Tag Archives: Kansas Policy Institute

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For Kansas budget, balance is attainable

A policy brief from a Kansas think tank illustrates that balancing the Kansas budget while maintaining services and lower tax rates is not only possible, but realistic.

The State of Kansas has implemented tax reform that reduces the tax burden for Kansans. A remaining challenge that has not yet been tackled is spending reform, that is, aligning Kansas state government spending with a smaller stream of tax revenue. Critics of tax reform say the Kansas budget is a mess or a train wreck, pointing to projections of large deficits before long. Tax increases or service cuts will be required to balance the budget, contend critics.

In a policy brief released today, Kansas Policy Institute presented a plan for bringing the budget in balance while retaining low tax rates (and future reductions) and accommodating projected future spending needs for Medicare and schools.

KPI’s analysis and proposed budgets are based on revenue and expenditure data from Kansas Legislative Research Department as of August. Because of some uncertainty of future revenue estimates, KPI used three different levels of starting revenue going to create three different scenarios. KPI then applied the same growth rate that KLRD uses.

Even with the changes proposed by KPI, spending will still increase in most cases. Baked into KPI’s tables are projections by KLRD of increases of $299 million for Medicaid caseloads and $215 million for additional K-12 school spending.

The changes that KPI recommends are primarily structural in nature. For example, one recommendation is to reform KPERS, the state employee retirement system, so that newly hired employees are covered by a defined contribution program. Another is reducing sales tax transfers to Kansas Department of Transportation to the level used in fiscal year 2013.

Another change is to improve accounting systems. The report illustrates one instance where inadequate payroll systems mean that the state can’t claim some payments that it is due:

States are entitled to be reimbursed by the federal government for the pension costs of school employees engaged in the delivery of federally-funded services, such as Special Education and Food Service. Kansas, however, foregoes federal reimbursement because many school districts’ payroll systems lack the ability to properly capture the necessary information. (Estimates are not permitted; the information must flow through payroll systems.)

KPI president Dave Trabert said: “We do have to have some structural changes that should have occurred in 2012 when tax reform was first implemented. We can do that now by making more effective use of existing resources.” Except in a few instances, the budget plan advanced by KPI doesn’t depend on government eliminating waste or becoming more efficient. While these goals are important, Trabert said, they take time to accomplish.

The policy brief is just ten pages in length. It may be downloaded from KPI here or alternatively from Scribd here (may work better on mobile devices). A press release from KPI announcing the policy brief is at 5 Year Budget Plan Outlines Path To Protect Essential Services and Tax Refom.

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For Wichita city hall, an educational opportunity

Will Wichita city officials and sales tax boosters attend an educational event produced by a leading Kansas public policy institute? It will be an opportunity for city officials to demonstrate their commitment to soliciting input from the community.

Wichita voters will face a choice in November — whether to vote for or against a proposed sales tax of one cent per dollar. Wichita city council members and city hall bureaucrats say they have spent great effort educating Wichitans on issues relevant to the sales tax. Members of the “Yes Wichita” group are holding events to educate the public on why they should vote in favor of the tax.

Wichita City Budget Cover, 1975All of the information presented by the city and the “Yes Wichita” group has a common ideological thread: That our city has problems, and the way to fix things is to implement a new tax and rely on government to provide the solutions it has determined we need.

City hall might be surprised to learn that there are differing opinions as to the nature and extent of our city’s problems, and different ideas about how to fix them. Some of these ideas are novel. Some may work, and some may not. (It’s far from certain that government-provided solutions will work.) Most of these diverse ideas are well-researched. They often rely on private sector initiative rather than government taxation and spending. They may rely on voluntary cooperation through markets rather than coercive government action.

Since city hall says that knowing the facts is important, you might think that city council members and city bureaucrats would welcome the production of educational events on sales tax topics. That’s why it was discouraging that a July forum on water issues produced by Kansas Policy Institute was attended by just a handful of city officials. Even worse, the city officials that attended left the meeting at its midpoint, as soon as the city’s public works director finished his presentation.

I understand that city council members are part-time employees paid a part-time salary. Some have outside jobs or businesses to run. But that’s not the case with the city’s public works director or its governmental affairs director. That’s not the case with the city manager, or the assistant city manager, or the city’s economic development staff.

It’s especially not the case for Mayor Carl Brewer. He is paid a full-time salary to be the leader of our community. When he shows little willingness to consider views other than those produced by city hall sycophants that work — directly or indirectly — for him and the council, we have a deficit of leadership in Wichita.

It’s especially grating because several city council members and the “Yes Wichita” group contend their opponents — like me — are misinformed and/or lying. (When pressed for specific examples, few are produced.)

If you’ve attended a city council meeting, you may have to sit through up to an hour of the mayor issuing proclamations and service awards before actual business starts. Fleets of city bureaucrats are in the audience during this time.

But none of these would spend just one hour listening to a presentation in July by a university professor that might hold a solution to our water supply issue.

kansas-policy-institute-logoI understand that city officials might not be the biggest fans of Kansas Policy Institute. It supports free markets and limited government. But city officials tell us that they want to hear from citizens. The city says it has gone to great lengths to collect input from citizens, implementing a website and holding numerous meetings.

About 70 people attended the KPI forum in July. Citizens were interested in what the speakers had to say. They sat politely through the presentation by the two city officials, even though I’m sure many in the audience were already familiar with the recycled slides they’d seen before.

But it appears that Wichita city officials were not interested in alternatives that weren’t developed by city hall. They can’t even pretend to be interested.

Now, this Friday morning September 19, Kansas Policy Institute is producing another forum on issues relevant to the proposed sales tax. The event’s agenda features six speakers over about four hours. Three speakers were selected by the Wichita Metro Chamber of Commerce. Two are from out of town. Another is an expert on the Wichita and Kansas economy. There will be opportunities for attendees to ask questions.

Will city council members, city hall bureaucrats, and members of the “Yes Wichita” leadership team attend this event?

The Fostering Economic Growth in Wichita event is open to everyone and presented at no charge by Kansas Policy Institute. For more information and registration, click here.

Fostering economic growth in Wichita

Kansas Policy Institute is hosting a conference titled “Fostering Economic Growth in Wichita.” This is the second in a series of events looking at issues surrounding the proposed sales tax in Wichita. Voters will see the sales tax question on the ballot in November.

Wichita job development sales tax Kansas Policy InstituteThis event focuses on the economic development, or jobs, portion of the sales tax. The other areas sales tax funds would be spent on are a new water supply, street maintenance and repair, and bus transit.

This is event on Friday September 19, from 7:30 am to noon, held in room 132 of the Wichita State University MetroPlex. the event is free, and you may register here.

Here is the lineup of speakers and topics:

  • Nuts and Bolts of the “Jobs Fund” Proposal: Wichita Metro Chamber of Commerce with:
    • Paul Allen, Allen Gibbs & Houlik, Leadership Council Jobs Task Force
    • Jeff Finkle, President/CEO, International Economic Development Council
    • Dr. John Tomblin, Vice President for Research and Technology Transfer, Wichita State University
  • Examining Kansas’ Incentive History:
    • Nathan Jensen, Ph.D., Associate Professor at George Washington University
  • Trends of Wichita’s Economy:
    • Jeremy Hill, Director of Wichita State University’s Center for Economic Development and Business Research
  • Creating a Dynamic Local Economy:
    • Pamela Villarreal, Senior Fellow at the National Center for Policy Analysis

This is the second in a series of KPI-sponsored forums covering the various aspects of the 1% sales tax proposal. A forum on the water proposal was held in July, and a forum on the street and transit portion will be held in the near future. Kansas Policy Institute is hosting these events to give citizens the opportunity to hear experts address all sides of the issues, and is not taking a position on the individual aspects of the 1% sales tax proposal.

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Public opinion on Wichita sales tax

As Wichita prepares to debate the desirability of a sales tax increase, a public opinion poll finds little support for the tax and the city’s plans.

Wichita City Hall 2014-08-05 11In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase. In summary:

  • Only 28% say the city has been spending efficiently.
  • Only 34% agree with the idea of local governments using taxpayer money to provide subsidies to certain businesses for economic development.
  • When asked whether they would personally pay a higher sales tax to pay for certain things, there was majority support for securing a long term water source, maintaining existing infrastructure, and building new infrastructure, but one-third or less would pay a higher sales tax for business incentives, developing downtown Wichita, and expanding or renovating convention spaces.
  • 78% said that to fund existing infrastructure, build new infrastructure, and secure a long-term water source Wichita should fund those items by adjusting spending and being more efficient rather than raising taxes.

More detail on these results follows.

Is city spending efficiently?

The first question the survey asked was “In the past few years, have Wichita city officials used taxpayer money efficiently? Or inefficiently?” Following are the results for everyone, and then divided by political party and political ideology.

Overall, 58 percent believe city spending was inefficient, compared to 28 percent believing spending was efficient.

The results are surprisingly consistent. An exception is that political independents strongly believed that city spending was inefficient. Those identifying as liberal were more likely to say that city spending was inefficient.

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Taxes for subsidies for economic development

About one-third of voters polled support local governments using taxpayer money to provide subsidies to certain businesses for economic development.

The second question the survey asked was “In general, do you agree? Or disagree? With the idea of local governments using taxpayer money to provide subsidies to certain businesses for economic development?” Following are the results for everyone, and then divided by political party and political ideology.

Overall, 55 percent disagreed with using taxpayer money to provide subsidies to certain businesses for economic development. 34 percent agreed.

The results are fairly consistent across political party and ideology, although Republicans are somewhat more likely to agree with using taxpayer funds for economic development incentives, as are those who self-identify as political moderates.

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Voters willing to pay for fundamentals

Voters are willing to pay a higher sales tax for fundamentals like infrastructure and water supply, and less willing for business incentives, downtown development, and convention centers.

In a series of questions asking if Wichita voters would be willing to pay a higher sales tax to provide certain services, a pattern appeared: Voters are willing to pay for things that are fundamental in nature, and less willing to pay for others.

As can be seen in the nearby chart, voters are willing to pay for infrastructure, and more willing to pay for maintenance of existing infrastructure than for new infrastructure. Voters are most willing to pay for securing a long-term water source.

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For business incentives, downtown development, and convention centers, Wichita voters express less willingness to pay higher sales tax to fund these items.

For the first three items, the average was 68 percent of voters willing to pay a higher sales tax. For the last three, the average is 30 percent.

Following is the complete text of the questions:

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund incentives to businesses expanding in Wichita or moving here from other states?

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund maintenance work on existing infrastructure, such as sewers and roads?

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund new infrastructure, such as new highways and passenger rail connections?

Would you personally be willing to pay a higher sales tax in the city of Wichita to continue developing downtown Wichita with apartments, businesses, and entertainment destinations?

Would you personally be willing to pay a higher sales tax in the city of Wichita to expand or renovate convention spaces, such as the Hyatt Hotel and Century II?

Would you personally be willing to pay a higher sales tax in the city of Wichita to secure a long-term water source?

How to pay for infrastructure

Wichita voters prefer adjusting spending, becoming more efficient, using public-private partnerships, and privatization to raising taxes.

Question nine asked how Wichita voters preferred paying for new government spending: “To fund existing infrastructure, build new infrastructure, and secure a long-term water source should Wichita fund those items by adjusting spending and being more efficient rather than raising taxes?”

Overall, 78 percent of Wichita voters answered “Yes,” meaning they prefer that Wichita adjust spending and become more efficient. 12 percent answered “No,” meaning they were in favor of raising taxes instead.

A related question was “Should Wichita fund those items through public-private partnerships, or privatization, rather than raising taxes?”

Overall, 65 percent answered “Yes,” meaning they prefer public-private partnerships, or privatization. 25 percent answered “No,” indicating a preference for raising taxes.

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What is truth on education finance in Kansas?

From Kansas Policy Institute.

Duane Goossen distorts the truth on education finance

By Dave Trabert

Former state budget director Duane Goossen’s recent blog post entitled “Woe to Education Finance” is yet another example of data being deliberately distorted or falsified for political gain. Mr. Goossen served as budget director under governors Graves, Sebelius and Parkinson and has been a vocal critic of anything even hinting at efficient government…let alone lower tax burdens. Indeed, his post concludes, “The fallout from the governor’s tax plan has made investment in Kansas public schools impossible.” That false claim is completely debunked on page 60 of the Division of Budget’s FY 2015 Comparison Report, showing that state funding of schools will increase by $176 million this year (not counting property taxes that will finally be recorded properly as state aid).

And that’s just the beginning of the false claims and distortions.

Goossen: “Costs for supplies, electricity, transportation, and teachers’ salaries are all increasing. But for the coming academic year, schools must cover those growing expenses with $548 less for each student than they had 6 years ago.”

Table 1 shows the most recent estimate of per-pupil spending for the year just ended. Even if the portion recorded as Federal and Local is unchanged this year, the addition of $176 million will take per-pupil expenditures to roughly $13,411. That would be $751 more per-pupil than six years ago … not $548 less.  Mr. Goossen is only telling a partial story, as shown in the next section.

What’s more, to the extent that costs are increasing for schools, they are also increasing for individual families and businesses. Mr. Goossen is essentially demanding that taxpayers give government a raise when they have no such power with their own paychecks and are facing rising costs as well. His demand for more money also presumes that districts are organized and operating efficiently, which we know is not true according to multiple Legislative Post Audit studies.

Note: The KSDE estimate for 2013-14 was provided before the addition of funding during the recent legislative session, so it is possible the actual spending will be higher than the estimate. It should also be noted that KPI’s estimate of 2014-15 utilizes data from Budget and KSDE and that there could be reporting differences between those entities that would affect the Total. This note also applies to Table 5.

Goossen: “In the 2008/2009 school year, school budgets were based on a per pupil amount of $4,400 — the high point for school finance in Kansas. For the upcoming 2014/2015 school year, lawmakers budgeted $3,852.”

Mr. Goossen writes this as though the amounts listed are all that is provided to schools. In reality, he is talking only about Base State Aid Per Pupil, which is just the beginning point for a portion of school funding. As shown above, total aid per-pupil is about three times greater than Base and that total state aid that is more than double the Base. He deliberately ignores funding that doesn’t suit his preferred narrative.

