MAY 1, 2012

Philadelphia School District Faces the Budgetary Music

It doesn't take an advanced degree to figure out that something's rotten in the school district of Philadelphia—or that school choice is the antidote. More than half of Philadelphia's 249 schools do not make Adequate Yearly Progress—they are failing. The school district is also notoriously violent: In 2011 alone, it saw nearly 4,000 violent incidents, including 1,437 assaults on students, 1,076 assaults on staff, 116 indecent assaults, 87 robberies, 37 arsons and 642 weapons possessions. Last year saw 10 rapes in Pennsylvania's public schools and all 10 were in Philadelphia.

To cap it all, the school district is almost insolvent, trying to plug a $218 million budget gap that is set to balloon to $1.1 billion by 2017. Faced with such woes, the school district is proposing some serious restructuring:

The plan—subject to public comment and (School Reform Commission) approval—would close 40 schools next year and 64 by 2017, move thousands more students to charters, and dismantle the central office in favor of "achievement networks" that would compete to run groups of 25 schools and would sign performance-based contracts.

As it happens, school choice in the form of Philadelphia charter schools—which have nearly 41,000 students—already saves more than $200 million on public education. That's because charter schools, on average, spend just 83 percent of what traditional public schools spend per student. The School District of Philadelphia retains more than $5,000 in funding for every child that moves to a charter school.

Ultimately, Philadelphia needs more school choice, not less. Opportunity Scholarships or a significant increase to the Educational Improvement Tax Credit would allow parents to use education tax dollars at the school of their choice, and grant an immediate escape to desperate families trapped by their ZIP code in violent, failing schools. It's good that Philadelphia school officials finally see the need to spend more efficiently, but that's a small step toward comprehensive—and necessary— education reform.

posted by PRIYA ABRAHAM | 10:10 AM | 0 comment

APRIL 25, 2012

Prevailing Wage Pummels Another School District

We've reported before about how Pennsylvania's outdated prevailing wage law imposes needless extra construction costs on local governments and school districts across the commonwealth, hurting taxpayers. The law requires that a community's "prevailing wage" be paid on public construction projects above $25,000—which is in practice the union-inflated wage. The $25,000 threshold figure has not been adjusted since its early 1960s level, when the average home cost half that amount.

One outrageous example of the impact of prevailing wage comes from South Western School District in York County: The cost for a roof repair project skyrocketed 50 percent when officials factored in prevailing wage, going from $84,504 to $126,825—for no added benefit or better construction quality.

Turns out prohibitive prevailing wage costs are preventing more than one school district from undertaking roof repairs. Central York School District needs to repair a 30,000 square-foot section of its middle school roof. Without prevailing wage, the project cost would be $115,000 for materials, and $75,000 for labor at the market wage, for a total project cost of $195,000.

Additional labor costs under prevailing wage, however, add an extra $85,000 to the bill, for a total project cost of $275,000. That's a 45 percent increase for the exact same job. School district officials have decided to defer the project in the hopes that Pennsylvania's legislature will finally pass a common-sense reform raising the minimum prevailing wage threshold from $25,000 to $185,000. In that case, officials hope to re-bid the project so the roof repair falls under the threshold, and save a good $100,000.

One school board member told the York Dispatch: "While I understand that we are required to pay these additional costs, it still really chaps me up." Complying with the prevailing wage mandate forces officials to delay even basic repairs in a time of strained budgets. Lawmakers should pass prevailing wage reform now, and let schools put a decent roof over their students' heads.

posted by PRIYA ABRAHAM | 03:55 PM | 0 comment

APRIL 2, 2012

Six Ways Prevailing Wage Increases Taxpayers' Costs

This week, the Pennsylvania House is set (yet again) to consider basic reforms to Pennsylvania's outdated prevailing wage law, which mandates that union-scale wages be paid on taxpayer-funded construction projects above $25,000.

We've noted before how the prevailing wage is on average 51 percent higher than the market wage—and for construction that is no better in quality. In 2010, Pennsylvania spent $12.7 billion on government construction projects subject to prevailing wage, such as roads, bridges and school buildings. Without prevailing wage, taxpayers could have saved between $1.3 billion and $2.5 billion. That's an extra $400 to $900 in needless taxes for the average family of four.

