Voice For Liberty

Tag: Kansas Policy Institute

  • Benefits of tax cuts without raising debt

    Benefits of Tax Cuts Without Raising Debt
    President-elect Donald Trump should learn from Kansas’s mistake on income-tax reduction — don’t reduce revenue and increase spending.

    By Dave Trabert, Kansas Policy Institute

    President-elect Donald Trump should learn from Kansas’s mistake on income-tax reduction: Don’t reduce revenue and increase spending. That’s the real problem with the Kansas budget (“Brownback Sees Kansas Tax Plan as Model for Nation,” U.S. News, Dec 24). There was never an expectation that spending wouldn’t have to be adjusted to accommodate revenue reductions, but Democrats and many Republicans refused to make government more efficient so spending and taxes were increased in 2013 and again in 2015. Kansas spent 27% more per resident in 2015 than the states without an income tax.

    The income-tax exemption on pass-through income for proprietorships, partnerships, Sub-S corporations and LLCs is paying real dividends. U.S. Census data show that pass-through businesses actually created the majority of new jobs in 2013 and 2014 (the most recent data for employment by legal organization). And while Kansas continues its decades-long tradition of trailing the national average on job growth, Kansas is performing closer to the average since taxes were reduced.

    Census data also show employment for pass-through entities is almost at parity with C corporations in the U.S., and cutting the corporate income tax affects only about half of the business employment base. Pass-through business profits are taxable to the individual owners, so individual rates must also be reduced to really help the economy.

    Dave Trabert
    President
    Kansas Policy Institute
    Overland Park, Kan.

    (Originally published in the Wall Street Journal at http://www.wsj.com/articles/benefits-of-tax-cuts-without-raising-debt-1484002119.)

  • A Wichita school official talks about KPERS

    A Wichita school official talks about KPERS

    A board member of the largest school district in Kansas repeated an untruth that has unfortunate consequences for Kansas schoolchildren.

    At a recent meeting of the Wichita Pachyderm Club Wichita school board member Sheril Logan participated in a panel discussion on local government legislative agenda. (The entire program may be accessed here.)

    She told the audience, “Truly, data can be maneuvered to make it look like what you want. We all know that. So can funding streams.”

    She went on to explain that what happened in the “last couple of years” was, for example, KPERS funds being counted differently.

    What Mrs. Logan told the Wichita Pachyderm Club is a standard argument of Kansas public school spending advocates, which is that because of a change in the way teacher retirement funds (KPERS contributions) are handled, it looks like the state is spending more on schools, when in fact it is not. According to her, this happened in the “last couple of years.”

    The story about KPERS reporting being changed in an underhanded way is told so often by the public school spending establishment that it is difficult to criticize Mrs. Logan for being wrong. Board members and others are told this so often, from sources they believe as authoritative, that they believe it. They want to believe it.

    Kansas Policy Institute asked the Kansas State Department of Education about this matter. It found this: “According to Dale Dennis, KPERS funding was last sent directly to KPERS in 2004; it has since been sent directly to school districts included in reported school funding totals.”1

    Here, Dale Dennis contradicts what a board member of the state’s largest school district told the Wichita Pachyderm Club. Dennis is Deputy Commissioner at Kansas State Department of Education and head of Fiscal and Administrative Services, widely cited as the leading authority on Kansas school finance..2

    Wichita Public Schools, State Revenue by Source, KPERS Contributions. Click for larger.
    Even though Dennis is the state’s top education finance official, we don’t have to rely solely on him to illustrate the error of believing the KPERS spending reporting has undergone recent changes. Information from the Wichita public school district3 shows the same. Here I’ve plotted the funding sent by the state of Kansas to USD 259 for KPERS contributions. As Dennis indicated, in 2005 the Wichita school district started receiving money from the state for KPERS. Prior to that year it received none.

    We might note that when this change in KPERS reporting started, Kathleen Sebelius was governor. If the change in KPERS reporting is, in fact, deceitful, we ought to ask why it happened under her watch.

    Does it matter?

    Does it really matter that there is this confusion about KPERS reporting? Yes. It matters a lot, and for two reasons.

    First, what the Kansas public school spending establishment says is incorrect. We should value the truth above all.

    Second: If we believe that Kansas public schools are underfunded, there is a ready-made excuse for anything and everything. If anyone points out that Kansas schools have problems, the excuse is that there’s isn’t enough money. This lets Kansas public school officials off the hook, and needed reforms are squashed. Even reforms that will save money.

    —
    Notes

    1. Trabert, Dave. State school board member should practice what he preaches. Available at kansaspolicy.org/state-school-board-member-practice-preaches/. ↩
    2. Kansas State Department of Education. Fiscal & Administrative Services. http://www.ksde.org/Agency/Fiscal-and-Administrative-Services. ↩
    3. USD 259 Comprehensive Annual Financial Report for 2015, State Revenue by Source, Governmental Funds, and USD 259 Comprehensive Annual Financial Report for 2007, State Revenue by Source, Governmental Funds. ↩
  • No one is stealing* from KPERS

    No one is stealing* from KPERS

    No one is stealing from KPERS, the Kansas Public Employees Retirement System. But there are related problems.

    You don’t have to look for long on Facebook before you’ll find comments like these regarding KPERS, the Kansas Public Employees Retirement System:

    “This is BS. Stupid Brownback robbed our pension plan; we have no real confidence that it will ever be paid back. Why don’t we have some kind of safety measure in place to prevent governors like him from stealing from us?”

    “If the governor would keep his greedy hands off of the KPERS money that is there, we might not be having this problem. It was not set up as a lending bank when the Governor’s policies proved to be unworkable. Leave my money alone!!!!!”

    These comments — and many similar posted all over Facebook — accuse Kansas state government, specifically the current governor, of stealing from KPERS. But that is not happening, according to Alan Conroy, KPERS Executive Director. By email, he answered this question posed by Kansas Policy Institute: “Can you please confirm that the Legislature or the Governor cannot and have not borrowed money from funds deposited with KPERS?

    Conroy’s response, in part, was “Once funds are placed in the KPERS Trust Fund they cannot be withdrawn or ‘loaned-out’ to another entity or group. The only way funds come out of the Trust Fund is to pay the promised benefits to the members.”

    That ought to settle the question of whether money is being “robbed” or “stolen” from KPERS.

