Tag Archives: Government spending

Richard Ranzau on core American values in Sedgwick County

Sedgwick County Commission Chairman Richard Ranzau spoke on the topic “Returning Core American Values to Sedgwick County” before a luncheon audience of the Wichita Pachyderm Club Friday, August 28, 2015. View below, or click here to view at YouTube.

Videography by Paul Soutar.

WichitaLiberty.TV: Congressman Mike Pompeo

In this episode of WichitaLiberty.TV: Congressman Mike Pompeo talks about passing legislation like the Safe and Accurate Food Labeling Act, the Iran nuclear deal and his role in discovering the secret side deals, and other topics. View below, or click here to view at YouTube. Episode 94, broadcast August 30, 2015.

Kansas schools ask to fund extraordinary needs

Asking taxpayer-funded entities whether they are operating efficiently is a perfectly legitimate question that, frankly, should be the starting point of every budget discussion. That some find it offensive is indication that the issue should be much more aggressively pursued across government, writes Dave Trabert of Kansas Policy Institute.

Extraordinary needs … or wants?

By Dave Trabert, Kansas Policy Institute.

Thirty-eight school districts have applied for additional state aid from the Extraordinary Needs fund based on increased enrollment, reduced property values, loss of state aid (just Hutchinson) and the reactivation of two refugee resettlement agencies in Wichita by the U.S. Office for Refugee Resettlement. The State Finance Council will decide whether — or the extent to which — each case merits additional funding from state taxpayers.

Several members of the Finance Council asked the applicants to provide information about steps taken to make their district operate more efficiently, to which some school districts, legislators and media responded with various forms of criticism. Asking taxpayer-funded entities whether they are operating efficiently is a perfectly legitimate question that, frankly, should be the starting point of every budget discussion; that some find it offensive is indication that the issue should be much more aggressively pursued across government. 

Kansas Policy Institute gathered the following data to help citizens make their own determinations, and even more information is available in our 2015 Public Education Fact Book. We requested a copy of each applicant’s Budget at a Glance for the current year from those who didn’t already have it posted to their web site in order to compare their current year budget with actual spending from prior years. We were only able to collect data on 21 of the 38 districts; remarkably, 8 applicants said their budget wasn’t finalized so the data wasn’t available. Seven applicants had the data but five of them would not provide it and two said they couldn’t provide it because those with access were away from the district. We were unable to get a response from the other two.

Some interesting information is found in the data shared by the 21 applicants, including:

  • 17 districts are budgeting more than an inflationary increase
  • 9 districts are budgeting more than a 10% increase
  • 10 districts plan to increase Administration more than Instruction.

Complete information on the applicants that provided information (dollar amounts by category including Capital, Debt Service and Total) can be downloaded here. The spreadsheet also shows the amounts each district received in block grant-equivalent funding for FY 2014 and the amounts for FY 2015 through FY 2017 as calculated by the Department of Education.

Kansas City’s 57% increase in Administration amounts to $15.7 million, which is ironically about the same amount that applicants are collectively requesting in Extraordinary Needs funding. A Legislative Post Audit efficiency study conducted in 2013 found that Kansas City was paying well above market for many positions and it appears that that may still be true.

The adjacent table is a sampling from the district’s payroll listing for the 2015 school year obtained through an Open Records request. Work of this nature could be outsourced at much better prices, with the savings made available for Instruction. 

Kansas City may be somewhat of an extreme example but it is very common for districts to have work performed by district employees that could be more efficiently outsourced. This is just one example of valid questions that should be asked of districts that are requesting additional aid. 

Allocation of resources to teaching and non-teaching positions would be another valid line of inquiry. Classroom teacher employment over the last ten years has outpaced enrollment in many cases and non-teacher employment has grown even faster. This is not to say that the relationship should be the same in every case, as there are a number of legitimate reasons for some degree of variance.  But the raw data — available here — allows for additional benchmarking that indicates opportunities more efficient staffing levels.

It would also be pertinent to ask applicants whether they provide lucrative payouts to employees who terminate or retire. The Blue Valley superintendent received a one-time payment for deferred compensation of $328,591 last year; the cost of that alone is significant but it could also dramatically increase his pension .. for life. The Shawnee Mission Assistant Superintendent collected $132,614 for unused sick leave and vacation upon retirement and could also collect additional pension as a result. Kansas City told us that the position of Chief Human Resources Officer was eliminated but his contract had to be paid out, which accounts for the large increase last year. 

Local school boards make these decisions to provide lucrative payouts but taxpayers all across Kansas pick up part of the tab, as there is no separation between what is paid with state and local tax dollars on items of this nature.

School districts may have made some spending adjustments but they are still organized and operating rather inefficiently according to Legislative Post Audit and other information. It would be appropriate for any grant of extraordinary aid to be conditional upon a commitment to implement substantive measures to implement specific operating efficiencies, including outsourcing to regional service centers and the private sector as appropriate.

Wichita property tax delinquency problem not solved

Despite a government tax giveaway program, problems with delinquent special assessment taxes in Wichita have become worse.

It’s surprising to read reporting in the Wichita Eagle that the city is owed millions in delinquent special assessment taxes. (City of Wichita owed $4.8 million in delinquent special assessments, August 15, 2015)

That’s because in 2012 the city adopted a program that rebated property taxes to buyers of new homes. The goal of the program was twofold: To help builders sell homes, and to help the city collect delinquent special assessment taxes.

In February of that year, according to city documents, “Current delinquent specials on vacant lots within the City of Wichita are an estimated $3.3 million.”

Now the delinquent taxes have risen to $4.8 million.

This wasn’t supposed to happen. At the council meeting Wes Galyon, president of the Wichita Area Builders Association, told the council, according to meeting minutes: “This program will also aid in eliminating current delinquencies on lots and new home subdivisions in the City and contribute to the developers and builders being able to keep taxes and specials current on buildable lots that they own and plan to build on.”

The city manager told the council, according to meeting minutes: “The other issue was the ability to collect on delinquent taxes and special assessments. Stated that is becoming a growing problem for us as we look at what is happening with the economy and home builders.”

A program that should not have been adopted

In his remarks to city council members in February 2012, Wichita city manager Robert Layton told the council, according to meeting minutes: “Stated they took a businesslike approach as they went through this and designed the program. Stated they consulted Wichita State University and the report references a 1.48 return on our investment just in terms of the present value of the direct and indirect jobs that are created as well as the construction expenditures, which was important to them.”

The manager was referring to an analysis prepared by Wichita State University Center for Economic Development and Business Research, titled Economic Impact of Proposed WABA Incentives, February 1, 2012.

In these analyses, the city attempts to estimate costs and benefits of a program, and adopt only those programs that have a positive ratio of benefits over costs. (Generally the city requires that the ration be 1.3 to 1 or greater.) Benefits are, according to the study, “sales tax revenues, from construction worker spending and construction material purchases, and property tax revenues.” The costs are the lost revenue due to the tax rebates. Following is an excerpt from a table that presents the results of analysis.

                   No Incentives    Incentives
Public Benefits       $2,364,429    $3,004,315
Public Costs                  $0    $2,032,312
Net Public Benefits   $2,364,429      $730,457
Return on Investment      N/A           1.48

Some, like the Wichita city manager, focused on the return on investment (ROI) ratio of 1.48 if the tax rebate incentive is used. (There is no such ratio if there are no incentives, as there is no investment.) The study explained the ratio this way: “For every dollar invested, the city will receive the initial dollar plus an additional 48 cents in return.”

That sounds like a good deal, and the ratios like this that are calculated by CEDBR are often used by the city to justify incentives.

But there is another way to look at this deal: the net value to the city. In this case, if the city did not offer the incentives, the benefits to the city would be $2,364,429. If incentives were used, the benefits would be $730,457. This means that if the city does nothing, it is $1,633,972 to the better.

That’s right: Even though the city had an opportunity to make an investment with a purportedly high ROI, it would be better off, dollar-wise, if it did not make the investment.

This illustrates the caveats of working with ratios. They are simply “the relation between two similar magnitudes with respect to the number of times the first contains the second.” A ratio says nothing about the absolute magnitude of the numbers.

For more about the problems CEDBR study found with the program, see Wichita new home tax rebate program: The analysis.

Wichita’s WaterWalk apartment deal

From August 2012, an episode of cronyism in Wichita.

On Tuesday the Wichita City Council will consider the type of taxpayer-funded giveaway that voters have shown they don’t like. How council members vote may set the stage for city elections next March and April.

Tuesday’s item involves a proposed apartment development on the west bank of the Arkansas River across from the downtown WaterWalk development. The apartment developer is WaterWalk LLC, whose manager is Jack P. DeBoer.

The highlights of the deal include:

1. The lease of 4.4 acres of city-owned land for $1 per year, for the next 93 years. City documents say the land is valued by Sedgwick County at $479,000. The city paid $919,695 to acquire the land in 1994 and 1995. It’s listed as for sale with an asking price of $1,153,344. The city is, however, asking the apartment developer to pay the full $93 in advance.

2. Development of an amphitheater, which was part of the WaterWalk master plan. Originally planned to be just west of WaterWalk Place, the condominium development on Main Street, the amphitheater will now be implemented as a floating stage in the Arkansas River. A $247,500 Economic Development Initiative (EDI) grant from the U.S. Department of Housing and Urban Development (HUD) will pay for a portion of the cost. Tuesday’s agenda item asks authorization to issue a request for proposal (RFP) for this stage.

