HBx and the Death of Distance

August 26, 2015

(Guest Post by Matthew Ladner)

Harvard Business school class, more from Fortune magazine here.

Oil prices-look out below!

August 24, 2015

(Guest Post by Matthew Ladner)

So global stock markets have crashed and the price of oil has dropped below $40 a barrel. This interesting article however points out that if one conceptualize the oil glut as an attempt by the Saudis to crush American frackers it is not going to work because the frackers now represent mid-price rather than high-price producers. In other words, if the Saudis and Frackers have started a bar room brawl, it is a number of other producers who will wind up getting their proverbial jaws broken. Mid-price producers will be very likely to find the financing needed to survive while demand and supply balance. High priced producers will likely find themselves out of luck.

Alternatively you can think of it this way: $100+ per barrel oil created a massive over-investment in oil supply. Right now you don’t want to be the high cost producer or saddled with a massive welfare state financed on petrol. American frackers are neither of these things.


Health Care Cost Inflation vs. K-12 Spending: Something Has to Give

August 19, 2015

(Guest Post by Matthew Ladner)

What happens when you have a large and growing elderly population in your state? One answer: you spend more money on health care.  While we think of Medicare as the program for the elderly and Medicaid as a program for the poor, the reality is that the elderly often access both programs. On a per person basis, the elderly consume considerably greater Medicaid resources than either children or non-elderly adults.

Medicaid has been the biggest single program in state budgets for some time (K-12 ranks second), creeping up on a quarter of total state spending. People sometimes overlook this because Medicaid operates through a system of federal matching grants to the states, and thus much of the funding for Medicaid comes from the feds.

Of course in the end we are all local, state and federal taxpayers at the same time, meaning that federal money does not represent manna from heaven unless your only concern in life involves certifying a state budget. I’ve been examining budget data from Florida however, and even after you exclude federal funds, the trend in health vs. K-12 is clear.


Medicaid vs K-12

Despite a healthy increase in K-12 spending, state funding of Medicaid looks set to overtake state K-12 funding in the very near future, constraining other spending. Increasingly budget battles between K-12 and Medicaid will be seen as a generational battle between the interests of the young and old. Policymakers have recognized for some time that health care inflation would spell the doom of state higher education funding (Texas lawmakers deregulated tuition in 2003 in recognition of this fact for example) but we have no reason to think that matters will rest there.

You may have heard  by the way that Uncle Sam has $55 trillion in unfunded entitlement liabilities, so state lawmakers should view his ability to sustain his end of the Medicaid matching funds bargain with some suspicion. America needs major policy and practice innovations in both education and health care.



Ed Next Poll Shows Character is Important

August 18, 2015


Education Next is out with a set of great new poll results.  They ask a representative sample of the general public, parents, and teachers about a variety of salient education policy issues.  You can see the results in detail on this fantastic interactive site.

There are many interesting results to discuss, but the one that caught my eye is a question about how much schools do and should emphasize different topics.  The general public, parents, and teachers were asked to rate on a scale from 1 to 7 (with 1 being “a little” and 7 being “a lot”) how much they thought schools were emphasizing reading, math, the arts, history, science, character, creativity, global warming, athletics, and bullying.  Respondents also described how much schools should be emphasizing those topics.  I calculated the difference between how much parents said schools should and do cover different topics to see where parents think schools are currently most falling short of their priorities.

Parents would like to see schools increase their emphasis on every topic except athletics.  But the two topics they wanted to see increased the most were character and creativity.  Parents rated the emphasis that schools give to character as a 4.10 on the 7 point scale.  When asked how much schools should emphasize character, parents gave an answer of 5.41 — an increase of 1.31.  For creativity parents rated schools’ current efforts as 4.25 but would like to see 5.63 — an increase of 1.38.

Parent demand for increased focus on character and creativity is almost double their desired increase for reading or math.  Parents say schools are emphasizing reading at 5.62 and math at 5.66 but would like to see that at 6.28 and 6.31, respectively.  They want more focus on math and reading but only an increase of .65 or .66 compared to an increase of 1.31 and 1.38 for character and creativity.

Why do parents think schools are falling much further short in their emphasis on character and creativity?  Part of the problem is that character and creativity involve questions of values on which there is much less consensus than on technical skills in math and reading.  If we assign students to public schools, we are often forcing people with diverse sets of values into the same schools.  If they try to teach character, they invite fights over what the content of that character should be.  Public school districts can’t even agree amicably on what to name their schools let alone what kinds of values to teach.  The Cato Institute has put together a useful web site documenting the endless conflicts produced by forcing everyone into the same school system.

If we really want schools to give a much greater emphasis to teaching character, we will need to expand school choice.  Choice allows families with similar values and priorities to send their children to schools that will then be free to teach those values.  Schools won’t be deterred by struggles over values since parents seeking a different type of character education can choose a different school rather than fight.

