Subscribe to this feedFrom Cyber School to West Point
Hannah Tuffy, 20, is one of the first cyber school students to be accepted at the prestigious U.S. Military Academy at West Point. The accomplished Scranton native credits her success to the flexible program she enjoyed at cyber school, which allowed her to excel academically while creating room for college classes, work and soccer. Her dream is to study biomechanical engineering and become an Apache pilot. Watch Hannah explain how cyber school prepared her for a successful military career.
Did you know that Pennsylvania’s cyber schools account for barely 1 percent of the state’s education budget? Despite this fact, legislation is in the works right now to slash what some call "excess funding" for cyber schools. Learn more at CyberSchoolsSave.org to find out how you can help us protect cyber school funding and keep kids like Hannah learning.
Dead? Mostly Dead? What's Happening with Privatization?
Have you heard that liquor privatization is dead? Or maybe just mostly dead? Well, as one of the great philosophers of our time (Billy Crystal in The Princess Bride) once said: "There's a big difference between mostly dead and DEAD." And here in Pennsylvania, there’s a big difference between mostly dead and where liquor privatization actually stands.
The two Senate hearings have frustrated liquor privatization advocates, to be sure, but key Senate lawmakers are publicly acknowledging and supporting some of the major components of privatization that consumers demand: choice and convenience.
Senate Law & Justice Committee Chairman Chuck McIlhinney stated that his privatization plan includes, "Ten times the number [of licenses than] in the House bill, albeit probably 30,000 less than the governor wanted." And Senator Joe Scarnati, President Pro Tempore, recently wrote in an op-ed:
That is why many were encouraged when, after years of hard work and long debate on the issue, the House of Representatives recently passed HB790. While far from perfect, passage of this legislation was an important first step in advancing the cause of privatizing our state liquor system, which I also support. I will continue to work … to craft a privatization proposal which increases consumer choice and convenience for all areas of the Commonwealth, while protecting our small business owners who have invested so much in their communities.
These are encouraging statements for Pennsylvanians who want to buy their beer, bread, and Bordeaux in one place. But, while increasing choice and convenience is critical to liquor privatization, so too is ending the government’s monopoly on wholesale wine and spirits. As my colleague Elizabeth Stelle recently wrote: "The reality is a monopoly over wholesale pricing and distribution is a monopoly over all liquor sales. Wholesale privatization is essential to securing the convenience consumers want without burdening taxpayers."
Ending the government’s wholesale monopoly is critical for the true privatization that Pennsylvanians want and deserve. To better understand why, check out: Why Privatizing Liquor Wholesale Matters to You and Liquor Privatization Done Right.
Facts Contradict Claims of Liquor Monopoly Supporters
I've received some email responses critical of my recent commentary on liquor privatization. These responses, unfortunately, echo many of faulty claims served up by supporters of the government liquor monopoly.
To ensure others are not misled, here are some facts and myths about liquor sales, prices, and PLCB operations.
Myth: Prices are lower in state stores.
Reality: Prices are not lower in Pennsylvania. You can see our prices analysis here. The PLCB also performed a price comparison showing higher prices for wine in Pennsylvania. And a recent study in Addiction finds that prices in license states are consistently lower than in control states.
Myth: Shoppers are flocking to Pennsylvania to use our state liquor stores.
Reality: Quite the opposite is true. The PLCB's own analysis finds that 45 percent of residents in the Philadelphia area cross state lines to buy wine and liquor, costing Pennsylvania hundreds of millions each year in sales and tax revenue due to border bleed. Studies by the Wine and Spirits Wholesalers, Distilled Spirits Council, and Pennsylvania Food Merchants Association also show Pennsylvania a loser as residents are buying wine and spirits in other states.
Myth: State liquor stores are great, and everyone loves them.
Reality: Support for privatization is actually highest among those who regularly visit the state stores. An astonishing 77 percent of weekly shoppers support privatization.
Myth: Because of its wholesale monopoly, the PLCB is the largest buyer of liquor and can drive prices down through tough negotiations.
