2014 Supplemental Budget

coinsThe House and Senate introduced budgets about two weeks ago that were similar in some ways, but radically different in others. We negotiated and came to a bipartisan solution that pleases no one except our families who get us back home again. The votes were lopsided in favor – 85-13 in the House and 48-1 in the Senate.

A budget must meet three constraints:

  1. It must balance in the current biennium.
  2. It must meet the “expenditure limit” introduced in initiative 601.
  3. It must show a positive balance in 2015-17 under the rules established in the 4-year balanced budget bill from several years ago.

Of these, the third constraint is the most difficult. The House and Senate had very different approaches to the problem.

The Senate proposed a number of spending cuts that create more capacity to spend in future years. Many of these made little sense to me. For example, in many agencies worker’s compensation rates changed. When the rate went down the Senate took the savings, but when the rate went up, they didn’t fund the increase. If a business did this they would be in court. When the agencies actually make the legally required payments they have to take cuts somewhere else. We are not excited about the $5m cuts in social services, and the level of cut that would be needed in higher education or corrections. If you are going to propose cutting something you should point at it and be honest about what gets cut.

The Senate also proposed about $83 million in new tax exemptions. These wouldn’t have started until next year, a common budget-writing strategy to hide the true cost of an item. They are paid for in the next biennium with a shift from a different account, resulting in cuts there. This would leave us with a long-term reduction of about $160 million per biennium and no revenue to pay for it. I do not think we should reduce taxes when we have the McCleary problem to deal with in the next biennium. (This is a vast understatement).

The House proposed closing some tax loopholes and extending a fee that is scheduled to sunset at the end of this biennium in order to fund the reinstatement of the Initiative 732 COLA for teachers and other school employees, plus an investment in improving the quality of our early learning system. The Senate didn’t like this. (Also an understatement).

Outside these fundamental differences:

  • Both chambers proposed increases in K-12 spending to comply with the McCleary decision. The Senate put in $38 million, the House $58 million. These are both very small increments in the overall solution.
  • Both budgets funded increases in mental health funding, a critical need in Washington. Again, the House proposal was a little larger than the Senate. The Seattle Times talks about the House proposal here. Another story on the underlying problem here.
  • Both budgets fund the “TR Settlement”, the result of a court case showing that we don’t provide adequate mental health care to children. This is about $8 million, and will grow to $35 million a year over the next five years.
  • Both the Senate and the House propose funding programs for our residents with developmental disabilities to try to reduce the “no state services” waitlist. We’re working through some technical issues about which bill will pass. Again, more reading on this topic here and here.

The biggest potential problem we face with this budget is responding to the Supreme Court on the McCleary decision. To try to clear up confusion about the “plan” for increasing education funding Rep. Pat Sullivan and I introduced HB 2792. The bill lays out the schedule for McCleary funding proposed by the Joint Task Force on Education Funding in 2012, a task force report the court has mentioned several times. As expected, the bill did not pass, but is a reasonable structure for next year.

The final budget drops all the tax increases, all the new tax loophole creation, the teacher COLA and the fee extension the House proposed.

Short sessions (every other year) are 60 days long and are designed to fix problems that have come up between the two longer sessions. This is the first time since the start of the great recession when we do not have major changes in the budget. I described the final product in the press as a “modest” budget. This is perhaps charitable. The final product includes:

  • $58 million investment in K12 books, supplies and technology, part of our McCleary obligation. (A small part.)
  • Significant steps on mental health beds in the community. The Senate didn’t pass the bill allowing families to provide input to the judge in commitment cases over concerns about how much it might cost, but we need the beds anyway.
  • 5000 new slots for services to our developmentally disabled community, taking a big bite out of the “no paid services” waitlist.

I’m OK with it, but it puts off big issues to next year.

The articles referenced above (and included below so those of you who read this in print can find the articles) all list parts of Washington’s budget that are inadequate. We’ve lost in court on children’s mental health, we are 49th in the country in community mental health beds, we are being required by the court to substantially increase funding for K-12, and our higher education system needs significant capacity increases to keep up with today’s economy. What’s up with all this? This didn’t used to be a problem. What happened?

We’ve turned into a low-tax state. A study from the Institute on Taxation and Economic Policy talks about this, and is available here.  A short summary:

Recently released data from the Census Bureau confirms that overall Washington could be considered a “low tax state.” However, families living near or below the poverty line generally do not experience Washington as a low tax state — instead, they pay more than their fair share of state and local taxes.

I wrote about this in 2012 (here) and will try to post some more information about it in the next week or so.

