Accountability in Kansas public schools

Critics of school choice say there is no accountability outside the traditional public schools. Here are the standards Kansas used to hold its schools accountable.

Are non-traditional public schools held properly accountable? Do charter schools and private schools escape the accountability standards states use for their traditional public schools, particularly in Kansas?

A standard argument against school choice is that charter schools and private schools are not held accountable. Underlying this argument is the assumption that parents have neither the time nor technical expertise to properly evaluate the schools their children attend. Only those with special training can do this, goes the argument.

This argument is troubling because it is often directed at parents of minority children, or parents who are from low-income households, or parents who may not be highly educated. Besides being elitist and bigoted, it doesn’t recognize the poor job that Kansas state education officials have done holding public schools accountable. Fortunately, Kansas school officials have corrected this, but it doesn’t make up for the years that Kansas purposefully used low standards to evaluate students, and told us students were doing well.

The former Kansas school standards for grade four reading, showing Kansas ranking low among the states.
The former Kansas school standards for grade four reading, showing Kansas ranking low among the states. Click for larger.
For years Kansas schools have used low standards to evaluate students. That is, Kansas was willing to say students are “proficient” at a much lower level of performance than most other states. Worse than that, during the 2005 to 2009 time period, Kansas actually weakened its standards.1 Coincidentally, this was during the time that Kansas courts ordered more spending in Kansas schools, and the legislature generally complied.

The new Kansas standards, however, are more in line with those of other states, and present a more truthful assessment of Kansas schoolchildren.

This is the finding of the EducationNext report After Common Core, States Set Rigorous Standards.2 EducationNext is a scholarly journal published by the Hoover Institution and the Harvard Program on Education Policy and Governance at the Harvard Kennedy School that is committed to careful examination of evidence relating to school reform.

The report compares the proportion of students considered “proficient” on states’ own exams with that of the National Assessment of Educational Progress (NAEP), known as “The Nation’s Report Card.” The EducationNext report explains:

Data from both the NAEP and state tests allow for periodic assessments of the rigor of each state’s proficiency standards. If the percentage of students identified as proficient in any given year is essentially the same for both the NAEP and the state exams, we can infer that the state has established as strict a proficiency standard as that of the NAEP. But if the state identifies a higher percentage of students as proficient than the NAEP, we can conclude that the state has set its proficiency bar lower than that of the NAEP.

From 2003 to 2013 the Kansas standards were weak, earning letter grades ranging from “C” to “D” in the EducationNext reports. In another similar study, the Mapping State Proficiency Standards Onto NAEP Scales series from National Center for Education Statistics, Kansas standards were also found to be low compared to other states. NCES is part of the United States Department of Education and the primary federal entity for collecting and analyzing data related to education. It has not yet examined the 2015 NAEP and state exam scores.

Now, after comparing Kansas state assessments to the 2015 NAEP exam, Kansas earns a grade of “A” from EducationNext for the strength of its standards.

This grade of “A” does not reflect the performance of Kansas schoolchildren on tests. Instead, it means that the state has raised the definition of proficient to a higher level. A presentation by Kansas State Department of Education to the Kansas State Board of Education explains the relationship of the new standards to the former:

The Kansas College and Career Ready Standards are more rigorous than the previous Kansas Standards. The Mathematics test is more demanding than even the ACT and taken a year earlier. The assessment is also more demanding than the NAEP assessment. Kansas takes seriously the current issues of college dropout and remediation rates and feels higher standards are necessary to help remedy the problem.3 4

Kansas is not alone in making a change, according to the EducationNext report:

The results are striking: The last two years have witnessed the largest jump in state standards since they were established as part of the federal accountability program. Overall, 36 states have strengthened their standards since 2013, while just 5 have loosened them, and 7 have left their standards essentially unchanged.

This is a refreshing change for Kansas. It means that after many years of evaluating students with weak standards and low expectations, Kansas now has reasonable standards.

But who do we hold accountable for the years of having low standards and further weakening them, while at the same time telling us Kansas students were performing well on tests?


Notes

  1. Weeks, Bob. Kansas has lowered its school standards. https://wichitaliberty.org/wichita-kansas-schools/kansas-has-lowered-its-school-standards/.
  2. http://educationnext.org/after-common-core-states-set-rigorous-standards/.
  3. Kansas State Department of Education. Cut Scores for the Kansas Assessment Program. Archived at https://drive.google.com/file/d/0B97azj3TSm9MdTJhRVBEeEg3NTA/view.
  4. Also, see Kansas State Department of Education, Office of the Commissioner. Kansas College and Career Academic Readiness Asessment. http://www.ksde.org/LinkClick.aspx?fileticket=KCpy0dXYuzc%3D&tabid=561&portalid=0&mid=3121.

WichitaLiberty.TV: Confirming a cabinet, Kansas spending, and Kansas finances

In this episode of WichitaLiberty.TV: Co-host Karl Peterjohn and Bob Weeks discuss technological progress, confirmation hearings, whether Kansas will trim spending or raise taxes, and Kansas fiscal nightmares. View below, or click here to view at YouTube. Episode 135, broadcast January 22, 2017.

School choice in Kansas: Some have it. Many do not.

Kansas non-profit executives work to deny low-income families the school choice opportunities that executive salaries can afford.

Kansas Association of School BoardsKansas Association of School Boards
Executives and annual salaries 1
John Heim, Executive Director $182,471
Donna Whiteman, Assistant Executive Director $120,041
Brian Jordan, Assistant Executive Director $106,568
Douglas Moeckel, Deputy Executive Director $109,425
David Shriver, Assistant Executive Director $103,845

These executives can afford to send their children to any school.

Kansas National Education AssociationKansas National Education Association
Executives and annual salaries 2
Mark Farr, President $118,314
Claudette Johns, Executive Director $149,553
Kevin Riemann, Executive Director $139,327
David Schnauer, General Counsel $142,630
Marjorie Blaufuss, Staff Counsel $123,584
Anthony White, Uniserv Director $119,782
Burle Neely, Uniserv Director $116,559
Gregory Jones, Uniserv Director $117,559

These executives can afford to send their children to any school.

