For years, Kansas has muddled in mediocrity in nearly every economic competitiveness index. This time is different. Due to the largest tax cut in state history being signed into law at the end of the 2012 legislative session Kansas jumped a remarkable 15 spots, to number 11 in Rich States Poor States, the premier  state economic competitiveness index. The outstanding improvement is in jeopardy as policy makers fail to address long term pension liabilities and debate raising the states’ sales tax.

Rich States Poor States is an annual publication written by Dr. Art Laffer, Stephen Moore of the Wall Street Journal (who will be speaking at KPI’s annual dinner on June 18th in Overland Park) and American Legislative Exchange Council's Jonathan Williams. The publication ranks each of the 50 states on 15 policy variables and economic performance.

Publications like this one help educate legislators and governors with the tools to understand which policies work and which policies waste taxpayer dollars. ~ Senator Rand Paul

While the 2012 session led to a great leap in Kansas’ competitiveness, next year much of that leap forward could be lost if we give in to calls for higher taxes. The legislature is currently debating a sales tax hike; without any change in the law sales taxes will be 5.7% on 1 July 2013 when the current 6.3% sales tax ends. The sales tax is estimated to take an additional $300 million from Kansas families each year.

Just as sound tax policy is based on a long-term vision the spending side of the ledger should also be structured with an eye to the future. Knowing this, Rich States Poor States highlights those states that are taking steps toward protecting promised benefits to retirees and reducing taxpayer future liabilities by transitioning to a 401(k) style plan. Kansas policy makers, unfortunately, failed to move the needle on public sector pensions. Instead of meaningful reform house members passed $1.5 billion in pension obligation bonds, a term most commonly associated with Illinois and California. Thankfully, the idea of adding more debt to get rid of state pension debt seems to be dead for the current session.

The result was a double loss for pension reform advocates in Kansas. There would be no structural reform, and the Kansas retirement system and taxpayers would take on $1.5 billion in additional debt. While the proposal for fundamental pension reform failed this session, fiscally conservative legislators and Gov. Brownback are optimistic that real reform will have a good chance of passing in the future. ~Rich States Poor States

There’s good and bad in this year’s Rich States Poor States for Kansas. We’ve made great strides in the income tax debate however the calls for more spending threaten to impose higher taxes on Kansans. While an inability to reach meaningful reform on growing pension obligations looms over our fiscal future.

The data could not be clearer.  Kansas has higher state taxes than many states because Kansas spends a lot more than those states.  Every state has public schools, highways, social services, safety net programs, etc.  But some states find ways to provide those services at a much better price.  They spend less and therefore tax less (and grow more).

This post is courtesy of Cato Health Policy Director Michael Cannon and the Cato Institute's @ Liberty Blog

Today, the nation’s top health economists released a study that throws a huge “STOP” sign in front of ObamaCare’s Medicaid expansion.

The Oregon Health Insurance Experiment, or OHIE, may be the most important study ever conducted on health insurance. Oregon officials randomly assigned thousands of low-income Medicaid applicants – basically, the most vulnerable portion of the group that would receive coverage under ObamaCare’s Medicaid expansion – either to receive Medicaid coverage, or nothing. Health economists then compared the people who got Medicaid to the people who didn’t. The OHIE is the only randomized, controlled study ever conducted on the effects of having health insurance versus no health insurance. Randomized, controlled studies are the gold standard of such research.

Consistent with lackluster results from the first year, the OHIE’s second-year results found no evidence that Medicaid improves the physical health of enrollees. There were some modest improvements in depression and financial strain–but it is likely those gains could be achieved at a much lower cost than through an extremely expensive program like Medicaid. Here are the study’s results and conclusions:

We found no significant effect of Medicaid coverage on the prevalence or diagnosis of hypertension or high cholesterol levels or on the use of medication for these conditions. Medicaid coverage significantly increased the probability of a diagnosis of diabetes and the use of diabetes medication, but we observed no significant effect on average glycated hemoglobin levels or on the percentage of participants with levels of 6.5% or higher. Medicaid coverage decreased the probability of a positive screening for depression [by 30 percent], increased the use of many preventive services, and nearly eliminated catastrophic out-of-pocket medical expenditures… This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

As one of the study’s authors explained to me, it did not find any effect on mortality because the sample size is too small. Mortality rates among the targeted population – able-bodied adults 19-64 below 100 percent of poverty who aren’t already eligible for government health insurance programs – are already very low. So even if expanding Medicaid reduces mortality among this group, and there is ample room for doubt, the effect would be so small that this study would be unable to detect it. That too is reason not to implement the Medicaid expansion. This is not a population that is going to start dying in droves if states decline to participate.

There is no way to spin these results as anything but a rebuke to those who are pushing states to expand Medicaid. The Obama administration has been trying to convince states to throw more than a trillion additional taxpayer dollars at Medicaid by participating in the expansion, when the best-designed research available cannot find any evidence that it improves the physical health of enrollees. The OHIE even studied the most vulnerable part of the Medicaid-expansion population – those below 100 percent of the federal poverty level – yet still found no improvements in physical health.

If Medicaid partisans are still determined to do something, the only responsible route is to launch similar experiments in other states, with an even larger sample size, to determine if there is anything the OHIE might have missed. Or they could design smaller, lower-cost, more targeted efforts to reduce depression and financial strain among the poor. (I propose deregulating health care.) This study shows there is absolutely no warrant to expand Medicaid at all.

In today’s Wall Street Journal, Christina Corieri describes how not expanding Medicaid will benefit the country and each state.

As the battle over Medicaid expansion rages in the states, supporters of expansion have dusted off an age-old favorite in making the case for taking federal dollars. They say: If our state doesn't take the money, those dollars will go to some other state instead. Happily, in this instance that is not true. When a state declines to expand Medicaid coverage to more people, no other state will receive its share of funds and federal spending declines. Based on figures from the Congressional Budget Office and analysis by the Kaiser Family Foundation, Washington was expected to spend roughly $950 billion expanding Medicaid between 2014 and 2022. Each state that declines to expand Medicaid relieves strain on the overall federal budget for this entitlement.

It’s no drop in the bucket either:

Using figures compiled by Kaiser and our own research at the state level, the Goldwater Institute estimates that the federal tab for Medicaid expansion has been reduced by more than $424 billion in new federal spending over the next eight years thanks to the 18 states that have already opted out. If the 12 still-undecided states also decide to opt out, there will be an additional $185 billion in savings.

According to Christina, Kansas' share of that savings is $6,696,000,000.

It’s also very likely current cost projections are understated:

In addition to protecting the federal budget, states that decline to expand their Medicaid coverage will protect their own budgets as well. States such as Arizona that voluntarily expanded their Medicaid programs in the past have faced much higher costs than expected. In 2005 alone, the program originally was projected to cost Arizona $315 million, but the actual cost that year was over $1.3 billion.

Lest we not forget the federal government’s track record on keeping promises:

States would be wise to remember that those who rely on assurances of federal dollars are often chasing fool's gold. A recent example is the Individuals with Disabilities Education Act, where Congress promised federal funding to the tune of 40% of program costs after 1982 but today funds only 17%.

The 2012 Workforce Development Report published by the Department of Administration shows that state-funded universities in Kansas have thousands more employees than the number of full time equivalent (FTE) employees authorized by the Kansas Legislature.  Even if this creates no statutory or budgetary issues, it certainly raises a number of transparency issues.  

Why isn't every position budgeted...and is this unique to universities or more widespread?  Do members of the Board of Regents know the exact employment level of each university (they certainly wouldn't know from the Databooks)?  Legislators and citizens should not be expected to piece together data from multiple reports to know how employees they are funding. 

The people whose job is to give money to corporations in return for promised new investment and jobs say that they give too much in too many deals, affirming what critics have been saying for a long time ~ “Giving Too Much With Too Little Scrutiny” (subscription required).

60.4% of the IEDC’s survey respondents feel there should be more transparency in financial incentive negotiations and 57% reported there are too many incentive deals in the U.S. It’s no surprise, considering state and local corporate giveaways top $80 billion each year, Kansas doles out over $1 billion. 

Images courtesy of Tax Analysts

Here's a little perspective on the current debate over state funding of Kansas universities.  The Senate is proposing a 2% reduction in state aid and the House is proposing a 4% reduction as part of the 2014-15 budget negotiations.  But reducing state aid by 2% or 4% is not the same as reducing universities' revenue by those percentages; universities also collect tuition, fees and have other income that supports their General Use Operating Expenditures.

State aid to universities (including the University of Kansas Med Center and the K-State Veterinary School) accounted for 48% of General Use Expenditures in 2012.  For the  sake of simplicity, let's say that state aid is half of General Use expenditures.

The impact on university expenditures of a reduction in state aid is therefore about half.  A 4% reduction in state aid would require a 2% reduction in expenditures; a 2% reduction in state aid would require a 1% reduction in expenditures.  

That assumes, of course, that universities would respond to a reduction in state aid by reducing expenditures.  As explained in our recent analysis, universities have a number of options to deal with potential changes in state aid without increasing tuition.

In the The Righteous Mind: Why Good People Differ on Politics and Religion, renowned psychologist Jonathan Haidt describes how the human mind is dual in nature: we live most of our lives in the ordinary world, but we achieve our greatest joys in those brief moments of transit to the sacred world, in which we become “simply a part of a whole.” 

A recent survey by the City of Wichita capitalized on this innate human tendency by equating community with government.  Our natural desire to become “simply a part of a whole” manifests itself in our jobs, churches, softball leagues, clubs, dinner parties and recently pride in WSU’s success in the NCAA tournament. Our citizenship in Wichita is one of many communities that define us as individuals, one of many communities we make sacrifices for, one of many communities we call upon to solve problems.

The survey respondents provide a list of wishes, all with the goal of improving our lives, many of which can and should be provided by city and county governments. Allowing businesses to openly compete to build water and street infrastructure, with competitive bidding for contracts, would strengthen the community by precluding any unfairness that weakens trust in the city.

Survey respondents showed a plea for business formation and young talent. The city could promote a sense of community by creating a welcoming culture for all businesses, one that does not pick favorites. 71.8% of respondents do not have faith that most people are willing to put community interests above personal interest—perhaps because so often city hall is called upon to hand out special tax treatment.

The survey also tries to identify challenges to the community; respondents were asked one question about Boeing and two questions about political divisions. Overwhelmingly respondents believe political divisions are negatively impacting our community’s ability to respond to global challenges.

In order to inform the debate KPI used the Beacon Hill Institute’s STAMP model to estimate the effects of making permanent Kansas’ once-temporary 6.3% sales tax. The STAMP model projects how the sales tax extension will affect economic and fiscal barriers relative to the baseline growth 

Further, any revenue gains from a higher sales tax rate would be partially offset by declining revenue elsewhere. Weakened job and income growth will cause nearly $40 million in reduced growth in personal income tax receipts each year through 2018. Growth in local sales and property tax collections will be $52.7 million lower in 2014 and $62.65 in 2018. According to the model the net tax revenue gain for state and local would be $125.04 million in fiscal year 2013 and $140.14 million in fiscal year 2018.

(Click image to enlarge)

While a sales tax increase is not as damaging as an increase in personal income taxes, any higher tax is associated with diminished economic growth. As Tax Foundation Chief Economist, Dr. William McBride, finds in his review of the academic literature: 

While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.

 

All the blood, sweat and tears you have poured into your job thus far this year went straight to Uncle Sam but you made it! April 9th is Kansas' 2013 Tax Freedom Day; from here on out the dollars you earn will be yours.

Each year the Tax Foundation calculates Tax Freedom Day, for the country and the each of the 50 states. The national average was April 18th, five days later than last year. Kansas' Tax Freedom Day arrived 6 days earlier than in 2012, thanks to last year’s income tax cuts. In spite of Kansas’ improvement our neighbors to the east and south still enjoy an earlier Tax Freedom Day.

 

 

 

This is a post by KPI Adjunct Fiscal Policy Fellow Barry Poulson, Ph.D.; Poulson is also Emeritus Professor at the University of Colorado - Boulder.

Public officials in Kansas have proposed using pension obligation bonds to solve the funding crisis in the Kansas Public Employee Pension System (KPERS). In my view this is not a solution to the funding problem and I will discuss what I perceive to be flaws in this proposal.

The rationale for using pension obligation bonds to pay off unfunded liabilities in the pension plan assumes that the state can borrow funds at a low interest rate and then earn a higher rate of return on the proceeds deposited with the pension fund. The flaw in this rationale is the assumption that KPERS will earn a higher rate of return on bond proceeds deposited in the KPERS fund. KPERS assumes an 8 percent return on assets accumulated in the fund. For a number of years, economists and actuaries have questioned this assumed rate of return and the use of this assumed rate to discount liabilities in the plan. The Government Accounting Standards Board has issued new standards, 67 and 68, to be implemented over the next two years, requiring state and local governments to use a lower interest rate, the mortgage bond rate, to discount liabilities in their financial statements.

If we assume that a lower rate of interest, such as the municipal bond rate, is the interest rate relevant in discounting unfunded liabilities in the pension plan then it is not clear that issuing pension obligation bonds will generate returns above the interest cost on those bonds. If the returns fall below the interest cost on the bonds then this introduces an additional risk and could in fact exacerbate the funding problem in KPERS.

A major flaw in the proposed issuance of pension obligation bonds is the lack of nexus between the investment of the bond proceeds and payments for unfunded liabilities in the plan. The experience in other states is that sometimes bond proceeds are earmarked for other state expenditures. The most egregious example of this problem is the state of Illinois which issued $10 billion in pension obligation bonds and then used the proceeds to meet current expenditures rather than to pay off unfunded liabilities in the pension plan.

Even if the state of Kansas would not commit this form of fraud on the taxpayers the fungible nature of state funding makes it impossible to guarantee the nexus between bond proceeds and the payment for unfunded liabilities in the pension plan. 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. The state has not allocated the annual required contribution (ARC) to KPERS for several decades and is not projected to do so for the foreseeable future. Legislators continue to promise pension benefits without allocating the funds required to meet these obligations. We should expect this moral hazard to be even greater with the issuance of pension obligation bonds.

Even if the proceeds of pension obligation bonds could be set aside in a lock box and earmarked to pay off unfunded liabilities in the pension plan the state must still address the accumulation of unfunded liabilities in the defined benefit plan. Without fundamental structural change, including shifting public employees to some form of defined contribution pension plan, these unfunded liabilities will continue to accumulate. Legislators should not be diverted from this difficult task by non-reforms, such as the issuance of pension obligation bonds.

Shifting the cost of pension obligations from one generation of employees and taxpayers to the next generation is not a solution to the funding crisis in KPERS. The defined benefit plan offered by KPERS is not sustainable.

I analyze the sources of unfunded liabilities in the plan and explore alternative reforms to solve this problem in an upcoming paper with KPI.

Some of my other work for KPI on KPERS is here and a legal analysis of what can, and cannot, be changed in KPERS is here; the latter piece was done by another scholar.

The New York Times reports:

A growing number of lawmakers across the country are taking steps to redefine public education, shifting the debate from the classroom to the pocketbook. Instead of simply financing a traditional system of neighborhood schools, legislators and some governors are headed toward funneling public money directly to families, who would be free to choose the kind of schooling they believe is best for their children, be it public, charter, private, religious, online or at home.

