Readers of PolicyBlog already know that Pennsylvania education spending is at a record high, that state funding to school districts for pension costs is skyrocketing, and that school district spending, revenues and reserve funds are at all-time highs.
That should be enough to stop government union leaders from repeating the $1 billion cut lie...but they're still at it. In fact, a new lie to defend the original lie has emerged.
Talking to Capitolwire (paywall), PSEA spokesman Wythe Keever claims, "No previous administration cited pension funding in order to boost their claims about K-12 funding."
It is preposterous to think that the cost of teachers' pensions isn't part of the cost of education, or that state aid to school districts for pension costs isn't part of state aid to school districts.
Of course, this is far from the first lie Wythe Keever has been caught in.
As we recently wrote, Mr. Keever has denied that union dues are used for any sort of political activity—even as his employer, the PSEA, told its members (as required by law) that 12 percent of their dues go to politics.
Wythe Keever also once denied to a reporter that the PSEA was behind mysterious ads claiming school choice would require a tax hike. We later uncovered that the PSEA spent $575,000 from union dues to fund those ads.
That a spokeman for PSEA consistently resorts to outright, provable lies is a telling commentary on how far government union executives are willing to go to advance their policy agenda.
RELATED : EDUCATION SPENDING, PENNSYLVANIA STATE BUDGET, PUBLIC EMPLOYEE PENSIONS AND BENEFITS, EDUCATION
Worker freedom leads to higher incomes. This according to the Competitive Enterprise Institute (CEI), which recently published a paper on the effects of right to work (RTW) laws in different states.
In their analysis, CEI found a substantial loss in per capita income for those states that lack a RTW law. Their results show that the total estimated income losses in 2012 amounted to $647.8 billion or “more than $2,000 for every American, including those in RTW states.”
Astoundingly enough, more than half of the economic damage occurred in just five non-RTW states, with Pennsylvania as one of the leaders. In fact, Pennsylvania ranked 13 out of 30 states in estimated income losses with a total of $3,373 lost per person. On a state-by-state level, RTW states’ growth was substantially higher (165 percent) than non-RTW states (99 percent).
Why do RTW laws increase income? The study explains labor unions raise labor costs, which reduces the capital resources available for workers to increase their productivity and their income.
CEI does take into account other factors that could affect economic growth. Using the example of New England, they show that states can prosper without a RTW law. Though their statistics show that these states could be doing even better if RTW legislation were in place. Overall, if non-RTW states had adopted RTW laws 35 years ago, “income levels would be on the order of $3,000 per person higher today,” according to the Institute.
The evidence provided by CEI’s report is an indicator of the major benefits of RTW laws. With states already experiencing a sharp decline in union membership, RTW legislation is a common sense way to bring prosperity to the states.
Often lost in the public pension reform debate raging across the state are the viewpoints of public school teachers themselves. That’s why our Senior Policy Analyst Priya Abraham recently interviewed two public school teachers at very different stages in their careers.
Bill Frye is a recently retired science teacher from Westmorland County and taught in Pennsylvania public schools for more than 20 years. He is currently collecting the defined benefit pension he earned.
But Bill is concerned about the more than $50 billion in public pension debt already on the books:
“Like any business, you have to be able to pay your bills now and in the future. When I hear of the huge debt, I think about everyone. The system as it is now won’t be able to support the current manner of payout.”
Steve Calabro is mid-career but is worried that teachers' pensions will be such a burden on taxpayers that his own son will effectively be paying Steve an allowance when he retires. He says action is needed now:
“Something has to be done. The sooner we get through all the rhetoric and all the talking points and actually do something, the better off we and our kids will be.”
How can lawmakers honor pension obligations while preventing future generations from being unfairly burdened by ever-growing pension debt?
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It is impossible to do more with less, they say; you cannot expect schools to achieve better results without increasing spending.
Yet an essential new report from the University of Arkansas dispels this myth by measuring the cost effectiveness and return on investment (ROI) of charter schools compared to traditional public schools (TPS). The authors find significant advantages for charters in their study of 28 states.
When it comes to cost effectiveness, or bang-for-your-buck, the authors measure National Assessment of Educational Progress (NAEP) scores per $1,000 of per-pupil revenue.
In this category, charter students achieved an average of 17 more NAEP points in math and 16 more NAEP points in reading than TPS students. In other words, charters were 40% more cost effective—while receiving less funding per student than their traditional counterparts.
Consider this most recent study another piece of the ever-mounting evidence that school choice is a win for students, a win for parents, and a win for taxpayers.
