Archive for January, 2009

The Cost of saving Money

Thursday, January 22nd, 2009

As it turns out, and contrary to some published reports, Otter Valley High School is not going to stop teaching French after all.

The school will reduce its one French teacher’s schedule from almost full-time to half-time, said Principal Dana Cole-Levesque. This will allow all the students now studying the language to continue through a fourth year if they choose.

There won’t be any first-year French class offered next year, Cole-Levesque said, but the plan is to restart a full French program as soon as possible, so that in the future “any students who want to start” studying French will be able to do so.

So it’s not a phase-out. More like a one-year suspension of French One to save some money.

That’s not all that Otter Valley has done to save money, Cole-Levesque said. It is also trimming a technical education teacher and will replace a retiring English teacher with someone who already works in the school. As a result, he said, the property tax rate in the Rutland Northeast Supervisory Union (Leicester, Whiting, Sudbury, Brandon, Goshen, Pittsford, Mendon and Chittenden) is tentatively slated to go down by one cent. These cuts, he said, will not lower the quality of education in the schools.

What the district did not do, Cole-Levesque said-what it considered and refused to do-was cut its budget so much that its per-pupil costs next year would be “level-funded,” meaning no more next year than this year.

That would have diminished the quality of education, Cole-Levesque said.

“When the board looked at the implications from an  educational standpoint, to try to create level funding, it was really draconian,” he said. “It was going to start hurting our programs.”

The problem-not just for Otter Valley but for the whole state-is that level funding of per-pupil cost is exactly what Gov. Jim Douglas is demanding of Vermont’s schools right now. Arguing-correctly-that almost every other unit of government in the state is going to have to spend less in the next fiscal year, Douglas asks why the public schools should be treated differently.

In his Inaugural speech, when he first announced his intention to hold down school spending, Douglas mentioned some specific steps that might be taken to reduce costs without making the schools worse. One of them was consolidation, though he did not specify whether he meant actually combining schools or just merging some of the 61 supervisory districts.

Either way, many experts say-and it just makes sense-that consolidation could make the schools cheaper without making them worse. It might weaken “local control.” But it would probably save money.

Since that speech, though, Douglas has said nothing about specific cost-cutting proposals. He’s just pressuring the schools to “level-fund” per-pupil cost.

Needless to say, that would save money, too. But as the Otter Valley example illustrates, perhaps at the cost of diminishing the quality of the state’s schools.

Not across the board, though. One result of the governor’s proposals could be greater inequality both within the schools and in the way they are financed.

For instance, that employee that Cole-Levesque is moving over to replace the retiring English teacher is now  working in a “support program,” offering “academic tutorial support for students who for one reason or another need some special help.”

The program will continue, Cole-Levesque said. But it will continue with one less teacher. Maybe it can be as effective without that teacher. But quite possibly it cannot.

And the students in that program are more likely to be from lower-income homes, precisely the students, Cole-Levesque said, among whom the school has “failed to meet adequate yearly progress.”

Elsewhere around the state, schools have been cutting “technical education” (the current preferred term for what used to be called “vocational education”). In some cases these cuts may make sense because special “technical centers” (vocational schools) have opened nearby. Either way, the students most likely to be affected come disproportionately from lower-income families.

These are not the governor’s decisions. They are school board decisions in response to pressure to cut cost. Nor does all the pressure come from Douglas. No doubt some of it comes from taxpayers. But the taxpayers with the most clout are not the parents of  children who take vocational classes or “need some special help.” They are more likely to be the parents of children who study French.

On the financing front, what Douglas wants to do is cut the amount of money that the state’s General Fund contributes to its Education Fund. Most of the money in the General Fund comes from  the “broad-based”  sales and income taxes. More of the Education Fund money comes from property taxes.

If the schools and the Legislature adopt the governor’s plans, then, more  school spending will come from property taxes, less from income and sales taxes. According to one study, that means the burden of school financing will shift downward, from the more to the less affluent.

In a 50-page paper prepared for the prestigious Social Science Research Network, Professor Susan Pace Hamill, with statistical help from Robert S. McIntyre and Matthew Gardner of The Institute on Taxation & Economic Policy has compiled tables showing that in almost all states, including Vermont, lower-income residents pay a higher percentage of their income in property taxes than do the wealthy.

Hamill makes no claim that she is objective. Her paper is called “The Vast Injustice Perpetuated by State and Local Tax Policy,” and while she rates Vermont as one of the four most responsible and progressive states, she doesn’t think any state spends enough on education, or raises the money for it fairly. Vermont’s public finance system was rated “slightly regressive” in her paper. Her assessments are open to debate; her statistics appear to be solid.

In Vermont, a typical taxpayer in the bottom fifth of the income distribution scale pays 5.6 percent of his or her income in property taxes. Middle income people pay 3.6 percent. The very wealthy pay only 2.6 percent of their income.