Besides the sweetheart land lease, there are two other components of this deal that are troubling. One will undoubtedly be presented to city council members and the public as a big benefit to taxpayers, something that will actually profit the city. This is a provision that requires the apartment developer to pay “Additional Annual Rent.” Under this concept, each year the apartment developer will calculate “Adjusted Net Cash Flow” and remit 25 percent of that to the city.

To the casual observer, this seems like a magnanimous gesture by the apartment developer. It makes it look like the city has been a tough negotiator, hammering out a good deal for the city, letting citizens profit along with the apartment developer.

But the definition of cash flow includes a comprehensive list of expenses the may be deducted, including the cost of repaying any loans. There’s also an allowable expense called “Tenant Development Cost Return,” which is the apartment developer’s profit. The agreement defines this profit as 20 percent, and it’s deducted as part of the computation of “Adjusted Net Cash Flow.”

If there is ever any money left over after the dedication of all these expenses and profit margin, I will be surprised. Shocked, even. Here’s one reason why. One of the allowable deductions that goes into the computation of “Adjusted Net Cash Flow” is, according to city documents: “Amounts paid into any capital, furniture, fixture, equipment or other reserve.” There’s no restriction as to how much can be funneled into these reserve accounts. We can be sure that if this project was ever in the position where it looked like it might have to remit “Additional Annual Rent” to the city, contributions to these reserve funds would rise. Then, no funds paid to the city.

This is an example of the city appearing to be concerned for the welfare of taxpayers. In reality, this concept of “Additional Annual Rent” is worse than meaningless. It borders on deception.

Then, there’s this: The city has agreed to allow its ownership of the land (remember, the city is leasing the land to the apartment developer) to be subordinated to other debt the apartment developer may take on, such as the mortgage that will certainly be obtained. This means that if the apartment complex doesn’t succeed and there is foreclosure, the lender takes ownership of the city’s land.

Last week the city council passed a revision to its economic development policy that states that economic development incentives should have a cost-benefit ratio of at least 1.3 to one. No such number is given for this project.

Waterwalk, a problematic development

This deal is another chapter in the history of the troubled WaterWalk development. So far, WaterWalk has received some $41 million in public spending, and we have little to show for that investment.

Three years ago the Wichita Eagle editorialized: “Seven years into a project that was supposed to give Wichita a grand gathering place full of shops, restaurants and night spots as well as offices and condos, some City Council members and citizens remain skeptical at best about WaterWalk’s ability to deliver on its big promises. … True, the skepticism to date is richly deserved.” When our newspaper’s editorial board is critical of a government spending project in downtown Wichita, that’s a red letter day.

In 2009, after DeBoer took over the management of WaterWalk, the Wichita Eagle reported: “‘I’m not going down to City Hall with my hand out,’ DeBoer said. ‘I can’t. The city has put their money in it, and I’m happy with that. We’ve put a lot of our own money in and that’s OK. Now, time to deliver.'”

Leasing land worth $479,000 or $1,153,344 for one dollar per year: To me, that smells like a handout. It doesn’t sound like delivering on promises.

Around the time DeBoer took over the management of WaterWalk, Wichita city manager Robert Layton said no more public money would be put in to WaterWalk, according to Eagle reporting. Later he said those remarks were misinterpreted, with the Eagle reporting “[Layton] said the city won’t spend more on infrastructure, and that specific developments would be analyzed case by case to make sure they offer a return on investment for taxpayers and fit with the master plan.”

Wichita, home to cronyism

Measures like the city council will consider on Tuesday are what leads to cynicism regarding city government. It reinforces that notion that there is a network of insiders — the “good ol’ boy network” — that gets what it wants from city staff and officeholders. This deal — the sweetheart land giveaway, the deceptive appearance of profit sharing, the subordination of the city’s interests — doesn’t generate prosperity for Wichita and citizen confidence in its government. Instead, this deal contributes to the stench of cronyism that permeates and infests Wichita City Hall.

Two recent elections have shown that Wichitans don’t much care for this culture of giveaways to the politically connected class. People don’t like crony capitalism. They know it doesn’t work. The city defends these giveaways by saying they create jobs. But Wichita economic development is failing. Our city is not doing well, in spite of all the money spent on economic development efforts.

Additionally, when it is apparent that a “good ol’ boy” network of insiders exists at Wichita City Hall, it creates a toxic and corrosive political and business environment. Companies are reluctant to expand into areas where they don’t have confidence in the integrity of local government. Will I find my company bidding against a company that made bigger campaign contributions than I did? If I don’t make the right campaign contributions, will I get my zoning approved? Will my building permits be slow-walked through the approval process? Will my projects face unwarranted and harsh inspections?

Last year Charles Koch, chairman of the board and CEO of Wichita-based Koch Industries, wrote in the pages of the Wall Street Journal this regarding cronyism: “Government spending on business only aggravates the problem. Too many businesses have successfully lobbied for special favors and treatment by seeking mandates for their products, subsidies (in the form of cash payments from the government), and regulations or tariffs to keep more efficient competitors at bay. Crony capitalism is much easier than competing in an open market. But it erodes our overall standard of living and stifles entrepreneurs by rewarding the politically favored rather than those who provide what consumers want.”

WaterWalk and Jack DeBoer have already received generous financial assistance ($41 million) from the taxpayers of Wichita. That the city would consider even one dollar more is a scandal.

Amendments to Wichita WaterWalk Developer Agreements

Wichita Chamber speaks on county spending and taxes

The Wichita Metro Chamber of Commerce urges spending over fiscally sound policies and tax restraint in Sedgwick County.

Today the Wichita Metro Chamber of Commerce issued a “key vote” alert. This procedure, used by political groups of all persuasions, alerts elected officials that the Chamber prefers a certain outcome on an issue. Those who vote in harmony with the Chamber are likely to receive support in their next election, while the noncompliant are implicitly threatened with opponents the Chamber will support.

Here’s what the Chamber sent to commissioners:

From: Barby Jobe
Sent: Tuesday, August 11, 2015 2:47 PM

TO: SEDGWICK COUNTY BOARD OF COUNTY COMMISSIONERS

FROM: WALTER BERRY, Vice Chair, Wichita Metro Chamber Government Relations Committee

RE: KEY VOTE ALERT

While we have not recently had many “key votes” at the local level, the Wichita Metro Chamber would like to alert you that we will be key voting the 2016 Budget.

The Chamber would like to encourage the Commission to consider a compromise by leaving the property tax rate as it is currently and reducing the amount of cash-funded roads thus allowing a reallocation of funds for economic development and education, culture and recreation, city partnerships, and health and human services.

Thank you for your consideration.

Wichita Pavement Condition Index, from the city's 2012 Performance Measure Report
Wichita Pavement Condition Index, from the city’s 2012 Performance Measure Report
It’s unclear precisely what the Wichita Chamber is asking commissioners to do. It seems likely the Chamber is asking for support of “Plan C.” That is the plan drafted by commissioners Tim Norton and Dave Unruh, which proposes deferring road maintenance in order to free funds for current spending. That plan sets the county on the course chosen by the city of Wichita some years ago. That is, defer maintenance on streets and other infrastructure to support current spending. That policy lead to declining quality of streets and a large backlog of other maintenance, with a recent report from the city finding that the “cost to bring existing deficient infrastructure up to standards” is an additional $45 to $55 million per year.

This deferral of maintenance needs is a form of deficit spending. It’s curious that a purportedly conservative organization like the Wichita Chamber of Commerce would support that.

Well, it’s not really surprising. The Wichita Chamber has long advocated for more taxation and spending, taking the lead in promoting the one cent per dollar sales tax proposal in Wichita last year. The Chamber has supported big-spending Republicans over fiscal conservatives for office at several levels.

Your chamber of commerce radio buttonsIn Wichita, and across the country, local chambers of commerce support crony capitalism instead of pro-growth policies that allow free enterprise and genuine capitalism to flourish.

That may be surprising to read. Most people probably think that local chambers of commerce — since their membership is mostly business firms — support pro-growth policies that embrace limited government and free markets. But that’s usually not the case. It’s certainly is not the case in Wichita, where the Chamber supports higher taxes, more government spending, more business welfare, more government planning and control, more cronyism — and less economic freedom. The predictable result is less prosperity, which has been the case in Wichita under the leadership of the Wichita Chamber, its policies, and the politicians and bureaucrats it supports.

Here, in an excerpt from his article “Tax Chambers” economist Stephen Moore — formerly of the Wall Street Journal and now with Heritage Foundation — explains the decline of the local chamber of commerce:

The Chamber of Commerce, long a supporter of limited government and low taxes, was part of the coalition backing the Reagan revolution in the 1980s. On the national level, the organization still follows a pro-growth agenda — but thanks to an astonishing political transformation, many chambers of commerce on the state and local level have been abandoning these goals. They’re becoming, in effect, lobbyists for big government.

In as many as half the states, state taxpayer organizations, free market think tanks and small business leaders now complain bitterly that, on a wide range of issues, chambers of commerce deploy their financial resources and lobbying clout to expand the taxing, spending and regulatory authorities of government. This behavior, they note, erodes the very pro-growth climate necessary for businesses — at least those not connected at the hip with government — to prosper. Journalist Tim Carney agrees: All too often, he notes in his recent book, “Rip-Off,” “state and local chambers have become corrupted by the lure of big dollar corporate welfare schemes.”

In the states, chambers have come to believe their primary function is to secure tax financing for sports stadiums, convention centers, high-tech research institutes and transit boondoggles. Some local chambers have reportedly asked local utilities, school administrators and even politicians to join; others have opened membership to arts councils, museums, civic associations and other “tax eater” entities.