Reality: The PLCB is not among the largest buyers of liquor. It is a fraction of the size of the largest wholesalers in the U.S. Under wholesale privatization, the wholesaler that secures the license for a particular brand is the wholesaler of that brand for the entire state. The myth that the PLCB's wholesale monopoly gives it greater buying power to reduce prices is simply erroneous.
Students Excel with School Choice
Hannah and Alyssa will tell you that the freedom to choose a school that works for them was essential to their academic success. They are just two of the 32,000 students across the nation enrolled in cyber schools. But you don’t have to take their word for it. Now, there is new research backing the academic benefits of school choice, specifically voucher programs.
A new report from the Friedman Foundation for Educational Choice found that children and families who utilize school vouchers achieve better educational outcomes. According to "A Win-Win Solution: The Empirical Evidence on School Choice," 11 out of 12 "gold standard" studies showed that students excel with school choice vouchers, and none suffer when they chose educational options outside of the public school realm.
The report also found that 22 out of 23 studies on how school choice impacts public education showed that competition actually improved public school performance. No research concluded that school choice harms public schools.
The Friedman Foundation also reviewed empirical research related to the impact school choice has on taxpayers, diversity and civic values. Research consistently supports school choice in those areas.
Despite decades of carping by skeptics, vouchers and school choice in any form are a win-win for children—whether they attend private school or remain in a public school affected by school choice, said Robert Enlow, president and CEO of the Friedman Foundation for Educational Choice. Competition works in all segments of our society, and it certainly helps children when they’re permitted to attend a school that fits their needs.
Pennsylvanians don't have to look far to see school choice at work. Last week, kids and parents celebrated the 12th anniversary of the Educational Improvement Tax Credit program. The program has allowed hundreds of thousands of children to escape failing schools while saving taxpayers millions of dollars.
In the past two years, five new states have adopted private school choice, and other states have expanded their school choice options, including the Pennsylvania's Opportunity Scholarship Tax Credit—a lifeline for kids trapped in violent and failing schools.
Perpetual Problems Plague PLCB
As Yogi Berra once quipped, "It's déjà vu all over again." Another year and another audit of the PLCB released by the Auditor General’s Office found mismanagement at the state agency. The report noted the agency is plagued by "internal control weakness over financial reporting for capital assets." (Still awake?)
In other words, the PLCB lacks any policy to label and keep track of its inventory properly. Why is this a big deal? The audit found out of a random sample of ten items, six were no longer in use, or could not be identified by PLCB employees. The price tag for these six items: $1.047 million.
The problems don’t end there. Kari Andren has more:
The audit found that the agency's internal controls over its Information Business Management System, which tracks store and warehouse inventory, agency assets and other financial details, are deficient.
• An "excessive number of users," including contractors, can add, change or delete user IDs and data. And a group of users can log in and make changes in the system under the same user ID, rather than individual IDs. The LCB does not have a policy or procedure in place to monitor the use of those functions.
• Credit card users who made purchases in state stores between Nov. 23 and Nov. 28, 2011, were charged twice because the computer monitoring did not detect a problem with the transactions. Cash-paying customers were not affected, and the LCB removed the duplicate credit card charges in March 2012.
This type of mismanagement is nothing new for the PLCB, yet opponents of liquor privatization are pulling out all the stops to prevent change.
Pennsylvanians deserve better than a wasteful, outdated government monopoly on wine and spirit sales. They deserve more choice and convenience at lower prices, which is why it's way past time to get government out of the booze business.
Anti-Privatization Study Dismantled
A study frequently cited by liquor privatization opponents is soundly debunked in an article by Trevor Butterworth, a statistics guru at Forbes.com. Butterworth dismantles the methodology of the Center for Disease Control’s (CDC) Task Force study that claims privatization would increase alcohol consumption (though admitting no connection with alcohol-related harms). Mr. Butterworth’s critique concludes with a few choice words:
[…] whatever way you parse the recommendations of the Task Force, and their adoption by the CDC, such reasoning is about as robust as Styrofoam. This is an astonishing abuse of data in the service of trying to sway legislation – and one which points to an agency being driven by politics and ideology, and not by science.
