Archive for April, 2008
There was a protest yesterday to advocate for more funding for public higher education. I’ve raised some questions previously about how our public higher ed dollars are being spent.
And the Globe’s coverage of the protest raised some more. The journalist left the most interesting detail until the final sentence:
The school [UMASS Amherst] provided funding for transportation to Boston
Reminds me of the Romanian miners from the old days. At least this protest was peaceful.
April 17th, 2008
A little-noticed provision in the housing bond bill, inserted by the Senate and supported by the Patrick administration, will require that all affordable housing projects pay ‘prevailing wage’ on construction.
The article in today’s Globe cites a Mass Housing Partnership study that found such provisions increase costs by 34%.
In the words of a leading housing advocate:
“It’s likely to increase the cost of developing affordable housing significantly,” said Aaron Gorstein, executive director of the Citizens Housing and Planning Association, an affordable housing umbrella group. “It could lead to fewer units being available for low- and moderate-income families.”
April 17th, 2008
Dumb John. I am not going to link to the McCain announcement to forego gas taxes this summer. Let me get this straight. Bridges are falling down. Traffic backs up because of the need for road repairs and improvements, using more gas (congestion is up incredibly since the 70s). And we will get, what?, $50 in savings through a federal gas tax sabbatical? (Assumptions: Americans average 1,000 miles a month, around 20 miles a gallon.) Dumb.
How about giving states flexibility (fewer dumb federal rules and restrictions on new project type and delivery) and the ability to use more federal dollars for maintenance?
Blustery Barack. According to Dennis Bernstein of the Common Dreams blog:
During a recent campaign stop in south Texas, Obama met with San Antonio-area residents who had been particularly hard hit by the sub-prime meltdown. He expressed dismay over how lobbyists for the sub-prime lending industry had spent more than $185 million in the last several years for their cause.
“To give you a sense of what that kind of lobbying gets you,” Obama said, a “CEO of the largest sub-prime lender was promised a $100-million severance package at a time when more than two million Americans were facing foreclosure, including nearly 14,000 right here in San Antonio.”
I could certainly cite Barack’s relationship with Superior Bank and the Pritzkers if I was trying to make a political point. More interesting is how his attempt at a populist message directly contradicts the views of his principal economic adviser, Austan Goolsbee. In the New York Times a year ago, good Dr. Goolsbee wrote:
Almost every new form of mortgage lending… has tended to expand the pool of people who qualify but has also been greeted by a large number of people saying that it harms consumers and will fool people into thinking they can afford homes that they cannot.
Congress is contemplating a serious tightening of regulations to make the new forms of lending more difficult. New research… suggests that regulators should be mindful of the potential downside in tightening too much.
A study conducted by Kristopher Gerardi and Paul S. Willen from the Federal Reserve Bank of Boston and Harvey S. Rosen of Princeton, Do Households Benefit from Financial Deregulation and Innovation? The Case of the Mortgage Market, shows that… [new types of home loans] mainly served to give people power to make their own decisions about housing, and they ended up being quite sensible with their newfound access to capital.
…
And this study shows that measured this way, the mortgage market has become more perfect, not more irresponsible.
And
[T]he historical evidence suggests that cracking down on new mortgages may hit exactly the wrong people.
And do not forget that the vast majority of even subprime borrowers have been making their payments. Indeed, fewer than 15 percent of borrowers in this most risky group have even been delinquent on a payment, much less defaulted.
When contemplating ways to prevent excessive mortgages for the 13 percent of subprime borrowers whose loans go sour, regulators must be careful that they do not wreck the ability of the other 87 percent to obtain mortgages.
For be it ever so humble, there really is no place like home, even if it does come with a balloon payment mortgage.
While we do need to rein in some bad actors, there is a lot of truth in Goolsbee’s view. But way too much posturing from Barack on this, NAFTA, and… the list gets pretty long.
April 16th, 2008
The latest dispatch from the Education Intelligence Agency continues to poke holes in the “teacher shortage” disinformation campaign. Take a look for yourself:
Public School Workforce Swells While Enrollment Growth Flattens. America loves its public school teachers. So much so that it continues to hire legions of them while growth in the number of students continues to peter out. An Education Intelligence Agency analysis of the latest U.S. Census Bureau figures shows that while K-12 enrollment grew only 2.45% between 2001 and 2006, the K-12 teacher force grew by 5.71% over the same period.
State level figures further illustrate the phenomenon. Twenty-five states had fewer K-12 students in 2006 than in 2001. Of these, 14 (Alaska, Connecticut, Delaware, Hawaii, Iowa, Massachusetts, Michigan, Mississippi, New Hampshire, New York, Ohio, Pennsylvania, Rhode Island, Vermont), had more K-12 teachers in 2006 than in 2001.
Even in states with significant spikes in enrollment, teacher hiring is keeping pace – and often greatly exceeding – that growth. Nine states (Florida, Georgia, Maryland, Nevada, New Jersey, New York, North Carolina, Rhode Island and Texas) experienced double-digit growth in the K-12 teacher workforce from 2001 to 2006.