The article goes on to tell the story of Nydia Salazar:

Some parents of modest means are surprised to discover that the education savings accounts put private school within reach. When Nydia Salazar first dreamed of attending St. Mary’s Catholic High School in Phoenix, for example, her mother, Maria Salazar, a medical receptionist, figured there was no way she could afford it. The family had always struggled financially, and Nydia, 14, had always attended public school.  But then Ms. Salazar, 37, a single mother who holds two side jobs to make ends meet, heard of a scholarship fund that would allow her to use public dollars to pay the tuition. She is now trying to coax other parents into signing up for similar scholarships. “When I tell them about private school, they say I’m crazy,” she said. “They think that’s only for rich people.”

It is truly unfortunate that the Kansas House of Representatives recently refused to expand educational opportunities for Kansas families.

The Mercatus Center at George Mason University just released their 2013 Freedom in the 50 States report. The report, authored by Professors William Ruger and Jason Sorens, analyzes over 200 policy variables to score the level of freedom in each state. A dismal showing for Kansas, whose score has fallen 33.7 points since 2001 causing the state's rank to fall from 7th in 2001 to 26th in 2011. 

 

The increasingly high burden of government spending was the chief among the reasons for Kansas tumble:

Fiscal policy is the dimension in which Kansas does worst. Its public payroll is extremely large, at 15.8 percent of the private workforce. Taxes are about average, but the debt burden is very high: 26.2 percent of income. The areas of spending that could most stand to be cut are education, hospitals, and highways, while the taxes that should have priority for cutting are individual and business income, sales, and property taxes. In fact, since the closing date for this study, Kansas has cut income taxes and the overall tax burden significantly.

The public employee largess, a product of an archaic county boundary system, has been a constant source of higher government spending. Debt will only worsen as $1.5 billion in pension obligation bonds are likely to be issued. In spite of these negatives the study's author had praise for Kansas and expects to see Kansas jump in the next edition:

The $800 million tax cut in 2012 would alone raise Kansas from #26 to #12 on overall freedom if all other states remained exactly the same. Trimming government debt, consumption, and employment to national averages would raise the state one more notch, to #11. ~ Jason Sorens, author of Freedom in the 50 States

Pair the 2012 tax cuts with the study's other recommendations and Kansas has the potential to be the freest state in the country. Regrettably, Kansas had the opportunity to provide tax credits for private school tuition, further advancing freedom in Kansas, but failed to do so.

Bloomberg news reports:

Several states including California and Maryland raised taxes on high earners last year, and Congress boosted federal levies on them. Families who look to change their domicile to a state with no income taxes such as Florida or Nevada open themselves up to years of scrutiny and possible litigation as local governments search for revenue.  “I look at some of these domicile audits almost as an archeological dig and a full physical including MRIs and CAT scans,” said David Scott Sloan, a partner who advises high net worth families at Boston-based Holland & Knight LLP. “What we’re seeing at least in Massachusetts is the tax authorities are not going quietly into the night.”

It’s disturbing to see governments go to such lengths to extract wealth from hard working individuals. Luckily, in Kansas, moves have been made to slow the growth of spending and alleviate the burden of taxation.

A few newspapers argued a bill in the legislature seeking to clarify Kansas’ 2006 exemption of business machinery and equipment from tangible personal property taxes would aid businesses at the expense of citizens. The editorial writers failed to understand who actually bears the burden of this tax. Business machinery and equipment taxes are chiefly borne by both Kansas workers and consumers, through lower paying jobs and higher prices for goods.

By increasing the cost of machinery, the tax discourages investments in Kansas’ worker productivity – in turn hindering growth in wages. Because machinery and equipment is mobile, firms can shift production to lower tax districts, meaning less production and fewer jobs in Kansas.

Businesses that do locate in Kansas can clandestinely offload the tax onto consumers. The Tax Foundation explains:

[Tangible Personal Property] tax is a business expense that must be offset by business revenues in order for the business to be profitable. The tax therefore is at least partly passed on to consumers through higher product and service prices, but this additional cost cannot be shown on receipts, such as with a retail sales tax. As a result, the impact of these non-transparent TPP taxes is hidden to most consumers and an invisible issue to most voters.

The 2006 legislature and governor were wise to pass this pro-growth and common reform. Unfortunately there is some confusion as to what defines real property verse personal property. For instance, Legislative Post Audit reports heating, ventilation and air conditioning (HVAC) is considered real property in Anderson County while Phillips County considers HVAC to be personal property. 

Montgomery County saw property taxes spike after 2006 and found itself in court over the issue. Further clarifying this reform will ensure the playing field is not arbitrarily determined by county appraisers.

Here are the highlights for Kansas:

The debate about whether Kansas should expand Medicaid only now seems to be heating up and reaching the public consciousness (here and here). Better late than never, I guess.

Amidst this debate are different (competing?) studies of what it may cost to expand Medicaid. We released a study after the Affordable Care Act (aka Obamacare) was signed into law but before the U.S. Supreme Court determined the individual mandate was a tax and allowed states the choice of expanding Medicaid, the Kansas Health Institute released a study last December, and the Kansas Department of Health and Environment did likewise earlier this month.

The authors of those studies gathered last week to discuss their findings and compare methodologies, projections, etc. The event was sponsored by KPI and KHI and also included a representative from KDHE.

The best moment of the event  may have been when the author of our study, Jagadeesh Gokhale, Ph.D., offered his projection of what could happen when the ACA is fully implemented with a simple, "Utter chaos!"

Aside from that, there was a lot of discussion regarding how much of an impact the different health care/Medicaid cost-drivers would impact Medicaid costs for Kansas. Keep in mind there is the choice of expanding Medicaid and estimated increases now that most Kansans will be subject to the individual mandate...some people were eligible for Medicaid pre-ACA but didn't sign up while in the future they'll likely join Medicaid to avoid paying the tax, er, fine.

Jagadeesh has written a bit more about how he arrived at his estimate and how this was driven by historical cost increases - it will be published shortly in a follow-up analysis - but check out a sneak preview below.

In the meantime, it is important to examine any gov't program in light of the benefits AND costs. More people may have access to gov't-run health care in the form of Medicaid (if eligibility is expanded) but the costs are staggering - $4.1 billion in extra costs to Kansas under the ACA in the next 10 years and $625 million if the decision is made to expand. These issues must be viewed for their impact, not simply good intentions.

It should be noted that other private and public agencies have also estimated the financial impact of the Mandate Effect and Medicaid Expansion Effect on the Kansas General Budget. Examples are those by the Kansas Health Institute, the Lewin Group, Urban Institute, Center for Budget and Policy Priorities, and the Kansas Department of Health and Environment. Estimates for the number of currently eligible but not Medicaid-enrolled individuals range from 30,000 (Kansas Health Institute, December, 2012) to 162,000 (also KHI, December 2012, alternative study). The KPI estimate of this group of potential new enrollees into Medicaid is 102,000 individuals—well within the range of other estimates. In terms of new enrollments from Medicaid Expansion, most estimates fall within the range of 100,000 (Kansas Health Institute, December 2012) to 200,000 (Center for Budget and Policy Priorities, latest available but undated). The KPI study’s estimate of newly eligible enrollees is 130,000 by 2023, also well within the range of other estimates. However, the KPI study’s total annual dollar cost projections from the two effects of ACA are larger than those of other studies. The key reason for this is that other studies’ cost estimates are calibrated based on a per-person cost from a given year in the past; it is a global estimate—applied to all new enrollees regardless of their demographic (gender/age/income/health) attributes—and it is either kept constant or increased at a fixed, relatively low growth rate. The KPI study does not “flat-line” the cost per person to be used to calculate future expenditure increments from Mandate Effect or the Medicaid Expansion Effect. Rather, historical trends in Medicaid costs per person are (a) differentiated by demographic/age/income group and (b) future years’ costs are based on extrapolating the historical trend for each separate category of enrollees. This is a methodologically sounder approach to making projections of future Medicaid expenditure increments from the two types of new enrollees that the ACA’s individual mandate and Medicaid expansion (if adopted) would trigger. It’s key advantages are, first, the implicit assumption that the same forces that escalated (or reduced) costs per person for particular categories of enrollees in the past would continue to influence cost growth in the future. Second, those cost rates per enrollee are appropriately weighted by the trend-determined shares of future enrollees by demographic (gender/age/income/health) type. A brief perusal of the historical data suggests that per-person costs have been growing at a rapid rate in Kansas for most categories of enrollees. Non-incorporation of historical information on the rate of cost growth (assuming, instead, a lower cost rate per person) and not weighting the cost rate according to the size of the projected new-enrollee group by the other studies cited above is the most likely explanation of why those projections of future Kansas Medicaid expenditure increases from both types of new enrollees are considerably smaller than KPI’s projections.

During a life growing up in Kansas, and getting a public education’s worth of state history, I remember hearing somewhere that Kansas counties were carved up so a one day horse ride could get citizens to a county courthouse.  Those boundaries, some dating to 1855, still determine who will be providing fire, police, judicial, and other services to Kansas citizens to this day.  Because of the ancient county lines and numerous municipalities, Kansas has one general purpose government for every 1,445.1 residents, according to data from the Census Bureau.  Only the Dakotas have fewer residents per government entities.  

Kansas consistently performs poorly in tax rankings due to high property tax burdens.  The 2012 Tax Foundation study Location Matters, found Kansas has the 3rd highest tax burden for mature businesses and the 2nd highest tax burden for new businesses.  The study cited high property taxes for Kansas’ poor showing.  A 2011 study by the Minnesota Taxpayers Association found Iola, Kansas had the highest effective tax rate on rural commercial property taxes and the 2nd highest rural industrial property taxes of all the rural communities examined.

Over 150 years of innovation would now allow Kansas to redraw the map and take advantage of enormous economies of scale.  This doesn't necessarily mean the State should force consolidation. While that option is worthy of serious consideration, shared services or even unified governments (e.g. Wyandotte and Kansas City) offer ways to increase efficiency, lower the burden of government and make Kansas more competitive.

 

State		2012 Population		General Purpose Governments		Citizens Per General Purpose Government
North Dakota		699,628		1,724		405.8
South Dakota		833,354		1,284		649.0
Kansas		2,885,905		1,997		1,445.1
Nebraska		1,855,525		1,042		1,780.7
Minnesota		5,379,139		2,726		1,973.3
Vermont		626,011		294		2,129.3
Maine		1,329,192		504		2,637.3
Iowa		3,074,186		1,046		2,939.0
Wisconsin		5,726,398		1,922		2,979.4
Indiana		6,537,334		1,666		3,924.0
Missouri		6,021,988		1,381		4,360.6
Alaska		731,449		162		4,515.1
Illinois		12,875,255		2,831		4,548.0
Wyoming		576,412		122		4,724.7
Pennsylvania		12,763,536		2,627		4,858.6
Ohio		11,544,225		2,334		4,946.1
Arkansas		2,949,131		577		5,111.1
Michigan		9,883,360		1,856		5,325.1
New Hampshire		1,320,718		244		5,412.8
Montana		1,005,141		183		5,492.6
Oklahoma		3,814,820		667		5,719.4
West Virginia		1,855,413		287		6,464.9
Idaho		1,595,728		244		6,539.9
Mississippi		2,984,926		379		7,875.8
Kentucky		4,380,415		536		8,172.4
Alabama		4,822,023		528		9,132.6
Utah		2,855,287		274		10,420.8
New York		19,570,261		1,603		12,208.5
Louisiana		4,601,893		364		12,642.6
Oregon		3,899,353		277		14,077.1
Georgia		9,919,945		688		14,418.5
Tennessee		6,456,243		437		14,774.0
North Carolina		9,752,073		653		14,934.3
South Carolina		4,723,723		315		14,995.9
New Jersey		8,864,590		587		15,101.5
Delaware		917,092		60		15,284.9
New Mexico		2,085,538		136		15,334.8
Colorado		5,187,582		333		15,578.3
Texas		26,059,203		1,468		17,751.5
Massachusetts		6,646,144		356		18,668.9
Connecticut		3,590,347		179		20,057.8
Washington		6,897,012		320		21,553.2
Virginia		8,185,867		324		25,265.0
Rhode Island		1,050,292		39		26,930.6
Maryland		5,884,563		180		32,692.0
Florida		19,317,568		476		40,583.1
Arizona		6,553,255		106		61,823.2
California		38,041,430		539		70,577.8
Nevada		2,758,931		35		78,826.6
Hawaii		1,392,313		4		348,078.3
District of Columbia		632,323		1		632,323.0
Sources:
Population:		http://www.census.gov/popest/data/state/totals/2012/index.html
Governments:		http://www.census.gov/govs/go/

The following is a representative sample of recommendations submitted to the Governor's School Efficiency Task Force.  Submissions were made by school employees, parents and involved members of the community. The recommendations do not necessarily represent the views of Kansas Policy Institute.

Athletics

• The last priority in our district is educating kids. It’s all about sports and fun. Our scores are some of the worst in the state. When it comes to educating the kids, it’s nickel and dime. When it comes to sports, money is no object. 
• Focus the money on education and not on sports! Cut back on the types of sports. Leave most of the sports programs to the communities! Have intramural sports as part of Physical Education and improve those programs. The kids that need to move and exercise are not going out for sports. 
• No study of our school system’s inefficiencies can be complete without a top-to-bottom analysis of how sports programs have come to dominate our curriculum and spending priorities. Sports are the curriculum and school work is the extra-curricular activity. Last week in our school involved about 30 hours devoted to traveling or attending sporting events. In small schools, this effectively shuts down the school for up to half of the day on any day involving away games. This needs to be addressed at the state level so as to mandate limits on the number of games per week, per year, etc. A cost-benefit analysis should be completed regarding what is being spent on sports versus what our “payoff” is toward educating students. 
• When new funds became available after the lawsuit settlement some years ago, the local district spent a large amount of money to totally renew athletic facilities. The next two years, they added more sports programs. When funds were reduced the following year, the district discussed reducing spending on arts and music. No mention was ever made of cutting any of the new sports. 

Contracting/Purchasing

• Contrary to state law, our district does not seek competitive bids for capital projects. They have a standing agreement with professional firms that design facilities (such as libraries and schools). The district contends that these services do not require competitive bidding since the work is not part of a “capital project” but is instead a “professional service.” The district has on multiple occasions entered into lease-purchase agreements with a private developer absent competitive bidding. These contracts include construction of new buildings and a multi-school contract for expansions. 
• Roofing projects in Kansas should be open for alternate materials. In several districts, administrations use single source material suppliers masquerading as roofing consultants. 
• Our district remodeled a school for a large sum of money. The district now heats/cools the entire building for a single police officer because there are no students there anymore. 
• The district in my area conducts a mandatory spend-down every year on routine supplies (markers, erasers, pens, pencils, etc.). The justification? “If we don't spend it, we will lose the money.” 