Trade and construction unions often argue that prevailing wage barely raises construction costs, and  doesn't hit taxpayers hard. But across the commonwealth, township and borough supervisors and county and municipal officials beg to differ. From Butler to Bucks, officials with strained local budgets are pleading with lawmakers to reform the prevailing wage mandate. From experience, they offer proof of how prevailing wage raise taxpayers' building costs:

• Carroll Valley Borough in Adams County reported that they had road/storm water damage in April 2011. Their engineer's estimate to repair the damage was $45,000, with prevailing wage. Instead of using outside contractors, the borough decided to use in-house workers, thus avoiding prevailing wage requirements. The cost then? $6,958. (From the Pennsylvania State Association of Township Supervisors, PSATS).

• Franklin Township in Adams County reports that their 2008-09 Cashtown/McKnightstown sewer project was $8 million...the township contributed $1.2 million towards the project. This project serves 261 households, 26 businesses, and an elementary school. According to the township, if it did not have to comply with prevailing wage, the total cost would have been $2 million less (from PSATS).

• A proposal for a roof repair project in South Western School District in York County initially came in at $84,504, without factoring in prevailing wage rates. The contractor resubmitted his proposal for the exact same scope of work and included the payment of prevailing wages and the total cost of the project increased from $84,504 to $126,825—an increase of $42,321 or 50 percent, which was footed by local taxpayers (from the Pennsylvania School Boards Association).

When it comes to road repairs, the prevailing wage law could well be Pennsylvania's "Pothole Mandate." Many local governments can no longer afford to pave their roads because prevailing wage hikes costs too high. More examples from PSATS:

• Morgan Township in Greene County has not bid out a paving job since the Youngwood decision (a 2008 PA Supreme Court ruling that subjected more maintenance work to the prevailing wage law). Instead, the township has resorted to using tar and chip, sealcoating, and other pavement maintenance methods from 30 to 40 years ago to extend the life of their roads because the preferred maintenance method, paving, is no longer affordable.
  
  
• Frenchcreek Township in Venango County may return its roads to a gravel surface as they deteriorate, because the township simply cannot afford to maintain hard-surfaced roads.
  
  
• In 2009, Rose Township in Jefferson County oiled and chipped a road that is a high-traffic major route to a neighboring township and another road used as a short cut between two state highways. The township was able to oil and chip these two roads for $36,000. The township would have liked to have paved them both, but the total estimated cost, including prevailing wage, was more than the township could afford.

Our local governments are fighting to provide essential services, and giving them prevailing wage relief would allow them to do more with less. House members will vote on a bill this week that simply adjusts the prevailing wage thresholdfor inflation, from its early 1960s level of $25,000 to $185,000.

Click here to contact your lawmaker about passing the reform.

posted by PRIYA ABRAHAM | 05:20 PM | 0 comment

MARCH 16, 2012

It's Good to be the King (of Charter Schools)

We blogged last month about HB 1973, a bill that would gut funding for cyber schools.  Now it turns out there's a bill—recently introduced to the House Education Committee—that goes even further: It would amend public school law and impose more damaging, needless regulation on all charter schools.

Perhaps the most bizarre proposed change is one found on page 2, dealing with how appeal boards review local boards' decisions to issue or deny a charter (the original language is in brackets; the proposed language is underlined):

The appeal board shall [give due consideration to the findings of the local board of directors] use an arbitrary and capricious standard to review the decision of the local board of school directors. 

An "arbitrary and capricious standard"?  Seriously?  Are we in pre-Revolutionary France?

Read the rest of HB 2220, however, and "arbitrary and capricious" fittingly describes the proposed changes. Like HB 1973, the bill limits schools' fund balances, the reserves they accumulate to meet operating expenses and which cover lags in funding, to a maximum of 12 percent of spending.  Some lawmakers think this will make charters more like school districts—only they have been duped by an education establishment myth.  As of July 2010, 143 school districts had undesignated fund balances exceeding that threshold.   The only limit on school district funds is tied to new borrowing.  Collectively, school districts had $2.8 billion in reserved funds following the 2009-10 school year.

The bill also outlaws advertising, though cyber and charter schools need to let communities know they exist.  Such measures would cover all charter schools, not just cybers.  And school districts face no such restriction.

Additionally, school districts would not have to pay cyber schools for "resident students" who attend them if the school districts offer cyber programs. That limits families' ability to use public education dollars at the school of their choice, forcing them into their school district's program if they want a cyber education at all.  This bill effectively says that rather than funding children's education, tax dollars should be used to protect the status quo.

