PERSPECTIVE March 2014
OKLAHOMA COUNCIL OF PUBLIC AFFAIRS
In Case You Missed It Oklahoma’s total tax collections and total spending are at record highs, and revenue collections are poised to break yet another record. ocpathink.org/articles/2636
OCPA’s Michael Carnuccio recalls the day that Rep. Jeff Hickman, now the Oklahoma Speaker of the House, was a real lifesaver. tinyurl.com/k8adkt8
The MetroFamily magazine “Kids Fest” is Saturday, April 5 in Oklahoma City, and OCPA is sponsoring an entire expo highlighting the many educational options available to parents.
Andrew Spiropoulos, who serves as OCPA’s Milton Friedman Distinguished Fellow, says “the establishment of universal school choice should be our highest policy priority.”
Another round of Oklahoma school-board elections with low turnout reminds us that we need to move school elections to November. ocpathink.org/articles/1558
tinyurl.com/komvuwd
A research fellow at the Heartland Institute, citing OCPA research, says Oklahoma would benefit from income-tax reduction. tinyurl.com/muty8zw
Researchers from the Heritage Foundation and the Reason Foundation say the return on investment in Oklahoma’s preschool program is abysmal.
OCPA’s Michael Carnuccio says the failure of Oklahoma’s political leaders to cut taxes is not due to a revenue problem, but a prioritization problem. tinyurl.com/k6ds94s
Writing in USA Today, the author of an OCPA report on early learning says universal preschool is not the answer.
tinyurl.com/moyrv4v
tinyurl.com/mnvw3q3
ocpathink.org/articles/2633
PERSPECTIVE OCPA Staff
OCPA Trustees
Brandon Dutcher .................................................. Editor
Blake Arnold • Oklahoma City
Tom H. McCasland III • Duncan
Daryl Woodard • Tulsa
Robert D. Avery • Pawhuska
David McLaughlin • Enid
Daniel J. Zaloudek • Tulsa
Lee J. Baxter • Lawton
Lew Meibergen • Enid
Steve W. Beebe • Duncan
Ronald L. Mercer • Bethany
OCPA Researchers
G.T. Blankenship • Oklahoma City
Lloyd Noble II • Tulsa
John A. Brock • Tulsa
Mike O’Neal • Edmond
Clint Colbert .................................................... Office Manager
David R. Brown, M.D. • Oklahoma City
Bill Price • Oklahoma City
Brandon Dutcher ............................. Senior Vice President
Paul A. Cox • Oklahoma City
Patrick T. Rooney • Oklahoma City
Kelly Ferguson .................... Communications Associate
William Flanagan • Claremore
Melissa Sandefer • Norman
Dacia Harris .............................. Communications Director
Josephine Freede • Oklahoma City
Thomas Schroedter • Tulsa
Ann Felton Gilliland • Oklahoma City
Richard L. Sias • Oklahoma City
John T. Hanes • Oklahoma City
Greg Slavonic • Oklahoma City
Brittoni Bobek ...................................................................... Intern Brian Bush ..................................... Executive Vice President Michael Carnuccio .................................................... President
Rachel Hays .................................... Development Assistant Rebecca Hobbes ................................................................ Intern
Steven J. Anderson, MBA Research Fellow
Tina Dzurisin
Research Associate
Vance Fried, J.D. Research Fellow
Jayson Lusk
Samuel Roberts Noble Distinguished Fellow
Matt Mayer, J.D. Research Fellow
Ralph Harvey • Oklahoma City
John F. Snodgrass • Ardmore
J. Scott Moody, M.A.
Jennie Kleese ............... Development Events Manager
John A. Henry III • Oklahoma City
Charles M. Sublett • Tulsa
Karma Robinson ...... Vice President for Development
Henry F. Kane • Bartlesville
Robert Sullivan • Tulsa
Andrew C. Spiropoulos, J.D.
Jonathan Small .............................Vice President for Policy
Robert Kane • Tulsa
Lew Ward • Enid
Gene Love • Lawton
William E. Warnock, Jr. • Tulsa
Research Fellow
Milton Friedman Distinguished Fellow
Wendy P. Warcholik, Ph.D. Research Fellow
Perspective is published monthly by the Oklahoma Council of Public Affairs, Inc. , an independent public policy organization. OCPA formulates and promotes public policy research and analysis consistent with the principles of free enterprise and limited government. The views expressed in Perspective are those of the author, and should not be construed as representing any official position of OCPA or its trustees, researchers, or employees.
Larry Arnn
SAVE THE DATE
John Bolton
William F. Buckley
George W. Bush
Jeb Bush
Dinesh D’Souza
Mitch Daniels
Artur Davis
Jim DeMint
J. Rufus Fears
Newt Gingrich David Horowitz Mike Huckabee Laura Ingraham
Steve Forbes
Tommy Franks
John Fund
Frank Keating
Jeane Kirkpatrick
Art Laffer
Rich Lowry
Ed Meese
Russell Moore
Stephen Moore
Peggy Noonan
Marvin Olasky
Bill Owens
Sarah Palin
Star Parker
Michael Reagan
Paul Ryan
Joe Sobran
Thomas Stafford
John Stossel
Cal Thomas
Clarence Thomas
Scott Walker
John Walton
J.C. Watts
Allen West
Walter Williams
Past OCPA speakers are pictured above.
