Teacher's of Mathematics in 1989 was influential in "dumbing down" math curriculum across the country by putting social goals above academic ones.

I am not claiming the article is right, but it is most definitely worth a read. I am still digesting some of the ideas and wondering if what the author suggests is actually happening and whether it did happen in Pennsylvania. For me, the article begs the question of whether or not our educational system has been taken over by bureaucrats and, if so, whether or not that has led to the overall decline of the US student achievement when compared to the rest of the world (another topic the article addresses briefly).

Regardless, the articles at the Manhattan Institute have earned a bookmark from me.

Thanks for reading.

James

State Budgets Facing Financial Peril

I took this headline right from a CNN article. Many of these states are different than what I posted about just last month here. As I have stated on many occasions, state budgets lag the overall economy by at least year, usually two. This was a lesson learned in California where I worked for a County government and layoffs typically followed recession by 18-24 months. Governments can typically fill one or sometimes even two-year budget gaps using stopgap measures like borrowing money or pushing out expenses to a future date. Spread budget problems out to three years or more and things really start to pile up.

Why is this a big deal? Well, projected cuts to state budgets to make ends meet could lead to a loss of almost 900,000 jobs. These layoffs would begin next fiscal year which starts in July in most states.

It is absolutely amazing to me that there is a recognized economist in this article that is saying that there needs to be MORE federal stimulus to fill budget gaps in state budgets for 2011. Stimulus simply is a way to borrow against future production. It's really that simple. The solution to a spending problem isn't borrowing money to continue spending too much. The solution to a spending problem is to spend less.

I do agree with the economist that "budget cuts and tax increases will be a serious drag on the economy at just the wrong time".

My belief is that creative destruction needs to take place. This will mean a painful adjustment for some, however, it is the right path and it needs to take place in order for us to go through this. One of my favorite investment/economics writes often, "In order to get through this, we need to go through this." We are in for years of high unemployment. It will be the new normal. Central Bank economists are predicting that unemployment will continue to remain high for "years to come".

The last Pennsylvania budget gap was filled by federal fiscal stimulus funds. We are already $3 billion behind heading into the 2010-2011 budget. How that gets filled is anyone's guess. This kind of fiscal problem is going to trickle down to our District budget at some point. While Mt. Lebanon gets a huge majority of its funding from local tax dollars, even a reduction of 5% of state funding would be significant.

There is no easy way out of this for states or, eventually, for local governments. Belt tightening will have to take place at some point. The hope I have is that we make decisions that make the most long-term sense. If we can focus our decisions on future government entities and the impact our decisions today will have on these entities five and even ten (or longer) years down the road, then we can start to lay in stone a path for financial stability.

Thanks for reading.

James

Educational Videos

Every once in awhile I come across some videos that I think are worth sharing.

I was sent an interesting video the other day by another Mt Lebanon resident. Its a video that puts out some information that most people will find fascinating.



Here is another video regarding the education of leaders in our world and why it matters:



Enjoy!

James

High School Community Advisory Board Approved

The School Board held a meeting on Thursday night to finish the discussion involving the formation of the Community Advisory Board. The motion passed 5-3.

There is a great discussion amongst community members regarding the pros and cons of the idea happening over at BlogLebo and I suggest that you get involved in the comments thread over there if you have anything to add (or subtract as the case may be).

The thing I will take issue with on that comment page is the unfair characterization of the meeting on Thursday night. This meeting was a continuation of the meeting from October 19th. Our Board President made a judgment call on the 19th and determined that the Board as a whole was not prepared to vote for the motion that was before it. Before bringing that meeting to a close he was clear to the members of the Board what he expected to happen prior to the reconvening of the meeting on Thursday night. He did a couple of things:

1) In anticipation of the motion passing on the 29th, he directed Dr. Steinhauer to advertise to the community that we would be accepting letter's of interest to be a part of this Community Advisory Board.

2) He asked all Board members to submit any changes they wanted to see to the motion in writing to the Superintendent prior to this Thursday's meeting so that those changes could all be seen and reviewed by Board members prior to the meeting. This was done in order to avoid to kind of confusion that happened at the October 19th meeting when some members of the Board made a number of motions to amend the original motion on the table.

3) He directed the solicitor to review our contract with the architect to determine if the amount that was being charged by Celli-Flynn was reasonable. At the time, Celli-Flynn was going to charge more than $30,000 for the first meeting and upwards of $20,000 for each meeting after that (see story here). This resulted in our architect substantially reducing the charges associated with this process.

When Board members received their weekly packet, it contained in it all the changes that were requested by each individual Board member. In the end, the President and Superintendent included in the final motion those changes that they thought the majority of the Board would support. For example, the two changes I requested were that, 1) the CAB have access to all previous project documentation (this was not made clear in the original motion) and, 2) that the CAB be able to continue their work if their suggestions were taken under consideration by the Board (the original motion simply said the CAB was disbanded after their December presentation). These changes along with the changes requested by a few other Board members were added to the resolution seen on Thursday night.

Some change requests were not added to the resolution. however, Board members were given the opportunity on Thursday night to get those changes in if they so desired. If you watch the meeting you will see that one of board member Sue Rose's recommendations did not make the resolution that was shown to the public. She requested at the meeting that her change be added to the motion. It did not get the votes required to become a part of the final motion. That process is good board leadership (setting expectations as was done at the Oct 19th meeting so that all Board members may be aware of changes that might be requested) and good board membership (following board procedure to get your requests heard and considered by the board). You can read the final motion at the District website here.

There are some things that I have disagreed with the Board president about in the past, however, in the case, he got it absolutely right.

My hope for the CAB is that the group will do what its purpose in the resolution says it should do:

1) Review the design according to the design criteria established by the Dejong group
2) Make recommendations to the Board that will save money (I am not talking about changing paint schemes here)
3) Determine if there was anything overlooked by the process that has been followed by the Board thus far that could potentially be costing us money

Contrary to what was said by some members of the public at the meeting, there is not a single board member who wants to start this group in order to delay the progress of the high school project. Accusations like that are just absurd. There is community buy-in on a high school project. This is something I have learned since I first got on the Board. We simply need to make sure we are collectively buying-in to the right project.

Thanks for reading.

James

Keystone Exams a done deal

UPDATE---

In my review of some of the posts on my blog, I realized that I have very little on what the actual Keystone Exams do to our graduation requirements. For that review I have found a great Pennsylvania School Board Association Document that can be found here.

Some highlights
-Keystone Exams will replace the 11th grade PSSA's. This was a development in July. Many people raised the concern of simply adding an additional standardized tests for our students. This was addressed by eliminating the 11th grade PSSA tests.

-Keystone Exams will be developed in literature, English composition, algebra I, geometry, algebra II, biology, American history, civics and government, chemistry, and world history

-Students will be offered remediation courses and alternative means of proving graduation readiness if they fail

- School districts will be given an opt-out provision that needs to be reviewed and approved by a 12 member board composed of people from the PDE, State Board of Education, PSBA, and other appointed board members as chosen by the PDE, State Board of Education, and PSBA

-Costs for validation will be split between the state and local government. If the state government is unwilling or unable to pay for their share, the local school district requirements will be deemed valid by default.