We've reported before how cyber and charter schools must meet accountability standards required of regular public schools, plus more. Overall, HB 2220 seeks to hamstring charter and cyber schools and diminish school choice, ensuring traditional public schools not only stay on top of Pennsylvania's education system, but rule over publicly funded charter schools, too. But hey—it's good to be the king.

posted by PRIYA ABRAHAM | 10:00 AM | 0 comment

MARCH 8, 2012

Big Bucks for Government Union Bosses

Union bosses frequently criticize corporate CEOs and government leaders for supposedly taking home hefty pay at workers' expense. Just this week, protesters picketed House Majority Whip Stan Saylor's office in York, and singled out his $82,000-a-year salary as lavish. But as our latest research shows, government union bosses do pretty well for themselves too—all funded through dues from ordinary union members. Take a look at the table below from "The Squeeze: Government Unions' Grip on Pennsylvanians."

All four union bosses earn six-figure compensation or close to it. The biggest earner—Wendell Young IV—earns pay equal to nine workers in UFCW 1776. And a whopping 148 employees at the Pennsylvania State Education Association earn more than $100,000. Perhaps government union bosses like Wendell Young attack the top 1 percent of income earners because his hefty pay only puts him in the top 2 percent.

posted by PRIYA ABRAHAM | 03:15 PM | 3 comments

MARCH 6, 2012

Construction Workers Picket Rep. Saylor

No sooner did we release research documenting the iron grip of Pennsylvania's labor unions on the commonwealth's taxpayers than they obliged us with a case-in-point on union bullying tactics. Some 40 "concerned taxpayers"—disgruntled construction workers—turned up outside House Majority Whip Stan Saylor's office in York protesting very basic reforms to state law that would allow local governments to use taxpayer funds more efficiently.

One of the reforms?  Raising the threshold for "prevailing wage" projects from $25,000 (the unchanged 1960s level) to $185,000 (adjusted for inflation). Pennsylvania's 1961 prevailing wage law mandates that a community's "prevailing wage" be paid on publicly funded projects of $25,000 and higher. In practice, the "prevailing wage" is the union-inflated rate found in collective bargaining agreements. On average, it is 51 percent higher than what we pay in the private sector for identical construction of equal quality.

You wouldn't know it to hear the picketers outside Rep. Saylor's office. "Cutting the wages of hard working taxpayers is not fair" their flyer proclaimed, singling out Rep. Saylor's $80,000 salary as further evidence of unfairness. But Rep. Saylor is right: It isn't fair for taxpayers to pay extra in prevailing wage for no added benefit. While one carpenter claimed his salary was still only "two-thirds of the big-city pay," carpenters on prevailing wage projects in York County still get paid 19 percent more than those working on private projects. And York's prevailing wage for other workers—plumbers, electricians, roofers, and others—ends up 50 percent higher than the regular occupational wage.

Prevailing wage reform—and the other efforts Rep. Saylor supports—will ensure taxpayer dollars are not wasted. We're already facing a four-alarm fire with our budget. Unions won't tolerate even the slightest spending reforms: Evidence, yet again, that Pennsylvania's taxpayers are in their grip.

posted by PRIYA ABRAHAM | 05:00 PM | 0 comment

MARCH 5, 2012

How Unions Put the Squeeze on Pennsylvanians

We've talked before about how passing meaningful reform on anything from school choice to prevailing wage has been stymied not by a Democrat vs. Republican fight in Pennsylvania's legislature, but by the real battle between the Union Party and the Taxpayer Party.

Now a comprehensive new policy report from the Commonwealth Foundation explains just how the Union Party got so powerful. Government unions, who represent half of Pennsylvania's government workers, derive their strength from two legal privileges: They're allowed to deduct union dues, at taxpayer expense, directly from payroll systems at schools and other government offices. Second, they can force even non-members to pay into the union just to keep their jobs.  That's called paying a "fair share fee."

Armed with automatic union dues and fair share fees from nearly 300,000 workers, Pennsylvania's four main government unions spent $6.5 million on political activities and lobbying in 2010-11. That money goes toward enacting policies that create unsustainable salary, pension and benefit increases that will either bankrupt the state or lead to severe tax increases.

The Pennsylvania State Education Association, or PSEA, further hurts families and students by heartlessly thwarting school choice. And member dues also fund six-figure salaries for union bosses, frequent luxury outings and junkets. Whether you're a taxpayer, parent or worker, unchecked union power is squeezing Pennsylvania dry. But lawmakers can change the rules in a fixed game by making unions collect their own dues, stopping the requirement that non-members pay "fair share fees," and requiring unions to get their members' permission before using dues for political activity.