Rich
Are Tax Hikes and Spending Increases Inevitable? By Patrick B. McGuigan
A great historian with whom I was privileged to study uttered, during an evening class in my years at Oklahoma State University, words that stuck with me through the last four decades: “Nothing is inevitable. Nothing—not the rise and fall of great nations; not the dawning of another day.” I have forgotten if that was original, or repeated thoughts from a great writer of the past. The latter part of the comment appealed to my spiritual side, my belief that there is an order to the universe, that a Benevolent and Just One governs that order, and that we are subject to that order regardless of wealth, intelligence, or any other attribute. And, the first part of the comment appealed to my rational side. What we call “history” flows from the decisions of actors on the stage … of history. Some are deeply depraved. Others are, as a Baptist preacher friend of mine said years ago, “so heavenly minded that they are no earthly good.” Most of us fall somewhere in between, including those who fight over government spending, the tax burden most appropriate in a free society, and such things. My parents both grew up as Democrats. Daddy admired Franklin D. Roosevelt; Momma was a Truman acolyte. They both loved Dwight D. Eisenhower and John F. Kennedy. Both, long before they left this vale of tears, became conservative Republicans, in belief and in practice. Save for Ronald Reagan, their evolution was not because of the Grand Old Party’s modern leaders, but because they paid attention. As a lad growing up in a union Democrat family, I concluded that the gov-
4
PERSPECTIVE • March 2014
ernment of my country was too large, too intrusive, and too abusive of the productive classes to be of true service to our country. That government did not and does not well serve rich or poor, able-bodied or disabled, the faithful or those without faith. As years passed, I fused that belief into those wise words from the old historian about the way things happen. Nothing is inevitable, yet every year of my life, the governments of this nation and state I love have grown, confiscating more and more of the people’s resources, delivering less and less of real value in return. I know not everyone shares this view, but it is a worldview neither dysfunctional nor irrational. It is a belief well represented in the founding generation of America and in every generation since. These days, it is a belief with which some not only disagree, but consider a form of psychosis. Yet, as a conservative, I still believe: Public policies evolve and develop based on the actions and reactions of real human beings, not plaster saints or stone monuments or inevitable social forces. Nothing is inevitable except death and judgment; but a whole lot of people believe that ever-rising taxes are not only inevitable but essential to the health of society, the productivity of government, and the course of history. And still, I dissent, even as I love those who conclude otherwise. In 2012, Oklahoma Gov. Mary Fallin wrote, in the foreword to a policy book for the American Legislative Exchange Council (ALEC): “Based on the success we have enjoyed enacting pro-growth policies like those championed by ALEC, our state is moving forward with
a bold tax reform plan that will represent the most significant tax cut in state history and chart a course toward the gradual elimination of the state income tax.” Nothing materialized. My pal Andrew Spiropoulos, a professor at my dad’s alma mater (Oklahoma City University) and a distinguished fellow at OCPA, reflects that too many people “seem to have been uninformed that conservative legislators are expected to cut taxes and spending.” Indeed, our political leaders have raised taxes and spent record amounts of money right here, in the place deemed the reddest of the red states. Jonathan Small, OCPA’s vice president for policy, has pegged at least nine “revenue enhancements” that have taken effect since 2009. Best known is the hospital provider tax. As OCPA analysts wrote last year: “Oklahomans were promised in 2011 that the hospital provider tax—a gimmick used to game the federal government for more money to prop up the dysfunctional Medicaid program— would be temporary. But policymakers, many of them violating a no-new-taxes promise they made to their constituents, extended the tax this year. “This despite the fact that President Obama’s own National Commission on Fiscal Responsibility (of which our own U.S. Sen. Tom Coburn was a member) has recommended that states eliminate this ‘Medicaid tax gimmick.’” Wait, that’s not all. It turns out that, once again, Oklahoma taxpayers likely will not see the tax relief they had been promised would begin on January 1, 2015. As this issue of Perspective went to press, the only tax-relief proposals
receiving consideration at the capitol wouldn’t kick in until 2016, and even those proposals have triggers which could delay the tax relief even further. And, some policymakers are in fact ready to raise taxes again. For example: • The horizontal drilling tax rate may lapse next year and return to its rate from decades ago. Talk in the capitol building has lawmakers covetous of more than $200 million in new revenue—not so they can cut taxes elsewhere, but rather so they can spend more money. • A state Senate committee advanced two separate tax proposals characterized as tax cuts but which would, through the elimination of certain deductions, increase the personal income-tax burden for some taxpayers. As my capitol press corps colleague Barbara Hoberock reported for the Tulsa World, “Senate Minority Leader Sean Burrage, D-Claremore, said it appears senators on the panel voted for a tax increase so they could hit the campaign trail and tell residents they voted for a tax cut.” Fortunately, it appears those proposals are dead now, replaced by actual tax cuts—which, however, won’t take effect for two years. • Some state bureaucrats and special interests that benefit from the millions of dollars in state excise taxes on traditional tobacco products are maneuvering to increase taxes on e-cigarettes and “vaping” products. These products currently are not considered tobacco products and are assessed the normal (and much lower) 4.5