Goossen: “At its root, a school district’s budget is determined by an amount per pupil multiplied by the number of students. School districts can then add on a “local option budget” of up to 33 percent of the basic budget. Schools must run their classrooms and education programs within that total.”

“Deceptive” would be a generous interpretation of Mr. Goossen’s representation in this regard.  As shown in Table 2, he is grossly understating total aid to school districts. Multiplying Base State Aid Per Pupil times Weighted Enrollment produces an amount roughly equal to Base State Aid plus extra money provided through many weightings (At-Risk, Bilingual, Transportation, etc.); adding Local Option Budget money would lead on to believe that school funding for 2013 was about $3.2 billion.  The actual total, according to the Kansas Department of Education, was $5.8 billion.

 

Saying “schools must run their classrooms and education programs within that total” is the caveat that saves his representation from being an outright false claim. There is no official definition of “education programs” but he later provides a few examples of what he may exclude from “education programs,” saying “… school districts also receive funds for to pay for other things: the Kansas Public Employees Retirement System (KPERS), special education, school building construction, capital outlay, food service, etc. However, that funding must be used for its intended purpose.”

It is true that money for the listed spending categories must generally be used for those purposes, but his “etc.” contains a lot of unrestricted funding, the most notable of which, Supplemental General State Aid, was $339 million for 2013 and is budgeted to be $448.5 million this year.

Mr. Goossen and other “just spend more” proponents loudly proclaimed over the last few years that the Legislature should raise Base State Aid in accordance with the Supreme Court settlement over Montoy. But now that the Supreme Court has effectively reversed that ruling and says that all funding, including State, Federal, Local and even KPERS must be counted toward adequacy, they have a decidedly different — and quite hypocritical — position. They still cling to Base State Aid as their touchstone and refuse to acknowledge that, as the Supreme Court says, “… a stable retirement system is a factor in attracting and retaining quality educators — a key to providing an adequate education.”

It is also worth noting that school districts say nicer facilities lead to better student outcomes when they want more money for that purpose, but facilities suddenly don’t count when they want other money. Spending more money on facilities also makes less available for other functions, as does having district employees perform functions that could be privatized, which forces more money to be spent on KPERS.

Goossen:  “Costs for supplies, electricity, transportation, and teachers’ salaries are all increasing. But for the coming academic year, schools must cover those growing expenses with $548 less for each student than they had 6 years ago.”

The false claim about per-pupil spending being down was already debunked but Goossen also implies here that Base State Aid Per Pupil is all that schools receive to pay for supplies, electricity, transportation and teachers’ salaries, which of course is not true. Table 3 highlights other major unrestricted funding sources that Mr. Goossen and others routinely ignore in their pursuit of more money.

At-Risk funding does carry some restrictions but that funding is not required to be used for the exclusive benefit of students who generate the funding. For example, the KSDE At-Risk Guidelines say “At-Risk funds can be used to support classroom teacher salaries to the proportional percent identified at-risk students.” The guidelines merely require that at-risk students be present in the classroom.

Table 4 shows spending from the K-12 At-Risk Fund in 2013 (another $19.8 million was spent from the At-Risk 4 year-old Fund, which can be used for K-12), including money spent on each category that Mr. Goossen implied could only be funded with Base State Aid dollars. Most of the salary expenditure was for regular classroom teachers but money was also used to pay for custodians, support staff and administration.

Goossen: “The per-pupil figure has dropped because state funding has dropped.”

Table 1 shows that per-pupil funding of schools has increased. Table 5 shows that state funding has also increased each year since 2011 and is budgeted to set a new record this year. Again, Mr. Goossen does not allow the facts to get in the way of his political narrative.

Goossen: “Is the state in a position to add money to push the per-pupil amount up?

Set aside the fact that that just happened. The real issue here is that Mr. Goossen is posing the wrong question. “Just spend more” is simply about institutional demand for more money and completely disregards the educational needs of individual students. Political demand for more money also ignores these realities:

  • Every Legislative Post Audit report says districts are not operating efficiently.
  • $430 million of education funding was used to increase district cash reserves since 2005.
  • Student achievement on independent national tests is relatively unchanged despite large funding increases over the last decade.

One must wonder how much of Kansas’ and the nation’s student achievement woes are attributable to political self-interest and putting a higher priority on institutions than on the needs of individual students.

Kansas School Finance Formula, from Kansas Policy Institute, August 2014

Kansas school finance formula explained

From Kansas Policy Institute.

Kansas Policy Institute presents the 2014-15 student weighted funding formula

By David Dorsey

The updated version of the formula that will be used by the Kansas State Department of Education to determine student weighting in the coming school year is presented below. This complex formula is the basis to adjust (increase) the number of “students” in a school district for state funding purposes.

Dissecting this complicated formula reveals those factors the state recognizes that require additional money.

Highlights include:

  • Up to 13 different factors decide what the “real” student count will be for a particular district*.
  • Seven factors (at-risk, vocational ed, bilingual ed, high-density at-risk, new facilities, high enrollment, and virtual students weighting) are calculated using percentages of student enrollment.
  • Four factors apply to all 286 districts. They include:
    • at-risk students (those who qualify for free lunch)
    • low or high student enrollment
    • special education weighting
    • transportation
  • The others vary in applicability from the vocational education weighting (267 districts in 2013-14) to declining enrollment weighting (2 districts in 2013-14).

Once all applicable factors are determined, the total weighted number of students is multiplied by the Base State Aid Per Pupil (BSAPP — $3,838 in 2013-14 and $3,852 in 2014-15) to calculate that part of the amount of state aid a district receives.

These weightings are no small affair. For example, in the Elkhart School District (USD218) last year, the weighting factors increased the student count from 502.6 (actual enrollment) to 1,668. 2, a 231.9% increase. In dollar terms, that increased Elkhart’s BSAPP funding by $4,473,573 from $1,928,979 to $6,402,552. That’s an effective BSAPP of $12,739! And that’s not an isolated case. Nearly half of Kansas’s 286 school districts realized at least a doubling of the effective BSAPP due to weighting.

People in the education establishment are quick to lament that BSAPP is down from the pre-recession figure of $4,400 in 2008-09 to the current $3,852 for the 2015 fiscal year. However, you never hear them speak of the all the weightings that significantly add to the dollars actually received. In fact, when all students statewide are included, the real BSAPP for 2013-14 was $6,640. In a recent Lawrence Journal-World article it was reported that Lawrence Superintendent Rick Doll said the district is still suffering from cuts in base state aid. According to Doll, “We are operating basically at about 1999 school funding levels.” That’s not even close to being accurate. According to KSDE, state funding per pupil in 1999 was $4,533. That figure rose to an estimated $7,052 per pupil for last school year. Local support has more than doubled since ’99 (from $2,238 to $4,809 per pupil). Likewise for federal support.

It is important to understand what a difference in the level of funding the weighting of students adds. Last school year, the weightings provided $1.3 billion over and above BSAPP to the state’s 286 districts. But some Kansas politicians, particularly those more interested in protecting institutions than serving children, and the education establishment don’t like to talk about that part of state aid to education. Instead, they like to focus only on the BSAPP figure. That’s why we hear statements made like Superintendent Doll’s.

If I were still a math teacher and they were my students, their homework assignment would be learn and understand this formula. And yes, it would be on the test.

*There is one change in the formula from the 2013-14 school year. The low-proficient, non-at-risk factor was removed during the 2014 legislative session.

Kansas School Finance Formula, from Kansas Policy Institute, August 2014
Kansas School Finance Formula, from Kansas Policy Institute, August 2014
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Kansas budgeting “off the tops” is bad policy

From Kansas Policy Institute.

Budget “Off The Tops” Bad Policy

By Steve Anderson

Direct transfers of taxpayer money sent to a specific business or industry is always a tough sell to politicians, let alone the voting public. But, that is why some corporations pay lots of money to lobbyists. If we can’t get a company more revenue (via a taxpayer-funded payment) why don’t we lower their expenses via a tax loophole that lowers how much they pay in taxes?

These sort of special interest tax breaks come in a variety of different forms but the net effect of each is the same — revenues are diverted from the appropriation process and instead sent to some “special” group. A shrewd lobbyist will often make sure the program is funded in a way that their client(s) will receive their funding even if the statute is changed in the future. However, that should not preclude bringing these special interest deals to an end. This is especially important given that the reduction in tax rates will increase the impact of these programs on the revenue stream even as the state continues along the path to eliminating the individual income tax.

These transfer schemes are funded in a number of different ways that obscure the transaction from both the public and the appropriation process. For example, there are a number of these special deals that are funded by payroll withholding taxes. The payroll withholding exemptions are programs where the state abates collection of state income tax withheld on employee’s wages. The state then provides either a program or directly funds some benefit for the employer. These programs come in many forms and often are nearly impossible to find within the very complex tax and revenue reporting statements. In general these programs require relatively long commitments by the state of taxpayer funds. The discontinuance of these type of programs will not generally eliminate the programs immediately but it will create savings going forward that could be substantial to the maintenance of a stable fiscal environment and a more transparent tax code. It would also be a breach of trust, on some level, to yank away a promise made by the state to an entity or individual. But, that doesn’t mean we have to let these program exist into perpetuity.

Investments in Major Projects and Comprehensive Training (IMPACT)

IMPACT provides for major project investment to provide financial assistance to defray business costs. IMPACT uses withholding revenue for a direct funding source to pay for bonds issued by the state for projects. In fiscal year 2013 that percentage was 2% and the program expended $25,420,654 of funds that otherwise would have gone to the state coffers. The good news is that Kansas stopped issuing bonds in the IMPACT program effective Dec. 31, 2011. The bad news was it was replaced with other programs that are very similar. The IMPACT payments will extend on for a number of years in to the future because of the bond’s that funded those projects. This ability to bind future legislators and taxpayers to these sort of “deals” is, in and of itself, problematic but there is more damage done to the state of Kansas than just the direct cost of these bonds.

Bad policy like the type of special interest payment that IMPACT represents often have negative impacts in the future that are not foreseen at the time of their passage. For example, the IMPACT bonds were at the heart of the recent Moody’s down grade of the Kansas state bond rating. The IMPACT bond’s ratings were reviewed by Moody’s rating agency because the funding source to pay off the bonds — withholding taxes — was being reduced by a cut in the tax on wage earners in the state income tax rates. The media, which generally is not comprised of individuals with a financial background, reported that the change in the IMPACT bond ratings were caused by the broad tax cuts, which is only partially true. What the media in general did not report, at least not with the same enthusiasm as their portrayal of the impact of the income tax cuts, was that Moody’s noted the long running unfunded liabilities of the Kansas Public Employees Retirement System (KPERS) and the lack of spending cuts as key elements of their downgrade.

However, analysis of the IMPACT bond rating issues bring to light another important problem with these type of giveaways. Future legislators have their hands tied because their predecessors have committed future tax revenues in a manner that precludes the ability to bring an immediate cessation, or even partial reduction, in the special interest funding source without repercussions such as the recent bond rating issue.

Promoting Employment Across Kansas (PEAK)

The PEAK program allows companies that create 100 new jobs within a specified two-year period to retain 95% of employee withholding taxes for up to 10 years. Not surprisingly with such a generous incentive companies have grown its use rapidly going from $2.7 million in expenditures in 2010 to an estimated $12.5 million in 2012 years. The “cap” on this program going forward is: In FY 2014, the cap is $12 million. In FY 2015, the cap is $18 million, $24 million in FY 2016, $30 million in FY 2017, $36 million in FY 2018, and $42 million 2019. Immediately freezing the cap at the current level and eliminating the program going forward to prevent new obligations generates significant savings going forward for the state. This is giveaway is even more troubling when considering that a recent analysis from Kansas City’s Kauffman Foundation found that, “PEAK incentives recipients are statistically not more likely to generate new jobs than similar firms not receiving incentives.”

Kansas Bioscience Authority (KBA)

The KBA’s short lifespan is a microcosm of what can go wrong with the concept of dedicated directed funding. The lack of transparency created by bypassing the scrutiny of the appropriation process often leads to expenditures that generate headlines but don’t create economic growth.

The legislation that created the KBA produced a number of programs and funding streams. It also set the total funding limit to the authority over 15 years at almost $582 million. The funding was to be for a period of 15 years from the effective date of the establishment of the KBA and required the State Treasurer to annually pay 95% of withholding above the certified base, as certified by the Secretary of Revenue, on Kansas wages paid by bioscience employees to the bioscience development (code categories from NAISC) and investment fund of the KBA.

The amount of funding transferred to the KBA grew from almost $20 million in 2006 to nearly $36 million by 2008 before the creation of the annual funding cap of $35 million in 2009. Issues with operations and management emerged in 2011 which led to a forensic audit by an outside CPA firm. The audit pointed to a number of issues that led subsequent legislatures to reduce the Authority’s funding to $11.3 million in 2012, $6.3 million in 2013, and $4.0 million in 2014 (KBA funding history here). It is doubtful that the current Administration or legislatures would increase funding above current levels but the $35 million is still the statutory cap leaving open that possibility.
There is a secondary issue with KBA’s statutory cap caused by the treatment of these type of dedicated directed funding in the budgeting process. These statutory caps for entities like KBA are considered to be at their cap amount when forecasting future budgets. The $35 million of KBA statutory cap, for example, creates an illusion in fiscal impact statements issued by the Kansas Legislative Research Department (KLRD) because those statements show the full statutory amount of $35 million being spent every year for the five years they project. Based on the current trend line of KBA funding this will not happen and, instead, creates a significant overstatement of expenditures and helps create fiscal deficits where none may exist. These projections are used by legislators and the media and should strive to present as accurate a picture as possible of current and possible future realities. A more proper and accurate display of these type of funded programs for five year projections like KLRD produces would consider whether spending could be altered or removed completely. This should be reflected in either the actual amount shown, if there was a history of partial funding, or, at the very least, in a separate line item with a notation that the sum could be arbitrarily reduced or eliminated.

