Alaska on top (for now) while the Euro Zone, Alabama, Britain and Mississippi bring up the rear

August 27, 2014

GDP

(Guest Post by Matthew Ladner)

Readers of a certain age will recall the days when European films got over 10% of the American box office. I recall being told that this was the thing to do, but being fairly consistently disappointed with the products. European governments are apparently willing to subsidize bad films on an ongoing basis, but I was not. Eventually the American public also found better ways to spend their entertainment dollars, and European film-going shrank in America.

It looks to me like the devotion of some Americans to European economic policies deserve the same fate. Even our versions of small population/big oil territories (Alaska and North Dakota) beat the stuffing out of their version (Norway). Germany is the economic titan of Europe but finds itself sandwiched between Montana and Arizona. Move an American state with a large population and high-end GDP per capita to Europe (say New York or Texas) and there would be a new sheriff in town.

Read the WaPo for more.  Someone explain to me again why the PISA rankings would look so much different than the economic rankings. Don’t bother trying to say that there is poverty in Alabama but none in the Euro zone because I’m not buying it. The last per student spending rankings I saw had Alaska (the top state at GDP per head) at $18,000 per year per kid and NAEP says 42% of the 4th graders score below basic in reading. It would be a great idea to concentrate on getting bigger bang for the buck because, ahem, well…


Bustin’ Makes Butcher Feel Good

August 24, 2014

ghostbusters butcher

(Guest Post by Matthew Ladner)

So if the above picture looks like a sloppy attempt at photo editing by someone goofing around with a program for the first time, it is only because it is in fact just such an attempt.

So Arizona voters passed an initiative long ago that provided for inflation adjustments to K-12 spending. During the bubble years spending went up faster than inflation, but during the catastrophic collapse of the economy it went down less. The AZ school district non-profit industrial complex eventually sued to get the funding restored, and they recently won, sticking lawmakers with a $317,000,000 bill. Arizona is broke and unlikely to find that sort of change in the sofa, and requires a 2/3 vote of each chamber to raise taxes. So, what happens next?

The Goldwater Institute’s Jonathan Butcher went to the pages of the Arizona Republic to suggest a couple of ways to recoup the money. First- stop funding ghost students. Districts get paid on last year’s student count, charter schools on this year’s count. Ergo every time a child transfers from a district to a charter school the state pays for them twice for a year. This is a pure waste of money that will continue to grow with Arizona’s charter school sector. Butcher estimates this could gain the state $125m of the needed $317m. If I were Arizona’s higher education community I would jump on the Ghostbuster bandwagon because otherwise that $125m is likely to come out of higher education spending sooner rather than later.

Second Butcher proposes that some of the base funding for schools be conditioned on kids actually learning something. With half the high-schools in the state having 5% or less of the graduating Class of 2006 finish a Bachelor’s degree in six years, this sounds like a promising if tricky idea.  The taxpayers ought to be getting an ROI from Arizona public school spending dominated by student learning, not by mere babysitting.


U.S. K-12 spending drops for the first time in 35 years

May 29, 2014

(Guest Post by Matthew Ladner)

Mmmkay, well, this sort of thing is going to happen when your labor participation rate hits 1978 levels.  With tens of millions of Baby Boomers reaching retirement age, it looks like it will be much easier to increase K-12 flexibility than funding going forward. Ah for the halcyon days of 2008 when the AFT dreamed of putting dentists and personal trainers in the public school system for transparently self-interested reasons the vague promise of creating a 21st Century utopia.

 


This Just In: Money is Still Not the Answer…

February 7, 2014

NAEP 4r dot chart

(Guest Post by Matthew Ladner)

Which is a relief since we are running out of money in any case. I took a stab at updating my favorite state NAEP chart ever for the 2013 NAEP.  My favorite chart ever of course is:

Hanuskek 4

I decided that it would be a bit easier to digest to do the chart by individual subjects and use points rather than percentages of a standard deviation and combined tests as an axis. Also revenue per pupil was easier to find than expenditures.  So what you see up there is a first crack at 4th grade reading between 1998 and 2013.  No shock- money is still not the answer (yes I am looking right at you New York and Wyoming).

8th Grade Reading Chart looks pretty similar:

NAEP 8r dot chart

Wyoming at least scores meh improvement this time for their gigantic increase in spending, New York- fuggedabouit.  Florida just blew you a kiss from the top left quadrant and said that you should come up and see her sometime.

In any case, these are prototype charts that have as yet been double checked by no one other than our family cat Charlie. Treat them accordingly for now, just putting them up for fun and feedback.


Arizonapocalypse

November 19, 2013

(Guest Post by Matthew Ladner)

Last week the Arizona Board of Regents released a report detailing the catastrophic failure of Arizona high-schools in preparing students for higher education.  Specifically the report traced the high school class of 2006, finding that half of the high-schools had five percent or less of students finishing higher education degrees or certificates within six years.  A mere 40 of the almost 460 schools produced 61% of Bachelor degrees in the AZ Class of 2006.

So, the news could have been much better. Here is the next shoe to drop- things are going to be getting increasingly more difficult in the years ahead.

The United States Census has produced population projections by state. Let’s see what the future has in store for Arizona. First a little context. Arizona’s current population is was about 6.5 million in 2012.

First challenge- a very large increase in the youth population.

Arizona Under 18

The Census Bureau projects a large year by year increase in young people.  The Census has projections for the 18 and under population, and also for the 5-17 population.  The 0-3 population is generally outside of the pre-school and K-12 system, meaning that the 18 and under population overstates the impact that the increase in the youth population will have on the state budget in 2030.  The 5-17 year old figure understates the situation due to 4 and 18-year-old students who will receive either preschool or K-12 assistance.