percent state sales tax. As more people convert to these safer, lower-taxed alternatives, it means a reduction in tax revenues to the state. Considered in isolation, any one increase in taxes can be rationalized. Taken together—in the absence of broad reform to the state’s taxing structure— they document a distressing pattern: higher taxes, a condition many consider inevitable. Frustrations for small-government folks over the last few years in Oklahoma were not inevitable; they were the result of choices made by elected officials. Choices which make no sense, given that total tax collections and total state spending in Oklahoma are both at an all-time high. As they say, you can look it up. Further, as Mr. Small pointed out to me, a review of the Oklahoma Tax Commission’s “Daily Report of Taxes Collected” documents that as of January 31, the Sooner State was on pace to set yet another record for tax collections in the current fiscal year. “According to the report, year-to-date, the Tax Commission has collected more than has ever been collected year-to-date in prior years,
even surpassing the abnormally high collections before the recession,” Small says. Michael Carnuccio, OCPA’s president, captured some of the frustration among conservatives when he wrote last month: “Oklahoma has plenty of revenue and that presents an opportunity—to cut taxes and show belief that Oklahomans can better employ the fruits of their labor than tax collectors and bureaucrats. The failure to do so is not a revenue problem, but a prioritization problem. Actions speak louder than rhetoric.” The all-but-sainted Prof. Spiropoulos—a lawyer, to be sure, but one emerging as the late historian Rufus Fears’s logical successor in the role of the intellectual most likely to speak truth to power—says our political leaders “must sign on to a tax cut that, without gimmicks or triggers, reduces the highest rate to less than 5 percent.” It would be a good thing for political leaders in power to keep promises they made in 2010 or earlier. Further, it would be nice if they kept them now, instead of waiting for two years. These things are not inevitable, but they are fine ideas.
Patrick McGuigan (M.A. in history, Oklahoma State University) is editor of CapitolBeatOK.com. He is the editor of seven books on legal policy, and the author or co-author of three books, including Ninth Justice: The Fight for Bork. Last year the Washington Post political blog, “The Fix,” designated McGuigan one of the three best political reporters in Oklahoma.
www.ocpathink.org
5
Let’s Reduce Oklahoma’s Penalty on Work By Leslie Osborn
Late last year, the Oklahoma Supreme Court threw out a modest reduction in Oklahoma’s penalty on work—our personal income tax rate— for violating the state constitution’s single-subject rule. While any tax relief is a blessing for many Oklahoma families, the court’s actions may present an opportunity to increase the level of relief—giving state lawmakers a chance to provide a more robust tax-relief plan to help Oklahoma’s economy continue to grow, attracting jobs and prosperity. For generations, Oklahoma has been losing job creators and job seekers to a more welcoming environment south of the Red River. From 1992 to 2010, Oklahoma lost nearly $1 billion in working wealth to Texas, as people pursued better opportunities there. Tens of thousands of hardworking individuals, business owners, employers, and, yes, taxpayers, left Oklahoma to put down roots farther south. Why? One reason is that Texas has no penalty on work, no income tax. Even with higher property taxes, Texas still offers a lower overall tax burden than in Oklahoma. Simply put, Texans get to keep more of their hard-earned money. No wonder many of Oklahoma’s best and brightest migrate to Dallas and Houston. But now, the drain may worsen. In the past two years, Kansas has dramatically reduced its penalty on work, dropping its top income tax rate below Oklahoma’s. And Kansas’ rate is scheduled to fall further—eventually to zero. In addition, Kansas eliminated income taxes on small-business profits. Already, the Sunflower State is attracting job creators from across state lines. Dynamic steps by Kansas, com-
6
PERSPECTIVE • March 2014
Oklahoma is becoming an income-tax sandwich. bined with constant pressure from no-income-tax Texas, have situated Oklahoma in an awkward income-tax sandwich. To stay competitive regionally—and nationally, and globally—it’s imperative we continue reducing Oklahoma’s penalty on work. Recently, a group of 10 state legislators, myself included, from the House of Representatives and state Senate introduced a proposal to gradually reduce Oklahoma’s personal income tax rate from 5.25 percent to 4 percent over four years. By 2018, when Kansas’ top rate will be 3.9 percent, we will only be one-tenth of 1 percent behind—in position to keep ahead of other states nipping at our heels. Those who oppose empowering Oklahoma families and preventing individuals from investing their hardearned capital as they see fit will predict a great loss of revenue from this
proposal. But they’ve been wrong before. Oklahoma has reduced income tax rates by more than 20 percent since 2005. Yet in the most recent full fiscal year, Oklahoma saw the highest total tax collections in state history, to the dismay of those who said tax cuts would deplete resources for core government services like public safety, roads, and education. Other states noticed Oklahoma’s positive growth as we steadily reduced our penalty on work over the past decade. They’re doing everything they can to be more competitive with us. Now, Oklahoma is in danger of taking our foot off the gas and shifting into the slow lane. Instead, we should seize an opportunity to provide additional tax relief to Oklahoma families and job creators.
State Rep. Leslie Osborn (R-Mustang) is a member of the Appropriations and Budget Committee in the Oklahoma House of Representatives.