Organization/ Logistics

• We have too many school districts with overlapping functions. This is partly due to having so many jurisdictions. Especially where school districts are close to each other, services and administration can be consolidated. This does not have to mean closing the schools—just sharing things like specialists, principles, and other administrative staff. 
• I feel that there are too many counties that have a number of small school districts. I feel that a county “central office” with a superintendent and district-level support personnel could save money. The various towns could still have their buildings with building-level personnel, but each district would not be top heavy with central office personnel. My small county is a perfect example of this inefficiency. There are too many school districts here! I was a teacher for 30 years teaching in 6 different districts, and I saw the same inefficiency in other counties. 
• Our school district has been very efficient with spending. When the cuts first began we had community meetings to lay out all the spending within the district. The pubic had the opportunity to prioritize areas of wasteful spending. Things that were cut/reduced/postponed from the budget were staff (teachers, aides, cooks, coaches, administrative assistants, etc.); supplemental contracts; purchasing of school vehicles, buses, and curriculum; salaries; 5 days from the school calendar; summer school weeks; after school at-risk programs; field trips; classroom supply spending; educational spending that wasn’t benefiting all students; building maintenance projects; utility costs; sports programs (changed to a pay-to-play activity where parents had to foot the total bill). 
• KSDE should consider a single statewide student information management system. Now, every district must submit data annually for funding. Those districts each are spending between $4.50 and $12.50+ annually for these SIS systems. Plus, KSDE is using another large database to collect all of the information sent by the districts. Several districts have employees dedicated all year or a large part of the year to accomplish the checking and uploading of information. Other states have proven that a single system provides the districts with a way to save by having the state pay for a single system and take that money out of the per student amount assigned to the district. Plus, KSDE could get information much more frequently than once a year. Statewide systems have proven to save money. The argument that the districts would not approve is no longer true as every district is looking to be more efficient and save money. 

Personal/Human Resources

• We now have two teacher leaders and one assessment manager. This used to be one job! Our district is very administrative-heavy, with little teacher support. Teachers have too many administrators that require extra reporting, email-answering, and additional duties! Cut these positions before cutting any classroom teachers. Some administrators leave at 3:30 or before every day. Most teachers have so much to do that they have to come in early and stay late just to stay afloat. Even the principal rarely works an 8-hour day! This lack of leadership (do as I say, but not as I do) hurts our school and causes a hostile environment for all. Our district is way too top-heavy. For example, we have an administrative employee of the district who stops in at our school to check in on his son, sit in with teachers, and offer advice. There are so many hard-working employees, but our principal (and teacher leader) do not lead by example, which is sad.
• Our district has maximized efficiency. We extended the school day by 30 minutes and shortened the school year by 14 days. We moved from two building-level media specialists to one district media specialist. We eliminated a maintenance staff position, a custodial staff position, and a food service staff position. We eliminated a rural bus route and after-school activity routes. We eliminated the in-town bus route. We reduced three counselor positions to two counselor positions. We moved from a block schedule to a traditional schedule. We blended middle school and high school. We have changed staffing, done fuel contracting (for our SPED cooperative), used TEEN video teaching network, changed SPED, reduced transportation, and optimized HVAC controls. We used EPM for business operations like payroll, leave, overtime, mandatory direct deposit, transportation, etc. We did an ESG feasibility study. We use ESSDACK for health insurance, PD, state bid list, etc. We also use paperless board meetings (via Blackboard).
• We are strongly encouraged to send our paperwork to the central office to be copied. This costs us time and we pay this person a full time wage to do something that most teachers would rather do ourselves. Vocational money is also not spent on classroom/supplies/field trips but is mostly spent on salaries.
• Administrators do not make teachers modify, take attendance, do their jobs, etc. Then they turn around and put more students in the good teacher’s class, therefore making her job harder. Let’s start having the same expectations for all teachers. Administrators need to speak up and start holding all teachers to the same standard. I'm also tired of coaches coming in for sports—they should be teachers first, coaches second. 

Tax Myths Debunked, a rigorous study by economists Dr. Randall Pozdena and Dr. Eric Fruits, was published by the American Legislative Exchange Council (ALEC) today.  The report takes a deep theoretical and empirical dive into both state and national tax policy debunking several myths along the way.

While drinking my morning coffee and perusing through the Wichita Eagle’s Business Today section I noticed a common theme: The feds are in the way.

On page C1 you’ll find Employers in limbo amid health care law’s changes:

To a large degree, a lot of business owners still don’t understand the changes, and I don’t think they clearly understand what it means for them in terms of things like the individual mandate,” said Tim Witsman, Wichita Independent Business Association president.  ... “People have a little bit of information but don’t have enough to really start making decisions,” said Janet Hamous, interim executive director for the Wichita Business Coalition on Health Care. ... [Karen] Vines suggests that employers start now to prepare for changes next year, trying to educate themselves about the financial implications for their company and looking at options for coverage.

On top of the Affordable Care Act provisions lies a tax code of ‘biblical proportions’ see page 7C for Tax filers struggle with complex laws:

Too intimidated to fill out your tax return without help? Join the club. At nearly 4 million words, the U.S. tax law is so thick and complicated that businesses and individuals spend more than 6 billion hours a year complying with filing requirements, according to a report Wednesday by an independent government watchdog.

With the level of regulatory kludge imposed by the federal government it truly amazes me that entrepreneurs and business still find time to serve their customers and earn a decent living.

This post is courtesy of William McBride and the Tax Foundation's Tax Policy Blog.

Since it appears more likely than ever that we’ll go over the fiscal cliff, we might as well start cataloging this historic achievement.

First, it will be the largest tax increase since World War II, at about 3.5 percent of GDP.

Second, the fiscal cliff is a historic income tax cliff. As the chart below shows, it will result in the highest tax rate on individual income (39.6 percent) since 2000, the highest tax rate on capital gains (23.8 percent) since 1997, and the highest tax rate on dividends (43.4 percent) since 1986.

Economic theory and evidence indicates these are among the worst kind of tax increases for the economy. As a result, most economists, including those at the Federal Reserve and the Congressional Budget Office, think this will lead to a recession in the first half of 2013. Arguably, this would be the first recession created by a tax increase since 1969, or, before that, the Great Depression. (The recession of 1990 coincided with a tax increase that was too small to have such an impact on the economy.)

Lastly, the fiscal cliff will be the first major tax increase since World War II to occur under a Republican controlled House of Representatives. The only lesson that can be drawn from that is don't do temporary tax cuts, e.g. the Bush tax cuts, unless you want them to be temporary.



Update: Steve Entin reminds me that the 1990 income tax increase was probably a contributing factor in that year's recession, as was that year's payroll tax increase, and the economy was already weakened by the 1986 tax increase on capital and the 1988 payroll tax increase.

Several media reports have recently mentioned that some legislators and Governor Brownback are considering a sales tax increase next year as part of a long term plan to eventually eliminate the income tax.  Eliminating the income tax is a worthy long term goal, but the immediate issue is implementing the tax reform already passed by making all aspects of government operate more efficiently.  Reducing the cost of existing services, including public education, can be accomplished without impacting outcomes but it's hard work.  It requires fortitude and political will to resist the pushback from state agencies and special interest groups.  

Eliminating the income tax may require a slightly higher sales tax but the necessary rate cannot be established until government is first made to operate as efficiently as possible.

Increasing the sales tax in 2013 might appease special interest groups that resist having government operate efficiently, but taxpayers deserve better.

If only we could derive our economic health by looking solely at the unemployment rate.  This simplistic view certainly has its perks – namely our economy would be easier to understand – unfortunately, without knowing the unemployment rate can decline for adverse reasons one can be misled into thinking some unhealthy economies are healthy.

The Unemployment Rate = (Number of Unemployed Persons)/(Labor force) – that is, if a state has 5 unemployed individuals and 100 people in the labor force the unemployment rate is 5%.

Mathematically the unemployment rate can decline three ways:

1. The Number of Unemployed Persons declines while the Labor Force is unchanged or increases (Good)
2. The Number of Unemployed Persons remains unchanged or decreases while the Labor Force increases (Good)
3. Unemployed declines at least as fast as the Labor Force declines (Probably Bad)

#1 and #2 are good because new jobs were created.  #3 is bad because the unemployed person just gave up (or moved to another state).  Complicating the matter further, depending on which time frame is chosen; one can see all three instances.  In order to determine if jobs were created we need look at the change in the number of employed.  

According to the Bureau of Labor Statistics from September 2012 to October 2012 the number of employed persons increased from 1,396,552 to 1,400,956 in Kansas.  This means the unemployment rate dropped because jobs were created not because workers dropped out of the labor force.

Looking back further from October 2011 to October 2012 we see employment is actually down 7,725 jobs – meaning the unemployment rate is lower than 2011 because unemployed individuals dropped out of the labor force.  

That means we’re in situation #3 above – not good for the people who either given up looking for work or given up life in Kansas to seek a job elsewhere. It also is not good for the state as we have fewer people working, investing, living, and paying taxes in The Sunflower State.

“In the end, the money that towns across America gave General Motors did not matter.” That’s the conclusion of a New York Times investigation of local subsidies.  They chronicle the proliferation of over $80 billion in local subsidies to businesses of all shapes and sizes across the United States.  (You can search the database for yourself here.)

According to the NY Times investigation, “as [GM’s] financial problems grew, incentives became a big part of its math.”  Put another way - as GM’s ability to build cars people wanted to drive declined; they ramped up the ability to take money from taxpayers.

The Fraser Institute’s Economic Freedom of North America 2012 study argues these incentives diminish economic freedom because“[w]hen the government taxes one person in order to give money to another; it separates individuals from the full benefits of their labor and reduces the real returns of such activity.”  

It’s rather intuitive that when we reward lobbying instead of production we get less production, which is why the Fraser Institute’s study “shows a powerful, consistent, and robust relationship between economic freedom and growth.”

Unfortunately, state and local governments in Kansas have been doling out $1 billion to politically-favored businesses in recent years.  The deterioration of economic freedom over the years has resulted in Kansas dropping below five Canadian provinces in the Fraser Institute’s annual economic freedom rankings.

There is hope!  Now that our state has lowered taxes for all Kansans by $800 million it seems there is hope that leaders in Topeka are less interested in picking winners and losers. So everyone in the state will have a little bit more money in their pocket and a better chance to chase their dreams. In fact, if you eliminate the $1 billion in subsidies Kansas governments give every year, then tax relief is paid for and cronyism is turned back. That is commonly referred to as a “win-win proposition.”

Kansas is number 21 according to Site Selection’s 2012 Top State Business Climate Rankings.  Getting into the top tier will require further efforts to provide quality services and a low tax burden.  

The magazine ranks each state’s business climate based on 6 criteria:

With 31 states spending less per resident than Kansas, it’s easy to believe Kansas can deliver a pro-growth tax policy by spending more efficiently.  It turns out, most Kansans agree. Kansans seem to understand that lower taxes means more opportunities for them to succeed and the only way to have lower taxes is to have lower spending.

KPI’s Dave Trabert on the results of KPI’s statewide poll conducted by SurveyUSA:

We often hear laughter when we ask people around the state if government operates efficiently. This poll not only backs that up, but also shows that 83 percent of Kansans believe the state government could operate five to 10 percent more efficiently. Even 82 percent of participants who are government employees agree.

These numbers are significant because in May of 2012 Kansas passed significant tax relief in HB 2117.  KPI’s dynamic analysis of those tax cuts, estimates a one-time 8.5% reduction in spending will be needed to implement the tax relief.  

If the state government can deliver a 5%-10% improvement in efficiency, as most Kansans deem possible, tax relief will make Kansas much more attractive to businesses without cuts in core services.  A win-win for all Kansans.

10.4% of Kansas' labor is under-utilized according to the Bureau of Labor Statistics U-6 measure. This number includes 156,300 unemployed, marginally attached, or involuntary part-time workers.

(Data was provided to KPI from the BLS via email on 10/29/2012)

The Wall Street Journal’s Ben Casselman explains the U-6:

The official unemployment rate uses a fairly narrow definition of “unemployed,” looking only at people who are actively looking for work. But the Labor Department also publishes a range of other rates using different definitions. The broadest and best known alternate rate, known by its Labor Department designation, U-6, includes people who want to work but aren’t actively looking and also people who are working part-time because they can’t find full-time jobs. As of September, the national U-6 rate stands at 14.7%. More recently, the Labor Department has begun publishing similar data for states. The numbers are released quarterly on a four-quarter rolling average, so they aren’t as up to date as the state unemployment figures that are released each month. Still, they give a window into state labor markets.

The Kansas Department of Labor just announced the September unemployment rate was 5.9%.  Nearly a full percentage point below the September 2011 rate of 6.7%.

A closer look at the Bureau of Labor Statistics household survey shows that the drop did not come from higher employment.  7,819 fewer Kansans were employed in September 2012 than in September 2011.  The unemployment rate is lower because over 12,000 unemployed Kansans dropped out of the labor force over the last year.

  

 

New analysis from Kansas Policy Institute puts Kansas’ general fund spending in perspective. Using data from the National Association of State Budget Officers (NASBO) and the Census Bureau, KPI has calculated general fund spending per-resident for all 50 states.

The Tax Foundation released the 2013 State Business Tax Climate Index, ranking Kansas 26th in the country. With significant tax relief coming into effect January 1, 2013 Kansas may finally break from the middle of the pack and be better positioned to attract and retain businesses.

The 2013 State Business Tax Climate Index looks at state tax law as it stood on July 1, 2012. Kansas's recently passed tax reductions do not take effect until 2013 and thus were not included in the analysis. However, they will likely improve the state's score and rank in future years. ~ Joseph Henchman, Coauthor of the 2013 State Business Tax Climate Index

The Tax Foundation report did mention Kansas’ recent tax reforms (pg 54):

In May 2012, Kansas enacted significant tax changes that will take effect in 2013. The existing three-bracket income tax with a top rate of 6.45 percent will become a two-bracket income tax with a top rate of 4.9 percent. The standard deduction is doubled to $9,000; some itemized deductions are eliminated; and non-wage income from sole proprietors, partnerships, and S corporations is exempted from tax. These changes, on net, will improve Kansas’s score on individual income tax.

Students in Sharon Springs, Kansas, have produced a YouTube sensation mocking school-lunch guidelines laid down by the federal government.In the video, students collapse from hunger while playing school sports, or even sitting in a classroom. Critics say the "Healthy, Hunger-Free Kids Act" is leaving students hungry by  limiting the calories they can get, and restricting their intake of protein, fats, and carbohydrates. Even so, some students and school officials say the problem, if it exists at all, is overblown. Rep. Tim Huelskamp (R-Fowler) has introduced legislation to overturn the law. He says it represents "a perfect example of what is wrong with government: misguided inputs, tremendous waste and unaccomplished goals."

He is right about that, but the controversy also illustrates the dangers of centralization. Most schools participate in the federal school lunch program, and many even often breakfast, all on money taken from local communities, cycled through Washington DC, and then returned to communities, but with federal strings attached.

As the saying goes, he who pays the piper calls the tune. Or to update that, he who buys the lunch gets to decide what goes on the cafeteria tray.

What should we do? Perhaps it's time to do away with the federal program, let states and local governments make up the difference (if they wish), and stop the idea that everything, including what goes on a high school student's lunch, should be influenced by the federal government.

Would that mean hungry kids? If the video is any indication, the new school lunch program is already producing hungry kids.

This post is courtesy of Michael Cannon and the CATO Institute's @Liberty blog.