    But you’ll notice that the title of this article contains an asterisk. That’s because KPERS does have many problems. The most important is its underfunded status, which is a chronic problem. This is because the state has not made the actuarially required contributions. This is “stealing,” in a roundabout way. Who is suffering the loss? Not future KPERS retirees, as it is almost certain they will receive their promised benefits. Instead, it is future Kansas taxpayers who will have to make extra contributions to KPERS to make up for the current and past legislatures not making sufficient contributions.

    This is one of the reasons why government should not offer defined-benefit pension plans. Because of the long time horizons involved, it’s easy to delay and postpone a solution to the future. Or, legislators are prone to make risky investment decisions as Kansas did in 2015. The state’s action simply replaced KPERS debt with debt the general fund is responsible for. This, of course, is the state selling $1 billion in bonds and transferring the proceeds to KPERS. It makes the KPERS unfunded ratio look better, as the governor and Republican legislative leaders continually boast. But it’s a risky maneuver, and it has led to undesirable behavior that was entirely predictable.

    The plan was that the state would borrow $1 billion, and invest it. If the state earned more in investment returns than in interest cost on the bonds, the state wins. Barry Poulson, Ph.D., Emeritus Professor at the University of Colorado — Boulder has written on the danger of borrowing to shore up state pension funds, as Kansas has done. He explained there is the “lack of nexus between the investment of the bond proceeds and payments for unfunded liabilities in the plan.” This means that the borrowed funds may be used for current spending rather than for correcting the KPERS unfunded liability.1 What Poulson warned of happened in Kansas.

    There’s another way that KPERS is stealing from future taxpayers. When performing projections, a key variable is the discount rate, which is to say, the rate that KPERS expects to achieve on its investments, over the long term. Small changes in the discount rate have large impacts. The nearby illustration from the KPERS annual report for 2015 shows that using a discount rate of 8.00 percent, the KPERS unfunded liability is slightly less than $9 billion. Change the discount rate to 7.00 percent, and the unfunded liability rises to almost $12 billion.

    Some authorities believe that state pension funds should use a realistic discount rate, maybe four percent or so. That would cause the unfunded liability to explode. To its credit, KPERS recently adopted a discount rate of 7.75 percent, but that adjustment is not nearly enough.

    Who will have to pay to make up the deficiencies caused by using an unrealistic discount rate? Future Kansas taxpayers, not KPERS retirees.

    There was a time when money was really and truly stolen from KPERS, in a way. Under the leadership of former Kansas Governor John Carlin, it was decided that KPERS would make targeted, or direct, investments in Kansas companies. A scandal erupted, and KPERS lost many millions.2

    Another source described the aftermath as this: “In total KPERS faced losses of at least $138 million from its direct investment program. Moreover more than seven hundred Kansas residents lost their jobs as a result of these failures — a striking contradiction to the stimulus purpose of the Kansas investment program. In hindsight the lack of professional oversight by KPERS of its private investments program was blamed for the failure of the direct investment program.”3 The chair of the KPERS Board of Trustees pleaded no contest to one felony count of aiding and abetting securities fraud regarding a KPERS investment.4

    This sounds like stealing from KPERS. Despite this happening at the urging of Carlin, he now portrays himself as a leader, a senior statesman to whom we should listen.

    —
    Notes

    1. Weeks, Bob. This is why we must eliminate defined-benefit public pensions. https://wichitaliberty.org/kansas-government/we-must-eliminate-defined-benefit-public-pensions/. ↩
    2. “It started as a way to use the state pension fund to boost the Kansas economy, making loans or investing in healthy businesses. But it has mushroomed into the biggest scandal in state history. Although the Kansas Public Employees Retirement System remains financially sound, with a value of about $4.4 billion, known losses exceed $230 million. Experts say total losses could double or triple.” Curran, Tim. Toto, we’re not in Kansas anymore: state pension scandal a nightmare. Associated Press. Oct. 7, 1991. http://www.apnewsarchive.com/1991/Toto-We-re-Not-in-Kansas-Anymore-State-Pension-Scandal-A-Nightmare/id-fe758e81f6b6a821076c829764cb6399. ↩
    3. Cumming, Douglas ed. The Oxford Handbook of Private Equity. Oxford University Press. ↩
    4. Press, A 1992, ‘Former KPERS Chief Sentenced To Probation For Securities Fraud’, Wichita Eagle, The (KS), 25 Jun, p. 4D, (online NewsBank). ↩
  • Year in Review: 2016

    Year in Review: 2016

    Here are highlights from Voice for Liberty for 2016. Was it a good year for the principles of individual liberty, limited government, economic freedom, and free markets in Wichita and Kansas?

    Also be sure to view the programs on WichitaLiberty.TV for guests like journalist, novelist, and blogger Bud Norman; Radio talk show host Joseph Ashby; David Bobb, President of Bill of Rights Institute; Heritage Foundation trade expert Bryan Riley; Radio talk show host Andy Hooser; Keen Umbehr; John Chisholm on entrepreneurship; James Rosebush, author of “True Reagan,” Jonathan Williams of American Legislative Exchange Council (ALEC); Gidget Southway, or Danedri Herbert; Lawrence W. Reed, president of the Foundation for Economic Education; and Congressman Mike Pompeo.

    January

    Kansas legislative resources. Citizens who want to be informed of the happenings of the Kansas Legislature have these resources available.

    School choice in Kansas: The haves and have-nots. Kansas non-profit executives work to deny low-income families the school choice opportunities that executive salaries can afford.

    Kansas efficiency study released. An interim version of a report presents possibilities of saving the state $2 billion over five years.

    Wichita Eagle Publisher Roy Heatherly. Wichita Eagle Publisher Roy Heatherly spoke to the Wichita Pachyderm Club on January 15, 2016. This is an audio presentation.

    Pupil-teacher ratios in the states. Kansas ranks near the top of the states in having a low pupil-teacher ratio.

    Kansas highway conditions. Has continually “robbing the bank of KDOT” harmed Kansas highways?

    Property rights in Wichita: Your roof. The Wichita City Council will attempt to settle a dispute concerning whether a new roof should be allowed to have a vertical appearance rather than the horizontal appearance of the old.