Family Structure, Geography, and Income Mobility By Wendy P. Warcholik
Politicians and economists from the left and the right have been decrying the lack of economic mobility in the United States and offering different solutions to solve the problem. In a recent interview on CNBC, Arthur Brooks, president of the American Enterprise Institute, said that although we should be proud of providing a safety net for Americans in need, we have failed to create an opportunity society. Brooks says the government has gotten in the way of creating opportunities for personal transformation that are the precursors of success—like faith, family, happiness, and work—for those at the bottom of the economic ladder. Educational reforms that allow school choice are the key inputs needed to achieve this transformation, but these reforms often are not embraced by advocates for the poor, who overwhelmingly attend failing schools. Another component to creating opportunity for those at the bottom is exposure to entrepreneurship. Brooks says that we’re good at helping the rich with regards to entrepreneurship but we’ve done a terrible job helping those at the bottom become entrepreneurs. Given all the regulatory barriers, it is just too difficult to start a business. So, with all this focus on the income gap and President Obama’s claim that we live in a continuous state of income inequality where the rich are getting richer and the poor are getting poorer, let’s see what the data have to say. A January National Bureau of Economic Research (NBER) study from the Equality of Opportunity Project by Harvard and UC Berkley economists concludes that children born into poverty today are just as likely as
their counterparts born 50 years earlier to be poor adults. So, despite President Johnson’s efforts to increase the government’s role in education and health care in 1964, $20 trillion later we haven’t moved the needle with regards to income mobility. Although the poor suffer less today, the odds that a poor child will rise out of poverty are the same as they were 50 years ago. So, what else can this study tell us about income mobility? There seem to be two important findings. First, these economists find that family structure has the greatest impact on upward mobility. Second, they find that geography matters. More specifically, when ranking the 100 cities (commuting zones) with the largest populations, they find that Salt Lake City has the greatest overall upward mobility and that commuting zones that have more two-parent families exhibit more upward mobility. According to an analysis by New York Times author David Leonhardt, “Climbing the income ladder occurs less often in the Southeast and industrial Midwest, the data shows, with the odds notably low in Atlanta, Charlotte, Memphis, Raleigh, Indianapolis, Cincinnati, and Columbus. By contrast, some of the highest rates occur in the Northeast, Great Plains, and West, including in New York, Boston, Salt Lake City, Pittsburgh, Seattle, and large swaths of California and Minnesota.”
So, where does Oklahoma fit into this analysis? Of the 100 largest commuting zones, Oklahoma City ranks 41st and Tulsa ranks 44th with regard to upward mobility. There are a total of 741 commuting zones. Of the 16 commuting zones within Oklahoma, the top four are Woodward, Elk City, Guymon, and Enid. Rounding out the bottom are Oklahoma City, Okmulgee, Tulsa, and Muskogee. Let’s examine a potential scenario to compare income mobility in Oklahoma with regard to its neighboring states. Consider a child born to parents making $31,000 in Oklahoma City. According to the data in this study, that child will, on average, climb the economic ladder and earn $50,000 in adulthood. In Dallas, that same child would end up grossing $48,000 as an adult. In Wichita, the child ends up earning $49,000, and, finally, in Little Rock the child would bring in $45,000. Overall, Oklahoma is performing well amongst its neighbors when it comes to upward mobility. However, when ranked across the country, Oklahoma’s biggest city is in the middle of the pack. What the Equality of Opportunity study does show us above and beyond anything else is that an emphasis on creating and maintaining two-parent families is not a supplemental prescription to a healthy economy, but a necessary one.
OCPA research fellow Wendy P. Warcholik (Ph.D., George Mason University) formerly served as an economist at the U.S. Department of Commerce’s Bureau of Economic Analysis, and was the chief forecasting economist for the Commonwealth of Virginia’s Department of Medical Assistance Services. She is a co-creator (with J. Scott Moody) of the Tax Foundation’s popular “State Business Tax Climate Index.”