“I used to think that public employee unions like the NEA were the main enemy in the struggle for limited government, competition and private sector solutions,” says Mr. Caldera of the Independence Institute. “I was wrong. Our biggest adversary is the special interest business cartel that labels itself ‘the business community’ and its political machine run by chambers and other industry associations.”

From Stephen Moore in the article “Tax Chambers” published in The Wall Street Journal February 10, 2007. The complete article is here.

Cost of restoring quality of life spending cuts in Sedgwick County: 43 deaths

An analysis of public health spending in Sedgwick County illuminates the consequences of public spending decisions. In particular, those calling for more spending on zoos and arts must consider the lives that could be saved by diverting this spending to public health, according to analysis from Kansas Health Institute.

Kansas Health Institute is concerned about proposed reductions in public health spending in Sedgwick County. Sunday it released a fact sheet titled Decreases in Public Health Spending Associated with More Deaths from Preventable Causes, subtitled “Analysis of how proposed public health funding reductions in Sedgwick County could lead to more preventable deaths over time.”

Kansas Health Institute infographic
Kansas Health Institute infographic
KHI’s analysis is based on the paper “Evidence Links Increases In Public Health Spending To Declines In Preventable Deaths,” Glen P. Mays and Sharla A. Smith, Health Affairs, 30, no.8 (2011):1585-1593, available here. Excerpts from the paper are below. KHI summarizes the findings of the paper as: “In short, the research showed that increased spending by local public health agencies over the thirteen-year period studied was linked to statistically significant declines in deaths from some preventable causes such as infant mortality, heart disease, diabetes and cancer.”

KHI developed a model based on the paper’s findings to conclude that the proposed reductions in spending on public health in Sedgwick County would result in the deaths show in the nearby table from their fact sheet. The total of these numbers is an additional 65 deaths per year.

Perhaps in response to these findings, two Sedgwick County Commissioners have proposed eliminating the proposed cuts. To help understand the effects of this spending, I duplicated the analysis performed by KHI. I took the proposed increases in spending (or reductions in cuts) and subtracted the spending for public health, leaving $1,019,499 in spending that loosely qualifies as “quality of life” spending. It’s for things like the zoo, Exploration Place, economic development, and the like.

Sedgwick County spending analysis based on Kansas Health Institute model. Click for larger version.
Sedgwick County spending analysis based on Kansas Health Institute model. Click for larger version.
As can be seen in the nearby illustration, if this quality of life spending was instead spent on public health, we could save 43 lives per year. Based on the methodology used by KHI, this is the human cost of restoring only the proposed cuts to quality of life spending in Sedgwick County. If we were to use the totality of quality of life spending, or even just a subset like the $5.3 million spent on an elephant exhibit, the cost in human lives is large. This, of course, assumes that the KHI methodology is valid and reliable.

In its summary, the KHI report states: “Budget decisions have real consequences.” Those supporting spending on quality of life issues instead of public health have some explaining to do.

Excerpts from Mays et al.

“On balance, there is very little empirical evidence about the extent to which differences in public health spending levels contribute to differences in population health. Several cross-national studies have found weak and conflicting associations between spending and health outcomes at a national level.”

In a section titled “Limitations” the authors note “Several limitations of this analysis are worthy of emphasis. Although we used strong statistical controls to address possible sources of bias, it remains possible that factors distinct from, but closely correlated with, public health spending may explain some of the observed associations between spending and mortality.”

Also, “Local public health activities may have important and perhaps more immediate effects on these other indicators of health … this analysis may underestimate the health consequences of changes in local public health spending.”

In conclusion, the authors write: “Our analysis supports the contention that spending on local public health activities is a wise health investment. Increasing such investments in communities with historically low levels of spending may provide an effective way of reducing geographic disparities in population health. However, more money by itself is unlikely to generate significant and sustainable health gains.”

In Sedgwick County, a moral crusade

In Sedgwick County the debate over the budget has the dimension of a moral crusade, except for one thing.

As Sedgwick County debates next year’s budget, the arguments against a three percent cut in spending have been heated. Proponents of spending say the commissioners are not honoring commitments (see here and here), the commissioners are being short-sighted and foolish for proposing cuts, the county has a moral obligation to use taxes to care for the needy, and that county spending has a great economic benefit.

But what isn’t often mentioned is the nature of taxation and government spending. A new video from Learn Liberty offers a perspective on the morality of government that seems to be totally missing in the debate. View the video below, or click here.

In summary, the video poses these questions:

1. Is it moral for you to donate your money and time to (the zoo, Exploration Place, arts, health care for the poor, vocational education, payments to companies so they remain in the county instead of moving, a livestock show, the river festival, the sports commission, etc.)?

2. Is it moral for you to force other people to donate their time and money to (same list as in question one)?

3. Is it moral for government to force people to donate their time and money to (same list as in question one)?

If you answer “no” to question two, then how do you justify answering “yes” to question three? All sorts of rationalizations are available to support these two answers, such as:

1. Society is like a club, and taxes are the dues.
2. Taxes are the price we pay for civilization.
3. Government owns the nation (state, county, city, school district), and if you want to live or do business there, you must pay rent.
4. Government gives (most) people back more in services and benefits than they pay in taxes.
5. Government makes investments with our taxes that earn it even more tax revenue.

Some of these have a grain of truth, such as taxes providing for the national defense and a justice system. These two things make it possible for us to be safe from foreign aggressors and to have our rights and property protected. It doesn’t take a whole lot — comparatively speaking — to provide these functions, but government goes way beyond.

In fact, the truth behind number four leads to a most uncivil society, where people spend vast amounts of time and money lobbying for government to take even more time and money away from others and give it to them — or to the things they think your money should be spent on. We end up fighting over things like zoos and arts, instead of cooperating to attain these desirable amenities.

And fight we do. The techniques are known in advance. The book Economics In One Lesson, first published in 1946 and available to read at the Foundation for Economic Education, explains fallacies (false or mistaken ideas) that are particularly common in the field of economics and public policy. At the very start of the book the author Henry Hazlitt explains:

Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine — the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for then plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.

An example of using the “best buyable minds” is the promotion of government spending on arts as having some magic power not present in other spending. These buyable minds have produced an impressive document titled Arts & Economic Prosperity III: The Economic Impact of the Nonprofit Arts and Culture Industry in the State of Kansas. It explains that when a theater company (presumably operating with a government grant) buys a gallon of paint, it sets off a chain of economic activity that benefits many people. True enough. It’s called commerce. But anyone buying the paint sets off the same chain of activity. The same, that is, except that homeowners spending their own money on paint are doing so voluntarily, while the government-subsidized theater company has used the force of government to take money from others.

That’s a big difference, and one lost on most residents of Sedgwick County. I’m hopeful that the people pleading for more taxation and spending are simply unaware of these considerations, as if so, their minds can change. The alternative is much more bleak.

Kansas school funding growing faster than inflation

Kansas school funding has been growing much faster inflation and enrollment, but for some, it will never be enough, and they will continue to use taxpayer money to press their monetary demands, writes Dave Trabert of Kansas Policy Institute.

Even by KASB standards, school operating spending is $3.9 billion ahead of inflation

By Dave Trabert

A recent blog post by the Kansas Association of School Boards (KASB) Associate Executive Director Mark Tallman says “Total school district funding is, in fact, at an all-time high, expected to top $6.1 billion this year” but “… the part of school funding available for day-to-day operating costs is not keeping up with inflation and enrollment.” There are several misleading aspects to his statement and the data does not support the intended message, but let’s first give credit for the courage to contradict education officials who say funding has been cut. Bravo!

KASB’s definition of operating costs does not comport with the official definition used by the Kansas Department of Education or the U.S. Department of Education1, but for the sake of argument, let’s say that it’s correct. Let’s also assume that their definition of current operating funding represents the amount needed to efficiently operate schools and achieve the required outcomes, even though the facts refute any such claim.

By increasing the KASB-defined operating spending for inflation (the calculation for 2006 is $6,928 times (191.41 ÷ 185.14) = $7,162), we find that schools received a lot more money each year than if KASB’s 2005 amount had been increased each year for inflation. The margin of difference is getting closer over the next two years (if one doesn’t count all of the funding), but funding will have exceeded inflation by almost $3.9 billion since 2005.

KASB uses a different methodology in their inflation analysis. They show prior years’ spending in 2014 inflation-adjusted (constant) dollars; i.e., $X spending in 2014 has the same buying power as $Y in prior years. That methodology is common for restating buying power but it is irrelevant to the question of whether schools are or have been adequately funded.

The Kansas Constitution says the legislature must make suitable provision for the finance of public education; it does not say that schools must be given whatever they want to spend or that efficient use of taxpayer money cannot be taken into account. The honest truth is that no one knows what schools need to achieve the necessary outcomes while making efficient use of taxpayer money, because no such analysis has ever been undertaken in Kansas. We do know, however, that every Legislative Post Audit has found schools to be operating inefficiently and school superintendents openly acknowledge that they choose to spend more than is necessary in many circumstances. We also know that school districts haven’t even spent all of the money they’ve received over the last ten years, as about $400 million has been used to increase operating cash reserves.

There may be ways to demonstrate that today’s funding has less buying power than a particular point in time but that doesn’t mean that each year’s funding didn’t keep up with inflation and enrollment — as shown above, per-pupil funding as defined by KASB was $3.9 billion more than an inflationary increase.

The gap is even greater for total funding, which would have been $6 billion less over the last ten years if per-pupil funding for the 2005 school year had been increased each year for inflation. School districts received large funding increases beginning in 2006 from a Supreme Court Montoy ruling based on a cost study that has since been abandoned by the Supreme Court in Gannon.