    Must it be public schools? A joint statement released by Kansas Association of School Boards, United School Administrators of Kansas, Kansas School Superintendents’ Association, and Kansas National Education Association exposes the attitudes of the Kansas public school establishment.

    Kansas schools and other states. A joint statement released by Kansas Association of School Boards, United School Administrators of Kansas, Kansas School Superintendents’ Association, and Kansas National Education Association makes claims about Kansas public schools that aren’t factual.

    After years of low standards, Kansas schools adopt truthful standards. In a refreshing change, Kansas schools have adopted realistic standards for students, but only after many years of evaluating students using low standards.

    Brownback and Obama stimulus plans. There are useful lessons we can learn from the criticism of Kansas Governor Sam Brownback, including how easy it is to ignore inconvenient lessons of history.

    February

    Spending and taxing in Kansas. Difficulty balancing the Kansas budget is different from, and has not caused, widespread spending cuts.

    In Sedgwick County, choosing your own benchmarks. The Sedgwick County Commission makes a bid for accountability with an economic development agency, but will likely fall short of anything meaningful.

    This is why we must eliminate defined-benefit public pensions. Actions considered by the Kansas Legislature demonstrate — again — that governments are not capable of managing defined-benefit pension plans.

    Kansas transportation bonds economics worse than told. The economic details of a semi-secret sale of bonds by the State of Kansas are worse than what’s been reported.

    Massage business regulations likely to be ineffective, but will be onerous. The Wichita City Council is likely to create a new regulatory regime for massage businesses in response to a problem that is already addressed by strict laws.

    Inspector General evaluates Obamacare website. The HHS Inspector General has released an evaluation of the Obamacare website HealthCare.gov, shedding light on the performance of former Kansas Governor Kathleen Sebelius.

    Kansas highway spending. An op-ed by an advocate for more highway spending in Kansas needs context and correction.

    Brookings Metro Monitor and Wichita. A research project by The Brookings Institution illustrates the poor performance of the Wichita-area economy.

    March

    Wichita: A conversation for a positive community and city agenda. Wichita City Manager Robert Layton held a discussion titled “What are Wichita’s Strengths and Weaknesses: A Conversation for a Positive Community and City Agenda” at the February 26, 2016 luncheon of the Wichita Pachyderm Club.

    In Kansas, teachers unions should stand for retention. A bill requiring teachers unions to stand for retention elections each year would be good for teachers, students, and taxpayers.

    In Kansas, doctors may “learn” just by doing their jobs. A proposed bill in Kansas should make us question the rationale of continuing medical education requirements for physicians.

    Power of Kansas cities to take property may be expanded. A bill working its way through the Kansas Legislature will give cities additional means to seize property.

    Wichita TIF district disbands; taxpayers on the hook. A real estate development in College Hill was not successful. What does this mean for city taxpayers?

    Kansas and Colorado, compared. News that a Wichita-based company is moving to Colorado sparked a round of Kansas-bashing, most not based on facts.

    In Wichita, the phased approach to water supply can save a bundle. In 2014 the City of Wichita recommended voters spend $250 million on a new water supply. But since voters rejected the tax to support that spending, the cost of providing adequate water has dropped, and dropped a lot.

    Wichita Eagle, where are you? The state’s largest newspaper has no good reason to avoid reporting and editorializing on an important issue. But that’s what the Wichita Eagle has done.

    April

    Wichita on verge of new regulatory regime. The Wichita City Council is likely to create a new regulatory regime for massage businesses in response to a problem that is already addressed by strict laws.

    Wichita economic development and capacity. An expansion fueled by incentives is welcome, but illustrates a larger problem with Wichita-area economic development.

    Rich States, Poor States, 2106 edition. In Rich States, Poor States, Kansas continues with middle-of-the-pack performance, and fell sharply in the forward-looking forecast.

    In Wichita, revealing discussion of property rights. Reaction to the veto of a bill in Kansas reveals the instincts of many government officials, which is to grab more power whenever possible.

    ‘Trump, Trump, Trump’ … oops! An event in Wichita that made national headlines has so far turned out to be not the story news media enthusiastically promoted.

    Wichita doesn’t have this. A small Kansas city provides an example of what Wichita should do.

    Kansas continues to snub school choice reform that helps the most vulnerable schoolchildren. Charter schools benefit minority and poor children, yet Kansas does not leverage their benefits, despite having a pressing need to boost the prospects of these children.

    Wichita property tax rate: Up again. The City of Wichita says it hasn’t raised its property mill levy in many years. But data shows the mill levy has risen, and its use has shifted from debt service to current consumption.

    AFP Foundation wins a battle for free speech for everyone. Americans for Prosperity Foundation achieves a victory for free speech and free association.

    Kansas Center for Economic Growth. Kansas Center for Economic Growth, often cited as an authority by Kansas news media and politicians, is not the independent and unbiased source it claims to be.

    Under Goossen, Left’s favorite expert, Kansas was admonished by Securities and Exchange Commission. The State of Kansas was ordered to take remedial action to correct material omissions in the state’s financial statements prepared under the leadership of Duane Goossen.

    May

    Spirit Aerosystems tax relief. Wichita’s largest employer asks to avoid paying millions in taxes, which increases the cost of government for everyone else, including young companies struggling to break through.

    Wichita mayor’s counterfactual op-ed. Wichita’s mayor pens an op-ed that is counter to facts that he knows, or should know.

    Electioneering in Kansas?. An op-ed written under the banner of a non-profit organization appears to violate the ban on electioneering.

    Wichita city council campaign finance reform. Some citizen activists and Wichita city council members believe that a single $500 campaign contribution from a corporation has a corrupting influence. But stacking dozens of the same $500 contributions from executives and spouses of the same corporation? Not a problem.

    In Wichita, more sales tax hypocrisy. Another Wichita company that paid to persuade you to vote for higher taxes now seeks to avoid paying those taxes.

    Wichita student/teacher ratios. Despite years of purported budget cuts, the Wichita public school district has been able to improve its student/teacher ratios.

    June

    KPERS payments and Kansas schools. There is a claim that a recent change in the handling of KPERS payments falsely inflates school spending. The Kansas State Department of Education says otherwise.

    Regulation in Wichita, a ‘labyrinth of city processes’. Wichita offers special regulatory treatment for special circumstances, widening the gulf between the haves and have-nots.

    They really are government schools. What’s wrong with the term “government schools?”