www.ocpathink.org
7
What Failing Schools Really Cost Oklahoma By Greg Forster
By the traditional measure, Oklahoma spends $8,630 per year on each student in public schools. That’s a huge amount of money, and the people of Oklahoma have a right to be upset at the substandard performance of its lavishly funded school system. However, even this spending figure doesn’t tell the whole story. It doesn’t account for all the students who never get the education the school system is paid to give them. If we look at spending per high school graduate instead of per student, at current spending levels the annual cost of Oklahoma public schools is not $8,630, but $10,483. Suppose you buy your daughter ten piano lessons at $20 apiece, but you forget to take her to the first two lessons. You have to pay for all 10 lessons, but she only gets eight of them. Being a conscientious parent, you then buy your daughter another two lessons at $20 apiece so she can complete the 10-lesson course of instruction. And this time you remember to take her! How much did you spend per lesson? Not $20, but $24. It’s pretty simple math: you spent a total of $240, and your daughter got 10 lessons. Yes, the immediate cost of each lesson at the time you paid for it was $20, but the total cost per lesson ended up being 20 percent higher than that because you didn’t do your job with the first two lessons. The same logic can be applied to school spending. It does make sense for the school system to report its level of spending per current student, just as it makes sense for you to know that the immediate cost of each piano lesson is $20. But we can get a more comprehensive picture of how well the school
8
PERSPECTIVE • March 2014
system is serving its students and stewarding our resources if we also know the total cost for each student who actually gets the education the schools are supposed to deliver. Oklahoma’s high school graduation rate is only 78.5 percent. According to calculations from the U.S. Department of Education, about 10,529 Oklahoma students who ought to have graduated from high school in 2010 dropped out instead. A state that spends so much has a right to expect a lot better than that from its schools. The education of these dropouts is roughly analogous to the two missed piano lessons. The people of Oklahoma paid the schools to educate these students, but the students didn’t get the education Oklahoma paid for. So in addition to knowing how much Oklahoma schools spend on each student per year, it’s fair to ask how much they spend on each student they see through to graduation. It makes sense to use high school graduation as a minimum standard of educational success. We can debate whether the schools do a good enough job educating the students they have, but not whether they’re educating the students they lose. Moreover, a broad range of critical life outcomes, from income levels to crime rates, is strongly associated with students graduating or dropping out. Getting a GED later in life does not reverse those trends very much on average. Some dropouts do turn their lives around, of course. But for most people, when schools fail to see students through to graduation, the impact of that failure will remain for life. You might think this measure is un-
fair to schools, because students make their own decisions to drop out. I certainly wouldn’t deny dropouts’ personal responsibility for their own actions. And if someone said the schools would be a failure unless 100% of students graduate, I’d agree that would be unfair. However, the evidence shows that dropout rates are strongly responsive to school quality. For example, a very modest school choice program in Washington, D.C. provided a huge bump in high school graduation rates—from 70 percent to 82 percent, according to a study using gold-standard random assignment methods. It appears that when schools serve students well, students tend to stay and graduate. Imagine that! Next thing you know, we’ll find out that when companies treat their employees well, employees are more likely to stay in their jobs and perform well. Who knows what crazy things we might discover next? People are responsible for their own decisions, but they never make their decisions in a vacuum. When large numbers of people are making bad choices, they are each responsible for their own decisions, but it’s also a clear indication of a deeper problem. Good citizens have every right to ask what’s going wrong and what can be done about it. If Oklahoma schools graduated 95 percent of their students (for real, not through phony “social promotion”), I’d say they were doing a great job of serving students in this area. If anyone complained about the other 5 percent, I’d say we should look somewhere else for an explanation, not at the schools.
Oklahoma Public Education Revenues at an All-Time High By Jonathan Small
But with a graduation rate of 78.5 percent, I say public school leaders need to look at themselves in the mirror and ask what they’re being called to do about it. We can help hold up that mirror by measuring school spending per high school graduate, in addition to spending per current student. Oklahoma’s spending by traditional standards is now $8,630 per student; that’s because in 2009-10 it spent just under $5.7 billion on 654,802 students. We could just as legitimately divide that spending figure by the 38,503 high school diplomas the state handed out that year. This tells us that at current spending levels, the total cost for each student the system nurtures from pre-kindergarten to graduation is $146,768. Divide that by fourteen for an annual spending rate of $10,483. Just as the cost per piano lesson went up 20 percent because of parental failure, the cost of providing each student in Oklahoma with a complete K-12 education goes up by 21 percent because of educational failure. It’s important to understand this measure properly. This is not the amount Oklahoma historically spent on the 2010 graduating class over
Total oklahoma common education Available revenues ,39 53 7,4 $8
,21
5,2 ,10 $8
,09 15 6,7 $7
,92
54
0.8
3 5.7 ,51 5,0 $7
,79
FY-2013
$7
,60
FY-2012
,11
$7,500,000,000
3,7
93
,71
9.3
7
$8,000,000,000
5,6
43
,93
58
4.3
2
$8,500,000,000
,80
6
9.4
1
8.5
3
$9,000,000,000
$7
The current system of public education in Oklahoma is a partnership between the state of Oklahoma and local school districts. Both provide revenue for the various expenses of common education. Given this relationship, analyzing total common education revenue is vital to assessing the current revenue picture for public education. And though you wouldn’t know it from listening to the education establishment or reading media reports, according to the Oklahoma State Department of Education, total common education available revenues have reached an all-time high.
$7,000,000,000 $6,500,000,000 0 FY-2008
FY-2009
FY-2010
FY-2011
Oklahoma State Department of Education
the previous fourteen years. It’s the amount Oklahoma will spend on every high school graduate if it maintains its current spending levels. That’s the right measurement to use; we want to know how much education costs under the state’s current policy and practice, not under policies and practices it used to have but now does not. Like all measurements, this one has limitations. Presumably the student who drops out in 12th grade got at least some additional educational benefit compared to the student who drops out in 10th grade, and this measure doesn’t capture that. But when it comes to helping students have a good life, the difference in status between a graduate and a dropout is much more important than the incremental difference between a 12th grade dropout and a 10th grade dropout. At the most
basic moral level, seeing through a tough task until it’s complete—even if it takes years—is one of the most important life lessons students need to absorb in school. And future employers are going to ask whether you graduated, not what year you dropped out. The most important question is not whether Oklahoma taxpayers can afford to go on spending $10,483 per graduate every year, although that question matters. The most important question is whether Oklahoma can afford to go on failing 10,529 students in every high school class, year after year. Schools, like students, need to learn to see a tough task through until it’s complete. And if they tell us they’re having too much trouble learning, reforms like school choice could help them get up to speed.