The Shawnee County District Court may believe that schools are not adequately funded, but they ignored the Kansas Supreme Court in arriving at what amounts to little more than a political perspective. School funding has been growing much faster inflation and enrollment, but for some, it will never be enough … and they will continue to use taxpayer money to fund KASB justifications (and attorneys) for their monetary demands.

 

1KSDE and the U.S. Department of Education say operating expenditures “…do not include equipment (700 object codes), Capital Outlay or Bond & Interest. [700 object codes include expenditures for acquiring fixed assets, including land or existing buildings; improvements of grounds; initial equipment; additional equipment; and replacement of equipment.]”  The KASB definition also excludes Food Service and employee retirement costs but they don’t disclose that their definition is not the official definition and it also does not comport with the Kansas Supreme Court, which says all funding sources, including retirement costs, should be considered as part of adequate funding.

WichitaLiberty.TV: The Sedgwick County budget and more episodes of “Love Gov”

In this episode of WichitaLiberty.TV: As Sedgwick County proposes small spending cuts, those who benefit are vocal in their displeasure. Then, two more episodes from “Love Gov” covering health care and the housing market. View below, or click here to view at YouTube. Episode 91, broadcast August 9, 2015.

Federal rules serve as ‘worms’ buried in promises of ‘free money’

An often unappreciated mechanism throughout the Kansas budget severely limits the ability of legislators and governors to adapt to changing state priorities. A new paper from Kansas Policy Institute explains.

Federal Rules Serve as “Worms” Buried in Promises of “Free Money”

Mandates remove state control of budgets, exemplify increasing federal overreach

July 30, 2015 — Wichita — An often unappreciated mechanism throughout the Kansas budget severely limits the ability of legislators and governors to adapt to changing state priorities. These Maintenance of Effort (MOE) requirements are highlighted in a new paper by Kansas Policy Institute and is authored by former state budget director Steve Anderson. MOE stipulations force state and local governments to maintain a constant level of funding for several federal grant programs, most notably Medicaid and the Elementary and Secondary Education Act, two major components of Lyndon Johnson’s “Great Society;” in FY 2014 these two programs accounted for over two-thirds of Kansas general fund expenditures.

Maintenance of Effort cover Kansas Policy InstituteDave Trabert, president of Kansas Policy Institute, offered the following in conjunction with the release of the paper, “Maintenance of Effort requirements are an end-run on the U.S. Constitution, which prohibits the federal government from dictating how states operate.  The feds use MOE to create contractual obligations that effectively control large chunks of states’ budgets and limit legislators’ ability to make appropriate decisions for their constituents.”

Unfortunately, policy makers are bound by MOEs regardless of the state’s budget situation, changing priorities, or new-found efficiencies. A previous legislature can effectively tie the hands of future elected officials. Sometimes it is even agency bureaucrats who sign up for “free federal dollars” apart from the normal appropriations process with little legislative input.

Steve Anderson, author of the “Maintenance of Effort: The Federal Takeover of State Budgets” and current Senior Fiscal Policy Fellow with KPI, said, “The constitutional right of a state to control the appropriation of their citizens’ tax dollars is too often being abrogated by the federal government’s MOE requirements. This takeover of the state budgets is like an addictive drug from which withdrawal is painful. Unlike a drug, this addiction can be created by prior legislatures, governors or even bureaucrats.  The pervasiveness of MOE goes to almost every function of state government.”

The report outlines several strategies that can be utilized by state governments to mitigate the negative effects of MOEs. One proposal may prove difficult with existing programs but brings some common sense to policy making moving forward — avoid federal funds as much as possible. Conversely, a similar recommendation would be that all new grant programs be approved by the state legislature.

In conclusion KPI President Trabert said, “MOE requirements are not about improving outcomes, but dictating how states operate. Until Congress puts a stop to this practice state legislators must say no to the promise of ‘free money’ from the feds and avoid the problems brought by MOEs.”

Michael Tanner: Going for Broke: Deficits, Debt and the Entitlement Crisis

Cato Institute Senior Fellow Michael Tanner speaks about his new book, “Going for Broke: Deficits, Debt and the Entitlement Crisis,” at a luncheon of the Wichita Pachyderm Club, July 31, 2014. View below, or click here to view at YouTube. Video production by Paul Soutar.

Tanner’s appearance on Wichitaliberty.TV is here.

Sedgwick County WATC funding trajectory following manager’s recommendations

Sedgwick County taxpayers have been generous with funding for Wichita Area Technical College, and the former county manager has recommended reducing its funding.

During the July 16, 2014 meeting of the Sedgwick County Commission, county manager Bill Buchanan presented the recommended budget for 2015. It included a cut in funding for Wichita Area Technical College in the amount of $150,000. In response to a question, Buchanan told the commissioners:

“The new president has been assertive and aggressive in trying to deal with their financial issues. They have, he has turned that financial, that institution around financially. They are in pretty healthy shape. They have a fund balance that’s relatively strong, and it’s in my opinion that our subsidy, although it was critical in the beginning, is less critical in their operations now, and perhaps it would be time for us, when we face our own fiscal issues, to reduce their funding so we can address some of ours.”

Under the leadership of Chair Dave Unruh, this reduction in funding was approved.

At the January 7, 2015 meeting of the commission, again under the leadership of Unruh, the commission heard an off-agenda item to restore $50,000 of the funding for 2015, making the cut $100,000. That item passed. Being an off-agenda item, there is little or no public notice. Commissioner Karl Peterjohn noted this in his remarks: “I frankly would feel much more comfortable if we postponed this issue until we could get it published in the paper and have at least whatever public attention that that would generate provided, as opposed to taking another Off Agenda item that’s going to increase county spending.”

In support of Peterjohn’s motion to delay the decision for a week, Commissioner Richard Ranzau expressed concern over the lack of financial information made available to commissioners. He also repeated the manager’s recommendation that WATC needs less county funding: “Well, I’d like to have more financial information. It’s my understanding that since the state has increased funding for Vocational Ed, they’re doing very well, their reserves increased significantly, and that’s why, I mean, I was told the reason we could reduce it $150,000 was because they were doing so well. I support what they’re doing out there, but if they’ve had an influx of money from the state, a result of Vocational Ed legislation then I think it’s appropriate to adjust our spending, and I’m not prepared to increase it by $50,000 without more financial information, and that’s why I support Commissioner Peterjohn’s motion to postpone this a week so we can get more information and make a more educated decision on this. There is really no reason for hurry through this in my estimation.”

In summary, the Sedgwick County manager recommended that commissioners reduce funding to WATC, as its need for county funding has declined. Under commission chair Unruh, the commission did so, in the net amount of $100,000. The same amount is proposed for cuts this year. In light of this, the criticism of WATC beneficiaries like Spirit Aerosystems is unfounded.

By the way, the commission has been criticized for considering off-agenda items since Ranzau became chair in January, with the Wichita Eagle editorial board describing one off-agenda vote as “abrupt.” In another op-ed, Rhonda Holman complained that “The move came in an off-agenda item, with little opportunity for GWEDC and the business community to argue against it.”

Whether off-agenda items are good or bad public policy seems to depend on the whim of the Eagle editorial board.

WichitaLiberty.TV: Michael Tanner of Cato Institute on deficits, debt, and entitlements

In this episode of WichitaLiberty.TV: Michael Tanner of the Cato Institute talks about his new book “Going for Broke: Deficits, Debt, and the Entitlement Crisis.” View below, or click here to view at YouTube. Episode 90, broadcast August 2, 2015.

Tanner’s page at Cato is here. Video of a book forum on “Going for Broke: Deficits, Debt, and the Entitlement Crisis” is here. Video of Tanner at the Wichita Pachyderm Club is here. A good discussion of the book on C-SPAN is here.

Sedgwick County spending beneficiaries overwhelm others

That so many speakers at a public hearing were in favor of government spending is not surprising.

In a letter to the editor of the Wichita Eagle the writer stated “But apparently few of them felt strongly enough to come to the commission hearing and express their support of budget cuts.” He was referring to the public hearing on Wednesday July 29, when some 50 people spoke, and just three supported cuts.

This lopsided ratio is not surprising. It’s an example of the well-known phenomenon of concentrated benefits and dispersed (or diffuse) costs. Explained in this video, it observes that for most government spending programs, the benefits are showered on a few very visible recipients who benefit greatly. There were 47 of these speaking at last week’s public hearing.

But the costs of these spending programs are spread across everyone, or at least a large group. For them, the cost is small. In fact, politicians use this argument in favor of their spending programs. Dave Unruh observed that the proposed county property tax cuts amount to savings of $1.37 per year for a $100,000 house. His arithmetic is correct, and so is his understanding of human nature. Most people look at the small cost of any single government spending program and realize it’s not worth much personal effort to save $1.37 (or whatever) per year.

Since the costs of each spending program is small for any single person, not many get worked up and take action. That’s why only three of 50 speakers opposed the spending programs. Politicians and beneficiaries of spending programs rely on this imbalance of motives.

Not often mentioned is that most of the organizations seeking county funding are charities. Anyone may make contributions directly to them. Some people have testified that they don’t need a cut in taxes, or that they would be willing to be taxed more so that these organizations could have more funding. Perhaps these people don’t realize that it is within their power to make contributions to these charities at any time.

It seems we have forgotten that charity is a voluntary act, and that government taxation and spending is not charitable. This is evidence of further drift from a civil society where things like zoos and medical care for the poor are handled on a voluntary and cooperative basis. Instead, we fight.

Public radio ignores facts, pushes rhetoric on Kansas school funding

A Kansas radio news reporter seems not to care about reporting facts about Kansas school spending. Dave Trabert of Kansas Policy Institute reports.