All the above lobby vigorously against any form of school choice.

Zip code 67214 in Wichita from Google mapsZip code 67214, Northeast Wichita
Median family income $29,637 3

Can this family afford school choice? Probably not. It is these minority children and children from low-income families that most need school choice. The cruel irony is that the highly paid executives work to deny school choice to these families.

Above the line, families have enough income to pursue many forms of school choice. Below the line, school choice is probably not affordable. Click for larger.

Notes

  1. IRS Form 990 for 2014
  2. IRS Form 990 for 2015
  3. U.S. Census, 2014

Kansas school employment

Kansas school employment rose slightly for the current school year, and ratios of employees to pupils fell, also slightly.

Kansas school employment. Click for larger.
Kansas school employment ratios. Click for larger.
Figures released by the Kansas State Department of Education show the number of certified employees rose slightly for the 2016-2017 school year.

The number of Pre-K through grade 12 teachers rose to 30,431 from 30,413, an increase of 0.06 percent. Certified employees rose to 41,459 from 41,405, or by 0.13 percent.1 These are not the only employees of school districts.2

Enrollment fell from 463,504 to 460,491, or 0.61 percent. As a result, the ratios of teachers to students and certified employees to students fell. The pupil-teacher ratio fell from 15.2 pupils per teacher to 15.1. The certified employee-pupil ratio fell from 11.2 to 11.1.

The relative change in enrollment and employment is not the same in every district. To help Kansas learn about employment trends in individual school districts, I’ve gathered the numbers from the Kansas State Department of Education and present them in an interactive visualization. Click here to use it.

These figures, at least on a state-wide basis, are contrary to the usual narrative, which is that school employment has been slashed, and class sizes are rising rapidly. The pupil-teacher ratios published by KSDE are not the same statistic as class sizes. But if the data shows that the ratio of pupils to teachers is largely unchanged for the past five years and class sizes are rising at the same time, we’re left to wonder what school districts are doing with teachers.


Notes

  1. According to KSDE, certified employees include Superintendent, Assoc./Asst. Superintendents, Administrative Assistants, Principals, Assistant Principals, Directors/Supervisors Spec. Ed., Directors/Supervisors of Health, Directors/Supervisors Career/Tech Ed, Instructional Coordinators/Supervisors, All Other Directors/Supervisors, Other Curriculum Specialists, Practical Arts/Career/Tech Ed Teachers, Special Ed. Teachers, Prekindergarten Teachers, Kindergarten Teachers, All Other Teachers, Library Media Specialists, School Counselors, Clinical or School Psychologists, Nurses (RN or NP only), Speech Pathologists, Audiologists, School Social Work Services, and Reading Specialists/Teachers. Teachers include Practical Arts/Vocational Education Teachers, Special Education Teachers, Pre-Kindergarten Teachers, Kindergarten Teachers, Other Teachers, and Reading Specialists/Teachers. See Kansas State Department of Education. Certified Personnel. http://www.ksde.org/Portals/0/School%20Finance/reports_and_publications/Personnel/Certified%20Personnel%20Cover_State%20Totals.pdf.
  2. There are also, according to KSDE, non-certified employees, which are Assistant Superintendents, Business Managers, Business Directors/Coordinators/Supervisors, Other Business Personnel, Maintenance and Operation Directors/Coordinators/Supervisors, Other Maintenance and Operation Personnel, Food Service Directors/Coordinators/Supervisors, Other Food Service Personnel, Transportation Directors/Coordinators/Supervisors, Other Transportation Personnel, Technology Director, Other Technology Personnel, Other Directors/Coordinators/Supervisors, Attendance Services Staff, Library Media Aides, LPN Nurses, Security Officers, Social Services Staff, Regular Education Teacher Aides, Coaching Assistant, Central Administration Clerical Staff, School Administration Clerical Staff, Student Services Clerical Staff, Special Education Paraprofessionals, Parents as Teachers, School Resource Officer, and Others. See Kansas State Department of Education. Non-Certified Personnel Report. http://www.ksde.org/Portals/0/School%20Finance/reports_and_publications/Personnel/NonCertPer%20Cov_St%20Totals.pdf.

Kansas school spending, an interactive visualization

An interactive visualization of spending for Kansas school districts.

The accompanying visualization holds both nominal dollar amounts and amounts adjusted to reflect 2016 dollars. Data includes state aid, local aid, federal aid, and total spending for each school district, both total and per pupil. The visualization includes both tables and charts.

Kansas school spending, entire state, through 2016. Click for larger. This is an example from the visualization.
Kansas school spending, entire state, through 2016. Click for larger. This is an example from the visualization.
For the school year ending in 2016, total spending per pupil was $13,015. This is down from an inflation-adjusted $13,222 for 2015, a decline of 1.56 percent. Considering state funding only, per-pupil funding for 2016 was $8,540, down from an inflation-adjusted $8,631 for 2016, a decline of 1.05 percent.

In fiscal year 2015 there was a shift in the way property tax revenue is reported, with revenue formerly counted as “local” being counted as “state.” One of the tabs in the visualization shows the sum of local and state values, which eliminates the effect of the change in reporting.

Kansas Policy Institute has spending data without KPERS (retirement) spending at Non-KPERS funding sets another per-pupil record in 2015-16.

Spending and revenue data is from Kansas State Department of Education. Inflation-adjusted data calculated using Consumer Price Index, all items, 1982-84=100 (series CUUR0000SA0) from U.S. Bureau of Labor Statistics. The price level used for 2016 is for the first half of 2016. Visualization created using Tableau Public.

Click here to open the visualization in a new window.

Pupil-teacher ratios in the states

Kansas ranks near the top of the states in having a low pupil-teacher ratio.