    July

    Kansas City Star as critic, or apologist. An editorial in the Kansas City Star criticizes a Kansas free-market think tank.

    State and local government employee and payroll. Considering all state and local government employees in proportion to population, Kansas has many, compared to other states, and especially so in education.

    Kansas government ‘hollowed-out’. Considering all state and local government employees in proportion to population, Kansas has many, compared to other states, and especially so in education.

    In Wichita, Meitzner, Clendenin sow seeds of distrust. Comments by two Wichita city council members give citizens more reasons to be cynical and distrusting of politicians.

    David Dennis, gleeful regulatory revisionist. David Dennis, candidate for Sedgwick County Commission, rewrites his history of service on the Kansas State Board of Education.

    Say no to Kansas taxpayer-funded campaigning. Kansas taxpayers should know their tax dollars are helping staff campaigns for political office.

    Roger Marshall campaign setting new standards. Attacks on Tim Huelskamp reveal the worst in political campaigning.

    Wichita Metro Chamber of Commerce on the campaign trail. We want to believe that The Wichita Metro Chamber of Commerce and its PAC are a force for good. Why does the PAC need to be deceptive and untruthful?

    August

    Which Kansas Governor made these proposals?. Cutting spending for higher education, holding K through 12 public school spending steady, sweeping highway money to the general fund, reducing aid to local governments, spending down state reserves, and a huge projected budget gap. Who and when is the following newspaper report referencing?

    Wichita Business Journal editorial missed the news on the Wichita economy. A Wichita business newspaper’s editorial ignores the history of our local economy. Even the history that it reported in its own pages.

    Sedgwick County Health Department: Services provided. Sedgwick County government trimmed spending on health. What has been the result so far?

    School staffing and students. Trends for the nation and each state in teachers, administrators, and students, presented in an interactive visualization.

    Intrust Bank Arena loss for 2015 is $4.1 million. The depreciation expense of Intrust Bank Arena in downtown Wichita recognizes and accounts for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena.

    School spending in the states. School spending in the states, presented in an interactive visualization.

    September

    Kansas construction employment. Tip to the Wichita Eagle editorial board: When a lobbying group feeds you statistics, try to learn what they really mean.

    Wichita has no city sales tax, except for these. There is no Wichita city retail sales tax, but the city collects tax revenue from citizens when they buy utilities, just like a sales tax.

    CID and other incentives approved in downtown Wichita. The Wichita City Council approves economic development incentives, but citizens should not be proud of the discussion and deliberation.

    Cost per visitor to Wichita cultural attractions. Wichitans might be surprised to learn the cost of cultural attractions.

    GetTheFactsKansas launched. From Kansas Policy Institute and the Kansas Chamber of Commerce, a new website with facts about the Kansas budget, economy, and schools.

    The nation’s report card and charter schools.
    * An interactive table of NAEP scores for the states and races, broken down by charter school and traditional public school.
    * Some states have few or no charter schools.
    * In many states, minority students perform better on the NAEP test when in charter schools.

    School choice and funding. Opponents of school choice programs argue the programs harm traditional public schools, both financially and in their ability to serve their remaining students. Evidence does not support this position.

    October

    Public school experts. Do only those within the Kansas public schooling community have a say?

    Kansas and Arizona schools. Arizona shows that Kansas is missing out on an opportunity to provide better education at lower cost.

    Video in the Kansas Senate. A plan to increase visibility of the Kansas Senate is a good start, and needs to go just one or two steps farther.

    Kansas, a frugal state?. Is Kansas a frugal state, compared to others?

    Topeka Capital-Journal falls for a story. The editorial boards of two large Kansas newspapers have shown how little effort goes into forming the opinions they foist upon our state.

    Kansas revenue estimates. Kansas revenue estimates are frequently in the news and have become a political issue. Here’s a look at them over the past decades.

    Kansas school fund balances.
    * Kansas school fund balances rose significantly this year, in both absolute dollars and dollars per pupil.
    * Kansans might wonder why schools did not spend some of these funds to offset cuts they have contended were necessary.
    * The interactive visualization holds data for each district since 2008.

    In Wichita, developer welfare under a cloud. A downtown Wichita project receives a small benefit from the city, with no mention of the really big money.

    Wichita, give back the Hyatt proceeds. Instead of spending the proceeds of the Hyatt hotel sale, the city should honor those who paid for the hotel — the city’s taxpayers.

    Kansas Democrats: They don’t add it up — or they don’t tell us. Kansas Democrats (and some Republicans) are campaigning on some very expensive programs, and they’re aren’t adding it up for us.

    November

    How would higher Kansas taxes help?. Candidates in Kansas who promise more spending ought to explain just how higher taxes will — purportedly — help the Kansas economy.

    Decoding the Kansas teachers union. Explaining to Kansans what the teachers union really means in its public communications.

    Kansas school spending: Visualization. An interactive visualization of revenue and spending data for Kansas school districts.

    Decoding Duane Goossen. The writing of Duane Goossen, a former Kansas budget director, requires decoding and explanation. This time, his vehicle is “Rise Up, Kansas.”

    Decoding the Kansas teachers union. Decoding and deconstructing communications from KNEA, the Kansas teachers union, lets us discover the true purpose of the union.

    Government schools’ entitlement mentality. If the Kansas personal income grows, should school spending also rise?

    December

    Wichita bridges, well memorialized. Drivers on East Twenty-First Street in Wichita are happy that the work on a small bridge is complete, but may not be pleased with one aspect of the project.

    Gary Sherrer and Kansas Policy Institute. A former Kansas government official criticizes Kansas Policy Institute.

    Wichita to grant property and sales tax relief. Several large employers in Wichita ask to avoid paying millions in taxes, which increases the cost of government for everyone else, including young companies struggling to break through.

    Economic development incentives at the margin. The evaluation of economic development incentives in Wichita and Kansas requires thinking at the margin, not the entirety.

    The Wichita economy, according to Milken Institute. The performance of the Wichita-area economy, compared to other large cities, is on a downward trend.

    State pension cronyism. A new report details the way state pension funds harm workers and taxpayers through cronyism.

    In Wichita, converting a hotel into street repairs. In Wichita, it turns out we have to sell a hotel in order to fix our streets.

