Gov. Tom Wolf has wasted little time staking out his vision for public education, and it doesn’t appear to have much room for school choice.
In a recent opinion piece for The Sentinel, I explain how Pennsylvania’s new governor is hostile to innovative schools and wedded to the educational status quo.
First, the Wolf administration catered to anti-reform interests in the troubled School District of Philadelphia. After the city’s School Reform Commission (SRC) approved just a handful of new charter schools, Wolf stripped SRC Chairman Bill Green of his leadership position.
The governor’s message was unmistakable: even tepid support for charter schools will not be tolerated. It’s not as though charters secured a decisive victory in Philadelphia—34 of 39 charter applicants were rejected, leaving tens of thousands on waiting lists.
Still, this meager charter expansion was justification for Wolf to shuffle deck chairs at the SRC. Who was tapped to replace Green as chairman? Marjorie Neff, the only SRC member who voted against all 39 Philadelphia charter applicants.
The Wolf Doctrine on education is particularly detrimental to students who attend public cyber charter schools:
Wolf’s budget is even more punitive to cyber charter students, who disproportionately come from low-income families. For them, Wolf would slash current funding levels by one-third. While the state currently spends an average of $14,600 dollars per public school student, the governor would spend only $5,950 per cyber student.
RELATED : EDUCATION, CYBER SCHOOLS, SCHOOL CHOICE, TEACHER UNIONS
Governor Wolf marked his 100th day in office by providing a list of accomplishments. In reality, the memo is more of a status update since many of his initiatives, including the natural gas tax and his budget proposal, are a long way from passage.
But the real question is not what the governor accomplished in an arbitrary 100 days, but what he can do over the next 1,360 days to improve the lives of Pennsylvanians. Here’s a few suggestions based on the governor’s goals for Pennsylvania:
Protect taxpayers to foster "jobs that pay."
Elected officials should pass the Taxpayer Protection Act (TPA) to protect the middle-class from reckless spending and tax increases. The TPA limits future government spending to inflation plus population growth. Reining in government spending is critical to creating an economic climate that attracts jobs—and working Pennsylvanians deserve a government that lives within its means.
Put students first to build "schools that teach."
Our education system is broken. From the commonwealth’s senseless funding formula, to wasteful mandates like prevailing wage, to the need for more school choice, there are many ways for the governor to create an education system that truly serves students. Gov. Wolf should work with the legislature to create a funding formula where dollars follow the students, repeal prevailing wage and remove obstacles to greater school choice, such as creating alternative authorizers for charter schools.
Enhance transparency and accountability to create a "government that works."
The lack of transparency in Harrisburg and special privileges enjoyed by select groups have created a system ripe for corruption and abuse. In his next 1,360 days, Governor Wolf has an opportunity to continue promoting transparency by opening the closed-door union contract negotiation process and ending the government unions’ unique privilege of using taxpayer resources for partisan politics.
These reforms are by no means exhaustive, but they would move our state in a pro-growth direction after years of profligate spending, which have failed to revive our historically weak economy. After decades of focusing on finding more revenue for state coffers, it’s time to restrain excessive government and transform Pennsylvania into a state of opportunity again
RELATED : JOBS & ECONOMY, ECONOMY, TAXES & SPENDING, PENNSYLVANIA STATE BUDGET, TAXATION
This week marks the beginning of Pennsylvania’s transition from Healthy PA to full Medicaid expansion. Over 100,000 beneficiaries were transferred to the traditional one-size-fits-all healthcare plan known for limited access to doctors and skyrocketing taxpayer costs.
At the same time, however, Pennsylvania’s network of free healthcare clinics continue to tap the power of local communities to provide free, quality care and a pathway to independence for the truly needy.
Consider the story of Andrea, a 25 year old from Chester County who experienced severe tooth pain but did not have dental insurance. When Andrea came to the Community Volunteers In Medicine (CVIM) clinic in 2012, volunteer dentists had to extract her top front tooth—a devastating blow to young Andrea’s self-esteem.
But Andrea persisted, making all of her follow-up appointments and maintaining her oral health to the point that the CVIM dental team decided to surprise Andrea with the funds to restore her smile. Created in honor of a long-time volunteer, the Smiles for Jackie fund pays for services beyond those available at CVIM. When the dental team saw Andrea’s restored smile for the first time, they were brought to tears of joy.