-Successful completion of an Advanced Placement course and test may be used in lieu of one of the courses required for graduation without the student having to take the Keystone Exam. International Baccalaureate classes will be treated the same way.

-Alternate measures of graduation readiness will be available for those students with Individualized Education Plans (IEP)

-In sum, the new graduation requirements for the class of 2014-2015 and beyond will include a combination of course completion and grades, graduation project, demonstration of proficiency as determined by the District, assessment requirements chosen by the school board in the form of Keystone Exams, validated local assessments, or AP/IB exams.

END UPDATE------

There was a big vote yesterday from the State Review Board regarding the Keystone Exams. In a 4-1 vote they approved the use of the exams in school districts across the states. Please see this article from the Philadelphia Enquirer.

I have talked about these exams from time to time on my blog. My issue, along with countless others, has always been that Pennsylvania has typically allowed local control of curriculum and graduation requirements. This exam, even while having an "opt-out" option will turn that control over to the State. The exams will be based on the graduation requirements by the State. Again, there is an opt-out provision but any school district that opts out has to have its requirements reviewed and approved by the state.

For the other side of the story, please see this op-ed from Joe Torsella, Chairman of the State Board of Education:

Strong Pennsylvania high school graduation requirements would pay off in long run
By Patriot-News Op-Ed
October 22, 2009, 1:59PM

by Joe Torsella

For almost two years, Pennsylvania has been engaged in spirited debate about the academic expectations we hold for our young people. In public hearings, the halls of the Capitol and newspaper editorial pages, there has been sharp disagreement about whether Pennsylvania should strengthen its high school graduation requirements.
grad hat.JPG
On the surface, this shouldn’t be a controversial question: Today’s high school graduates are entering the worst economy of our lifetimes, and our increasingly mobile society adds complexity and competition to their postsecondary plans. Nor is the state board’s proposal to strengthen graduation requirements a radical one.

Under the plan, students will have several options to meet graduation standards. The state will couple the reform with new resources, and no student will be denied a diploma based on test scores alone. The proposal will eliminate the 11th-grade state tests currently used to comply with No Child Left Behind and replace them with a series of standard course finals — a step that will make the state assessment more relevant to students and reduce testing time.

The proposal isn’t perfect — some business and postsecondary leaders advocated for higher standards. Others claim the regulation is too complicated and will present implementation challenges. But these qualms don’t explain away the fervor of the opposition — and that got me thinking.

In significant ways, I believe the debate around graduation requirements has become a proxy fight for broader policy questions buffeting public schools — and Pennsylvania.

For example, the emerging conversation about a voluntary national “common core” of academic standards might be seen by some as a threat to Pennsylvania’s tradition of local control of education decision-making and the power of school boards. Meanwhile, the weak economy might exacerbate worries among parents and educators that higher expectations will increase dropout rates, making the search for good jobs even more challenging for disadvantaged students.

On the issue of local control, let me be clear: School districts will decide how their students meet graduation requirements, and districts that want to set higher standards may do so. In addition, education stakeholders, and especially teachers, will have a significant role and voice in implementing the new policy.

Regarding dropout rates, there is no correlation between higher academic expectations and students leaving school. In fact, an absence of challenging curriculum is the more likely culprit along with systemic issues such as school safety.

While it’s worth remembering that assessments will be just one part of one pathway to meeting graduation requirements, results released last month by the Maryland Department of Education should help ease these concerns: only 11 of about 60,000 Maryland high school seniors did not graduate in 2009 solely because they failed the state’s exams.

Indeed, evidence from other high-performing states suggests that stronger graduation requirements are a powerful reform lever. Since instituting new graduation requirements, Virginia has seen significant achievement gains in every subject. Pittsburgh Public Schools Superintendent Mark Roosevelt, a former Massachusetts legislator and co-author of that state’s Education Reform Act, calls strong graduation requirements the “single most significant act in catalyzing Massachusetts’s phenomenal growth in student achievement.”

For Pennsylvania, the question now is whether to go forward or stand still. State-level education reforms — sustained across multiple administrations — have produced significant achievements, including some of the nation’s most rigorous academic standards. And during the last seven years, Harrisburg has made a commitment to dramatic increases in state funding for public education. Even this year’s budget, with billions in cuts to worthy programs, provides a $300 million increase for K-12 education.
torsella
These efforts have led to achievement gains across Pennsylvania and among all groups of students. But we have more work to do — especially for our high schools when more than 40 percent of graduates cannot demonstrate grade-level mastery of reading and math.

We have today a proposal that reflects input from thousands of Pennsylvanians and diverse stakeholders.

The proposal has been strengthened thanks to study by legislative leaders — especially Sens. Jeffrey Piccola and Andrew Dinniman and Rep. James Roebuck.

The regulation borrows from strategies in the nation’s best-performing public education systems. And it finds balance between rigorous expectations for every student and flexibility that respects individual learning needs.

For all of these reasons, it’s time to move ahead.

Thanks for reading.

James

Updated: State Revenues

Regular readers of this blog may remember an article I linked to back in June. It was a report from the Rockefeller Institute that discussed how State revenues were declining and predicted that states would end up having to again raise revenues and cut costs in the 2010-2011 budgets. I also posted my thoughts of the possibility of this happening last week.

Bloomberg has picked up the latest update from Rockefeller Institute and has this article:

State Revenue Falls Most Since 1963 on Incomes, Sales (Update2)

By Jerry Hart and William Selway

Oct. 15 (Bloomberg) -- U.S. state tax collections tumbled the most in almost half a century in the second quarter as the economic recession curbed levies on incomes and sales.

The 16.6 percent plunge was the biggest since at least 1963, the Nelson A. Rockefeller Institute of Government said today. For the 12 months to June 30, the fiscal year for most states, revenue declined 8.2 percent, or $63 billion, about twice what states got from the $787 billion U.S. economic stimulus package, the institute said.

State revenue has dwindled for two straight quarters and continued to decline in July and August, the Albany-based research organization said. Budgets for the year that began July 1 already face $26 billion of deficits, the Washington, D.C.- based Center on Budget and Policy Priorities said Aug. 12, forcing state lawmakers to confront additional spending cuts.

“We’re looking at a multiyear problem hitting essentially every state,” Robert Ward, the institute’s deputy director, told reporters. “It has happened during recessions before, but the depth of this decline is unprecedented in modern times.”

Collections dropped in 49 states in the second quarter as sales and personal-income taxes slid for the third consecutive period, the institute said. Income tax was down 27.5 percent and sales tax fell down 9.5 percent, its study said. Both categories fell by the most in 45 years.

“Many economists believe that the national recession has ended and that a tepid recovery is now underway,” Rockefeller analysts Lucy Dadayan and Donald J. Boyd wrote. “Unfortunately for states, an emerging economic recovery does not spell instant budget relief.”