RELATED : ACADEMIC ACHIEVEMENT, SCHOOL CHOICE, EDUCATION SPENDING, EDUCATION
You're probably aware that Pennsylvania’s tax burden is among the most oppressive in the country. But the tax code is just the tip of the iceberg when it comes to the state’s stifling regulatory policy. Entrepreneurs and innovators are also weighed down by complex regulations and onerous licensure requirements.
According to a recent survey of thousands of firms, Pennsylvania is one of the least friendly states for small business—receiving a "D" grade for its overall business climate, a lower mark than each of its bordering neighbors. Only 5 states scored worse with an "F".
The survey estimates a whopping 43 percent of low-income occupations in Pennsylvania require a state license. Starting a new business in the Commonwealth has never been more challenging.
The hidden cost of regulatory compliance is staggering. Every afternoon spent toiling away with confusing paperwork is an afternoon that could be spent providing goods or services. Every trip to City Hall to renew a permit, every hour wasted on a government phone tree, every day spent waiting for the bureaucratic stamp of approval to arrive in the mailbox—each of these is a lost opportunity for sustainable, long-term economic growth.
And let’s not forget the cynical reason behind many regulations: to protect established firms from facing new competition. The unfortunate victims of these regulations are consumers, who suffer with higher prices and fewer choices.
Making life simpler for families and job creators may sound like a minor reform, but it would go a long way toward improving Pennsylvania’s economic outlook.
RELATED : TAXES & SPENDING, JOBS & ECONOMY, ECONOMY, REGULATION, PROFESSIONAL LICENSING, STATE RANKINGS, TAXATION
This week, a federal court ruling shook the foundations of Obamacare by prohibiting tax credits and subsidies for health insurance policies purchased on the federal exchange. As Elizabeth Stelle says, "The law is crystal clear: In the section where it talks about the subsidies, there is no mention of a federally-facilitated exchange."
To muddy the waters further, another court ruled the opposite way on the very same day.
Elizabeth explained how serious the ramifications for Pennsylvania and other states could be on The David Madeira Show yesterday: "The Affordable Care Act is like a big Jenga tower—if you take out the wrong piece, the whole thing collapses."
Listen to the conversation here:
The David Madeira Show can be streamed live daily at http://thedavidmadeirashow.com/
RELATED : JOBS & ECONOMY, HEALTH CARE
A new $2 million political TV ad campaign represents the first foray of "SuperPAC" spending into Pennsylvania. And taxpayers are forced to pay for this political spending.
As we've noted before, SuperPACs—officially designated as "independent expenditure committees"—were authorized to operate in Pennsylvania by a court order. The organizations can accept an unlimited amount of union dues to spend on independent campaign ads for or against a candidate (but they cannot give directly to a candidate).
PA Families First, the SuperPAC behind the new ad—highlighted by Tom Fitzgerald—is indeed backed by union dues. State campaign finance records show that PA Families First received $500,000 from the national arm of SEIU and $550,000 from the national arm of AFSCME. Both are unions representing government workers.
The Democratic Governors Association is responsible for setting up PA Families First, and contributed another $695,000 from its coffers to PA Families First last reporting cycle.
The DGA made news itself this week for a major fundraising haul, again with much of the funding coming from union dues. Indeed, their last report shows more than $4 million received from the NEA, AFT, AFSCME, UFCW, and SEIU—all unions which represent government workers and public school teachers.
And as EAG News adds, which is worth repeating—this funding comes from union dues:
Someone will ask, so let’s be clear that this is dues money being used, since it is not a direct contribution to a candidate for office. Traditionally these funds are spent on media buys to promote a particular stance on an issue, which tend to appear in battleground states and coincide with the position of a recommended candidate.
The NEA contribution came from the NEA Advocacy Fund, which is a Super PAC. As we all know, “Super PACs’ corrosive influence undermines our system of democracy and threatens to make elections a commodity to be purchased by the highest bidder,” unless, of course, it belongs to you. Then it’s pretty cool.
The troubling aspect of all this is that taxpayers are forced to subsidize this political spending. Government union leaders of the NEA, AFSCME and others get to use public resources to collect their political money. Union dues, SuperPAC money, and even direct campaign contributions are taken out of teachers’ and government workers’ paychecks using taxpayers-funded resources.
This should not be. Public resources should not be used for partisan politics. It is time to pass paycheck protection.