    In Wichita, we’ll not know how this tax money is spent. Despite claims to the contrary, the attitude of the City of Wichita towards citizens’ right to know is poor, and its attitude will likely be reaffirmed this week.

  • Gary Sherrer and Kansas Policy Institute

    Gary Sherrer and Kansas Policy Institute

    A former Kansas government official criticizes Kansas Policy Institute.

    I wouldn’t normally use a Facebook comment in a public way, but the comment was left in public, to a post on my Facebook profile. Plus, the writer is a former Kansas government official. He’s Gary Sherrer, who has been Lieutenant Governor, Secretary of Commerce, and Chair of the Kansas Board of Regents.

    From the author's Facebook profile, starting December 2, 2016. Click for larger.
    From the author’s Facebook profile, starting December 2, 2016. Click for larger.
    Sherrer had criticized the truthfulness of Kansas Policy Institute, claiming he “could write an essay” on his criticism of KPI. Upon my suggestion for him to do so, he offered two criticisms.

    First, Sherrer wrote this: “They count KAPERS payments that in the past were direct state payments. Now they send them to the school districts and within hours transfer them back to the state yet it shows as increased revenue in the local budget. Same $s just an accounting trick.”

    This is a standard argument of Kansas public school spending advocates, which is that because of a change in the way teacher retirement funds (KPERS contributions) are handled, it looks like the state is spending more on schools, when in fact it is not.

    In response, Kansas Policy Institute noted this: “According to Dale Dennis, KPERS funding was last sent directly to KPERS in 2004; it has since been sent directly to school districts included in reported school funding totals.”1

    Dale Dennis is Deputy Commissioner at Kansas State Department of Education and head of Fiscal and Administrative Services.

    Wichita Public Schools, State Revenue by Source, KPERS ContributionsEven though Dennis is the state’s top education finance official, we don’t have to rely solely on him to illustrate changes in KPERS payment accounting. Information from the Wichita public school district2 shows the same. Here I’ve plotted the funding sent by the state of Kansas to USD 259 for KPERS contributions. As Dennis indicated, in 2005 the Wichita school district started receiving money from the state for KPERS. Prior to that year it received none.

    So if anyone wants to claim that KPERS payment accounting has been changed in order to be deceptive, why don’t we ask former governor Kathleen Sebelius why it happened under her watch?

    Additionally, the argument that the KPERS funds are held by school districts for just hours or minutes is trivial. If the state allowed school districts to hold the funds for two days, two weeks, two months — would that make any meaningful difference? Instead, school districts ought to be thankful that the taxpayers of the state of Kansas cover part of employee retirement costs. But we don’t hear those thanks, just complaints.

    Sherrer is correct on one thing: There are people in government who may be touting increased KPERS payments as increased school spending. Two things: KPERS spending is school spending. If not that, what is it? Second, these people are not Kansas Policy Institute. KPT takes efforts to separate KPERS spending from other school spending.3

    Here’s something else from Sherrer: “Anther example- local property taxes collected for schools was always sent directly to the school district- after all it is local not state tax $s. Now the local sends it to the state, then it is sent to school districts. Again, same dollars but trick accounting to make it look like increased state spending.”

    I’ve never seen KPI make the claim that Sherrer makes. Others may make it, but KPI takes steps to adjust figures for this change.4

    Finally, Sherrer writes: “When is Kansas Policy going do do research on the financial disaster called the Kansas budget?” Well, KPI has done this, providing a detailed roadmap. In my reporting on KPI’s plan, I wrote:

    The State of Kansas has implemented tax reform that reduces the tax burden for Kansans. A remaining challenge that has not yet been tackled is spending reform, that is, aligning Kansas state government spending with a smaller stream of tax revenue. Critics of tax reform say the Kansas budget is a mess or a train wreck, pointing to projections of large deficits before long. Tax increases or service cuts will be required to balance the budget, contend critics.

    In a policy brief released today, Kansas Policy Institute presented a plan for bringing the budget in balance while retaining low tax rates (and future reductions) and accommodating projected future spending needs for Medicare and schools.

    You can more about the plan at For Kansas budget, balance is attainable.

    —
    Notes

    1. Trabert, Dave. State school board member should practice what he preaches. https://kansaspolicy.org/state-school-board-member-practice-preaches/. ↩
    2. USD 259 Comprehensive Annual Financial Report for 2015, State Revenue by Source, Governmental Funds, and USD 259 Comprehensive Annual Financial Report for 2007, State Revenue by Source, Governmental Funds. ↩
    3. For example, see Dorsey, David. Non-KPERS funding sets another per-pupil record in 2015-16. https://kansaspolicy.org/non-kpers-funding-sets-another-per-pupil-record-in-2015-16/. ↩
    4. For example, see Parkes, Patrick. State school funding ranks high in Kansas. https://kansaspolicy.org/state-school-funding-ranks-high-in-kansas/. ↩
  • Government schools’ entitlement mentality

    Government schools’ entitlement mentality

    If the Kansas personal income grows, should school spending also rise?

    Kansas Policy Institute has noticed something about the Kansas public school spending establishment, in particular Kansas Association of School Boards. KPI president Dave Trabert wrote “KASB published a three-part series last week, making the case that school funding and other government spending hasn’t kept up with the growth in personal income.”1 KASB believes that if Kansans’ personal income rises, so too should school spending, and in proportion.

    This is not the first time KASB has made this argument. Last year I wrote “If Kansas personal income rises but the school spending establishment doesn’t get its cut, something is wrong, they say.”2

    I also wrote: “Another indication of the perversity of this argument is that spending less of a share of our income to obtain a product or service is usually viewed as an advancement, not a situation to be cured. For example in 1929, American households spent 23.4 percent of disposable personal income on food. In 2013 it was 9.8 percent. This is a good thing.”

    Read the complete article from KPI at Government’s Entitlement Mentality — Part 1.

    —
    Notes

    1. Trabert, Dave. Government’s Entitlement Mentality — Part 1. https://kansaspolicy.org/governments-entitlement-mentality-part-1/. ↩
    2. Weeks, Bob. For Kansas schools, a share of your income is the standard. https://wichitaliberty.org/wichita-kansas-schools/kansas-schools-share-income-standard/. ↩
  • Decoding the Kansas teachers union

    Decoding the Kansas teachers union

    Decoding and deconstructing communications from KNEA, the Kansas teachers union, lets us discover the true purpose of the union.