‘Considerably More’

Figures for July and August for 36 early-reporting states showed tax collections down 8 percent, the Rockefeller Institute said. At least 17 states have announced budget shortfalls since July, with “considerably more” expected, Boyd said.

New York’s tax revenue from April 1 to Sept. 15 was $634.5 million below projections and $3.6 billion less than a year ago, Comptroller Thomas DiNapoli said yesterday. California reported last week that revenue trailed a forecast made less than three months earlier by $1.1 billion, or 5.3 percent.

States are anticipating more cuts to current-year budgets, already pared once to bring them into balance. Mississippi Governor Haley Barbour told managers on Oct. 13 to cut spending 5 percent because tax collections in the first three months of fiscal 2010 were 7.7 percent below estimates. Florida Governor Charlie Crist told department heads on Oct. 12 not to request more money for next year, when the state faces a $2.6 billion deficit.

“It’s clear that when governors propose their budgets in January, the vast preponderance will be looking for more spending cuts and tax increases,” Boyd said.

'Housing Market'

The main driver for the second-quarter decline was lower income-tax collections, Boyd said on a conference call, “most likely due to lower capital gains from market declines in 2008 and the bursting real estate bubble.”

Payroll-tax withholding fell 4 percent from a year earlier and estimated-tax payments made in the quarter fell 32 percent in the median state, he said.

“Real wages take 13 to 17 quarters to recover from the end of a recession,” he said. “It will take several years for states to bring spending into line with incomes.”

The study’s retail-sales index showed an 11 percent decline since the start of the recession in December 2007, he said. The second quarter’s 9.5 percent decline in sales taxes followed an 8.3 percent decline in the first quarter, he said.

Alaska’s tax income declined the most of any state, the study said, with an 86.5 percent drop because of lower oil prices. Vermont fared the best, with a 2.2 percent gain because of a one-time estate-tax settlement.

Local tax collections declined by 2.8 percent in the second quarter, the Rockefeller study said. That’s less severe than the state slowdown because municipalities rely more on property taxes, which rose “a surprising” 3.1 percent in the quarter, the report said.

Still, 88 percent of local finance officers said in a September poll by the National League of Cities that they’re less able to cover expenses than in the year before.

To contact the reporters on this story: Jerry Hart in Miami at jhart@bloomberg.net; William Selway in San Francisco at wselway@bloomberg.net.

A couple of points struck me. First, the fall in state revenues is of record proportions. However, while state revenues collectively declined 16.6%, local government tax revenues declined by only 2.8%. This disparity is due in large part to local governments being dependent upon local real estate taxes as opposed to income and sales tax. See the following chart from the Rockefeller Institute Report that depicts this:


Click on image to enlarge

Also from the report is the following statement:

Unfortunately for states, an emerging economic
recovery does not spell instant budget relief. As we have noted
previously, some elements of the economy that are very important
to state finances — particularly employment and wages — are
likely to recover more slowly than gross domestic product. In addition,
state tax revenue, when it does begin to recover, will be below
its earlier peak for at least several years and will not be
sufficient to support spending commitments that are now in
place. Despite the recovery, most states will face budget gaps this
fiscal year and next, and probably for at least one to two
additional years.

When I say state budgets are based on the past, this is exactly why. It is always a game of playing catch-up. Spending every dime in good economic times leads to the severe cuts we are seeing now.

If you like tables and charts and graphs, the Rockefeller Report is really a revelation. It contains a ton of information on every state comparing revenues, changes, and the effect of recent legislation.

One more point I need to make on this, and I did not see this in the Rockefeller Report, is that many states, if not most of them, used the Federal Stimulus funds to balance their budgets this year. I believe Pennsylvania used $3 billion to do just that. What this means is that every one of these states was already in a structural deficit before the new fiscal year began. Many states used that money as a one-time fill for their budget gap. The problem is, this is not a one-time revenue shortcoming. Tough decisions are going to have to be made.

Thanks for reading.

James

State Budgets Across the Country Struggle

First, let me explain a little about State budgets. All state government budgets are unique in this way; government budgets are based on the past. That is, they are based on past tax collections on transactions that took place even farther in the past- especially income tax collections. This isn't like a real estate tax where one can predict every day what kind of revenues are going to come in. This is why you see state and federal government revenue collections struggle 1-2 years after economies start to struggle. The first budget that was passed in good times typically can be adjusted to make ends meet. But the second budget where the full force of the economic downturn has finally had its impact and revenue collection, states have a difficult time closing gaps. As time goes on and short-term budget gap solutions have been exhausted, each successive budget gets more and more difficult to balance.

Pennsylvania passed its budget the other night. There is a good, quick summary of the roundabout way we got the the budget we did over at the Post-Gazette. There are many who say we did not cut spending enough. The problem is that the impetus to cut spending just wasn't there. The budget wasn't bad enough for lawmakers to have make those kind of very difficult decisions. However, in other states, lawmakers are struggling with budgets that are under water mere months after passing.

Let's take a look at California. Once the worlds seventh largest economy on its own, California has struggled the past two years to figure out a way to cut programs and raise revenues. Even with $32 billion in budget cuts and efforts to raise almost $17 billion in new revenue, California is still in the red. From this article at Bloomberg you can see that things in California are still dire.

Next, let's take a look at New York. You may remember back in April/May that New York planned on implementing a 30% increase in taxes on the wealthy. They saw it as an easy way to close their budget gap. The income tax increased 3.45 percentage points to 10.4% on people earning greater than $250,000- one of the highest rates in the nation. Other states across the country waited to see what the outcome of this taxation would be. Well, here in this article from Miami (Florida was apparently one of the states watching) New York Governor David Patterson admits that the higher tax rates have "yielded lower than expected state wealth". Twenty-percent lower to be more exact.

Ok, so those are two of the larger states in the Country. Surely the smaller states are in better financial condition. Well, not exactly.

Indiana- Continuing Plunge in Revenue Alarms Governor Daniels- State revenue for the last three months is almost 10% less than projected just a few months ago.

Kentucky- State Revenues Plunge in First Quarter- General Fund revenue has dropped 10% from last year.

Iowa- Tax Collections forecast to drop 7.1%; steep budget cuts expected- "Today's news is that plunging tax revenues have knocked the state budget severely out of balance just three months into the budget year."

Texas- State sales tax collections down for 8th month in a row- In Texas they expect this will continue through the end of the year.

Georgia- State Tax Collections Drop Sharply- Georgia's collections are down over 16% year over year.

A lot of states made some tough decisions last year in cutting workers and making serious budget cuts. Look for round two of these cuts to start heating up early in the new year.