Pupil-teacher ratios in the states for 2015. Click for larger.
Data from National Center for Education Statistics, ELSI Elementary and Secondary Information System, shows that Kansas is near the top of the states in pupil-teacher ratio, meaning that Kansas has many teachers compared to the number of students. NCES is a division of the U.S. Department of Education.

A common complaint in Kansas is that class sizes have been rising. While pupil-teacher ratio is not the same measure as class size, the question is this: If Kansas has a low pupil-teacher ratio, but class sizes are (purportedly) large and rising, what are these teachers doing?

In the chart of pupil-teacher ratios over time, we see that while the ratio in Kansas rose for the 2015 school year, the trend over time is down, meaning that the number of teachers has increased faster than enrollment. The ratio for 2015 is the same as for 2008, and lower than the years before then.

Also, note the position of Kansas compared to other states. The pupil-teacher ratio in Kansas is lower than in most states.

This data is available in an interactive visualization. You may select different views of the data, and filter for specific states and time frames. Click here to access the visualization.

Pupil-teacher ratios in the states, with Kansas highlighted. Click for larger.

Kansas legislative resources

Those who want to be informed of the happenings of the Kansas Legislature have these resources available.

Legislative documents
The Legislature’s site at kslegislature.org has rosters of members, lists of committees, lists of bills, journals (the daily record of proceedings in each chamber), and calendars (the plan for the day, along with topics for upcoming committee meetings).

A useful feature is the “Current Happenings” link for both the House and Senate. This has a link to the bills that have seen movement in some way each day. The page for each bill is generally useful, too, with the steps in the bill’s history, along with links to the bill text, fiscal and supplemental notes, and other material. Fiscal notes — prepared by the Division of Budget — estimate the financial impact of a bill, while the supplemental notes — prepared by Kansas Legislative Research Department — contain background and explanatory information. When attempting to understand legislation, the fiscal and supplemental notes are very useful.

New this year is the menu item “Committee Bill Hearings” on the “Committees” tab.

Of note, the Legislature’s site has for several years held an icon promising an RSS feed. But nothing is behind the link. Also, there is still an icon representing a link, but it does nothing.

Audio and video
Both the House and Senate broadcast audio of their proceedings. But you must listen live, as the broadcasts are not made available to the public in any other way. It would be exceedingly simple to make these past broadcasts available to the public, as explained here. But the legislature does not retain audio recordings of sessions.

As of this writing, the Kansas Legislature does not make available video of its proceedings.

Documents
Kansas Legislative Research Department (KLRD) has many documents that are useful in understanding state government and the legislature. This agency’s home page is www.kslegresearch.org. Of particular interest:

Kansas Legislative Briefing Book. This book’s audience is legislators, but anyone can benefit. The book has a chapter for major areas of state policy and legislation, giving history, background, and explanations of law. In some years the entire collection of material has been made available as a single pdf file, but not so this year. Contact information for the legislative analysts is made available in each chapter. The most recent version can be found on the Publications page. The version for 2017 is available here.

Of note, versions of the briefing book from years past are useful. KLRD doesn’t provide links to these old documents, but they are available. The search feature of the page (top right corner) will find these documents. It forms a Google site-specific search which looks like this: “site:www.kslegresearch.org summary of legislation.” The same works for old versions of other KLRD documents.

Kansas Fiscal Facts. This book, in 124 pages, provides “basic budgetary facts” to those without budgetary experience. It provides an overview of the budget, and then more information for each of the six branches of Kansas state government. There is a glossary and contact information for the fiscal analysts responsible for different areas of the budget. This document is updated each year. The most recent version can be found on the Publications page.

Legislative Procedure in Kansas. This book of 236 pages holds the rules and explanations of how the Kansas Legislature works. It was last revised in November 2006, but the subject that is the content of this book changes slowly over the years. The direct link is Legislative Procedure in Kansas, November 2006.

How a Bill Becomes Law. This is a one-page diagram of the legislative steps involved in passing laws. The direct link is How a Bill Becomes Law.

Summary of Legislation. This document is created each year, and is invaluable in remembering what laws were passed each year. From its introduction: “This publication includes summaries of the legislation enacted by the 2016 Legislature. Not summarized are bills of a limited, local, technical, clarifying, or repealing nature, and bills that were vetoed (sustained).” The most recent version can be found on the Publications page. For 2016, this document also summarizes the special session.

Legislative Highlights. This is a more compact version of the Summary of Legislation, providing the essentials of the legislative session. The most recent version can be found on the Publications page.

Kansas Tax Facts. This book provides information on state and local taxes in Kansas. The most recent version can be found on the Publications page.

Kansas Statutes. The laws of our state. The current statutes can be found at the Revisor of Statutes page.

Kansas Register. From the Kansas Secretary of State: “The Kansas Register is the official state newspaper. This publication provides a wide range of information such as proposed and adopted administrative regulations, new state laws, bond sales and redemptions, notice of open meetings, state contracts offered for bid, attorney general opinions, and many other public notices.” The Register is published each week, and may be found at Kansas Register.

Employment by MSA and industry

An interactive visualization of employment in metropolitan areas.

Employment data from the Bureau of Economic Analysis, an agency of the United States Department of Commerce, is available for all metropolitan areas and major industries. I present this data in an interactive visualization using Tableau Public. In this visualization you may access several different presentations of the data. You may filter for specific areas, industries, and time periods. The data is available in a table of employment numbers, or in series presented as the percentage change since the first value. This illustrates relative growth, rather than magnitude, of employment. This is annual data from BEA table CA25N1 through 2015, the last year available at this time.

In the nearby example from the visualization we can see that Wichita has performed poorly compared to some peers of interest.

You may use the visualization yourself by clicking here.

Of note, the definitions of MSAs change from time to time.2

Employment by MSA and Industry example. Click for larger.


