Month: September 2012

Oregon’s Real Education Spending Has Quadrupled Since 1957

Advocates on all sides of the public education spending-versus-results debate can cite various statistics to make their respective cases. Some argue that more money leads to better results. Others (myself included) cite studies that show spending more dollars per student―at least in the ways our public school system has spent them―makes little or no difference in educational outcomes.

Now, another fascinating fact has come to light. Oregonian education reporter Betsy Hammond recently wrote an article about what she found in an old 1957 U.S. Census document entitled “Finances of School Districts.”It turns out that Oregon spent more per pupil that year than any other state―a whopping $356, which was almost 40 percent more than the national median of $256. Of course, these were “current operating expenditures” and likely excluded items such as construction and debt service, which today raise total per pupil spending on the order of sixteen percent.

While Hammond didn’t inflation-adjust those numbers to what they would be today, it’s easy enough to do. Using the U.S. Bureau of Labor Consumer Price Index Calculator, Oregon’s $356 in per student spending in 1957 dollars is the equivalent of about $2,919 in today’s dollars.

So, what are we actually spending per pupil in Oregon today? The latest full data reported by the nation’s largest teachers union, the National Education Association, shows Oregon spent $11,391 per enrolled student in the 2009-10 school year. That’s nearly four times what we spent in 1957. And while it is about four percent below what was being spent nationally ($11,841), when you compare that difference to the fact that per capita income of Oregonians recently has been almost nine percent below the national average, you will see that Oregonians are actually funding our public schools at a higher level than the nation, compared to our ability to pay.

Even acknowledging that there are slightly different ways to count students (enrolled, average daily membership, fall enrollment, etc.) and different ways to tally spending (current or total), the order of magnitude between what we spent in 1957 and what we spent recently is so large that such differences pale in comparison.

Any way you look at the numbers, after adjusting for inflation, Oregon is spending several times what we spent per public school student in 1957. So, what are we getting for that increase?

State by state educational outcome comparisons are hard to come by for the 1950s, but more recently the national publication Education Week has rated all state school systems on a number of criteria. In 2010, 2011, and 2012, Oregon ranked 43rd overall, which gave us a C- report card score. On K-12 Student Achievement alone, we rated a D all three years. Unless Oregon rated an F on some similar scale in 1957, it is hard to see how spending nearly four times as much per student as we spent then is giving us any appreciable bang for our harder-to-come-by bucks.

So, rather than look for ways to spend in real terms, say, five times what we did in 1957, we should let families spend the dollars we do have on the public, private, religious, or home schools of their choice. School choice breaks up the monopoly control of teachers unions and the educational establishment. Unleashing consumer power gets more bang for the buck in other areas of the economy; it’s time to put it to work in education.

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Hospital Apologizes, PDC Repeats the Tragedy

Last Friday, Legacy Emanuel Hospital held a breakfast to apologize to the North Portland community for bulldozing nearly 300 homes and businesses 40 years ago. Hospital administrators conspired with Portland urban renewal officials to secretly plan a 55-acre expansion in the Albina neighborhood. By the time affected property owners were informed, the final decision had been made. The city used its powers of eminent domain to seize all private property within the district, destroying a vibrant African American community.

Hospital officials now admit they were wrong and promise never to do it again. Unfortunately, their colleagues at the Portland Development Commission (PDC) haven’t learned the same lesson. PDC is teaming up with TriMet to build the Portland-Milwaukie light rail line. Sixty-eight businesses and twenty residences will be destroyed to make way for the slow train, at a taxpayer cost of $1.5 billion.

This is a tragic waste of money, time, and energy. The Portland-Milwaukie corridor is already served by five TriMet buses, including express and local service. There will be no public benefits to the light rail line, yet 88 private buildings will be lost.

If urban renewal officials refuse to learn from experience, we should take away their powers. The State of California did this last year when it abolished all urban renewal districts. Oregon should do the same when the legislature convenes in 2013.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Doubling the Sellwood Bridge for the Use of the Two Percent

By Michael Nielsen

For more than six years, Multnomah County has been considering how best to replace the Sellwood Bridge. The adopted plan calls for removing the current bridge and replacing it with a new one that is twice as wide.

However, none of the new space will be available for cars, even though cars carry nearly 98% of all passenger-trips during the peak hours. Only about 40% of the new bridge will be allocated to vehicular travel, with the other 60% dedicated to non-motorized transportation in the form of bikeways and mega-sidewalks.

