Healthy PA Approved, but Still Room to Improve

AUGUST 29, 2014  | by ELIZABETH STELLE

On Thursday, the Center for Medicare and Medicaid Services (CMS) announced approval of the Healthy PA waiver, including a new private coverage option. But the approved waiver severely limited the flexibility Governor Corbett sought. While the state was able to achieve rewards for work, rewards for healthy behaviors and some cost sharing, the federal government refused to allow fundamental changes that could truly improve access to quality care. Some of the key reforms granted are:

  • Work requirements: The Governor fought tooth and nail to tie taxpayer-funded health care to work. In the end, enrollees can receive premium discounts for participating in work search activities.
  • Healthy behaviors: Enrollees can also reduce their premiums by attending yearly checkups and other healthy behaviors.
  • Cost sharing: It’s important for enrollees to contribute to their health care costs. The waiver charges enrollees monthly premiums based on income and family size.
    • However, there are few consequences for not paying. There is no waiting period if one fails to pay. If an enrollee misses three months of payments, they will be disenrolled. While that is a deterrent, it may not be enough to keep individuals from not paying when they are healthy and then begin payments again when they become sick and need medical care.
    • Providers can refuse service to enrollees above the poverty line who do not make co-pays.

These are good reforms. However, they do not justify the expansion of a system that's still fundamentally broken.

There are much better ways to help low-income adults than placing them in a system that competes with our neediest citizens for limited taxpayer funding. The Governor can pursue state-based ways to improve low-income adults’ access quality and affordable care.

  • State lawmakers can ease waiting times and improve the quality of care by encouraging more physicians to locate in Pennsylvania through House Bill 1760—which gives doctors liability protection if they volunteer to help the neediest among us at free clinics.
  • State lawmakers can allow doctors licensed in other states to participate in temporary free clinics by organizations like Remote Area Medical (RAM), a volunteer corps that provides free quality health care. Currently, it is illegal for RAM to bring medical volunteers to Pennsylvania.
  • Finally, Senate Bill 1063 would allow nurse practitioners to run their own practices, as they currently can in 17 other states, improving patient accessibility.

Pennsylvanians deserve real Medicaid reform that encourages work and provides patients with robust health care choices, no matter their income.


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Lies from PSEA Leadership

AUGUST 29, 2014  | by JAMES PAUL

Repeating the same lie over and over does not make it magically come true. Yet this hasn’t stopped the Pennsylvania State Education Association (PSEA) leadership from an endless campaign of deception regarding education funding in the commonwealth.

A recent release from the PSEA claims that state funding cuts are causing disproportionately poor test scores for low-income students.

Unfortunately for the “research division” of the PSEA, the truth is state education spending has increased since 2010-2011 and is currently at a record high. What’s more, there is considerable evidence that increased spending has no relationship with improved academic performance.

When calculating education spending, the PSEA refuses to acknowledge rising pension costs, which are an enormous cost driver for districts across the state. You can’t have an honest discussion about education policy without talking about pension reform—unless you’ve buried your head in the sand. In fact, every governor since Milton Shapp in the early 1970s has included pension costs as funding for public schools. 

Growing pension costs are directly responsible for layoffs and program cuts. By standing in the way of responsible pension reform, the PSEA holds much of the blame for the current pension crisis.

Since 2009, the state has seen a $1.9 billion increase in Public School Employees Retirement System (PSERS) payments. To put that increase in perspective: $1.9 billion is equivalent to the salary of 33,400 public school teachers.  

The PSEA claims that Pennsylvania should “just let Act 120 work”—referring to legislation passed in 2010 that slightly reduced benefits for new employees and relied on unrealistic projections of future investment returns. But letting Act 120 "work" will result in pension costs continuing to skyrocket in coming years. School districts will thus have less money to spend in the classroom, and property taxes will sharply increase to keep pace with pensions.

Of course, higher property taxes are a desirable outcome for PSEA leaders. “Let Act 120 work” essentially means “let higher property taxes fund our retirement.” Between 2012-13 and 2016-17, the average Pennsylvania household will pay nearly $900 in new taxes as a result of pension obligations.

The PSEA doubles down on faulty arguments by pointing the finger at imaginary spending cuts for low scores on the Pennsylvania System of School Assessment (PSSA). A study conducted by The 21st Century Partnership for STEM Education, however, found “either no or very weak association between levels of education expenditures and student achievement.”

This is just another piece of the growing evidence that throwing more money at struggling schools will not improve student performance, but it will hurt property owners—particularly seniors on fixed incomes.

