Voice For Liberty

Tag: Kansas Policy Institute

  • Energy subsidies exposed

    On the campaign trail, President Barack Obama calls for an end to energy subsidies for the fossil fuel industry. It turns out, however, that this industry receives relatively little subsidy, while the president’s favored forms of energy investment — wind and solar — receive much more. Additionally, coal, oil, and gas industries paid billions in taxes to the federal government, while electricity produced by solar and wind are a cost to taxpayers.

    Saturday’s Wall Street Journal piece The Energy Subsidy Tally: Wind and solar get the most taxpayer help for the least production gathers the facts: “The nearby chart shows the assistance that each form of energy for electricity production received in 2010. The natural gas and oil industry received $2.8 billion in total subsidies, not the $4 billion Mr. Obama claims on the campaign trail, and $654 million for electric power. The biggest winner was wind, with $5 billion. Between 2007 and 2010, total energy subsidies rose 108%, but solar’s subsidies increased six-fold and wind’s were up 10-fold.”

    When looking at subsidy received per unit of power produced, the Journal found that oil, gas, and coal received $0.64 per megawatt hour, hydropower $0.82, nuclear $3.14, wind $56.39, and solar $775.64. Commented the Journal: “So for every tax dollar that goes to coal, oil and natural gas, wind gets $88 and solar $1,212. After all the hype and dollars, in 2010 wind and solar combined for 2.3% of electric generation — 2.3% for wind and 0% and a rounding error for solar. Renewables contributed 10.3% overall, though 6.2% is hydro. Some ‘investment.’”

    In Kansas, there is disagreement among elected officials over wind power. Kansas Governor Sam Brownback and U.S. Senator Jerry Moran favor the production tax credit that makes wind feasible. Together they penned an op-ed that tortures logic to defend the tax credits. Each has spoken out on his own on the national stage. See Brownback on wind, again and Wind energy split in Kansas.

    Brownback has also supported, at both federal and state levels, renewable portfolio standards. These in effect mandate the production of wind power. Recently Kansas Policy Institute produced a report that details the harmful effect of this law: “Renewable energy is more expensive than conventional energy, so government mandates are necessary to ensure that more renewable energy is purchased. However, the unseen consequences of well-intended efforts to increase energy independence are rarely considered. The authors estimate that by 2020, the average household’s electricity bill will increase by $660, approximately 12,000 fewer jobs will have been created, and business investment in the state will be $191 million less than without the mandate.” See The Economic Impact of the Kansas Renewable Portfolio Standard.

    In Wichita, Mayor Carl Brewer is recruiting wind power companies to come to Wichita. If he is successful, you can be sure it will be at great cost to Kansas and Wichita taxpayers.

    Contrast with the position taken by U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, which includes the Wichita metropolitan area. Recently he wrote: “Supporters of Big Wind, like President Obama, defend these enormous, multi-decade subsidies by saying they are fighting for jobs, but the facts tell a different story. Can you say ‘stimulus’? The PTC’s logic is almost identical to the President’s failed stimulus spending of $750 billion — redistribute wealth from hard-working taxpayers to politically favored industries and then visit the site and tell the employees that ‘without me as your elected leader funneling taxpayer dollars to your company, you’d be out of work.’ I call this ‘photo-op economics.’ We know better. If the industry is viable, those jobs would likely be there even without the handout. Moreover, what about the jobs lost because everyone else’s taxes went up to pay for the subsidy and to pay for the high utility bills from wind-powered energy? There will be no ribbon-cuttings for those out-of-work families.”

    Pompeo has introduced legislation in Congress that would end tax credits for all forms of energy production. See H.R. 3308: Energy Freedom and Economic Prosperity Act.

    The Energy Subsidy Tally
    Wind and solar get the most taxpayer help for the least production.

    President Obama traveled to Iowa Tuesday and touted wind energy subsidies as the path to economic recovery. Then he attacked Mitt Romney as a tool of the oil and gas industry. “So my attitude is let’s stop giving taxpayer subsidies to oil companies that don’t need them, and let’s invest in clean energy that will put people back to work right here in Iowa,” he said. “That’s a choice in this election.”

    There certainly is a subsidy choice in the election, but the facts are a lot different than Mr. Obama portrays them. What he isn’t telling voters is how many tax dollars his Administration has already steered to wind and solar power, and how much more subsidized they are than other forms of electricity generation.

