Tag: Featured

  • Fake government spawns fake news

    Fake government spawns fake news

    Discussions of public policy need to start from a common base of facts and information. An episode shows that both our state government and news media are not helping.

    A recent Hutchinson News article1 started with this:

    Once you wake up to where Kansas was in 1992 at funding schools and what it needs to do to get caught up, said the Kansas Department of Education’s Deputy Commissioner Dale Dennis, it’s a shocker.

    In 1992, base state aid per pupil was $3,600. That amount, taking into account the Consumer Price Index, would be the equivalent of $6,001.12 in 2013. Base state aid, however, has been frozen at $3,852 since 2014-15.

    “The numbers are shocking, shocking,” Dennis told the Hutchinson Rotary Club at its Monday luncheon meeting at the Hutchinson Town Club.

    Why is a speech by a government bureaucrat, as covered in a major newspaper, important? It illustrates two problems we face in understanding, discussing, and debating important matters of public policy.

    First, can government be truthful and accurate? Dale Dennis — the state’s top official on school finance — certainly knows that the numbers he presented do not accurately characterize the totality of school spending in Kansas. But the problem is even worse than that. To use base state aid as the indicator of state spending on schools is deceptive. It’s deceptive in that, after adjusting for inflation, base state aid has declined. But total state aid to school districts has increased.

    Base state aid is a false indicator of total spending on schools by the state. It’s fake — fake government. And for a newspaper to uncritically present this as news illustrates the second problem we face.

    Background on base state aid and school spending

    Kansas school spending, showing base state aid and total state aid. See article for notes about 2015. Click for larger.
    Base state aid per pupil — the statistic Dennis presented — is an important number.2 It’s the starting point for the Kansas school finance formula used before the 2015-2016 (fiscal 2016) school year, and something like it may be used in a new formula.3

    Base state aid, however, is not the only important number. To calculate the funding a school district receives, weightings are added. If students fall into certain categories, weightings for that category are added to determine a weighted enrollment. That is multiplied by base state aid to determine total state aid to the district. 4

    While this may seem like a technical discussion that doesn’t make a difference, it’s very important, because some of the weightings are large. The at-risk weighting, intended to cover the additional costs of teaching students from low-income families, started at five percent in 1993. In other words, for every student in this category, a school district received an extra five percent of base state aid. The value of this weighting has risen by a factor of nine, reaching 45.6 percent starting with the 2008-2009 school year.

    There’s also the high-density at-risk weighting. Starting with the 2006-2007 school year districts with a high concentration of at-risk students could receive an extra weighting of four percent or eight percent. Two years later the weightings were raised to six percent and ten percent. (This formula was revised again in 2012 in a way that may have slightly increased the weightings.)

    Kansas school spending, showing ratio of total state aid to base state aid. See article for notes about 2015. Click for larger.
    Kansas school spending. See article for notes about 2015. Click for larger.
    The weightings have a large effect on school funding. For example: During the 2004-2005 school year, base state aid was $3,863 and the at-risk weighting was ten percent. An at-risk student, therefore, generated $4,249 in state funding. (Other weightings might also apply.)

    Ten years later base state aid was $3,852 — almost exactly the same — and the at-risk weighting was up to 45.6 percent. This generates funding of $5,609. For a district that qualified for the maximum high-density at-risk weighting, an additional $404 in funding was generated. (These numbers are not adjusted for inflation.)

    So even though base state aid remained (almost) unchanged, funding targeted at certain students rose, and by a large amount.

    Over time, values for the various weightings grew until by 2014 they added 85 percent to base state aid. A nearby chart shows the growth of total state aid as compared to base state aid. (Starting in fiscal 2015 the state changed the way local tax dollars are counted. That accounts for the large rise for the last year of data in the chart. For school years 2016 and 2017, block grants have replaced the funding formula, so base aid and weightings do not apply in the same way.)

    What have we learned?