Job Creation Fund

Another of those dedicated directed funds is the Job Creation Fund (JCF). The Job Creation Program Fund or the “deal closing” fund, its more press-friendly moniker, lets the state, led by the Office of the Governor, make investments and extend incentives aimed at attracting or retaining businesses within a range of statutory guidelines. The funding for the JCF was from the elimination of three other credits: Kansas Enterprise Zone, Job Expansion and Investment Credit Act and a refundable credit for property taxes paid on machinery and equipment. This sort of reallocation of funding sources carry the coveted title of “revenue neutral” and hence have no fiscal impact statement for legislators to worry about when the funding was created. This allowed elected officials to be able to say on one hand they eliminated special interest funding while creating another special interest fund out of the “elimination” of those entities. The annual cap on JCF funds is $10 million which is how much could be immediately saved by letting JCF join its now-defunct predecessors in state history.

Transfers Out of the State General Fund

There is another area where what would be State General Funds are diverted from the appropriation process. There are a number of transfers out of the State General Fund with the largest and most notorious being the $135 million School District Improvements Fund. Not only does this amount not get counted in the school formula, the recent Gannon ruling on school funding pointed directly to this fund as an example of inequity in funding. This “inducement” to issue bonds for new buildings was a bad idea both from a policy and process aspect. Policy-wise the Kansas Supreme Court’s Gannon ruling was correct in pointing out that only the growing school districts could use this fund with a few big school districts garnering most of the monies. Process-wise the choice to use a transfer as the funding mechanism not only bypassed the school finance formula but also ensured that these funds are not counted by the National Center for Education Statistics; NCES is the “go to” place for comparing education-related data from across the country and is run by the U.S. Dept. of Education.

There is also another series of transfers that have their own particular issues.The adjacent list shows the recipient and the amount for FY-2015 (available at link above).The picking of winners and losers by government is never a good idea and the direct transfer of taxpayer funding to companies is a suspect type of economic development.

Transfers out of the State General Fund
Spirit Aerosystems Incentive ($3,500,000)
Eaton MDH Spec. Qual. Indus. Mfg. Fund ($30,000)
Siemens Manufacturing Incentive ($650,000)
Learjet Incentive ($6,000,000)
TIF Replacement Fund ($900,000)
Learning Quest Match  ($500,000)
Total ($11,580,000)

It is also troubling when local communities enter into Tax Increment Finance (TIF) arrangements, not to mention other subsidy giveaways, which are basically an agreement between a company or individual and the city to suspend property tax payments for that company or individual. State taxpayers as a whole have to make up for lost revenues to the governing body of each such city from the TIF arrangement. This means that a TIF issued in Johnson County is, at least in part, paid for by residents of Bourbon County and Elkhart. This distribution of funds from taxpayers across the state to individual “redevelopment areas” that were created by local governments in a manner that is basically hidden from the citizens is another great example of why these “off the tops” are bad policy. Requiring these TIF subsidies to be debated in the light of the full appropriation process would no doubt lead to questions by legislators whose districts did not include cities who receive this subsidy.

A general thought for legislators, citizens and industry on these economic subsidies. The reduction in income tax rates by the state on withholding rates has already provided a huge incentive for these companies in addition to the direct largess they receive from these dedicated funds. The rate cut on withholding taxes increased the take home pay of their employees without those companies having to give a pay raise to their employees out of company funds. Note that the “incentive” of lower withholding taxes is applied to EVERY wage earner in the state and does not go about picking favored businesses, industries, or individuals. This type of transparent, rules-based, and equally-applied policy is the correct way to encourage economic growth and allow the free market to dictate outcomes not politicians or bureaucrats.

Conclusion

Every program that spends the funds of the taxpayer should be examined regularly and the nature of these “off the tops” suggests that is not happening. The need for transparency and accountability is especially true of programs that benefit any specific individual, company or sector of the economy at the expense of another. Because of the contractual type of arrangement some of these represent we do not advocate for the state breaking existing contracts in regards to incentives. But, the creation of new or expansion of existing economic development handouts that are direct redistributions from taxpayers to other sectors of the economy needs to be halted and those still in existence need to be reviewed.

A complete review of every agreement entered into by the state to ascertain if that agreement is contractual in nature or are not legally binding going forward should proceed this next legislative session. The state should review those that are not legally binding and current renewals that can be foregone and put this “off the top” funding back in the appropriation process going forward. How much could the state expect to realize would be determined by that review. Even a preliminary, informed estimate would be in the neighborhood of $50 million annually without breaking any contractual arrangements. The following chart gives an estimate of just three programs with statutory flexibility.

Total Dollars Returned to the State Coffers
$s in Millions FY16 FY17 FY18 FY18
Freeze PEAK at Current Levels $6 $12 $18 $24
Kansas Bioscience Authority $25 $25 $25 $35
Cease Job Creation Fund $10 $10 $10 $10
Totals $41 $47 $53 $69
The issue of transparency is front and center in all of these programs and it would be appropriate for every “off the top” to be displayed on both Consensus Revenue Estimates and Appropriation profiles so that legislators and citizens can see that a significant amount of funds have already been appropriated by these arrangements.

Wichita City Hall 2014-08-05 11

What the Wichita city council could do

While the proposed Wichita city sales tax is a bad idea, the city could do a few things that would not only improve its chance of passage, but also improve local government.

This week the Wichita City Council passed an ordinance that starts the process of placing a sales tax measure on the November ballot. The one cent per dollar tax will be used for several initiatives, including an economic development jobs fund.

The city will need to gain the trust of citizens if the measure is to have any chance of passage. While I am personally opposed to the sales tax for some very good reasons, I nonetheless offer this advice to the city on what it could do to help pass the sales tax.

Oversight commissions

Presentations made by city hall state that the city council will appoint a private-sector led jobs commission. It would examine potential projects and make recommendations to the council. There will also be a citizens oversight committee and a jobs commission audit committee.

Wichita Investing in Jobs, How it WorksThe problem is that committees like these are usually stacked with city hall insiders, with people who want to personally gain from cronyism, and with people the city believes will be quietly compliant with what the city wants to do.

As an example, consider my appointment to the Wichita Airport Advisory Board last year. I had to be confirmed by the city council. I’ve been critical of the subsidy paid to airlines at the Wichita airport. I’ve researched airfares, air traffic, and the like. I’ve presented findings to the city council that were contrary to the city’s official position and that discovered a possible negative effect of the subsidy effort. Because of that, the council would not confirm my appointment. The city was not willing to have even one person on the airport board who might say wait, let’s take a look at this in a different way, and would have facts to support an alternative.

At Tuesday’s meeting the council assured citizens that it would not be the same group of city hall insiders serving on these boards. According to meeting minutes, council member James Clendenin (district 3, southeast and south Wichita) said “Over the next few months there is going to be a lot more detail given to the public so that they can make an informed decision at the time this comes up to a vote in November.”

If the council is serious about this it could take a simple step: Appoint the members of these boards well in advance of the November election. Also, define the structure of the boards, such as the number of members, how appointed, term of appointment, and other details.

Transparency

The city says that the operations of the committees and the jobs fund will be transparent. But the city’s record in transparency is poor. For many years the city’s quasi-independent agencies have refused to release spending records. Many, such as I, believe this is contrary to not only the spirit, but the actual language of the Kansas Open Records Act. There is nothing the city has said that would lead us to believe that the city plans to change its stance towards the citizens’ right to know.

If the city wants to convince citizens that it has changed its attitude towards government transparency and citizens’ right to know how tax money is spent, it could positively respond to the records requests made by myself and Kansas Policy Institute.

The city is also likely to engage in an educational and informational campaign on its cable television channel. If it does, a welcome gesture would be to offer time on the channel for citizen groups to present their side of the issues. The city’s cable channel is supposed to be a public access channel, but as of now, citizens have no ability to produce content for that channel.

In presentations to the council, reports released by the Texas Enterprise Fund have been used as examples of what Wichita might do to inform citizens on the economic development activities funded by the sales tax. But many in Texas are critical of the information provided about the fund’s operation.

Even when information is provided, it is subject to different interpretations by self-interested parties. On the Texas Emerging Technology Fund, the Houston Chronicle recently reported “Whether or not the fund has lost taxpayer money depends on which accounting method is applied. The Associated Press says a method common to government entities placed the fund’s value at $175 million, with a loss of $30 million. The governor’s office uses a private accounting standard that places the fund’s value at $230 million, a $25 million profit.”

In 2011 the Wall Street Journal reported on how job creation numbers can be stretched far beyond any sense of reason:

In Texas, Mr. Perry in a 2011 report to the legislature credited the Texas A&M Institute for Genomic Medicine with already producing more than 12,000 additional jobs. That’s ahead of the 5,000 promised by 2015.

According to the institute’s director, however, 10 people currently work in its new building. A Houston-area biotech firm that agreed to produce about 1,600 of the project’s jobs has instead cut its Texas staff by almost 400 people, and currently employs 220 people in the state.

What accounts for the discrepancy? To reach their estimate of 12,000-plus jobs created by the project, officials included every position added in Texas since 2005 in fields related sometimes only tangentially to biotechnology, according to state officials and documents provided by Texas A&M. They include jobs in things ike dental equipment, fertilizer manufacturing and medical imaging.

William Hoyt, an economics professor at the University of Kentucky who studies state economic-incentive programs across the U.S., said similar efforts elsewhere have been dogged by controversy over how many jobs they actually created. Even so, Mr. Hoyt said he hasn’t come across a definition as broad as that employed by Texas. “It’s hard to see jobs in dental supplies in El Paso being related to a genome clinic in College Station,” where Texas A&M’s main campus is located, he said.

A spokeswoman for Mr. Perry’s office in Austin, Texas, said the job totals for the A&M project were provided by the grant recipients, using figures compiled by the Texas Workforce Commission, the state’s labor agency, and hadn’t yet been “verified.” (Behind Perry’s Jobs Success, Numbers Draw New Scrutiny, October 11, 2011)

Locally, Wichita has had difficulty making information available. Last year the Wichita Eagle reported on the problems.

The Eagle asked the city last week for an accounting of the jobs created over the past decade by the tax abatements, a research project that urban development staffers have yet to complete.

“It will take us some time to pull together all the agenda reports on the five-year reviews going back to 2003. That same research will also reveal any abatements that were ‘retooled’ as a result of the five-year reviews,” city urban development director Allen Bell said. “I can tell you that none of the abatements were terminated.” (Wichita doubles property tax exemptions for businesses, October 20, 2013)

wichita-economic-developmentOne might have thought that the city was keeping records on the number of jobs created on at least an annual basis for management purposes, and would have these figures ready for immediate review. But apparently that isn’t the case.

We need to recognize that because the city does not have at its immediate disposal the statistics about job creation, it is evident that the city is not managing this effort. Or, maybe it just doesn’t care. This is a management problem at the highest level.

gwedc-office-operations

In fact, the city and its economic development agencies don’t even keep promotional websites current. GWEDC — that’s the Greater Wichita Economic Development Coalition credited with recruiting a company named InfoNXX to Wichita — doesn’t update its website to reflect current conditions. InfoNXX closed its facility in Wichita in 2012. When I looked at GWEDC’s website in October 2013, I found this on a page titled Office Operations:

Wichita hosts over a dozen customer service and processing centers — including a USPS Remote Encoding Center (985 employees), InfoNXX (950), T-Mobile (900), Royal Caribbean (700), Convergys (600), Protection One (540), Bank of America (315) and Cox Communications (230.) (emphasis added)

Observe that the official Wichita-area economic development agency touted the existence of a company that no longer exists in Wichita, and claims a job count that the company never achieved. Also, at that time the USPS facility was in the process of closing and eliminating all Wichita jobs.

What is Wichita doing to convince citizens that it has moved beyond this level of negligence?

ballot-296577_640

Women for Kansas voting guide should be read with caution

If voters are relying on a voter guide from Women for Kansas, they should consider the actual history of Kansas taxation and spending before voting.

A political advocacy group known as Women for Kansas has produced a voting guide, listing the candidates that it prefers for Kansas House of Representatives. But by reading its “Primer on the Issues,” we see that this group made its endorsements based on incorrect information.

One claim the group makes is this regarding taxes in Kansas: “Income taxes were reduced for many Kansans in 2012 and 2013, and eliminated entirely for some, with a corresponding increased reliance on sales taxes and local property taxes. This shifted the tax burden to the less affluent and from the state to counties, cities and school districts.”

This is a common theme heard in Kansas the past few years. But let’s unravel a few threads and look at what is actually happening. First, keep in mind that the lower tax rates took effect on January 1, 2013, just 1.5 years ago.

Then, Women for Kansas may be relying on information like this: A university professor who is a critic of Sam Brownback recently wrote in a newspaper column that “Property taxes are on track to increase by more than $400 million statewide during Gov. Sam Brownback’s term in office.”

Through correspondence with the author, Dave Trabert of Kansas Policy Institute found that this claim is based on increases of $300 million plus an estimated $100 million increase yet to come. Trabert noted that this amounts to an increase of 11 percent over four years. To place that in context, property taxes increased $767 million and 29 percent during the first term of Kathleen Sebelius. Inflation was about the same during these two periods. A more accurate claim would be that Kathleen Sebelius shifted taxes to counties, cities, and school districts, and that Sam Brownback’s administration has slowed the rate of local property tax increases compared to previous governors.

Another claim made by Women for Kansas concerns school spending: “Reflecting decreased revenues due to tax cuts, per-pupil spending is down, and both K-12 and higher education are facing further reductions in the immediate future.”

The allegations that per-pupil spending is down due to tax cuts is false. The nearby chart of Kansas school spending (per pupil, adjusted for inflation) shows that spending did fall, but under budgets prepared by the administrations of Kathleen Sebelius and Mark Parkinson. Since then, spending has been fairly level. (Remember, lower tax rates have been in effect for just 1.5 years.)

Kansas school spending, per student, from state, local, and federal sources, adjusted for inflation.
Kansas school spending, per student, from state, local, and federal sources, adjusted for inflation.

If we look at other measures of school support, such as pupil teacher ratios, we find that after falling during the administrations of previous governors, these ratios have rebounded in recent years.

When spending figures for the just-completed school year become available, it’s likely that they will show higher spending than the previous year. That’s been the trend.

If you’ve received or read the voter guide from Women for Kansas, please consider the actual history of Kansas taxation and spending before voting.