Greg Forster (Ph.D., Yale University) is a senior fellow with the Friedman Foundation for Educational Choice. His research has appeared in the peer-reviewed publications Teachers College Record and Education Working Paper Archive, and his articles on education policy have appeared in the Washington Post, the Los Angeles Times, the Philadelphia Inquirer, the Chronicle of Higher Education, and numerous other publications.
www.ocpathink.org
9
ESAs Will Put Oklahoma Parents in Charge By Michael Carnuccio and Robert Enlow
Oklahoma’s public schools serve many children very well. Still, for various reasons, some students’ needs are better met in private schools, in virtual schools, or elsewhere. That is why two state lawmakers have introduced legislation to give parents debit cards, literally, to shop for the educational services that work best for their kids. Education savings accounts, or ESAs, enable parents to receive a portion of their children’s public education funding through a use-restricted debit card with which parents can pay for therapists or tutors, private-school tuition,
Let’s give parents debit cards to shop for the educational services that work best for their kids. 10 PERSPECTIVE • March 2014
or a combination of services. They even can save unused funds for their children’s college expenses. ESAs were implemented in Arizona in 2011, and have been a tremendous success for participating families. Take Amanda, and her son, Nathan. Using an ESA, Nathan attends Lauren’s Institute for Education, a private school that specializes in helping students with autism. Before the ESA, Nathan could not speak and needed regular one-on-one attention. Today, he is speaking in full sentences and enjoying science and social studies. That is just one story from the 730 students in Arizona’s ESA program, which has more than doubled in enrollment each year since its launch. And, notably, participants are “doubling down” on their learning options. Analyzing Arizona Department of Education data, the Heritage Foundation’s Lindsey Burke found that 34.5 percent of Arizona’s first-year ESA parents purchased multiple educational options for their children. For example, a family might have paid for private school tuition and therapeutic tools. Or, they bought online courses and tutoring lessons. ESAs allow parents to tailor their children’s schooling experiences like never before. And because parents can roll over unused funds, ESAs provide a powerful incentive for participants to shop economically. According to Burke, first-year enrollees saved 43 percent of their ESA funds for future educational expenses. Now that’s an efficient use of taxpayer dollars. Those successes are why Rep. Jason Nelson (R-Oklahoma City) and Rep. Tom Newell (R-Seminole) are working to bring ESAs to Oklahoma. And it ap-
pears lawmakers’ constituents are supportive. In a new survey released by our two organizations, 56 percent of Oklahoma voters support ESAs. Only 34 percent oppose them. Support was strongest among Republican voters (65 percent), but majorities of both Democrats (50 percent) and Independents (54 percent) identified ESAs favorably. Encouragingly, most respondents (58 percent) thought ESAs should be available “universally” to all families. That may sound dramatic, but, remember, just because all families would be eligible doesn’t mean all families would participate. ESAs are just an option. The point is to empower every Oklahoma parent with the choices that provide every child an opportunity—regardless of socioeconomic status or geography. And that’s the goal of ESAs: Wherever Oklahomans may get their education, ensure it is a high-quality one that meets students’ needs. Shopping grows our economy. It can do the same in education.
Michael Carnuccio is the president of the Oklahoma Council of Public Affairs.
Robert Enlow is the president and CEO of the Friedman Foundation for Educational Choice.
School Administrator Job Growth Dwarfs Student Growth By Brandon Dutcher
Amid the ongoing discussion of the need for more funding of Oklahoma’s public education system, an important point is often overlooked: According to data that the state of Oklahoma reports to the U.S. Department of Education, Oklahoma school district administration has been growing dramatically. According to a new analysis by economist Benjamin Scafidi, “Using the time period available, FY 1998 to FY 2011, Oklahoma public schools increased employment in school district administration by 49 percent, while the number of students in Oklahoma public schools increased by only 6 percent. In other words, in Oklahoma public schools, school district administration employment increased over eight times faster than its student population from FY 1998 to FY 2011.” We’ve now reached the point that “only half of Oklahoma’s public education employees are teachers,” as Greg Forster pointed out in these pages in January 2011 (“The Blob That Ate the Schools”). “The bureaucracy is now so big, it takes up half the system.” There’s absolutely no reason for any sector of government to directly employ bus drivers, cafeteria workers, janitors, or any of the rest of this category. The whole enchilada needs to be privatized posthaste. You wouldn’t just eliminate unnecessary positions that are there due to featherbedding, although that’s considerable. More important, though, you’d be able to pay the market rate for the positions you kept, instead of hyperinflated civil-service salaries and benefits. And you’d be able to fire people if they didn’t deliver good services. When only half of Oklahoma’s public education employees are teachers—and the administrative growth shows no sign of letting up—policymakers should ask themselves if more money is really the answer.
Change in FTE Students and FTE School District Administration Employment: Oklahoma Public Schools, FY 1998 to FY 2011 60%
49%
50% 40% 30% 20% 10%
6%
0% Students
School District Administration
Source: National Center for Education Statistics, U.S. Department of Education, Common Core of Data for fiscal years 1998 and 2011. School District Administration employment is defined as LEA (local education agency) Administrators and LEA Administrative Support Staff.