There are a couple of lessons to be learned here. First, committing future budget dollars to perpetual programs based on the tax collections obtained in good economic times only leads to the pain that many of these states are feeling today. If the states had budgeted within their means and had sufficient reserves then some programs would not have been started in the first place. Unfortunately, most governments budget to the last dollar leaving insufficient dollars for the lean times. Pennsylvania has a "rainy day" fund and they have tapped that fund the last two years to help make ends meet- this is why we didn't have as severe cuts as other states. The second lesson to be learned (thanks to New York) is that increasing taxes on the wealthy will only make the wealthy leave. There were some high profile defections from New York from Rush Limbaugh to Tom Golisano (owner of the Buffalo Sabres) to Nancy Bell (a manufacturer who moved her facility to Florida). All three of these people moved their residences to Florida to avoid the higher taxes. The fact is, you need the wealthy. You need them to stay and invest and employ people.

There is a lot of uncertainty out there at the moment. People are talking about a "V" shaped recession where we get out of the thing as fast as we got into it. Others suggest "W"s or "U"s or even "L"s. No matter what letter you choose, unemployment is expected to rise past 10% and continue rising into next year. If George W. Bush had the "jobless economic expansion" then this is turning into the "jobless economic recovery". Income tax and sales tax revenues to governments will not recover until employment recovers. This means we have at least two more years of state and federal budget cuts coming.

Thanks for reading.

Keystone Exams 2.0 Update

There is currently some wrangling on the Keystone Exams going on in the PA Legislature. There is a bill out there that was co-sponsored by a majority of legislators that would have required legislature approval for Pennsylvania Department of Education and Governor Rendell to adopt the Keystone Exams. That fight is apparently ongoing and I will update when I find out more. The introduction of the resolution of PA House Resolution 456 is below:

A Concurrent Resolution urging Governor Edward G. Rendell to cease funding of implementation of high school graduation requirements until the General Assembly establishes a policy by legislation, requesting the Governor to impress upon his cabinet officials involved in educational policy to regard the desires of the citizens of Pennsylvania, recognizing that actions by public officials that impede the democratic process will be considered as actions in disregard of the officials' assigned constitutional and statutory duties and in disregard of the honor which their constituents have called these officials to uphold, and asking the Independent Regulatory Review Commission to consider whether proposed high school graduation requirements have been given due consideration by the General Assembly and by the Governor, in accordance with the Regulatory Review Act, before a decision is made on final-form regulation of high school graduation requirements.

Full text of the bill can be found here. State Representative Matt Smith is a co-signer of the above resolution. In fact, 161 of the 200 members of the House have supported the bill.

Today I came across this article from the Times-Herald that talks about some of the pros and cons of the current Keystone Exam proposal as well as many of the parties involved in the discussion:

By GARY PULEO
Times Herald Staff

WORCESTER — Earning passing grades is not necessarily assurance of obtaining a high school diploma for many U.S. public school students anymore.

A growing number of states now require high school students to pass an exit exam before that diploma is handed over,

With opposition from many education officials, Pennsylvania’s own version of the assessment, the Keystone Exams, has overcome several stumbling blocks. But the test is no less controversial as it awaits review by Senate and House committees and final approval by the IRRC next month.

The State Board of Education voted earlier this year (14-2) to adopt the final regulation for implementing the new statewide standard for the 2010-2011 school year. Schools will have the choice of putting the Keystone Exams into service or local assessments that conform to Pennsylvania standards that are validated by the state.

Many local educators have concerns with the Keystone Exams, including Methacton Area School District superintendent Timothy Quinn, who worries that having the test count for one-third of a student’s final grade puts too much emphasis on it and takes away from other course work students do.

“In its current form, the exams for 12th graders will constitute 33 percent of their final course grades,” Quinn noted. “Any student falling below basics on that exam will get a zero on that test. If they get a zero on 33 percent of their test, you can imagine what that’s going to do. We can have students failing because they’re bad test takers or just having a bad day, or any other reason.

“A student could get 100 percent on all other tests, but if I get a zero on the Keystone test, I now get a 66 for the course and have now failed it. So that’s pretty serious stuff. Mathematically, it lowers the grade point average of a student who does well. They can do all sorts of things that are showing they’re good students, but now one test could erode their grade point average and really cause our students harm whether it be getting into college or something else. So that shouldn’t be taken lightly.”

While Quinn said he supports holding students to higher academic standards, he doesn’t support the Keystone program in its current form.

“There has been serious discussion with educators who are coming out in droves against it and there are a lot more conversations that have to occur about the ramifications and consequences,” he said. The directives imposed by the Keystone Exams will unequivocally destroy any control at the local level, he added.

“Right now, it all comes under teachers, school boards and principals how grading works. I think the state needs to make more clear the precise purpose of the Keystone Exams. Are we looking to prepare a student for the world of work, or are we preparing students for the world of college or other possibilities after high school graduation?

“Is it supported by clear research and data that their success in college and/or the work world will go up? I think as part of the review process they should be looking at other states and see if it has had a positive effect.”

According to www.greatschools.net, 26 states either currently have a high school exit exam or plan to adopt one. Given the number of high school students in those states, more than two-thirds of the nation’s public high school students are affected by the exams. The exams vary from state to state in terms of content and opportunities for students who do not pass to retake the test and prove their competency.

Most states test students on their reading, writing and math skills as part of the high school exit exams. Nine states use end-of-course tests on specific classes, such as English, rather than specific grade-level tests, which allows students to take the test for a particular subject after they have completed the course rather than taking the test at a designated grade level.

Remediation classes and opportunities to take the test again are offered by most states.

Jane Callahan, Upper Merion Area School District assistant superintendent said she would reserve judgment on the Keystone Exams until she saw “a final picture of exactly what it’s going to look like. The Pennsylvania School Board Association has been following it very carefully and they just put out an update where they said at this time they don’t support it, so I’m following all of that very closely.

“We get regular updates from the Legislature, so we know what’s going on and where things are in the process,” she added. “Like every other school district, we’re paying close attention to the discussions that are taking place. Nothing is finalized yet so until then I don’t think the districts know clearly what the options will wind up being.”

The possibilities that have been discussed include allowing the exams to cover specific disciplines, Callahan noted.

Four states currently use end-of-course exams. By 2015, 11 states will rely on end-of-course tests to determine if a student receives a high school diploma, while others will have a dual testing system in place that includes the high school exit exam and end-of-course exams. The 14 states that will use end-of-course exams by 2015 are: Arkansas, Indiana, Maryland, Massachusetts, Mississippi, North Carolina, New Jersey, New York, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and Washington.

“Another possible option would be local assessment which would have to be verified by an outside provider.”

According to www.stateline.org, five companies are responsible for producing the majority of state tests currently in use: CTB/McGraw-Hill, Educational Testing Service, Harcourt Assessment, Pearson Educational Measurement and Riverside Publishing. Together, they own about 90 percent of the state-testing business, which has blossomed into a $1.1 billion industry since passage of the federal No Child Left Behind Act in 2001. The law, which took effect in January 2002, requires states to give annual reading and math tests to third through eighth graders, and to re-test students in those subjects in high school.