The Washington Post‘s Sarah Kliff writes that the Department of Health and Human Services has decided to “punt” on the “monumental” task of dictating exactly what types of coverage those who get health insurance through the individual market or small employers must purchase. HHS has decided to let each state decide for its own residents what constitutes “essential health benefits.” It was a shrewd move: under the guise of decentralized decision-making, HHS is offering to let state officials take the blame for an inevitably controversial decision and the inevitable higher costs that will result. Yay, federalism! States have until the end of this month to decide just how much coverage they are going to help ObamaCare force their citizens to purchase.

Kliff reports that many states are now wrestling with the unanswerable question, “What health-care benefits are absolutely essential?”

Is acupuncture essential health care? Weight-loss surgery? Under Obamacare, states choose… California legislators say acupuncture makes the cut. Michigan regulators would include chiropractic services. Oregon officials would leave both of those benefits on the cutting-room floor. Colorado has deemed pre-vacation visits to travel clinics necessary, while leaving costly fertility treatments out of its preliminary package… A Virginia advisory board recommended that the state adopt a plan that includes speech therapy and chiropractic care. A District subcommittee has endorsed a plan pegged to an existing BlueCross BlueShield package, and public comment remains open through Friday Sept. 28…

Of course, an objective definition of “essential” coverage is impossible. Like “medical necessity,” the only way to determine whether health coverage is “essential” is if the benefits exceed the costs. That is an inherently subjective question that no legislator or regulator, state or federal, can or should try to answer for a diverse population of consumers. When they do, health care providers invariably hijack the process, demanding that consumers be required to purchase coverage of their services. Since the legislators/regulators are handing out benefits while consumers and taxpayers shoulder the costs, the result is predictable: health insurance premiums rise.

Thanks to HHS’s punt, providers now have an even greater incentive to lobby states to mandate coverage of their services. If a state creates its own list of “essential health benefits,” then any benefits the state mandates will be eligible for federal subsidies. If not, the cost of state-mandated benefits continues to fall on consumers or employers, who tend to complain. (Again, shrewd. Corrupt and irresponsible. But shrewd.)

But since ObamaCare is on the books, and HHS gave states a choice, what should states do?

The choice is identical to what states face with regard to health insurance Exchanges: states have the option to implement part of ObamaCare themselves, but no matter what they decide, Washington is ultimately running the show.

The federal government will not let states pick a menu of “essential health benefits” or establish an Exchange with fewer regulatory controls than HHS would impose itself. Since less regulation than the federal government would impose is not an option, implementing these parts of the law can only lead to more regulation, fewer choices, and higher costs. And of course, state officials will take the blame when ObamaCare starts increasing costs and denying care to people. There is simply no good reason for states to assume this impossible, harmful, and thankless task.

Instead of doing the feds’ dirty work, states should use this opportunity to show how ObamaCare rigs the game against states and consumers alike. State officials that want to rid the nation of ObamaCare should submit to HHS a “benchmark” EHB plan that they know HHS will refuse. It could be either the most affordable health plan they can find in their individual or small group markets, or a plan that state officials designed themselves. Leave out benefits that HHS considers dealbreakers. Push the deductible as high as you dare. Allow annual or lifetime limits. The less coverage you include in your EHB benchmark, the more choice consumers will have and the lower the premiums will be. Submit such a proposal to HHS and dare them to reject it. Let your voters see that under ObamaCare, choice is a mirage. Dare HHS to explain why they rejected affordable health plans and forced the Treasury to subsidize more-expensive health plans.

Alternatively, state who are not inclined to confrontation can tell the Obama administration the same thing they should say with regard to health insurance Exchanges: it’s your stupid law, you implement it.

This entry is written by KPI's education policy fellow, John LaPlante. Read more about John here and for more of his writing click here.

Arne Duncan, secretary of the U.S. Department of Education, has been visiting Kansas this week as part of a national tour designed to highlight the importance of excellent teachers.

Duncan's tour couldn't come at a better time. As he pointed out in Topeka, one million students drop out of high school each year--with serious consequences for them and everyone else. He added that "far too many of those who do graduate need remedial classes."

So what can we do? For starters, we can recognize the importance of excellent teachers by taking the task of evaluating all teachers seriously.

Teachers are not the only factor in how well a student learns; the home environment matters, too. Still, teachers are the most important in-school influence on student achievement. As the experience of some public charter  and traditional public schools demonstrates, even students from low-income families can do well, if given the right environment.

So exceptional or even adequate teachers matter. Unfortunately, exceptionally poor teachers matter as well; the student who is placed in a classroom with a poor teacher is set back months.

Oddly enough, our K-12 bureaucracy doesn't do much to recognize the fact that teachers, like people in any occupation, aren't all the same. As a result, an excellent teacher, a competent but unspectacular teacher, and a dangerously incompetent teacher may all be paid the same. Seniority and number of college credits, not job performance, determine pay in most schools. If a school's finances come to the point where administrators must lay off teachers, a third-year teacher who has won "teacher of the year" may be dismissed to protect the 20-year veteran who is disengaged from his subject and students.

Thankfully, some education researchers and schools are working on ways to evaluate teachers, to separate the wheat from the chaff. Some of the work has centered on using "value added" tests that pinpoint which teachers are exceptional in helping students gain in knowledge and skills over the course of a school year.

Tying teacher pay to student achievement (as measured in test scores) is controversial, and leaders who try to do so risk strikes that throw children out of school for days or weeks at a time. Witness the ongoing drama in Chicago, where Duncan used to serve as superintendent.

Is it difficult to evaluate teachers? Yes, it can be difficult for any business to evaluate its employees. Still, most companies find a way to do it, and schools need to find a way, too. As Duncan says, no teacher should be evaluated solely on the result of one test, no matter how good.  For one thing, the tests are a work in progress, so student test scores should be just one factor in a teacher's evaluation, along with qualitative assessments of student learning and teacher performance.

Students who deal with teachers every day know that "every teacher a great teacher" is a myth. If you ask them in private, you'll get a lot of teachers to say the same thing. Why, then, should we act as if what we know to be true is not?

Today's editorial from the Wichita Eagle:

The three goals that the Priority Project set for Wichita this week have been kicked around for decades. But there is value in seeing them elevated to the top of the community agenda and treated with new urgency and accountability. The big three: Develop more downtown activities and events for individuals and families of all ages. Diversify the local economy by keeping industries already here and recruiting new jobs in new industries. Increase the number of people in the region who advance their post-high school education, either through degrees, certificates or retraining opportunities. There is something for everybody on that wish list, and a lot for Wichita as a whole.

The identified goals are certainly laudable, but projects of this nature are re-introduced every few years...while the Wichita Metro area (Sedgwick, Butler, Harvey and Sumner counties) and Sedgwick County continue to become less competitive. Private sector employment in the Wichita Metro for 2011 was 6.3% below its 1998 level...and was below the 1998 in 9 of the last 14 years (here). But local government employment jumped 14.8%.

The IRS says (here) Sedgwick County lost people and Adjusted Gross Income every year since 2005, looking at interstate domestic migration (left the county for another state or moved in from another state). Even if one counts movement to and from other parts of Kansas, Sedgwick County only had a very small gain in 2009...all other years were losses.

There's a very simple reason that these well-intended initiatives haven't worked: local government and their public-private partners are offering employers what they want them to have instead of what they need to create jobs. The Wichita Chamber's own survey of business owners said taxes were too high. WIBA's member survey identified tax and regulatory issues as their top concerns, as did the US Chamber of Commerce. Yet government and their public-private partners ignore what the customer wants because they don't want the same things.

It's no surprise (or excuse, frankly) that people will say they want more downtown activities or other amenities; that's what happens when you simply ask people what they want without putting anything in context. You get a wish list.

Government and their public-private partners cannot create jobs but they can help create an environment that fosters job growth if they will listen to employers and give them what they need.

A report recently released by the Kansas Legislative Research Department (KLRD) estimates total tax payer support of public schools will reach $5.757 Billion in 2013, topping 2012s record setting $5.672 Billion.  The new numbers show total funding has likely increased $2.17 Billion or 61% since 2001; inflation was up 26% over the same period.

KLRD’s data estimates per-pupil funding will be $12,628 just $32 shy of the record set in 2009. K-12 Per-pupil funding is up $4,604 or 57% since 2001. 

K-12 spending data from 1994 through 2013 is available here.

A mere 5% of small businesses plan to create new jobs; a stunning revelation from a recent survey by the National Federation of Independent Business. According to the survey, small businesses' three biggest concerns are taxes, regulation and poor sales.

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 study's 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 Income 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 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 low income earners caused our GSP per capita and Real Household Median 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 $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.

Earlier this week, Steve Rose of the Kansas City Star wrote an editorial outlining what he viewed as a negativity towards public education. Rose quoted from an AFP candidate questionnaire with;

Which of the following do you believe most accurately reflects your view of K-12 spending? A. School districts operate very efficiently and make good use of taxpayer money. B. School districts are pretty efficient but there might be a little room for improvement. C. Aggressive, independent efficiency studies should be immediately implemented to identify best practices and find ways to achieve required outcomes at more efficient costs. The correct answers are (A) or (B), but (C) is an erroneous, loaded question for conservatives...

Apparently, asking folks to look at the facts and try to be more efficient is little more than thinly veiled hostility.

It’s quite telling that Rose's 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 or 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.

Too bad for Jayhawk fans this has nothing to do with Charlie Weis' first season on the gridiron.

Also, it is the wrong Top 10. A more apt description would be that Kansas has the 9th HIGHEST combined (state and local average) sales tax rate in the country. This according to a new study from the Tax Foundation in Washington.

As KPI fiscal analyst Todd Davidson wrote in our most recent paper on tax reform,

A higher sales tax increases the cost of a product, and like any other price increase, prompts customers to purchase that product elsewhere (even across state lines) at a lower price or cut back on other purchases to offset the price increase. Either way, state retailers suffer an economic loss that impacts their employees and customers; lower profits reduce the amount available to compensate employees and/or may result in a price increase in an attempt to offset the lost income.

What does that mean in the Kansas City area where it is very easy for people to travel across state lines to make a purchase? Say you want to be ready for the upcoming football season with a new TV and you live in Wyandotte County. BestBuy.Com has a nice looking 65" Sony flatscreen TV for $2,999.98...even Energy Star rated. A purchase certainly outside of most family budgets, but you would pay an extra $62.10 in state sales tax if  you purchased the TV at a Best Buy in KCK instead of going a few short miles into Missouri. Keep in mind, that is before any local sales taxes are applied.

$62 might not sound like to someone spending $3K on a TV, but the point is obvious. Take this in the aggregate and Kansas is potentially losing a lot of sales tax revenue because the state remains uncompetitive.

In their analysis, the Tax Foundation reminds us...

Avoidance of sales tax is most likely to occur in areas where there is a significant difference between two jurisdictions' sales tax rates. Research indicates that consumers can and do leave high-tax areas to make major purchases in low-tax areas, such as from cities to suburbs. For example, strong evidence exists that Chicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago's 9.5 percent sales tax rate. At the statewide level, businesses sometimes locate just outside the borders of high sales tax areas to avoid being subjected to their rates. The state of Delaware actually uses its state border welcome sign to remind motorists that Delaware is the "Home of Tax-Free Shopping." State and local governments should be cautious about raising rates too high relative to their neighbors because doing so will amount to less revenue than expected, or in extreme cases, revenue losses despite the higher tax rate.

With the threat of closing Judge James Riddel Boys Ranch, to save $1.2 million, some have been calling for an increase in property taxes.  Instead of asking for higher taxes, we should look at some choices Sedgwick County has.

Some of the $12.2 million going to “Economic Development” (tax money for private profit of preferred businesses) could be reprioritized to the ranch.

Perhaps, instead of cutting services, the county could be creative and find cost effective ways to operate that eventually add up to real money.

In 2011 the county paid out $4.2 million in OVERTIME. One EMS lieutenant collected $63,007 in OVERTIME.  Three Sheriff’s Detention Deputies split $119,405 in OVERTIME.  $25,843 in OVERTIME went to one mechanic.  Two zoo keepers took home a combined $31,883 in OVERTIME. 

The correlation between high taxes and noteworthy economic growth between 1947 and 1979 has caused many to conclude High Taxes = Economic Growth.  Such a correlation fails to account for the different circumstances of the era.  Namely, after the Second World War nearly all foreign competitors were destroyed, the US government alleviated burdensome WWII taxes and rationing and the era saw the implementation of numerous cost saving innovations.  The circumstances of yesteryear no longer apply and we must realize we cannot afford the high taxes of the past.

Economic growth boils down to one equation: Revenues – Costs.  Put simply increased revenues or decreased costs drive economic growth. While taxes and regulations were incredibly costly during the post-war era a multitude of circumstances both raised revenues and lowered costs for producers.  

Foreign countries had been demolished

The late Princeton Economics Professor William H Branson:

At the end of World War II the United States was by far the dominant industrial economy in the world. With industrial capacity largely destroyed in Europe and Japan, the United States produced more than 60 percent of the world's output of manufactures in the late 1940s. As a result, the United States was a net exporter of manufactured goods of all kinds; historically the United States was a net importer of consumer goods, but in 1947 there was a net export surplus of $1 billion in that category.

The late 1940s were unique in that America companies had somewhat of a monopoly on worldwide production.  This offered a nice boost to revenues.

Government actually shrank following the Second World War

Although government was big from 1950s to 1970s, it was much smaller relative to the 1930s and 1940s, as described by economics professors Jason Taylor and Richard Vedder:

[The US] Government canceled war contracts, and its spending fell from $84 billion in 1945 to under $30 billion in 1946. By 1947, the government was paying back its massive wartime debts by running a budget surplus of close to 6 percent of GDP. The military released around 10 million Americans back into civilian life. Most economic controls were lifted, and all were gone less than a year after V-J Day.

As Professor Burton Folsom points out taxes were lowered from New Deal and WWII highs:

Income tax rates were cut across the board. FDR's top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.  Corporate tax rates were trimmed and FDR's "excess profits" tax was repealed, which meant that top marginal corporate tax rates effectively went to 38% from 90% after 1945.

The downsizing of government freed up resources, reduced onerous taxation and eliminated burdensome rationing; significantly lowering costs for producers and consumers.

1948-73 was a “Golden Age” of Innovation

The increased prevalence of affordable electricity augmented manufacturing output by powering mechanized labor.  Productivity on the farm began its exponential trend, thanks to the internal combustion engine.  The internal combustion engine also brought on faster, cheaper travel which reduced the cost of shipping and enabled Americans to travel farther to work; expanding their pool of potential jobs.  The advent of containerized shipping dramatically reduced the cost of transporting goods across the ocean while the interstate highway system provided efficient routes for those containers to reach their destinations.  The result of these and many other cost saving innovations was a “Golden Age” of productivity that boosted economic growth.

(For the charts I thank Stephen Moore, Julian L. Simon, and Pf. David Beckworth.)

As shown in the fourth chart, gains in productivity slowed after 1977.  Tyler Cowen, George Mason University Economics Professor, argues in his book The Great Stagnation; that we’ve ate all the low hanging fruit and innovation is now much harder.  Rather innocently, we’re not innovating as much because we’ve advanced so much already.