Brandon Dutcher (M.A. in public policy, M.A. in journalism, Regent University) is senior vice president at OCPA. He’s the editor of the book Oklahoma Policy Blueprint, which was praised by Nobel Prize-winning economist Milton Friedman as “thorough, well-informed, and highly sophisticated.” His articles have appeared in Investor’s Business Daily, Forbes.com, WORLD magazine, the Tulsa World, The Oklahoman, and 200 newspapers throughout Oklahoma and the U.S.
www.ocpathink.org
11
Religious Liberty ‘Has Everything to Do with the Limits of the State’ By Tina Korbe Dzurisin
Earlier this year, the United States Supreme Court agreed to hear a consolidated case against the Obamacare abortifacient mandate, including the challenge brought by the David Green family, the owners and operators of Oklahoma City-based Hobby Lobby. The Greens—Christians who oppose abortion—claim they cannot in good conscience pay for their employees to have free access to abortion-inducing drugs, which the mandate would force them to do. As president of the Southern Baptist Convention’s Ethics and Religious Liberty Commission, Dr. Russell Moore has closely followed this case from its inception—and he’s bullish about the outcome. At a February 5 policy briefing at OCPA, Moore said he anticipates the Supreme Court will side with the Greens against the federal government. Two important factors fuel his optimism: the current composition of the Supreme Court and the Religious Freedom Restoration Act. Justice Anthony Kennedy—who is widely considered the swing vote on the Supreme Court—has a solid voting record on religious liberty cases, according to Moore. The Religious Freedom Restoration Act specifies that the federal government must demonstrate a clear and compelling public interest to justify the abridgment of religious liberty— and may only burden the free exercise of religion by the least restrictive available means. The Obamacare abortifacient mandate does not meet the criteria. The administration argues that “public health and gender equality” justify the mandate. That’s a dubious claim in itself,
12 PERSPECTIVE • March 2014
Pseudo-pluralism aims to pave over all differences of genuine conviction to arrive at a religion that has no questions about government limits. but, even supposing “public health and gender equality” somehow demanded access to abortifacients, requiring employers to provide employees with insurance that covers these drugs is clearly not the “least restrictive” means to ensure that access. “The law is with us on this,” Moore said. Yet, even as he expressed confidence on this particular case, Moore cautioned his listeners against complacence about religious liberty. If the Supreme Court does by chance decide in favor of the administration—if Hobby Lobby loses—the public square will narrow, civil society will shrink and government will grow, Moore predicted. “I think we’re going to win this case, but we need to recognize that, even if and when we do, the religious liberty issue is going to remain with us and we are going to have to be vigilant,” he continued. In part, the religious liberty question will remain open because of a persistent attempt by legislators and the
courts to divorce the two religious liberty clauses of the first amendment— the so-called “free exercise” and “establishment” clauses. Yet, as Moore pointed out, the two clauses stand together. A government that restricts the free exercise of religion is establishing a religion, he said. Beware the pseudo-pluralism of the government, Moore added. Pseudopluralism aims to pave over all differences of genuine conviction to arrive at a religion that has no questions about government limits. “This is an issue that ought to matter to every American citizen,” he said. “We need to understand that this has everything to do with the limits of the state.”
Tina Korbe Dzurisin is a research associate at OCPA. Formerly, she was a staff writer at The Heritage Foundation and an associate editor at HotAir.com.
Bureaucratic Restraint? Fat Chance By Jayson Lusk
Back in November, the Food and Drug Administration (FDA) announced its plan to remove artificial trans fats from its list of ingredients that are Generally Recognized as Safe (GRAS)—essentially banning the ingredient. In a few weeks, the comment period on the proposal will close and the FDA will likely move to implement the policy. Trans fats occur naturally in meat and dairy products, but their use increased when food processors in the 1950s figured out a process to hydrogenate oils—increasing shelf life and making flavors more stable—that are today used in many baking and frozen foods. The process of hydrogenation creates the trans fats, which are now the subject of concern. The research from the medical health community does indeed suggest that excess consumption of these “synthetic” trans fats has deleterious health effects. Interestingly, however, a few studies show that “natural” trans fats from animal sources may not be as unhealthy, despite having similar chemical compositions as the “synthetic” trans fats (although this last point seems to be a subject of debate). The question before us isn’t whether certain trans fats are unhealthy—they probably are—but rather: What is the government’s role in regulating trans fats? The move in recent years to educate the public on the scientific evidence, and even to require labeling of trans fats on nutritional facts panels, is reasonable given the established safety risks. And indeed, these efforts alone caused a significant voluntary drop in use and consumption of trans fats by food manufacturers and consumers. The trouble comes when a third party—the FDA, in this case—moves
from informing the public about risks to making the decision for us. The government has moved from the role of impartial referee conveying the rules of the game to a player in the game, picking sides. Many of the news stories surrounding the FDA announcement point to the projected number of lives saved if a ban on trans fats were implemented. But, this is misleading when discussed without context. We could save many more lives each year if the government banned driving. Many lives could also be saved if we banned alcohol and went back to prohibition. Skydiving is risky. Why not ban that, too? The reason is that many risky activities convey benefits that must also be considered. What are the benefits from the use of trans fats in food? Taste. Mouthfeel. Cost. Improved shelf life. What would be the costs of removing trans fats? Higher food prices. Manufacturers may have to add more sugar or salt or more saturated fat to compensate for the loss of trans fats. The point is that any discussion of the benefits of a ban on trans fats must be considered in the context of the costs of the ban. The FDA has attempted to estimate some of these costs but ultimately concluded, “in many cases we have very limited data to support our rough estimates.” Moreover, they make no more than a passing attempt to estimate the costs to consumers of having to eat products they find less desirable.