On Sept. 21 the Keystone exams were formally submitted to the IRRC legislative committee, as well as the House and Senate Education Committee

“Text of the regulations is not yet posted but will be eventually, along with the required regulatory analysis document sometime soon,” Callahan said. “Without the text being published, it’s difficult to know what it’s going to say.”

IRRC will meet in Harrisburg on Oct. 22.

The House and Senate Education Committee have until 24 hours before the meeting to take action on the regulations, she allowed.

Testimony of Secretary of Education Gerald L. Zahorchak before the Senate Education Committee in June — available at www.edweek.org — supported the case for stronger high school graduation requirements.

“Let me underscore why business leaders statewide, the State Board of Education, and many of our educational leaders believe there is such a sense of urgency in addressing the need to better prepare our students for college and the workforce,” Zahorchak said, as he made the following points: Approximately 50,000 students graduate each year from a Pennsylvania public high school without demonstrating proficiency on the PSSAs.

A 2009 study by Penn State’s College of Education revealed that only 18 of Pennsylvania’s 500 school districts — making up less than 3 percent of the state’s total public school enrollment — appropriately measure whether their students can read and do math at the 12th grade level in order to award high school diplomas, according to a February 2009 study.

Zahorchak also noted that in 2007-08, 20,394 public high school graduates who enrolled in a public higher education institution required some form of remediation, with a total cost to taxpayers, students, and parents in excess of $26 million.

Finally, it was revealed that 66 percent of business leaders surveyed considered it a high priority that new employees be able to demonstrate that they have the basic skills to enter the workforce.

Colonial School District superintendent Vince Cotter regards the Keystone Exams as a burdensome mandate.

“It’s being imposed on school districts like Colonial that have made AYP (Adequate Yearly Progress) consistently,” Cotter said. “Additionally, it appears to structurally and financially penalize the districts that have previously invested heavily in the development of final exams that are aligned with state and national standards.

“From a practical perspective, the Keystone Exams’ percentage calculated into a student’s final grade appears to be too heavily weighted and further undermines a rigorous curriculum already designed to address national and state standards,” he added.

“Finally, at a time when additional state funding for a district like Colonial is virtually non-existent and local revenues have diminished due to the downturn in the economy along with previously established financial limitations through Act 1, the development of a state testing program that would literally cost millions of dollars should be reconsidered in this current economic environment.”

Gary Puleo can be reached at 610-272-2500, ext. 205, or gpuleo@timesherald.com.

This is definitely something that can change at any moment. Legislators are dealing with this and the budget at the same time.

Thanks for reading.

James

Message from Dr Steinhauer on H1N1

I think this is important to share.

October 1, 2009

Dear Mt. Lebanon School District Parents and Guardians:

This letter is to inform you that our first case of the H1N1 influenza virus has been confirmed in the High School. We are working in consultation with the Allegheny County Health Department to manage this flu season with the least disruption for our students and staff while maintaining a healthy school environment. We will continue to monitor the situation, and at this time, schools will remain open and operating normally.

Please continue to follow the guidelines established by the Centers for Disease Control by keeping your child home from school if he or she shows any flu symptoms including fever (100 degrees and above) severe cough, sore throat, body aches, headache, chills, fatigue, diarrhea, and/or vomiting. Students who come to school with flu symptoms will be evaluated by our nursing staff, and in some cases, you may be called to pick your child up from school. Students with the flu should stay home until at least 24 hours after they no longer have a fever, or signs of a fever, without the use of fever-reducing medicines.

Children experiencing flu symptoms who have chronic health conditions like asthma, diabetes, heart problems or who have immune systems that are compromised or suppressed should contact their family doctor for advice. These conditions can result in more severe illness from influenza, including the new H1N1 virus.

The best way to reduce the spread of H1N1 or any other virus is to maintain good hygiene practices. I encourage you to teach your children to wash their hands often, keep their hands away from their eyes, nose, and mouth, and cover coughs and sneezes with their sleeve or a tissue. I have directed our staff to reinforce these skills with all of our students. For more prevention tips, see the back of this letter.

To learn more about the precautions our schools are taking, visit http://www.mtlsd.org/healthservices. For more information about H1N1 and seasonal flu viruses, visit http://www.dsf.health.state.pa.us and http://www.cdc.gov/h1n1flu.

Let me assure you that the health and well being of our students is our top priority. We will inform you of any changes to our District’s strategy to prevent or reduce the spread of the flu via email or phone alerts. To receive Mt. Lebanon School District emails, please make sure you register your email address on the Dashboard.

Please contact your school nurse or family health care provider if you have any questions or concerns.

Sincerely,

Dr. Timothy Steinhauer
Superintendent

Shaky Ground

It’s a position that should be non-partisan. People have said that. I have maintained for the last three years that there was a place for political parties at the school board level. This high school project was to me the perfect opportunity to be able to demonstrate the kind of unity and communication that can come from being part of a Board majority . For me, one of my most important guiding principles has been fiscal responsibility. I have tried to demonstrate this principle and vote this idea with every opportunity I have on the Board. Being fiscally responsible doesn't mean cutting programs, cutting staff, and cutting everything. It is about maximizing efficiencies and, most importantly, making long-term financial decisions that will put this Board on better financial footing in the future. These ideas to me have represented the best of what the Republican Party has to offer.

Understand that this Board is on shaky ground. One could legitimately argue that the next few years and their forthcoming tax increases will define the next generation of our residents. Under the school board’s current path the high school construction project will raise taxes between 15-20% alone. When looking out a bit further we can see more tax increases for PSERS, staff salaries, health benefits, and more. This will be coupled with possible lower revenues from earned income taxes and investments income. An unconstitutional real estate tax system here in Allegheny County only adds to the uncertainty of future taxes in Mt Lebanon. Add to all this an article by the City Manager down in Johnstown, PA where he points out that more than 50% of the municipalities in the 10 county Pittsburgh region have experienced structural deficits between the years of 2000 and 2005 and you can see that the financial footing out there is rather treacherous.

I have posted before regarding some of the effects of higher taxes here and here. I have posted on the options that potential residents have (here and here) when comparing tax rates of similar communities. The fact is that people have choices. I WANT people to choose to live here. We have a lot to like. Mike Madison over at BlogLebo has posts about what he loves about Mt Lebanon. I'd encourage people to go over there and post what they love about Mt Lebanon as well. The tree-lined streets aren't going anywhere. Snow being off the road about five minutes after it hits the ground will most likely stay as well. Hopefully, we can maintain and even increase the achievement levels of our students here in Mt Lebanon. I think we have the right superintendent in place to make this happen. Mt Lebanon is a great place to live. Will it still be that kind of place when folks are paying $7000 a year in real estate tax on a $200,000 home and 1.9% in income tax in three years? My fear is that people in Mt Lebanon and beyond will soon come to realize that living in another community with half the taxes and a similar educational experience will allow them to save enough tax money to pay for their child's college education. There are great things about Mt Lebanon but every current and potential family must weigh those positives against a tax structure that penalizes residents more than surrounding communities.