Recently Andrea has been able to increase her hours at work and is now eligible for comprehensive dental benefits.
On the other side of the state, Clemmie Johnson is receiving quality health care with a personal touch at the Catholic Charities Free Health Care Center (CCFHCC) in Pittsburgh.
Clemmie was perpetually exhausted and sensed that things just weren’t right. The 63-year old widow had health insurance through her husband, but he died several years ago, and she could no longer afford the monthly premiums or her blood pressure medication. Eventually, she lost the family home.
When friends encouraged her to go to the clinic, Clemmie said her pride wouldn’t let her. “I thought people would judge me, so I stayed away.” When Clemmie finally went to the clinic she was surprised. Talking about Dr. Tom Antos, Clemmie explains, “I couldn't think of a better match. He really listens. He hears even what I don't say. He is very thorough.”
With the help of residents from Duquesne University, Clemmie was able to receive medications to treat her hypertension, diabetes, and asthma at little or no cost. She says, “They [the volunteers] work better than people who get paid!”
Andrea and Clemmie are just two of countless free clinic success stories. Paul didn’t have dental insurance and discovered a cancerous growth under his tongue thanks to a CCFHCC dentist. He says, “This was better than winning the lottery. He saved my life.” Than there's Reyna (pictured above), a 36 year old with Down syndrome who came to CVIM with out-of-control type II diabetes. Thanks to innovative teaching techniques, she’s learning to better manage her disease.
Free clinics demonstrate the power of community to efficiently and compassionately care for those who can’t afford health insurance.
Unlike Medicaid, the giving is reciprocal. For instance, Andrea was so grateful for her new smile that she donated $500 to the Smiles for Jackie’ fund. And a CCFHCC patient donated a Bible for the patient waiting area.
Free clinics are an important element of the safety net that must be preserved despite any expansion of Medicaid. In fact, the flexibility and the personalization of services available at free clinics are often against the rules of the Medicaid system. Government should attempt to emulate, rather than replace, this critical form of care.
RELATED : JOBS & ECONOMY, HEALTH CARE, WELFARE, TAXES & SPENDING, MEDICAID
Imagine a little girl and her young mother sitting on a porch on 19th Street in Harrisburg. The child smiles happily, but the mother looks tired—she’s working second shift and raising a daughter by herself. The father has never played a role in the girl’s life, but she has loving grandparents doing their best to support and care for the child and mother.
It could be a page from the lives of thousands of working-class, ethnically-mixed families—but it happens to be from my own. I was that little Puerto Rican/Slavic American girl growing up with the odds stacked against me. That was my mother gritting her teeth and getting by so that I could have a chance to thrive.
Politicians constantly give lip service to helping families like mine, but I've found that their solutions often do more harm than good.
Given my life experience, it surprises me when people promote government intervention to address issues like income mobility, job growth, and public education. Throwing taxpayers’ hard-earned money at these problems will not make them go away. Taxing and spending is not a recipe for creating jobs or helping middle-class—or working class—families.
When I worked through college and subsisted on a diet that included way too much Ramen, a tax on textbooks would have been a substantial burden. Not to mention the impact that taxes on everything from child care to non-prescription drugs to nursing home care would have on the rest of my family.
It may not seem like a lot of money to high-income households, but in working-class and minority communities struggling to make ends meet, every cent counts.
It's time we entrusted Pennsylvanians to make their own choices with their own money.
That's why I came to work at the Commonwealth Foundation, which points out how a vibrant, free economy can enable individuals to reach their full potential regardless of color, class, or creed.
Unfortunately, some will resort to ad-hominem attacks of racism, bigotry, sexism, and classism to promote their government-based solutions. They rely on name calling because they are unable to justify policy perspectives that so clearly hurt the worst off among us.
Let's be clear, there is nothing racist or divisive about empowering people to create success on their own terms. There is no place that one can point at to claim that poverty was taxed or spent out of existence.
Struggling communities in Pennsylvania are better equipped to make spending decisions about their own personal needs than politicians. If we want a brighter future for our commonwealth, we need state government to do less so that we are free to do more in our local communities and in our own families.