    Here, we look at a dispatch from Kansas National Education Association’s “Under the Dome” newsletter from March 14, 2013. It may be found here. The topic of this day was a charter school bill. Kansas has a law that allows charter schools, which are public schools that operate outside many of the rules and regulations that govern traditional public schools. But the Kansas law is written in a way that makes it difficult to form a charter school, and as a result, Kansas has very few charter schools.

    KNEA, the teacher union in Kansas, says: Rep. Ed Trimmer noted that a study provided by the proponents (anti-public school “think tank” Kansas Policy Institute) reported that the worst performing charter schools are in states that have multiple charter school “authorizers” — just like this bill.

    This sentence holds much of the key to understanding the motives of the teachers union, and the rest of the public school spending lobby. First, they use the term “anti-public school.” This lets us know that for all the bluster coming from the teachers union and its allies about the importance of education and Kansas schoolchildren, it is only public schools that interest them. The simple reason is that in private schools and charter schools, the teachers aren’t union members. It is those union members that the union cares about. Other schools where teachers can work free of the union and its influence are competition to the union.

    The use of “think tank” lets us know that the union doesn’t think Kansas Policy Institute is deserving of respect. KPI uses government data to show the true state of Kansas public education, so naturally the teachers union needs to suppress the tellers of truth.

    By the way, I don’t think KPI is “anti-public school.” KPI advocates for school choice, to be sure, but school choice programs comfortably co-exist with public schools in many states. And — let’s remind the teachers union that charter schools are public schools.

    Then the use of “authorizers” in quotes: Charter school authorizers oversee the charter schools they authorized. In Kansas, the only charter school authorizers are local school boards, and they have shown very little willingness to authorize charters. Here’s what is interesting: In some states with good charter school laws, authorizers must hold their charter schools accountable. In Denver, for the 2011 school year, 25 percent of the charters seeking renewal were closed.1 (There, charters are reauthorized every third year.) That type of accountability is rarely seen in the traditional public schools, where poor-performing schools live on, year after year.

    The teachers union says: The Committee reconvened at 1:30 to get a special presentation by anti-public school zealot Dave Trabert of the “think tank” Kansas Policy Institute. Trabert sold his usual snake oil denouncing Kansas public schools as failing most students and thoroughly confused the committee with his talk of NAEP, NCLB, RTTT, state assessments, cut scores and the performance of Texas schools compared to Kansas.

    See? The teachers union doesn’t like to talk about the performance of Kansas schools. Anyone who presents the data is denounced. It’s easy to see why. The U.S. Department of Education, through the National Center for Education Statistics (NCES), conducts the National Assessment of Educational Progress (NAEP) every other year. Known as “The Nation’s Report Card,” it is “the largest nationally representative and continuing assessment of what America’s students know and can do in various subject areas.”2 The important thing to remember is that the test is not under the control of states. It is the same in all states, and allows for state-to-state comparisons. (More about this in a moment.)

    Kansas and Texas NAEP scores. Click for larger.
    Kansas and Texas NAEP scores. Click for larger.
    Nearby is a chart showing performance on the NAEP test. It presents data for grade four reading over time, divided by major categories of race. It shows the percent of students scoring at the level of Basic or better, and on a separate scale, at Proficient or better.

    Looking at the first column of data, labeled “All Students,” we can see that Kansas performs better than Texas in every year. It is this finding that the teachers union and its allies use to promote the goodness of Kansas schools.

    Aggregated data like this can hide some underlying truths. Look at the third column, reporting scores for black students. For “At or above Proficient,” Kansas and Texas students perform nearly the same. For Basic or better, Texas has the clear advantage in most years.

    Similar investigation reveals that for Hispanic students, Texas and Kansas score nearly the same. For white students, Texas scores better than Kansas in each year.

    So which schools are better in fourth grade reading, Kansas or Texas? If you were the parent of a young black child learning to read, Texas is doing a better job. For that matter, if you were the parent of a young white child learning to read, Texas has been doing a better job than has Kansas.

    (By the way, Texas spends less on its schools than Kansas, on a per-pupil basis.3)

    (These charts are derived from an interactive visualization of NAEP scores that I developed. You may access it here to conduct your own investigations.)

    We can see why the teachers union demeans and demonizes those who present data like this.

    The former Kansas school standards for grade four reading, showing Kansas ranking low among the states.
    The former Kansas school standards for grade four reading, showing Kansas ranking low among the states.
    Why are NAEP scores important? Doesn’t the State of Kansas have its own tests? The answer is yes, Kansas has its own tests. And until recently these tests — the standards that the state used to measure achievement — were very weak. That is, Kansas was willing to say students are “proficient” at a much lower level of performance than most other states. In some cases, just a handful of states had lower standards than Kansas. But now the new Kansas standards are more in line with those of other states, and present a more truthful assessment of Kansas schoolchildren. Not surprisingly, scores on the new tests are lower.4

    In the past, the teachers union and its allies used the (generally good) performance on these very weak Kansas tests to conclude that Kansas schools were performing well. But that was a lie.

    The teachers union says: He was joined via Skype by noted ideological researcher Matthew Ladner. Ladner, who greatly admires Jeb Bush and Florida schools was brought to Kansas by Trabert and KPI once before. Only back then his presentation was colored by the fact that he won a “Bunkum Award” from the National Educational [sic] Policy Center (NEPC). The NEPC, located at the University of Colorado is a national consortium of education researchers and academicians who review the reports of think tanks to make sure it is based on sound research standards.

    First, Florida schools perform well on the NAEP, relative to Kansas. If you need convincing, use the visualization of NAEP scores referenced above to compare Florida and Kansas. You’ll find many cases where Florida does better than Kansas.

    (By the way, Florida spends less than Kansas on schools, on a per-pupil base.3 This is the real problem the teachers union and its allies have with Florida and Texas: These states spend less than Kansas.)

    Now: What is the National Education Policy Center (NEPC)? Just like the Kansas teachers union says, it reviews the reports of think tanks. And when it does, its criticisms are routinely shredded when placed under scrutiny. (Example criticism of one NEPC writer: “His review is deeply flawed and significantly misrepresents our data and findings.6) Almost all the reports it finds to be faulty are published by conservative/libertarian think tanks, although I did see a Brookings Institute report criticized.