Schools also fall short of parent expectations for teaching character and creativity because those concepts are ill-defined and even more poorly measured.  What do we mean by character and creativity?  How would we know if schools are doing it?  To address these difficulties, the Department of Education Reform has launched the Character Assessment Initiative, or Charassein (sounds like kerosene), under the direction of my colleague, Gema Zamarro. I’ve written before about some of the path-breaking research coming out of Charassein, but be sure to stay tuned as more is on the way.

With better understanding of what we mean by character, better ways of measuring those outcomes, and more choice so that schools and families are free to teach desired character traits, we may see a closing of the gap between what parents want and what schools do in teaching character.

The School Choice Myth That Just Won’t Die

August 13, 2015

(Guest Post by Jason Bedrick)

The myth that there’s no evidence that school choice works has more lives than Dracula. Worse, it’s often repeated by people who should know better, like the education wonks at Third Way or the ranking Democrat on the U.S. Senate education committee. In a particularly egregious recent example, a professor of educational leadership and the dean of the University of Wisconsin-Madison School of Education wrote an op-ed repeating the “no evidence” canard, among others:

The committee also expands the statewide voucher program. There is no evidence privatization [sic] results in better outcomes for kids. The result will be to pay the tuition for students who currently attend private school and who will continue to attend private school—their tuition will become the taxpayers’ bill rather than a private one. Additionally, the funds for the expansion would siphon an estimated $48 million away from public schools, decreasing the amount of money available for each and every school district in the state.

It is astounding that a professor and a dean at a school of education in Wisconsin would be unfamiliar with the research on the Milwaukee voucher program, never mind the numerous gold standard studies on school choice programs elsewhere. Fortunately, friends of the Jay P. Greene Blog, Professor James Shuls of the University of Missouri-St. Louis and Martin Lueken of the Wisconsin Institute for Law & Liberty, set the record straight:

…the Wisconsin Legislature commissioned a comprehensive five-year study by researchers at the University of Arkansas. The research team matched and compared children at private schools in the choice program to similar students at Milwaukee Public Schools. The study concluded that children in Milwaukee who used vouchers were more likely to graduate from high school, enroll in four-year colleges and persist in college.

These findings are very similar to those of “gold-standard” studies done nationwide. Among 13 peer-reviewed studies on voucher programs that use research methods based on random assignment, all but one study concluded that vouchers benefit students (the other was unable to detect an impact). In addition, recent work by a Harvard economist demonstrates that giving low-income families better educational options can help improve social mobility for children.

Just a year and a half ago–in response to yet another school choice denier who should know better–the coauthors of the Milwaukee study clarified that their research found school choice produced “a modest but clearly positive effect on student outcomes.”

First, students participating in the Milwaukee Parental Choice (“voucher”) Program graduated from high school and both enrolled and persisted in four-year colleges at rates that were four to seven percentage points higher than a carefully matched set of students in Milwaukee Public Schools. Using the most conservative 4% voucher advantage from our study, that means that the 801 students in ninth grade in the voucher program in 2006 included 32 extra graduates who wouldn’t have completed high school and gone to college if they had instead been required to attend MPS.

Second, the addition of a high-stakes accountability testing requirement to the voucher program in 2010 resulted in a solid increase in voucher student test scores, leaving the voucher students with significantly higher achievement gains in reading than their matched MPS peers.

Moreover, as Shuls and Lueken note, “private schools in the choice program obtain these results when the government funding for a voucher is 60 percent less than what public schools receive.”

The final two claims by the UW-Madison faculty–that the voucher program benefits students who would attend private school anyway and siphons money from the district school system–also fail to withstand scrutiny. A conservative analysis of the Milwaukee voucher program by Prof. Robert Costrell of the University of Arkansas found that “about 10 percent of low-income voucher users would have attended private school anyway.” The 2009 study also found that the voucher program produced significant savings to the state taxpayers, as shown in the figure below:

Taxpayer Savings from Milwaukee Voucher Program

Chart by Robert M. Costrell.

A Friedman Foundation study released last year found that the Milwaukee voucher program saved the state more than $238 million since its inception in 1990. Moreover, as the Wisconsin Institute for Law & Liberty notes in a recent report, Wisconsin gives a “school choice bonus” to district schools that lose students to the voucher program. Although a district’s total revenue decreases when a student leaves (along with the variable costs associated with that student), the “school districts will actually have more revenue per pupil because the district can continue to count students it no longer educates for equalization aid and revenue limit purposes.”

Sadly, opponents of school choice are likely to continue resurrecting the “no evidence” canard. But when they do, Van Helsings like Shuls and Lueken will be there to put a stake in its heart.

(First posted, with slight differences, at Cato-at-Liberty.)

On Her Majesty’s Secret Server

August 12, 2015

(Guest Post by Matthew Ladner)


Heritage Foundation’s Burke recruits Arizona All-Stars to talk ESAs

August 11, 2015

(Guest Post by Matthew Ladner)

I finally got to watch this Uncle Milton birthday event at the Heritage Foundation on ESAs with Jason Bedrick, Jonathan Butcher and Tim Keller of Cato, Goldwater and IJ Arizona respectively.  Cactus patch represent! Spoiler alert but look for guest appearances by a famous spymaster and another by a very famous animated character.



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