Perhaps an example will be more intuitive; going from no refrigerator to a refrigerator in every home was a significant decrease in the cost of food and a substantial increase in our standard of living.  While now – it makes my life only slightly better to have a larger refrigerator that makes ice in cubed or crushed form – some cost reduction but not nearly as much.

My how times have changed

Last week the Supreme Court ruled the Affordable Care Act constitutional however as Michael Cannon of the Cato Institute points out, Kansas can still reject its full implementation.

Once again, it doesn't seem unreasonable to call this unsustainable: 

While Kansas government spending rose 47% private sector GDP per capita only grew 8.9% over the same period.

From Nick Kasprak at the Tax Foundation.

The map doesn’t specify what type of spending this represents but the Tax Foundation blog says it is Direct Spending, which Census defines as Total Expenditures (for this purpose, Expenditure does not include a government's payment of its debt, or purchases of investment securities, loans it has granted, agency or private trust transactions, nor correcting transactions) less Intergovernmental Expenditures.  Direct expenditures therefore would be somewhat less than the All Funds Budget.   For 2010, Census lists Kansas’ Direct Expenditures at $12.4 billion.

Notes:

The data behind my private sector calculation comes from the Bureau of Economic Analysis (Real GDP Private Industry, Kansas) and population data from the Census Bureau.

Here's the math:

2000: ($83,338,000,000)/(2,688,925) = $30,993.05

2010: ($96,334,000,000)/(2,853,118) = $33,764.46

($33,764.46 - $30,993.05)/($30,993.05) = 8.9%

Government subsidies of one form or another have become as American as apple pie. Everyone goes to Washington with their hand out and politicians looking for votes are more than happy to oblige with other people’s money.

Too often, this practice becomes so entrenched that Americans can hardly be blamed for thinking this is the only way to do things. Can you imagine life without Social Security or the mortgage interest tax deduction? Probably not.

It should come as no surprise, then, that farmers throughout the U.S.  can’t get their mind around operating without federal farm subsidies. As the U.S. Congress debates a new “farm bill” – an all-encompassing legislative package they pass every five years dealing with agriculture and food policy – the debate will be less about whether rural America can exist without federal subsidies and more about how much Washington can throw at favored programs. In fact, the term “farm bill” is probably misleading because 80% of the funding cover in the bill went to things not ag related last year. The lion’s share of the bill is spent on food stamps and other non-ag programs.

FYI, the farm bill passed the U.S. Senate today by a vote of 64-35; committee action in the House is scheduled to begin on 11 July.

With federal spending and deficits driving the discussion in D.C., the Senate version is being hailed for "saving" $23 billion, compared to current policy. That may sound like a lot at first glance, but it pales in comparison to the projected federal deficit of $1.3 trillion or the total cost of the bill itself, $969 billion over ten years.

Pending any last minute amendments, it spends $193 million for farmers to grow crops for biofuels, extending a program that was previously cited by the USDA’s inspector general for extending unequal and improper benefits to farmers, and over $200 million to retro-fit refineries to produce biofuels. Biofuels are but one of numerous examples.

As currently written, this bill does little to help America tackle our budget deficits and does less in freeing Kansas farmers to capture the entrepreneurial and risk-taking heritage that saw our state  turn into the “World’s Breadbasket.” Fortunately, a modern example exists which shows what a subsidy-free agricultural sector can look like.

From the Cato Institute during the 2002 farm bill debate:

So, what does New Zealand’s agriculture sector look like nearly 20 years after they stopped subsidizing it? In a word, bountiful. According to the World Bank, in 1980 New Zealand’s ag sector produced $2.3 billion in value-added product. By 2009, that same number was $4.9 billion – a 111% increase (all numbers in 2000 dollars and are most recent available). Over the same time frame, the World Bank’s production indexes for both livestock and food have also showed tremendous gains in New Zealand. Maurice McTigue, a farmer by trade and member of the New Zealand Parliament when subsidies were kiboshed, has this to say about things in NZ...McTigue is also the vice president of the Mercatus Center at George Mason University in Virginia...

"In 1985 the [NZ]  government removed all subsidies form agriculture whether they were price support, subsidized insurance, input subsidies or production controls. This was a tough love approach with all the subsidies disappearing over the succeeding 9 months...[we] can look back on the last 25 years as probably the best in the history of New Zealand farming.

"Why would this be so? The major effect of subsidies is that they kill off or water down innovation...An example of this unfettered innovation is that the dairy industry in New Zealand in 1985 produced 35 products from milk by 2005 the dairy industry was producing 2200 products from milk and the dairy industry is the boom industry of New Zealand farming. The conclusion, subsidies keep farmers poor."

While the Kiwi’s were busy not subsidizing farmers their rural population grew by 11.6% (1980-2011), here at home our rural population decreased by 8.4%, once again from the World Bank. Certainly, more was at play than subsidies, but you get the point – the rural populations can thrive without government handouts.

The Federated Farmers of New Zealand (picture our National Farmers Union) might have said it best in that New Zealand has "thoroughly debunked the myth that the farming sector cannot prosper without government subsidies."

The 2012 farm bill, as currently written, is only the most recent example of someone in Washington saying one thing and doing something completely different. You’ll hear talk about helping family farms and supporting rural America, but the key thing to remember is that the farm bill is little more than a bunch handouts to politically connected industries (hello biofuels!) and an extension of federal food stamps. It isn’t about an individual farmer in Finney County and certainly isn’t about less government spending or intrusion in the market.

Listen to a good George Strait song as he extolls the virtues of the Heartland and hard work.  The people he is singing too aren’t asking for a government handout, but Washington has distorted the market for so long that it is hard to imagine farm life without subsidies and mandates. Farm profits continue to grow in spite of government manipulation - not because of it.

Pull off I-70 on your way to your next trip to Breckenridge or Estes Park and ask a farmer or rancher if they want more government involvement in their operation. The answer will almost certainly be no. Hopefully, someone in Washington is listening, but if the bipartisan comments following today’s Senate vote are any indication, I’m not holding my breath.

Schools for Fair Funding, the coalition of schools suing Kansas tax payers, has spent nearly $1.3 million in 2010 and 2011 according to their 990s, posted on GuideStar.org. That amount is likely much higher now that the trial has begun.  

What do you think? Should local school boards spend taxpayer money to sue taxpayers for more money?

It doesn't seem unreasonable to call this unsustainable. 

From Matt Mitchell at the Mercatus Center:

Wichita’s hotel developments are beginning to follow the same path that many government induced supply surges took before them.  From the Wichita Eagle today:

If that’s not enough taxpayer funded rooms for your upcoming family reunion, you are in for a treat when the new 117 room, taxpayer supported Ambassador Hotel opens in December.  All of this on-top of the 303 room, city-owned Hyatt Regency.  With occupancy rates hovering around 50% it’s only a matter of time before hotels begin closing up shop.

This is an all too common story of government incentives.

Homeownership enjoys an indulgence of government incentives at the Federal, state, and local levels.  These incentives helped boost housing supply to bubble proportions.  When the glut of housing was realized the bubble popped and we are still reeling from The Great Recession.

The student loan crisis is following this very same path.  Government induced the supply of college education with tax credits and cheap loans; the excess supply caused the value of degrees to drop; the bubble is bursting, (but the debt stays) and many of those with debt can’t find work to earn wages and pay down their loans because the economy continues to tumble.

Kansas STAR bonds program forced taxpayers to subsidize a massive outdoor shopping mall, which merely steals economic activity from other non-subsidized retailers, leading the less fortunate to closure.

Those calling for big empty office and manufacturing buildings should pay attention.  The economic fundamentals are simple, incentives lead to supply increases not matched by consumer demand.  The oversaturated market then leads to the shuttering of homes, shops, and hotels while taxpayers are left holding the bag.

The CJ argued that the Wyandotte County boom would have taken place in Missouri if it weren’t for the fat loans.  Granted, the closer you get to a border the more effective the STAR bonds will be at stealing business from a neighbor. That would be A-OK if Missouri were the only neighbor losing business.

Growing up I often spent my Friday night at the West Glen 18 Movie Theatre at 435 and Midland. After the Legends Shopping Center was built I started going to the fancier Legends 14.  Is this new economic activity or just shifting my purchase at the expense of the sales tax paying West Glen theatres?  Would West Glen have installed Tempur-Pedic seat cushions if the Legends weren’t built, I don’t know, but any expansion by West Glen would have been futile in the face of the legendary STAR bond development to the north.

Another activity I enjoyed growing up was taking a stroll down Mass Street, in Lawrence, to buy sweet new jeans. However, shortly after the Legends Shopping Center was up and running, Mass Street was old news and my friends and I would travel to Village West instead.  Again, did we create new economic activity at the Legends, or just shift purchases from the sales tax paying businesses on Mass Street to the posh stores at the Legends?

Jay P Greene’s Global Report Card has outlined some strong evidence in support of charter schools:

Greene did acknowledge that this correlation does not prove causality, and argued a series of academic studies that use 'randomized control trials' – the method used in medical experiments – more rigorously prove the efficacy of charter schools.

Here's a run down of the studies:

From Boston:

From Stanford for the National Bureau of Economic Research:

The same Stanford researcher also studied Chicago schools:

And lastly Greene summarized a study conducted Mathematica for the US Department of Education:

For more on what it is that makes charter schools effective check out what the National Alliance for Public Charter Schools has to say.

The Winfield Daily Courier recently called out proponents of Kansas' recent tax reforms; stating the reforms were based on a discredited economic theory. 

Perhaps if the Winfield Courier wasn’t convinced by our tax reform analysis, we should jump across the pond and see what those folks are saying.  The Centre for Policy Studies, based out of London, recently published this gem:  Small is Best: Lessons from Advanced Economies.

They found:

In layman's terms; higher taxes hurt economic growth. Also...

They even made a video to go along with it:

For further reading check here and here.

There’s good news for those who are understandably concerned about the state’s ability to fund core services with implementation of the just-signed tax reform legislation. The billions in deficits that have been predicted in future years will never happen.

The standard analysis performed by Kansas Legislative Research Department (KLRD) makes no allowance for the Constitutional requirement to have a balanced budget. Spending adjustments required in 2014 would have long term effects that are not accounted for in that methodology, thereby artificially inflating future deficits.  KLRD also assumes that State General Fund (SGF) spending would grow by more than $700 million over the next few years, so a lot of the predicted deficits are driven by the assumption of large spending increases. (It’s standard methodology to change just one variable; we’re not here to criticize KLRD, only to take their analysis one step further.)

Below are three spending and revenue scenarios; the first is KLRD’s baseline scenario and the other two show the real world application of having a balanced budget.

Scenario 1: We have numbers pulled directly from KLRD.  As you can see revenue is projected to dive in 2014 and climb to $6.3 billion in 2018 while spending is projected to continuously grow unchecked; resulting in a $2.4 billion ‘deficit’ in 2018.

Scenario 2 uses KLRD’s revenue projections but reduces spending in 2014 by $670 million… enough to leave a $450 million ending balance ($450 million was chosen for math simplification and it’s in the ball park of the 7.5% ending balance requirement). Spending is then allowed to grow in lock step with revenue so long as $450 million is left in the bank.

Scenario 3 illustrates what happens if we implement aggressive efficiency programs and reduce spending by 6.5% in fiscal year 2013. That’s a smaller one-time reduction and still allows more spending than in FY 2011. The ending balance dips lower than recommended temporarily but controlled spending increases allow it to gradually rebuild. 

Rest assured these tax reductions will not result in a spiraling debt, but they will result in common sense spending restraint, economic growth and job creation.  As we have shown before a low tax burden is an essential component of economic competitiveness and the key to a low tax burden is spending restraint.

Today’s Wichita Eagle Blog wants readers to believe that now is the time to increase funding on public K-12 education:

When the economy crashed and the state made large budget cuts to education funding, lawmakers urged school districts to be patient. “The common goal is restoring that money, and we will restore that money,” Rep. Steve Huebert, R-Valley Center, told Wichita superintendent John Allison in 2010. Well, the economy is growing again and the state now has a significant budget surplus. Yet the House has resisted a Senate proposal to restore about 10 percent of the base state aid that was cut over the past four years.

When the economy crashed and the state made large budget cuts to education funding, lawmakers urged school districts to be patient. “The common goal is restoring that money, and we will restore that money,” Rep. Steve Huebert, R-Valley Center, told Wichita superintendent John Allison in 2010. Well, the economy is growing again and the state now has a significant budget surplus. Yet the House has resisted a Senate proposal to restore about 10 percent of the base state aid that was cut over the past four years.

The data for Kansas and the nation in general shows no connection between higher spending and better achievement.

Taxpayer funding of public education increased from $3.1 billion in 1998 to $5.6 billion last year, but test scores on The Nation's Report Card (NAEP) show relatively no change.  Spending on public education in Kansas has grown much faster than inflation and enrollment.

The states with the highest NAEP scores in the region on each student cohort (White, Hispanic, Low Income, etc.) spend at least $1,200 per-pupil less than Kansas.  Colorado has the best scores for White students.  Texas has the highest scores for Hispanic and Black students; Texas also has higher scores than Kansas for White students and trails Kansas by a single point for Low Income...yet spends $1,400 less per-pupil.

Every state, including Kansas, has a lot of work to do to raise student achievement, but more money isn't the answer.

Okay, the economy is growing relative to what was happening in 2008 and 2009 but much slower than in most parts of the country.  Kansas continues to fall farther behind in job creation, wage and salary distribution and private sector GDP.  Kansas continues to have more U.S. residents choose to leave Kansas than to move here.

I'm sure Rep. Huebert meant what he said, but the 'being patient' part still applies.  Yes, the state finally has some small reserves but those reserves pale in comparison to those held by local school districts.  Kansas is attempting to have a 7.5% reserve balance and some see that as justification for increasing school funding.  But many of those same people say schools need every penny of their own 16% ending balance (which grew from 11.7% six years ago).

School districts enter the year with far greater certainty of their revenues than does the state.  School districts have added to their reserves every single year since 2005.  The last two years alone have seen reserves increase by $160 million, meaning that administrators either felt it was more important to increase reserves than spend that money on education services or the formula is giving districts more money than they actually need.  Or some combination of the two.

A review of the data indicates it's probably a little of both.  There is very strong evidence that the funding formula is providing more funding than is needed for Special Education, At Risk and Bilingual.  Districts surely are providing all of those services they believe are necessary, so the fact that they've increased reserves in those funds by $84 million over the last two years must mean that they are receiving more money than necessary.

Recognizing this, the legislature last year passed SB 111 to allow districts to transfer up to $232 per-pupil (about $154 million) from a dozen funds (including those mentioned) and use it for any purpose.  Most districts declined that opportunity; at last report, only $24 million of that transfer authority had been exercised.

Some districts don't have the ability to tap reserves because they don't have much set aside, but the vast majority can do so.  Dozens of districts consistently operate with less than a 10% carryover ratio (current operating reserves as a percentage of that year's operating costs).  Yet the state average last year was 16%, with many districts consistently operating with more than a 20% ratio.

That's just one reason that many legislators may be hesitant to increase school funding.  Another may be that Deputy Commissioner Dale Dennis' last estimate showed that 2012 will be a record-setting year for school spending at $5.672 billion, with per-pupil spending at $12,454 and only 1.6% below the 2009 record of $12,660.  With spending at or near record highs, operating reserves having increased more than $400 million since 2005 and most districts choosing not to use prior years' excess revenue, it's certainly understandable that some legislators might think it's not necessary to give schools more money right now.