Write your legislator now and tell them to release taxpayers from the grip of government unions.

posted by PRIYA ABRAHAM | 02:00 PM | 0 comment

MARCH 1, 2012

Rent Seeking: Pennsylvania's Prevailing Wage Musical

"Rent" isn't just a depressing musical about New Yorkers facing AIDS. It's also a term economists use to describe the benefits special interests win for themselves in the political arena, such as regulation that limits competition.

Pennsylvania's 1961 prevailing wage law is a rent. The outdated law mandates that the "prevailing wage" in a community be paid to construction workers on publicly funded projects costing greater than $25,000 (when the law was passed, the average home cost about half that figure).

There's a huge problem with the prevailing wage law: The "prevailing wage" is not the market rate for a carpenter, plumber or electrician—it's the artificially inflated wage that labor unions get in their collective bargaining agreements. On average, the prevailing wage is 51 percent higher than regular wages Pennsylvania construction workers receive for building quality homes, hospitals and offices. That's the rent— the extra taxpayers are forced to pay labor unions for no extra benefit.

In 2010, Pennsylvania taxpayers spent $12.7 billion on construction that was subject to the prevailing wage law. Using county wage data, typical labor costs on construction projects, and the experience of other states that suspended or eliminated their wage mandates, that translates to about 10 to 20 percent in extra costs. Overall, that's an additional $1.3 billion to $2.5 billion that taxpayers pay. That's a needless $400 to $800 more in taxes for the average family of four— money they could use for childcare, groceries, increasingly expensive gas and other essentials.

Two weeks ago, Pennsylvania's lawmakers had a chance to enact a first-step, basic reform to the prevailing wage law: By increasing the "threshold" for prevailing wage projects from the 1960s-era $25,000 to $185,000, which is what the figure would be after adjusting for inflation. But the reform didn't even make it to a vote, and the earliest it will be considered is March 12, when the House returns to session. Labor unions lobby hard to keep their rent. For Pennsylvania's stretched taxpayers, however, prevailing wage is a tired, tuneless score.

posted by PRIYA ABRAHAM | 08:00 AM | 0 comment

FEBRUARY 15, 2012

Attacking Cyber School Funding

The House Education Committee held an informational hearing today with administrators from several of Pennsylvania's cyber schools. The school officials mainly addressed myths about cyber school funding and performance, in light of a new bill introduced by Rep. Michael Fleck in December, HB 1973. One testifier described the bill as "a wolf in sheep's clothing, purporting to reform charter operations with the true intent of killing cyber charter schools."

Why such strong language? Cyber schools are public, taxpayer-funded online schools that began a decade ago. They offer parents an alternative to their local brick-and-mortar public school, without the cost of a private education. And they are proving immensely popular, with nearly 28,000 students enrolled today. When a student leaves her school district for a cyber school, public funding—76 percent of the per-student cost, on average—follows the child. Faced with a loss of funding—though it is a minuscule 1 percent of public education spending—school districts are crying foul, and demanding that lawmakers "fix" how cyber schools are funded.

The main funding element of HB 1973 is a restriction: It would mandate that cyber schools keep their "fund balances" —essentially the school's reserves—at 8-12 percent of their budgeted expenditures. Lawrence Jones, President of the Pennsylvania Coalition of Public Charter Schools, explained why this is a problem:

Half of the 400 school districts refuse to pay for their students enrolled in cyber charter schools, forcing cybers into the four-month long redirection process and often into procurement of loans to cover operating costs...Cyber charters need to retain a fund balance so that taxpayer dollars that currently go to lending institutions and attorneys can instead be used to educate children. Imagine what it would be like to run the government if half of Pennsylvania's taxpayers simply refused to pay their taxes and there were absolutely no recourse to force them to do so.

So, yes: Cyber school officials agree that funding for their schools needs fixing and should be more equitable. But there is no one-size-fits-all "actual instruction expense" for every cyber school. Furthermore, questions such as "How much does it really cost to educate a child?" could equally be asked of a traditional public school.

In reality, having a competitive education marketplace in the form of charter, cyber, private and public schools is what keeps costs down and learning effective. Burdening cyber schools with needless regulation serves only to smother the innovation our public education system so desperately needs. In the end, public education funding should serve children, not a system.

posted by PRIYA ABRAHAM | 04:49 PM | 0 comment