The new bridge does need more space for cyclists and pedestrians because the current bridge was never designed for them. There are only about four feet for cyclists and pedestrians to maneuver around each other. However, there is no reason to allocate 60% of bridge space to satisfy two percent of all travelers.

County Commissioners were recently shocked to discover that the price tag for the bridge has increased by $70 million since last year. If planners want to save money, they should reduce the width of the bridge. Planning for two 12-foot sidewalks to accommodate a few hundred pedestrians is simply a waste of resources. Thirteen feet in all will be added to please the bikers. It is important to be honest about how people actually use this bridge. During rush hour, every time 1,200 people cross the bridge via motor vehicle, only about 21 cross the bridge on bikes. Furthermore, only three cross the bridge by foot.

In addition, the new Sellwood Bridge will have a weight capacity of only 13 tons, excluding many commercial and private trucks from crossing the bridge. Before 2004, the old bridge was thought to hold a maximum of 32 tons. Since then, however, it has been deemed unsafe for anything over ten tons. According to Multnomah County’s website, “weight limits prevent many companies from using the bridge, forcing out-of-direction travel that adds to congestion on other routes and increases costs to businesses and consumers.” While the weight capacity is being increased slightly, it will be impossible for heavier trucks to use the bridge.

Given the above criticisms, the new Sellwood Bridge could be built more effectively in a number of ways. Reducing the width and increasing the weight capacity would serve the needs of the community better. The savings from the width modification could be more efficiently used to increase the structural integrity of the bridge. This would not force large trucks to go out of their way downtown in order to cross the river.

With the total cost of the bridge at approximately $299 million, planners should look for opportunities to cut expenses. When considering the odd and, at times, useless characteristics of the bridge (along with the half million dollars being spent on decorative columns), it is hard to justify the current plans from a cost efficiency perspective.

Much of the thought process going into this plan has been political in nature. This is an effective strategy only when the purpose of building a bridge is to make Portland appear more bike-friendly. Ultimately, the cost of the new Sellwood Bridge will be paid by taxpayers. It is only just that the real transportation needs of the community be addressed by the bridge’s capacity and design.

Michael Nielsen is a research associate at Cascade Policy Institute, Oregon’s free market public policy research center. Nielsen is a student at California State University, Chico.

 

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“A Republic, If You Can Keep It”

Our Constitution is 225 years old this week. In a famous story, a woman asked Benjamin Franklin, “Well, Doctor, what have we got, a republic or a monarchy?” He replied, “A republic, if you can keep it.”

Constitutionally limited government was our new country’s distinctive characteristic. But while we have rights as individuals, we are also members of society. Limited government works best when our common values act as our rights’ line of first defense. John Witherspoon, a member of the Continental Congress from New Jersey and a signer of the Declaration of Independence, wrote: “A Republic must either preserve its virtue or lose its liberty.”

Personal virtue, honesty, responsibility, and courtesy are the basis of relationships, communities, and a sound marketplace. Expanding government regulations will fill the vacuum created when people don’t respect each other, keep their word, or deal fairly with others. Every time we experience an epic failure of honesty, integrity, and justice, government responds with thousands of pages of laws and regulations.

Defending American freedom and minimizing intrusive government require both standing up for our founding principles and proactively living with integrity. “Character,” it is said, “is doing what is right when no one is looking.” If we do that, we’ll keep our Republic. When we don’t, government will arbitrate, and regulation will increasingly dictate every aspect of American life.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

 

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The Unsustainability of Green Buildings

By Victoria Leca

Portland politicians and civic leaders have tried to “brand” the city as a world leader in “sustainable development” for the past decade. Now that Portland has so many buildings built to so-called “green standards,” it’s appropriate to take a look back at the track record.

One of the first eco-buildings built in Portland with help from the local government was Viridian Place in Lake Oswego. It is a three-story office building with 15,000 square feet, built by Blazer Development and CES Northwest. Construction on the building began in 1999, and the building opened two years later. The cost was $2 million or $130 per square foot. It has maximum exposure to sunlight, low-flow water fixtures to cut use by 20 percent, and efficiency measures to reduce energy consumption by 40 percent. It was the region’s first LEED project, and people all over the world came to look at it and tried to replicate the model. However, the problem with replication is that the project was not financially viable without government subsidies.