For McGinn, a liberal voting record is a tradition

Based on votes made in the Kansas Senate, the advertising claims of Sedgwick County Commission candidate Carolyn McGinn don’t match her record.

Kansas CapitolIn a radio advertisement, Carolyn McGinn says she is conservative. In a mailer, she touts her “fiscal conservative leadership” in the Kansas Senate.

But voting records don’t match these claims.

Several voting scorecards in recent years show Senator McGinn ranking low in terms of voting for economic freedom issues. These issues generally concern taxation, wasteful spending, and unnecessary regulation. In recent years, a freedom index has been produced by Kansas Policy Institute. In 2012 the Kansas Economic Freedom Index was a joint product of Americans for Prosperity-Kansas, Kansas Policy Institute, and myself. In 2010 I produced an index by myself. All tabulations show McGinn rarely voting in favor of economic freedom.

In the 2014 formulation, McGinn scored 25.8 percent. Four senators (Kansas has 40 senators) had lower scores. Some Wichita-area legislators that had higher scores than McGinn include Senator Oletha Faust-Goudeau and Representatives Ponka-We Victors, Gail Finney, Jim Ward, Tom Sawyer, and Brandon Whipple. All these are Democrats, by the way, and they voted more in favor of economic freedom than did Carolyn McGinn.

In 2013, McGinn scored 40 percent. Eight senators had lower scores.

In 2012 the scores were calculated in a different manner. McGinn scored -6, with 16 senators scoring lower.

There was no index for 2011.

In 2010, on an index that I produced, McGinn scored seven percent. Three other senators had the same score, and one had a lower score.

At a recent forum, McGinn criticized the concept of a vote index, telling the audience: “The economic freedom index, I just find that interesting. Because it’s based on amendments after we’re out of session, so you can pick and choose what you want for who.”

She’s right, in a way. I don’t know what she meant by “amendments,” but the organizations that construct voting scorecards choose votes that they believe distinguish candidates along some axis. Usually the votes are chosen after they’re made, although sometimes organizations “key vote” an issue. That means they alert legislators in advance of a vote that the vote will be included on their scorecard.

There are organizations that are in favor of more spending, less accountability, and fewer choices for Kansas parents and schoolchildren. They produce scorecards, too. In particular, Kansas Association of School Boards found that McGinn never voted against their position from 2009 to 2012. Kansas National Education Association, while not making a scorecard public, recommended that its members vote for McGinn.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Waste, economic development, and water issues.

In this episode of WichitaLiberty.TV: Wichitans ought to ask city hall to stop blatant waste before it asks for more taxes. Then, a few questions about economic development incentives. Finally, how should we pay for a new water source, and is city hall open to outside ideas? View below, or click here to view at YouTube. Episode 53, broadcast July 27, 2014.

Wichita City Council Chambers

For Wichita leaders, novel alternatives on water not welcome

A forum on water issues featured a presentation by Wichita city officials and was attended by other city officials, but the city missed a learning opportunity.

This week Kansas Policy Institute held an educational form on the issues of water in the Wichita area. The event featured four presentations with questions and answers, with most being about one hour in length.

This was a welcome and important event, as the city is proposing to spend several hundred million dollars on an increased water supply. It is likely that citizens will be asked to approve a sales tax to pay this cost. It’s important that we get this right, and citizen skepticism is justified. The city has recently spent $247 million on a water project that hasn’t yet proved its value over a reasonably long trial. A former mayor has told audiences that he was assured Wichita had adequate water for the next 50 years. It was eleven years ago he was told that. Wichita’s current mayor has admitted that the city has not spent what was needed to maintain our current infrastructure, instead pushing those costs to the future.

Most of the information that Wichitans have access to is provided by city government. So when an independent group produces an educational event on an important topic, citizens might hope that Wichita city officials take part.

And, Wichita city officials did take part. The second of the four presentations was delivered by Wichita public works director Alan King and council member Pete Meitzner (district 2, east Wichita). City governmental affairs director Dale Goter and council member Lavonta Williams were in the audience.

But after this presentation ended, the four city officials left.

What did they miss? They missed two additional presentations, or half the program. The city officials did not hear a presentation by Dr. Art Hall of Kansas University which presented novel ideas of using markets for water resources. Particularly, how Wichita could secure increased water supply by purchasing water rights and using the infrastructure it already has in place.

In the final presentation, the audience asked questions that the presenter was not able to answer. City officials like public works director King would have been able to provide the answers.

I understand that city council members are part-time employees paid a part-time salary. Some have outside jobs or businesses to run. But that’s not the case with the city’s public works director or its governmental affairs director.

Come to think of it, where was the city manager? Assistant city manager? Other council members? The city’s economic development staff?

Where was Mayor Carl Brewer?

If you’ve attended a city council meeting, you may have to sit through up to an hour of the mayor issuing proclamations and service awards before actual business starts. Fleets of city bureaucrats are in the audience during this time.

But none of these would spend just one hour listening to a presentation by a university professor that might hold a solution to our water supply issue.

I understand that city officials might not be the biggest fans of Kansas Policy Institute. It supports free markets and limited government.

But city officials tell us that they want to hear from citizens. The city has gone to great lengths to collect input from citizens, implementing a website and holding numerous meetings.

About 70 people attended the KPI forum. Citizens were interested in what the speakers had to say. They sat politely through the presentation by the two city officials, even though I’m sure many in the audience were already familiar with the recycled slides they’d seen before.

But it appears that Wichita city officials were not interested in alternatives that weren’t developed by city hall. They can’t even pretend to be interested.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Water, waste, signs, gaps, economic development, jobs, cronyism, and water again.

In this episode of WichitaLiberty.TV: A look at a variety of topics, including an upcoming educational event concerning water in Wichita, more wasteful spending by the city, yard signs during election season, problems with economic development and cronyism in Wichita, and water again. View below, or click here to view at YouTube. Episode 50, broadcast July 6, 2014.

Kansas Farm Scenic Sky Clouds Wheat Farmland kansas-243079_1280

Third annual Kansas Freedom Index released

From Kansas Policy Institute.

3rd Annual Kansas Freedom Index Released

Support of Freedom About More Than Politics, IDs Role of Government and Freedom of Citizens

July 1, 2014 — Wichita — Kansas Policy Institute released a new scorecard tracking votes from the 2014 legislative session. The third annual Kansas Freedom Index takes a broad look at voting records and establishes how supportive state legislators are regarding economic freedom, student-focused education, limited government, and individual liberty. The Index is intended to provide educational information to the public about broad economic and education freedom issues that are important to the citizens of our State. It is the product of nonpartisan analysis, study, and research and is not intended to directly or indirectly endorse or oppose any candidate for public office.

“An informed citizenry is an essential element of maintaining a free society. Having a deeper understanding of how legislation impacts education freedom, economic freedom and the constitutional principles of individual liberty and limited government allows citizens to better understand the known and often unknown consequences of legislative issues,” said KPI president Dave Trabert.”

A Freedom Percentage is calculated for each legislator, representing the relative position of a legislator’s raw score on a number line of the minimum and maximum score, with the percentage indicating proximity to the maximum score.

A positive cumulative score (or a Freedom Percentage above 50%) indicates that a legislator generally supported economic and education freedom, while a negative cumulative score (or Freedom Percentage below 50%) indicates that a legislator was generally opposed. A score of zero or a Freedom Percentage of 50% indicates that a legislator was generally neutral. The cumulative score only pertains to the specific votes included in the Kansas Freedom Index and should not be interpreted otherwise. A different set of issues and/or a different set of circumstances could result in different cumulative scores.

Trabert continued, “Each year it has been clear that support of economic freedom isn’t an issue of political affiliation. Republicans represented at least 70 percent of all House members and all Senate members since 2012. Those counts would produce fairly strong results one way or the other if economic freedom was a partisan issue, but instead, the overall score of both chambers was very near neutral.”

Trabert concluded, “Too often votes come down to parochial or personal issues and the idea of freedom is left on the legislature’s cutting room floor. Hopefully, the Kansas Freedom Index can start to recalibrate citizens and legislators towards supporting the freedoms of everyday Kansans and not be driven by politics.”

2014 Freedom Index by the Numbers
water fountain gargoyles fountain-197334_640

Examining Wichita’s water future

From Kansas Policy Institute.

water fountain gargoyles fountain-197334_640A proposal before the Wichita City Council would raise the sales tax in the city by 1% to fund several projects. The biggest piece of the proposal would be to fund additional water capacity for users of the city water system.

On Thursday 17 July, come hear from the City of Wichita and others on the scope of the problems, possible solutions, and the perspectives of several experts in the debate.

Click here to register for this event.

Date: Thursday 17 July
When: 7:30 a.m. registration and 8:00 a.m. start to presentations
Where: Wichita State University MetroPlex Room 132 ( 29th and Oliver)
Cost: Free with Advance Registration

A light breakfast will be served. The session will conclude by 12:15 p.m.

Speaker Line-up and Agenda:
7:30 a.m. — Registration and Breakfast
8:00 a.m. — Kansas Water Office on scope of water usage/needs in SCKS
9:00 a.m. — City of Wichita Proposal: Alan King, Dir. of Public Works, accompanied by Councilman Pete Meitzner
10:00 a.m. — Are Water Markets Applicable in Kansas?: Dr. Art Hall, executive director of the Center for Applied Economics at the University of Kansas
11:00 a.m. — Wichita Chamber of Commerce Water Task Force Findings: Karma Mason, president of iSi Environmental

KPI is not taking a position of the water proposal before the City Council. This event is to provide a forum for relevant parties to present their perspective on the issue with the public. Each presenter will have 30 minutes for a presentation followed by an Q&A.

This is the first in a series of KPI-sponsored forums of this nature on the different aspects of the sales tax proposal. Future forums will be held on the economic development and street and transit proposals.

For more information about this event contact Kansas Policy Institute at 316.634.0218. To register, click here.

kansas-policy-institute-2014-04-willing-to-fund

To fund government, Wichitans prefer alternatives to raising taxes

In this excerpt from WichitaLiberty.TV: Wichita voters told pollsters they prefer adjusting spending, becoming more efficient, using public-private partnerships, and privatization to raising taxes. View below, or click here to view on YouTube. For more on this topic, see To fund government, Wichitans prefer alternatives to raising taxes.

kansas-policy-institute-2014-04-q01-01

Wichita voter opinion on city spending and taxation

In this excerpt from WichitaLiberty.TV: Wichita voters give their opinions on city spending, subsidies for economic development, and their willingness to pay higher taxes for certain services. Since this episode was recorded, the Wichita City Council has given tentative approval for a one cent sales tax to be used for water supply, street maintenance, economic development, and transit. View below, or click here to view on YouTube.

For more from this survey, see

Wind farm near Spearville, Kansas.

Kansas City Star’s dishonest portrayal of renewable energy mandate

Commentary from Kansas Policy Institute.

Kansas City Star’s dishonest portrayal of renewable energy mandate

By Dave Trabert

A recent Kansas City Star editorial criticizing opponents of Kansas’ renewal energy mandate for being disingenuous was itself a fine example of disingenuity.

Kansas law mandates that utility companies purchase specific levels of renewable energy, which means that Kansans are forced to purchase wind energy and pay higher energy prices. The degree to

Wind farm near Spearville, Kansas.
Wind farm near Spearville, Kansas.
which it is more expensive is a matter of dispute, but even the Star admits that wind is more expensive than fossil fuel alternatives. The Star describes this mandate as “consumer-friendly.”

They falsely say “these laws encourage electric facilities to supplement their use of fossil fuels with renewables.” The law does not “encourage;” it requires.

The Star touts economic gains to the wind industry but ignores the reality that those gains come at the expense of everyone else in the form of higher taxes, higher electricity prices and other unseen economic consequences.

They conclude by saying people “deserve a choice”, but mandates are the opposite of choice. Real choice would not only allow citizens to individually decide whether to purchase renewable energy, but to choose their energy supplier as well. Maybe it’s time to look at breaking up the utility monopoly in Kansas as other states have done.

Wichita per capita income compared to the nation. Click for larger version.

Wichita per capita income not moving in a good direction

Despite its problematic nature, per capita income in Wichita is used as a benchmark for the economy. It’s not moving in the right direction. As Wichita plans its future, leaders need to recognize and understand its recent history.

One of the benchmarks used by Visioneering Wichita to measure the growth of the Wichita-area economy may not be the best statistic, and its interpretation requires caution.

The measure is per-capita personal income. Specifically, the benchmark goal of Visioneering is “Stop the 21-year decline of Wichita per capita income as a percentage of U.S. per capita income before 2011. By 2024 exceed the annual average of Omaha, Tulsa, Kansas City and Oklahoma City.” (Note that per capita measurements are problematic. See the section at the end of this article.)

Wichita per capita income compared to the nation. Click for larger version.
Wichita per capita income compared to the nation. Click for larger version.
How has the Wichita metropolitan area performed on this benchmark? What are the trends? I’ve plotted per capita income for the United States and the Wichita MSA, along with the ratio of Wichita to the nation. The leaders of Visioneering are right to be concerned about the direction of the Wichita economy relative to the country. Since about 1980, the trend of Wichita as compared to the country is that Wichita is not keeping up, and is falling behind. During the decade of the 1980s, per capita income in Wichita fell below that of the nation. Wichita per capita income had been higher, but since then has mostly been falling farther behind.

Visioneering peers

One of the Visioneering concepts is the idea of peers. The cities Visioneering Wichita selected as Wichita peers are Omaha, Tulsa, Kansas City, and Oklahoma City. It’s useful to compare Wichita with these cities, and also with a few others that are comparable to Wichita and interesting for other reasons.

Wichita per capita income growth compared to peers. Click for larger version.
Wichita per capita income growth compared to peers. Click for larger version.
Nearby are two snapshots from an interactive visualization of per capita income growth. Wichita is the dark line in each of these charts. As you can see, by the last year of available data (2012), Wichita is near the bottom in performance. It wasn’t always that way. In early years, Wichita did well.

Per capita income growth in Wichita and peers, annual rate of growth. Click for larger version.
Per capita income growth in Wichita and peers, annual rate of growth. Click for larger version.
The interactive visualization holds data from the U.S. Bureau of Economic Analysis and was created using Tableau Public. Click here to open it in a new window so that you may form your own conclusions.

