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15.10.09

MPERS must eschew vanity, cut golf course losses

It’s been coming for years, the only question being how long would it take before the foolish investments of Louisiana’s Municipal Police Employees Retirement System would implode. The answer is now, and it can join other retirement-related issues that put Louisiana taxpayers on the hook for billions of dollars.

The vast majority of municipal police officers statewide participate in MPERS. Until the beginning of the decade, the system was overfunded but stock market difficulties began to erode the value of its holdings. The 2007-08 audit showed the trend has accelerated as almost $200 million alone, or over 9 percent of value, was lost in that time span, with more surely to be revealed in the 2008-09 audit.

While in the overfunded condition in 2002, the Board of Trustees that oversees MPERS made a fateful decision (The Board is comprised of police officials representing chiefs, police retirees, and rank-and-file members, elected by the membership and serving voluntarily, plus ex-oficio members, one from each, of the House and Senate that rarely attend meetings). To diversify the billion-dollar portfolio, they sought to invest in real estate.

14.10.09

Progess will continue if BESE keeps up standards

It’s hard to find relative bad news in the latest release of accountability scores for Louisiana’s elementary and secondary education systems. But it would be a mistake to think it’s downhill from here in improving educational quality in the state, and to ease up just when goals are looking more realistic in their achievement than ever.

Accountability scores, which weigh in factors such as standardized test scores, attendance, and pupil progression, generally speaking for both specific schools and entire districts were higher and significantly so in the 2009 round of results. In a broader perspective viewing matters from the late 1990s when this effort started until now, the progress has been impressive: accountability scores for schools are up about 30 percent, the number of schools scoring 100 (deemed the minimal acceptable target) or more has increased from 152 in 1999 to 366 this year, and the number of academically unacceptable schools shrank to 55, down from 388 in 1999.

However, things must be kept in perspective. At best, Louisiana still ranks average among students in their achievement (according to the Iowa Test as of 2008) if not much closer to the bottom (on 4th and 8th grade levels, as of the 2007 National Assessment of Educational Progress test on math and reading the state ranked last in one category and no better than 43rd in any, with maximum scoring at least “proficient” in any being 24 percent). There is way too much to be made up before any real sense of satisfaction should be entertained.

This means the state’s educational establishment cannot relax in any way, yet one temptation to do so rapidly approaches. This year, politicians wearying of the sustained effort to improve education and wanting to create a situation for which they could take credit, passed into law an alternative set of high school graduation criteria that is less demanding to prepare students for the demands of jobs that are disappearing as technology advances. This so-called “dummy diploma” is intended to boost graduation rates by devaluing the achievement, to allow legislators to claim they had boosted these rates even as this kind of curriculum is becoming less useful.

But despite the relaxed requirements, the state’s Board of Elementary and Secondary Education still has the ability to ensure that standards can be maintained. Presently, to earn a high school diploma a student must pass the Graduate Exit Exam, but the legislation did not specify this. It has been left up to BESE whether to promulgate this as a standard, a decision expected at its meeting next month.

As anyone who has taught students who have choices in their coursework knows, if something easier is offered, especially for those compelled to be in school many students will take that route. Thus, by keeping passage of the GEE mandatory for recipients of this diploma, incentives will continue to ensure students strive for maximal grades, knowing if they try to slide by these less-demanding courses that will comprise the new curriculum, it might endanger their graduation abilities. The state cannot claim strides forward if, at the end of the educational process, it lets up on rigor, wasting the efforts of the early years of students and their schools.

The recent results reinforce the need of BESE to counteract this loss of nerve by politicians. It would be a shame to start backtracking when the foundation for great success seems firmly in place.

13.10.09

Shreveport reaping badly sown past spending choices

At least Shreveport's government is taking its 2010 operating budget disucssions slowly and seriously with an eye towards genuine needs. It hasn't always been this way with capital expenditures. While members of Shreveport’s City Council may grouse about spending decisions made by Mayor Cedric Glover, some of themselves share Glover’s culpability in the creation of crisis strategy that in the past has neglected high priority items to saddle the people with problems today.

