Corrections Reform Proves a Win-Win


Unprecedented reductions in the prison population, $69.9 million in taxpayer savings, and lower recidivism rates all indicate that the 2012 corrections reforms are working.

Earlier this month Don Gilliland over at the Tribune Review chronicled some of the big accomplishments of the two-year-old initiative to get smart on crime:

The drop in prison population in 2014 'was the largest one-year drop in our population since 1971, and only the fourth time in the past 40 years that our population has shown an annual decrease, rather than an increase,' said Bret Bucklen, Corrections' director of planning, research and statistics.

The state ended the calendar year with 50,756 inmates. Four years ago, the prison population was expected to top more than 56,000 inmates by the end of 2014.

My colleague Nate Benefield points out that fewer prisoners means no new guards to hire, no new prisons to build and no need to pay other states to board our prisoners (which we did in 2009). All of those developments mean big savings for taxpayers.

The drop in inmates avoided approximately $69.9 million in costs in 2014 alone, and a total of $222 million during Corbett's four-year tenure, according to estimates from the department.

Overall, the corrections budget for 2015-16 is still set to increase, thanks to rising pension costs for corrections officers, but the overall fiscal situation is much more manageable today thanks to the actions taken two years ago.

And the final bit of good news? Governor Wolf's decision to retain Secretary of Corrections John Wetzel indicates the reforms will continue improve both the quality and cost-efficiency of our prison system.

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Five Ways Dollars Are Kept Out of Philadelphia Classrooms


The school district of Philadelphia saw a $1 billion increase in revenue over the past decade, even as enrollment declined. Yet many claim there isn't enough funding for basic classrooms supplies. The question is: Where is the money going if not into the classroom?

1. Union Leader Salaries

The PFT forces teachers to pay more than $700 for the average teacher each year in dues (or more than $500 in fair share fees to keep their jobs). Teachers never see that money as it is deducted from their paycheck just like taxes. 

At the same time, president of the American Federation of Teachers (AFT), Randi Weingarten, makes an astounding $550,000 a year off of teachers' dues. In fact, AFT has more than 200 staffers making more than $100,000 in compensation, according to the Center for Union Facts

Without such high dues, teachers could keep more of their salary and higher take home pay would help attract high quality teachers.

2. Political Spending

Philadelphia teacher union dues are being spent on political ads at the rate of $70,000 per minute. PFT ran two 30-second TV ads during an Eagles football game attacking Governor Corbett and select lawmakers. The cost of those two ads alone were $35,000 each, according to records filed with the FCC.

Nationally, the AFT spent more money on elections this year than ever before, including a gift of $500,000 from teachers’ union dues to fund attack ads via a “SuperPAC.” This money could buy countless classroom supplies the union claims Philadelphia schools lack. The teacher’s union’s actions indicate leadership is more concerned with playing politics than providing resources to struggling teachers and students.

3. Administrative Costs

The School District of Philadelphia has among the highest administrative costs in the state. In 2012-13, Philadelphia had a higher administrator to student ratio than the average Pennsylvania school district. In addition, the average administrator salary is $129,573, which ranks in the top 25 most generous school districts in Pennsylvania. These high overhead costs focus resources on adults instead of kids.

4. Health Care Costs

This past fall, for the first time, Philadelphia teachers were asked to contribute a portion of their salary towards health care premiums, a request made of teachers in every other Pennsylvania school district save one. With this change, approximately $54 million could go directly to classrooms if teachers begin to contribute just a percentage of their own health care costs. The School Reform Commission proposed teachers pay between 5 and 13 percent of their health care costs. That is about half of the 23 percent the average Pennsylvanian pays towards employer sponsored family coverage.

Former Governor Rendell, Philadelphia Mayor Nutter, and the Philadelphia Inquirer editorial board all agree with the necessity for reasonable concessions—but the PFT refuses to compromise. Without these savings, more teacher layoffs will be necessary.

5. PFT Health and Welfare Fund

Apart from health insurance, the school district contributes to the PFT Health and Welfare Fund. This entity, controlled by the PFT, provides supplemental benefits, such as dental and vision, along with a wide variety of other programs, such as term life insurance and an annual educational conference.

By simply ending the PFT’s monopoly control over these benefits, and selecting a high-quality benefit provider in the marketplace, the school district would save an estimated $22.4 million. Teachers will still receive these benefits with the savings would being directed back into the classroom for the benefit of students.