The next chart uses the Census Bureau’s projection for the increase in the 5-17 year old Arizona population, and puts it into context by comparing it to the size of the charter school and private choice populations of Arizona.  Arizona’s charter school law passed in 1994, and the scholarship tax credit program passed in 1997. The time between then and now is roughly comparable with the time span between now and 2030.

Arizona 5-17

Arizona school district enrollment is set to expand regardless of what we do on the parental choice front, just as it has for the last two decades. In the last two decades, the charter school law has produced a large number of those 40 schools that produced 61% of the BA degrees. In combination with the scholarship tax credit programs and the still nascent ESA program, they have taken the edge off of district enrollment growth in the aggregate.

Arizona does have high-quality charter operators who will continue to slowly but sure increase the islands of quality.  If the ESA program survives court challenge it may allow for a quicker pace of private choice expansion than the tax credit program. Creative destruction of the sort that might actually close dysfunctional schools, other than charters that fail to launch, is simply not in the cards.  The districts full of those 5% and under high schools will be going into the debt markets to build more dropout factories.

Or perhaps they will be running double shifts at the current dropout factories, as it will become increasingly difficult to finance new construction.

At precisely the same time Arizona will be dealing with a surge in the youth population, an even larger problem looms the growth in the elderly population. Again from the Census projections:

Arizona Elderly

For those of you squinting to read the numbers, that is an increase from 922,000 65+ year olds in 2010 to almost 2.4 million in 2030.

So let’s sum up the story so far- Arizona’s K-12 system currently does a very poor job in educating anything more than a thin slice of students.  Arizona has a vast increase in students on the way to coincide with an even larger increase in the elderly population.  Still with me? Okay, let’s keep going.

Demographers calculate age dependency ratios, and economists have found that they predict rates of economic growth. An age dependency ratio essentially compares the number of young and elderly people in a population to the number of working age residents. The logic behind the notion is that young people require a heavy investment in social services (primarily education) while the old also require a heavy investment (primarily in the form of health care and social insurance retirement benefits).  From the perspective of a state budgeting agency, young people don’t work, don’t pay taxes, and go to school. Older people are out of the prime earning years, often heavily use Medicaid. An age dependency ratio basically tells reveals the number of people in the young/old categories compared the number of people in neither category (i.e. people of typical working age).

The United States Census Bureau calculates an Age Dependency Ratio by adding the number of people aged 18 and under to the number of 65 and older and dividing it by the number of people aged 19 to 64. They then multiply the figure by 100 just to make things tidy. The formula looks like:

Age Dependency Ratio = ((Young + Old)/(Working Age)) * 100

Many people continue to work and pay taxes past the age of 65, making it inappropriate to view them as “dependent.” It is also the case however that many people above the age of 19 are still in school and thus are not yet working and/or paying much in the way of taxes. We all probably know hyper-productive 70 year olds and people in their 20s engaged in a six-year taxpayer subsidized odyssey of self-discovery that will not number “graduation” among an otherwise wonderful set of experiences. During periods of prolonged economic difficulties, moreover, it is obviously the case that lower rates of working age people will in fact be working, and thus making taxes.

Notwithstanding these important caveats, the broad idea behind age dependency ratios is to roughly assess the number of people riding in the cart compared to the number pulling the cart at any given time. People of course both benefit and pay into these programs at different stages of life, but the current ratios serve as a measure of societal strain.  What does the age dependency ratio for Arizona look like?

Arizona Age Dependency Ratio

Note that Arizona’s age dependency ratio in 2010 was already among the highest in the country. A social welfare state with 86 people riding in the cart for every 100 pushing it will not compute. In 2030, the Class of 2006 will be squarely among those expected to push the cart of the Arizona social welfare state.  How alarming and unfortunate then that many of them dropped out of high-school, and many more of them dropped out of college. The most immediate way Arizona can help address the looming crisis of 2030 is to get more students educated now.

I’m not sure how this plays out. I am certain that we have been thinking too small given the size of our challenges.

 


Heads You Win, Tails You Still Win

March 5, 2013

(Guest Post by Matthew Ladner)

I had the opportunity to testify to the Senate Education committee in Texas today on the experience with parental choice programs for special needs children. One of the items of discussion was the following chart:

McKay Texas 1This phenomenon is often discussed regarding special education, but seldom quantified. In 2004 however officials from Education Service Center 20 (a regional body roughly covering school districts in the San Antonio area) provided the following chart to quantify the additional cost per special education student in a number of school districts. There were costs above and beyond those covered by state funding, and thus represented in effect a transfer from district general funds into special education funds on a per special education student basis.

 

Stanford economist Caroline Hoxby also testified to this interim committee in 2004, and she made the point that since school districts have been complaining that states don’t cover the full costs of special education for decades, that they have no cause to complain about students leaving with their (inadequate) funding. Districts can either keep these funds in the general education effort, or spend more on their remaining special education students (approximately 5% of Florida special education students directly utilize McKay but far more benefit from it) but either way they benefit.

 

 


The Moynihan Corollary to Baumol’s Cost Disease

December 10, 2012

(Guest Post by Matthew Ladner)

Over at the Ed Fly Blog I discuss the Moynihan Corollary to Baumol’s Cost Disease, my theory that Moynihan intended to leverage Hillarycare for welfare reform before killing it, and more on the failure of the staffing-bloat-as-ed-improvement strategy.


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