    Here’s something else: The Kansas teachers union and its allies vigorously attempt to discredit KPI because of its purported funders. If that is a valid concern or criticism, consider this. NEPC’s funders include the National Education Association and the American Federation of Teachers.7 Teachers unions funding research to discredit non-union schools. Who could have figured?

    Now we ask this: Should we hold the Kansas teachers union to the same standards it expects of others?

    —
    Notes

    1. Colorado League of Charter Schools. ↩
    2. National Assessment of Educational Progress. About. Available at nces.ed.gov/nationsreportcard/about/. ↩
    3. U.S. Census Bureau. Annual Survey of School System Finances: Per Pupil Amounts for Current Spending of Public Elementary-Secondary School Systems by State: Fiscal Year 2014. https://factfinder.census.gov/bkmk/table/1.0/en/SSF/2014/00A08. ↩
    4. Weeks, Bob. After years of low standards, Kansas schools adopt truthful standards. https://wichitaliberty.org/wichita-kansas-schools/after-years-of-low-standards-kansas-schools-adopt-truthful-standards/. ↩
    5. U.S. Census Bureau. Annual Survey of School System Finances: Per Pupil Amounts for Current Spending of Public Elementary-Secondary School Systems by State: Fiscal Year 2014. https://factfinder.census.gov/bkmk/table/1.0/en/SSF/2014/00A08. ↩
    6. Jim Kessler, Tess Stovall, and Dee Dee Dolan. A Response to the National Education Policy Center: “NEPC review is fatally flawed.” http://www.thirdway.org/memo/a-response-to-the-national-education-policy-center-nepc-review-is-fatally-flawed. ↩
    7. National Education Policy Center. Support. http://nepc.colorado.edu/support. ↩
  • Decoding Duane Goossen

    Decoding Duane Goossen

    The writing of Duane Goossen, a former Kansas budget director, requires decoding and explanation. This time, his vehicle is “Rise Up, Kansas.”

    Duane Goossen was Kansas budget director from 1998 to 2010.1 He is critical of the administration of Kansas Governor Sam Brownback and recent sessions of the Kansas Legislature. It’s useful to examine his writings so that Kansans may become aware of the ramifications of his recommendations, and how during his years as budget director he was unable to adhere to the principles he now advocates. Following, some language from his recent article Rise Up, Kansas.

    Goossen: “This marks the beginning of a hopeful new chapter in the Kansas story. It also presents a desperately needed opening for comprehensive tax reform.”

    Comprehensive tax reform. That sounds good, as “reform” has a positive connotation. It means change for the better. But in this case reform means raising taxes, and by a lot. In fact, advocates of tax increases generally won’t say by how much they want to raise taxes.

    As an example, in May a coalition of spending groups called for what they termed “Option 4.” It would eliminate all tax cuts enacted since 2012. This action would reinstate the tax on pass-through business income — the so-called “LLC loophole.” But this would also raise income taxes wage income, as those tax rates also were reduced in 2012. For example, income tax rates for a married family earning up to $30,000 would rise to 3.50 percent from the current 2.70 percent. That’s an increase of 30 percent in the income tax rate. For other income levels the increase is greater.2

    A spokesperson for the Option 4 coalition argued that rolling back the tax cuts could increase revenue to the state by $1 billion. By the way, the Option 4 coalition did not call for the rollback of the sales tax increase passed in 2015. I should qualify that with apparently, as no handouts explaining Option 4 can be found. In addition, an audio recording of the press conference has been removed.

    Members of the Option 4 coalition included Shannon Cotsoradis of Kansas Action for Children, Bob Totten from the Kansas Contractors Association, Rebecca Proctor of the Kansas Organization of State Employees, and Mark Desetti from the Kansas National Education Association.3

    With the exception of the pass-through business income tax, failing to be specific about whose taxes will be raised by how much is characteristic of spending groups. In fact, these spending groups generally shy away from using the term tax. Look at these examples of language from Goossen’s article:

    • damage to state finances
    • hemorrhage revenue
    • can’t start healing while still in triage mode
    • fix our structural revenue imbalance
    • broaden the tax base
    • means reviewing our entire tax code
    • modernizing all revenue sources
    • get our fiscal house back in order
    • begin with commonsense basics
    • new priorities
    • recover the opportunities we lost
    • senseless era of crisis
    • begin restoring those opportunities
    • rise above the political fray
    • find courage to make difficult decisions
    • imagine the possibilities

    Commonsense basics. Who could be against that? Yet each of these terms is a call for more and higher taxes.

    Goossen: “Three credit rating downgrades”

    The Kansas credit rating has declined. In making this decision, Moody’s mentioned “revenue reductions (resulting from tax cuts) which have not been fully offset by recurring spending cuts.4 So Kansas has a decision: Offset revenue reductions with higher taxes or spending cuts. Moody’s doesn’t care which is chosen, but Goossen and the spending coalition does.

    KPERS funded ratio through 2014Of note, Moody’s mentions another problem: “an underfunded retirement system for which the state is not making actuarially required contributions.” This is an ongoing problem, as the nearby chart illustrates. The funding ratio of the Kansas retirement plan has deteriorated for many years, including the years when Duane Goossen was Kansas budget director. (Recently Kansas has improved the funding ratio of KPERS, but it did that by borrowing funds, which was an unwise decision. Because of the borrowing, Kansas has delayed schedule KPERS contributions, which effectively pays for current spending with long-term debt.5)

    Moody’s also mentioned “In recent years the state has appropriated funds from or shifted costs to the State Highway Fund to help balance the general fund budget.” This too, is an ongoing problem.6 “Raiding the Bank of KDOT” has been a problem for many years, including the years when Duane Goossen was Kansas budget director.

    Goossen: “It will likely take a generation to fully recover from this horrible experiment.”

    Spending in Kansas. Click for larger.
    Spending in Kansas. Click for larger.
    Goossen is not specific as to the nature of the damage. Generally, a claim of slashed state spending is made. But it’s difficult to see the purported decline. Some programs may have been cut, but overall, spending is level or climbing, as can be seen in the nearby chart.7 Additionally, in comparison to other states Kansas spends a lot, and continues to.8

    Goossen: “lifting the burden the Brownback plan forced onto our lowest-earning Kansans.”