We’ve had a plan

The current stance of Wichita civic leaders is that we need a plan to create jobs. But we’ve had plans, with Visioneering being just one.

These leaders also tell us that Wichita can’t compete with other cities in economic development because Wichita’s budget is too small. But as I show here, when Wichita leaders complain about a small budget for incentives, these officials don’t include all incentives that are available and regularly used. Not nearly all.

Per capita measurements

Per capita measures are problematic. They are not meaningless, but interpretation requires caution. Some of the issues with per capita measures are explained by Dave Trabert of Kansas Policy Institute:

Per-capita income is a bad measurement because it rewards cities that are losing people due to domestic migration and punishes those who are gaining.

Even without the per-capita issue, personal income is not a clean measure. Personal income can increase because federal transfer payments grew, employers had to spend more to provide health care benefits, and other items that have nothing to do with measuring relative economic growth.

Better measurements would be private sector jobs, private sector GDP and private sector wage and salary disbursements. Unless the point of Visioneering is to grow government, the measurements should only be of private sector elements.

KPI has explained how the mathematics of per-capita measures can produce results that seem paradoxical. A recent edition of Rich States, Poor States has a section devoted to these problems. Here’s an explanation of a scenario that requires caution to interpret:

Further, the residents of a state can be better off even if that state’s per-capita or median income decreases. If, for example, 50,000 low income agriculture workers move into Texas, those workers’ incomes almost surely rise (or else they would not have moved there). The residents and business owners in Texas who benefit from their labor services are better off, and the final result is that no one is worse off. But the per-capita income in Texas may actually go down if the low income agricultural workers earn less than the state’s average wage.

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WichitaLiberty.TV: Alternatives to raising taxes, how to become involved in politics, and bad behavior by elected officials

In this episode of WichitaLiberty.TV: Wichita voters tell pollsters that they prefer alternatives to raising taxes. Then, how can you get involved in politics? A deadline is approaching soon. Finally, some examples of why we need to elect better people to office. Episode 44, broadcast May 25, 2014. View below, or click here to view at YouTube.

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To fund government, Wichitans prefer alternatives to raising taxes

Wichita City Budget Cover, 1975Wichita voters prefer adjusting spending, becoming more efficient, using public-private partnerships, and privatization to raising taxes.

In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

Question nine asked how Wichita voters preferred paying for new government spending: “To fund existing infrastructure, build new infrastructure, and secure a long-term water source should Wichita fund those items by adjusting spending and being more efficient rather than raising taxes?”

Overall, 78 percent of Wichita voters answered “Yes,” meaning they prefer that Wichita adjust spending and become more efficient. 12 percent answered “No,” meaning they were in favor of raising taxes instead.

A related question was “Should Wichita fund those items through public-private partnerships, or privatization, rather than raising taxes?”

Overall, 65 percent answered “Yes,” meaning they prefer public-private partnerships, or privatization. 25 percent answered “No,” indicating a preference for raising taxes.

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Debunking CBPP on tax reform and school funding — Part 4

From Kansas Policy Institute.

Debunking CBPP on tax reform and school funding — Part 4

By Dave Trabert

kansas-policy-institute-logoWe continue our debunking of the Center on Budget and Policy Priorities (CBPP) latest report entitled “Lessons for Other States from Kansas’ Massive Tax Cuts.” Part 1 dealt with state revenues. Part 2 covered state spending in general and school funding in particular. Part 3 addressed claims that that tax reform hasn’t boosted the economy. Today we tackle their assertion that tax cuts won’t lead to economic growth.

CBPP claim #4 — Little Evidence to Suggest That Tax Cuts Will Improve Kansas’ Economy in the Future

Actually, there is a lot of evidence; CBPP just conveniently avoids it. Instead, they substitute their opinion and employ their standard tactic of making claims without disclosing supporting data; they also reference predictions that Kansas will trail the nation next year in some economic indicators.

We’ll start the debunking with a brief history lesson. Private sector job growth in Kansas trailed the national average in ten of the last fifteen years (1998-2013). Kansas’ private sector gross domestic product trailed eight times (1997-2012) and personal income trailed eleven of the last fifteen years (1998-2013). Indeed, Kansas’ history of economic stagnation was the impetus for tax reform. As we explained in Part 3, the full economic impact of tax reform will take years to unfold. It’s intellectually dishonest of CBPP to imply that tax reform isn’t working because a long term negative trend hasn’t suddenly created tremendous gains.

Now let’s look at the evidence. The adjacent table compares the performance of the ten states with the lowest state and local tax burdens with the ten states with the highest burdens, based on the most recent rankings from the Tax Foundation. The low-burden states are Wyoming, Alaska, South Dakota, Texas, Louisiana, Tennessee, New Hampshire, Nevada, South Carolina and Alabama. The high-burden states are New York, New Jersey, Connecticut, California, Wisconsin, Minnesota, Maryland, Rhode Island, Vermont and Pennsylvania.

The low-burden states increased jobs at twice the rate of high-burden states. Low-burden states have superior growth in Wages and Salaries and Private Sector Gross Domestic Product. Low-burden states have positive domestic migration while high-burden states have negative domestic migration. In other words, US residents are choosing to move to low-burden states and choosing to leave high-burden states.

Tax reform critics like to attribute the superior economic performance of low-burden states to weather and access to ports and natural resources. But you’ll notice that both groups have states with good weather, bad weather, coastal, land-locked and natural resources. But there is one category which really separates the two groups of states — spending. High-burden states spend 40 percent more per resident to provide the same basket of essential services. States with an income tax spend 49 percent more than those without an income tax.

The key to having low taxes is to keep spending under control by providing services at a better price. A state could be awash in oil revenue and still have a high tax burden if it spent more. Texas, by the way, gets less than 3 percent of revenue from oil; they have a low tax burden because they only spent $2,293 per resident to provide the same basic basket of services on which Kansas spent $3,409 (2012 actual per NASBO).

The moral of the story is pretty clear: states that spend less, tax less — and grow more.

Myth: The Kansas tax cuts haven’t boosted its economy

From Kansas Policy Institute.

Debunking CBPP on tax reform and school funding — Part 3

By Dave Trabert

kansas-policy-institute-logoWe continue our debunking of the Center on Budget and Policy Priorities (CBPP) latest report entitled “Lessons for Other States from Kansas’ Massive Tax Cuts.” Part 1 dealt with state revenues and Part 2 covered state spending in general and school funding in particular. Today we debunk their claims that tax reform hasn’t boosted the economy.

CBPP claim #3 – Kansas’ tax cuts haven’t boosted its economy.

While tax reform hasn’t produced the “shot of adrenaline” predicted by Governor Brownback, the problem is one of political enthusiasm rather than economics. Most elected officials are prone to effusive optimism for their ideas, just as opponents to their ideas can often be counted upon to distort and deliberately misstate information in pursuit of their own beliefs.

The data pretty clearly shows that states with lower tax burdens have much stronger economic growth and job creation over time; we’ll review the facts in Part 4. Today’s post covers some of the reasons why the benefits of Kansas’ tax reform will unfold over several years rather than overnight and explain a number of misleading claims by the Center on Budget and Policy Priorities (CBPP).

Many employers are also awareFirst of all, tax reform was implemented while coming out of a recession. It’s impossible to know the extent to which this impacts employers’ decision-making on adding jobs or relocating, but having run a few businesses, I can appreciate how the initial benefits of tax reform might be used to shore up the business while continuing to work through the recession.

Concurrent federal changes are also a factor. Pass-through income on LLCs, Subchapter S corps, partnerships and proprietorships was not subject to state income tax in 2013 but those employers were simultaneously hit with higher federal income taxes (marginal rates and on capital gains) and multiple changes related to Obamacare.

Predictability is an important element of tax policy, and some of the mixed signals coming out of Topeka over the last two years may also be prompting taxpayers to proceed cautiously. The 2012 tax reform legislation would have reduced income taxes by $4.5 billion over the first five years but changes implemented in 2013 took back about $700 million. While still a very positive net effect, the 2013 changes sent a number of mixed signals.

Many employers are also well aware that a majority of legislators and Governor Brownback have not yet made the necessary (and quite feasible) spending reductions that will be required to fully implement tax reform. Kansas’ General Fund budget in 2012 was 25 percent more per-resident than states with no income taxtotal budgeted spending was 39 percent higher on a per-resident basis. Every state provides the same basic services – public education, highways, social services programs, etc. — but some states provide those services at a much better price and keep taxes low.

The fiscal year 2015 General Fund budget of $6.273 billion is a new record for Kansas and is 2.9 percent higher than the 2012 budget. Until government is made to operate more efficiently, taxpayers must consider the possibility of further modifications to the tax plan — and that uncertainty will continue to impact economic growth.

Relocating a business is also not something that happens quickly. For starters, leases might have several years to run before a move is feasible.

CBPP uses a combination of unsubstantiated claims, fails to put a lot of information in context and exploits the unrealistic notion that tax reform would have an immediate, explosive impact on the state’s economy. “Data from” is not how intellectually honest people substantiate a position; they show you all their data or at least tell you exactly what data they used and where to find it. Claiming that a one-year change in jobs or earnings is proof that something as complex as major tax reform failed is just a political statement; it is certainly not an intellectually honest economic analysis.

Yes, private sector job grew a little slower in 2013 than in 2012, but that was not a Kansas phenomenon. In fact, private sector job growth nationwide in 2012 was 2.2% but dipped to 2.1% in 2013.[1] This is a good example of CBPP ignoring context.

It’s also important to examine the underlying factors that contribute to a state average. The adjacent table shows that Kansas did better than all but one adjacent state in 2013. Colorado did better, but then Colorado has historically had a better tax structure than Kansas and also did a better job of controlling spending. Less favorable tax and spending policy has been introduced in Colorado over the last few years but, just as it takes time for upward momentum to build, it does as well for the full measure of bad policy to be seen.

Digging deeper, we find that the Kansas City, Kansas metro area not only outperformed the national average but also grew at five times the rate of the Kansas City, Missouri metro area. The Wichita metro lost jobs in aerospace but that is a reflection of the global economy; the balance of the Wichita metro was almost at the national average.

CBPP dismisses the increase in new business filings but if history is any guide, these gains are quite significant. Research conducted by the Center for Applied Economics at the University of Kansas found that, if not for jobs created by new startups in their first year of existence, Kansas would have only had two years of net job growth between 1997 and 2010.

Dr. Arthur Hall, who conducted the research at KU, says “Economic development is a numbers game. The more that an economic environment motivates entrepreneurs to try new business ideas, the more likely a gazelle will be born.” Dr. Hall cites Garmin Industries as an example of what he calls a “gazelle” — a company founded by two people in Lenexa, Kansas in 1989 that is now a multi-billion dollar company.

Hall’s views are similar to those of Carl Schramm, former CEO of the Ewing Marion Kauffman Foundation, a leading entrepreneurial think tank in Kansas City. In 2010, Schramm told Forbes Magazine “The single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars in revenue within 20 years.”[3]

The initial economic signs are encouraging but the true economic impact of tax reform won’t be known for several years. Snap judgments based on partial one-year data are the hallmark of politicians and special interest groups looking for justification to support their beliefs — whether in support of or opposition to tax reform.

[1] Bureau of Labor Statistics, average annual private sector employment not seasonally adjusted.

[2] The Kansas City, Kansas metro is comprised of Franklin, Johnson, Leavenworth, Linn, Miami and Wyandotte counties.  The Kansas City, Missouri metro is comprised of Bates, Caldwell, Cass, Clay, Clinton, Jackson, Lafayette, Platte and Ray counties.

[3] “What Grows an Economy,” Forbes Magazine.

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WichitaLiberty.TV: Examining surveys about the future of Wichita

In this episode of WichitaLiberty.TV: What do Wichitans want for their city’s future? Surveys from the City of Wichita and Kansas Policy Institute are examined. Episode 42, broadcast May 11, 2014. View below, or click here to view at YouTube.

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Wichitans willing to fund basics

Wichita City Hall SignIn Wichita, voters are willing to pay a higher sales tax for fundamentals like infrastructure and water supply, and less willing for business incentives, downtown development, and convention centers.

In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

In a series of questions asking if Wichita voters would be willing to pay a higher sales tax to provide certain services, a pattern appeared: Voters are willing to pay for things that are fundamental in nature, and less willing to pay for others.

As can be seen in the nearby chart, voters are willing to pay for infrastructure, and more willing to pay for maintenance of existing infrastructure than for new infrastructure. Voters are most willing to pay for securing a long-term water source.

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For business incentives, downtown development, and convention centers, Wichita voters express less willingness to pay higher sales tax to fund these items.

For the first three items, the average was 68 percent of voters willing to pay a higher sales tax. For the last three, the average is 30 percent.

Following is the complete text of the questions:

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund incentives to businesses expanding in Wichita or moving here from other states?

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund maintenance work on existing infrastructure, such as sewers and roads?

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund new infrastructure, such as new highways and passenger rail connections?

Would you personally be willing to pay a higher sales tax in the city of Wichita to continue developing downtown Wichita with apartments, businesses, and entertainment destinations?

Would you personally be willing to pay a higher sales tax in the city of Wichita to expand or renovate convention spaces, such as the Hyatt Hotel and Century II?

Would you personally be willing to pay a higher sales tax in the city of Wichita to secure a long-term water source?

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Few Wichitans support taxation for economic development subsidies

line-chart-01In Wichita, about one-third of voters polled support local governments using taxpayer money to provide subsidies to certain businesses for economic development.

In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

The second question the survey asked was “In general, do you agree? Or disagree? With the idea of local governments using taxpayer money to provide subsidies to certain businesses for economic development?” Following are the results for everyone, and then divided by political party and political ideology.

Overall, 55 percent disagreed with using taxpayer money to provide subsidies to certain businesses for economic development. 34 percent agreed.

The results are fairly consistent across political party and ideology, although Republicans are somewhat more likely to agree with using taxpayer funds for economic development incentives, as are those who self-identify as political moderates.

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In Wichita, opinion of city spending consistent across party and ideology

Wichita City HallIn April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

The first question the survey asked was “In the past few years, have Wichita city officials used taxpayer money efficiently? Or inefficiently?” Following are the results for everyone, and then divided by political party and political ideology.