    Continue reading at the Wall Street Journal (subscription required)

  • In Kansas, more debunking of the benefit of high taxes

    From Kansas Policy Institute.

    Proponents of high taxes are again quoting a study from the Institute for Taxation and Economic policy (ITEP). The study argues high-income tax states perform as well or better than states without an income tax.

    The result runs contrary to findings by the Organization for Economic Co-operation and Development (OECD), a Paris-based organization comprised of 34 developed countries, including the United States. The OECD study concluded: Growth-oriented tax reform measures include tax base broadening and a reduction in the top marginal personal income tax rates.

    ITEP comes to their counter-intuitive conclusion by carefully choosing three measures: Per Capita Real Gross State Product (GSP) Growth, Real Median Household Growth and Average Annual Unemployment rate. One needs only a simple drawing to see why these variables are inappropriate measures.

    In the first scenario our state has nine individuals; seven earning an income and two unemployed. GSP per capita is $3, Real Median Household Income is also $3, the Unemployment Rate is 22 percent and lastly our overall wealth is $28. Now suppose the four low-income-individuals decide to seek opportunities in another state. Now our state looks like this:

    Our GSP per capita and Real Household Median Income rose to $5, the Unemployment Rate decreased to 0, and our overall wealth declined to $25. The out migration of the low income earners caused our GSP per capita and Real Household income to grow 66 percent and our Unemployment rate to drop 100 percent. Although, not one person’s wealth increased and in fact our state is worse off, we have fewer jobs and less wealth.

    This is precisely what the IRS’ Adjusted Gross Income (AGI) data suggests is happening. From 2000 to 2009 the average AGI for each tax return leaving the nine states with the highest-income taxes was $59,502 (2010 dollars), which is $5,000 lower than the average AGI for all tax returns in those nine states, over the same period. Now we see why ITEP carefully chose those measures.

    Thanks to this map, put together by the Tax Foundation, we can see that the nine states without-an-income tax gained a $117.6 billion from interstate migration whilst the nine high-income tax states lost $105.8 billion between 1999 and 2009.

    Data from the Census Bureau shows that during this time nearly 4 million fled the high-income tax states, while nearly 3 million found a new home in the states without-an-income tax. Just as the pictures above illustrate; ITEP’s chosen measures can go up, even as wealth leaves.

  • Steve Rose defends Kansas school spending

    Attitudes toward Kansas public schools, or facts about them: Which is most important? For boosters of the Kansas school spending establishment, attitude is all that matters. The actual facts about Kansas schools — if we were honest enough to recognize and confront them — need not be considered.

    Kansas City Star columnist Steve Rose is a case in point. His recent op-ed Negative attitude toward public schools is scary is scary itself for its vigorous and misinformed defense of a system that isn’t working very well for Kansas schoolchildren.

    Kansas Policy Institute president Dave Trabert left this comment to Rose’s article:

    It’s quite telling that your basis for saying schools operate very efficiently and spending has only kept up with inflation is a lobbying group that advocates for more spending rather that actual figures from the Dept. of Education of the state budget office.

    Here are the facts according to official government data for the period 2001 to 2011:

    • Inflation was 24.2% (Bureau of Labor Statistics, Midwest Urban Cities)
    • FTE enrollment increased 1.8% (KSDE)
    • Taxpayer support of public education increased 55.8%; state aid +37.6%, federal +155.4% and local +67%. (KSDE)
    • 2012 is expected to be a record-setting year for taxpayer support of public education, at $5.672 billion (KSDE)

    Here are a few more facts that, like those listed above, are not generally known to the public and are routinely denied by education officials.

    • $402 million more in state and local aid was not spent between 2005 and 2011 but was used to increase operating cash reserves (KSDE)
    • Instruction spending per-pupil increased 84% between 1999 and 2011 (KSDE) while inflation was up only 32% (BLS)
    • Taxpayer support of public education in Kansas increased from $3.1 billion in 1998 to $5.6 billion in 2011 (KSDE) yet student proficiency levels are well below 50% (US Dept. of Ed.)

    Telling parents the inconvenient truth is not attacking schools, teachers or anyone else. It is giving them the facts they need to make fully informed decisions about what needs to be done to improve public education.