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Audio: School Choice Offers New Direction to Academic Excellence


Pennsylvania’s students deserve the best education opportunities available, and the recent academic performance of York City School District—the second lowest district in the state—makes clear that we can do better than the status quo. School choice is a growing and increasingly popular solution for poorly performing schools districts like York City.

Being able to provide these students with the best educational service is crucial for the future of Pennsylvania, so why leave students trapped in underperforming school districts?

James Paul, a CF senior policy analyst, recently spoke with WURD radio 900AM host Stephanie Renée about how expanding school choice offers parents and students a new direction to academic excellence.

There is already evidence of charter schools being able to outperform and be more efficient than their school district counterparts. Adding alternate educational providers, such as charter schools, provides needed choice for families who want the best for their children.

Listen below to hear James explain how we can improve the academic performance, as well as the financial situation, in school districts throughout Pennsylvania.

The Mid-Morning MOJO with Stephanie Renée airs Mondays through Thursdays on 900AM-WURD. 

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

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How to Help the Poor Leave Poverty Behind

JANUARY 19, 2015  | by BOB DICK

Making "the rich" pay higher taxes will miraculously help the poor. This antiquated idea is the conclusion of a recent paper released by the Institute on Taxation and Economic Policy (ITEP).

According to ITEP, the poor pay a higher effective tax rate than any other income group. Without a doubt, this is unfair.

But is it true? The Tax Foundation has an excellent analysis questioning the validity of ITEP's findings. The Tax Foundation finds that ITEP’s report does not offer the full picture of each income group’s tax burden.

But let's put aside the problems with the report and assume the poor really do pay the highest effective tax rate. What is the fairest solution to this problem? It’s certainly not higher taxes on the wealthy.

Although the report pays lip service to the idea of a fairer tax system, their solution—a progressive tax system—would lead to more inequality, proving detrimental to the poor.

The "Big Government Party"—led by government union leaders—wants you believe that higher taxes on the wealthy is fair. Yet raising tax rates on the wealthy would require the government to treat individuals unequally based on their income. There's nothing fair or equitable about this.

Tax policy, to the extent possible, should ensure all income groups are treated equally. Pennsylvania's flat tax is a model to follow in this regard.

Not only is a progressive tax system unfair, but it is not a good way to lift the poor out of poverty.

A better alternative would be to lower the tax burden on all income earners and shrink government's involvement in the economy. These steps would increase economic freedom, which has proved to be the greatest tool for economic prosperity and poverty reduction in human history.

Economic Freedom 2014

As the chart above shows, countries with more economic freedom—think lower taxes and less government spending— have a higher GDP per capita and lower levels of poverty intensity. Here's how the Heritage Foundation describes poverty intensity:

Poverty intensity, as measured by the United Nations Development Programme (UNDP) Multidimensional Poverty Index that assesses the nature and intensity of deprivation at the individual level in education, health, and standard of living, is much lower on average in countries with higher levels of economic freedom.

If the goal of political activity is to improve the lives of everyone, including the poor, then limiting the size and scope of government is imperative.

We will have a freer, fairer, and more prosperous society as a result.

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Are Charter Schools Too Popular?

JANUARY 16, 2015  | by JAMES PAUL

Charter schools

Of the 40 applications for new charter schools in Philadelphia, surely a few should not be approved by the School Reform Commission (SRC). Each individual applicant has its own strengths, weaknesses, and visions for expanding educational opportunity. It seems reasonable that some schools receive a green-light while others are turned away.

According to a report from Public Citizens for Children and Youth (PCCY), however, all 40 charter applicants should be flatly rejected. Why? Because they will be too popular and attract too many students.

The charter slots requested could grow total charter enrollment to 104,642 students or approximately 51 percent of the District’s total enrollment. Nationally, Philadelphia ranks 3rd highest for percentage of students who are enrolled in charter schools, trailing only New Orleans and Detroit.

Clearly there is a reason why so many students are fleeing the traditional schooling model in Philadelphia. Yet defenders of the education status-quo want to force these families to remain trapped in an unsatisfactory system.

PCCY also bemoans that only 40 percent of the schools currently operated by applicants for new charters exceeded a score 70 on the 2013 Department of Education State Performance Profile (SPP). The report fails to mention that the 2013 average district SPP score was 57.5. This means that roughly 70 percent of the schools currently operated by new charter applicants exceed the district’s average SPP score.

The SRC is tasked with selecting the best applicants in a city desperate for more choice and better options. Rather than following PCCY's lead and stubbornly lumping all charter schools into the same group, each applicant should be evaluated on its own merit. 