Overall, 58 percent believe city spending was inefficient, compared to 28 percent believing spending was efficient.

The results are surprisingly consistent. An exception is that political independents strongly believed that city spending was inefficient. Those identifying as liberal were more likely to say that city spending was inefficient.

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Wichita City Budget Cover, 1968

Poll: Wichitans don’t want sales tax increase

kansas-policy-institute-logoFollowing is a press release from Kansas Policy Institute.

Scientific Poll: Wichitans Don’t Want Sales Tax Increase

They’re opposed to business incentives, want to pursue privatization over tax increases, and have concerns about how city hall has recently spent money.

May 2, 2014 — Wichita — According to a newly released poll from Kansas Policy Institute, Wichitans may want more jobs and a secure water source but they certainly don’t support a sales tax increase as the means to get either. A scientific survey of 502 registered Wichita voters, conducted by SurveyUSA, shows strong opposition to a sales tax increase, as well as a possible explanation for their opposition. Full results, cross tabs, and methodology are available here.

  • 63 percent oppose a sales tax increase to provide incentives to businesses; only 28 percent support the idea
  • 64 percent oppose a sales tax increase to expand or renovate convention spaces such as the Hyatt Hotel and Century II; only 28 percent support the idea
  • 78 percent would be willing to pay a higher sales tax to secure a long-term water source and build new infrastructure but 65 percent believe the City should fund those projects through privatization rather than raise taxes.

“Government typically claims that citizen support for certain projects means they are also supportive of higher taxes, but that’s often because citizens are presented with false choices,” said Dave Trabert, president of Kansas Policy Institute. “That’s exactly what the City of Wichita did with their ACT ICT community meetings. Wichita officials were simply looking for justification to do what they wanted to do — raise taxes.”

Trabert believes the survey provides insight on citizens’ opposition to tax increases. “Only 28 percent of Wichitans believe city officials have efficiently used taxpayer money. 78 percent believe the City should adjust spending and be more efficient to fund new infrastructure and secure a long-term water source. City officials would understand that if they had an honest dialogue with citizens about all of the options, instead of just pushing a tax increase.”

Kansas Policy Institute is planning a series of public forums over the coming months to examine multiple options for long-term water solutions, economic development and infrastructure. National experts on privatization and other options will be brought in, as well as government officials who have successfully used privatization to provide services. The effectiveness of taxpayer subsidies will also be explored. Local elected officials and other civic leaders will be invited to participate.

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WichitaLiberty.TV: Newspaper editorial writers on how democracy works, Kansas school test scores.

In this episode of WichitaLiberty.TV: An editorial in a Kansas newspaper exposes a dangerously uninformed and simplistic view of politics and democracy. Then, will Kansas school leaders and newspapers tell us the hidden truths about Kansas school test scores? Episode 41, broadcast May 4, 2014. View below, or click here to view at YouTube.

CBPP on Kansas schools and taxes, part 2

From Kansas Policy Institute.

Debunking CBPP on tax reform and school funding — Part 2

By Dave Trabert

We continue our debunking of the Center on Budget and Policy Priorities (CBPP) latest report entitled “Lessons for Other States from Kansas’ Massive Tax Cuts.” Part 1 dealt with state revenues. Today we debunk their claims on school funding and other state services.

CBPP claim #2 — School funding is 17 percent below pre-recession levels and funding for other services is way down and declining.

This is simply an outright fabrication — and not the first time that CBPP has done so. CBPP shows a graph of how they calculate what they claim is a reduction in school funding but, true to form, they provide no supporting data. The only source provided says “CBPP analysis of state budget documents and Kansas Governor’s Budget Reports.” CBPP routinely plays this game and they have refused to give us their data every time we requested it. I’ll get to school funding shortly but let’s start debunking this claim with a total spending review.

Here are the facts from the Governor’s Budget Reports cited by CBPP.[1] General Fund spending would decline a mere 1.8 percent this year (FY 2014) but it is still 6.3% higher than just three years ago. Next year, Kansas will set a new record for General Fund spending without even counting the education money that was just added to next year’s budget. Fiscal year 2013 was the highest level of General Fund spending on record.

The next table breaks total spending down into the primary functions listed in the Governor’s Budget Reports.

Of course, Kansas should have reduced spending last year and this year rather than spend down reserves but the fact remains that spending is not “way down and declining” as claimed by CBPP.

Their bogus claim on school funding may be grounded in an earlier collection of falsehoods published last year — and thoroughly debunked on this blog. CBPP often makes unsubstantiated claims which they attribute to their “analysis of data” but the data is not made available for review — even when requested.

The first thing to understand is that CBPP deliberately misleads readers by only talking about state funding of schools while ignoring the fact that Kansas, like many states, has a foundational funding formula that provides multiple funding sources, including local money that does not flow through the state budget.

But that is just the beginning of the deception. Their statement that “Kansas is still cutting school funding” on page four of their report is an outright lie.

This data provided by the Kansas Department of Education shows that State funding of public education has increased for four consecutive years.[2]  As CBPP is fully aware, one cannot get the full picture of school funding in state budget documents; the money reported as Local funding is provided on state authority but doesn’t run through the state budget.[3] Property taxes (including the 20 mills mandated by the Legislature) are sent directly to school districts by county treasurers.[4] Even the Kansas Supreme Court acknowledged (three weeks before CBPP’s report) that “… funds from all available resources, including grants and federal assistance, should be considered” when evaluating school funding.[5]

The following inflation comparisons are based on total school funding from the adjacent chart and shown on a per-pupil basis to also account for enrollment changes. The first comparison shows that actual school funding continues to run well ahead of inflation. Per-pupil funding increased from $6,985 per-pupil in 1998 to $12,781 in 2013; 1998 funding adjusted for inflation would be only $9,768. (Funding for the Kansas Public Employees Retirement System was not included in KSDE calculations of school funding until 2005; they provided the data for prior years and we adjusted spending accordingly.)


CBPP claims that school funding has not kept up with inflation since 2008 but that is misleading at best. Again, they provided no data to support their claim but we’ll lay it all out here.

Note that every chart shown above references “spending” instead of “funding.” KSDE arrives at their Local number each by subtracting State and Federal aid from districts’ reports of total expenditures. Total expenditures is different from total funding because districts report on a cash-basis fund accounting method and those figures do not reflect any aid received that was not spent. That information can be obtained by comparing the change in ending unencumbered cash balances of districts’ operating funds (excluding capital and debt).[6]

The above table shows that total inflation-adjusted spending between 2008 and 2013 was $85.3 million greater than actual spending, but districts could have spent $345.9 million more if they had used all of the aid provided during those years.

It should also be noted that school spending is not based on what schools need to meet required outcomes while also making efficient use of taxpayer money. To this day, not a single superintendent, legislator, KSDE employee, policy analyst or judge can identify that amount because no such analysis has been performed in Kansas. The cost study upon which previous court rulings were made was found to be deliberately skewed so as to provide the courts with inflated numbers.[7] The Kansas Supreme Court also recently abandoned the “actual cost” method of determining adequate funding in Gannon and substituted new standards (Rose), against which no cost or funding measurement has been conducted.[8]

In conclusion, CBPP’s claims about school funding in particular and state funding of services in general are merely a collection of false, misleading and inconsequential statements.

Kansas does need to reduce spending a bit in the coming years in preparation for the next tranche of tax reduction but there is ample ability to do so without reducing current services. There are tax transfers out of the General Fund that should be reconsidered and there are also multiple opportunities to significantly reduce the cost of providing current services.

The opportunities are there, and we’ll cover them separately in the coming months. The only question is whether Governor Brownback and a majority of legislators will stand up to the bureaucracy and special interests.
Stay tuned for Part 3.


[1] Kansas Division of the Budget, Governor’s Budget Report for FY 2015 published January, 2014, page 22 at http://budget.ks.gov/publications/FY2015/FY2015_GBR_Vol1–UPDATED–01-28-2014.pdf
[2] Kansas Department of Education; school years 2003-04 through 2012-13 located at http://www.ksde.org/Portals/0/School%20Finance/data_warehouse/total_expenditures/d0Stateexp.pdf. All other years provided by KSDE via email; copies in author’s possession.
[3] CBPP published a response to my September 13, 2013 blog post that provided this explanation. http://www.offthechartsblog.org/the-price-of-kansas-costly-tax-cuts/
[4] Explanation of property tax distribution with a quote from Dale Dennis at http://www.kansaspolicy.org/KPIBlog/Default.aspx?min=2013-01-01&max=2014-01-01.
[5] Gannon v. State of Kansas, page 77 at http://www.kscourts.org/Cases-and-Opinions/opinions/SupCt/2014/20140307/109335.pdf
[6] See KSDE explanation at the link for Endnote #2.
[7] Caleb Stegall, “Analysis of Montoy v. State of Kansas” published by Kansas Policy Institute in 2009 at http://www.kansaspolicy.org/ResearchCenters/Education/Studies/d65168.aspx?type=view
[8] Ibid, pages 76 and 77.

CBPP misleading Kansans on revenue

From Kansas Policy Institute.

Debunking CBPP on tax reform and school funding (Part 1)

By Dave Trabert

If Ronald Reagan were alive and saw the latest piece from the Center on Budget and Policy Priorities (CBPP), he would say, “Well, there they go again … not letting the facts get in the way of the story they want you to believe.”

The premise of their March 27 piece is that “Kansas’ huge cuts have left … schools and other public services stuck in the recession, and declining further — a serious threat to the state’s long-term economic vitality.” That’s not true, of course, but it’s what the way-left-leaning CBPP wants you to believe … and what the big-government interests in Kansas are only too happy to repeat.

CBPP and their allies seem to believe that government needs an unlimited supply of taxpayer money and could not possibly operate with a penny less. It’s a classic entitlement mentality and the premise is laughably false.

The volume of falsehoods and misleading statements in “Lessons for other States from Kansas’ Massive Tax Cuts” is so great that we will address each of their five “lessons” in separate blog posts this week. Today’s post will focus on their claim about state revenues.

This isn’t the first time we’ve debunked CBPP tales about Kansas and sadly, probably won’t be the last.

CBPP claim #1 — Kansas’ revenue loss will rise to 16 percent in five years if the tax cuts are not reversed.

As is typical for CBPP, they don’t explain how they arrive at their 16 percent figure but it probably has something to do with their entitlement focus (what government could/should have rather that what it needs). Regardless, the facts from Kansas Legislative Research (KLRD) show otherwise.

KLRD estimates that General Fund revenue will be 9.6 percent higher in five years.1 FY 2014 is the first full year of income tax reform; revenue is 7.1 percent lower this year than the record-setting level of 2012 but it is actually 1.3 percent higher than three years ago! Even more remarkable, a new revenue record is predicted to be set in FY 2018 — just four years after historic tax reform was fully implemented.

I dare you to find one media outlet in Kansas reporting these remarkable facts. To the contrary, most media and their big-government allies cling to versions of CBPP’s “sky is falling” mentality.

CBPP is flat out lying when they say Legislative Research “… estimates that Kansas received $803 million less revenue this year because of the 2012 tax cuts…” It should be noted here that CBPP provides no citation for their outrageously false claim. Here’s the truth. KLRD did predict that much of a loss in personal income tax revenue (not total revenue as claimed by CBPP) two years ago when tax reform was being discussed but they did so on a static basis using the parameters of a particular proposal. Changes to that proposal have since been implemented and consensus revenue estimates have dramatically improved. CBPP wants you to believe that an outdated, static estimate is current despite having access to information that contradicts their claim.

The November 2013 Consensus Revenue estimate for FY 2014 was $5.857 billion or just $484 million below last year’s total revenue.2 Tax revenue (which comprises the vast majority of General Fund revenue) was predicted to be down $466 million and Other Revenue was projected to be $18 million lower.

But tax revenue has been running well ahead of November projections so official revenue estimates were increased in April (after the CBPP publication) by $103.3 million for FY 2014 and $74.3 million for FY 2015.3 Later years were not adjusted upward but that’s just a function of the Consensus Revenue process; we will hopefully an even brighter revenue forecast soon from Legislative Research.

Whenever you see CBPP’s false claims repeated by media, legislators or others who are opposed to tax reform, ask them why they are spreading false claims in light of these facts from Kansas Legislative Research:

  • FY 2014 revenue will be 1.3 percent greater than just three years ago.
  • Revenues will hit an all-time high in FY 2018, just four years after full implementation of tax reform (and maybe sooner, if revenues continue to run ahead of projection).

Tomorrow’s post will deal with their fairy tales about education and other state spending.


1. Kansas Legislative Research, General Fund Profile published by KLRD on April 6, copy in author’s possession. Actual revenue for FY 2011 and FY 2012 and estimated revenue for FY 2016 through FY 2019; FY 2014 and FY 2015 revised per April Consensus Revenue at http://skyways.lib.ks.us/ksleg/KLRD/Publications/2014_CRE_ShortMemo-4-17-14.pdf.
2. Kansas Legislative Research,  http://skyways.lib.ks.us/ksleg/KLRD/Publications/2013_CRE_ShortMemo-11-6-13.pdf
3. Kansas Legislative Research,  http://skyways.lib.ks.us/ksleg/KLRD/Publications/2013_CRE_ShortMemo-11-6-13.pdf

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Kansas news media should report, not spin

kansas-policy-institute-logoA Hutchinson News editorial contained an uninformed opinion of which special interest groups are working for the best interests of Kansans. Following, Dave Trabert of Kansas Policy Institute explains that influence may be shifting from media, unions, the education establishment, cities, counties, and school boards to those with different views — those of limited government and economic freedom that empower citizens, not an expansive government and its beneficiaries. The editorial referred to is Goodbye Democracy, Hello Wealthocracy.

Media spin a threat

By Dave Trabert

Kansans are bombarded with claims that range from innocently incomplete to quite deliberately false. Increasingly, the media perpetrates this bad information. That behavior limits civil discourse and is a serious threat to personal freedom and our democratic republic.

Media should use its powerful voice to provide unbiased information. Instead, we see a growing trend in Kansas media to distort the truth, ignore facts and attack those who disagree with their view of the world. A recent Hutchinson News editorial is an example of this petulant behavior.