We have seen communities fall. The City of Pittsburgh has tried for years to tax its way to prosperity and to what avail? From the same article listed above there is the following line:

All the research shows a majority of the municipalities in Pennsylvania are on a path to fiscal distress, with many already there. Currently, 18 municipalities in Pennsylvania are in Act 47 status and an additional 39 in the Early Intervention Program, which means they qualify for Act 47 status but haven’t yet officially entered the program.

The City of Pittsburgh has had to resort to gimmicks like forgoing real estate tax receipts for a number of years to new homebuyers in the City to attract people back to the downtown real estate market. However, the never ending cycle of tax increases to fill budget gaps simply pushed more and more people away from downtown and out to the suburbs. The result has been a net population decrease for the Pittsburgh region that was second only to New Orleans between 2000 and 2006. The point is this; the road to prosperity for Mt Lebanon does not include spending as much as possible on a high school and asking our taxpayers to pick up the bill. Not when we are already taxed at a high rate. Not when there are options on the table that would cost significantly less and give us the same student outcomes. And especially not in an economic environment that is so severely disrupted.

These last points are the ideas that I have brought to my fellow Republicans on the Board. I have brought these ideas to them thinking that if nothing else, as Republicans they would have to agree that being fiscally responsible does not include proposing and approving a project that is less than 1% under a voter referendum limit. Instead, that is exactly what has happened. I had conversations with my Republican colleagues on the Board prior to this past budget to suggest ways to improve the budget in order to offset part of the cost of the high school project. Instead there were no changes. I had hoped that at least my Republican colleagues on the Board would agree with me when I suggested this past spring to invest all our surplus from the 2008-2009 budget into the high school project so as to avoid interest expense on 25 years of borrowing that same amount later. Instead, we set aside less. To me these suggestions were mostly common sense. It is quite possible that I am the worst salesman for my own ideas but for each of these suggestions I always had at least one other Board member who was right there with me.

I am not so sure why my expectations were much different on Monday night. But, I showed up on Monday hoping to have a good discussion about why floating the $69 million worth of bonds right now doesn't make sense. I was also willing to compromise and try to find a way to come to the middle with the rest of the Board if they could meet me in the middle on some issues as well. Instead, I got more of the same. I was against spending almost $1 million in interest on bonds that would be floated months before we actually needed the proceeds. It had previously been suggested by members of the Board that floating the bonds now would allow us to pre-buy things that we need anyway. This idea was shot down by our construction manager who suggested that doing the project this way would instead add cost. I was against floating bonds for a project that did not yet have a firm budget associated with it. I was also hoping that the Board would finally adopt a "not to exceed" number on this project. This point became particularly important as we found out that we would be able to borrow over and above the $115 million debt limit that had been previously established. The idea of setting a firm budget did not gain traction. Unfortunately, each of these ideas was shot down by the majority of the Board. In fact, tonight, not only did we vote to begin funding the project with $69 million worth of bonds, but the majority of the Board voted in favor of issuing bonds that in the long run allow us to borrow even more money (scope creep) and will cost us at least $3 million more in principal and interest payments. Between floating the bonds months before we need them and approving the sale of the premium structure of tax-exempt bonds, we just passed $4 million in additional expense on to the taxpayers that will result in absolutely no net benefit to them. I was willing to give on floating bonds earlier than we needed them but I at least would have liked to see the Board take advantage of the Build America Bond program to reduce future tax strain on our residents.

What I don't think has gotten through to some in the party is that one of the reasons Republican's were so resoundingly thrown out of office in 2006 and 2008 is because people absolutely do not trust elected officials who spend tax money recklessly. The Democrats picked up so many seats that they now control both houses of Congress and the Presidency. I, and many of my fiscally conservative friends, could not tell the difference anymore between the elected Republicans of the early 2000’s and the “tax and spend” Democrats that were the nemesis to Reagan when I was growing up. So at this point I have to say I have had enough of the party politics. If the Republican leadership on the Board cannot find a way reduce costs on this project or is unwilling to do so, then any possible argument for party membership is lost.

With that said, I will be leaving the Republican Party and joining a growing number of Independent voters in this country. It is from this position that I will bring my fiscally conservative principles to the Board and will try to govern in a party-neutral manner. This has been a difficult decision for me with the more recent actions of the GOP finally pushing me over the edge. The high school project and the inability to form a cost-saving consensus even among Republicans over the last two years has been frustrating and started this ball rolling. The straw that broke the camel’s back was the nationwide Republican political opposition to the President of the United States giving a speech to our school children about the importance of staying in school and working hard. I will never understand why there was an organized email campaign against this speech and its supposed “indoctrination”. We have ONE President folks and he has earned the right to address our children. If you don’t like what he says then you have the other 23 hours and 40 minutes of the day to “unindoctrinate” your kids. I disagree with our President as much as the next person, but I also respect his office.

Thanks for reading.


James

Keystone Exams Update

There have been a lot of twists and turns to this story. After the PA legislature voted not to fund the exams last year, the Governor and Secretary of Education went ahead with their planning anyway. There is no question that the majority of the legislature does not want these exams to go any further as evidenced by 145 of 203 house members that have signed onto a bill asking that the plans be stopped.

Please see the article below from PennLive.com:

Move to stall Keystone Exams faces uphill fight
House education chairman says he has no plans to take up a resolution to hold off high school graduation testing.
Thursday, September 17, 2009
BY JAN MURPHY jmurphy@patriot-news.com

The proposal to attach tests to high school graduation continues to stir controversy in the state Capitol.

A House resolution introduced this week calls for slowing the plan's approval and requiring it to gain House and Senate approval before any more money is spent on it. The resolution has the backing of 145 of the 203 House members.

Rep. Paul Clymer, R-Bucks, who sponsored the resolution to slow the plan, said the strong backing of Republican and Democratic House members reflects widespread opposition to moving ahead with the initiative. The state plans to invest $18.3 million this year to implement the initiative, and $176 million through the next five years.
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"We need to take another look before the Keystone Exams" are approved, Clymer said.

The State Board of Education approved the statewide graduation requirements last month to ensure graduates leave high school with skills needed in college or the workplace. It requires students pass either state exams, advanced placement or international baccalaureate exams, or a state-approved local assessment in four core subjects to graduate. Students who fail can complete a project instead.

The plan is now making its way through the state's regulatory approval process, which does not include a vote by the full House or Senate. The Senate Education Committee endorsed the plan last month.

In his resolution, Clymer cites education groups that oppose the plan or have withdrawn their support. It also mentions the Pennsylvania State Conference of the NAACP's position that the change could lead to higher dropout rates and increase the prison population.

At a Wednesday meeting, Clymer informed the State Board of Education of his resolution and asked for a response. Board Chairman Joseph Torsella, who led the effort to strike a compromise with education groups and legislators on the initiative, said the resolution raises no new issues.

The resolution has been sent to the House Education Committee for consideration. That committee's chairman, Rep. James Roebuck, D-Philadelphia, said he supports the Keystone Exams and at this point, has no intention of bringing the resolution to a vote

"I'm not quite certain what the intent of the resolution is," Roebuck said.