Maybe someday we will see these facts in news stories.

Claims that Base State Aid Per-Pupil (BSAPP) has been cut back to 1990s levels are quite deceptive, as they ignore how state funding of schools has significantly changed over the years.  At one point, nearly all programs were funded out of BSAPP, but subsequent years have seen more money added on top of BSAPP for services that previously came out of the base.

Since student populations vary widely some districts receive additional money through ‘weightings’ on top of BSAPP ("At Risk, Bilingual, etc).  Quite a few ‘weightings’ have been added or expanded over the years, with the effect of reducing stress on BSAPP.  A full list of the weightings, their respective values and the complete formula is available on KansasOpenGov. 

The adjacent table demonstrates how those weightings and other state aid have changed.

In 1998, there was only $178 per-pupil in addition to BSAPP, KPERS and Bond aid.  This year’s estimate is more than 10 times that amount. 

It is correct to say BSAPP has remained relatively unchanged since the late 1990s, but that leaves out an increasingly large portion of State K-12 funding.  In 1998, BSAPP accounted for nearly all of State funding of Education (91%) while today BSAPP has been supplemented by allotments made via ‘weightings’ and now accounts for only 55% of State funding of education.

The only way to fairly compare the change in BSAPP over the years would be to deduct those items that once were paid out of the base but are now in supplemental funds (or vice versa; increase BSAPP each year on the same basis). 

School districts, and now newspaper editorials, see today's KC Star, only want to talk about base state aid when it comes to discussions about K-12 finance in Kansas. However, base state aid is only about 30% of this year's estimated total funding.

Here are some facts that are conveniently ignored in too many discussions of school funding. Every fact below comes from the Kansas Dept. Of Education; Deputy Commissioner Dale Dennis provided the 2012 estimates to KPI last November.

Total spending in 2012 is predicted to be $5.672 billion and set a record. State aid is set to account for $3.157 billion, at $6,931 per-pupil. That is more than double base state aid.

While there have been recent declines in state aid, they have been grossly overstated. 2012 aid is only 4% below the 2009 peak but is 34% higher than in 2005.

A good portion of these increases have gone directly to Instructional spending, as defined by the state. In fact, that number has increased 87% between 1999 and 2011 and more than double the combined rates of inflation (32%) and FTE enrollment (1%).

At the same time spending has increased, current operating cash reserves (excluding capital outlay, federal and bond payment funds) have increased to a record-high $868 million at the beginning of this year. That’s 90% more than was in those accounts in 2005. The balances increased more than $400 million as state and local tax dollars were not spent.

Some level of reserves is appropriate, but districts had no cash flow problems when they had $500 million in reserves. They could and should spend some of that money left over from prior years while still operating responsibly.

If the Senate gets their way and spends $74 million it would reduce the State’s ending balance. How is it logical for the State to spend reserves but not school districts, especially since districts' reserves are far greater than the State's?

The Senate plan is not logical...or prudent. It is political.

Last Wednesday, April 18, the Wichita Eagle editorial page made an outrageously false claim about Kansas Policy Institute, saying we were 'playing fast and loose with the truth.  Our crime?  We have a fact-based opinion with which they disagree!

We asked for an immediate meeting to make our case and request a retraction, but the Opinion Page Editor, Phillip Brownlee, said he wasn't available until next week but didn't believe a meeting was really necessary, saying "It's just that The Eagle editorial board (and the Kansas Dept. of Ed, school districts and many other observers) thinks the ads are misleading. Even your last piece to us was misleading, implying that the state had lowered its standards because the cut scores had changed and its terms (proficient, satisfactory) had changed. The cut scores changed because the test changed, not because the standards were lowered. And the terms changed in order to match the NCLB terminology (again, it didn't lower standards)."

The Eagle editorial board, KSDE, local districts and others don't like the ads because they disclosed that proficiency does not require full comprehension of grade-appropriate material.  There is nothing whatsoever misleading about stating that fact.  The 'misleading' part is that parents hadn't been told that standards were that low or that they had been reduced.

Our last piece to the Eagle didn't 'imply' that standards were reduced in 2006, it stated it for a fact based on documents we acquired from the Kansas Department of Education.  According to the Kansas Assessments in Reading and Mathematics 2000 Techical Manual, the five assessment categories were once (highest to lowest) Advanced, Proficient, Satisfactory, Basic and Unsatisfactory; at some point between 2000 and 2006 (when the cut scores were changed) they were changed to Exemplary, Exceeds Standard, Meets Standard, Approaches Standard and Academic Warning.

As explained in this full-page ad we ran in the Eagle on Sunday, April 22 (yes, we had to spend a lot of money to get the truth in front of Eagle readers), the former categories of Proficient and Satisfactory were combined into a single category now called Meets Standard.  (As KSDE says, "...a proficient student has satisfactory comprehension....").  A student formerly had to fall into one of the top two categories to be proficient, but now only has to be in the top three categories.  

The KNEA (teachers' union) likens the current definition of Meets Standard to a 'C.'  If they are consistent in their logic, they must also believe that a student previously had to earn a 'B' to be considered proficient.

KSDE lowered the cut scores in 2006 - the minimum percentage of correct answers required for inclusion in each category.  Some people believe lower cut scores are not necessarily indicative of lower standards (arguing that the test could have been made infinitely harder) but there is nothing in the KSDE Technical Manual that says so. Proficiency under the 2000 standards required having at least 87% correct answers; now it is as low as 63%.

But even if you discount the change in cut scores, there is no denying that the U.S. Department of Education says Kansas has some of the lowest standards in the country.  They say Kansas' 4th grade Reading standard is lower than 40 other states; the 8th grade standard is lower than 35 other states.  

If that's not enough proof, there's more.

That same KSDE 2006 Technical Manual says the standards were changed to such extent that no comparisons to prior years' achievement results should be made.  (Sometimes it's important to note what people don't say; we find no place where they say the standards were made more difficult in 2006, yet no comparisons to prior years should be made.  If standards were essentially the same, comparisons would be OK...but if they were lowered....)

Of course, written policy saying comparisons to prior years results should not be made does not stop KSDE and local districts from doing it anyway.  (Imagine what editorial writers would say about KPI if we did something like that.)  

Who do you think is 'playing fast and loose with the truth'?

 

Capitalism is the most amazing vehicle for social cooperation that has ever existed. And that’s the story we need to tell… to show that it’s about creating shared value, not for the few, but for everyone.

~John Mackey, Co-Founder of Whole Foods Market

Cooperation is as much a part of capitalism as competition.  Both are essential elements of the simple system of natural liberty, and most of us spend far more of our time cooperating with partners, coworkers, suppliers, and customers than we do competing.

~David Boaz Executive Vice-President of the Cato Institute

The earth by these labours of mankind has been obliged to redouble her natural fertility, and to maintain a greater multitude of inhabitants.

~Adam Smith

Tom Palmer, editor of "The Morality of Capitalism," will be making the moral case for capitalism at a free reception and lecture that is open to the public in Overland Park on 15 May and in Wichita of 16 May. Event details are below and be sure to check out the video for more information.

Overland Park - 15 May 2012
When: 5:30 p.m. reception and 6:30 p.m. lecture
Where: Overland Park Sheraton - 6100 College Blvd.
RSVP HERE, via e-mail at events@kansaspolicy.org, or by calling 316.634.0218

Wichita - 16 May 2012
When: 5:30 p.m. reception and 6:30 p.m. lecture
Where: Hyatt Regency Downtown - 400 W. Waterman
RSVP HERE, via e-mail at events@kansaspolicy.org, or by calling 316.634.0218

This week Wichita Downtown Development Corp. (WDDC) is hosting workshops to foster grassroots community engagement for downtown Wichita.  During these workshops participants will be given an imaginary $500 to make Wichita a “better more interesting place,” which begs the question will any group reward the people already working hard to make Wichita an interesting place?

My first thought is to donate $500 to the unfortunate tornado victims.

If it were not for Saturday’s storms I would first use the money to treat the office to authentic Mexican cuisine at Angela’s Café on the corner of E Central and N Mosley ($50).

On my way home I’d stop by Yoder Meats to buy some award winning smoked meats and cheeses.  Next door at the Seafood Shop I’d pick up some fresh lobster tail, ($100, yes you can get fresh seafood in land locked Wichita)!

To go with my surf and turf dinner I’d buy a bottle of Grace Hill Winery’s fine Cabernet Franc, made from grapes grown right here in Kansas ($24).  Then travel up northwest to the Wichita Brewing Company to purchase a growler of their handcrafted Half-Wit Wheat ($16).

All this driving around would surely wear down my tires, fortunately Wichita is home to Tracy’s Automotive, where I can receive a much needed tune-up and new set of tires ($250).

While waiting on my new tires I would enjoy some live music as I chow down on a delectable Maple Bacon donut at the Donut Whole ($10).

Luckily Safe Riders could drive me to the Shockers game where I can enjoy the 70 and sunny weather with friends ($50).

Today the Bureau of Labor Statistics released Wichita Metro Area February employment numbers, small gains are a positive step, but yet again we see public sector employment growth outpacing the private sector.  One month is nothing to fret over but a 13 year trend can be telling, as this can only mean higher taxes on a struggling private sector.

Since 1998 the Wichita Metro Area has seen all levels government grow and grow, while private sector employment has often failed to stay above water.  The chart below indexes Wichita Metro Area employment growth in the private sector and levels of government, (any value below 100 means employment is lower than 1998 levels).

Source: Bureau of Labor Statistics

Wichita private sector employment peaked in 2008 at 267,000, but has since lost 24,500 jobs. Only 4 of the 13 years since 1998 has Wichita employed more private sector workers than in 1998. 

All local gov't in the metro area fared better, each year setting a new record level of public employment, until shaving a few workers in 2011.

In 1998 there were 10.35 private sector employees supporting 1 local public sector employee, by 2011 that number decreased to 8.45.  Meaning a heftier tax burden must be carried by each private sector employee to support the growing local public sector.

This post is courtesy of Bob Weeks and his Voice for Liberty in Wichita blog, where the piece originally appeared.

Recently Kansas Governor Sam Brownback and U.S. Senator Jerry Moran of Kansas made the case for extending the production tax credit (PTC) for the production of electrical power by wind.

The PTC pays generators of wind power 2.2 cents per kilowatt-hour produced, a high rate of subsidy for a product that sells for 9.5 cents, according to a March 2010 illustration provided by Westar.

Brownback and Moran contend that this tax credit is necessary to let the industry "complete its transformation from being a high tech startup to becoming cost competitive in the energy marketplace." But wind is not a new industry. The PTC has been in place for twenty years. If an industry can't get established in that period, when will it be ready to stand in its own?

The authors also contend that canceling the PTC will result in a "tax hike on wind energy companies." To some extent this is true -- but only because the industry has enjoyed preferential tax treatment that it should never have received.The proper way to view the PTC is as a government spending program in disguise. That's the true economic effect of tax credits. They are equivalent to grants of money.

Amazingly, Brownback and Moran do not realize this -- at least if we take them at their written word as they describe the PTC: "These are not cash handouts; they are reductions in taxes that help cover the cost of doing business." (Emphasis added.)

It is the mixing of spending programs with taxation that leads these politicians to wrongly claim that tax credits are not cash handouts. But not everyone falls for this seductive trap. In an article in Cato Institute's Regulation magazine, Edward D. Kleinbard explains:

Specialists term these synthetic government spending programs "tax expenditures." Tax expenditures are really spending programs, not tax rollbacks, because the missing tax revenues must be financed by more taxes on somebody else. ... Tax expenditures dissolve the boundaries between government revenues and government spending. They reduce both the coherence of the tax law and our ability to conceptualize the very size and activities of our government. (The Hidden Hand of Government Spending, Fall 2010.)

U.S. Representative Mike Pompeo of Wichita recognized the cost of paying for tax credit expenditures when he recently wrote: "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."

This is an example of the seen and unseen, and also of the problem of concentrated benefits and dispersed costs. Politicians hope we won't notice.

When Brownback and Moran write of the loss of income to those who profit from wind power, we should remember that these profits do not arise from transactions between willing partners. Instead, they result from politicians who override the judgment of free people and free markets with their own political preferences -- along with looking out for the parochial interests of the home state. We need less of this type of wind power.

Today’s Lawrence Journal-World had another ‘sky-will-fall’ story warning of economic catastrophe that would accompany tax reform in Kansas.  “Study says lower state income taxes will lead to higher property, sales taxes” is based on a ‘study’ by the Center for Budget and Policy Priorities (CBPP) based in Washington, DC.  

New York Times reporter Matt Bai says the Center for Budget and Policy Priorities (CBPP) is funded by the Democracy Alliance.   According to Bai's account, representatives of CBPP attended a May 2006 meeting of the Democracy Alliance to "talk about the agendas they were busy crafting that would catapult Democratic politics into the economic future."  

It's quite telling that the left-leaning Lawrence Journal-World calls this organization 'non-partisan' but consistently labels free market- oriented organizations as 'conservative'.  

The CBPP study's conclusion is based on nothing more than an assumption: "the state will likely find itself both raising other taxes on middle- and low-income families and making massive cuts to vital services that will badly damage the state’s economy."

This is the classic 'either/or' ultimatum that governments typically give taxpayers...either pay higher taxes or surrender some service you want. In other words, give us what we want or pay the price. Instead, governments should examine every program for effectiveness and efficiency, always looking for ways to maintain essential services at the most cost-effective manner. States with lower tax burdens have far greater job growth and wage & salary disbursements; their private sector GDP dwarfs high burden states. They gain population from people choosing to move from other states while the high burden states (including Kansas) lose population from domestic migration.

The key to having a low tax burden is to control spending, and that's exactly what low burden states and those with no income tax do. According to the National Association of State Budget Officers, states with no income tax spent $2,444 per resident in 2010 while the rest of the country averaged $3,572 or 46% more. Kansas spent $3,216 per resident and would have saved $2.2 billion by spending at the rate of states with no income tax.

Tax reform is about job creation and economic growth. The CBPP 'study' is about justifying the continuation of policies that have fed the growth of government and largely contributed to sub-standard private sector economic growth.

It is disingenuous at best to blame school closings on the current governor and legislature when the changes to school funding, which were prompted by a serious recession, began under a previous governor and legislature.

 And the overall impact of the changes has not been even close to those claimed by Ms. Dietz.  Neither state funding nor overall funding have been 'cut back to 1999 levels' and she knows it.  Ms. Dietz is only referencing a piece of state funding.  The truth, as provided by the Kansas Dept. of Education and Wichita financial reports, is that:

 - State support of public education in 1999 was $2.04 billion; this year it is expected to be $3.2 billion.

 - Total taxpayer support increased from $3.2 billion in 1999 to $5.7 billion this year.

 - KSDE online records for individual districts only go back to 2002 but show state aid per-pupil for Wichita was $4,812; last year it was $7,092.
 
- Total taxpayer aid to Wichita schools was $8,393 per-pupil in 2002; last year it was $13,069.

When governments talk about budget cuts, they are most often talking about reducing their plans to spend more rather than actually spending less money.  According to data provided by KSDE, the Wichita district has spent more money every single year.  The pace of the increase certainly slowed in the past few years but they are still spending more money every single year.