    Kansas Senator Mary Pilcher-Cook was mentioned in the Rose op-ed and offered this response:

    In his commentary on my response to a candidate survey from Americans for Prosperity at www.afpks.org, Steve Rose used the term “hogwash” to describe this statement, with which I agreed: “Parents, teachers, and taxpayers should have a transparent system so they know how much money is being spent in each school and school district.” He stressed that I had put the statement in bold-face type.

    It’s a bold-faced belief. Repeatedly, I have heard frustration from parents, teachers and taxpayers who say they do not know how tax money is being spent. This is especially true in education, which represents a huge investment by the taxpayers of Kansas. I agree with Mr. Rose that “how much” is being spent at the school district level is a matter of public record. However, what is not known is how much is being spent at “each school,” and more precisely, “how it is being spent” at each school. Individual schools have substantial budgets. How much ends up in the classroom? How much goes to fund lobbying for more money by the school administration? How much goes to fund activities and programs that are more properly described as something other than education?

    It is important to remember that school based budgeting not only exposes inefficiencies and problems but it also highlights positive areas, as well. However, without the information, we are not fully equipped to make informed decisions regarding our schools. Parents, teachers, and taxpayers should have a transparent system so they can have more input over local school decisions. Mr. Rose thinks that kind of information is “hogwash.” This will come as a surprise to many of his readers, no doubt.

    On the bright side, it is amusing that Mr. Rose quotes “facts” from the Kansas Association of School Boards, a lobbyist group that continually insists on tax increases and demands more funding without any accountability for public education, while at the same time saying that my figures “came right out of the conservative propaganda.” Actually, the data I used came from the Kansas State Department of Education.

    Maybe Mr. Rose forgot that just a few years ago the Shawnee Mission School District dropped its membership with the KASB because the KASB uses taxpayers’ money to continually lobby against local control, something many taxpayers think is urgently needed for schools in Johnson County.

    Mr. Rose’s bogeymen-of-the-moment, “ultra-conservatives Charles and David Koch of Wichita,” have never lobbied the state of Kansas for any special interest money that would benefit only themselves, their companies or their industry. In my experience, their interest is advocating tax policies that would be beneficial to every Kansas citizen.

    I typically bold-face responses in questionnaires and surveys to help distinguish between my response and the questions offered. It’s a formatting choice, not a rhetorical weapon. But in this case, let me use boldface to reiterate a very simple point: I believe parents, teachers, and taxpayers should have a transparent system so they know how much money is being spent in each school and school district.

    If Mr. Rose believes otherwise, he can boldface his “hogwash” as much as he likes. After all, it’s his ink — and his hogwash.

  • Wichita school spending

    Talking about Wichita school funding this week, district superintendent John Allison was quoted in Wichita Eagle reporting as saying “We’re still at 2001 funding levels.” This claim is part of an ongoing campaign of misinformation spread by school spending advocates in Wichita and across Kansas.

    Mr. Allison may have been referring to a component of the Kansas school finance formula called base state aid per pupil. It has been cut, as shown in this chart that the Kansas school spending establishment uses.

    Kansas school spending, as presented by the Wichita public school district.

    But base state aid is only the starting point. When we look closely at all spending by USD 259, the Wichita public school district, we see a picture vastly different from that described by the Wichita superintendent.

    Considering all sources of funding, the Wichita school district has been able to spend more money each year for many years, despite the claims of cuts. What cuts have been made to base state aid per pupil have been more than compensated for by weighted state aid, federal aid, and local aid, as shown in the following chart.

    Wichita school spending, as reported by Kansas State Department of Education.

    Focusing on base state aid misses the larger picture. As an example, for the 2010-2011 school year, base state aid was $3,937. Yet the Wichita school district received $7,092 per pupil from the state, 80 percent more than the base aid number. Focusing only on base state aid per pupil also fails to recognize the federal and local sources of revenue to schools. For this year the Wichita district received $2,123 per pupil from the federal government and $3,855 per pupil from local taxpayers, for a total of $13,069 per pupil. The same figure for the previous year was $12,526.

    There are also other issues to consider when analyzing Kansas base state aid per pupil spending. Dave Trabert of Kansas Policy Institute wrote this is response to Allison’s statement:

    Superintendents sometimes talk about base state aid as though it was total aid, so let’s take a look at those facts. Kansas State Department of Education broke out the components of state aid back to 1997, when total state aid was $4,047 per pupil (base was $3,670, KPERS was $157, bond was $42 and all other aid was $178). Back in the days before a lot of weightings were added/expanded, districts had to cover At Risk and other weighting-funding costs out of the base.