    We’re left wondering a few things:

    • Did Deputy Superintendent Dale Dennis tell the audience that base state aid is just part of the school funding landscape, and not reflective of the big picture? Did he tell the audience that total state aid to schools has increased, and increased substantially? If so, why wasn’t it mentioned in the article?
    • If Dale Dennis did not tell the audience these things, what conclusions should we draw about his truthfulness?
    • Why didn’t the Hutchinson News article explain to readers that base state aid is not an accurate or total indicator of total state spending on schools?
    • What is the duty of reporters and editors? We’re told that experienced journalists add background and context to the news — things that the average reader may not know. (This article is designated as “Editor’s Pick” by the Hutchinson News.)

    By the way, the Wichita Eagle, on its opinion page, cited in a positive and uncritical manner the Hutchinson News article.5 This is notable as the writer of the Eagle piece, opinion editor Phillip Brownlee, was a certified public accountant in a previous career. This is someone we should be able to trust to delve into numbers and tell us what they mean. But that isn’t the case.

    Whatever your opinion on the level and trend of school spending, we need to start the discussion from a common base of facts and information. From this episode, we see that both our state government and news media are not helping.

    For another take on the problems with this episode, see Paul Waggoner’s column in the Hutchinson News.6 (If not able to access that link, try Shocking News about Kansas Education!)


    Notes

    1. Clarkin, Mary. Department of Education’s Dennis: Shocking number when looking at funding gap. Hutchinson News. April 17, 2017. http://www.hutchnews.com/news/local_state_news/department-of-education-s-dennis-shocking-number-when-looking-at/article_4abe359e-8421-53f9-a8d7-1eaa56e95423.html.
    2. Weeks, Bob. Kansas school weightings and effects on state aid. In making the case for more Kansas school spending, the focus on base state aid per pupil leaves out important considerations. https://wichitaliberty.org/wichita-kansas-schools/kansas-school-weightings-and-effects-on-state-aid/.
    3. For the fiscal 2016 and 2017 school years, the formula was replaced by block grants.
    4. AMENDMENTS TO THE 1992 SCHOOL DISTRICT FINANCE AND QUALITY PERFORMANCE ACT AND THE 1992 SCHOOL DISTRICT CAPITAL IMPROVEMENTS STATE AID PROGRAM (FINANCE FORMULA COMPONENTS), Kansas Legislative Research Department, May 20, 2014
      http://ksde.org/Portals/0/School%20Finance/amends_to_sdfandqpa_2015.pdf
    5. Brownlee, Philip. School funding numbers are ‘shocking.’ Wichita Eagle. April 22, 2017. http://www.kansas.com/opinion/opn-columns-blogs/now-consider-this/article146084839.html.
    6. Waggoner, Paul. Shocking news about Kansas education. Hutchinson News. April 21, 2017. http://www.hutchnews.com/opinion/columnists/shocking-news-about-kansas-education/article_2ebea7d3-6659-51fc-b3b5-409d5b0aa243.html. Or, see http://wichitaliberty.org/kansas-government/shocking-news-kansas-education/.
  • WichitaLiberty.TV: The Sentinel’s Danedri Herbert

    WichitaLiberty.TV: The Sentinel’s Danedri Herbert

    In this episode of WichitaLiberty.TV: Danedri Herbert of The Sentinel joins Bob Weeks and Karl Peterjohn to discuss news reporting and politics in Kansas. View below, or click here to view at YouTube. Episode 148, broadcast April 23, 2017.

    Shownotes

  • Cargill subsides start forming

    Cargill subsides start forming

    Details of the subsidy programs used to keep Cargill in Wichita are starting to take shape.

    This week the Wichita City Council will consider one of the (potentially many) subsidy programs offered to keep Cargill in Wichita.

    Cargill Protein Group is currently located at 151 N. Main. The plan is for Cargill to purchase and demolish the Wichita Eagle building at 825 E. Douglas, then build a new office building in its place. The subsidy program to be considered this week is the Industrial Revenue Bond program1. The city won’t be lending Cargill money. Instead, IRB’s are a (convoluted) method whereby local governments are able to forgive the payment of property taxes. For the case of Cargill, city documents state the tax forgiveness could be worth $1,359,531 per year.2 This would be shared by these taxing jurisdictions, again according to city documents.