The basic premise of “Goodbye Democracy, Hello Wealthocracy” is that elected officials are chosen and kept in line by special interest groups. The author allows that moneyed interests work both sides of the aisle in Washington and in other states but incredibly asserts that this is not the case in Kansas. He says, “Here, the GOP rules, and the split is between those who labor for their constituents and those who pledge allegiance to their sponsors.”

Even casual political observers know that to be laughably false. Republicans have a paper majority, but even cub reporters know it is meaningless. KPI’s Economic Freedom Index has consistently found Republicans at the top and bottom of rankings based on their votes for economic and educational freedom.

The dividing line is not party affiliations or labels like liberal, moderate or conservative. Rather, it’s a philosophical belief in the role of government and collectivism versus the personal liberty of individuals.

There is no such thing as a “wealthocracy,” but special interest groups do influence politics. Claiming this to be the exclusive province of Kansans with a limited government perspective, however, is a conscious lie.

The behaviors attributed to the Kansas Chamber of Commerce and Americans for Prosperity (recruiting and financially supporting friendly candidates for public office and encouraging elected officials to see things their way) are equally attributable to public employee unions, school board associations and others with big-government views. “Laboring for constituents” is a Hutchinson News euphemism for upholding the self-serving ideals of KNEA, KASB, state employee unions and other institutional interests.

There is nothing wrong, according to the U.S. Supreme Court, about special interests attempting to influence government. The difference — and perhaps the real objection of The Hutchinson News — is that their “side” is losing its long-standing monopoly over information and, with it, heavy influence over government and citizens.

The Kansas Policy Institute is perhaps the leading provider in Kansas of factual information on school funding and student achievement. Our information often differs from that published by media, unions and the education establishment, but they are facts nonetheless.

The editorial said, “… few lobbyists dominate like the Kansas Chamber of Commerce, Americans for Prosperity and the Kansas Policy Institute.” We’re flattered to be considered a dominant force, but the editorial conveniently didn’t mention other dominant players, including cities, counties, school boards and unions. The objection is not to our dominance; it’s that we don’t share the big-government/collectivist perspective of The Hutchinson News.

We call that hypocrisy.

Seal of the State of Kansas

Two versions of the Kansas income tax cuts

From Kansas Policy Institute.

Two Versions of the Income Tax Cuts: The Media’s Story and Reality

By Steve Anderson

In January 2011, when I was first appointed State Budget Director, the state was on the verge of what appeared to be a financial meltdown. Under the previous administration, the first negative ending balance in state history had been allowed exist. Kansas was $27.6 million “in the hole” and this headline was on the front page of the Wichita Eagle “Shortfall for ’11 State Budget Tops $500 million.” Much of the first six months was spent trying to not bounce checks and finding areas to cut spending immediately. We also spent considerable time giving agencies more flexibility to spend down unencumbered funds as agencies had previously been allowed to overspend available funding, a typical policy of Gov. Mark Parkinson and his Budget Director Duane Goosen. However, even as I was using the power the Budget Director holds to operationally limit spending I realized the media’s claim of a $500 million shortfall was an exaggeration.

At the end of the first six months Kansas had $188 million in the bank and within eighteen months the state ended fiscal year 2012 with a $502.9 Million ending balance. This would have been lost to citizens who weren’t doing their own research. They never would have known that the “budget” crisis had passed because the media had moved onto their next “crisis” without revisiting the initial headlines and, in the process, calling into question their first reports.

The media’s next “crisis” was centered on the individual income tax cuts that were passed in 2012. The bill to reduce the tax burden on citizens “would slash income taxes and is expected to produce a $2 billion deficit within five years” according to theWichita Eagle’s articleThe Kansas City Star led with this quote of “state fiscal analysts projecting budget deficits reaching $2.5 billion in 2018.” Just to further emphasize the dire situation the Star added this scare from a representative of a special interest group with no known expertise on the economic impact of lower tax burdens by saying that the tax cuts, “have an enormous impact on everything from public education to public health coverage to infrastructure to other vital social safety-net services.”

Who are these “state fiscal analysts” that the media used to fan the flames and how did this version of a looming fiscal crisis occur? The state fiscal analysts are staff of the Kansas Legislative Research Division (KLRD) which presents their projection of the impact on the state’s finances of any change in tax regulations. Here are the numbers from KLRD’s analysis of Senate Bill Substitute for House Bill 2117 — the tax cut bill — and the impact on the state’s budget:***

The approach used by KLRD to generate these numbers is not consistent with the realities of state finances. There are three fundamental problems with KLRD’s analytic techniques which create these illusions of fiscal crises where none exists.

  1. It is impossible for the state to have a negative ending balance of this size because the state cannot print money (unlike Washington) which precludes the ability to carry such huge imbalances forward year after year.
  2. The projection of spending growth the KLRD staff uses ignores the reality of the first issue. Spending cannot continue at a rate that exceeds revenue once the first negative balance occurs. KLRD’s analysis ignores options to control spending that are available to the state’s elected officials and instead shows increasing negative balances. In reality shortfalls and surpluses are dealt with each year through a multitude of available options.
  3. KLRD uses a static view of what will happen to revenues when money is returned to the state’s citizens. For example, the assumption is that if a tax cut is $500 million there will be $500 million less in revenues that come into the state coffers the next year. To believe that one of two things would have to happen, 1) either the money would be buried in a jar in the back yard, or 2) every dollar would have to be spent out of state. In reality, that $500 million in tax cuts means that business owners will reinvest some part of that money and wage earners will spend some of it in the local economy.

A more realistic view of Senate Bill Substitute for House Bill 2117 puts things in perspective. The following chart shows what has transpired, to date, based on the effects of the tax cuts. It is very good example of why citizens should take media accounts based on KLRD’s numbers with a full shaker of salt.

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The net difference between KRLD’s ending balance and what the current actual receipts show is $913.4 million. The crisis of the “enormous impact on everything from public education to public health coverage to infrastructure to other vital social safety-net services” that the Kansas City Star’s “expert” on the tax cuts predicted hasn’t occurred. But, we have not yet heard the Eagle or the Star report these facts.

Kansans simply haven’t heard that, after returning $231.2 million to taxpayers in FY-2013 and ANOTHER $802.8 million in fiscal year 2014, ending balances were actually up nearly a billion dollars over the estimates! Estimates that directly led to some dire headlines upon their initial release. Returning nearly a billion dollars to Kansans’ pocket books while ending balances have been steady or increasing is an incredible story of success that media would want to share with readers.

Citizens of Kansas have a right to hear forecasts of disasters but they also deserve to be told by those same media outlets that those forecasts didn’t match what actually took place and that things are going well. Citizen should insist that their legislators request that KLRD begin a policy of only producing projections for a reasonable number of future years based on the realities of the Kansas Constitution. This would limit the use of statistically flawed data being used to fuel for the fire of those who are playing politics under the guise of “news reporting.”

I will follow up shortly with part two of this story on where the state’s finances are headed including commentary and possible adjustments to April 2014 Consensus Revenue Estimates.

*** Kansas Legislative Research Division Senate Tax Plan with Adjusted Severance Tax Receipts 2/15/2012 — full version on file. Expenditures and Revenues Totaled in order to fit the page

Kansas school finance reporting and opinion

school-crayons-colored-pencils-168392There’s a range of opinion, that’s for sure.

Republicans concede bill would let teachers be fired without cause (Wichita Eagle)
“Statehouse Republicans are having to abandon a key talking point in their effort to defuse teacher anger over an anti-tenure bill the Legislature passed a week ago, conceding the bill would allow school districts to fire veteran teachers without having to give a reason why. If Gov. Sam Brownback signs the bill into law, teachers would essentially be at-will employees of their school districts and able to challenge termination only if they allege the firing violates their constitutional rights.” Click here to read.

Kansas bill renews debate about how easy it should be to fire teachers (Kansas City Star)
There is a diversity of opinion, much conflicting, it seems: “It’s not too damn hard to fire a teacher,” said Marcus Baltzell, the director of communications for the Kansas National Education Association. “It’s just that the teacher has a redress of due process, a hearing officer, (a chance to say) ‘Here’s my take. Here’s what we’ve done to address the area of concern, and I believe this is unfair.'” … “Lawmakers who backed the change — it becomes law if Gov. Sam Brownback signs it — argued that dumping dead weight from the faculty has become harder than it ought to be.” … “I don’t like tenure. I never have,” said Rep. Ward Cassidy, a Republican from northwest Kansas who worked as a high school principal for 20 years. “Good principals have a whole lot of other things to do besides going through all you need to fire a teacher.” Click here to read.

In Wichita, Brownback neither praises nor criticizes measure stripping K-12 teacher tenure rights (Wichita Eagle)
“… most questions he was asked after his short talk concerned a provision to strip veteran K-12 teachers of tenure rights in the recently passed public school financing bill, which he said he has not decided whether to sign. And while he didn’t criticize that provision, he didn’t endorse it either.” Click here to read.

In Kansas, education is all about money and politics for UMEEA (Kansas Policy Institute)
“Media reaction to the school finance legislation has been pretty predictable. It focuses almost exclusively on institutions and ignores the impact on students. As usual, it’s all about money and politics. Unions, media and their allies in the education establishment (UMEEA) oppose tax credit scholarships for low income students. They rail against taxpayer money going to private schools and how that might mean a little less money for public institutions but ignore the very real purpose and need for the program. (FYI, the scholarship program is capped at $10 million; schools are expected to spend almost $6 billion this year.) Achievement gaps for low income students are large and getting worse, despite the fact that At Risk funding intended to improve outcomes increased seven-fold over the last eight years. So predictably, a program to give an alternative to low income students in the 99 lowest-performing schools is attacked by UMEEA as being unfair to institutions. Media and their establishment friends don’t even make a token mention of the serious achievement problem. It’s all about money and politics.” Click here to read.

Far-Right Kansas Legislature Sells Out Kansas Schools (Kansas Democratic Party)
“But none of these stories could compete with what the Kansas Legislature did to Kansas public schools. Under the cover of night and with virtually no debate or hearings, the Kansas Legislature forced through an education “reform” bill that stripped teachers of due process rights, passed out even more tax breaks to corporations, and potentially widened the disparity between rich schools and poor schools. School districts say new school finance bill will widen disparities.” Click here to read.

Opinion: Public education under attack (Lawrence Journal-World)
“The inclusion of these so-called “policy” provisions in the school finance bill passed by the Legislature are a mistake and will actually harm the very schools that the Kansas Supreme Court sought to assist. This is just one more step in the Legislature’s assault on public K-12 education in Kansas.” Click here to read.

Teachers are sacrificial lambs in school finance (Iola Register via High Plains Daily Leader and Southwest Daily Times)
A confused editorial. The writer says that teachers are held accountable to, among others, school administrators, but usually it is claimed that teachers need defense from this accountability. “The defense of tenure is at its best when you consider a teacher is accountable to hundreds of ‘bosses’ — parents and school boards as well as administrators.” Click here to read.

Selling education (Hutchinson News)
“Two elements of the bill are particularly troubling. One creates a $10 million-a-year corporate welfare program in support of private education. It allows large companies to enjoy a 70-percent credit against their state tax liability if they offer scholarships to at-risk students who move to private schools. This has nothing at all to do with public education equity; rather it creates a mechanism to damage the finance structure for public schools. The second concerning component redefines “teacher” as a way to eliminate due process protections. And the concept of teacher tenure is a myth. The current due process for teachers simply ensures a written termination notice and the right to challenge the decision through review by a hearing officer. In fact the Kansas Association of School Boards reported that the state sees about 10 due process claims each year – hardly a number that indicates a systemic problem that requires legislative action. The measure is little more than a way to break the teachers’ union and silence those teachers who honestly educate and advocate for their students.” Click here to read.

Richard Crowson: We Need Some Education (KMUW)
“And that guy who was smiling and joking with me in the checkout line at the grocery last Saturday? He lit a firebomb, taped a tax credit for private school supporters on it, and flung it through the window of a first grade classroom in the wee hours of Sunday morning.” Click here to read.

Rep. Rooker ‘heartsick’ over results of education finance bill (Prairie Village Post)
Small steps towards Kansas education reform are “immoral” and make this representative “heartsick.” Click here to read.

Shame, says Wichita Eagle editorial board (Voice for Liberty)
The Wichita Eagle editorial board, under the byline of Rhonda Holman, issued a stern rebuke to the Kansas Legislature for its passage of HB 2506 over the weekend. Click here to read.

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WichitaLiberty.TV: Schools and the nature of competition and cooperation, Wind power and taxes

In this episode of WichitaLiberty.TV: A Kansas newspaper editorial is terribly confused about schools and the nature of competition in markets. Then, we already knew that the wind power industry in Kansas enjoys tax credits and mandates. Now we learn that the industry largely escapes paying property taxes. Episode 38, broadcast April 6, 2014. View below, or click here to view at YouTube.

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In Kansas, education is all about money and politics for UMEEA

From Kansas Policy Institute.

Education is all about money and politics for UMEEA

By Dave Trabert

Media reaction to the school finance legislation has been pretty predictable. It focuses almost exclusively on institutions and ignores the impact on students. As usual, it’s all about money and politics.

Unions, media and their allies in the education establishment (UMEEA) oppose tax credit scholarships for low income students. They rail against taxpayer money going to private schools and how that might mean a little less money for public institutions but ignore the very real purpose and need for the program. (FYI, the scholarship program is capped at $10 million; schools are expected to spend almost $6 billion this year.)

Achievement gaps for low income students are large and getting worse, despite the fact that At Risk funding intended to improve outcomes increased seven-fold over the last eight years. So predictably, a program to give an alternative to low income students in the 99 lowest-performing schools is attacked by UMEEA as being unfair to institutions. Media and their establishment friends don’t even make a token mention of the serious achievement problem. It’s all about money and politics.

An ugly, inconvenient truth about low income achievement gaps emerges when the data is honestly examined. We compiled and published the information in our2014 Public Education Fact Book, available on our web site. For example, only 45 percent of 4th grade low income students can read grade-appropriate material with full comprehension on the state assessment, versus 74 percent of those who are not low income. State assessment data also shows that 57 percent of low income students in private accredited Kansas schools can read grade-appropriate material with full comprehension. Tax credit scholarships offer a lifeline to low income students who want to try something else.