Notes

  1. Bureau of Economic Analysis. Regional Economic Accounts. https://www.bea.gov/regional/.
  2. Broomfield County, CO, was created from parts of Adams, Boulder, Jefferson, and Weld counties effective November 15, 2001. Estimates for Broomfield county begin with 2002.
    Estimates from 2008 forward separate Skagway-Hoonah-Angoon Census Area into Skagway Municipality and Hoonah-Angoon Census Area. Estimates from 2009 forward separate Wrangell-Petersburg Census Area into Petersburg Census Area and Wrangell City and Borough. In addition, a part of the Prince of Wales-Outer Ketchikan Census Area was annexed by Ketchikan Gateway Borough and part (Meyers Chuck Area) was included in the new Wrangell City and Borough. The remainder of the Prince of Wales-Outer Ketchikan Census Area was renamed Prince of Wales-Hyder Census Area. Petersburg Borough was created from part of former Petersburg Census Area and part of Hoonah-Angoon Census Area for 2013 forward. Prince of Wales-Hyder Census Area added part of the former Petersburg Census Area beginning in 2013. For years 2009-2012, Petersburg Borough reflects the geographic boundaries of the former Petersburg Census Area. Wade Hampton Census Area was renamed Kusilvak Census Area on July 1, 2015.
    Virginia combination areas consist of one or two independent cities with 1980 populations of less than 100,000 combined with an adjacent county. The county name appears first, followed by the city name(s). Separate estimates for the jurisdictions making up the combination area are not available. Bedford County, VA includes the independent city of Bedford for all years.
    Shannon County, SD was renamed to Oglala Lakota County, SD on May 1, 2015.
    Nonmetropolitan portion includes micropolitan counties.

Spending on roads in Kansas

A look at actual spending on Kansas highways, apart from transfers.

Spending on major road programs in Kansas. Click for larger.
When we look at actual spending on Kansas roads and highways, we see something different from what is commonly portrayed. Kansas Department of Transportation publishes a Comprehensive Annual Financial Report that details spending in four categories. These figures represent actual spending on roads and highways, independent of transfers to or from the highway fund.

  • Spending on “Preservation” has been rising, but fell last year.
  • Spending on “Expansion and Enhancement” has been rising.
  • Spending on “Maintenance” has been level, with a small decline.
  • Spending on “Modernization” has declined, then rose.

Total spending on major road programs in Kansas. Click for larger.
For these four categories — which represent the major share of KDOT spending on roads — spending in fiscal 2016 totaled $857.133 million. That’s down from $932.666 million the year before, and up from a low of $698.770 million in fiscal 2010.

Again, these are dollars actually spent on highway programs. A common characterization of the way Kansas government is funded is called “robbing the bank of KDOT.” To the extent that characterization is accurate, there is a separate line item titled “Distributions to other state funds” that holds these values. It appears in the nearby table.

Sales tax revenue to the highway fund

Transfers from sales tax to Kansas highway fund. Click for larger.
Kansas law specifies how much sales tax revenue is transferred to the highway fund. Here are recent rates of transfer and dates they became effective:1

July 1, 2010: 11.427%
July 1, 2011: 11.26%
July 1, 2012: 11.233%
July 1, 2013: 17.073%
July 1, 2015: 16.226%
July 1, 2016 and thereafter: 16.154%

A nearby chart shows the dollar amounts transferred to the highway fund from sales tax revenue. In 2006 the transfer was $98.914 million, and by 2016 it had grown to $517.698 million.

Kansas Department of Transportation Spending. Click for larger.


Notes

  1. Kansas Statutes Annotated 79-3620.

Obama’s stimulus, in retrospect

A positive effect of the 2009 Obama stimulus appeared only long after its forecasted date.

Many people remember that President Barack Obama warned that the unemployment rate would rise to a high level without a stimulus program. In January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus.1 That plan passed.

Stimulus projections from the Obama Administration. Click for larger.
That paper included a table projecting what employment levels the country would experience with, and without the stimulus. For the fourth quarter of 2010, the authors estimated payroll employment would be 133,876,000 without the stimulus, and 137,550,000 with the stimulus. That’s a gain of 3,673,000 jobs due to the stimulus, estimated the authors.

What was the actual experience in jobs? First, for a look at the projections regarding the unemployment rate, see Holding politicians to their boasts and promises. The promoters of the stimulus also projected employment levels, that is, the number of jobs.

To examine the effect on jobs, I gathered data from the Bureau of Labor Statistics and compared the results to projections. I used seasonally adjusted data, which is only slightly different from the non-adjusted data.2

Actual employment with lines showing forecasts of employment with and without stimulus. Click for larger.
Employment exceeded the forecasted level with the stimulus in January 2014, when seasonally adjusted employment reached 137,574,000. (Employment exceeded the forecasted level for the economy without the stimulus in May 2012, when seasonally adjusted employment reached 133,951,000.)

What was projected (or promised) for the fourth quarter of 2010 wasn’t achieved until January 2014. That’s three years late.

The lesson, I believe, is that the power of government to affect the economy in a positive way is weak and limited, especially when using the Keynesian tools of attempting to manage aggregate demand.3 It’s even more true at a state level, as the tools state governments can use are weaker than the federal government’s.


Notes

  1. Romer, Christine, and Bernstein, Jared. The Job Impact of the American Recovery and Reinvestment plan. https://www.economy.com/mark-zandi/documents/The_Job_Impact_of_the_American_Recovery_and_Reinvestment_Plan.pdf.
  2. The BLS data series are:
    CES0000000001, series title All employees, thousands, total nonfarm, seasonally adjusted
    CEU0000000001, series title All employees, thousands, total nonfarm, not seasonally adjusted
  3. For criticims of Keynesian economics from free market perspectives, see
    Mitchell, Daniel J. Keynes Was Wrong on Stimulus, but the Keynesians Are Wrong on Just about Everything. https://www.cato.org/blog/keynes-was-wrong-stimulus-keynesians-are-wrong-just-about-everything.
    Gerald P. O’Driscoll Jr. Keynes vs. Hayek: The Great Debate Continues. https://www.cato.org/publications/commentary/keynes-vs-hayek-great-debate-continues.
    Richard B. McKenzie. John Maynard Keynes, R.I.P. https://fee.org/articles/john-maynard-keynes-rip/.
    Hans-Hermann Hoppe. The Misesian Case against Keynes. https://mises.org/library/misesian-case-against-keynes.