Somewhat out of the blue, although not inconsistent with the Glover managerial style of the executive proposes, the legislature disposes, he dropped on the council’s lap a proposal for a $115 million bond issue to have been vetted by voters this fall. Most of it dealt with items Glover said the federal government was putting the heat on to the city because they could lead to possible sanctions, in the areas of water treatment and handicap accessibility. Thus, the issue needed action now, Glover implied as if Paul Revere reincarnated had come to warn that that feds were coming.

Of course, none of it should have been any surprise at all, including the amount. A good chunk of the entire request to the council months ago had formed a much smaller overall request to the federal government shortly after Pres. Barack Obama rammed into policy his spending bill that singlehandedly roughly tripled the fiscal year’s deficit. A giveaway politically in the guise of somehow being an immediate stimulus to the economy, in relative terms Glover was one of the most enthusiastic hogs to belly on up to the trough when he asked on behalf of the city for over $2.3 billion. The supplication appeared not only brazen enough to make it fodder for national ridicule, but even seemed to be too much for Santa Barack, since now Glover is wanting city debt to pay for some of it.

And why the Shreveport taxpayer would get off only being hit up for 5 percent of Glover’s wish list is due to the fact it almost all the city can afford. Because of the profligacy of Glover’s predecessor Keith Hightower, the city was close to its constitutional debt ceiling (and still owes $827 million, about twice the annual budget) in large part due to the city borrowing in the neighborhood of $100 million to build a money-losing convention center that was not supposed to lose money in part because of the presence of an adjacent a money-losing Hilton-managed hotel built by the city to the tune of around $40 million of its debt.

Meanwhile, residents in some parts of town moaned about substandard water provision of water and the city’s own managers warned a tremendous infrastructure problem loomed concerning this service. None of this fazed Hightower who was more interested in setting up conditions for lucrative contracts to be let to supporters and making it look like he was doing something than actually governing responsibly. Delayed maintenance simply has made matters worse since. And the final insults are that water rates have been jacked up substantially since then in the effort to make a dent in three years ago an estimated $450 million in repairs yet Glover still wants to spend more, and more debt on whatever will lower the city’s bond rating and make borrowing to solve infrastructure repairs eve more costly.

In the few years since, enough debt has been paid back to allow current addressing this and other (what should have been recognized years ago as) festering imperatives. But while Hightower deserves the lion’s share of the blame, it’s also the fault of Glover and some of those on the Council. As it was, the main legislative water-carrier for the city on the hotel issue – because almost all of the city’s delegation were against it – was none other than Glover, then a state representative. (Among other things, his intervention of the issue cost state taxpayers $12 million in addition to what Shreveport is on the hook for.) Also, voting in favor of building the facilities were Democrats on the Council then still on it now – Calvin Lester and Monty Walford, so they bear liability as well.

At least Glover wants a vote of the people; it’s not required and Hightower dispensed with that on the hotel. The Council told him to slow down, get direct citizen input, and to expect some kind of resolution next spring – right when campaigns for city elections in 2010 will begin flowering. However, issues of sewerage and response to federal mandates could have been ameliorated years ago with more emphasis on doing the basic, unglamorous duties of government instead of building monuments to it --mistakes that will cost the citizenry both in the subsidies they pay for them and in the additional resources that will be taken from them to do what should have been done all along.

12.10.09

State body wrongly talks of making child poverty worse

If the rhetoric coming out of a Child Poverty Prevention Council forum is any indication of the kinds of policy its state legislator members wish to advocate on this issue, Louisiana might as well abolish an institution that will increase, rather than decrease, child poverty in the state.

Some things said by its members were inane enough. State Sen. Sharon Weston Broome, for example, seemed to indicate that defeated causes she has stumped for, such as increased regulation of small lending and government subsidization by tax credits of lower-income housing have some thing to do with children being in poverty. The thinking appears to be that these kinds of loans, voluntarily entered into by people, trap them in some way and keeps families in poverty, and that more low-income housing is needed to prevent homelessness that can affect negatively children.