    State aid in 2012 was estimated by KSDE to be $6,931 per-pupil … base was $3,780 … KPERS was $804 … bond was $230 … and all other aid was $2,116. More than a ten-fold increase in other state aid, most of which is in those weightings that formerly had to come out of the base.

    By the way, KSDE says 2012 was estimated to be a record-setting spending year.

    More information about the changing nature of base state aid is at Base state aid is wrong focus for Kansas school spending.

    Why do school spending supporters focus only on base state aid? Its decline provides the grain of truth for their larger and false argument about school spending. As explained in Kansas school spending: the deception this grain of truth enables school spending advocates like Mark Desetti (Director of Legislative and Political Advocacy at Kansas National Education Association (KNEA), our state’s teachers union) to be accurate and deceptive, all at the same time.

    We ought to demand more truth from school districts and school officials regarding school finance.

  • Base state aid is wrong focus for Kansas school spending

    Much of the discussion surrounding school funding in Kansas centers around base state aid per pupil. It’s the starting point for the Kansas school finance formula, and therefore an important number.

    Base state aid per pupil has been cut in recent years. This allows supporters of more school spending to claim that spending has been cut. The truth is that when considering all spending, Kansas schools will spend more this past school year than in any other. See Wichita school spending: The grain of truth.

    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.

    It is a happy accident for the Kansas school spending establishment that base state aid per pupil has fallen at the same time that overall spending on schools has increased in almost every year. It allows the school spending lobby to make an argument that is superficially true, but deceptive at the same time. A closer look at school spending is necessary to understand the entire situation.

  • Kansas school finance lawsuit could be costly

    If school districts prevail in the Kansas school finance lawsuit, the result could be very costly for Kansas taxpayers.

    Kansas Policy Institute has developed some estimates of extra cost to Kansans based on what schools are asking for. It’s a lot of money: over $2 billion per year.

    If the state chose to pay for this court-ordered spending through property tax, the mill levy would have to increase to 73 from 20.

    If financed through sales tax, the state-wide rate would increase to 9.8 percent from the current rate of 6.3 percent. Many counties, cities, and special taxing districts would continue to add to that rate.

    Or if paid for by individual income taxes, rates would need to increase by 54 percent.

    In all cases, local property taxes would rise by 14 percent for the local option budget portion of school funding.

    Full details are available from KPI at School Lawsuit Could Increase Property Taxes by 55%: Total Aid Per-Pupil Would Exceed $17,000.

  • In Kansas, there are ways to reduce the cost of government

    Recently-passed tax reform in Kansas has lead to fear that the state will suffer large deficits in upcoming years and will have to cut services like education and social services. There are many ways, however, that Kansas government can save money and still provide the essential services that Kansans rely on. One way is to improve the budgeting process.

    Something else Kansas needs to do is improve the operations and reduce the cost of state government. In 2011 the Kansas Legislature lost three opportunities to do just this. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the Senate, or had its contents stripped and replaced with different legislation.

    Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

    Kansas Streamlining Government Act

    HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.

    In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”

    In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”

    The bill passed the House of Representatives by a vote of 79 to 40. It was referred to the Senate Committee on Federal and State Affairs, where it did not advance.

    Privatization and public-private partnerships

    Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

    According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

    This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic.

    Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”

    Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans; to them it is our work.

    Then, there’s the warning that private industry pays less. Most of the time representatives of state workers like KOSE make the case that it is they who are underpaid, but here the argument is turned around when it supports the case they want to make. One thing is probably true: Benefits — at least pension plans — may be lower in the private sector. But we’re now painfully aware that state government has promised its workers more pension benefits than the state has been willing to fund.

    Performance measures

    Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

    This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2, with Wichita’s Nile Dillmore and Geraldine Flaharty the two nay votes. In the Senate, this bill was stripped of its content using the “gut-and-go” procedure and did not proceed intact to a vote.

    Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

    These proposals to scale back the services that government provides — or to have existing services be delivered by the private sector — mean that there will be fewer government employees, and fewer members of government worker unions. This is another fertile area of gathering support for killing these bills.

    State workers and their supporters also argue that fewer state workers mean fewer people paying state and other taxes. Forgotten by them is the fact that the taxes taken to pay these workers means less economic activity and fewer jobs in the private sector. And, in fact, Kansas has seen the number of government workers — at all levels — rise.