RELATED : UNIONS & LABOR POLICY, UNION DUES AND POLITICS
On the heels of Pennsylvania’s bond rating downgrade, House Majority Leader Mike Turzai has declared his intention to ease Pennsylvanians’ debt burden. This represents a necessary step towards restoring Pennsylvania’s fiscal health and credit rating.
According to the Standard Speaker, Rep. Turzai proposes capping annual spending on public improvement and flood control projects with the goal of reducing annual interest payments made on the state's debt obligations. This proposal should be applauded, as the state and local debt burden exceeds $10,000 per resident and debt payments have been one of the fast growing areas of state spending. Debt payments from the General Fund Budget exceed $1 billion per year, nearly triple what it was 12 years ago.
The move is both pro-taxpayer and pro-economic growth. By easing the debt burden, lawmakers can avoid increasing taxes to pay for mounting debt obligations. Equally important, investors and businesses will be more willing to invest and grow in the state, leading to more jobs.
Last October, the General Assembly lowered the state’s debt ceiling for the RACP program by $600 million during a time when politicians in Washington were voting to raise the national debt ceiling. At that time, we noted how refreshing it was to see lawmakers move to protect taxpayers; the same can be said again with Rep. Turzai’s current proposal.
RELATED : TAXES & SPENDING, GOVERNMENT DEBT, SPENDING LIMITS, TAXATION
Back in 2012, many laughed at the idea of challenging Obamacare’s individual and employer mandates by arguing that the law as written allows subsidies for insurance in state exchanges only. Laugh no more: Today the U.S. Court of Appeals for the D.C. Circuit ruled the IRS could not provide tax credits or subsidies to individuals with insurance policies purchased on a federal exchange.
The prohibitions would apply to Pennsylvania and 35 other states that do not have state exchanges under Obamacare.
If the case reaches the Supreme Court and court rules in Halbig’s favor, subsidies on federal exchanges will be illegal.
What does that mean in practice? It means an estimated 357,000 Pennsylvania residents will be free from the individual mandate tax. In addition, 15,000 employers with 3.9 million workers will be free of the employer mandate.
The reasoning is a little complicated. Under the employer mandate, employers can only be fined when their employee gets a subsidy from the exchange. Similarly, an individual can only be fined if the cost of their insurance would be less than 8 percent of their income after subsidies. Without subsidies, more people qualify for the affordability exemption and employers have no penalty.
If the ruling is upheld, many will argue that the court is taking away tax credits, but in reality the blame lies with the Obama administration and the IRS which moved forward with doling out taxpayer funds in violation of the Affordable Care Act. Effectively the ruling means that the cost of insurance will no longer be shifted onto taxpayers, and the more than 20 new taxes created as part of Obamacare.
The fact is the Obama administration has been violating its own health care law to impose new burdens on Pennsylvania residents and a new tax on employers. It’s time for the administration to start implementing the law as written.
RELATED : JOBS & ECONOMY, HEALTH CARE
For the third time in two years, a major bond rating agency gave Pennsylvania a downgrade.
The most recent downgrade, courtesy of Moody’s, has real implications for taxpayers. Moody's points to "one-time measures", a "structural impalance," and "large and growing pension liabilities" as reasons for their downgrade.
This has been a long time coming. For seven straight years—dating back to the Rendell administration and reliance on temporary stimulus funds—Pennsylvania has spent more than revenue. The most recent state budget, while avoiding raising taxes and doing well to keep spending under the rate of inflation and population growth, did not fully fix this structural deficit.
In addition, past decision combined with poor investment performance have resulted in a massive, and still growing, unfunded pension liability. This pension liability and lack of meaningful reform was the primary impetus for Moody’s downgrade.
Due to the downgrade, creditors may require higher interest rates for state and local debt, leaving you to pick up the tab. This threatens taxpayers with future tax increases, and makes Pennsylvania a less attractive state for investment or new businesses.
Moreover, neglecting pension reform could result in the commonwealth, not to mention cities that have their own pension problems, facing Detroit-like insolvency. This month, Detroit workers and retirees voted to accept a 4.5 percent cut in their pension benefits. Such a cut—particularly for retirees—used to be unthinkable in the public sector. But today's pension crisis represents a triple threat to state and local governments, taxpayers, and employees.
But Detroit's fate need not be our destiny. By continuing to practice fiscal restraint and addressing long-term cost-drivers via meaningful reform, we can build a Prosperous Pennsylvania.
RELATED : TAXES & SPENDING, GOVERNMENT DEBT, SPENDING LIMITS, PUBLIC EMPLOYEE PENSIONS AND BENEFITS, TAXATION
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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.