Category: Publications

How the PERS Pac-Man Eats Teacher Salaries

By Steve Buckstein and Kathryn Hickok

What do Pac-Man and public pensions have in common? An intriguing 2016 national study of pension debt and teacher salaries recently answered this question. Depending on what economic assumptions are made, it’s likely that unfunded public pension liabilities for all states and local governments exceeded $6 trillion last year. Based on the same assumptions, Oregon’s share of those liabilities likely approached $50 billion.

The study, The Pension Pac-Man: How Pension Debt Eats Away at Teacher Salaries, by Chad Aldeman of Bellweather Education Partners, concluded that unfunded public pension liabilities are eating away at teacher salaries in every state—just like the arcade game. This happens because the school districts teachers work for have to pay an increasingly larger share of their budgets into retirement funds for teachers who are no longer teaching, at the expense of those currently in the classroom.

To stop the PERS Pac-Man from eating teacher salaries, Oregon’s Governor and state legislators need to get serious about PERS reform. They should end the “defined-benefit” elements of PERS for all work done in the future. Instead, public employees, including teachers, should move to 401(k)-style retirement plans. The costs to future teachers, schools, and taxpayers will only get worse if we don’t end the PERS Pac-Man once and for all.

Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization. Kathryn Hickok is Executive Vice President at Cascade.

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Right to Try Goes National

By Steve Buckstein

Last week President Trump signed a national Right to Try law, allowing terminally ill patients the right to try drugs that have gone through part of the FDA testing process but are not yet approved.

In 2015 Cascade Policy Institute helped craft Oregon’s Right to Try law, but with two troubling restrictions. First, patients must be 18 years of age or older; and second, “in a physician’s reasonable medical judgment” patients will die within six months.

Neither of these restrictions is in the new federal law. One of the witnesses at the bill signing was Diego Morris of Arizona. Diagnosed with a deadly form of cancer when he was just 11 years old, Diego was denied a possible treatment because it was not approved in the U.S. It was, however, approved in other countries; so his family spent months in England where Diego was treated. Years later, he is still cancer-free.

Diego came to Oregon in 2015 to help us pass Oregon’s law. When someone asked him whether such laws offer false hope to desperate patients, this then-fourteen-year-old teenager answered: “There is no false hope, only hope.”

We hope that as legal issues are clarified, the new national law will “trump” Oregon’s law and offer all terminally ill Oregonians real hope for a better future.

Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Children’s Scholarship Fund Gives Low-Income Parents Real Education Choices

By Kathryn Hickok

This spring, the Children’s Scholarship Fund-Oregon program sponsored by Cascade Policy Institute is celebrating twenty years of giving low-income parents more choices in education through partial-tuition grade school scholarships.

The Children’s Scholarship Fund was founded by the late Ted Forstmann and John Walton, who donated $100 million together and partnered with scholarship organizations across the country, raising money from supporters in each community, to award the initial 40,000 scholarships in 1999. Here in Oregon, the parents of more than 6,600 children applied for the first 550 scholarships.

Over the last two decades, CSF and CSF partner program scholarship alumni have gone on to higher education or career training and are pursuing jobs in fields as diverse as business and finance, law, advertising, computer science, and the arts.

An Oregon scholarship recipient once said: “What [the Children’s Scholarship Fund has] given me is so much more than money; you have given me opportunity, confidence, faith, and trust that life has meaning, and that I am meant to succeed no matter what obstacles come my way.”

Our founders often said, “If you save one life, you save the world.” By offering parents the opportunity to choose which school best fits their child’s needs, the Children’s Scholarship Fund puts the power of education back in the hands of parents, where it belongs.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also director of Cascade’s Children’s Scholarship Fund-Oregon program, which provides partial tuition scholarships to Oregon elementary students from lower-income families.

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New Transportation Tax Is on the Wrong Side of History

By John A. Charles, Jr.

Oregon employers began receiving notices this week regarding the new statewide transit tax that goes into effect on July 1. The law requires all employers to withhold, report, and remit one-tenth of one percent of wages paid to their employees to the Oregon Department of Revenue. The money will go into a Statewide Transportation Improvement Fund to subsidize public transit agencies.

The new tax is being imposed at exactly the wrong time in history. Transit ridership is declining across the country, and it’s not because transit agencies lack money. The problem is that their service models are obsolete.

The ride-hailing revolution brought about by Uber, Lyft, Sidecar, and other start-ups has raised the expectations of customers. People now want on-demand, door-to-door service that they can order through their phones. The coming revolution in driverless cars will only accelerate that change.

The traditional service offered by legacy transit agencies—fixed-route, limited-schedule service on slow buses—just isn’t good enough anymore.

Subsidizing transit with one more tax will simply delay the inevitable. The legislature should repeal this tax as soon as possible.