The developers went to the Oregon Office of Energy, which offers low-interest, fixed-rate, long-term loans for projects that save or produce energy. The low-cost energy loans serve as incentives to encourage businesses and governments to incorporate energy efficiencies into their projects and “get more for their money.” The money is geared towards only the energy saving parts of the project; but the loan committee can recommend financing for the entire project, if it qualifies as a demonstration project.

In the case of Viridian Place, the entire project qualified as a “demonstration” project since it was one of the first eco-buildings in Portland. In order for a project to be placed into this category, the project has to act as a model for subsequent projects, be visible to the general public, and be as energy efficient as possible. Viridian Place fell under all three categories. Thus, the Office of Energy Loan Program offered the developers of Viridian Place a $1.8 million loan for 15 years at a fixed rate of 7.11 percent. Commercial lenders at the time were charging nine percent interest rates for comparable loans.

“The Office of Energy loan made this facility possible,” said Tom Kelly in “Growing a Green Building,” a case study published by the Oregon Office of Energy. Kelly, a co-partner in the construction of Viridian Place, said he could not have started the project without the resources the Office of Energy provided. “They made it work. I wouldn’t have done it without them, because it would not have made economic sense,” he said. “We were on the edge of financial viability, and those programs helped make conservation make sense.”

One reason the building was financially infeasible was that the developers chose to install expensive solar panels that had a payback period of more than 40 years. From the developers’ perspective, it was worth the cost because they “wanted something to show our commitment. Without those solar panels there is nothing to say this is a sustainable building by looking at it.”

However, there is one way to offset the unwillingness of the customer to pay for a symbolic, but high-cost product: tax credits and low-interest loans from the government. At the time of Viridian Place’s construction, the Oregon Office of Energy offered Business Energy Tax Credits (BETC) to encourage investments in energy conservation, recycling, renewable energy resources, and less-polluting transportation fuels. Any Oregon business could qualify, and the tax credit was 35 percent of the project cost. Viridian Place received $21,136 in tax credits. The BETC program expired in July 2012, but provisions were added to a new Tax Credit Extension Bill which still allocate public money either to energy conservation projects or to renewable energy developments.

When developers apply for government help, they don’t think of how sustainable the project’s business model is or what their customers really want. When a project has such an unsustainable business model, it shouldn’t be touted as a ground-breaking, energy-saving project. In order for a project to be sustainable, it also must be financially sound.

Currently, another sustainable building faces the same financial dilemma. The now-stalled Oregon Sustainability Center needs to be massively subsidized with state funds and government tenants in order to be built. No private investor is willing to pay the high price of building an eco-building with a projected price tag of $62 million. The early lessons of Viridian Place seem to have been lost on Portland politicians.

Victoria Leca is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization. She is a student at Portland State University.

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Agassi Foundation for Education Is Tennis Great’s “Life’s Work”

Last Sunday tennis great Andre Agassi was inducted into the U.S. Open Court of Champions. Agassi is famous for regaining his #1 world tennis ranking after falling to #141. But today, he helps children in need of a quality education pull off their own extraordinary achievements. Since his retirement, the eight-time Grand Slam winner has dedicated his time, effort, and financial resources to developing charter schools for at-risk children as an alternative to failing conventional public schools.

“Education is a tool a child can use to create their own life and hopefully change the world,” Agassi explained. “…But once you start, you can’t stop….What are you going to do then? Send them back into a failing system?…[S]uccess is going to be these children coming back to their community and making a difference in the next generation.”

“The [Andre Agassi Foundation for Education] is my heart and soul,” Agassi has said. “It’s my life’s work. It’s my future.”

Innovative schools like Agassi’s succeed because the people behind them are results-oriented, entrepreneurial, and committed to making decisions that are professionally, fiscally, and educationally sound, maximizing the impact of the private philanthropic investments they work hard to raise. If Andre Agassi puts half the passion into education reform that he put into advancing his tennis career, America’s at-risk children can only come out winners.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

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“Kicking” Education Funding Around―Why Measure 85 may not do what you think

Please join us for Cascade’s monthly Policy Picnic. Senior Policy Analyst Steve Buckstein will lead a discussion of the proposal to reform Oregon’s corporate kicker, Measure 85.

Measure 85 on the November ballot purports to redirect any future corporate kicker funds to public education. Steve will discuss why that won’t necessarily happen, and what other agendas the public employee unions that put it on the ballot may have.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to ten guests on a first come, first served basis, so sign up early. To RSVP, email Patrick Schmitt at patrick@cascadepolicy.org or call 503-242-0900.