The PSEA is entitled to its own opinions, but not its own facts. Government union bosses should stop deliberately confusing Pennsylvanians with false and misleading claims.  


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Audio: 73% of PA Voters Underestimate School Spending

AUGUST 26, 2014  | by JOHN BOUDER

Yesterday, we released a new poll showing just how confused voters are about state education spending levels and the results that money is buying.

When 54% of voters say they would not be personally willing to pay higher taxes to increase education funding, other solutions like pension reform and school choice must be considered.

To discuss the poll details and what can be done to improve our public education system—without raising taxes—CF's Matt Brouillette joined WSBA's The Gary Sutton Show.

Listen to a portion of the conversation:

The Gary Sutton Show airs daily on WSBA 910AM in the York area.

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Union Lobbying Holds Back Lottery Performance

AUGUST 26, 2014  | by ELIZABETH STELLE

Illinois’s decision to terminate its lottery private management agreement with Northstar is being misinterpreted as proof that Pennsylvania dodged a bullet by failing to approve a private lottery management agreement. The truth is, Pennsylvania’s contract better protected taxpayers and those served by lottery programs.

Pennsylvania’s negotiated contract required Camelot, the management company, to pay penalties if they did not meet guaranteed revenues. In fact, Camelot placed $200 million in a reserve fund to cover shortfalls.

Illinois's experiment was not without benefits. Even though Northstar did not meet yearly revenue goals, the state's taxpayers are still better off. Illinois' lottery grew faster under private management, an estimated 12 percent per year compared to 3 percent a year prior to their contract.

In contrast, Pennsylvania's Lottery sales have increased by only 5.8 percent per year, and net revenue has grown by only 4.2 percent per year over the past 3 years. In other words, Illinois' "failure" has resulted in sales growth twice as high as Pennsylvania's "succesful" lottery program.

At the same time, Indiana's lottery private management arrangement is succeeding. Contractor GTECH missed this years revenue goal by $1.6 million, but under the 15-year contract it must pay the difference to the state. That’s a win for taxpayers and those served by lottery programs.

Overall, GTECH's management of the lottery brought in total revenue of more than $1 billion in fiscal year 2014, up 9 percent from the previous record two years ago. GTECH's work will allow the lottery to provide nearly $250.7 million in surplus revenue to the state for the 12-month period that ended in June.

In the end, the greatest advantage of these partnerships is accountability. Illinois terminated its agreement with Northstar because the company did not meet its performance goals.

But as noted, Illinois and Indiana's private lottery manager outperformed Pennsylvania! Unfortunately, thanks to an intense lobbying effort from the American Federation of State, County and Municipal Employees (AFSCME), funded by union dues, Pennsylvania taxpayers and senior citizens won't be able to enjoy the benefits of improved management.  


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Podcast: Profiles in Perseverance, Overcoming Poverty

AUGUST 25, 2014  | by ELIZABETH STELLE

Bobbi was struggling. A single mom of two kids, she had a job but no place to live. Thanks to Opportunity House in Reading, Pennsylvania, Bobbi found a home and eventually advanced her career by becoming an operations manager for the non-profit organization.

Tracy was homeless when she first came to Opportunity House’s shelter. Today, Tracy works three jobs to support her children, and she’s a school crossing guard. Her kids are finishing high school and are on track to attend college.

What do these success stories have in common? Both show that moving out of poverty takes a lot of support.

We spoke to Opportunity House’s president, Modesto Fiume, to find out how they are overcoming poverty in Reading, one of the nation's poorest cities. Modesto explains, “It takes a lot of commitment. It takes a lot of hard work. It’s not something that happens overnight—there’s no quick fix here.”

Lifting families out of poverty isn’t only on Modesto’s mind. Key players at all levels of government are trying to get a handle on poverty.

In Washington, D.C., Congressman Paul Ryan released a book and policy paper focused on reforming welfare. His Opportunity Grant combines eleven different programs into one funding stream for states. Most critically, benefits are tied to work requirements, because Ryan and others recognize that work is about more than just a paycheck. Work provides purpose and builds self-worth.

In Harrisburg, the House Majority Policy Committee, led by Rep. Dave Reed, is spearheading the Gateways out of Poverty initiative. The committee spoke with the poor and community organizations to indentify common barriers and areas where public policy can make a positive impact.  

Among those focus areas is Benefits That Work, where lawmakers are working to address the disjointed system of benefits that punishes families for working more hours or receiving a promotion.

Modesto explains one barrier called the welfare cliff: “A family at min wage can get the full subsidy. If it’s a single mom with two kids they may have to pay $5 a week per kid. But if they get up to $9 an hour, they may now want $50 per week per child. I’m just giving you examples of how it doesn’t reward people for advancing throughout their lives.