Public radio ignores facts, pushes rhetoric on school funding

By Dave Trabert

The latest attempt to undermine Kansas tax reform comes from KCUR-FM and National Public Radio: “Huge income tax cuts have led to … shrinking classroom budgets for public schools.” That statement might make a captivating movie ad but the film would be classified as fiction.

The Kansas Department of Education says school funding last declined by 0.045% in the 2011 school year and has increased every year since. To put that tiny reduction in perspective, it’s the equivalent of cutting spending from $1,000.00 to $999.55. Income tax cuts hadn’t even been proposed at that point and didn’t go into effect for another eighteen months. Tax reform had nothing to do with the 2011 reduction in school funding, but why let facts get in the way of a popular tale.

The final numbers aren’t in yet, but funding for the 2015 school year just ended is estimated at about $6.1 billion and more than $13,000 per student. That would be the fourth consecutive record for total funding and the third consecutive record for per-student funding, using data from the Kansas Department of Education and the Kansas Division of the Budget.

Why do KCUR and NPR say school budgets are “slashed” and “shrinking” given this data? Because school officials say so. Seriously. No data was cited — just statements made by school officials.

The first story on KCUR-FM ran on July 2 and included this false statement: “The Legislature has cut classroom funding.” First of all, the Legislature does not set classroom funding and there is no official definition of ‘classroom funding;’ the amount that goes to Instruction (defined by the Department of Education) is determined by each local school board. On average, school districts spend about 55 cents of every education dollar on Instruction — and that ratio has remained about the same since 2005 even though total funding increased by nearly $2 billion.

Secondly, the Legislature increased funding. Administrators may not be getting as much funding as they want (in government parlance that is a “cut”) but KSDE data shows block grant funding increased last year by $142.2 million without counting KPERS and increased another $4.5 million this year. (The spreadsheets are no longer on the KSDE site but we have them for anyone interested.)

I shared this information with KCUR reporter Sam Zeff but the data apparently didn’t matter to him. He said KSDE Deputy Commissioner Dale Dennis told the court that schools were getting less money and superintendents say they are getting less money, so that’s all the proof he needed. But school officials’ claims are based on getting less money than they want or feel they are entitled to receive … school officials are not saying that they are getting less money than they actually received in the previous year, but that is the message they want to send.

For example, USD 259 said the block grants cut their funding by $4.8 million last year but the district’s chief financial officer said spending was expected to increase by $87 million, or 14 percent. Only government could call that a “cut.” (See here for details.)

The reporter was even given an email from Dale Dennis (also documented in a KPI Blog post), confirming that school funding increased last year.

Mr. Zeff agreed to get together and look at the KSDE data but that meeting never occurred. Two days later, another version of the story ran on NPR’s “All Things Considered.” And just to make sure listeners got the message, there were four false references to school funding “shrinking” or being “slashed.” That story also falsely said the Kansas Legislature “…stripped teachers of tenure.” No such thing occurred. The Legislature merely said ‘due process’ procedures associated with efforts to remove a teacher would be determined by individual school districts rather than be mandated by state law. If any districts actually eliminated due process, it must be a well-kept secret; we can’t find any media stories citing elimination of due process and inquiries to various education organizations produced no results in that regard.

There was another breach of sound journalistic principles in both stories — no alternate views were included. Both stories dealt with opinions on the perceived ramifications of political actions but only one viewpoint was presented.

Reporters should be able to rely on school officials to make clear, factual statements but that still is no substitute for actual examination of hard data and the inclusion of multiple viewpoints in these plainly political stories.

The real free lunch: Markets and private property

As we approach another birthday of Milton Friedman, here’s his article where he clears up the authorship of a famous aphorism, and explains how to really get a free lunch. Based on remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 1993.

I am delighted to be here on the occasion of the opening of the Cato headquarters. It is a beautiful building and a real tribute to the intellectual influence of Ed Crane and his associates.

I have sometimes been associated with the aphorism “There’s no such thing as a free lunch,” which I did not invent. I wish more attention were paid to one that I did invent, and that I think is particularly appropriate in this city, “Nobody spends somebody else’s money as carefully as he spends his own.” But all aphorisms are half-truths. One of our favorite family pursuits on long drives is to try to find the opposites of aphorisms. For example, “History never repeats itself,” but “There’s nothing new under the sun.” Or “Look before you leap,” but “He who hesitates is lost.” The opposite of “There’s no such thing as a free lunch” is clearly “The best things in life are free.”

And in the real economic world, there is a free lunch, an extraordinary free lunch, and that free lunch is free markets and private property. Why is it that on one side of an arbitrary line there was East Germany and on the other side there was West Germany with such a different level of prosperity? It was because West Germany had a system of largely free, private markets — a free lunch. The same free lunch explains the difference between Hong Kong and mainland China, and the prosperity of the United States and Great Britain. These free lunches have been the product of a set of invisible institutions that, as F. A. Hayek emphasized, are a product of human action but not of human intention.

Continue reading The real free lunch: Markets and private property

Sedgwick County Zoo funding

The Sedgwick County Commission has been generous with zoo funding, spending far more than agreed upon and granting a moratorium on loan payments and interest.

Funding agreement from 2013.
Funding agreement from 2013.
In September 2013 the Sedgwick County Commission agreed on a new funding plan with the Sedgwick County Zoo for years 2014 through 2018. For 2016 the recommended budget calls for keeping funding the same as the 2015 level instead of a 6.9 percent increase as indicated by the 2013 plan.

That’s the plan. What actually happened is quite different.

In September 2014 the commission voted to give the zoo $5.3 million to help pay for a new elephant exhibit. This contribution was not in any funding agreement, and the money was paid in January 2015. This extra funding is almost as large as the planned funding for 2015, which was about $5.6 million.

Sedgwick County Zoo funding, planned and actual.
Sedgwick County Zoo funding, planned and actual.
For next year the commission proposes drawing back just a little, proposing that 2016 funding be the same as 2015 planned and actual funding.

But instead of being grateful for the contribution of $5.3 million for the elephant exhibit, zoo boosters are bitter because the commission is proposing to keep zoo funding level from 2015 to 2016. Level, that is, if one ignores an extra $5.3 million from the county in 2015.

When considering zoo funding we also need to factor in the zoo’s failure to keep its commitment to the county. The zoo has borrowed money from the county so it could build a restaurant. Now the zoo is enjoying a deferral of loan payments and a break from accumulating interest charges. See For Sedgwick County Zoo, a moratorium on its commitment.

By the way, the 2013 funding plan holds that “either party may terminate this agreement by giving written notice.” The parties contemplated that one may not be able or willing to meet the plan.

For Sedgwick County Zoo, a moratorium on its commitment

As the Sedgwick County Zoo and its supporters criticize commissioners for failing to honor commitments, the Zoo is enjoying a deferral of loan payments and a break from accumulating interest charges.

In 2007 the Sedgwick County commission authorized a loan of up to $2.4 million to the zoo to build a restaurant. The idea for this is credited to just-retired County Manager Bill Buchanan. According to meeting minutes from February 21, 2007, the Manager told the commissioners “A new restaurant in the zoo will make some money for the zoo, it is a feature that zoos around the country use as a way to attract people and as an additional revenue source.” As for the county’s role in the venture, the manager said “I’ve viewed this as a way to invest our money, rather than with a Treasury note[,] with a partner.”

Buchanan pitched the loan as a way for the county to earn a little bit more interest than a Treasury note, and as a way for the Zoo to save over $100,000 in interest. If the Zoo was not able to repay the loan, the manager said the county’s annual contribution to the Zoo could be a repayment source. “No one is anticipating that,” said Buchanan.

Immediately after the manager spoke Chris Chronis, the county’s Chief Financial Officer, told the commissioners that “despite what you may have concluded from what the Manager just said, we do not consider this an investment. In fact, it would not be a permitted investment under State law.” Instead, he told the commissioners it should be considered “a loan for economic development purposes.”

Mark Reed, the Zoo Director, told the commissioners “it is my desire and hope to have this paid off in five to seven years.”

What has been the result of this loan?

The zoo borrowed a total of $2,251,100 in two draws in 2007 and 2008. Payments were made through 2013. As of the end of 2014 the zoo owed $936,044 on this loan, according to the county’s annual financial report and other documents.

In 2013 the commission authorized a five-year moratorium on loan payments, to start in 2014. Besides deferring loan payments, the commission decided that interest will not accrue during the moratorium. The deferred payments are in the amount of $234,011.11 for each year.

Sedgwick County budget outlook

The Sedgwick County recommended budget for 2016 reduces projected deficits.

Sedgwick County budget outlook as presented to commissioners in February.
Sedgwick County budget outlook as presented to commissioners in February.
In February Sedgwick County Commissioners were presented with a forecast of budget deficits through 2020, as can be seen in the nearby illustration provided by the county. (Click charts for larger versions.)

Sedgwick County budget outlook as contemplated by recommended budget in July.
Sedgwick County budget outlook as contemplated by recommended budget in July.
The recommended budget reduces the deficits in each year, as can be seen in the second chart provided by the county. The bar chart provides a different view of the same figures.

During a meeting with commissioners, the county’s financial officer said “In each year this budget provides for a reduction in the anticipated deficit.” He also added that it improves the county’s financial picture.

The recommended budget cuts spending in some areas. An alternative that could be proposed by commissioners is to raise taxes, either property or sales.

An alternate presentation of the projected deficits based on the recommended budget.
An alternate presentation of the projected deficits based on the recommended budget.