Even their current operating expenses have increased.  The first column below shows total spending for USD 259 from the Kansas Comparative Performance and Fiscal System; the second column shows current spending, with all Capital Outlay and Debt Service removed (all figures in millions):

2005   $422.4   $383.4
2006   $468.1   $429.7
2007   $527.1   $471.3
2008   $552.0   $507.6
2009   $573.9   $523.5
2010   $585.5   $524.3
2011   $603.8   $526.9

The recession certainly created a lot of unfortunate challenges for everyone but taxpayers and parents deserve honesty from elected officials, not political rhetoric and false information.

The Bureau of Labor Statistics annually revises prior year job numbers and the new 2011 numbers show that Kansas and many states actually had slightly more job growth than originally reported.

Each January BLS performs a final revision on all monthly jobs reports or as the BLS puts it:

This year the Bureau of Labor Statistics (BLS) used special model adjustments to control for survey interval variations for all seasonally adjusted data. These special adjustments are designed to correct for variations in the number of weeks between reference periods in any given pair of months. This resulted in revisions to many seasonally adjusted series affecting data from 1990 forward.  Full details available here.

The numbers changed for each month and resulted in an increase of 15,600 private sector jobs on an average annual basis.  As a result, Kansas now officially recorded a 1.65% increase over 2010; previous reports showed an increase of 0.4%.  The revised numbers also show that Kansas has finally pulled ahead of 1998 employment levels.  Previous reports showed Kansas had 1.1% fewer private sector workers in 2011 than in 1998; the revised report now shows an increase of 0.4%.

Data for all states was revised but Kansas’ upward revisions also improved its competitive position.  Kansas’ previous 2011 growth rate of 0.4% had the state ranked #49, or the second worst in the nation.  The revised 2011 growth rate of 1.65% places Kansas at #23.  Among regional states, Texas, Oklahoma and Colorado had stronger job growth; Missouri and Nebraska had gains but grew at a slightly smaller rate than did Kansas.

The improved numbers are encouraging but Kansas’ private sector employment remains 52,000 jobs (4.65%) below its 2008 peak.   

Have you noticed that some of the same people who say the State should spend its surplus balance have a completely opposite opinion about school districts?

Today’s story in the Topeka Capital-Journal about House Appropriations recommendations on school funding misstates what was actually proposed.  School funding would not be 'cut' in the sense that money is taken away.  As explained today in the Wichita Eagle, the Governor's budget proposed adding $29 million this year and the House Appropriations action is simply eliminating the proposed increase.

The rationale for not increasing funding is that districts already have the money in carryover cash reserves – state and local tax dollars provided in prior years that were not spent.  Legislation passed last year gives districts the authority to transfer up to $154 million to current operations this year and to date, only $24 million of that authority has been exercised.  Even if districts used the entire $154 million, they would still have about $700 million left over, plus another $837 million in Capital Outlay and Debt Service funds.

School districts' balances in their current operating funds have increased 90% over the last six years, going from $458 million to $868 million.  Those balances increased every single year, which means districts didn't spend all of their tax dollars...every single year.

All government entities need some degree of surplus balances but district balances are much larger than state balances.   And not just in total dollars.  The state's goal is to have the statutorily required ending balance equal to 7.5% of General Fund expenditures.  School districts' ending balances in their current operating funds (everything but capital and debt service) represented 11.7% of current expenditures in 2006 and increased to 16.0% by 2011.  The current reserve ratio is somewhere between 16.6% and 18.8%, depending upon which budget figures one uses from KSDE.  Carryover cash reserve balances by district are available on KansasOpenGov.org.

We agree that excess reserves should be used to fund current operations instead of taking more money from taxpayers.  Those who believe the State of Kansas should give some of it's relatively small surplus to school districts should be consistent and call for school districts to tap their own large reserves instead of asking taxpayers for more money.

Last month, Wichita voters took to the ballot box to weigh in on whether the City of Wichita should provide government funded incentives for a new downtown hotel.  This vote reminded everyone that a debate, in Kansas and around the country, remains about the best way to create jobs and economic prosperity.

As the Wall Street Journal wrote after voters decided against this incentive package:

Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.

Policy beliefs aside, some degree of incentives may be necessary as long as some companies expect them, but pragmatism also dictates that neither Wichita nor the State of Kansas can win an economic development war where the largest checkbook wins.  Fortunately, incentives aren’t the only way to compete and in fact may only be important to a small portion of potential employers.

Should we increase incentives?  What about lower taxes and less regulation?  Targeted government spending or investment? These are some of the important issues that will be addressed on 11 April at an economic development summit hosted by KPI.

National and Kansas experts will join at the WSU MetroPlex for a half-day of panel discussions and expert presentations. This free event is open to the public and you can register here. Breakfast and lunch will be served and you can view the full agenda below;

Eco-Devo Through Economic Competition - 11 April 2012

7:30 – 8:15 a.m.: Registration and breakfast

8:15 a.m.: Welcome
- Dave Trabert – President of Kansas Policy Institute

8:30 a.m.: Implications of "Location Matters: A Comparative Analysis of State Tax Costs on Business”
- Joe Henchman - Vice President of Legal and State Projects at the Tax Foundation

9:00 a.m.: Shaping Government to Increase Competitiveness
- The Honorable Maurice McTigue - Vice President of the Mercatus Center at George Mason University

9:45 a.m.: Break

10:00 a.m.: Panel Discussion - Different Perspectives on Competitiveness and Development
- Ron Wilson - Director of the Huck Boyd National Institute for Rural Development at Kansas State University
- Jeremy Hill - Center for Economic Development and Business Research at Wichita State University
- Art Hall, Ph.D. - Executive Director of the Center for Applied Economics at the University of Kansas
- The Honorable Maurice McTigue, Vice President of the Mercatus Center at George Mason University
- Walter Berry - Chair, Wichita Metro Chamber of Commerce Board of Directors
- Nick Jordan, Kansas Secretary of Revenue

11:45 a.m.: Break

12:00 p.m.: Lunch served

12:15 p.m.: A Perspective from Washington
- U.S. Representative Mike Pompeo

A KPI student achievement awareness campaign (an example from the Topeka Capital-Journal is here) has prompted a few people to question whether the ads are correct. The Kansas National Education Association (KNEA) also issued a press release full of blatantly false accusations about KPI and the campaign.

It’s understandable that people might think there is something wrong with the ads. Most people reasonably believe the descriptions listed in the ads – “reads grade-appropriate material with full comprehension” and “usually performs accurately on most grade-level tasks in Math” – are the definitions of Meets Standard or Proficient.

The truth, however, is that those are the Kansas definitions of Exceeds Standard. A student does not have to read grade-appropriate material with full comprehension or usually perform all grade-level Math tasks accurately to be considered Proficient by state standards. The ads accurately reflect the percentages of 11th grade students who perform at or above the listed performance descriptors. Here are their definitions for  Reading:

Meets Standard – when reading grade-appropriate narrative, expository, technical and persuasive text, a proficient student has satisfactory comprehension.

Exceeds Standard – when reading grade-appropriate narrative, expository, technical and persuasive text, an advanced student has full comprehension.

As we have traveled the state discussing education in public forums, we’ve found that parents and even some educators have been shocked to learn that Kansas has such low standards. (The U.S. Dept. of Education says Kansas has some of the lowest standards in the country.) An honest examination of all the facts on student achievement shows that a lot of changes are needed to help every student reach their full potential, but a false sense of high achievement is a tremendous barrier to change.

State assessment results are not the only indication that achievement is lower than most people understand. The U.S. Department of Education reports much lower proficiency levels and shows next to little progress over the last thirteen years. The ACT college-readiness measurement says only 28% of 2010 Kansas high school graduates scored high enough to be considered college-ready in English, Reading, Math and Science. KSDE says 21.1% of Kansas high school graduates who attend a Kansas university sign up voluntarily for remedial training. That all makes sense when you understand that KSDE tests show that only about half of 11th graders in Kansas have full comprehension of grade-appropriate material.

The KNEA press release deliberately misrepresents the ad content by implying that full comprehension of grade-appropriate material is the same as Proficient. KNEA may not want parents to know the truth but we’ve been sharing this information with legislators, parents and educators for nearly a year and KSDE has not denied the facts we include in the awareness campaign.

This is not about assessing blame or criticizing students and educators; we have no doubt that educators are doing their best within the confines of the current system. It’s about taking an honest look at student achievement and deciding whether the current system is producing acceptable results or whether some changes are needed. Our kids deserve nothing less.

[Editor's Note: KSDE released a revised report showing that 21.1% of Kansas high school graduates who attend a Kansas university sign up voluntarily for remedial training whereas the original report said 24.6%.]

By now, hopefully you've seen an advertisement in your local paper about the student achievement levels of your area districts. If not, you can view an example of one from the Topeka Capital-Journal here. A version of this exact same ad is running in multiple papers around the state highlighting surrounding districts; you can find the numbers for your district's reading and math scores at www.KansasOpenGov.Org.

What seems to be drawing the most attention is that many Kansans understand student achievement to be higher than what we published. This is because we looked beyond the top-line definitions of student achievement (e.g., Meets Standard) and examine the underlying verbiage that supports it.

Right up front, we are using data directly from the Kansas Department of Education. As with all data at KansasOpenGov, it is from an official government source, in this case KSDE, and is publicly available (we just put it all in one place) or we filed the appropriate Kansas Open Records Act request.

The question we're asking Kansans to keep in mind as they digest the advertisement and this blog is - Are these levels of student achievement good enough?

For instance, the high school reading definition for Meets Standard, from KSDE, reads as “When independently reading grade-appropriate narrative, expository, technical, and persuasive text, a proficient student has satisfactory comprehension.” It is only when a student achieves “Exceeds Standard” status that they are expected to have “full comprehension.”

Let's look at what this means in real terms and use an example from the advertisement linked to above. In the ad, USD 330-Mission Valley is listed as having 50% of 11th grade students who read grade-appropriate material with full comprehension and 71% are usually accurate on all grade-level math tasks. Those numbers reflect the percentage of students who ranked as "Exceeds Standard" and "Exemplary" on the 2011 state exam in either category.

The confusion arises because often a school district or the state point to the number of student at or above grade-level to include those student who "Meets Standard.” Strictly using the state’s top-line definitions, 100% of 11th graders in Mission Valley meet or exceed the state standard in math and 93.3% at the same level on reading.

Remember, a student who “Meets Standard” doesn't have to fully understand his reading material or accurately complete all of his math problems.

So, the question remains, are these levels of achievement good enough?

Many Kansas students receive a fine education, but too many are being left behind. The only way we can have a conversation about how to move forward is to be honest with what our children are achieving. Let’s also remember that there appears to be no link between student achievement and K-12 spending. For instance, between 1998 and 2011, funding for public education in Kansas increased from $3.1 billion to $5.6 billion and Kansas test scores on the “gold standard” of achievement tests from the U.S. Department of Education are virtually unchanged.

We applaud the hard work of Kansas students and teachers but also think some are taking the easier route of looking for evidence to defend the status quo rather than taking an honest look at where we are and how we can get better.

As we tour the state discussing K-12 education, the one constant theme is that No Child Left Behind (NCLB) has been a millstone around the neck of the entire system.  Teachers, administrators, parents, board members, legislators, you name ‘em and people are in near-lockstep agreement that NCLB is, at best, rubbish and, at worst, an educational and constitutional train wreck.

Articulated in countless ways, the arguments against NCLB boil down to more bureaucratic meddling in the classroom interfering with student learning.  From states to teachers to students, the classroom experience is less about learning and more about meeting a national standard.

It should be no surprise, then, that many are starting to offer the same criticisms of the Common Core (CC) curriculum.  CC is being sold as voluntary, but it turning into yet another federal takeover of a state’s prerogative.

CC was originally envisioned as states deciding on their own to agree to basics of student curriculum and standards.  Unfortunately, and unsurprisingly, what was originally envisioned has been polluted by an increasingly political education apparatus in Washington, D.C.

How are the supposedly voluntary CC being hijacked by the Feds?  Both with money and with the desire to get out from underneath that other oppressive, nationally mandated education protocol known as NCLB.

Kansas is like many states and continues to feel the pinch of a very tough economy.  In response, the financing of states priorities are under review.  No different with K-12 education and Race To The Top money being offered to states through the U.S. Department of Education.  Education Week’s blog said it best last March when describing the federal dictate to states on Race To The Top funding.

I'm sure you remember, because it set a lot of people's neck hairs on end, that President Obama recently proposed that Title I [Race To The Top] funding for disadvantaged students be tied to whether states have adopted the Common Core State Standards.

And I am also sure you know that in order to get the most bang for their buck in Race to the Top applications, states have to promise to adopt the common standards.

It is unrealistic to believe that states won’t belly up to the federal bar for this happy hour special.  Policy makers respond to the same incentives as do individuals and what is ceding a little K-12 control to the Feds in exchange for more money?  Nearly every other area of public policy is moving in that direction, so why not education?

Second, as states work to get out from underneath the widely-panned NCLB, they are being encouraged (much like the Corleone Family encouraged filmmakers to hire family members) to adopt CC.  Once again, the Education Week blog offers some insight into what is takes for a state to score a NCLB waiver.

…a key requirement for states seeking a waiver is that they have adopted "college- and career-ready standards" and assessments. The standards don't have to be the [Common Core standards]. But if they're not, a state will have to certify, through its public higher education system, that its standards are tough enough that mastery of them will serve as a passport allowing students to skip remedial courses in college and go right into credit-bearing work.

That is a pretty powerful ONE-TWO combination for states to ignore, “Hey Kansas!  We’ve got money for you to spend on K-12 education and we’ll even let you off the hook from NCLB.  All you have to do is let us effectively run your schools from Washington.”

Which gets us back to where we started as the one common theme as we talk to people around Kansas – more federal, and Topeka, involvement in education does nothing to help Kansas students learn.  In fact, returning control to local school boards is at the heart of Governor Brownback’s K-12 finance plan.  Regardless of its other faults, the plan recognizes the imperative to put control in the hands of those closest to actual student learning.

Assurances that CC won’t turn into NCLB on steroids amount to a collective “trust us” from its proponents.  “Things weren’t perfect with the previous regulations, but we’re smarter now and have learned from our mistakes.  This time we’ll get it right,” is a common enough bureaucratic refrain as to be cliché.

Let’s stop pretending that CC is voluntary and call it what it is – an offer state can’t refuse.  

Proponents of the education status quo often turn to images of a dedicated teacher, toiling for hours with little pay to help Johnny learn his multiplication tables.  Teacher and student grinding out hour after hour to learn and succeed and it works because we all had a teacher who stuck around after class to help us get past that stumbling block and remember their dedication to us.  

How does more red tape and bureaucratic intrusion help that teacher get through to a struggling child?  It doesn’t and every teacher we’ve spoken with will be happy to tell you about how NCLB is driving them out of the classroom.  

CC is no different and further threatens to undermine the best parts of our educational system and institutionalize the worst.  