"You can’t be a little dependent; you have to be totally dependent or independent.

In fact, Opportunity House had to turn down a government grant because it discouraged work.

“We were looking to apply for a grant, a homeless prevention grant . . . In the past, we asked the client to pay 50 percent, so if they owed $500 we could pay $250 and they could come up with the other $250 to cover their rent and utilities. We had to turn it down . . . they want us, the agency, to come up with the other 50 percent.

"We’re being asked to cover other people’s bills as opposed to empowering the client to pay half their bill. So ultimately people in the community who are struggling to stay in their homes are going to, in many cases, end up losing their homes because the state has this inflexible rule.”  

Hear more of Modesto’s solutions to poverty and Opportunity House’s success stories by listening to the entire podcast.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

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Landowners Will Bear Burden of Severance Tax

AUGUST 21, 2014  | by ELIZABETH STELLE

Randy Walker’s Armstrong County farm has been in the family for three generations. On 72 acres they grow hay, corn, oats, and care for cattle. A few years ago, Randy leased his land to local energy firm EQT, which built three Marcellus Shale wells on his property. Randy receives damage payments for the acres that aren’t usable during drilling. "The payments aren’t much" he says, "but if I said no, no one would get the benefits."

The drilling site includes two lined ponds, one with fresh water and one with flowback water. "The water has to be at least two feet below the liner’s edge," Randy explains, "and the fence around the pits go eight inches into the ground. When all the wells are drilled they’ll take out the water, and put the dirt back...the well pad will cover less than two acres."

Randy has a good relationship with EQT. "They’ve been so easy to work with. They explained everything to me so I knew what was coming. They’ve been extremely honest...they took care of small problems quickly."

For example, the company couldn’t build a road to move in their equipment due to an existing pipeline that no one would claim. In the meantime, EQT asked permission to use a small farm road. Randy recalls the road being completely destroyed, "It was a quagmire of disaster." Eventually EQT rebuilt the road—a road they would never again use. In fact, Randy later asked EQT to add more gravel, and the same day they were out adding rock.

EQT also took care to protect the environment. "They did all kinds of water testing before and after drilling. I have cattle that drink from a spring just down the hill from the well pad, and we’ve had no problems."

Soon the crews will return and begin a fourth well.

Randy is grateful for the extra income. He notes there are fewer financial pressures, "Life is a lot easier now for my wife and me." Thanks to a leasing bonus and royalty payments, he was able to paint his barn and purchase a higher quality tractor. "There are over 600 acres in my pool. That’s a lot of people benefiting from drilling."

Drilling in rural Pennsylvania isn’t just benefiting landowners. Randy notes his amazement when he visited the drilling pad and saw his brother-in-law from Texas. "He just happened to be assigned to my drilling pad," he chuckles.

It’s not just out-of-staters who are finding work. Randy says he’s always running into locals working on his pad, from mechanics to construction workers. And he’s quick to point out that even the experts from Texas and Louisiana contribute to the local economy. During the construction of his well pad, workers booked rooms at a nearby hotel in Kittanning.

If a severance tax is enacted in Pennsylvania, Randy knows he’ll be the one paying the bill. "My royalties are based on my share of what the wells produce," he explains. "A tax at the wellhead taxes my share and the company’s share, but the companies will just pass that on."

In other words, it’s the landowners and consumers of natural gas heat or electricity that will bear the brunt of the tax. It’s a good reminder that people ultimately pay the taxes levied on corporations. 

Randy concludes, "We could run our state economy on this boom if the government would let us. But with more taxes...I just don’t know how many wells won’t be drilled and jobs won’t happen."


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Pension Costs Forcing Teacher Layoffs

AUGUST 20, 2014  | by JAMES PAUL

We've debunked on this blog the "billion dollar education cut" myth time and time again.

Yet another common refrain—even among those who admit state spending has increased, which it certainly has—is that new expenditures are not "showing up in the classroom." In other words, school districts are hamstrung by pension costs and have to make cuts in other areas.

This point does indeed carry water. 

Take a look at how Public School Employees' Retirement System (PSERS) contributions have skyrocketed over the last five years in Philadelphia and Pittsburgh, the state's two largest districts. We can also project the coming costs for 2013-14 and 2014-15 using the mandated contribution rates for those respective years.

In Pittsburgh, pension payments rose from $11 million in 2008-09 to $26 million in 2012-13, and an estimated $45 million in 2014-15. In Philadelphia, payments rose from $42 million to more than $101 million, and will reach $175 million this coming school year.