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Audio: Mary's Law Ends Unfair Political Privilege


Government unions have the luxury of using taxpayers’ resources—which should never be used for politics—to collect their political dues money and direct campaign contributions. Simultaneously, these unions have been wrongly representing their own union members’ opinions by declaring that some, like Mary Trometter, support political candidates that they do not.

CF’s Bob Dick explains how Mary’s Law, named after Mary Trometter and also known as paycheck protection, would put an end to this unfairness.

Bob points out that it’s morally wrong for anyone to “be forced to subsidize political policy they disagree with.”

Mary’s Law would force union leaders to come face-to-face with the employees they represent, allowing members to ask why their union is spending their dues on candidates they might not support.

Listen below to hear Bob on WSBA 910's The Gary Sutton Show as he explains why Pennsylvania needs  Mary’s Law now.

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

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Union-Backed Political Group Not Accountable

JANUARY 14, 2015  | by BOB DICK

Here's your daily dose of irony: Pennsylvanians for Accountability, a union-backed political nonprofit, may have to pay a $50,000 fine for its lack of accountability. According to The Center for Public Integrity, the group failed to file a mandatory tax return critical to providing a look at its internal operations.

Back in 2013, we first pointed out that the group—which has run attack ads and mailers targeting Tom Corbett and House Republicans—received large contributions from government unions (using union dues) to fund their political ads. Well, here’s more evidence confirming what we already know:

As a social welfare nonprofit, Pennsylvanians for Accountability isn’t required to reveal the identities of its funders. Therefore, it wasn’t known during its advertising barrage who was bankrolling the group — or even who was leading it.

But Department of Labor records and tax documents reviewed by the Center for Public Integrity show three unions combined to give Pennsylvanians for Accountability $1.11 million — 90 percent of the money it raised between Sept. 1, 2012, and Aug. 31, 2013, the tax year covered by the return.

The largest donors to the group were the National Education Association (NEA), followed by the Service Employees International Union (SEIU) in Pennsylvania, and the SEIU national chapter. The group also received funding from another union-backed organization, America Votes, which itself received $334,500 from the NEA in 2013-2014.

Not only was the group funded by government unions, but it was staffed by union activists:

In state business filings, Pennsylvanians for Accountability lists three union-connected activists — Linda Cook, Kevin Kantz and Georgeanne Koehler— as the people who incorporated the group. The same three union activists, who are all Pennsylvania residents, are listed in the group’s new tax filing as its only officers.

Both Cook and Kantz have worked for the Pennsylvania State Education Association, where, tax records show, they both served as directors as recently as 2012. Koehler also has ties to organized labor: she's an SEIU member and healthcare activist.

When a reporter with attempted to uncover more information about the left-leaning group, he had no such luck. In fact, when he interviewed one of the union activists associated with the group, she said "I'm not sure who started it or why it was started, other than they want to fight for a better life for our citizens" and "I don't know who’s in charge."

Public employees who believe their union dues should not be given to political organizations like Pennsylvanians for Accountability should support Mary's Law, which would allow union members to withhold the political portion of their dues if members feel their union is not spending their dues properly.

That’s real accountability. 

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Doing Business in Pennsylvania Can Be Taxing

JANUARY 12, 2015  | by BOB DICK

Tax policy may not be as exciting as discussing Golden Globe winners, but few topics rise to the level of its importance. Taxes directly impact your quality of life. The more the government collects from you, the fewer dollars you have to provide for yourself and your family.

The same principle applies to businesses. When government finances its profligate spending through excessive corporate taxes, entrepreneurs have fewer dollars to re-invest in those businesses. Less investment results in reduced job and wage growth.

The commonsense notion that higher taxes stunt economic growth is not without evidence. A Mercatus study determined higher taxes lead to a decline in gross state product (GSP), per-capita income, and the number of new businesses. Our own analysis (page 23) found better job growth in states with the lowest tax burdens when compared to states with the highest tax burdens.  

As we've persistently pointed out, Pennsylvania is among the states with the highest tax burdens. Luckily, relief may be on the way. Senator Michelle Brooks and Representative Seth Grove will be sponsoring bills to cut the state's corporate tax rate, which is the 2nd highest in the U.S.

Last year, my colleague Elizabeth Stelle wrote about cutting the corporate tax rate by ending special subsidies. This idea is just as relevant in 2015. According to the most recent numbers, if lawmakers eliminated nearly $675 million in special subsidies (indentified below), the corporate tax rate could be lowered to 7.3 percent from 9.99 percent.