Why such an emphatic condemnation? The Task Force study relies on something called Single Distribution Theory to reach its anti-privatization conclusion. This theory contends that changes in the mean alcohol consumption level result in corresponding changes in consumption levels for all alcohol drinkers. So, if liquor stores are privatized and alcohol consumption increases, Single Distribution Theory suggests that those who use alcohol irresponsibly will also be drinking more, resulting in more DUIs and other social ills.
The problem is, Single Distribution Theory has been essentially debunked for more than a decade for a variety of reasons explained by Mr. Butterworth. To put it simply, some people wouldn’t accept a drink for free, while others, like many Pennsylvanians, are willing to skirt the law and drive across state lines to get the products they want. These bootleggers will not necessarily be drinking more under privatization; they will just be keeping their tax dollars in Pennsylvania and employing workers in our own state.
He also points to another major flaw in the research. The Task Force found a 44 percent increase in median alcohol consumption in states after privatization. But this is mostly the result of the dramatic rise in wine consumption across the U.S. over the past few decades—an increase which also occurred in states that did not privatize alcohol.
Butterworth aptly calls the study, "an astonishing abuse of data in the service of trying to sway legislation,"—very convenient for vested interests currently seeking to keep Pennsylvania stuck in the 1930s, but very inconvenient for the rest of us.
Pension Crisis Facts: Are Pension Obligation Bonds Risk Free?
This is the third in a series of blog posts debunking the myths surrounding Pennsylvania’s pension crisis.
Pennsylvania's two main government worker pension systems, the Public School Employee Retirement System (PSERS) and the State Employee Retirement System (SERS), are dramatically underfunded. Together these funds owe more than $47 billion in unfunded liabilities, which works out to around $8,400 per Pennsylvania household
Myth: Pension obligation bonds are a risk-free investment to finance pension plans.
Fact: Issuing a pension obligation bond is like taking out a second mortgage on your house, investing the money in the stock market and hoping for a great investment return. It’s a risky bet that requires investment returns to consistently exceed interest payments on bonds.
Moody's Investor Service has warned state and local governments on such borrowing to finance underfunded pension systems. Their report stated:
"[P]ension bonds are often a red flag associated with greater rigidity of long term obligations, failure to find sustainable solutions to pension funding and a pattern of pushing costs off into the future.”
Under Mayor Ed Rendell in 1999, Philadelphia issued $1.29 billion in pension bonds to balance the city’s budget. But officials continued to underfund the city’s pensions, leaving Philadelphia in the same predicament as before the bonds were issued, only now with more than $1 billion in additional debt.
So what does genuine pension reform look like? To find out, see our myths and facts on the pension crisis.
Privatization Great for Washington State
A year ago this June, the government liquor monopoly ended in Washington state. Critics of Pennsylvania’s plan to privatize state wine and spirits stores have pointed to Washington as an example of the negative consequences of privatization, yet Washington has seen liquor tax revenue increase by 12 percent and liquor sales increase by $23 million compared to last year.
Many of Washington's lawmakers, including Senate President Pro Tempore Tim Sheldon (D), have praised the state’s privatization efforts. Sen. Sheldon states:
Liquor privatization was a good idea when the voters approved it, and it's a good idea now. Washington state's implementation of privatization is still, however, a work in progress. While we no longer have state liquor stores, the state is still highly involved in regulating the industry, especially in areas like wholesale distribution. The dust is still settling during this transition, but I remain convinced that what will ultimately emerge is a system that will be fairer to consumers and to private business. Liquor privatization continues to be one of the most visible reforms that our state has done in years.
Today, almost two months since the House passed HB 790, the Senate Committee on Law and Justice holds its second hearing to discuss liquor privatization. In weighing whether to end Pennsylvania's 80-year old government monopoly, lawmakers shouldn't just listen to folks saying "we've always done it this way", but also examine the successes in the 48 states that allow some degree of private sellers of wine and liquor.