RELATED : JOBS & ECONOMY, PENNSYLVANIA STATE BUDGET, TAXATION
No one should be forced to fund political activity that they don’t support. Jane Ladley, a teacher in Chester County, didn’t want her dues money being spent on partisan political causes. She initially decided against joining the union. However, her school became agency shop in her last year, so she had to become a fair share fee payer. Subsequently she filed a religious objection, where the amount equivalent to the fair share fee is sent to a charity mutually agreed upon by the teacher and union.
Sounds pretty simple, right? The problem is that the unions believe that they are under no obligation to agree to the teacher’s charity choice.
Jane chose to direct her fees to a scholarship fund for high school seniors showing interest in the U.S. Constitution. The PSEA rejected her request.The PSEA never responded to her regarding her second choice, a charity which provides education material on the U.S. Constitution. Jane retired from teaching in 2014, but her fees are still sitting in an escrow account.
Sadly, this is not unusual as there are numerous cases of teachers’ charities being rejected or ignored. Chris Meier also became a religious objector and opted to send his money to the Right to Work Legal Foundation. The PSEA refuse to approve his choice because they said it was a “conflict of interest.”
Fed up with the games being played with their hard earned money, Jane and Chris filed a lawsuit against the PSEA through The Fairness Center. Their hope is to give teachers the freedom to choose which charity receives their money.
Thanks to their bravery, state legislators are taking action. State Representative Lawrence plans to introduce legislation that would allow religious objectors, like Jane and Chris, to send their fees to any recognized 501(c)3 charity of their choosing.
If you’re a teacher or know one who is interested becoming a religious objector, check out this primer ‘4 Steps to Leaving Your Union’ and consider sharing your own story!
RELATED : TEACHER UNIONS, UNION DUES AND POLITICS
Friday, we pointed out a new Independent Fiscal Office (IFO) study that shows every income group will pay more in net taxes under Gov. Wolf's proposed budget. In response, the Wolf administration criticizes the IFO's methods and continues to insist that "the average family," even one earning $100,000 would pay less.
Gov. Wolf's short infographic shows a net tax reduction at all income levels, for families earning $36,000 to $100,000. The IFO's analysis show that every income group would pay more, on net. We broke that down on a per taxpayer basis in the table below.
While those earning more than $100,000 per year would pay a lot more, households in the $50,000 to $75,000 brackets would also pay almost $600 more annually per household And households in the $75,000 to $100,000 bracket would, on the net, pay $838 more per taxpayer.
|Tax Incidence for Pennsylvania Residents, FY 2018-19|
|Net tax increase by household income under Wolf proposed budget|
|Under $25,000||$25,000-$49,999||$50,000-$74,999||$75,000-$99,999||$100,000-$250,000||More than $250,000|
|Total tax increase (millions)||$8||$316||$506||$461||$1,271||$1,009|
|Total increase per tax filer||$2.07||$221.23||$589.67||$838.43||$1,825.37||$5,796.75|
|Sales and use tax increase||$367||$616||$606||$512||$1,283||$721|
|Sales tax increase per tax filer||$95.17||$431.26||$706.21||$931.18||$1,842.61||$4,142.18|
|Sources: Tax increases from Independent Fiscal Office:
Tax filers from IRS, SOI Tax Stats: http://www.irs.gov/uac/SOI-Tax-Stats-Historic-Table-2;
filers in the $200,000 to $250,000 range estimated using PA Department of Revenue, Personal Income Tax Statistics:
Instead of resorting to "liar, liar, pants on fire," we thought we'd actually explain the big differences between the IFO's analysis, and Gov. Wolf's infographic.
1) The IFO includes all tax increases and reductions. In contrast, the Wolf analysis excludes the cigarette tax increase, new tobacco taxes, a natural gas severance tax, and other business taxes (some of which, like the Corporate Income tax, will reduce overall taxes). The tobacco taxes in particular hit lower-income households, but even excluding these, the IFO concludes all but the lowest income bracket (those earning under $25,000 per year) will pay higher taxes.
2) Wolf assumes much less in sales tax per family than the IFO. Wolf's infographic shows that a family earning $36,000 per year would pay $206 more per year under the sales tax increase and expansion, and a $363 increase for a family making $100,000 per year.
The IFO analysis shows double to triple that amount—$431 per taxpayer earning between $25,000 and $50,000, and $931 per taxpayer earning $75,000 to $100,000.