Even if a ban passed a narrow costbenefit test, we would also want to ask whether the infringement on freedom of choice can be justified on logical grounds. Stated differently, where is the market failure? Normally, economists identify market failures if there are price-altering market powers, externalities, public goods, or information asymmetries. Only the last of these has any credibility in the trans fat debate, but with the existence of labels, even that is no justification. That leaves only one primary motive for the ban: the dim view that the public is unable to properly weigh the risks themselves and is in need of paternalistic intervention. Of course, government officials typically will not come right out and tell us that their motivation is our perceived ineptitude, because we’d rightly rebel against such a condescending attitude. It is clear that the provision of information via labels, and resulting consumer demands, induced innovation by food companies to come up with ways to do without trans fats. But, is it possible that a ban could hinder future innovation? As already mentioned, all trans fats are not created equal. Is it possible for scientists to develop new fats that convey some of the same beneficial properties as existing “synthetic” trans fats without the health risks? I don’t know. And we may never know if we institute a blanket ban.
Jayson Lusk (Ph.D., Kansas State University) is the Samuel Roberts Noble Distinguished Fellow at OCPA and Regents Professor and Willard Sparks Endowed Chair at Oklahoma State University. His new book is The Food Police: A Well-Fed Manifesto about the Politics of Your Plate (Crown Forum, 2013).
www.ocpathink.org
13
1
2
@OCPAThink 1. OCPA’s spring interns are a terrific addition to the OCPA staff. Brittoni Bobek (left) is a senior at the University of Oklahoma pursuing a degree in sociology/ criminology. A Moore native, she enjoys movies, ice skating, coffee, and a good cupcake. Rebecca Hobbes (right) is a senior at Oklahoma Christian University pursuing a degree in political science. Hobbes, from Edmond, enjoys following domestic and international politics, and plays piano in her spare time. 2. On February 15 in the OCPA library, senior vice president Brandon Dutcher (right) discussed Arizona’s innovative Education Savings Account program with former U.S. Congressman Barry Goldwater, Jr. 3. On January 28 in the Blue Room of the state capitol building, OCPA and the Friedman Foundation for Educational Choice released a new public-opinion survey (edchoice.org/OklahomaPoll) showing that Oklahomans favor vouchers, tax credits, Education Savings Accounts, and other forms of school choice. Pictured here are Andrew Spiropoulos (at podium), who serves as OCPA’s Milton Friedman Distinguished Fellow, OCPA’s Brandon Dutcher, and the Friedman Foundation’s Paul DiPerna.
4
4. Dr. Russell Moore, president of the Ethics and Religious Liberty Commission, spoke last month at OCPA on “Why the Hobby Lobby Case Matters.” You can watch his presentation at http://www.ocpathink.org/videos. 5. Dr. Moore is pictured here with Oklahoma Attorney General Scott Pruitt, who introduced him. 6. OCPA’s vice president for policy, Jonathan Small (center), recently spoke to the Stillwater Chamber of Commerce on the need for pension reform. OCPA has been advocating a defined-contribution pension system for more than a decade.
14 PERSPECTIVE • March 2014
5
3
6 www.ocpathink.org
15
Change Service Requested
NONPROFIT ORG. U.S. POSTAGE PAID OKLA. CITY, OK PERMIT NO. 2573
1401 N. Lincoln Blvd. Oklahoma City, OK 73104 Tel: 405.602.1667 Fax: 855.819.0085 ocpathink.org
QUOTE UNQUOTE “If schools are doing their job, no student will leave the school system. If they’re getting the services they need, they’ll stay.” State Rep. Jeff Hickman (R-Fairview), arguing in 2010 for the proposed Lindsey Nicole Henry Scholarship program for special-needs students
“39 percent.”
The percentage of Oklahoma teenagers (ages 15-17) who have grown up in an intact married family, according to Census data analyzed by Dr. Patrick Fagan
“Those [homeless] children are the ones that we can do the most for. Every child that we take relieves some pressure on the burdened public school system who has to be all things to all children. We can take children who need some special care and we can take care of those kids and in the end we can save everybody a lot of money.”
Susan Agel, president of Positive Tomorrows, a private school serving homeless children, speaking in favor of legislation creating an Education Savings Account program in Oklahoma
“A government which robs Peter to pay Paul can always depend on the support of Paul.” George Bernard Shaw
“You would think that the first principle of any conservative legislator would be to actually conserve our institutions.”
OCPA distinguished fellow Andrew Spiropoulos, criticizing Oklahoma lawmakers who are seeking to gut the Electoral College
“So I’m willing to battle in order to give my kids an education. I’m here to let people know, we have to give our children choices. … If you don’t give them choices, they are the welfare recipients, the food stamp recipients, and the Medicare recipients.” Florida mother Chanae Jackson-Baker, speaking March 6 at a legislative committee hearing on a bill to expand Florida’s popular tax-credit scholarship program