    • City of Wichita: $378,450
    • Sedgwick County: $340,958
    • USD 259, the Wichita Public School District: $622,723
    • State of Kansas $17,400

    Of note, the city is in a hurry to handle this matter. Pending legislation would reduce the amount of property tax able to be exempted.3

    In addition to the property tax exemption, the IRBs also carry a sales tax exemption for purchases related to construction. City documents give an estimated value of $2,026,291 for the sales tax Cargill will not have to pay.

    Not the entire subsidy package

    The action to be considered this week is likely just a portion of total subsidy package. For example, at one time it was speculated that the City of Wichita would build a parking garage and let Cargill use it as their own. With a proposed capacity of 750 parking spots, this would cost many millions.4

    Now, the city plans to let Cargill construct the garage, and the city will, according to city documents, “purchase a parking easement from Cargill to obtain public access to the parking structure Cargill will complete as part of this project.” It sounds like the city will rent spaces in the garage. It will be interesting to see the rate the city will agree to pay.

    From the state of Kansas Cargill is likely to receive PEAK benefits. Under this program, the Kansas state withholding tax deducted from Cargill employees’ paychecks will be routed back to Cargill.5 (Well, only 95 percent goes back to Cargill. The state keeps five percent.)


    Notes

    1. Weeks, Bob. Industrial revenue bonds in Kansas. http://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/.
    2. City of Wichita. Council agenda packet for April 18, 2017.
    3. Kansas Legislature. SB 146: Continuation of 20 mill statewide levy for schools and property tax exemption of certain portion of property used for residential purposes from such levy. http://www.kslegislature.org/li/b2017_18/measures/sb146/.
    4. Recently the city paid $4.73 million (not including change orders) to build a downtown garage with 270 parking spaces, a cost of about $17,500 per stall. Applying that to a 750 stall garage results in a cost of $13.1 million).
    5. Weeks, Bob. In Kansas, PEAK has a leak. http://wichitaliberty.org/kansas-government/kansas-peak-leak/.
  • WichitaLiberty.TV: Kansas Senator Ty Masterson

    WichitaLiberty.TV: Kansas Senator Ty Masterson

    In this episode of WichitaLiberty.TV: Kansas Senator Ty Masterson joins Bob Weeks and Karl Peterjohn to discuss legislative issues and politics. View below, or click here to view at YouTube. Episode 147, broadcast April 16, 2017.

    Shownotes

  • For Sedgwick County Commission, too much debate

    For Sedgwick County Commission, too much debate

    By moving to end motions and debate, the Sedgwick County Commission isn’t effectively serving citizens and taxpayers.

    Yesterday’s meeting of the Sedgwick County Commission offered an opportunity to learn how we can improve local government.

    The issue the commission was considering, significant in its own right, is not important to the following discussion. It’s the process that needs improvement.

    There was a proposed ordinance. Commissioner Jim Howell offered two amendments — really substitute motions — that altered the proposed ordinance. Each failed by votes of three to two.

    Howell had two more motions to offer. But Commissioner David Dennis moved a motion to end the offering of additional motions. In this vote the majority prevailed, and Howell was silenced. Commissioners voting to end debate were Chair Dave Unruh, Michael O’Donnell, and Dennis. Richard Ranzau and Howell opposed the motion to end debate.

    The county commission is not a deliberative body like a legislature. The county does not have committees like a legislature. I’m not advocating for the county to form committees, but here’s what is missing from the county process: There is no opportunity for interested parties — often lobbyists, but also regular people — to testify before a committee as legislation is being developed. There is no committee mark-up process in which the text of a bill is crafted and finalized. There is no committee vote that decides whether to recommend the bill to the entire legislative body.

    Some of this happens in Sedgwick County, of course, but mostly behind the scenes. There is the county staff meeting Tuesday morning, when the commissioners meet with staff in an informal setting. While this meeting is open to the public, there is rarely news coverage. (Hint to county staff: These meetings could easily be broadcast and archived on the internet without much cost or effort.)

    In a legislature, when a bill is considered by the entire body, there is usually an amendment process. They may be many amendments that require time to debate and consider. This process was mentioned by two commission members who have served in the Kansas legislature.