Per-pupil spending continues its steady upward spiral, with an increase of more than 25% (unadjusted) in the same five-year period. Spending on compensation tracked closely with a 24.51% increase. Oregon is the only state that did not experience double-digit growth in spending over that time.
The full state-level table is available at http://www.eiaonline.com/districts/USA06.pdf. District-level tables will be updated with the latest figures over the next few weeks.
April 15th, 2008
Remember the Globe column by Steve Bailey about Jonathan Winthrop (old money) vs. John Walsh (new money)? Walsh wanted to move into a Beacon Hill co-op building, but Winthrop and the co-op board rejected Walsh’s application because he didn’t have the right pedigree. Walsh today is a wealthy executive, but he grew up in a Somerville housing project.
Is this kind of elitism legal? Bailey writes that co-op boards can legally reject any application as long as they do not break laws barring discrimination based on race, sex, or age. Some state legislators are working to change that - House Bill 1224 would make it so that co-op boards could only use financial criteria in selecting members.
In general, it sounds like a good policy change. But I am not so sure now after getting a call from Kathy Bitetti, a tireless advocate for artists. She says that the proposed change would in effect prohibit artists co-ops.
Is there a way to end Winthrop’s brand of housing elitism without undermining artists’ ability to create residential communities?
April 15th, 2008
South Carolina Senator Jim DeMint has introduced a provocative alteration to federal transportation policy. Not quite sure how I feel about it, but it’s certainly food for thought.
One of the key problems for states is the ’siloing’ of federal transportation aid, which divides up federal funding by mode and project type, limiting the flexibility of states to plan for its particular need.
DeMint ’solves’ this problem by slashing the federal gas tax from 18.7 cents to 3.7 cents (this remaining amount funds programs where a federal role is clearly needed.). The implication of the legislation is that states would raise their own gas taxes by a similar amount, then be able to spend the money as they wished.
What does this mean for Massachusetts? Just more flexibility, as the funding totals would be roughly a wash.
But check out this list of winners and losers by state. Sparsely populated states, like Alaska, North Dakota and Montana, get a massive return on their contributions now and would suffer. While others like California and Florida get less back then they currently contribute and would benefit.
April 15th, 2008
Pioneer Institute offers its qualified support for the Governor’s recent proposal to fix structurally deficient bridges. As our research demonstrates, Massachusetts has a large number of decaying bridges that need to be repaired.
The Governor’s proposal correctly notes that fixing these bridges sooner rather than later avoids the effects of construction inflation. We would add that these bridges will have to be fixed with borrowed funds at some point, and borrowing now to fix these assets before they fall into further (and more costly) disrepair is the preferable option.
However, new borrowing is not new revenue. At the end of the day, this proposal shifts around flows of money from the future to the present; it does not create new revenues. Pioneer views the prioritization of maintenance as the key point in this proposal. We salute the Governor’s focus on this problem.
Our caution in lending full support to the proposal stems from several unanswered questions. The final form of the legislation should address these issues, and we are confident that the Senate President and Speaker will weigh these elements seriously, given their previous leadership on transportation reform.
1) Overall Debt Request For Capital Plan Should Be Lowered: Massachusetts has the highest per capita median debt levels in the country, even leading a number of other states that also do not have debt at the county level. Increasing the cap and adding on more debt only exacerbates the problem and puts even more pressure on the operating budget. Pioneer agrees that the cap should be increased, to a point, but believes the ongoing cap increases over time put too much pressure on the operating budget.
Portions of the existing capital plan should be delayed or removed in order to lower the total amount of debt needed and to ensure that priority be given to maintenance. Given our high levels of debt, we cannot have it all and leadership requires that we show some restraint. We urge the Governor and Legislature to prioritize borrowing for maintenance and limit other capital projects. This plan, combined with other planned capital expenditures, leaves no margin for error. In several upcoming years, the plan puts debt service levels right up against the 8% threshold selected by ANF. Any subpar revenue years would quickly impact the state’s fiscal standing.
2) Importance of Reform is Magnified: Generating this level of debt to repair bridges requires a commitment that they be properly maintained this time around. The transportation reforms currently in the legislature are a needed first step and all parties must prioritize maintenance. If not, the Commonwealth will only create a larger backlog of maintenance in the future.
3) Federal Aid Should Be Maximized: Will the acceleration of construction projects jeopardize any federal aid? Will acceleration comply with federal mandates to participate in various planning exercises, such as the MPO and STIP development processes? Is acceleration of bridge projects the most cost-effective pathway for improved maintenance that maximizes federal funding? It would be helpful to know the Federal Highway Administration’s view of the proposal and their willingness to provide flexibility across funding streams.