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

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Underestimating Public School Spending

By Steve Buckstein

A 2017 national poll on education issues found, among other things, that most Americans underestimate how much money is being spent to educate kids in their local public schools. College-educated whites, for example, underestimated school spending by a fourth, while less-educated whites underestimated spending by almost a third. Before finding out the real numbers, 55 percent of the more-educated group favored higher spending, while 46% of the less-educated did so.

But, when told the actual spending levels, support for higher spending dropped by 14% among the more-educated and by 12% among the less-educated.

While the poll didn’t break down results by state, we know the big cry in Oregon is that we aren’t funding schools adequately. In reality, we were recently spending $14,827 per student in average daily attendance, compared to the national average of just $13,900. We spend more than 30 other states.

When more Oregonians learn this surprising truth, their support for higher school spending may drop, hopefully to be replaced by support for policies that might actually make a difference. One such policy is a universal Education Savings Account program that offers a portion of current school spending to families interested in choosing between their local public schools, private, religious, online, and home schools. Such choices can save tax dollars and improve educational outcomes. Win, win.

Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization.

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School Choice Leads to Student Success

By Kathryn Hickok

Parents know a solid education prepares their children for life, and that path begins in grade school. But many Oregon families are trapped in public schools that don’t meet their kids’ educational needs. While families with greater means can move to neighborhoods with public schools they like, or pay twice for education by opting for a private school, lower-income families often don’t have those options.

And those families’ children are at the greatest risk of not graduating from high school. According to the National Association of Education Progress, only 33% of Oregon fourth-graders tested “proficient” in reading in 2017. Our state continues to have the third-lowest graduation rate in the country. Nearly half the children born into poverty will stay in poverty as adults. Changing those outcomes requires a solid early education leading to graduation and employment.

This spring, the Children’s Scholarship Fund-Oregon program sponsored by Cascade Policy Institute is celebrating twenty years of giving low-income parents more choices in education, so their children can have a better chance. As director of the Children’s Scholarship Fund-Oregon, I’ve watched how partial tuition scholarships, funded by private donors in our community, have changed the trajectories of our students’ lives, sparking their passion for learning and helping them fulfill their potential.

One of the Children’s Scholarship Fund-Oregon’s first scholarship recipients described her experience this way: “My parents…wanted my brother and me to be placed in an environment where we would be academically challenged and be able to succeed….What [the Children’s Scholarship Fund has] given me is so much more than money; you have given me opportunity, confidence, faith, and trust that life has meaning, and that I am meant to succeed no matter what obstacles come my way.”

Every child should feel that way, and with school choice they can.

In 1998, philanthropists Ted Forstmann and John Walton wanted to jumpstart a national movement that would support low-income parents wanting alternatives to faltering government schools. Pledging $100 million of their own money, Forstmann and Walton challenged local donors across the U.S. to match their gift and help them offer 40,000 low-income children the chance to attend the tuition-based schools of their parents’ choice. That challenge became the Children’s Scholarship Fund and a national network of independently operating private scholarship programs for K-8 children.

But instead of 40,000 applicants, the Children’s Scholarship Fund heard from 1.25 million low-income parents nationwide. Here in Oregon, parents of more than 6,600 children in the Portland tri-county area applied for 500 available scholarships. Forstmann and Walton found out quickly that low-income parents were desperately seeking a quality education they couldn’t find in their local public schools.

They believed that if parents had meaningful choices among educational options, children would have a better chance at success in school. Twenty years of data have proven this true. Studies of college enrollment and graduation rates of scholarship alumni have shown that, despite coming from socioeconomic backgrounds associated with lower rates of college enrollment, Children’s Scholarship Fund students enroll in college at an average rate that is similar to or higher than the general population.

In other words, education in private grade schools is closing the achievement gap for kids from less advantaged backgrounds.

Ted Forstmann was known to say, “If you save one life, you save the world,” and “if you give parents a choice, you will give their children a chance.” Thanks to Forstmann, John Walton, and private donors in Oregon and 18 other states who have supported low-income parents in their quest for a quality education, more than 166,000 children have been a given that chance through scholarships worth more than $741 million. By offering parents the opportunity to choose which school best fits their child’s needs, the Children’s Scholarship Fund puts the power of education back in the hands of parents, where it belongs.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also director of Cascade’s Children’s Scholarship Fund-Oregon program, which provides partial tuition scholarships to Oregon elementary students from lower-income families. A version of this article was originally published by the Pamplin Media Group and appeared in The Gresham Outlook on April 24, 2018.

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Charters Schools Are a Laboratory for Innovation Within Public Education

By Kathryn Hickok

This is National Charter Schools Week. Did you know almost half of Washington, D.C.’s public school children attend tuition-free charter schools? In fact, our nation’s capital now has 120 charters, run by 66 nonprofit organizations.