Sales taxes are similarly regressive, with the poorest paying 5.7 percent of their income and the richest 3.3 percent. Only the income tax-where the poorest pay nothing and the very wealthy 4 percent of their income in state taxes-counter-acts the regressive influence of the other taxes. So the more that schools are paid for by property taxes, the more they seem likely be paid for by lower income taxpayers.

Starving the Beast (and other creatures?)

Wednesday, January 21st, 2009

Gov. Jim Douglas does not deliver his annual budget address until Thursday afternoon, but behind the numbers ,his political strategy is already clear.

Call it the modified, limited Grover Norquist. Douglas is trying to “starve the beast.”

Norquist, one of Washington’s most influential (and contentious) conservative operatives, did not coin that phrase., or the policy it illustrates, which conservatives have followed since the Reagan Administration.  But Norquist, the head of Americans for Tax Reform, is the one who made it famous as short-hand for the strategy of cutting government spending by simply making sure the government has less money to spend.

In Norquist’s view, almost all of government is “the beast,” deserving starvation, or at least malnutrition, to the point where it can’t do much. Gov. Douglas, not nearly as far to the political right as Norquist, is being more selective. He’s just targeting one slice of government-elementary and secondary education. And he doesn’t really want to starve it; just put it on a strict diet.

That’s the strategy behind Douglas’s plan to spend $63 million less on schools in the next fiscal year. Or, to put it more precisely, to give the schools $63 million less in money that comes from statewide “broad-based” taxes-income and sales taxes and the like.

That’s the political-fiscal reality behind the government jargon of altering how much money is spent from which of the state’s various “funds,” as Douglas proposed the other day. Ignoring the official gobbledygook, the important distinction is that money in the “General Fund” comes mostly from the “broad-based” taxes while money in the “Education Fund” comes mostly from the statewide Education Property Tax.

But-and this is the important “but”-the Education Fund also gets an infusion every year from the General Fund-a projected $40 million next year specifically for the teachers retirement system, plus another $298 million. What Douglas wants to do is cut the second figure to $275 million and place the entire burden of contributing to the retirement plan onto the Education Fund.

The result: More school spending comes from the property tax, less from the more broadly based taxes. And more pressure on the schools to cut costs.

Schools would still be able to spend more, but they’d have to get all the extra money from local property taxes, with the approval of local property taxpayers.

Even without the current recession, that approval would be hard to get. Considering the unpopularity of property taxes, Douglas’s proposal almost makes it seem that he’s trying to instigate a taxpayers’ revolt against the public schools.

He is, as demonstrated by another of his suggestions-lowering the “income sensitivity” of the statewide education property tax from $90,000 a year back to the $75,000-a-year level of just a few years ago. Douglas and his Tax Commissioner Tom Pelham, have made no secret of their opinion that the higher limit shields too many taxpayers from the full effect of the statewide property tax. Protected from big tax hikes, these property owner/voters are less likely to pressure their local school boards to hold down spending.

The likelihood that the Legislature-or any legislative body in the English speaking world-would effectively raise the taxes on upper-middle income voters is tiny. Many of these people are adept at calling their legislators and finding (and contributing to) primary candidates to oppose them.

But with his new plan to reduce the amount transferred from the General Fund to the Education Fund, he may not need to change the income sensitivity provision to accomplish his goal of slimming down the public school establishment.

The connection between the Douglas strategy and the Norquist slogan is limited, but unmistakable. For decades before the 1980s, conservatives complained that government spent too much money. The response from liberals, moderates, and even some moderate conservatives was: “Ok, what do you want to cut, and how?”

Conservatives answered that question, but never very convincingly. Not until Ronald Reagan became President did they find an alternative: Just cut taxes, forcing government agencies to reduce spending.

Douglas is following the same path. He could offer suggestions on how schools could cut costs. He could put in place a process-a commission, say, or a series of meetings with school officials, legislators, outside experts and the like-to come up with a plan for saving money without lowering the quality of education.

But he does not seem interested in either course. Instead he is mounting a major effort simply to cut the amount of money the schools get from broad-based taxes, almost daring them to try to make up the difference from their local property taxpayers. This week, his office is sending letters to school boards urging them to spend no more per pupil next year than this year.

On the federal level, the Reagan-Norquist strategy didn’t work all that well. Government spending as a percentage of Gross Domestic Product is no lower than it was in 1981, as more borrowing offset lower taxes.

But that doesn’t mean Douglas won’t succeed. By law, Vermont can borrow, but states don’t have a Central Bank or control of their currency; their borrowing capacity is limited. Spending less or taxing more are the real alternatives.

Besides, he has at least one politically compelling argument, one that differentiates him from the Reagan-Norquist conservatives. Douglas says he wants to keep $63 million in the general fund so it will be available to spend on programs that help the sick and the poor. If that money continues to be funneled into the Education Fund, he claims social programs will have to be cut back, harming the most vulnerable Vermonters.