    But it seems a majority of Sedgwick County Commission members don’t care for this process.

    I understand why some commissioners wanted to end debate. Sometimes amendments to legislation create a moment where legislators have to cast a vote on an issue, often a finely-grained issue. Sometimes that vote is used as a campaign issue in future elections. Those votes may appear in compilations of legislative activity that reveal how legislators vote.

    But amendments and debate are part of the legislative process. Commissioner Howell had several amendments that he had prepared in advance. They were not off-the-cuff, spur-of-the-moment ideas. They were crafted to attempt to find a compromise that a majority of commissioners could accept.

    But a majority of Sedgwick County Commission members didn’t want that.

    Perhaps some commissioners where concerned about the meeting becoming lengthy. We see that from Wichita City Council members. They’re paid a part-time salary, so maybe there’s merit to their carping about long meetings.

    But Howell’s amendments took just a few minutes each to consider. And — this is highly relevant — the members of the Sedgwick County Commission are paid a handsome full-time salary. They should not object to the meeting lasting all day, if that’s what it takes to serve the citizens. And citizens were not well-served by the commission’s decision to silence one of its members.

  • Kansas Special Congressional Election

    Kansas Special Congressional Election

    An interactive map of voting in the special congressional election in Kansas district 4, for Sedgwick County only.

    Intensity of red indicates higher percentage of votes for Ron Estes. By using the interactive map (link below) you may zoom and pan. Click on a precinct to see details of its vote. Precinct sizes — in terms of the number of voters — vary widely. Precincts cast anywhere from one to 950 votes.

    This is data for Sedgwick County only. (It’s the only data I have at the moment.) Sedgwick County cast 67.9 percent of the votes in the district.

    Click here to access the interactive map. Built with Google Fusion tables.

  • Sedgwick County to consider raising debt limit

    Sedgwick County to consider raising debt limit

    Tomorrow the Sedgwick County Commission will consider raising its limit on borrowing for reasons which need to be revealed, and then carefully examined.

    Update: By vote of three to two, the commission adopted the second item in the following list, implementing a higher debt limit.

    There are three proposals for a policy regarding a debt limit for Sedgwick County government, according to information from the county’s finance office:

    • 2017 cap in current policy (debt service payments as % of budgeted expenditures): 9% = $126,341,621
    • 2017 cap included in March 22 agenda item (debt service payments as % of budgeted expenditures): 10% = $155,303,346
    • 2017 cap using Commissioner Howell’s comments from the bench on March 22 (% of assessed value): 3% = $135,944,585

    The third option has intuitive appeal as it pegs the borrowing limit to the county’s primary source of income to pay debt, which is property tax. In any case, taxpayers might wonder why the county is considering any proposal to raise the amount it can borrow.

    Why borrow more?

    Personal correspondence from Sedgwick County Commissioner Richard Ranzau last month explains the changes the Commission is scheduled to hear tomorrow:

    In 2016, the Board of County Commissioners modified the debt policy by limiting the annual debt service obligations (the amount we pay in principal and interest on a yearly basis) to 9% of budgeted expenditures until January 1, 2019, at which time the maximum will decrease to 8%. The previous maximum had been 20% with the County’s annual debt service hovering around 10% of budgeted expenditures. The policy was amended in an effort to place meaningful yet reasonable limits out the County’s borrowing capacity so as to avoid unnecessary habitual borrowing and excessive spending on projects “just because we can.”

    The County’s current annual debt service is 8.22% and will fall below 8% in 2018.

    No reason or project has been given as to why this change is needed. The county currently has no plans to issue debt for anything in 2017.

    A nearby table summarizes and compares the present policy with debt limits that would exist under the new policy, according to the Sedgwick County Financial Office. (There is an alternative interpretation of policy that if used, would limit borrowing in 2019 to $73,218,639.)

    Ranzau’s correspondence says there have been no reasons given for the need to change the debt limit, and that there is no plan to issue debt in 2017.

    But that’s the county’s public position. Internally, there is consideration of borrowing and bonding in 2017. Some is for projects already completed and paid for.