Wichita Eagle editorial board on county budget

When someone invokes “ideology” in their criticism of you, you know that they’ve either run short of actual arguments based on fact, or they don’t know what ideological means.

In its op-ed this Sunday, the Wichita Eagle editorial board blasts the Sedgwick County Commission for cuts to various programs, mentioning “Sedgwick County Zoo, Exploration Place, the Arts Council and Greater Wichita Economic Development Coalition” specifically.

I might invite the Eagle editorialists to revisit the county’s recommended budget for 2013, prepared under the leadership of then-chairman Tim Norton, the body’s sole Democrat, both then and now. According to county documents, Norton’s recommended budget made these cuts:

Zoo: $255,889
Exploration Place: $112,405
Arts Council: $0
GWEDC: $0

So this is not the first time the zoo and Exploration Place have been cut.

Additionally, Norton’s recommended budget cut 113.80 employees from the county payroll. Of these, 60.75 were from the closure of the Judge Riddel Boys Ranch Juvenile Detention Program, leaving 53.05 in cuts from other county programs. The 2016 recommended budget calls for cuts of 10.00 employees.

I wonder: Did the Eagle editorial writers rail against commissioners Norton, Unruh, and Skelton for the cuts in the 2013 recommended budget? Yes, there was criticism of budget cuts then, but no ideological bashing.

This year the Eagle editorial board also criticizes the commission majority for its plan to eliminate routing borrowing for county roads and bridges. Last year the Eagle recommended Wichitans vote in favor of a sales tax. One of its components, viewed favorably by the city and the Eagle, was the avoidance of borrowing for a large public works project.

But now that conservatives on the county commission propose avoiding debt — some debt, not all debt — the Eagle is opposed.

The shifting sands underlying the Eagle editorial board’s criticism is evidence of an ideology, and a rather shallow one. Cuts made by conservatives? Bad. There will be damage, says the headline.

Much larger cuts made by progressives? The editorial board acknowledges “the county needs to tighten its belt and prioritize its services.”

That’s quite a contrast.

Here are excerpts from the 2013 and 2016 Sedgwick County recommended budgets showing recommended cuts.

WichitaLiberty.TV: Sedgwick County Commissioners Karl Peterjohn and Richard Ranzau

In this episode of WichitaLiberty.TV: It’s budget season for local governments. Sedgwick County Commissioners Karl Peterjohn and Richard Ranzau visit the WichitaLiberty.TV studios to explain the county budget for 2016. View below, or click here to view at YouTube. Episode 89, broadcast July 26, 2015.

Sedgwick County’s page for the 2016 budget is here.

Friedman: The fallacy of the welfare state

As we approach another birthday of Milton Friedman, here’s an insightful passage from the book he wrote with his wife Rose: Free to Choose: A Personal Statement. It explains why government spending is wasteful, how it leads to corruption, how it often does not benefit the people it was intended, and how the pressure for more spending is always present.

A simple classification of spending shows why that process leads to undesirable results. When you spend, you may spend your own money or someone else’s; and you may spend for the benefit of yourself or someone else. Combining these two pairs of alternatives gives four possibilities summarized in the following simple table:

friedman-spending-categories-2013-07

Category I in the table refers to your spending your own money on yourself. You shop in a supermarket, for example. You clearly have a strong incentive both to economize and to get as much value as you can for each dollar you do spend.

Category II refers to your spending your own money on someone else. You shop for Christmas or birthday presents. You have the same incentive to economize as in Category I but not the same incentive to get full value for your money, at least as judged by the tastes of the recipient. You will, of course, want to get something the recipient will like — provided that it also makes the right impression and does not take too much time and effort. (If, indeed, your main objective were to enable the recipient to get as much value as possible per dollar, you would give him cash, converting your Category II spending to Category I spending by him.)

Category III refers to your spending someone else’s money on yourself — lunching on an expense account, for instance. You have no strong incentive to keep down the cost of the lunch, but you do have a strong incentive to get your money’s worth.

Category IV refers to your spending someone else’s money on still another person. You are paying for someone else’s lunch out of an expense account. You have little incentive either to economize or to try to get your guest the lunch that he will value most highly. However, if you are having lunch with him, so that the lunch is a mixture of Category III and Category IV, you do have a strong incentive to satisfy your own tastes at the sacrifice of his, if necessary.

All welfare programs fall into either Category III — for example, Social Security which involves cash payments that the recipient is free to spend as he may wish; or Category IV — for example, public housing; except that even Category IV programs share one feature of Category III, namely, that the bureaucrats administering the program partake of the lunch; and all Category III programs have bureaucrats among their recipients.

In our opinion these characteristics of welfare spending are the main source of their defects.

Continue reading Friedman: The fallacy of the welfare state

Wichita airport spends $180K on ads

The Wichita airport spends to produce and broadcast a television advertisement, and taxpayers didn’t have to pay. Sort of.

Shortly after the opening of the new terminal at Wichita Dwight D. Eisenhower National Airport, television ads began appearing. Citizens viewing the ads might wonder why a government-owned facility that has a monopoly on service needs to advertise, especially when the purpose of the ad is to generate an emotional response. (Curiously, the ad can’t be found on the airport’s website, but it is available on the Wichita City Channel 7 site, where it’s labeled as a public service announcement.)

Inquiry to the city about the cost of the ads resulted in these figures:

Production costs for TV: $83,308.73 (includes talent fees)
Media buy: $97,522
Total: $180,830.73

Apart from the necessity or wisdom of this advertisement, there is another consideration that has important implications for public policy. When I was supplied these figures, I was admonished that these are not tax dollars being spent. Instead, it’s airport revenue. The city also says the same about the cost of the new terminal — no tax dollars were spent. How is this possible?

The airport has a monopoly on regularly scheduled commercial air service in Wichita. If you want to travel on a major airline, you must use the Wichita airport or drive several hours to another airport. The airport functions as a branch of government. The fees it collects — the so-called “airport revenue” or “airport funds” — are mandatory. The rates are set by government. They fees are collected by government and spent by government.

Officials say the user fees the airport collects are not taxes because they are voluntary. You don’t pay the Wichita airport passenger fee (it’s included in ticket prices) unless you actually use the airport. Arguments like these are used by government officials to distinguish user fees from taxes. They say that the airport is operating like a business, charging only those who use its service.

There’s a small grain of truth in that. But when the airport has a monopoly on commercial air service in a large area, are the fees really voluntary? Of course not.

This principle of user fees being preferred to taxes is quickly abandoned when it suits the need of government spenders. For example, the state, county, and city tax everyone to pay Southwest Airlines to provide service in Wichita. Why not collect the subsidy funds only from airport users? It would be just another user fee.

The justification used by the city leads citizens to believe that government can spend money at no one’s cost. That’s false, but politicians believe it. Or so they say.

WichitaLiberty.TV: Bad news from Topeka on taxes and schools, and also in Wichita. Also, a series of videos that reveal the nature of government.

In this episode of WichitaLiberty.TV: The sales tax increase is harmful and not necessary. Kansas school standards are again found to be weak. The ASR water project is not meeting expectations. Then, the Independent Institute has produced a series of videos that illustrate the nature of government. View below, or click here to view at YouTube. Episode 88, broadcast July 19, 2015.

The “Love Gov” series of videos from the Independent Institute can be found here: Love Gov: From first date to mandate.

‘Love Gov’ humorous and revealing of government’s nature

A series of short videos from the Independent Institute entertains and teaches lessons at the same time.

Lov Gov trailer exampleThe Independent Institute has produced a series of humorous and satirical videos to present lessons about the nature of government. The Institute describes the series here:

Love Gov depicts an overbearing boyfriend — Scott “Gov” Govinsky — who foists his good intentions on a hapless, idealistic college student, Alexis. Each episode follows Alexis’s relationship with Gov as his intrusions wreak (comic) havoc on her life, professionally, financially, and socially. Alexis’s loyal friend Libby tries to help her see Gov for what he really is — a menace. But will Alexis come to her senses in time?

There are five episode (plus a trailer). Each episode is around five minutes long and presents a lesson on a topic like jobs, healthcare, and privacy. The episodes are satirical and funny. They’d be really funny if the topic wasn’t so serious. I recommend you spend a half-hour or so to view the series.

The link to view the video series is here.

In Wichita, wasting electricity a chronic problem

The chronic waste of electricity in downtown Wichita is a problem that probably won’t be solved soon, given the city’s attitude.

Some lights like these have been left on so long that the bulbs have burnt out. But the city hasn't replaced them.
Some lights like these have been left on so long that the bulbs have burnt out. But the city hasn’t replaced them.
Street lights in downtown Wichita burning during the middle of the day. It’s a continuing problem.

What can citizens do to solve this problem? The attitude of the city is “don’t bother us with this problem.” The city advises citizens to call Westar when they see street lights wasting electricity. That’s the city’s attitude, even though this is a chronic problem.

Wichita city government Facebook page public service advice regarding "vampire" power waste.
Wichita city government Facebook page public service advice regarding “vampire” power waste.
The city is concerned that working with Westar to turn off street lights during the day may not be cost-effective, according to Ken Evans, the city’s director of strategic communications. That’s the attitude he expressed in a recent City of Wichita Facebook dialog with citizens. But the city has run a campaign asking people to turn off appliances like microwave ovens and alarm clocks when not in use. This saves a vanishingly small amount of electricity, and at a large cost in convenience.

At least five tall street lights can be seen wasting electricity.
At least five tall street lights can be seen wasting electricity at 2:30 in the afternoon.
But the city feels it is not cost-effective for them to ensure that dozens of street lights are switched off during the day, even though this is a chronic problem. Even though the city is concerned about the use of electricity contributing to ozone pollution.