The February 21 newsletter published by Kansas Education Policy Report, a subscription-based news service located in Topeka, included the following accusatory statement:

"That’s because districts receive large property tax distributions in May of each year, near the end of the school year, which makes their June 30 carryover amounts look artificially high – a quirk in the system that is often exploited by critics who allege districts carry excessively large cash balances.”

Saying that critics are ‘exploiting’ what they call a quirk in the system is simply not true and an attempt to brush aside a very substantive issue.  Anyone who has followed our writing on carryover cash balances knows full well that the primary issue is that the balances continue to grow each year, which the commentary completely ignores.

Payments and expenditures occur on the same schedule each year.  These funds operate on a cash basis, just like personal checking accounts.  Since there is an annual reconciliation of outstanding encumbrances as of June 30, the only way that ending unencumbered balances grow is for annual revenue to exceed annual expenditures.  

The July 1 unencumbered balances by district and fund are available at KansasOpenGov.org.  Annual unencumbered carryover cash balances in current operating funds (excluding those dedicated to Capital Outlay, Debt Service and Federal funds) grew every single year since 2005 as follows:

2005 – $458.2 million
2006 – $494.1 million
2007 – $542.3 million
2008 – $587.1 million
2009 – $699.2 million
2010 – $774.6 million
2011 – $868.3 million

The 2011 total includes $8.3 million in Activity Funds which had not previously been reported by districts, but the balance of the $402 million difference between 2005 and 2011 ending balances represents state and local taxpayer funds that districts received but did not spend.  

Districts need some degree of carryover balance but the fact that these balances have grown nearly 90% in the last six years is a clear indication that the funding formula is giving districts more money than they need to provide current services.  

Further evidence is found by examining the trend in Current Carryover Ratio, which measures the beginning balance in current operating funds (as described above) as a percentage of that year’s current operating expense (total expense less capital and debt service).  The 2006 Current Carryover Ratio was 11.7% (July 1, 2005 beginning balance divided by 2005-06 current expenditures).  The ratio dropped a bit in the next two years but look at what happened in the last few years:

2006 – 11.7%
2007 – 11.0%
2008 – 11.3%
2009 – 11.9%
2010 – 14.4%
2011 – 16.0%

The 2012 budgeted ratio is even higher, although the exact amount depends upon which budget data one uses from KSDE.  The Carryover Reserve Ratio report on KansasOpenGov also shows that dozens of districts have consistently operated with less than a 10% ratio…quite a few even operate with less than 5%.  That is a strong indication that many of those districts operating with reserve ratios of 20% (and much higher) are likely doing so by choice, not necessity.

Deputy Commissioner Dale Dennis has said on numerous occasions that districts increased their reserves (by not spending tax dollars on current services) in the last three years in reaction to changes in state funding and because the state has been late making payments.  Motivation aside, districts’ choice to put some of their aid dollars in the bank indicates that at least that amount of money must be considered discretionary; surely, districts would not deny services to students that they believed are truly needed when they have more money to spend.  

It is also noteworthy that districts have reportedly been paid on time this entire year and it is anticipated that that will continue into the future.  Still, the last report from KSDE showed that districts had only chosen to draw down $24 million of the $154 million authorized by SB 111.

The bottom line, if you will, is that every dollar unnecessarily appropriated to one service is a dollar that is either taken away from another service or is unnecessarily taken from taxpayers.  We believe government has a fiduciary and moral obligation to use taxpayer funds efficiently and effectively.   While there is no question that government entities need some degree of carryover reserves, the evidence overwhelming indicates that school district operating reserves are much higher than is necessary.

The current K-12 funding formula is not designed to provide schools with the minimum resources they need to achieve required outcomes while also operating and being organized in a cost-effective manner because such a study has never been conducted in Kansas.

The Augenblick & Myers 2001 study that was used by the Montoy courts was supposed
to have taken efficiency into account but, as explained by Caleb Stegall in “Analysis of Montoy vs. State of Kansas,” A&M chose to ignore efficiency. 

A&M presented the court with inflated numbers by deliberately including 50 high-spending districts that did not meet their own criteria for 'successful schools' - those achieving required academic outcomes and also operating in a cost-effective manner.  

The subsequent Legislative Post Audit study merely duplicated the bogus A&M study.  It is particularly noteworthy that LPA carefully pointed out on page 2 of their report that they were not asked to determine what it would cost to achieve required outcomes AND have schools organized and operating in a cost-effective manner.

The only logical thing to do is to finally have such a study conducted and then fund it.

Dave Trabert

You may have read about a new plan in the Wichita Eagle to incentivize new home purchases.

"With new-home construction foundering and builders buried under the weight of taxes on unsold lots, the Wichita City Council on Tuesday will look at a plan to jump-start the flagging local homebuilding industry. "City staff is recommending adoption of a five-year property tax moratorium for the first 1,000 qualifying new houses built over two years. The city and the Wichita Area Builders Association started developing the plan in October in an attempt to reinvigorate a market that has stagnated with declining sales and tight credit."

This proposal may be a well-intended effort to help home builders and some taxpayers, but it would do so at the expense of all other businesses and taxpayers.  Unless the City of Wichita reduces spending by the amount of the tax rebates, the foregone revenue will have to be made up by everyone else.  Government doesn't just spend money when it writes checks, it also spends taxpayer money when it gives credits, rebates, loans and other types of incentives.

City Council should also recognize that rebating property taxes to buyers of certain new homes will also harm taxpayers who are trying to sell existing homes.  

If the City of Wichita wants to help (all) taxpayers, the best way it can do so is to cut spending and reduce everyone's taxes.  The City's annual financial reports show that property tax collections increased from $59.3 million in 1997 to $115.4 million in 2010.  That's a 95% tax increase.  Over the same period, Wichita's population increased 16% and inflation was up 33%.  There is no good justification for taxes to increase at nearly double the rate of population and inflation.

The Institute on Taxation and Economic Policy (ITEP) recently published a paper arguing that the nine states with the highest income taxes are actually faring better than the nine states with no income tax.  ITEP cites Gross State Product (GSP) per capita, Real (inflation-adjusted) Median Household Income, and the Unemployment Rate as their basis.

Using per-capita data to justify that high-tax states are doing well deliberately discounts overall growth in GSP, employment and population shifts.  One needs only a simple drawing to see GSP Per Capita, Real Household Income, and the Unemployment Rate are not appropriate measures.

In this 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%, and lastly our overall wealth is $28.  Now supposed the first 4 individuals decide to seek opportunity in another state.  Now our state looks like this:

Our GSP per capita is $5, Real Household Median Income is $5, the Unemployment Rate is 0%, but our overall wealth is now $25.  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 IRS data suggests is happening.  From 2000 to 2009 the average adjusted gross income for taxpayers leaving the 9 states with the highest income taxes was $59,502, which is $5,000 lower than the average AGI for those states.

Instead of focusing on math trickery to justify our spending habits we need to focus on the policies that foster wealth and job creation.

• The nation saw 2.9% decline in private sector employment between 2001 and 2010.
• The 9 highest income tax states saw 4.8% decline in private sector employment.
• The 9 states without an income tax saw a 2.4% increase in private sector employment.

(Source: Bureau of Labor Statistics)

Jonathan Williams of the American Legislative Exchange Council and coauthor of Rich States Poor States, spoke to the Senate Committee on Assessment and Taxation, a pro-growth crowd for lunch, and the House Committee on Taxation.  Jonathan reiterated what has been the case for decades now, a lower tax burden will lead to more output, more opportunity, and more jobs.

Below is a slide Jonathan presented to our legislators yesterday, as you can see,  states with No Income Tax achieved faster growth in Gross State Product, Population, and Jobs within the past ten years.  

Less intuitively Total State Tax Receipt Growth in the non-income taxing states actually outpaced the highest income taxing states.  How is this possible?  Texas gained 4 congressional seats worth of people who now pay sales tax, property tax, as well as any other tax in the state ~ Jonathan Williams.
In-short people move to the opportunities that a low tax environment fosters.

Kansas has a choice, do we take lessons from the other laboratories and propel our state into a high level of economic performance or do we continue to watch as other states pass on by with bold moves to foster more output, more opportunity, and more jobs. 

The Bureau of Labor Statistics December jobs report shows Kansas has a lot of ground to cover before private sector employment returns to its 2008 peak. Kansas began 2011 with private sector employment at 93.4% of the 2008 peak and finished 2011 at 94.4%.

Kansas still needs 63,000 jobs, roughly Butler County's population, to reach the 2008 employment high.Under the current scenario Kansas will not likely reach the 2008 peak for years to come. WSU’s Center for Economic Development and Business Research pinned Kansas private sector employment growth at just under 13,000 for 2012.

Aggressive tax reform that puts money back in the hands of hard working Kansans will help speed the recovery.

A recent story in the Wichita Eagle focused on comments from Senate Minority Leader Anthony Hensley, D-Topeka, regarding a conflict of interest for members of the House and Senate Tax Committees. After examining data gathered by the Eagle, showing that 20 of the 23 members of the House Taxation Committee and 9 of the 11 member of the Senate Tax Committee have business interests that would be exempted from state income tax under the Brownback plan, Hensley suggested that some of the members should consider recusing themselves from voting on the plan.

“They certainly ought to at least let the general public and the rest of their colleagues know that they have a conflict of interest,” Hensley said. “We have rules in the Senate that provide for that. “When a bill hits the floor on final action, you cannot be forced to vote if you have a conflict of interest and you announce that publicly before the vote takes place. It addresses this very kind of thing.”

It’s one thing if a piece of legislation targets a specific industry or employer, but when legislation applies uniformly as in this case, it’s simply not practical to have members of a part-time citizen legislature recuse themselves. And no one knows that better than Senator Hensley, a special education teacher in the Topeka district who routinely introduces and votes on legislation impacting public schools. Senator Hensley obviously believes he has no conflict on education issues, yet he has no problem finding fault with others who do the same as he.

It’s also noteworthy that the Eagle story failed to mention this obvious conflict.

Here are a couple of maps for Monday, courtesy of our friends over at the Tax Foundation.
This first map shows the percent of income residents are paying to their state and local governments, essentially the price for services in each state.

The map below shows how much money each state has lost due to interstate migration. States, much like Wal-Mart and Target, must deliver services at a greater value than competitors to win over consumers, or residents.

Too often in Kansas we talk a lot about how much we spend on K-12 education but not nearly enough time talking about student achievement.

Next week the House Education Committee plans to change that (at least for the day) with a series of hearings on Thursday 19 January.  Never mind the usual hearings of one person standing up and giving a canned speech.  Next week, Rep. Clay Aurand's committee will be having congressional style panels with multiple people testifying at the same time.  Hopefully allowing for a more robust discussion.  Check out the proposed speaker line up below...subject to chance, unfortunately.

9:00 a.m. – The State of Kansas Education
Dave Trabert - President of Kansas Policy Institute
Dr. Janet Barresi - Oklahoma State Commissioner of Education and member of Chiefs for Change
Mark Tallman - Kansas Association of School Boards

10:00 a.m. – Public School Reform
Natise Vogt – Walton (KS) Rural Life Center
Gary Lewis – Maize (KS) Virtual Preparatory School
Peter Groff – Visiting fellow at Johns Hopkins University School of Education and the Principal of MCG2 Consulting and the former President and CEO of the National Alliance for Public Charter Schools
Susan Patrick – President of International Association For K-12 Online Learning

The hearings will likely be held in the Old Supreme Court Chamber at the Capitol.

After the hearings, Dr. Barresi will present at a public lunch for legislators at the Topeka Capital-Plaza hotel.  More details to come.

Unless we start challenging the status quo, more and more Kansas kids will be left behind their peers.  Hopefully, this is the first step in the right direction.

A recent column by the KC Star’s Steve Rose (available here) tried to make the case that states with no income tax are only able to do so because they have unique revenue sources. Examples he gave included gambling in Nevada, tourism in Florida and oil & gas in Texas, Alaska and other states. Fortunately, Mr. Rose didn’t do his homework.

The key to having a low tax burden and/or no income tax is not access to extra revenue; it's how much you spend. Yes, some states with no income tax have unique revenue opportunities but they could just spend more and have higher taxes like other states. Instead, they’ve figured out that they can have good quality government services AND high job growth by controlling spending and keeping taxes low.

The nine states with no income tax spent $1,767 per resident in 2009 out of their General Fund. That was 27% less than the national average and 21% less than Kansas. If Kansas had spent at the rate of the no-income-tax states, we would have spent $1.1 billion less that year.

KPI compiled research comparing the states with the highest tax burden to those with the lowest tax burdens and also those with no income tax. The low burden states dramatically outperform high burden states on job creation, gross domestic product, wage & salary distribution and domestic migration (U.S. residents moving in and out of states). The states with no income tax tend to do even better.  Check out the facts here at our tax reform page.

Okay, so this doesn't deal specifically with Kansas but it is a pretty good explanation of the work KPI does.

Around the world, the countries that are most economically free enjoy better health, longer life spans, a cleaner environment, and even their least well off populations have more money.  Why should it be any different in Kansas?

The answer - It wouldn't be any different!  The freer Kansans are to provide for themselves and their family, the better off the entire state will be.

Tip 'o the hat to www.EconomicFreedom.org for the video

Welcome to KPI's latest effort to help make Kansas a freer and more prosperous place to live and work.  (Please note the use of the German word for "welcome" because who doesn't appreciate a tip of the hat to the native language of the Austrian School of Economics.)

My name is James Franko (sorry, not the actor but this one) and I'm in charge of making sure we get this blog started off on the right foot.  To that end, our goal is to create a place to discuss the public policy questions facing our state. We believe this can be done in a courteous way that allows for all voices to be heard and respected.

With that in mind, please remember that Kansas Policy Institute is a 501(c)3 non-profit organization and is governed by rules that will prevent any comments, messages, or other content from being posted that;

• Constitute a communication in support of or in opposition to any candidate for any public office;
• Electioneering or lobbying communications within the meaning of applicable federal or state law.

Once again, this is to be a place to discuss, and even debate, the policy issues of the day. This does not include personal attacks, vulgarity, offensive content, spam, or links to things directly selling products. However, we gladly encourage you to post links to other blogs, media outlets, or organizations that advance the conversation and make a meaningful contribution. This means we can delete content that;

• Is abusive, vulgar, offensive, threatening or harassing language, personal attacks of any kind, or offensive terms that target specific individuals or groups;
• Off-topic comments or comments that promote services or products;
• Gratuitous links to sites that could be viewed as spam;
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Something appearing on this blog DOES NOT constitute or imply the support or endorsement of said content by KPI, our staff, or board members. We’re trying to create the free flow of ideas and someone posting a study from the Bugs Bunny Institute for Public Policy does not mean KPI is supporting Bugs Bunny or his policy ideas.

We reserve the right, at our absolute discretion, to remove any comments we feel violate the rules outlined above or the spirit of this blog.

Lastly, while we were all riveted by the debates in Washington, D.C. about raising the debt ceiling or extending the payroll tax cut, we'll be focusing on Kansas issues.  There are plenty of other forums to debate the latest news from inside the Beltway and trust you'll find an appropriate place to make your opinion known. So, unless it deals with a direct impact on Kansas policy (e.g., Medicaid, NCLB), personal liberty, or economic freedom we'll leave those federal topics for discussion elsewhere.

Please e-mail me (james.franko@kansaspolicy.org) should you have any questions or concerns.