He noted Clymer did not participate in conversations that Torsella orchestrated to address concerns about the plan. Furthermore, Roebuck said he told Clymer that he would consider having the committee discuss the resolution after the 2009-10 state budget is finalized.

House Republican spokesman Steve Miskin said that timing makes no sense because funding for the initiative is part of the budget discussion.

Clymer and Rep. Rosita Youngblood, D-Philadelphia, sent a letter Wednesday to Roebuck asking him to reconsider his position on taking up the resolution.

"With overwhelming support for our resolution, we hope that you will allow the committee to act on this legislation and provide answers and accountability to the people of this state," it states.

Given how this process has gone so far, I am not optimistic about this move working. There has been widespread opposition to these exams from the outset and somehow the Governor and a few members of the legislature have been able to shield these exams from being shut down.

Please consider giving your state representative a call to voice your opinion on the matter. State Representative Matt Smith is a co-sponsor of the current bill (HR 456) that would prevent any further tax dollars from going to these new high school graduation requirements.

Thanks for reading.

James

Tax Rates and the Local Economy

Some of the issues I pound on when it comes to the school board have to do with fiscal responsibility. With that comes the desire to reduce or lessen the growth of the tax burden on members of our community. That is not to say that the Board has the ability to reduce property taxes, I would never make that promise- not in an environment where property assessments are frozen at 2002 levels and where the District has contracts that increase every year. When I look out 2-5 years it is pretty easy to see what is coming down the pike. When you look at the more than $100 million high school, PSERs (which I will give an update on soon), and the contracts mentioned above, it is easy to see larger than 30% increases in property taxes here in Mt Lebanon. The only reason I say it probably won't be more than that is that I expect the State legislature will come up with a solution to address much of the PSERS expenses coming due in 2012. Call it wishful thinking if you like, but elected officials are in the business of getting re-elected and if they can't come to a solution on that single issue, there won't be many people getting re-elected in 2012. On many occasions I have opined about the coming tax increases and how we will compare to other Districts across the State. I have only touched on what the implications of such high taxes will be. It is those implications that I wish to address here.

To that end, I came across a speech given by Calvin Coolidge on February 12, 1924 in front of the National Republican Club. I don't know if I have ever read a speech by a President that so clearly illustrated the effects of high taxes on economic activity. While President Coolidge's speech was addressing the national economy, the effect of high taxes is the same whether at the federal level or local level. Below are some excerpts with my comments on sections that I think need highlighting:

In time of war, finances, like all else, must yield to national defense and preservation. In time of peace finances, like all else, should minister to the general welfare. Immediately upon my taking office it was determined after conference with Secretary Mellon that the Treasury Department should study the possibility of tax reduction for the purpose of securing relief to all taxpayers of the country and emancipating business from unreasonable and hampering exactions. The result was the proposed bill, which is now pending before the Congress. It is doubtful if any measure ever received more generous testimony of approval. Opposition has appeared to some of its details, but to the policy of immediate and drastic reduction of taxes, so arranged as to benefit all classes and all kinds of business, there has been the most general approbation. These recommendations have been made by the Treasury as the expert financial adviser of the Government. They follow, in their main principle of a decrease in high surtaxes, which is only another name for war taxes, the views of the two preceding Secretaries of the Treasury, both of them Democrats of pronounced ability. They are nonpartisan, well thought out, and sound. They carry out the policy of reducing the taxes of everybody, especially people of moderate income. They give to the country almost a million dollars every working day.

During World War I, taxes were raised to help fund the war effort. The United States still ended up borrowing billions of dollars to help fight the war, and we were also a major credit provider for our allies in that war. However, after the war ended, tax rates were not reduced to pre-war levels. President Coolidge in this speech is essentially calling for a return to the normalization of pre-WWI tax rates. As he said in his opening, he had no problem with financing a war with higher taxes, but in times of peace, he felt differently.

The proposed bill maintains the fixed policy of rates graduated in proportion to ability to pay. That policy has received almost universal sanction. It is sustained by sound arguments based on economic, social, and moral grounds. But in taxation, like everything else, it is necessary to test a theory by practical results. The first object of taxation is to secure revenue. When the taxation of large incomes is approached with that in view, the problem is to find a rate which will produce the largest returns. Experience does not show that the higher rate produces the larger revenue. Experience is all in the other way. When the surtax rate on incomes of $300,000 and over was but 10 per cent, the revenue was about the same as when it was at 65 per cent. There is no escaping the fact that when the taxation of large incomes is excessive, they tend to disappear. In 1916 there were 206 incomes of $1,000,000 or more. Then the high tax rate went into effect.

The next year there were only 141, and in 1918 but 67. In 1919 the number declined to 65. In 1920 it fell to 33, and in 1921 it was further reduced to 21. I am not making any argument with the man who believes that 55 per cent ought to be taken away from the man with $1,000,000 income, or 68 per cent from a $5,000,000 income; but when it is considered that in the effort to get these amounts we are rapidly approaching the point of getting nothing at all, it is necessary to look for a more practical method. That can be done only by a reduction of the high surtaxes when viewed solely as a revenue proposition, to about 25 percent.

I agree perfectly with those who wish to relieve the small taxpayer by getting the largest possible contribution from the people with large incomes. But if the rates on large incomes are so high that they disappear, the small taxpayer will be left to bear the entire burden. If, on the other hand, the rates are placed where they will produce the most revenue from large incomes, then the small taxpayer will be relieved. The experience of the Treasury Department and the opinion of the best experts place the rate which will collect most from the people of great wealth, thus giving the largest relief to people of moderate wealth, at not over 25 per cent.

This part of his speech perfectly illustrates the soundness of the Laffer Curve which was "discovered" in the 1970's by economist Arthur Laffer. The Laffer Curve suggests that there are two tax rates that will produce the exact same revenue. Think about it this way, at 0% tax, the government realizes no revenue and at 100% tax, there is no incentive to work and therefore the government again realizes no tax revenue. At various points along the graph coming down from 100% and up from 0%, there are points at which government can realize the same revenue. This is illustrated perfectly when Coolidge points out that tax receipts at the 65% tax rate were the same as when tax rates were at 10%.

A very important social and economic question is also involved in high rates. That is the result taxation has upon national development. Our progress in that direction depends upon two factors; personal ability and surplus income. An expanding prosperity requires that the largest possible amount of surplus income should be invested in productive enterprise under the direction of the best personal ability. This will not be done if the rewards of such action are very largely taken away by taxation. If we had a tax whereby on the first working day the Government took 5 percent of your wages, on the second day 10 per cent, on the third day 20 per cent, on the fourth day 30 percent, on the fifth day 50 per cent, and on the sixth day 60 percent, how many of you would continue to work on the last two days of the week? It is the same with capital. Surplus income will go into tax-exempt securities. It will refuse to take the risk incidental to embarking in business. This will raise the rate which established business will have to pay for new capital, and result in a marked increase in the cost of living. If new capital will not flow into competing enterprise the present concerns tend toward monopoly, increasing again the prices which the people must pay.