Phila SD PSERS

Pitt SD PSERS

The statewide retirement contribution trend tells the same story. From 2008-09 to 2012-13—a span of just five years—statewide PSERS costs nearly tripled. Estimated payments for this year are about 5 times what they were in 2008-09.

With contribution rates continuing to rise, the fiscal outlook only grows more ominous in the years ahead. 

PA Statewide PSERS

To put this in perspective, consider how these costs compare to teachers' salaries. Pension costs from all public schools will have risen by approximately $1.9 billion from 2008-09 to 2014-15. Given that the average teacher salary is $63,500, that increase in pension payments equals the salary of 30,400 public school teachers.

The bottom line is that Pennsylvania faces a genuine pension crisis. School districts are simply running out of options. Even increased education revenue will not be able to offset the growing retirement costs. 

Responsible pension reform is the best way to ensure that future education funding truly finds its way into the classroom. 


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Audio: 81% in PA Support Employee Freedom

AUGUST 19, 2014  | by JOHN BOUDER

Should workers be penalized for leaving a union? 81 percent of Pennsylvanians say "no."

So why hasn't a policy change happened to free workers from having to pay a private organization they disagree with just to keep their jobs?

CF President Matt Brouillette joined The David Madeira Show to discuss this important issue.

Listen to and share a portion of the show:

The David Madeira Show airs daily and can be streamed live at www.thedavidmadeirashow.com

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Podcast: Teachers Opt Out of Union Membership

AUGUST 19, 2014  | by JOHN BOUDER

As part of National Employee Freedom Week, we sat down with two western Pennsylvania teachers who successfully left their teachers’ unions last year. John Cress is a middle school math and special education teacher and Rob Brough is a 20-year history and reading teacher. Both were motivated to opt out after seeing the political nature of their unions’ activities.

Why is an annual educational campaign designed to inform teachers of their right to opt out of full union membership even necessary? Teachers’ unions don’t make such information widely available. Indeed, both Rob and John thought they had to join the union as full members in order to get their first teaching jobs.

Rob Brough for BlogBrough says, “The bottom line is: No. I can say with absolute certainty that none of those options were given to me . . . If a person doesn’t know that their rights even exist, how can they exercise those rights freely?”

Cress agrees, saying, “There should be full disclosure on where the dues are going and the educator should be permitted to make the decision by him or herself as to whether or not to continue to contribute to those causes.”John Cress for Blog

After years of union membership, Brough determined that the teachers’ unions weren’t designed to help improve his effectiveness in the classroom: “I was learning nothing about becoming a better public servant. I was, however, learning about politics. I was learning about organizations that were designed to increase the union’s effectiveness.”

Cress disagreed with his unions’ political stances but was powerless to change them: “It was very frustrating every time one of those [political] emails came because I was thinking, ‘Why do I have to be part of this organization? Why do I have to support these causes just to be a teacher? I should have free will. I should be able to have an open mind, but I was under the impression that I couldn’t.”

Listen to the full conversation:

Know a teacher who might benefit from knowing their rights? Send them to www.FreeToTeach.org for more information.

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School Reserves Offer Pension Reform Opportunity

AUGUST 18, 2014  | by NATHAN BENEFIELD

Pension Reform

Despite the rhetoric of "billions of dollars" in cuts from education, school districts across Pennsylvania have been able to increase their reserve funds. School districts had a combined reserve fund balance of nearly $4 billion as of July 2013, a $445 million increase from the prior year.

Jan Murphy of the Patriot-News reports that several districts have fund balances equaling almost a third of their annual budgets. One district—Valley Grove School District—even has a fund reserve of more than 99 percent of its total budget.

As part of the story, the Patriot-News created a database for readers to look up school districts' annual budget and reserve fund balances.

PA School District Fund Balances 2014

One school superintendent suggested that school fund balances be considered as a factor in state funding—that is, school districts with excessive reserve funds would receive fewer state dollars.

At the Commonwealth Foundation, we've pointed to the growth in school funding reserves, but also outlined a commonsense way to put those funds to use immediately.

Many school districts have built up funding reserves in anticipation of the coming pension crisis—and yes, there is a crisis, and it is getting worse for school districts. Putting money aside for future pension costs makes a lot of sense.

But it would be better to pay off pension obligations now and earn investment income on those fund reserves. If a school district turned their reserves over to the pension system now, however, it would simply be pooled with other funds, and that district would still have to pay the same contribution rate as other districts next year.

To help alleviate our looming pension crisis, lawmakers should look to change state law to allow districts to use reserves to prepay their pension obligations and receive a credit for doing so. 


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