    Borrowing against the Ronald Reagan Building at 271 W. Third St. is being considered in the amount of $4.0 million. That’s $2.1 million of renovations already completed, plus $1.9 million in planned renovations already paid for.

    Borrowing against the Downtown Tag Office at 2525 W. Douglas is considered at $2.3 million. This project has been paid for.

    Additionally, the county may borrow to pay for the new Law Enforcement Training Center, in the amount of $5.5 million. This building is under construction, but the county has already transferred cash to the capital improvement fund that is designated to pay for this building.

    Why would these buildings — some paid for, another for which cash is already set aside — be under consideration for bond issues?

    An analogy is in personal finance, where a family might — after many years — pay off the mortgage on their house. Or maybe they saved and purchased the house outright without borrowing.

    But then, the family takes out a mortgage — a new loan — on the house to have additional money for current spending. And more current spending is likely what some Commission members have in mind, as there is no need to take out a mortgage on property owned free and clear unless one wants to spend on something else.

    Further, there are more projects the county may consider starting in years through 2021, using borrowing through bonds as payment. These total to $59.4 million, which is within the $61.6 million of borrowing allowed just through 2019. (That limit rises each year.)

    This seems to contradict the need for a higher debt limit.

    Before approving a higher borrowing limit, Sedgwick County Commissioners need to explain the need for the higher limit, and let taxpayers know if they’re about to be saddled with new mortgages on properties we thought we owned outright.

  • Cash incentives in Wichita, again

    Cash incentives in Wichita, again

    The City of Wichita says it does not want to use cash incentives for economic development. But a proposal contains just that.

    Update: The council did not approve this project, by a vote of four to three.

    This week the Wichita City Council will consider a package of incentives for the developer of a large downtown building, the Finney State Office Center. While the city has said that it does not want to use cash incentives, they are proposed for this project.1

    Finney State Office Building environs
    Elements of the proposal are these:

    The Wichita Public Building Commission will sell the building for $100,000.

    The project is also asking for the city to issue Industrial Revenue Bonds. Despite the use of the term “bond,” the city is not lending money to anyone. Someone else will purchase the bonds. Instead, the IRBs are a vehicle for conveying property tax abatements and sales tax exemptions.

    In this case, the developer requests a sales tax exemption for purchases during the renovation. City documents don’t give a value for the sales tax that might be exempted. But the developer has requested IRBs for an amount up to $35,000,000. Therefore, a sales tax exemption might be worth up to $2,625,000, depending on the price of taxable products and services purchased, and the sales tax rate at the time.

    If someone excuses you from paying millions in sales tax, that’s better than receiving cash. But cash incentives are proposed, too. The city proposes a grant of up to $2,000,000, although the city calls this an “investment.”2

    Whatever it is called, this is a cash incentive.

    Also, the Wichita Public Building Commission will pay up to $1,000,000 for improvements to the building.3

    This proposed payment from the WPBC seems to be in violation of the city statutes governing the commission, which read: “Under no circumstances shall any income of the public building commission inure to the benefit of any private person.”4

    I’m sure the city will characterize its $2 million “investment” in some way other than a cash incentive. The city will also say the $1 million from the WPBC is not from the city, which is true. But the city will have to rationalize allowing the commission to violate the clear language of its statutes.

    There are some good aspects of this agreement with the developer, such as a timeline and performance bond requirement. But the cash incentives are against stated city policy and its laws.


    Notes

    1. Wichita City Council agenda packet for April 11, 2017.
    2. ibid. “The City proposes to invest up to $2,000,000 to be used to modernize the building. The investment would only be paid upon completion of the entire building renovation project.”
    3. ibid. “On April 5, 2017, the WPBC approved the Development Agreement/Purchase and Sale Agreement and agreed to commit up to $1,000,000 for building improvements as well.”
    4. Wichita Municipal Code. Sec. 2.12.640 (i). Under no circumstances shall any income of the public building commission inure to the benefit of any private person. https://www.municode.com/library/ks/wichita/codes/code_of_ordinances?nodeId=TIT2ADPE_CH2.12BOAGCO_S2.12.640SAUNCO.