Taken altogether, I think it is easy enough to see that I wish to include in the program a reduction in the high surtax rates, not that small incomes may be required to pay more and large incomes be required to pay less, but that more revenue may be secured from large incomes and taxes on small incomes may be reduced; not because I wish to relieve the wealthy, but because I wish to relieve the country.

President Coolidge here is suggesting that allowing people to keep their surplus capital (and not the government) will lead to better economic growth. People will employ this capital in the most efficient way possible, in a way that gets them a return on their investment. His stated goal is to secure the largest possible amount of revenue to the federal government but not at the expense of stifling production. His plan to do this, under the guidance of Treasury Secretary Mellon, is to reduce the top marginal tax rates to 25%.

This legislation was past shortly after this speech and so began the "Roaring 20's". There were tremendous increases in overall GNP from just under $70 billion to over $103 billion in just over five years. And this happened without a jump in inflation, indeed, prices actually went down while GNP increased.

The point of this is to say that for decades (perhaps more) we have seen the impact that high taxes have on consumption and production. Many of those in favor of a large high school project here in Mt Lebanon like to say that an extra $60 per month is just a cup of coffee a day, or that its just one less dinner out per month. If that is the case then let me ask the obvious question. What if this actually turned out to be true? What if the residents of Mt Lebanon decided to give up their morning cup of joe or their monthly night out at dinner? What is the impact of that decision? How many people from Mt Lebanon do you think go to Aldo's or the Uptown each morning for coffee? How many people hit one of the restaurants on Washington Road or Beverly Road once a month or even once a week? What happens if all of these people actually DO reduce how much coffee they drink or how often they eat out? An increase of $60 a month in tax has the potential to take money directly from the productive part of our local economy (the coffee shops, the florists, the restaurants) and places it directly in the non-production part of local economy (debt service for a high school construction project).

This money will not go to hire more teachers to reduce class sizes. It won't expand programs. It won't make the District magically find ways to become more efficient. There most likely will not be an increase in student achievement and/or test scores due to a newly renovated building- although with our new Superintendent I hope this will happen anyway. The fact is that research does not show that constructing a new building will add anything to our ability to ready our kids for college and life after school. Isn't that what this should be all about?

The question that needs to be addressed has to do with how best to prepare our students for a constantly changing and ever more demanding future. Spending $100 million on bricks and mortar does not seem to be the best answer.

Thanks for reading.

James

August 10 Meeting Summary

There were a few interesting topics discussed at last night's board meeting. The Board was given some high school financing options and we also discussed the possibilities of relocating the 6 tennis courts that will be displaced.

During the architects update we were given a presentation on the Mechanical, Plumbing, Fire Protection, and Electrical Systems. You can find that document here. There was some good information in this presentation regarding some of the technologies we are expecting to use. Other than that, it was a nuts and bolts type presentation.

We were also presented with four options to relocate the tennis courts that will be displaced by the current design. You can view the entire document here. There are good pros and cons presented for each option. Please look through that link yourself and think of what you would prioritize. For me, the top three priorities are to 1) keep the courts on the high school campus, 2)keep the courts together as a unit, and 3) to have parking spaces next to what should be the main building entrance on Horsman.

Option One separates the courts on either side of Horsman Drive and does not allow for much parking near the new main entrance on Horsman. Option two keeps the courts together but has them facing a non-optimal direction while eliminating all parking near the main entrance. Option 3 keeps the courts on campus by moving them behind the rockpile and also allows for maximum parking spaces near the main entrance. However, this does eliminate a number of parking spaces and potentially reduces the area in which our marching band practices. Option 4 relocates the courts to Markham Elementary school.

Given the above options I would choose option 3. If this is the option chosen then I would expect that we are early enough into the design process to figure out a way to add back as many parking spaces as possible through this project while also figuring out an alternative practice space for our marching band. The combination of having parking where we need it (near the main entrance), having the tennis courts all together, and keeping the courts on campus make me believe that this option is the best one. During the meeting last night I asked Dr. Steinhauer to take the lead in figuring out alternative practice spaces for our teams during the construction phase of this project. Hopefully we will have some options shortly.

The other topic of interest was the financing options for the high school project. You can view the presentation here. As you may know, this project is too large to fit under our current debt limit. This requires us to do two floats of bonds to fund this project. In 2006 prior to Act 1, the Board passed a resolution to allow for the floating of $69 million of pre-Act 1 Debt. This means that when that bond is floated, the millage increase required to pay for that debt will not be counted against our Act 1 maximum allowable millage increase (which has been about 4% per year). The structure and payment of those bonds has already been set. The only thing about those bonds not set is what interest rate we would get when we go to auction.

The second set of bonds is where things get a little trickier. The presentation linked to above really is a discussion of the options regarding floating these bonds at a level payment (like your mortgage) versus a wrapped issuance (like an interest only loan for the first number of years). It has been my contention from the start that we ought to have a level payment of the debt. Pushing out the principal payments simply burdens taxpayers with $10 million in additional interest payments (see page 5) and burdens future boards with lowered borrowing capacity since the debt would be repaid at a slower rate.

Having the bonds wrapped simply puts us in the same position where we are now. In 2005 we wrapped the $55 million in elementary school construction bonds. To this date we have paid down very little in principal on those bonds. If memory serves me correctly we still have almost $54 million in outstanding debt on those bond floated back in 2005. This means that our current borrowing ability has been restricted by that wrapped bond schedule. It also means that our taxpayers will be paying excessive interest on those bonds because the principal has been pushed back to the later years of the debt service. As long as we keep wrapping bonds, the district will continue to burden taxpayers with millions of dollars of unnecessary interest costs.

While I have no doubt that we will have the ability to go to the market for the first $69 million in bonds and also the second $47 million, I do have concerns about the Act 1 limitations on the second bond issuance. As I mentioned before, the first bond float is exempt from Act 1. Even if millage needs to increase above an Act 1 limit, we will not be forced to referendum. However, with the second float, that might not be the case. If we did a straight float at $47 million that resulted in over a 1 mill increase, then along with any other kind of budget changes, I would expect that our 2011-2012 budget would be over the Act 1 millage increase limit. It would be the worst of all scenarios to have to go to referendum at that point in the high school project to get the final $47 million to complete a two-thirds completed project. I did ask our financial adviser about this and he admitted that it "could" be an issue. But he also said that there are ways around this. Essentially, what he said is that there are ways to avoid the Act 1 referendum at that point which would include structuring the bonds in such a way that they have minimal up-front impact on millage- essentially recommending that if we were expected to exceed Act 1 limits then we should just wrap the bonds to avoid a referendum.

Why are we trying so hard to avoid a referendum every time we turn around? It seems to me that if we know that the taxpayers would vote down a project of this size (or $500,000 more), then we ought to be planning to do a project of significantly less size and scope.

More on that in a future post.

Thanks for reading.

James