WichitaLiberty.TV: A new season, with co-host Karl Peterjohn

In this episode of WichitaLiberty.TV: Co-host Karl Peterjohn joins Bob Weeks to discuss Karl’s service as county commissioner, the new session of the Kansas Legislature, and choosing a successor to Congressman Mike Pompeo. View below, or click here to view at YouTube. Episode 134, broadcast January 15, 2017.

Again, KPERS shows why public pension reform is essential

Proposals in the Kansas budget for fiscal year 2018 are more evidence of why defined-benefit pension plans are incompatible with the public sector.

Kansas Governor Sam Brownback has proposed delays in funding KPERS, the Kansas Public Employees Retirement System. The delays are in both directions. The state intends to break a past promise to pay, and also to skip some future payments.

A memo from KPERS summarizes recent history and the proposed changes: “Last fiscal year, the State delayed its fourth quarter payment for School employer contributions with a promise to pay it in Fiscal Year 2018 with interest. The Governor is recommending the State not pay this contribution and skip one quarterly payment each year through FY19. In addition, the Governor recommends extending the time to pay down KPERS’ existing unfunded actuarial liability by 10 years.”1

Many will criticize the proposed reduction in funding KPERS as stealing from KPERS. That really isn’t true. KPERS has plenty of money to pay current retirees their promised benefits. The above memo also says that those near retirement won’t be affected.

But what about younger employees who may not retire for 20 or 30 years? Will they receive their promised benefits?

The answer is yes, almost certainly. Their retirement benefits are in the form of a contract, and it is very unlikely that the state will break those contracts.

So: Is KPERS being robbed? Stolen from?

No. It’s future Kansas taxpayers who will be mugged. They will have to pay the unfunded liabilities accumulated by not only the current governor and legislature, but by past governors and legislatures too. I explain in more detail in my recent article No one is stealing* from KPERS. (The asterisk notes that there is stealing in a way, but from future taxpayers.)

Further: It is entirely foreseeable that this is happening. In 2015 the state issued $1 billion in bonds to address a portion of the KPERS unfunded liability. This made the unfunded liability ratio look better, and the governor and Republicans continually boast of this. But debt has simply been shifted from one balance sheet to another. The same taxpayers that will eventually pay.

This is one of the reasons why government should not offer defined-benefit pension plans. Because of the long time horizons involved, it’s easy to delay and postpone dealing with problems. Or, legislators are prone to make risky investment decisions as Kansas did in 2015 by $1 billion in bonds and transferring the proceeds to KPERS. This was — is — a risky maneuver, and it has led to undesirable behavior that was entirely predictable.

The plan was that the state would borrow $1 billion, and invest it. If the state earned more in investment returns than the interest cost on the bonds, the state wins. Barry Poulson, Ph.D., Emeritus Professor at the University of Colorado — Boulder has written on the danger of borrowing to shore up state pension funds, as Kansas has done. He explained there is the “lack of nexus between the investment of the bond proceeds and payments for unfunded liabilities in the plan.” This means that the borrowed funds may be used for current spending rather than for correcting the KPERS unfunded liability.2

Paulson explains: “If legislators see that additional funds are available to pay off unfunded liabilities in the pension plan they may choose to allocate less general fund money to meet these pension obligations.” What Poulson warned of happened in Kansas in 2016. Now, the governor proposes even more: Pushing off KPERS contributions to the future so that more money is available for spending on other stuff now.

In a way, it’s surprising that groups who advocate for public employees are upset with this. (See, for example, here from KNEA.) Instead, they should be grateful. KPERS benefits are unlikely to be cut for any retirees. But underfunding KPERS today means there is more money available for public employees and the agencies that employ them. In reality, these groups simply want higher taxes now.


Notes

  1. Kansas Public Employees Retirement System. Governor’s Budget Proposal & KPERS Shortfall. https://www.kpers.org/pdf/govbudgetproposalmember_statement.pdf.
  2. Weeks, Bob. This is why we must eliminate defined-benefit public pensions. https://wichitaliberty.org/kansas-government/we-must-eliminate-defined-benefit-public-pensions/.

Understanding job growth and the Kansas tax reforms

Commissioned by Kansas Policy Institute and written by researchers from Arizona State University, a new report looks at the Kansas economy after the tax reforms passed in 2012.

The full report is available to read at A thousand flowers blooming: Understanding job growth and the Kansas tax reforms. Following, material from its executive summary:

Much of the discussion over economic growth following the 2012 Kansas tax reforms were enacted is misguided, hobbled by a misunderstanding of what the tax cuts were trying to accomplish and reliance on incomplete data. Additionally, it fails to take into account the fact that most job growth in Kansas has been — and will continue to be — from pass-through businesses (i.e., sole proprietorships, S-corporations, limited liability corporations, and joint partnerships). In fact, the 36,135 jobs created by pass-through entities in Kansas represent 82 percent of all private sector jobs created in 2013 and 2014, the latest data available from the U.S. Census Bureau, and the growth is more than three times as great after tax reform than before.

Using this Census data and other appropriate private sector data our analysis indicates that the impact of the tax reforms has been positive. Kansas comes out on top or at least shows strong growth in almost every relevant state comparison of the most comprehensive private sector job growth metrics. Kansas also matches up with other states well even when the less-comprehensive data often used to make comparisons is adjusted for the size of the state.

It is also important to consider the source of job creation data, the structure of a state’s economic make-up, and a state’s population when comparing job numbers. In short, just as it would not be appropriate to compare student achievement for the Kansas City and Blue Valley school districts for obvious demographic differences, it is not appropriate to compare certain states just because of geographic proximity. The monthly employment numbers from the Bureau of Labor Statistics (BLS) use a different methodology to count employment than does a more comprehensive, but less frequent, analysis from the Bureau of Economic Analysis (BEA). For instance, the BLS data estimates that in 2015, Kansas had an employed private-sector workforce of nearly 1.4 million, while the BEA data puts it at 1.9 million. So while the BLS data warrants monthly media coverage this paper puts more emphasis on the BEA analysis as it better captures those employed by proprietorships and in farm employment.