Naturally, these miss the real causes of poverty. The so-called “payday” loan industry already is heavily regulated and full information about the nature of the loans is given out when they are contracted. Increased government regulation may serve only to negate the industry in its entirety, and the vast majority of clients who pay off such loans in a timely fashion would not have access to micro-capital. It is likely in many cases of those who get caught up in not repaying and eventually find much of the money owed is in accumulated interest is because they already access many government benefits which discourages them to think about the long-term consequences of failure to repay, as they are used to receiving monetary benefits without strings attached. (Also, in a number of these cases the money is used for nonessentials so the money never was even really needed in the first place, just that personal affectation took over.)

The solution for housing provision is not more government, but less. Developers want to make money, and they can’t make it without building to meet unsupplied demand; property managers want to make money, and they can’t unless they place renters in housing stock. The market provides solutions to both of these conditions without any government subsidies; if anything, government regulation discourages provision by driving up costs to developers and owners. (This very debate is going on in New Orleans now, about how much government should intervene into the market.)

But perhaps the biggest indicator of the failure, if not downright harmfulness, of this effort, came from an incredibly asinine remark during the session about “what the absence of public benefits looks like. It’s called poverty.” This attitude absolutely misunderstands the origins and nature of poverty, ignoring the theoretical understanding of it first elucidated by Edward Banfield’s The Unheavenly City and then initially empirically verified by Charles Murray’s Losing Ground.

Lack of government benefits does not “cause” poverty; otherwise, why is the poverty rate essentially the same in the U.S. after over four decades of presumed “anti-poverty” programs costing in the neighborhood of $15 trillion? Rather, as Banfield noted, poverty comes from a complex of attitudes residing in and behaviors practiced by individuals that retards their abilities to earn their way out of impoverished status. As Murray first demonstrated, government “anti-poverty” policies have encouraged these attitudes and behavior by rewarding with government benefits many who prefer to remain less productive and to make inferior long-term choices in their lives. If anything, many “public benefits” are more likely to increase poverty than to decrease its incidence for those who are able-bodied.

This especially is true if the financing of these benefits comes at the expense of diverting productive resources of the people through taxation. For this is the real solution to poverty: getting government out of the way of the private sector and enabling it to use maximally its resources to produce jobs and wealth without government distortion of the marketplace. Eliminating disincentives for productivity while allowing people to keep more of what they earn will do much more to reduce child poverty than by throwing large sums of money at wealth transfer programs. But it appears that this fundamental truth of the human condition remained unrecognized in all the talk that took place in this forum.

Without that basic understanding, the Council is nothing more than a useless entity wasting taxpayer dollars, and it will be complicit in failing to provide opportunity for Louisiana’s children to exit poverty.

11.10.09

LA faces no-win care scenario unless it rejects favoritism

As Louisiana approaches a precipice looming above a pit of budgetary deficit, it needs to take care that it does not miss a big opportunity to prevent itself from falling off it, in the matter of long-term care for the elderly and disabled.

This year, as part of cost control measures, the state began instituting a resource allocation model to better match needs and services in its home- and community-care settings. These waiver programs permit those with physical infirmities due to age and/or disability with limited means (in the case of the disabled, financial hardship often caused because of the high costs imposed by living with that disability) to live at home or in a community setting by the state paying for direct service workers to perform certain tasks ranging from the simple to very complex. Not only does this improve the quality of life for many, it is designed to save the state money.

The alternative is to be sent to a nursing home, either private or the few state-operated centers. For many of the elderly with recurring medical problems, this can be the best and most cost efficient solution for the state, which pays a certain daily rate as opposed to the hourly rate under the waiver program. (However, it would not be the best for the most severely disabled, whose medical needs often are exceptionally tailored to individual needs and require personal attention that very few nursing homes are specifically equipped to provide, and even then at a cost several times the typical reimbursement rate.)