Part of the problem may lie in that the city pays Westar a fixed amount per street light, without regard to the amount of electricity used or wasted. Westar, while a privately-owned company that should be responsive to the profit motive, is instead a highly-regulated utility that functions almost as an arm of government.

None of this mitigates the fact that waste is waste, especially waste that could be fixed easily — if the city wanted to.

Wichita Transit snapshot

Here is a financial snapshot of the Wichita Transit System. Data is from the National Transit Database for 2013. These are operating costs only, and do not include the costs of acquiring buses and other capital equipment.

Of note is the low fraction of expenses paid for through fares. Considering operating expenses only, the number is 20.3 percent. The remainder is provided by taxpayers. Operating expenses per passenger mile were $0.69.

Wichita transit system snapshot 2013

National Transit Database, an interactive visualization

An interactive visualization of data over time from the National Transit Database.

The National Transit Database holds data for transit systems in the U.S. I’ve gathered some key statistics and presented them in an interactive visualization.

Some definitions used in the database:

UZA: The name of the urbanized area served primarily by a transit agency.
UPT: Unlinked passenger trips.
PMT: Passenger miles traveled.
OpExp Total: Total operating expense.

There is also a set of cities named “Wichita peers.” These are cities that Wichita has been compared to in a variety of situations. Some I selected because they were of similar size to Wichita.

The visualization holds three tabs or sheets. One is a table of figures. The other two illustrate data for a single year, or a single transit system.

Click here to access the visualization.

Cash incentives in Wichita still in use

Wichita is moving away from the use of cash incentives for economic development, except for this.

We’ve been told that the city is not going to use cash incentives for economic development. But an item the Wichita City Council will consider this week includes a cash grant of $30,000. It follows a similar project the council considered two weeks ago that included a grant of $10,000.

The building at 100 S. Market as it appeared in 2009. This building is slated to receive a grant of $30,000 to improve its exterior.
The building at 100 S. Market as it appeared in 2009. This building is slated to receive a grant of $30,000 to improve its exterior.
These grants are part of the city’s facade improvement program. Under it, properties in certain parts of the city can apply to use special assessment financing to pay for the improvement of their outside appearance. The city borrows the funds and advances them to the property owner. The bonds are repaid through special assessment taxes that are added to the property’s tax bill.

This process is similar to the way the city finances improvements such as street, water, and sewer infrastructure in new neighborhoods or commercial developments. Except: The infrastructure in new development becomes the property of the city. For a facade improvement project, the improvements remain private property.

Are facade improvement cash grants an exception to the new era of economic development in Wichita? Or when will we start implementing these new policies? Some might say that the grants are not for the purposes of economic development. If not, then how does the city justify these grants?

Wichita has cut waste, officials say

Wichita city officials say they have worked hard to eliminate waste. Well, except for this.

Looking south on Topeka from Broadway, May 29, 2015 at 11:25 am. Four burning street lights are seen here. There were dozens more further south.
Looking south on Topeka from Broadway, May 29, 2015 at 11:25 am. Four burning street lights are seen here. There were dozens more further south.
It’s been an ongoing problem in downtown Wichita. Not only are bench lights apparently permanently switched on, we find the tall street lights also burning in the middle of the day.

This is especially problematic given these two Fridays — with street lights switched on near noon — were Riverfest Fridays. Many visitors, both natives and tourists, may have been downtown to see the waste on display. It doesn’t promote a good image for our city and its leaders.

A Downtown Wichita street light struggles to compete with the midday sun. June 5, 2015.
A Downtown Wichita street light struggles to compete with the midday sun. June 5, 2015.
The wasteful spending on illuminating street lights in the middle of the day is an indication of the attitude of the city as explained in Forget the vampires. Let’s tackle the real monsters. Through public service announcements on television and Facebook, Wichita city officials have urged citizens to do things like unplugging microwave ovens when not in use. This saves a very small — vanishingly small — amount of electricity at a huge cost of inconvenience.

So while the city advises you to unplug alarm clocks and cell phone chargers when not using them, note that the city cares nothing about running the street lights in the middle of the day.

The lights illustrated in these photographs are, undoubtedly, a small portion of the city’s spending. But you don’t have to look very hard to find waste like this, and we know that small examples of waste are multiplied many times. So when city leaders tell us that there is nowhere left to cut in the budget, that everything that can be done to trim the fat has already been done, and that the only thing we can do is raise taxes — well, think of this photograph and others illustrated in Wichita advances in the field of cost savings, Another Friday lunch, and even more lights are on, To compensate, Wichita switched on the street lights, In Wichita, the streetside seating is illuminated very well, In Wichita, the rooftops are well-lit and On a sunny day in downtown Wichita you can see the street lights.

City of Wichita official Facebook page.
City of Wichita official Facebook page.
This is not to say that waste like this does not occur in the private sector. Of course it does. But businesses and individuals have a powerful incentive to avoid waste that isn’t present in government: Businesses and people are spending their own money. And even if they waste money, it’s their money, not ours.

Topeka school figures

The Topeka school district is asking voters for more tax revenue. Here are some figures for this school district. Click charts for larger versions. Data from Kansas State Department of Education.

Spending per pupil in Topeka school district.
Spending per pupil in Topeka school district.
Enrollment and employment in Topeka school district.
Enrollment and employment in Topeka school district.

Spending in the states, a visualization

To see how your state compares with others in spending, use the interactive visualization below. The figures presented are per-person, and not adjusted for inflation.

To use the visualization, click the check boxes to add or remove states and years from the chart. Use the visualization below, or click here to open it in a new window. Data is from National Association of State Budget Officers and U.S. Bureau of Economic Analysis (BEA); visualization created by myself using Tableau Public.

Kansas City school district figures

The Kansas City, Kansas school district has implemented layoffs and salary cuts. Following are some charts of statistics for this district. Data is from Kansas State Department of Education. Click on charts for larger versions.

Spending in Kansas City school district.
Spending in Kansas City school district.
Enrollment and employment in Kansas City school district.
Enrollment and employment in Kansas City school district.
Fund balances for Kansas City school district.
Fund balances for Kansas City school district.

Kansas needs low taxes

Two research papers illustrate the need to maintain low taxes in Kansas, finding that high taxes are associated with reduced income and low economic growth.

As Kansas legislators seek to balance the state’s budget, most Kansas opinionmakers are urging higher taxes instead of spending restraint. Many claim that government taxation and spending are the driving forces behind growing the Kansas economy. An example is the motto of the Kansas Economic Progress Council, which is “… because a tax cut never filled a pothole, put out a fire or taught a child to read.”

Two research papers illustrate the need to maintain low taxes in Kansas, finding that high taxes are associated with reduced income and low economic growth. Research such as this rebuts the presumption of government spending advocates that low taxes have killed jobs in Kansas.

One paper is The Robust Relationship between Taxes and U.S. State Income Growth by W. Robert Reed, published in the National Tax Journal in March 2008. The abstract to this paper states:

I estimate the relationship between taxes and income growth using data from 1970 – 1999 and the forty-eight continental U.S. states. I find that taxes used to fund general expenditures are associated with significant, negative effects on income growth. This finding is generally robust across alternative variable specifications, alternative estimation procedures, alternative ways of dividing the data into “five-year” periods, and across different time periods and Bureau of Economic Analysis (BEA) regions, though state-specific estimates vary widely. I also provide an explanation for why previous research has had difficulty identifying this “robust” relationship. (emphasis added)

In his introduction, Reed writes that previous studies had found: “To the extent a consensus exists, it is that taxes used to fund transfer payments have small, negative effects on economic activity.” His paper found a stronger relationship.

Reed issues a caution on the use of his conclusions: “It needs to be emphasized that my claim for robustness should be understood as applying only within the context of U.S. state income growth. It should not be interpreted as being more widely applicable to other contexts, such as employment growth, manufacturing activity, plant locations, etc., or to the relationship between taxes and income growth outside the U.S.”

This illustrates one of the ways we focus on the wrong measure of growth. Politicians focus on jobs. But to business, jobs are a cost. One of the better goals to seek, as Art Hall specifies in his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, is income growth, along with population density and population migration, productivity growth, capital investment, gross business starts and expansions, and customer service and throughput measures of state economic development agencies. Hall writes: “If Kansas performs well in the measures provided, it will also perform well in terms of job count.”

Another example of research finding a negative impact of taxation is State Taxes and Economic Growth by Barry W. Poulson and Jules Gordon Kaplan, published in the Winter 2008 Cato Journal. In the introduction to the paper, the authors write: “The analysis reveals a significant negative impact of higher marginal tax rates on economic growth. The analysis underscores the importance of controlling for regressivity, convergence, and regional influences in isolating the effect of taxes on economic growth in the states.” (emphasis added)

In its conclusion, the paper states:

The analysis reveals that higher marginal tax rates had a negative impact on economic growth in the states. The analysis also shows that greater regressivity had a positive impact on economic growth. States that held the rate of growth in revenue below the rate of growth in income achieved higher rates of economic growth.

The analysis underscores the negative impact of income taxes on economic growth in the states. Most states introduced an income tax and came to rely on the income tax as the primary source of revenue. Jurisdictions that imposed an income tax to generate a given level of revenue experienced lower rates of economic growth relative to jurisdictions that relied on alternative taxes to generate the same revenue. (emphasis added)

Kansas legislators: Don’t raise taxes

Letter from ALEC to Kansas lawmakers. Click to read.
Letter from ALEC to Kansas lawmakers. Click to read.
To balance the budget, there are many things Kansas lawmakers could do other than raising taxes.