Cyber Schools Save Kids from Bullying
Stephen Frank was a cheerful young student with an enthusiasm for learning and an interest in football. Not long into his first year of middle school at his traditional public school, however, there was a change in his attitude. He became humorless, lethargic, and withdrawn.
After losing 40 pounds to an eating disorder, the problem became clear: bullying.
Stephen's mother, Monica, contacted the school's vice principal and guidance counselor but found no one willing or able to help protect her son. As Stephen's condition became more desperate, Monica decided to look beyond the traditional school setting to find a solution.
Luckily, Monica is a cyber school teacher and was confident in the academic rigor and supportive environment offered by these public schools. Stephen has now been attending 21st Century Cyber School for a year and the difference is stark. He is happy, full of life, and is on the distinguished honor roll every quarter. Most of all, he is safe.
Today is the seventh annual Day on the Hill for public charter and cyber charter schools sponsored by our friends at pacyberfamilies.org and pacharters.org. It's when families like the Franks—who now number in the thousands across Pennsylvania—come to Harrisburg to show how cyber schools have saved them.
In the end, Monica learned that parents have choices, even if traditional schools don't offer them. You can read the Franks' full story here. And if you couldn't make it to the state capitol today, visit CyberSchoolsSave.org. Sign up, send a letter to your legislators in support of cyber schools, and help maintain a safe alternative to traditional schools for kids like Stephen.
Reckless Scheme or Reckless Ad?
The United Food and Commercial Workers Union (UFCW) is spending a million in order to save a million—every year!
The UFCW announced a $1 million statewide television ad buy attacking "reckless" liquor privatization proposals. But the real "reckless scheme" is the union’s shameful attempt to mislead the public to protect its own political and financial largess. The Commonwealth Foundation estimates that UFCW 1776 receives approximately $1.2 million annually in forced union dues collected from roughly 2,100 members employed in the state-run liquor stores.[1]
Let’s look at some of the false claims in their reckless ad:
- Claim: Liquor privatization will increase taxes.
Fact: There are no new taxes in the privatization legislation. Tax revenue is expected to increase after privatization because of increased sales. Pennsylvania currently loses hundreds of millions of dollars each year due to residents purchasing their wine and spirits in other states.
- Claim: Liquor privatization will cost 5,000 jobs and destroy small businesses.
Fact: Ending the government monopoly on wine and spirits sales will mean additional investments in Pennsylvania, creating thousands of new jobs. Right now, the best paying job a government wine salesman in Pennsylvania can hope for is a union president’s six-figure salary. Under a private system, a wine clerk could own his own store. That’s the American dream.
- Claim: Privatization will put alcohol on every street corner.
Fact: The current legislation only allows for 1,200 additional licenses. That amount doesn’t put Pennsylvania anywhere near the national average of stores based on population. In fact, the PLCB has already granted more than 25,000 alcohol licenses and permits to restaurants, taverns, and beer distributors. It is reckless to suggest this proposal to bring Pennsylvania into the 21st century spells doom for the state.
Misleading advertising is not the only tactic the UFCW has used to try to stop liquor privatization. In March, union president Wendell Young IV tried to shout down a Capitol press conference and harassed numerous speakers (click here for video). UFCW leaders have even accused "privateers" of rigging a non-scientific Post-Gazette online poll to show public support for privatization—even though scientific polls consistently show voters support liquor store privatization.
Pennsylvanians know the truth: Maintaining a Prohibition-era government monopoly known for corruption, incompetence, and waste is the real reckless scheme. For more information on liquor privatization, visit BoozeFacts.com.
[1] Average annual UFCW 1776 dues are $564.72. For the 2,086 UFCW members working in PLCB stores, those dues would equal $1,178,006 per year.
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Who are We?
The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.
PolicyBlog
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McIlhinney Renews Hope for Liquor Privatization!
Common Core Questions, School Choice Answers
Fact Check: Liquor Liberty in Washington
Union Poured Member Dues into Defeating Liquor Privatization