    As to not wanting performance measures: Supporters of the status quo say that people outside of government don’t understand how to make the decisions that government workers make. In one sense, this may be true. In the private sector, profitability is the benchmark of success. Government has no comparable measure when it decides to, say, spend some $300 million to renovate the Kansas Capitol. But once it decides to do so, the benchmark and measurement of profitability in executing the service can be utilized by private sector operators. Of course, private contractors will be subject to the discipline of the profit and loss system, something again missing from government.

  • Reducing Kansas taxes and government footprint

    Across Kansas editorial writers and candidates for state offices are harshly criticizing the new tax policy passed this year. Editorials with titles like “Tax cut is huge gamble” predict doom and gloom for our state. But we’ve been in the doldrums in Kansas, and reducing taxes is a good first step on the road to recovery for many reasons.

    The most fundamental reason we need to reduces taxes in Kansas is that the money people earn belongs first to themselves, not the government. Not everyone believes this. You can tell these people when they talk about the cost of a tax cut. An example is a recent op-ed by KU political science professor Burdett Loomis, when he wrote “We will, however, discover the public costs to disbursing these private benefits.” The political class believes the current level of taxation belongs to them, and any reduction in tax revenue is a cost to government.

    The correct view is that government is a cost to taxpayers. Reducing that cost leaves more money in the pockets of people, where it belongs. Reducing taxes is the correct thing to do for this reason.

    Another reason to reduce taxes is that it leaves more money in the hands of the private sector. Examples of government waste, fraud, and abuse are everywhere. No one spends money as carefully as their own, so leaving money in the private sector almost guarantees the money will be spent or invested more wisely than sending it to government to spend.

    As far as the prediction of drastic cuts in services or the shifting of costs to local property taxes, Kansas Policy Institute has shown that reducing state spending by 6.5 percent in 2013 — and then working to control the rate of increase — will result in a balanced budget. Who doesn’t believe that government can cut spending by that amount and still provide essential services? Kansas employs no budgeting methodologies that have been shown to root out wasteful and unneeded spending. Two examples are zero-based and priority-based budgeting.

    Some complain that there is no evidence that cutting taxes will spur economic growth and job creation. An example is from the Loomis op-ed: “There is simply no evidence, nor any studies, to suggest that tax reductions alone can ever generate this kind of economic growth, much of it untaxed.” (Note the lament that the growth won’t be fully taxed.)

    We don’t have to look hard to find evidence that low taxes work. We can’t perform controlled experiments regarding states and income tax rates, but we can look at what has happened in the states. There, the results are striking. Analysis in the current edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index shows that low taxes are conducive to economic growth: “When it comes to growing gross state product (GSP), the [states with no personal income tax] have, on average, outperformed those states with the highest rates by 39.2 percent over the past decade. They have also outperformed the U.S. average by 25.6 percent. Additionally, not even one state in the high tax rate group performed as well as the average no personal income tax state.”

    We also need to face the grim realization that the Kansas economy has not been performing well. Rich States, Poor States evaluates state economies two ways. The “Economic Outlook Ranking” is a forecast looking forward. It is based on factors that are under control of the states. The “Economic Performance Ranking” is a backward-looking rating that measures state performance, again using variables under control of each state.

    For Economic Performance Ranking, Kansas is ranked 39 among the states, near the bottom in terms of positive performance. In the 2010 edition, Kansas was ranked 40th, and in 2010, 34th. Kansas is not making progress in this ranking of state performance.

    In the forward-looking Economic Outlook Ranking, Kansas ranks 26th. Again, Kansas is not making progress, compared to other states. In annual rankings since 2008 Kansas has been ranked 29, 24, 25, 27, and now 26.

    Recently the Tax Foundation released a report that examines the tax costs on business in the states and in selected cities in each state. The news for Kansas is worse than merely bad, as our state couldn’t have performed much worse: Kansas ranks 47th among the states for tax costs for mature business firms, and 48th for new firms. The report is Location Matters: A Comparative Analysis of State Tax Costs on Business.

    The most startling fact, and one that should be a wake-up call to anyone who cares about the future of Kansas, is the uncovering by Kansas Policy Institute that not long ago, Kansas was the only state to have a loss in private sector jobs over a year-long period.

