Notes from the Prichard Committee Fall 2012 Meeting at UK.
On a couple of occasions today it seemed that Prichard Committee Executive Director Stu
Silberman was a apologizing to members because the meeting was not more uplifting. But I guess that's what you get when early childhood education and the Kentucky tax structure are on the agenda. Both are presently stymied by legislative inaction.
Prichard Chair Harvie Wilkinson piled on when he told of two of his daughter's friends who graduated UK with 3.7+ GPAs and a tank full of ambition. They wanted to be teachers. But after two years in a high-poverty elementary school, under today's conditions, with little support, no mentoring, no professional development, 30ish kids, and no time to do what they have been asked to do, they are seeking a new profession. Harvie asked Fayette County Superintendent Tom Shelton what he would say to them and Tom was honest enough not to contrive some BS on the spot. There's really not a lot anyone can say to refute what they must be feeling. The work has never been harder, the standards higher, or the resources spread so thin since the late 20th century reform movement began. "We talk about cuts while the needs keep growing," Shelton said. "Our greatest resource is our teachers...and that's the place where investment needs to take place." Shelton reported that since the 2008 recession FCPS students have moved above 50 percent on free and reduced lunch...78 percent for students of color.
Dr Ruth Ann Shepherd presented a ton of data and research on early childhood education and why educators should care about the state's HANDS Home Visiting Program. I could not help but notice how closely the research mirrored that presented by Paul Tough in his new book How Children Succeed. We have a school system that is necessarily based on the attainment of cognitive skills, yet IQ and high test scores are not the things that correlate most highly with success in life. Those are non-cognitive skills closely related to good parenting and most easily and effectively taught when children are very young.
The bulk of the afternoon was spent discussing money. Former "Cassidy Dad" and UK Economics Professor Bill Hoyt taught a lesson on taxation that I am not particularly qualified to relate, but I'll take a swing at in the form of loose notes in bullet points. Bill is a consultant for the Governor's Blue Ribbon Commission on Tax Reform which is chaired by Lt. Governor Jerry Abramson who also spoke to the group about the process. (The short story is: don't expect a bill before 2014. Since the upcoming short session would require a super-majority to enact any budgetary measures and heavy lifting will likely be required to gain even a simple majority...it's not going to happen.)
From Hoyt's point of view:
- How taxes are collected is the question.
- Opinions differ
- Bill thinks it’s as much about how we tax as it is how much
- Tax what?
- Some ways are more efficient than others.
- Some ways reduce competitiveness.
- Part of the trick is to lower the cost associated with collecting taxes - be more efficient.
- Committee Charge
- Adequacy (are taxes sufficient to meet state goals) and elasticity (revenues track the economy) are central issues along with...
- Other concerns
- There is a kind of cost/benefit ratio at play.
- Taxes distort prices
- Create a wedge between pricing and value
- How can the state minimize the impact taxes have on purchasing decisions?
- The present system held up well in last 4 years essentially because it was outdated and didn’t respond as strongly to hits taken by the most active part of the economy...but it won't be stable going forward
- Present system has low elasticity
- Tax Structure
- In Kentucky collections are centralized
- Ky is more reliant on income tax than most states
- Slightly less on sales tax
- We have low property tax...for the most part (House Bill 44 sucks [my words not Bill’s])
- Among competitor states, Ky ranked 2nd in state tax at 7.3% of income
- But ranks 10th in combined state and local tax
- Adequacy & Elasticity
- The present structural imbalance will leave the state $1 billion out of whack by 2020
- Revenue will decline to 6.5% a level not seen since 1968.
- Kentucky revenues are below average compared to our most competitive states
- Kentucky’s spending on Public assistance and Medicaid is above average
- State and local spending on K-12 Education is below average of competitive states
- “Despite demonstrating the highest growth rate in state and local education spending from 2001 to 2009, Kentucky ranks 10th and 12th respectively in elementary and secondary education spending as a percentage of personal income and per capita.”
- Kentucky ranks 4th in state and local funding of higher education
- Spending is above average in transportation and corrections
- Equity Concepts
- Vertical equity...fairness in treatment of individuals
- Horizontal equity...folks with similar income levels ought to pay similar percentage
- Economic incidence...who actually pays (i.e., taxes paid by gas station..but cost passed along to buyer)...or pushed back to labor
- Businesses never pay taxes. Only people.
- In what ways do taxes affect business?