This study also uses new data from the Kansas Department of Revenue (KDOR) to clearly demonstrate that tax evasion or strategic corporate tax planning has not been widespread. KDOR records also make clear that the total value of the Kansas tax reforms from 2012 was primarily driven by lowering the income tax burden on individual wage earners. This is yet another overlooked aspect of the tax cut, as 71 percent of the overall tax relief went to individual taxpayers and 29 percent went to pass-through businesses through the income tax exemption. A final data point from KDOR also makes clear who is benefitting from the pass-through exemption. Median family income in Kansas is around $52,000 and 88 percent of the filers in 2014 with business income had Kansas adjusted gross income that year of less than $50,000.

While there is still more analysis to be done and more data to be released over the coming years, we believe the preliminary signs indicate that the Kansas tax reforms have had and, more importantly, will continue to have a positive impact on state job growth.

Image credit: Flazingo.com.

In Wichita: ‘The Future of News in Our Digital Age’

Soon in Wichita: A panel discussion with audience interaction on the topic “The Future of News in Our Digital Age.”

New Symposium is a group of Wichitans who hold regular meetings of public interest. New Symposium describes its goal is to “engage in the kind of thoughtful and respectful dialogue that is so seldom experienced in our modern world of political propaganda and social media sound-bites … but which still characterizes men and women of good will when they take the time to step back and logically think things through together.” It also uses the motto “New Symposium: Rescuing Discourse from the Political Parties.”

New Symposium’s next event is on January 31, and I will be a symposiast. This event is a public forum on the topic “The Future of News in Our Digital Age.” It is a panel discussion with audience interaction.

This event will be held on Tuesday, January 31, 2017 from 7:00 pm to 8:30 pm. The location is Social Networking Technologies, Inc., located in the High Touch Building at 110 S. Main in downtown Wichita, Kansas. (Link to Google map.)

There is no cost to attend this event.

Panelists are

  • W. Davis (Buzz) Merritt, Former Senior Vice President and Senior Editor of The Wichita Eagle; Adjunct professor of journalism at University of Kansas
  • Dave Trabert, President of Kansas Policy Institute and Board Member of The Sentinel, a new online news service
  • Mike Marlett, Former owner of local, weekly newspaper F-5; current manager of website content at Wichita State University
  • Mark McCormick, Former professional journalist and current Executive Director of The Kansas African American Museum
  • Bob Weeks, Publisher of the Voice for Liberty at wichitaliberty.org

For updates and dialogue on the symposium, see
newsymposium.blogspot.com. Much more information may be found there. In particular, questions for consideration at this event include:

  • What are the motives and incentives that shape the “news” produced by the different forms of media (some more centralized, traditional, or corporate than others)? What should they be?
  • Given the internet’s enormous potential for misinformation, how can one find “just the facts”? When everyman’s a journalist, what happens to accountability for telling the truth?
  • Has the centralized, legacy media been caught up in the hyper-polarization of American politics? If so, is there a remedy? Can we have tough, independent investigative journalism that does not start with presupposition and prejudice?
  • What is the future of explanatory journalism that emphasizes nuance and context in a digital age in which speed and headlines are prized? How could Twitter and Snapchat ever properly inform?
  • Are digital media/communications making us all attention-deficit? Are we too easily “informed”?

Benefits of tax cuts without raising debt

Benefits of Tax Cuts Without Raising Debt
President-elect Donald Trump should learn from Kansas’s mistake on income-tax reduction — don’t reduce revenue and increase spending.

By Dave Trabert, Kansas Policy Institute

President-elect Donald Trump should learn from Kansas’s mistake on income-tax reduction: Don’t reduce revenue and increase spending. That’s the real problem with the Kansas budget (“Brownback Sees Kansas Tax Plan as Model for Nation,” U.S. News, Dec 24). There was never an expectation that spending wouldn’t have to be adjusted to accommodate revenue reductions, but Democrats and many Republicans refused to make government more efficient so spending and taxes were increased in 2013 and again in 2015. Kansas spent 27% more per resident in 2015 than the states without an income tax.

The income-tax exemption on pass-through income for proprietorships, partnerships, Sub-S corporations and LLCs is paying real dividends. U.S. Census data show that pass-through businesses actually created the majority of new jobs in 2013 and 2014 (the most recent data for employment by legal organization). And while Kansas continues its decades-long tradition of trailing the national average on job growth, Kansas is performing closer to the average since taxes were reduced.

Census data also show employment for pass-through entities is almost at parity with C corporations in the U.S., and cutting the corporate income tax affects only about half of the business employment base. Pass-through business profits are taxable to the individual owners, so individual rates must also be reduced to really help the economy.

Dave Trabert
President
Kansas Policy Institute
Overland Park, Kan.

(Originally published in the Wall Street Journal at http://www.wsj.com/articles/benefits-of-tax-cuts-without-raising-debt-1484002119.)

Holding politicians to their boasts and promises

There are useful lessons we can learn from the criticism of Kansas Governor Sam Brownback, including how easy it is to ignore inconvenient lessons of history.

Tax cuts in Kansas were promised by Governor Brownback to be a “shot in the arm” for the Kansas economy. Opponents of the governor and tax cuts take great delight in reporting the generally anemic growth of the Kansas economy since then. Month after month, the tax cuts are condemned by Kansas newspaper editorial writers and the governor’s detractors.

I don’t think it’s a particularly strong form of argument to defend someone by showing how someone else is equally as bad — or worse. Similarly, criticizing someone for their fixation on A while they ignore the equally bad B: We need to know why they ignore B. Have they forgotten B? Do they not have time to write about B? Or do they ignore B because the fact of B is inconvenient to their ideology or their criticism of A? But I see that not everyone shares these ideals, and even so, perhaps we can learn something.