Among other advantages for him, this argument nicely divides his liberal opponents. Advocates of more (or at least not less) spending on social programs are gearing up to fight proposed cuts. The better job they do convincing voters these funds are necessary for health care, childrens programs and help for the destitute, the stronger becomes Douglas’s case for keeping some of the money out of the Education Fund.

Furthermore, on the face of it, there is a case to be made for financing teacher retirement from the Education Fund. It is, after all,  an education expense. And asking entities which collectively spend some $1.4 billion to make do with $63 million less may strike many Vermonters as reasonable.

On the other hand, all these “Funds,” state and federal, are artificial constructs designed for political expediency, and often “raided” for political convenience. And many school districts are already cutting their budgets in response to the governor’s campaign.

Cutting budgets, of course, while not easy, is simple. Eliminate a class here, a teacher there. It’s cutting budgets without degrading quality that is complicated. There is a danger in starving the beast. Unless done carefully, it could malnourish the brood stock.

All of which will be examined tomorrow.

Musings On a Special Day (with another to follow)

Tuesday, January 20th, 2009

An unusual post today because it is written on Martin Luther King Day, on which:

–Offices are closed, rendering it nigh on to impossible to get the kind of information needed to write responsibly about what’s going on in the world, or the state;

–A certain amount of reflection is in order, especially considering what is schedule to happen the day after Martin Luther King Day this year. To be astonished-pleasantly astonished-by this coincidence, it is not necessary to be starry-eyed about the incoming President.

It may help to be old enough to remember when a black teen-ager was murdered for (perhaps) whistling at a white woman,  to remember when people were killed on bleak country roads for having the temerity to help their fellow-citizens register to vote,  to have come upon a diner early one summer morning-not even in the Deep South, but in New Mexico-with a big, hand-lettered sign on its front door reading, “No Dogs. No Blind. No Colored.”

Not that long ago, in the great scheme of things. And today a man who would not have been allowed into that diner becomes President of the United States.

Any year, just as one ought to read the Declaration of Independence on the Fourth of July, one ought to read “Letter from a Birmingham Jail” on Martin Luther King Day. In case you forgot, or couldn’t find it, here it is.

Even with all those offices being closed, I thought that rather than take the day off myself, I’d recount my one meeting with King. Not only because it’s appropriate, but because it reveals something about my attitude toward the news business, which readers of this site are entitled to know.

One evening in 1967 I was assigned to cover a speech King was making at a great big synagogue in Great Neck, Long Island. There would also be a post-speech reception, to which the press was invited, at the home of the president of the congregation.

I sat in the back, left as soon as the speech ended, and made the short drive to the reception. Hardly anyone else was there yet. In fact, no one was there yet except the catering staff, the hostess (who was of course a-twitter with making sure all was in order), Martin Luther King, Jr., and moi. So we had to make small talk.

At which, it turns out, he was not very good. No surprise, when you think about. Men who change the world usually have more serious matters on their minds than the techniques of chit-chat.

What it meant, though, was that I had to make small talk. Desperately trying to think of something to say (I was 26 years old) it occurred to me that in his speech he had warned the audience that America must not become “a nation of observers.”

A reporter is an observer.

So I said that, and asked, “we shouldn’t become a nation with no observers at all,, should we?”

Well, no; it was worse than that. The above sentence is English. I think what I actually said, in my nervousness, was, “We shouldn’t become a national completely devoid of observers, should we?”

Completely devoid of? What kind of way is that to talk?

Anyway, he thought a moment, and said, “I think you’re right. I suppose it depends on one’s temperament,” pronouncing the word with its middle A-temper-a-ment-which I had never heard before and have not heard since.

It wasn’t all that profound a statement, but I’d never heard the idea put quite so succinctly before. Yeah, that’s it, I realized. I am temperamentally (under any pronunciation) suited to be one of the guys on the sidelines, the disinterested observer casting the same skeptical eye on all the participants out on the field.

Or as my (sadly, now late) buddy Jerome Holtzman, the Chicago Tribune’s great baseball writer, put it, “There’s no cheering in the press box.” I don’t know whether Jerome invented the term, but it’s associated with him because he used it as the title for one of his books.

“We watch the game,” Jerome once said. “We’re supposed to understand the game. We wear these credentials around our necks that let us go onto the field during batting practice and into the clubhouse after the games so we can talk to the players and coaches and managers. But we don’t root for either side.”

A nice summing-up of the reporter’s credo.

After another minute or two, to my great relief, a few more guests arrived, many of them heading right toward us.

“Well, thanks,” I said. “It’s been good talking to you.”

“Yeah,” he said, suddenly less formal. “You too. Take it easy. Keep observing.”

And so I have.

Happy Inauguration Day.