    All the spending on schools, highways, and other government programs that are supposed to spur our economy to greatness lead to this: last place. The only state with private-sector job loss. We couldn’t have done worse.

    You might think that this evidence would matter to those who care about the future of Kansas. Judging from the flurry of opposing editorials the last month, it doesn’t seem to have an impact.

    Kansas will do better by leaving more of its citizens’ resources in the private sector, under their own control. Cutting taxes — and government spending to match — is the way to generate prosperity in Kansas for all of its citizens.

  • School funding suitability in Kansas

    As a Kansas court considers intervening in Kansas school finance, the importance of accurate and meaningful evidence on school funding should be the court’s top priority. Supporters of increased school funding rely on two studies that they claim supports more funding for schools. An analysis by Kansas Policy Institute is helpful in understanding why the studies relied on in the past should be discarded.

    “Suitable” Funding of K-12 Should Not be Based on Montoy

    Augenblick & Myers Gave the Court Deliberately Inflated Numbers

    June 7, 2012 — Wichita — The attorneys representing Kansas school districts suing taxpayers for additional funding in Gannon v. State of Kansas are trying to prove that the state is not making suitable provision for K-12 funding. Their definition of “suitable” is based on a formula that the legislature implemented after the Kansas Supreme Court ordered nearly a billion dollar increase in the 2005 Montoy decision. But the Montoy decision was based on a seriously flawed study.

    “Basing suitability on the Montoy decision or any variation thereof throws efficient use of taxpayer money out the window. The 2001 Augenblick & Myers (A&M) study was supposed to take efficiency into account but they admitted that they deviated from their own methodology and by doing so, gave the court inflated numbers,” said Kansas Policy Institute president Dave Trabert.

    KPI published a legal analysis of Montoy in 2009 that was written by Caleb Stegall, now Gov. Brownback’s general counsel. Stegall wrote a critique of the previous efforts to determine suitability with a nod to cost-effectiveness that still holds today, “So while the Legislative Post Audit (LPA) study — and the A&M study for that matter — attempted to provide informed estimates of the price of certain policy decisions, in the end, LPA rightly recognized that only the Legislature is capable of making such decisions. As such, the best that any cost study can do is inform the Legislature as to the range of possible costs associated with different policy decision, and not dictate the exact price tag associated with a funding system that passes constitutional muster. This fact simply brings critical clarity to the contradictions at the heart of the school finance debacle in Kansas.”

    Trabert continued, “The subsequent Legislative Post Audit study was designed to essentially replicate the A&M study. LPA very deliberately reported that they were not asked to determine what it would cost if schools were organized and operated in a cost-effective manner.”

    LPA made this very clear on page two of their report. “In other words, it’s important to remember that these cost studies are intended to help the Legislature decide appropriate funding levels for K-12 public education. They aren’t intended to dictate any specific funding level, and shouldn’t be viewed that way.

    Finally, within these cost studies we weren’t directed to, nor did we try to, examine the most cost-effective way for Kansas school districts to be organized and operated. Those can be major studies in their own right. However, such issues potentially could be addressed in the on-going school audits we’ll be doing after these cost studies are completed. Topics for those audits will be approved by the 2010 Commission, which was created by the 2005 Legislature.”

    The 2010 Commission waited three years to have LPA begin to look at efficient operations of schools. They released a study in July 2009 that cited eighty recommendations for schools to save money without impacting outcomes. The next step was to have been audits of individual districts but superintendents objected and convinced the Commission to stop the mandatory efficiency audits.

    Trabert continued, “All along the way, the Legislature has attempted to receive information on the efficient use of taxpayer money in public education but their efforts have been thwarted. They passed legislation that encouraged districts to direct 65 percent of funding into Instructional costs in another attempt to ensure that taxpayer money was put to the best use but districts ignored them. Instruction spending accounted for 53.6 percent of total spending in 2005; total spending was $1.3 billion higher in 2011 but Instruction spending was only 54.3 percent of the total. Upon discovering that districts had used another $400 million in state and local tax dollars to increase cash reserves since 2005, legislation was passed to make a lot of that money easily accessible but very little of the money has been used.”

    Trabert concluded by saying, “Legislators have shown multiple good-faith efforts to make provision for suitable finance of public education and we believe they have fulfilled their constitutional obligation to do so. ‘Suitability’ may not be a clearly-defined term but it certainly hasn’t been established by any study to date.”