Many people remember that President Barack Obama warned that the unemployment rate would rise to a high level without a stimulus program. I can’t find that he mentioned a specific number that the unemployment rate would rise above. But in January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus.1 That plan passed.

The Romer paper included a graph of projected unemployment rates. The nearby chart from e21 took the Romer chart and added
actual unemployment rates. (The accompanying article is Revisiting unemployment projections. That chart and article were created in 2011. I’ve updated the chart to show the actual unemployment rate since then, as black dots. The data shows that the actual unemployment rate was above the Obama administration projections — with or without the stimulus plan — for the entire period of projections.

The purpose of this is not to defend Brownback by showing how Obama is even worse. (Disclosure: Although I am a Republican, I didn’t vote for Brownback for governor.) Instead, we ought to take away two lessons: First, let’s learn to place an appropriately low value on the promises and boasts made by politicians.

Then, let’s recognize the weak power government has to manage the economy for positive effect. Indeed, the lesson of the Obama stimulus is that it made the unemployment rate worse than if there had been no stimulus — at least according to the administration projections.

And, there is one more lesson to learn about our state’s newspaper reporters and editorial writers, but I think you’ve discovered that already.

Unemployment with and without stimulus through 2014-01


Notes

  1. Romer, Christine, and Bernstein, Jared. The Job Impact of the American Recovery and Reinvestment plan. https://www.economy.com/mark-zandi/documents/The_Job_Impact_of_the_American_Recovery_and_Reinvestment_Plan.pdf.

A Wichita school official talks about KPERS

A board member of the largest school district in Kansas repeated an untruth that has unfortunate consequences for Kansas schoolchildren.

At a recent meeting of the Wichita Pachyderm Club Wichita school board member Sheril Logan participated in a panel discussion on local government legislative agenda. (The entire program may be accessed here.)

She told the audience, “Truly, data can be maneuvered to make it look like what you want. We all know that. So can funding streams.”

She went on to explain that what happened in the “last couple of years” was, for example, KPERS funds being counted differently.

What Mrs. Logan told the Wichita Pachyderm Club is a standard argument of Kansas public school spending advocates, which is that because of a change in the way teacher retirement funds (KPERS contributions) are handled, it looks like the state is spending more on schools, when in fact it is not. According to her, this happened in the “last couple of years.”

The story about KPERS reporting being changed in an underhanded way is told so often by the public school spending establishment that it is difficult to criticize Mrs. Logan for being wrong. Board members and others are told this so often, from sources they believe as authoritative, that they believe it. They want to believe it.

Kansas Policy Institute asked the Kansas State Department of Education about this matter. It found this: “According to Dale Dennis, KPERS funding was last sent directly to KPERS in 2004; it has since been sent directly to school districts included in reported school funding totals.”1

Here, Dale Dennis contradicts what a board member of the state’s largest school district told the Wichita Pachyderm Club. Dennis is Deputy Commissioner at Kansas State Department of Education and head of Fiscal and Administrative Services, widely cited as the leading authority on Kansas school finance..2

Wichita Public Schools, State Revenue by Source, KPERS Contributions. Click for larger.
Even though Dennis is the state’s top education finance official, we don’t have to rely solely on him to illustrate the error of believing the KPERS spending reporting has undergone recent changes. Information from the Wichita public school district3 shows the same. Here I’ve plotted the funding sent by the state of Kansas to USD 259 for KPERS contributions. As Dennis indicated, in 2005 the Wichita school district started receiving money from the state for KPERS. Prior to that year it received none.

We might note that when this change in KPERS reporting started, Kathleen Sebelius was governor. If the change in KPERS reporting is, in fact, deceitful, we ought to ask why it happened under her watch.

Does it matter?

Does it really matter that there is this confusion about KPERS reporting? Yes. It matters a lot, and for two reasons.

First, what the Kansas public school spending establishment says is incorrect. We should value the truth above all.

Second: If we believe that Kansas public schools are underfunded, there is a ready-made excuse for anything and everything. If anyone points out that Kansas schools have problems, the excuse is that there’s isn’t enough money. This lets Kansas public school officials off the hook, and needed reforms are squashed. Even reforms that will save money.


Notes

  1. Trabert, Dave. State school board member should practice what he preaches. Available at kansaspolicy.org/state-school-board-member-practice-preaches/.
  2. Kansas State Department of Education. Fiscal & Administrative Services. http://www.ksde.org/Agency/Fiscal-and-Administrative-Services.
  3. USD 259 Comprehensive Annual Financial Report for 2015, State Revenue by Source, Governmental Funds, and USD 259 Comprehensive Annual Financial Report for 2007, State Revenue by Source, Governmental Funds.

From Pachyderm: Legislative Agendas for 2017

From the Wichita Pachyderm Club this week: Representatives of local governments presented issues important to them in the upcoming session of the Kansas Legislature. Presenters were:

  • Sheril Logan, board member for Wichita Public Schools. The material she presented to the audience is here.
  • James Clendenin, Wichita City Council. His presentation is here.
  • Jim Howell, Sedgwick County Commission. A link to the county’s legislative agenda is here.

This is an audio presentation recorded on January 6, 2017.

Kansas schools, right in the middle

A national report shows Kansas schools close to the middle of the states in many areas.

Education Week, a widely-read publication focusing on schools, has published the latest edition of the long-running series Quality Counts. The headline for the Kansas summary reads “Kansas Earns a C on State Report Card, Ranks 27th in Nation.”

In the overview for Kansas, the report concludes “This year, Kansas finishes 27th among the 50 states and the District of Columbia, with an overall score of 72.8 out of 100 points.”

In more detail, the report computes a “Chance-for-Success Index,” said to measure the “role that education plays in promoting positive outcomes across an individual’s lifetime.” In this index, Kansas ranks 19th in early foundations, 22nd in school years, and 19th in adult outcomes.