Corporate Welfare Grant & Loan Programs 2014-15 Budget (Thousands)
General and Special Funds
Agricultural Excellence $1,100
Agricultural Research $787
Agricultural Promotion, Education and Exports $250
Ben Franklin Tech Development Authority Transfer $14,500
Commonwealth Financing Authority Transfer $77,755
Council on the Arts $898
Discovered in PA Developed in PA $5,000
Food and Marketing Research $494
Grants to the Arts $8,590
Hardwoods Research and Promotion $350
Industry Partnerships $1,813
Infrastructure and Facilities Improvement Grants $19,000
Keystone Communities $6,150
Keystone Works $100
Livestock Show $177
Marketing to Attract Business $2,008
Marketing to Attract Tourists $7,264
Municipalities Financial Recovery Revolving Fund Transfer $4,000
New Choices/New Options $500
Open Dairy Show $177
Partnerships for Regional Economic Performance $11,880
Pennsylvania First $20,000
Pennsylvania Race Horse Development Fund $252,583
Tourism-Accredited Zoos $550
World Trade PA $5,824
Youth Shows $140
Total $441,890
Tax Credits
Film Tax Credit $60,000
Job Creation Tax Credit $10,100
Research and Development Tax Credit $55,000
Keystone Opportunity Zone $70,300
Keystone Innovation Zone $25,000
Resource Enhancement and Protection Tax Credit  $10,000
Alternative Energy Production Tax Credit $2,000
Total $232,400
Total $674,290

This 27 percent decrease in the corporate tax rate would rank Pennsylvania 22nd among the fifty states—a vast improvement over our current position.

What's more, these calculations are based on a purely static model. Given that businesses respond to lower taxes, a lower tax rate could result in more robust economic growth, creating an increase in state revenue and allowing the rate to be cut even further.

Historically, Pennsylvania's economy is slow to grow. A cut in the corporate tax rate may be just the jolt it needs to pick up steam. 

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Disappointed and Determined


Today, I am both disappointed and determined.

I am disappointed that it is now a mathematical impossibility for any of the reforms you and countless other Pennsylvanians have demanded to reach Governor Corbett’s desk before he leaves office.  That includes not just paycheck protection, but also pension reform, liquor privatization, broader school choice, the Taxpayer Protection Act, and any number of long-overdue, common-sense policy priorities.  As you well know, CF has been making the case aggressively for these changes not just throughout the current administration, but since our founding in 1988.

I am also determined, because I believe with all my heart that our battle is not ending—it is only beginning.  When I moved to Pennsylvania 13 years ago, these ideas were laughed out of the room in our State Capitol.  Even two years ago, when CF took it upon itself to educate our state about the importance of ending the taxpayer collection of union political money, we were ridiculed by people who were supposed to be our friends.  Today, these issues are at the forefront of the debate, because we have gone on offense against the root of bad policy—namely the unfair political and financial advantages enjoyed by the most powerful advocates of big government.

Those forces marshal $175 million per year that we, the taxpayers, collect for them.  We haven’t beaten them just yet.  But I am totally convinced that if we stay on offense, we will!

I'm reminded of a quote that is frequently attributed to Gandhi: "First they ignore you, then they laugh at you, then they fight you, then you win." Keep fighting!

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Obamacare Failing Big Time


According to John Micek's reading of a recent Gallup poll on health insurance, Obamacare is "working after all." In reality, though, Gallup’s findings indicate that the health care overhaul has failed miserably to provide affordable health care.

After the federal government mandated that every individual buy health insurance, and has already shoveled tens of billions of taxpayer subsidies to big insurance companies, 13 percent of Americans still do not have insurance. That's about as ineffective a government program as anyone could imagine.

Oddly, the uninsured rate (based on this Gallup poll) spiked in 2013—three years after Obamacare passed. The current Gallup poll finds the uninsured rate sits only marginally below where it was in 2008.

Most of the reduction in uninsured (as well as the prior rise in uninsured) is tied to employment. As unemployment drops, so too does the uninsured rate. When unemployment rises, as it did during the recession, there are more uninsured.

Most importantly, there is a difference between health insurance and health care. Loading more people into a government run program like Medicaid offers "coverage" but doesn’t insure quality care or that recipients even have access to a doctor. We've reported frequently on the problems in Medicaid, and even the NY Times has taken note that giving someone Medicaid doesn’t mean they can be actually seen by a doctor.

And as Elizabeth Stelle notes, Obamacare imposes new burdens on businesses and workers, resulting in fewer hours and cut wages to avoid or pay fines. Congress is currently working to make these mandates slightly less harmful to workers and our economy.

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The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.