The IFO and Gov. Wolf agree that the sales tax expansion will net somewhere in the vicinity of $4 billion per year from the sales tax increase and expansion. The IFO analysis accounts for who is paying this $4 billion, Gov. Wolf does not.
3) "Average Family" vs. all families. Wolf presents an infographic showing the "average family," but assumes the average family doesn't smoke or use tobacco products, and wouldn't pay higher energy costs because of a natural gas tax.
It is very unclear what the "average family" buys in goods and services that would be taxed under the sales tax. Indeed, as we've pointed out numerous times, some of the big ticket items that will now be taxed alone exceed the "average" a family will pay. For instance, taxes on day care for an infant would run more than $700 per year. Taxes on home health care or nursing home care would cost on average $3,000 to $6,000 per year, respectively. Even funeral services would cost several hundred dollars more in sales tax under Wolf's plan.
Of course, not every family pays these costs, but those who do will have a rough time finding a way to absorb the massive tax hike Gov. Wolf is offering them.
The impact on your family depends quite a bit on spending habits—and, as we've outlined, varies greatly depending on where you live. Nonetheless, the IFO's study presents a better analysis of the tax impact on all families, because it measures the impact of all proposed tax increases, not just a select few.
Last Saturday Pennsylvanians passed an important milestone: Tax Freedom Day. This is the day Pennsylvanians earn enough dollars to pay off their federal, state and local tax bills for 2015.
Pennsylvania's celebration came one day after national Tax Freedom Day, making us the 36th state to celebrate. Last year we did slightly better as the 35th state to celebrate on April 21st.
However, Tax Freedom Day has arrived later and later each year as government spending has climbed. For some perspective, national Tax Freedom Day was January 22nd in 1900.
RELATED : STATE RANKINGS, TAXES & SPENDING, TAXATION
The Independent Fiscal Office (IFO) released a new analysis of Gov. Wolf's tax proposals yesterday. What is their most interesting conclusion? Taxpayers in every income bracket will see a net tax increase.
The table below breaks down the incidence of tax changes by 2018-19, the first full fiscal year in which all of Wolf's proposals would be in effect.
|Tax Incidence for Pennsylvania Residents, FY 2018-19|
|Net tax increase by household income under Wolf proposed budget, in millions|
|Under $25,000||$25,000-$49,999||$50,000-$74,999||$75,000-$99,999||$100,000-$250,000||More than $250,000|
|Sales and Use||$367||$616||$606||$512||$1,283||$721|
|Corporate Net Income||-$25||-$45||-$41||-$35||-$87||-$75|
|Net Severance tax||$44||$56||$47||$34||$60||$23|
|Source: Independent Fiscal Office: http://www.ifo.state.pa.us/resources/PDF/Revenue_Proposal_Analysis_April2015.pdf|
The IFO offers another look at tax incidence excluding tobacco taxes—which impose a significant burden on lower-income households. If, for whatever reason, you wanted to exclude an analysis of the burden of tobacco taxes, the lowest income group (households earning less than $25,000) would see a net tax reduction, but taxpayers in every other income category would still see a net tax increase.
That is, middle class families will pay more, even after Wolf's promised property tax reductions.
This finding shouldn't be surprising. As we noted, using Gov. Wolf's own revenue projections, only 30 cents of every dollar collected in new state taxes during the first two years of the plan go to property tax relief. Even if we ignore the tax implications of the governor's first budget, in which families will pay higher state taxes before seeing any property tax reduction, Wolf's tax shift proposal raises twice as much revenue in new state taxes than it provides in school tax relief.
It should also be noted that Wolf's tax shift provides an arbitrary system of doling out money to school districts. The amount of money your family could get in property tax relief depends—with quite dramatic differences—on where you live.
The IFO analysis delves specifically into the unique case for Philadelphia. Under Wolf's plan, Philadelphia, unlike any other school district, would see a reduction in its local cigarette tax, sales tax and wage tax along with property tax reductions.
Gov. Wolf has been trying to sell his budget by making a remarkable claim: Everyone will receive these great benefits, but only the wealthy will have to pay for them. The IFO analysis demonstrates otherwise. Not only will the wealthy pay, but low-income and middle class families alike will be hit hard under the governor's plan.