- Ky ranks third in business taxes as a percentage of private sector gross state product for 2011
- Studies show Ky with 4th lowest tax rate affecting business
- Policy Options
- Not simply a menu: Some are minor, others major, some are mutually exclusive, others most effective when used in certain combinations
- Advantages are seen in a broadened tax base
- More elastic
- Lower rates for all
- Reduced inefficiencies
- Should reduce differences in tax treatment
- Increase Ky’s competitiveness and employment
- Reduce compliance costs
- Other Random notes
- State earned income tax credit?
- Make taxable income equal to adjusted gross income?
- Tax base no longer matches what we consume?
- Residential use of electricity?
- Avoid using tax of purchases from business to business due to tax pyramiding.
- Can't yet tax Internet purchases..Perhaps Ky should support federal legislation allowing it.
- Lot of concerns on cross border shopping in Louisville and N Ky.
- Corporate income tax...controversial...but only a small chunk of the state budget...6%.
- Most states use: sales, capital, employment...taxes
- Kentucky could permit a local sales tax.
- Dump HB 44…because it sucks (my words not Bill’s)
- Occupational license tax puts us at a competitive disadvantage.
- Sales tax on services?
- Luxury item tax? Country club..golf..limos...?
To explore the impact at the school level the committee heard from Tom Shelton, Madison Southern HS Principal David Gilliam, Carter Co. elementary school teacher Merry Berry, Danville HS senior Alex Burnside and John Hayek, Sr VP for Budget and Planning at CPE.
Again, loose notes:
· Tom Shelton...
· the real issue we haven is adequacy. Equity issues result from lack of adequacy.
· Districts forced to cut back on maintenance..busses..central office staff...running out of places to cut...people and classrooms are next.
· Cuts in ESS, PD, Safe Schools impact kids...the impending fiscal cliff and sequestration loom.
· Money cut but no expectations have been reduced.
· As Council for Better Education Chair Shelton says the state has shirked their responsibility...cities responding with higher local taxes to cover...
· When Shelton was in Daviess Co. there was a 9-point swing in funding between local and state...shift burden to local taxpayers
· The SEEK formula is designed to provide equity to [poor districts. When cuts came, the poorest districts in state got the biggest cuts.
· Early childhood has to be part to the conversation
· Ability to use funds flexibly helps..capital funds for maintain..insurance..federal stim funds to prep lace busses
· When legislators cut funding but keep expectations high, it's like talking out of both hides of your mouth
· David Gilliam Madison Southern HS…
· ..Flex focus funds significantly reduced...not icing on cake...money was used for interventions to close gaps.
· Essential school services...innovation...district support to schools dried up...partial salaries on additional staff...encumbered council allocation.
· You ask teacher what do you need...the biggest answer from teachers was PD
· ...And time
· Looking at online PD to reduce costs
· Alex Burnside...
· I see all of my teachers are stressed more..
· Larger classes..
· I can’t get the one-on-one help I used to get freshman year."
· We don’t have French any more
· I haven't talked to my counselor at all this year about college. He's too busy doing ACT...
· I haven’t had a new textbook.
· We need counselors. I ask my mom..but there are things she knows and things she doesn't ...things change.
· Merry Berry...
o class size is a problem...
o There is less help for subjects like art.
o Youth services have been “cut down to the nub.”
o Basic necessities now come out of our pockets...shoes for kids...
o We share textbooks..nobody at the 5th grade can teach social studies or science at the same time...textbooks can’t go home.
o It's beyond me now. It's down to hurting those 36 kids in that classroom..which shouldn't be 36.
· John Hayek...
· 1970 full year tuition was about $300..if you had a minimum wage job...during the summer you could pay for a full years tuition in 6 weeks.
· Making minimum wage today it would take about 35 weeks to repay a year of tuition.
· K-12 and higher Ed lost 500 million in the recent cuts.
· KEES money frozen at $2000...
· Need based grants are about $100 million short.
· Need to keep reform momentum going.
· Teachers are doing more with less.
· Higher Ed is producing twice the number of degrees as a decade ago.
· Education is labor intensive..Highest skilled professionals in their discipline...benefit structure is pretty good...tech driven ..rising cost of health care, benefits.
· $4000 less per FTE...
· Stu Silberman
o Need tolook at a blended technology model..generating dollars for $100,000 salaries...fewer teachers more students at once
o Kentukcy now lacks the teacher supports that we're present when Ky moved from 48th to 34th.
o Teachers support more rigorous studies for our kids...but they don't have the support they need.