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Power Buoys or Expensive Anchors?

Commercial wave power soon may be coming to the Oregon coast. Last month, a New Jersey-based company, Ocean Power Technologies Inc., received the first federal permit to develop a 30-acre wave energy park near Reedsport. If successful, the facility would generate 1.5 megawatts of electricity from 10 buoys, enough to power 1,000 average homes.

While this sounds like a breakthrough for green energy, in fact it is just another example of Crony Capitalism. Ocean Power Technologies already has received grants of $4.4 million from the federal government and $420,000 from the Pacific NW Generating Cooperative, a $900,000 tax credit from the state of Oregon, and more than $430,000 from the Oregon Wave Energy Trust. Thus, each of the 1,000 homes receiving “wave power” will be subsidized by roughly $6,150.

That scenario assumes that the project ever produces electricity at all. The same company previously built the nation’s first wave energy generator off Hawaii, and it was decommissioned by the Navy after only two years of operation. Thus, there is a good chance that the Oregon project will never become commercially viable, and the taxpayer money will disappear.

This is the problem when politicians try to pick winners and losers in the economy. Nobody can predict the future, so most of the time they are wrong.

Wave energy yet may prove to be a great source of renewable energy, but choosing the right technology should be left to the private sector, where investors voluntarily bear all the risks as well as the rewards.

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“Kicking” Education Funding Around―Why Measure 85 may not do what you think

This November, Oregon voters will be asked to direct a highly uncertain, highly volatile, and relatively small amount of income tax money into the state’s General Fund, supposedly to help school children.

If Measure 85 would surely benefit kids, we might have a serious debate about it. But it won’t.

Measure 85 was placed on the ballot by several public employee unions. It would take any future corporate kicker money from businesses that paid those taxes and redirect it into the state’s General Fund to “…provide additional funding for public education, kindergarten through twelfth grade.”

As most taxpayers know, the “kicker law” requires state economists to estimate how much income tax revenue will be generated over each two-year budget period. If actual revenue exceeds the estimate by two percent or more, the entire surplus is returned to those taxpayers who earned it.

The kicker law covers both personal and corporate income taxes. The vast majority of income tax money comes from individuals. Corporate income tax receipts are often highly volatile and recently amounted to only seven percent of General Fund revenue.

Some argue that the way the kicker “kicks” makes little sense, because it is terribly difficult to estimate state revenue two years out. Others defend the law as an important brake on runaway government spending, especially since Oregon has no other strong tax or expenditure limitations.

Whether the kicker is good or bad policy, Measure 85 does not guarantee any benefit to public education, even though it implies that it will. This is because the General Fund can be allocated to various government programs at the full discretion of the legislature. So-called “Other Funds” are dedicated for specific purposes, as are federal funds the state receives. The General Fund is called that for a reason—it’s the one pot of money legislators can allocate at their discretion.

When asked whether Measure 85 guarantees more funding for public schools, the legislature’s Chief Deputy Legislative Counsel said in writing, “I think the answer to your question is no….[Measure 85] does not require the Legislative Assembly to appropriate a total amount of moneys from the General Fund to K-12 public education that is greater than what it might appropriate under current law.”

Of course, if Measure 85 passes, legislators will spend any future corporate kicker money on public education as it requires, but they then can turn right around and spend less than they otherwise might have on public education from the rest of the General Fund. Voters will have no way of knowing whether Measure 85 will result in more spending on public education or not.

Why? Because any new money in the General Fund will attract “special interests” arguing that they need some or all of that money for their own programs. And, those “special interests” may be some of the same public employee unions that put Measure 85 on the ballot in the first place. In particular, they might be unions whose members work in agencies not involved with public education.

This is the way the legislative process works now, and it will work virtually the same way if Measure 85 passes.

The fact that Measure 85 won’t ensure any additional spending on public education should be reason enough for voters to reject it. They also should oppose it because there are better ways to reform the kicker law. Reform could place all corporate and personal kicker money into a rainy day fund. Or, the entire kicker law could be replaced with a strong state spending limitation tied to the growth of population and inflation.

Whichever reform voters prefer, Measure 85 is arguably the worst way to reform the kicker. It will take money from the private sector and let state government grow without any assurance that Oregon’s school kids benefit at all. It should be rejected in November.

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