In congratulating Kansas lawmakers for passing a pro-growth tax cut, American Legislative Exchange Council (ALEC) reminds everyone that there is more than one way to balance a budget. Spending needs to be addressed:

However, as budget realities need to be addressed, the spending side of the fiscal coin is a good place to start. ALEC has conducted non-partisan research on how states can make government more efficient. In the State Budget Reform Toolkit, case studies and policy options are examined that allow the state to maintain core services of government at a lower cost. One example is to eliminate positions in state agencies that have been vacant for more than six months, or to adopt a sunset review process for state agencies, boards and commissions. These examples and many more can be found on our website for your review.

Some of the ideas in the State Budget Reform Toolkit have been considered and rejected by the Kansas Legislature. Others have not been considered, as far as I know. Most take more than one year to implement. These ideas remind us that when the Kansas Legislature and Governor Brownback cut taxes for everyone, they did not start planning for lower spending.

WichitaLiberty.TV: Kansas legislative failure, newspaper editorials, and classical liberalism

In this episode of WichitaLiberty.TV: The failure of Kansas lawmakers to reform state spending means you will pay. A newspaper editorial excuses bad behavior by government. Then: What do classical liberals and libertarians believe? View below, or click here to view at YouTube. Episode 85, broadcast May 24, 2015.

In Topeka, to raise taxes, scare the voters

The Topeka public school district is using scare tactics to persuade voters to raise taxes. David Dorsey of Kansas Policy Institute explains.

Topeka schools use scare tactics to justify LOB election

By David Dorsey

The USD 501 school board voted unanimously on April 29 to hold an election to increase the district’s local option budget (LOB). They claim the $3 million that could be raised with voter approval is necessary “in the face of state budget cuts.”  The district held three public meetings to discuss how to deal with what they called a $1.6 million cut in state funding this year and $2 million over the next two years. KPI has shown in this blog that Topeka Public Schools will actually get a total increase in state aid of 6.5% over the three years of the new block grant funding law.

But that’s not how a school district sees things. To the educrats, a cut means getting a smaller increase than they had planned.

If I were the suspicious type, I might think the meetings were just a ruse, using the implicit threat of cutting school programs in order to scare the public into supporting an override election to raise more money.

The purpose here is not to revisit the increase vs. decrease debate. The purpose here is to discuss the spending side of the equation and show just how easy it would be for USD 501 to meet their self-defined shortfalls – and without having any impact on students.

First, here’s a little perspective on the realities between what is budgeted and how much is actually  spent. The adjoining table shows the millions that have gone unexpended for the last four years. Given this recent history, it’s hard to imagine that a $1.6 million “cut” from the budgeted $203 million 2014-15 budget is even a concern, let alone cause for an election.

Even if one concedes the point of a revenue shortfall, should the taxpayers of USD 501 (in the name of full disclosure, I do not live in the district, so I don’t have a dog in this hunt) shell out more money to the district? Or could the district find ways to reduce spending and operate more efficiently (a concept foreign to any government organization)? As a former employee of USD 501 I can attest that finding a savings of what amounts to $114 per pupil should be pretty easy to accomplish.

I offer these three opportunities that would reduce spending far in excess of what the district calls a cut and save local taxpayers the burden of providing more financial support to a district that won’t look seriously at reducing spending.

Reduce a bloated administration

As the table shows, Topeka Public Schools has the highest per pupil administrative costs of the 25 largest districts in the state. A glance at their own budget document reveals the costs are trending significantly higher. The 2013-14 costs were a 14% increase from the previous year. The USD 501 2014-15 budget for administration and support of $28,301,407 is a whopping 25% higher than 2013-14! That’s an increase from two years ago of 41.8% when administration costs were just under $20 million.

Some of that increase can be explained by the decision made by the USD 501 school board to drastically increase salaries of the administrative staff by $435,400 in the summer of 2013 in the name of being competitive with other districts. Perhaps if USD 501 was “competitive” in terms of administrative costs per pupil, there would be no issue.

 I’m guessing these facts didn’t come up at the public meetings.

Put literacy and math coaches back in the classroom

Little-known to the public is that in every USD 501 school there are licensed teachers who do NOT teach students. They are known as math coaches and literacy coaches. Each school has at least one coach and most have more than one. What is their job, you ask? They are in the buildings to help classroom teachers do a better job. Furthermore, USD 501 forbids the coaches from directly teaching students, except in special circumstances. They are there to teach the teachers.

There are several reasons the practice of having licensed teachers be coaches should end.

  • “Teaching the teachers” is what professional development is supposed to do.
  • Dealing with ineffective teachers should be the job of the principals, not other teachers.
  • Since coaches have no contractual authority over teachers, teachers do not have to utilize coaches. In practice, that means teachers who are least effective don’t solicit assistance from the coaches, so the coaches end up spending most of their time with the most effective teachers.
  • Many coaches use the position as a stepping-stone toward getting into administration.
  • Most of the coaches are among the best teachers in the district and should be with students, not other teachers.

To be fair to USD 501, math and literacy coaches are an educational trend and most districts now employ them. However, it doesn’t stray from the fact that money spent on coaches doesn’t directly benefit students. In fact, students lose out anytime a quality teacher chooses to become a coach and leaves the classroom.

Putting just one coach per building back in the classroom through attrition would go a long way toward dealing with the budget “cut.”

Cash reserves

The district could easily deal with any short-term budget issue simply by using their current operating cash reserves. The following table shows USD 501’s cash reserves for the past ten years. The table not only shows the district had in excess of $24 million from which to draw at the beginning of this school year, but that is 56.2% more than a decade ago. I doubt they explained that fact to the patrons at the public meetings.

I now present a rather conservative approach to dealing with the “budget cut.” A 5% reduction in administration, returning just one coach in each building to the classroom, and tapping 10% from the operating cash reserves, hardly Draconian measures, would generate nearly twice as much as they could take from the voters.

Savings Category Spending reduction
5% reduction in administration costs $1.41 million
Returning 1 coach to the classroom (through attrition) in each traditional public school building – 26 X $60,000 (salary/benefits)  

$1.56 million

10% from operating cash reserves $2.47 million

Total reduction

 $5.44 million

Board member Patrick Woods was quoted as saying K-12 funding is a “state responsibility.” Maybe it’s time the state starts taking responsibility for how the money gets managed.

Kansas school weightings and effects on state aid

In making the case for more Kansas school spending, the focus on base state aid per pupil leaves out important considerations.

Kansas school finance formula at-risk weighting history tableMuch of the discussion surrounding school funding in Kansas has centered around base state aid per pupil. It’s the starting point for the Kansas school finance formula, and therefore an important number. But base state aid is not the only important number. Action taken by the Kansas Legislature has led to increases in state funding for schools at the same time that base state aid has fallen. Much of the increase is due to the conditions that schools say are costly, such as teaching students from low-income families or non-English speaking students.

School districts are compensated for these costs through weightings. If a district has a student who falls into certain categories — like qualifying for free or reduced-price lunches — that adds a weighting in that category. The number of pupils plus the number of weightings are multiplied by base state aid to determine total state aid. 1

A large weighting — in terms of its magnitude — is the bilingual education weighting, intended to cover additional costs of non-English speaking students. This weighting was originally 20 percent. Starting with the 2005-2006 school year it was raised to 39.5 percent.

Kansas school finance formula at-risk weighting history. Click for larger version.
Kansas school finance formula at-risk weighting history. Click for larger version.
Another large weighting is the at-risk weighting, intended to cover the additional costs of teaching students from low-income families. This started at five percent. As shown in the nearby chart, it has risen by a factor of nine, reaching 45.6 percent starting with the 2008-2009 school year. This chart doesn’t include the high-density at-risk weighting. Starting with the 2006-2007 school year districts with a high concentration of at-risk students could receive an extra weighting of four percent or eight percent. Two years later the weightings were raised to six percent and ten percent. This formula was revised again in 2012 in a way that probably slightly increased the weightings.

The weightings have a large effect on school funding. For the 2004-2005 school year, base state aid was $3,863 and the at-risk weighting was ten percent. An at-risk student, therefore, generated $4,249 in funding. Other weightings might also apply.

Ten years later base state aid is $3,852 and the at-risk weighting is 45.6 percent. This generates funding of $5,609. If in a district that qualifies for the maximum high-density at-risk weighting, an additional $404 in funding is generated. (These numbers are not adjusted for inflation.)

Kansas school spending per student, compared to base state aid, adjusted for CPI, 2014. Click for larger version.
Kansas school spending per student, compared to base state aid, adjusted for CPI, 2014. Click for larger version.
As can be seen in the charts produced from data available from the Kansas State Department of Education, the ratio of total state spending to base state aid has generally risen since the adoption of the school finance formula two decades ago. For the school year ending in 1993 the ratio was 0.7, meaning that state aid was less than base state aid. For the school year ending in 2014, the ratio was 1.85, or 2.6 times as much as in 1993. This means that while base state aid per pupil for 2014 was $3,838, total spending by the state was $7,088 per pupil.

Kansas school spending per student, ratio of state aid per pupil to base state aid per pupil, 2014
Kansas school spending per student, ratio of state aid per pupil to base state aid per pupil, 2014
  1. AMENDMENTS TO THE 1992 SCHOOL DISTRICT FINANCE AND QUALITY PERFORMANCE ACT AND THE 1992 SCHOOL DISTRICT CAPITAL IMPROVEMENTS STATE AID PROGRAM (FINANCE FORMULA COMPONENTS), Kansas Legislative Research Department, May 20, 2014
    http://ksde.org/Portals/0/School%20Finance/amends_to_sdfandqpa_2015.pdf