    Yes, we should sharply reduce or eliminate the sales tax on groceries. It affects low-income households most severly.9

    Goossen: “And it means establishing a responsible state savings account.”

    Kansas General Funding ending balance. Click for larger.
    Kansas General Funding ending balance. Click for larger.
    Kansas doesn’t have what some states have, which is a true rainy day fund that is governed by statute as to when contributions must be made and when the fund may be used. Instead, Kansas has a simple requirement for an ending balance of 7.5 percent, which the state has regularly ignored for decades. Low ending balances are a hallmark of Kansas government, including the years when Duane Goossen was Kansas budget director. In fact, in one year his budget had a negative ending balance.10

    —
    Notes

    1. Goossen, Duane. Kansas Budget Blog. http://www.kansasbudget.com/. ↩
    2. Kansas Policy Institute. *Option 4: Soak the poor. https://kansaspolicy.org/option-4-soak-poor/. ↩
    3. Hancock, Peter. Session resumes with call for total repeal of Brownback tax cuts. Lawrence Journal-World, April 27, 2016. http://www2.ljworld.com/news/2016/apr/27/session-resumes-call-total-repeal-brownback-tax-cu/. ↩
    4. Moody’s Investors Service, Inc. Moody’s downgrades Kansas issuer rating to Aa2 from Aa1, notched ratings to Aa3 from Aa2 and KDOT highway revenue bonds to Aa2 from Aa1; outlook stable. April 30, 2014. https://www.moodys.com/research/Moodys-downgrades-Kansas-issuer-rating-to-Aa2-from-Aa1-notched–PR_298383. ↩
    5. Weeks, Bob. This is why we must eliminate defined-benefit public pensions. http://wichitaliberty.org/kansas-government/we-must-eliminate-defined-benefit-public-pensions/. ↩
    6. Weeks, Bob. Kansas transportation bonds economics worse than told. http://wichitaliberty.org/kansas-government/kansas-transportation-bonds-economics-worse-than-told/. ↩
    7. Weeks, Bob. Kansas government spending. http://wichitaliberty.org/kansas-government/kansas-government-spending-2/. ↩
    8. Weeks, Bob. Spending in the states, per capita. Interactive visualization. http://wichitaliberty.org/economics/spending-states-per-capita-2/. ↩
    9. Weeks, Bob. Kansas sales tax has disproportionate harmful effects. http://wichitaliberty.org/taxation/kansas-sales-tax-has-disproportionate-harmful-effects/. ↩
    10. Weeks, Bob. Kansas General Fund. http://wichitaliberty.org/kansas-government/kansas-general-fund-2/. ↩
  • Topeka Capital-Journal falls for a story

    Topeka Capital-Journal falls for a story

    The editorial boards of two large Kansas newspapers have shown how little effort goes into forming the opinions they foist upon our state.

    Here’s a quote from a recent opinion piece in the Topeka Capital-Journal, the second-largest newspaper in Kansas: “If the past year is any indication, Totten is right about the harmful effects of KDOT sweeps on the construction industry in our state. According to the Bureau of Labor Statistics, between July 2015 and July 2016, Kansas lost 4,400 construction jobs — a 7.3 percent decline. This means Kansas ranked 49th in the country for construction job growth.” 1

    Here, the newspaper argues that transferring money from the state’s highway fund has led to a loss of construction jobs in the state. Fortunately, there are some institutions and people in our state that will actually look at statistics to see what they mean. And if the editorial board of the Capital-Journal had done this, they would have realized they were fed a line of hooey by a self-interested lobbyist. You see, the “Totten” the newspaper cited as an authority is Bob Totten, Executive Vice President of Kansas Contractors Assocation.2 His job is to agitate for as much spending as possible to benefit his members. It matters not if the spending is wise or needed. The members of Kansas Contractors Association would happily build the proverbial bridge to nowhere, as long as they were paid.

    The Capital-Journal was not alone in believing what Totten told them. The editorial board of the Wichita Eagle did, too. It wrote a similar editorial, telling Kansans “Over the past six years, Brownback and the Legislature have taken $2.7 billion in transportation funding to help pay other state bills, Totten said. The loss of this funding has meant fewer projects and fewer jobs.”3

    The statistics that are cited deserve further investigation, which is what Kansas Policy Institute did in its article Media and highway contractors mislead again. KPI’s Dave Trabert reported this:

    Had the Eagle bothered to examine Mr. Totten’s claim, they would have learned that only 2 percent of the construction job decline was attributable to highway construction and that the loss of 100 jobs is less than 1 percent of total highway jobs.

    In addition to learning that Mr. Totten was grossly exaggerating, they would have learned that employment for construction of new homes and non-residential buildings showed very nice growth and the real problem is in specialty trade contractors for non-highway projects.

    I verified these statistics and reported them in my article Kansas construction employment. I built an interactive visualization that anyone can use to explore this data.

    The upshot is that Kansas highway construction jobs declined slightly, but the bulk of the job loss in construction was in other types of construction. Not in highway construction, as the highway construction lobbyist told Kansas editorial writers.

    This is a sad episode in Kansas newspaper journalism. The editorial boards of two newspapers — one the state’s largest — accepted as true the claims of a lobbyist, apparently without spending a moment in verification. Both newspapers have staffs of reporters, some of which I’m sure are capable of accessing the Bureau of Labor Statistics to gather a few statistics and perform an independent investigation.

    But that didn’t happen. Instead, it appears that these two newspapers accepted the claims of the Kansas Contractors Association at face value because it fit the editorialists’ world view — that view being that Sam Brownback is bad, state spending on everything has been slashed, and the only thing to do is raise taxes.

    That’s an opinion, which is what newspaper editorial boards produce. Now Kansans know just how uninformed are these opinions.

    —
    Notes

    1. Topeka Capital-Journal. Editorial: KDOT sweeps continue to harm our state. September 13, 2016. Available at cjonline.com/opinion/2016-09-13/editorial-kdot-sweeps-continue-harm-our-state. ↩
    2. Kansas Contractors Assocation. Meet the Staff. Available at www.kansascontractors.org/aboutthekca/professionalstaff/. ↩
    3. Highway fund raids affecting jobs. Wichita Eagle. August 31, 2016. Available at www.kansas.com/opinion/editorials/article98922052.html. ↩