President Bill Clinton signed the legislation authorizing D.C.’s charter schools more than twenty years ago. Since then, D.C. charter school students have made significant academic gains. A 2015 study on urban charter schools by the Center for Research on Education Outcomes at Stanford University found that D.C. charter students are learning the equivalent of 96 more days in math and 70 more days in reading than their peers in traditional public schools.

David Osborne, director of the project Reinventing America’s Schools at the Progressive Policy Institute, has called D.C. “the nation’s most interesting laboratory” for public education. In an article for U.S. News and World Report, Osborne compares the traditional public school system with a Model T trying to compete on a racetrack with 21st century cars. “…[F]or those with greater needs,” he writes, “schools need innovative designs and extraordinary commitment from their staffs.”

Charter schools’ entrepreneurial governance model allows them to innovate, adapt, and specialize to meet the particular needs of students. Their success in educating children who face the greatest challenges to academic achievement is fueling an even greater demand for the kind of choice in education that charter schools have come to represent.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Throwing Money at Homelessness Is a Failed Strategy

By John A. Charles, Jr.

Portland Mayor Ted Wheeler hopes to spend $31 million next year addressing homelessness. This is ten percent more than Portland is spending this year. According to the Mayor, the goal is to help place people in permanent housing.

Of course, ending homelessness has been a goal of Portland mayors for decades. They never solve the problem because they conceptualize the homeless as an amorphous blob. But every person who lacks housing has a unique set of circumstances, and that background has to be understood.

It’s much more complicated than simply building more housing. Some people don’t want to live in a traditional home. They may have a psychological need to be outside. Others don’t want the responsibilities that come with home ownership, such as maintaining a yard and paying taxes. Some people have drug addictions that prevent them from earning enough income to afford housing.

While specific facts change, certain principles don’t; and the most important one is that simply giving people free stuff doesn’t work. Everybody deserves a hand up; no one benefits from a handout.

Before spending another $31 million, the Mayor should tell us what will be different this time around. If he can’t answer the question, he shouldn’t get the money.

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

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What’s Better for Low-Skilled Workers: Higher Minimum Wages or Lower Taxes?

By Kathryn Hickok

What’s better for welfare recipients and low-skilled workers: a higher minimum wage, or a larger Earned Income Tax Credit (EITC)? David Neumark, director of the Economic Self-Sufficiency Policy Research Institute at the University of California, Irvine, explains in a recent op-ed in the Wall Street Journal why the EITC benefits low-income single parents more over time than does a higher minimum wage.

The Earned Income Tax Credit is a tax benefit for low-to-moderate-income wage earners who have dependent children. By reducing the amount of taxes owed, the EITC lessens the impact of taxation on earned income when people enter the workforce, and therefore can provide a strong incentive to transition off public assistance.

“The minimum wage does, of course, provide an immediate boost to earnings of employed workers,” Neumark writes. “But evidence indicates that minimum wages reduce employment among young workers, costing them work experience that generates earnings growth in the long run. One of my recent studies shows that the shift to higher minimum wages since 2000 has contributed significantly to declines in employment among teens in school, which can reduce adult earnings later.”

“Because it promotes work,” he adds, “the EITC should do the opposite among those eligible for its most generous benefits—low-skilled single mothers….The evidence shows that exposure to a more generous EITC leads to markedly higher earnings in the long run among less-educated single mothers.”

Neumark recommends that if lawmakers want to pursue policies “that help turn government assistance…into economic self-sufficiency,” they should incentivize work. Rather than make it harder to enter the workforce, lawmakers should make it easier for working parents to keep more of the money they earn. They’ll not only take home more of their paychecks, but they’ll also increase the skills and experience that will raise their wages. That combination is a winning path out of poverty and government dependence for working parents and their children.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Amateur Hour at the State Land Board

By John A. Charles, Jr.

Oregon owns 1.5 million acres of School Trust Lands that must be managed for the benefit of public education. When profits are earned, the money goes into the Common School Fund, an endowment. Last year, the Fund distributed more than $70 million to local schools.

The Trust Lands are managed by the State Land Board, comprised of the Governor, the State Treasurer, and the Secretary of State. By policy, they are supposed to sell money-losing lands and keep the profitable ones.

Unfortunately, they tend to do the opposite. At its April meeting, the Board voted to sell a 3-acre industrial parcel in Washington County. There was no compelling reason to sell, as the property had an internal rate of return of 8% since it was purchased in 2012.

The state also owns 74,000 acres of timberland within the Elliott State Forest, near Coos Bay. Earnings on the Elliott have been spiraling downwards since the 1990s. In 2013, it finally started losing money and is expected to continue doing so for the foreseeable future. These losses take money directly out of public school classrooms.

In November 2016, the Board received an all-cash offer of $221 million dollars for the Elliott from a consortium of private landowners and tribal nations. That offer was rejected last year.

Students deserve professional management of their assets. They will never get it from the State Land Board because it’s made up of politicians. It’s time to amend the Oregon Constitution to remove trust land management from the Board’s jurisdiction.

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

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