4) Additional Funds Must Not Crowd Out Maintenance: Maintenance should be a priority going forward and additional funding for bridge maintenance does not obviate the need for continued focus on maintenance levels of effort at EOT and other state agencies. This extraordinary tranche of money should not be used to free up other capital funds for expansion. Also, the plan decreases available transportation capital funds in future years; this should not decrease the available funds for maintenance.
In addition to these key items, we urge the Senate and the House of Representatives to give consideration to these additional issues:
- What Are The Limits On Changing The Terms of Debt?: A significant portion of this program is being funded by terming out debt to 30 years. This is appropriate in the case of assets whose lives match this term. But what are the limits to this strategy? Is the Treasurers’ office agreeable to structuring only a percentage of bond offerings at a 30-year term? How does the existence of numerous short-lived items (operating costs like utilities, computers, software, automobiles, payroll, grants etc.) on the capital budget impact the principle of matching assets and bond terms?
- What Are the Details of the Transaction?: It would be helpful to now more specifics about the envisioned refunding and new money transactions. What is the purpose of refunding the $366 million, which has initial upfront costs in excess of $30 million? In addition, a breakout of debt service and debt affordability analysis over the 30-year life of the proposed bonds would be useful.
- What Are the Ground Rules for Inclusion of Authorities?: This transaction includes bridge assets owned by MassPike and the MBTA. What is the reasoning behind including these quasi-publics? Why do we include them when additional MHD bridges are in similar need of repair?
Pioneer is pleased to offer its qualified endorsement to the Governor’s proposal on deficient bridges. In past, we have offered similar support to other Administration initiatives, including the consolidation of underperforming local pension funds in the state fund, the initial funding of the state’s long-term healthcare liability, the removal of some employees from the capital budget, and a number of other components of the Governor’s first budget. We have also opposed certain of the Administration’s initiatives, most notably the dismantling of education reform and the tax credit giveaways embedded in the life sciences initiative. Pioneer urges the cooperation of the Governor and Legislature to address the above issues and enact modified legislation.
April 14th, 2008
The lead in today’s Globe says everything that needs to be said about our skewed expectations of government. The article amounts to little more than hand-wringing that the Big Dig tunnels have yet to be wired for cell phone reception.
The money quote, though, comes from a Scituate man who flies in and out of Logan two or three times a week and expresses his frustration that he is forced to use South Boston roads instead of the Big Dig tunnel to connect to I-93 so that he can call his family and tell them he’s landed safely. Why he simply can’t call them walking from the arrival gate to his car, I don’t know, but he is right about one thing:
It sounds like it’s just not a priority for somebody.
With the state facing a possible $17 billion maintenance backlog, the T carrying roughly $8 billion in debt and the Governor proposing a bond restructuring plan that proposes to free up $3.8 billion in capital spending over the next eight years to fix more than 400 structurally deficient bridges and another 400 that soon will be if they aren’t fixed, I sure hope nobody is making it a priority to wire the Big Dig tunnels for cell phone service.
Let’s keep our eyes on the ball, people. We can’t have everything we want. Call me crazy, but I’ll take safe bridges over cell service any day.
April 12th, 2008
The latest WBZ/SurveyUSA poll breaks the news that Governor Patrick’s approval ratings are not good. Overall approval-disapproval is 41% - 49%. Probably the most troubling news for the Administration is that independents (who make up a plurality of voters these days) are 35% - 59%, approve versus disapprove.
But I had to grin about the last question: “Is Governor Patrick doing enough to help the Massachusetts economy? Or could he be doing more?”
Guess what? Doing more wins in a landslide. But that’s a pretty stiff standard. Apply that test to your own life — Is my boss doing enough to help my bank account? Or could he be doing more? Am I doing enough to post interesting stuff on this blog? Or could I be doing more?
Questions suggests the answer, no?
April 11th, 2008
There is what I think is an instructive article on interdistrict school choice in the Worcester Telegram & Gazette this morning. As part of education reform 15 years ago, public school districts can choose to accept students from other districts, in turn receiving reimbursement from the state for the costs incurred educating those students. Conversely, districts that lose students lose money. As with the creation of charter schools, the idea was to use competition to spur school improvement.
Last spring, the Worcester School Committee, in a split vote, chose for the first time to accept interdistrict choice students. Last night, looking toward the 2008-9 school year, the school committee elected again to accept interdistrict choice students. This time the vote was unanimous, including two opponents of the measure last year. Why the change of heart?
It seems Worcester was able to attract 29 students from outside the district, receiving roughly $5,000 per student in reimbursement from the state. The money will come in handy as the district attempts to close a projected $3.1 million deficit for the fiscal year that begins July 1, 2008.
Now imagine if Worcester were to innovate aggressively and demonstrate concrete academic progress as measured by MCAS. It’s just possible that more and more students from outside Worcester might want to attend the city’s schools and the district would, in turn, receive more and more state reimbursement, which would, in effect, be nothing more than pay for performance.
I think this may be just what the architects of education reform envisioned when they created interdistrict choice almost 15 years ago.
April 11th, 2008
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