RELATED : TAXES & SPENDING, PENNSYLVANIA STATE BUDGET, TAXATION
Pennsylvania's $50 billion public pension problem isn't going to solve itself. Reform is a must, which is why Senate Majority Leader Jake Corman has rightly called for structural changes to the public pension systems before considering higher taxes.
A reform being considered now would put new state and school employees into a defined-contribution (DC) plan. Transitioning to a DC plan for new hires—a necessary move to extract politics from pensions—is an important first step on the road to real pension reform.
But not everyone is convinced.
A common assertion put forth by critics of this approach is that such a switch would increase "transition costs," forcing taxpayers to foot the bill. The argument is as follows: Transferring new state and school district employees to a DC plan will increase costs for taxpayers as the pool of employees paying into the current DB plan shrinks, requiring more conservative investments and higher contributions.
Still awake? Good.
This argument against switching to DC plans is flawed. Eileen Norcross, program director and research fellow at the Mercatus Center explained why in her testimony last week:
Closing a defined benefit plan does not add liabilities to the plan. Rather, it changes how the plan’s liabilities are accounted for and changes the investment strategy for the plan’s assets. It reveals the economic value of the plan and makes the funding of the plan’s benefits more sound. Closing a defined benefit plan doesn’t add new costs; it makes the costs transparent, and it makes it easier to ensure that the benefits for retirees are fully funded.
But what about the specific contention that closing a DB plan requires moving to more conservative investments, leading to an increase in costs? Norcross refutes this myth:
The investment-based transition costs argument is a casualty of the flawed accounting standards that have created large, unfunded pension liabilities that states must now address. The use of GASB 27 over the years created an accounting and funding illusion that allowed public plans to ignore investment risk and undercontribute annual plan payments. It is why plans experienced such large and unanticipated losses during the 2008 market crash and why plans suffer from large unfunded liabilities today.
To summarize, unrealistic assumptions about future investment returns can increase costs—not a transition to a DC plan. In fact, unrealistic assumptions create dramatic risks for taxpayers that may be alleviated by moving new hires to a DC plan:
…the probability of Pennsylvania meeting its pension obligations by the year 2030 without additional contributions is not even 50 percent, but significantly lower: 31 percent for the Public School Employees Retirement System (PSERS) plan and 16 percent for the State Employees’ Retirement System (SERS). The need to make up this shortfall is the reason for saying that closing a defined benefit plan generates investment-based transition costs. But these costs lessen the risk of pension underfunding and may even eliminate the risk.
RELATED : PUBLIC EMPLOYEE PENSIONS AND BENEFITS
A Commonwealth Court judge has issued a preliminary injunction to stop full enforcement of Gov. Tom Wolf's executive order to stealthily unionize home healthcare workers.
For folks like Dave Smith and his care provider Don Lambrecht, the injunction is wave of relief. The two men have lived together for years and they have no interest in a union dictating their working relationship.
The unionization drive by the United Home Care Workers of Pennsylvania (UHWP) will continue. However, even if UHWP is selected to represent workers, the state cannot get involved in collecting dues from individual paychecks until the full court addresses the legality of Wolf’s executive order.
The union’s goal is to skim 2 percent of home care workers’ salaries from their pay, which would be up to 8.4 million each year if dues were collected from all 20,000 homecare workers under this order. Not a bad return after UHWP backers AFSCME and the SEIU contributed heavily to Gov. Wolf’s election campaign.
Dave and Don aren't the only ones concerned with the governor's overreach. On Monday, President Pro Tempore Scarnati and Speaker of the House Turzai filed an Amicus brief on behalf of the plaintiffs in the Fairness Center’s lawsuit. The leaders noted;
Executive Order 2015-05 is a blatant attempt by the Governor to circumvent the constitutionally-granted legislative authority of the General Assembly. The executive order should be declared invalid.
The Senate Republican Majority Caucus also issued a motion to intervene on the same day. And yesterday members of the Senate Health and Public Welfare Committee pressed acting-secretary Ted Dallas on the necessity of the order (paywall).
David Osborne, general counsel for the Fairness Center, notes, "No one—Republican or Democrat—should be comfortable with their governor issuing unconstitutional executive orders."
Click here for more background on Wolf’s executive order.
RELATED : HEALTH CARE, MEDICAID, UNIONS & LABOR POLICY, HOMECARE WORKER UNIONIZATION
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