And before the attacks on the validity of the data begin, know that Education Commissioner Diane DeBacker and I participated in a discussion on the topic before the House and Senate Education committees recently; she could have objected or corrected me when I presented this KSDE achievement data. She did not. Instead, she said low income achievement gaps are large and getting worse. Even the education establishment agrees that having effective teachers in classrooms is probably the most important element of improving outcomes, but of course money and politics take priority over students, so UMEEA attacks efforts to make it easier and faster to remove ineffective teachers. After all, the adults in the system are a higher priority than students.

And don’t forget to throw in some clichés … efforts to help students are “ideological” but prioritizing institutional demands is “progressive” and “pragmatic.” UMEEA likes to pretend that “just spend more” and promoting institutional demands are not ideological positions.

Media is also spreading institutional notions that increasing the Local Option Budget (LOB) ceiling from 31 percent to 33 percent will create inequities among school districts, even though legislators just agreed to fully equalize the LOB. If school districts really believed that higher ceilings create inequity, they would be calling for the ceiling to be reduced. One must wonder if the real issue is that districts don’t want to, or can’t, justify the need for higher property taxes to local voters.

UMEEA will continue to attack legislators for combining policy reforms with the commitment to increase spending for equalization, but the simple reality is that that may have been the only real chance to get these student-focused initiatives passed. In that regard, spending more money finally made a difference for students.

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Kansas not good on spending visibility

For more about this issue, see Open Records in Kansas.

The results are in, and the news isn’t good: Kansas continues to plummet in state spending transparency rankings, and it barely squeaked by with a grade of D-minus, according to a report by the U.S. Public Interest Research Group.

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Kansas Policy Institute at work

Kansas CapitolA letter in the Wichita Eagle accused Kansas Policy Institute of the “destruction of K-12 education.” Following is part of the comment KPI president Dave Trabert wrote in response to the letter. It’s a good recap of what KPI has done the past few years. I’m left to wonder how anyone who cares about Kansas schoolchildren could be opposed to the work KPI has done.

We are showing citizens and legislators the facts about student achievement. Contrary to claims of nation-leading achievement, Kansas students scores on the National Assessment of Educational Progress and ACT are just about average. Overall averages are distorted by demographic differences but scores for each student cohort (White, Low Income, etc.) are actually about average across the nation.

We are showing citizens and legislators that the achievement gaps for low income students in Kansas are large and growing. Even [Kansas Education Commissioner] Diane DeBacker had to agree with that statement in front of the House and Senate Education Committees.

We proved that Kansas State Department of Education and the State Board of Education reduced performance standards to some of the lowest in the nation (according to the US Dept. of Ed.).

We are giving people the truth about school spending and showing that very large spending increases did very little to improve achievement.

We are showing people that school spending continues to set records, even though districts are not even spending all of the money they are given to run schools.

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In Kansas, base state aid is only a small part of spending

chalkboard-portion-800Considering only base state aid per pupil leads to an incomplete understanding of school spending in Kansas. The Gannon school finance decision reinforces this.

Much 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.

Ratios of school spending to base state aid.
Ratios of school spending to base state aid.
Base state aid per pupil has fallen in recent years. Because of this, public school spending advocates claim that spending has been cut. But that’s not the case. As shown in the nearby chart, there has been a steady increase in measures of school spending when compared to base state aid.

Considering Kansas state spending only, the ratio of state spending to base state aid was 1.10 in 1998. By 2013 that ratio had risen to 1.82, an increase of 65 percent for the ratio.

For total spending, the ratio rose from 1.86 to 3.33 over the same period, an increase of 79 percent.

What’s important to realize is that the nature of Kansas school funding has changed in a way that makes base state aid per pupil less important as a measure of school spending. Research from Kansas Policy Institute has shown that while base state aid per pupil has not grown, total state spending on schools has grown. Two reasons are rising spending on KPERS pension contributions and aid to schools for bond construction projects. The largest factor is rapid growth in the spending produced by the school finance formula’s various weightings.

A chart is available from KPI at Simple Comparisons of Base State Aid are Deceptive.

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Rural Kansans’ billion-dollar subsidy of wind farms

From Kansas Policy Institute.

Rural Kansans’ Billion-Dollar Subsidy of Wind Farms

By Dave Trabert

Kansas wind turbinesNo, I’m not talking about any federal tax subsidies or mandates to buy high-cost wind energy that have forced higher taxes and electricity prices on every citizen. This billion-dollar gift comes in the form of local property tax exemptions. In some ways, this handout is even more insidious because the cost is borne by a relatively small number of Kansas homeowners and employers in the rural counties where wind farms exist.

Under current law, renewable energy producers enjoy a lifetime exemption from property taxes in Kansas. I testified last week in support of SB 435 to limit their property tax exemption to ten years.  As shown on an attachment to my testimony, the Kansas Legislative Research Department says there is a $108.4 million annual difference between the small fees paid in lieu of taxes and the taxes that would be due if taxed at the regular rates within each county. So technically, the legislation would only “limit” the property tax gift to $1.1 billion over ten years on existing wind farms; more tax gifts would still be done on new wind farms and other renewable energy facilities.

And while renewable energy producers were basically getting a free ride, property taxes on everyone else where going through the roof!

Giving property tax exemptions to private companies, regardless of the rationale, only increases everyone else’s property tax. Local government spending is not curtailed to absorb the exemption; cities and counties just raise taxes on everyone else. We encouraged the Legislature to also require that local mill rates be reduced proportionately if these property tax gifts are limited to ten years so that the new revenue from renewable energy producers’ property tax is used to reduce the burden on everyone else. (You should have seen the stink-eye this produced from the tax-and-spend crowd.)

Predictably, wind farm lobbyists lined up to protest that this legislation would increase their property taxes and send a bad message to the wind industry. Even local governments are opposed to taking away the exemption — after all, they can get their money from everyone else and take credit for bringing jobs and investment to their communities. They refuse to acknowledge that any economic benefit enjoyed by the green energy industry (and their own political benefit) comes out of the pockets of everyone else.

P.S. Remember this billion-dollar gift the next time you’re angered by cronyism in Washington, DC. Bad players in Washington often learn their craft at the state level; fending off bad policy at the state level has many long term benefits.

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In Kansas, the Blob is worked up

apple-chalkboard-books“Education reformers have a name for the resistance: the education ‘Blob.’ The Blob includes the teachers unions, but also janitors and principals unions, school boards, PTA bureaucrats, local politicians and so on.” (John Stossel, The Blob That Ate Children.)

In Kansas, we’re seeing the Blob at full activation, vigorously protecting its interests. The source of the Blob’s consternation is a bill in the Kansas Legislature that would add charter schools and tax credit scholarships to the educational landscape in Kansas. (Kansas does have charter schools at present, but the law is so stacked in favor of the Blob’s interests that there are very few charter schools.)

An example of a prominent spokesperson for the Blob is the Wichita Eagle’s Rhonda Holman. She recently wrote regarding Kansas school funding: “In the Kansas Speaks survey released last fall by the Docking Institute of Public Affairs at Fort Hays State University, two-thirds said they wanted to see more K-12 state funding.”

I don’t doubt that these results are accurate. The desire for good schools is nearly universal. But when we look at the beliefs of people, we find that they are, largely, uninformed and misinformed about the level of school spending. Kansas Policy Institute commissioned a survey that asked the public a series of questions on schools and spending. (See Citizens generally misinformed on Kansas school spending.) A key finding is that most people think that schools spend much less than actual spending, and by a large margin. Further, most people think spending has declined, when in fact it has risen. These finding are similar to other research commissioned by KPI, and additional surveys by other organizations at the national level.

Not surprisingly, when citizens and taxpayers learn the true level of school spending, their attitude towards school spending changes. That’s dangerous to school spending advocates — the Blob. It diminishes their most compelling arguments for more school spending — “it’s for the kids.”

The Eagle editorial board, along with the Kansas City Star, has been instrumental in misinforming Kansans about school spending. These newspapers continually use base state aid per pupil as the measure of schools spending, when in fact this is just a fraction of total spending on schools. (See Here’s why Kansans are misinformed about schools.)

The survey that Holman relies upon as evidence of the desire for more school spending didn’t ask — as far as I know — questions to see if respondents were informed on the issue. Even worse: Instead of seeking to educate readers on the facts, Holman resorts to demagoguery and demonizing, referring to “education reforms coveted by some conservatives and the American Legislative Exchange Council.” There, the two evils: Conservatives and ALEC, the substance of her argument.

Reform in Kansas

There are two reforms being talked about in Kansas that are popular in other states. Popular except with the Blob, that is.

One is a tax credit scholarship program. This lets corporations make contributions to organizations that would provide scholarships for students to attend private schools. The corporations would then receive credits against their income tax. The Blob opposes programs like this. The Blob says that these programs simply let students that are already in private or church schools have the state pay their tuition.

But the proposed law in Kansas this year, as in years past, contains these provision: For the scholarship program, students must qualify as “at-risk” students and be attending a school that qualifies as “title I,” a program that applies to schools with many students from low-income families.

Further, the student must have been enrolled in a public school before seeking a scholarship, unless the student is less than six years old.

Together these requirements rebut the argument of the Blob: That the scholarships are just a way for children already in private or church schools to get tax funds to pay for their schools. Instead, the law targets these scholarships at students from low-income households.

Another possible reform is charter schools. These are schools that are public schools and receive public funding, but operate outside the present education establishment and local school boards. The Blob objects to this because they say that without government oversight, charter schools aren’t held accountable. The Blob must forget that charter schools are accountable to parents of children, which is a higher standard than the accountability of government bureaucrats. Also, unlike the regular public schools, the government can’t force children to attend a charter school.

The Blob criticizes charter schools because they say they “cherry-pick” the best students, leaving public schools with the worst. Here’s what the proposed Kansas law says: “A public charter school shall enroll all students who wish to attend the school.” If more students apply than the school has space, students will be selected via lottery. In most areas that have charter schools, there are many more aspirants than available spaces, and students are chosen by lottery. That would undoubtedly be the case in Kansas.

The Blob says that charter schools pick only the students they want, and therefore lead to segregation. Here’s the proposed law: “A public charter school shall be subject to all federal and state laws prohibiting discrimination on the basis of disability, race, creed, color, gender, national origin, religion, ancestry or need for special education services.”

Here’s what the Blob really hates: “A public charter school shall be exempt from all laws and rules and regulations that are otherwise applicable to public schools in this state.” And also this: “Teachers in public charter schools shall be exempt from the teacher certification requirements established by the state board.”

The Blob values its rules and regulations that make work for its fleets of bureaucrats. Never mind that these regulations probably don’t increase student learning. That’s not the point.

And the political muscle of the Blob, the teachers unions? Well, charter school teachers usually aren’t unionized. The union is in favor of public schools only if the the teachers are in unions.

What the Blob won’t tell you

The Kansas Blob is proud of Kansas schools, partly because of scores on the National Assessment of Educational Progress (NAEP), known as “The Nation’s Report Card.” Kansas ranks pretty high among the states on this test. It’s important, however, to examine the results from a few different angles to make sure we understand the entire situation. An illustrative video is available here.

Visualization of National Assessment of Educational Progress scores.
Visualization of National Assessment of Educational Progress scores.
Data for the 2013 administration of the test was just released. I’ve gathered scores and made them available in a visualization that you can use at wichitaliberty.org. The most widely available NAEP data is for two subjects: reading and math, and for two grades, fourth and eighth. The video presents data for Kansas, Texas, and the average for national public schools. I choose to compare Kansas with Texas because for several reasons, Kansas has been comparing itself with Texas. So let’s look at these test scores and see if the reality matches what Kansas school leaders have said.

Looking at the data for all students, you can see why Kansas school leaders are proud: The line representing Kansas is almost always the highest.

NAEP makes data available by ethnic subtypes. If we present a chart showing black students only, something different appears. Now Texas is higher than Kansas in all cases in one, where there is a tie.

If we consider Hispanic students only: Texas is higher in some cases, and Kansas and Texas are virtually tied in two others. National public schools is higher than Kansas in some cases.

Considering white students only, Texas is higher than Kansas in three of four cases. In some cases the National public school average beats or ties Kansas.

So we have what seems to be four contradictory statements, but each is true.

  • When considering all students: Kansas scores higher than Texas.
  • Hispanic students only: Kansas is roughly equal to Texas.
  • Black students only: Kansas scores below Texas.
  • White students only: Kansas scores below Texas in most cases.

When you hear the Blob trumpet high Kansas test scores, does it also explain the nuances? No, of course not, But you can examine these test scores in an interactive visualization.

Kansas school standards

Another problem you won’t hear about from the Blob: Kansas has low standards for its schools. Even worse, at a time when Kansas was spending more on schools due to an order from the Kansas Supreme Court, the state lowered its already low standards for schools.

Kansas school standards for grade 4 reading compared to other states.
Kansas school standards for grade 4 reading compared to other states.
This is the conclusion of the National Center for Education Statistics, based on the most recent version of Mapping State Proficiency Standards Onto the NAEP Scales. NCES is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations, and is located within the U.S. Department of Education and the Institute of Education Sciences.

The mapping project establishes a relationship between the tests each state gives to assess its students and the National Assessment of Education Progress, a test that is the same in all states. As explained in Kansas school standards and other states, Kansas standards are relatively low, compared to other states. This video explains. (View below, or click here to view in HD at YouTube.)

For Kansas, here are some key findings. First, NCES asks this question: “How do Kansas’s NAEP scale equivalent scores of reading standards for proficient performance at grades 4 and 8 in 2009 compare with those estimated for 2005 and 2007?”

For Kansas, the two answers are this (emphasis added):

“Although no substantive changes in the reading assessments from 2007 to 2009 were indicated by the state, the NAEP scale equivalent of both its grade 4 and grade 8 standards decreased.

Also: “Kansas made substantive changes to its reading grade 8 assessment between 2005 and 2009, and the NAEP scale equivalent of its grade 8 standards decreased.

In other words, NCES judged that Kansas weakened its standards for reading performance.