In school finance spending indicators, Kansas ranks 29th. In school finance equity, 21st.

For school achievement, the report looks at three areas. In current performance, Kansas ranks 28th in the nation. In improvement over time, Kansas posts a D-minus and ranks 50th. In equity, Kansas ranks 36th.

No one is stealing* from KPERS

No one is stealing from KPERS, the Kansas Public Employees Retirement System. But there are related problems.

You don’t have to look for long on Facebook before you’ll find comments like these regarding KPERS, the Kansas Public Employees Retirement System:

“This is BS. Stupid Brownback robbed our pension plan; we have no real confidence that it will ever be paid back. Why don’t we have some kind of safety measure in place to prevent governors like him from stealing from us?”

“If the governor would keep his greedy hands off of the KPERS money that is there, we might not be having this problem. It was not set up as a lending bank when the Governor’s policies proved to be unworkable. Leave my money alone!!!!!”

These comments — and many similar posted all over Facebook — accuse Kansas state government, specifically the current governor, of stealing from KPERS. But that is not happening, according to Alan Conroy, KPERS Executive Director. By email, he answered this question posed by Kansas Policy Institute: “Can you please confirm that the Legislature or the Governor cannot and have not borrowed money from funds deposited with KPERS?

Conroy’s response, in part, was “Once funds are placed in the KPERS Trust Fund they cannot be withdrawn or ‘loaned-out’ to another entity or group. The only way funds come out of the Trust Fund is to pay the promised benefits to the members.”

That ought to settle the question of whether money is being “robbed” or “stolen” from KPERS.

But you’ll notice that the title of this article contains an asterisk. That’s because KPERS does have many problems. The most important is its underfunded status, which is a chronic problem. This is because the state has not made the actuarially required contributions. This is “stealing,” in a roundabout way. Who is suffering the loss? Not future KPERS retirees, as it is almost certain they will receive their promised benefits. Instead, it is future Kansas taxpayers who will have to make extra contributions to KPERS to make up for the current and past legislatures not making sufficient contributions.

This is one of the reasons why government should not offer defined-benefit pension plans. Because of the long time horizons involved, it’s easy to delay and postpone a solution to the future. Or, legislators are prone to make risky investment decisions as Kansas did in 2015. The state’s action simply replaced KPERS debt with debt the general fund is responsible for. This, of course, is the state selling $1 billion in bonds and transferring the proceeds to KPERS. It makes the KPERS unfunded ratio look better, as the governor and Republican legislative leaders continually boast. But it’s a risky maneuver, and it has led to undesirable behavior that was entirely predictable.

The plan was that the state would borrow $1 billion, and invest it. If the state earned more in investment returns than in interest cost on the bonds, the state wins. Barry Poulson, Ph.D., Emeritus Professor at the University of Colorado — Boulder has written on the danger of borrowing to shore up state pension funds, as Kansas has done. He explained there is the “lack of nexus between the investment of the bond proceeds and payments for unfunded liabilities in the plan.” This means that the borrowed funds may be used for current spending rather than for correcting the KPERS unfunded liability.1 What Poulson warned of happened in Kansas.

There’s another way that KPERS is stealing from future taxpayers. When performing projections, a key variable is the discount rate, which is to say, the rate that KPERS expects to achieve on its investments, over the long term. Small changes in the discount rate have large impacts. The nearby illustration from the KPERS annual report for 2015 shows that using a discount rate of 8.00 percent, the KPERS unfunded liability is slightly less than $9 billion. Change the discount rate to 7.00 percent, and the unfunded liability rises to almost $12 billion.

Some authorities believe that state pension funds should use a realistic discount rate, maybe four percent or so. That would cause the unfunded liability to explode. To its credit, KPERS recently adopted a discount rate of 7.75 percent, but that adjustment is not nearly enough.

Who will have to pay to make up the deficiencies caused by using an unrealistic discount rate? Future Kansas taxpayers, not KPERS retirees.

There was a time when money was really and truly stolen from KPERS, in a way. Under the leadership of former Kansas Governor John Carlin, it was decided that KPERS would make targeted, or direct, investments in Kansas companies. A scandal erupted, and KPERS lost many millions.2

Another source described the aftermath as this: “In total KPERS faced losses of at least $138 million from its direct investment program. Moreover more than seven hundred Kansas residents lost their jobs as a result of these failures — a striking contradiction to the stimulus purpose of the Kansas investment program. In hindsight the lack of professional oversight by KPERS of its private investments program was blamed for the failure of the direct investment program.”3 The chair of the KPERS Board of Trustees pleaded no contest to one felony count of aiding and abetting securities fraud regarding a KPERS investment.4

This sounds like stealing from KPERS. Despite this happening at the urging of Carlin, he now portrays himself as a leader, a senior statesman to whom we should listen.


Notes

  1. Weeks, Bob. This is why we must eliminate defined-benefit public pensions. https://wichitaliberty.org/kansas-government/we-must-eliminate-defined-benefit-public-pensions/.
  2. “It started as a way to use the state pension fund to boost the Kansas economy, making loans or investing in healthy businesses. But it has mushroomed into the biggest scandal in state history. Although the Kansas Public Employees Retirement System remains financially sound, with a value of about $4.4 billion, known losses exceed $230 million. Experts say total losses could double or triple.” Curran, Tim. Toto, we’re not in Kansas anymore: state pension scandal a nightmare. Associated Press. Oct. 7, 1991. http://www.apnewsarchive.com/1991/Toto-We-re-Not-in-Kansas-Anymore-State-Pension-Scandal-A-Nightmare/id-fe758e81f6b6a821076c829764cb6399.
  3. Cumming, Douglas ed. The Oxford Handbook of Private Equity. Oxford University Press.
  4. Press, A 1992, ‘Former KPERS Chief Sentenced To Probation For Securities Fraud’, Wichita Eagle, The (KS), 25 Jun, p. 4D, (online NewsBank).

Individual liberty, limited government, economic freedom, and free markets in Wichita and Kansas