Links

Ross’ blog post on Tax Incidence in Washington: http://www.rosshunter.info/2012/08/tax-incidence-in-washington/

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Lawmakers pass 24-credit HS diploma; NCLB waiver bill dies

Lawmakers pass 24-credit HS diploma; NCLB waiver bill dies.

Lawmakers pass 24-credit HS diploma; NCLB waiver bill dies

The first in a series of notes on this year’s session. I can no longer write a summary of what happens during the actual session, particularly in short sessions where the budget negotiations take until the last !@#$%^&* minute. (I will be less testy about this in a week or so.) I have been working on the 24-credit graduation requirement bill for many years. It’s the foundation of our restructuring of school finance in HB 2261 from 2009. I’m super-excited that we got it done. Over the next few years we will add more rigor to our curriculum, including additional lab science classes and enough mathematics that most kids will be set up for success in whatever they do next, be it a four-year college route or a more specialized program in one of our community colleges or trade schools.

I share the concerns of the Partnership for Learning here that schools in Washington will lose control over 20% of their “Title I” money from the federal government. Title I is a program that sends money to schools with a high concentration of kids from low-income families. This is around $40 million a year that won’t be available to districts if we do not get a waiver to the No Child Left Behind act, the modern incarnation of the Elementary and Secondary Education Act, (ESEA) the federal legislation created in the 60s as part of the war on poverty and the civil rights era. Neither the Senate nor the House had the votes to advance the bill that fixed it. I would have voted yes in the House as I have said many times. Very frustrating.

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Use of “economic models” to mislead the public

thumonscaleThe Washington Policy Center, a right-leaning think tank, published a report today with a terrifying title: “Economic model shows Superintendent Dorn’s proposed tax increases would cost 18,500 jobs“. This is “truthy”, AN economic model did show this. Of course, THIS economic model ALWAYS shows job losses from proposed public policy proposals.

Economic model shows Superintendent Dorn’s proposed tax increases would cost 18,500 jobs |Washington Policy Center  Economic model shows Superintendent Dorn’s proposed tax increases would cost 18,500 jobs | Washington Policy Center.

The model in question, the STAMP model, is often used by people who want to make a point. The Policy Center, and this author in particular often have their thumb on the scale when they describe the impact of actually funding our K12 system. For an alternate viewpoint on a similar discussion in Arizona, the link below discusses a comparison of three different economic models, models based on the same basic set of data about the economy.

They are looking at a remarkably similar issue – the impacts of a $1 billion increase in the sales tax in Arizona, an increase I believe they did in the end. The other two economic models showed the exact opposite – an increase in jobs in Arizona. The conclusion from the University of Arizona analysis is:

Both the model structure and the parameter assumptions suggest  that the STAMP model was both designed and specified in a way that biases the  results toward the findings of very low impacts of government expenditures and  very high impacts of tax increases.

UA Estimates of Tax/Expenditure Impacts Compared to those of the Goldwater Institute (prepared by Beacon Hill) and REMI. | Economic and Business Research Center, Eller College of Management, University of Arizona http://ebr.eller.arizona.edu/research/articles/2010/compare_ua_remi_stamp_simulations.asp

You can say almost anything you want about economics and get a study to “prove” it. This article from the Policy Center is unlikely to say anything interesting because of its use of the STAMP model. It’s yet another example of the Policy Center not providing data and analysis in a way that can actually be used by policymakers. By not providing a balanced view of the variety of economic models out there it makes the analysis almost painful to read, and not trustworthy.

Posted in Budget, Education, Tax Policy | 4 Comments

Improving Quality of Early Learning

Legislative news from Rep. Ross Hunter, D-Medina (48th Legislative District)

OLYMPIA – The state House of Representatives approved HB 2377 today by a vote of 64-33, which will substantially improve the quality of early learning for kids in Washington State.

“If we want to improve school readiness outcomes for students, our best investment is in high-quality early learning,” said the bill’s sponsor, Rep. Ross Hunter of Medina.

“We now know how to assess the quality of pre-school programs and assess these outcomes. We just have to be serious about doing it. The evidence is really clear – quality early learning is the best investment we can make to close the achievement gap here in Washington.”

HB 2377, the Early Start Act of 2014, will use a balanced approach – a mix of incentives and requirements – to increase child care quality by getting more facilities to provide high-quality child care.

Washington State has done an excellent job creating and expanding our early learning network. We have nearly 7,500 child care facilities that serve about 174,000 children.

The focus now must be on improving the quality of care those children receive each day. Only high-quality child care provides a positive return on investment. It leads to positive outcomes like greater academic achievement, increased graduation rates, lower incarceration rates, less poverty, and less reliance on government assistance.

“McCleary talks about improving education outcomes for children,” said Rep. Ruth Kagi, chair of the House Early Learning and Human Services Committee. “This bill will do more to close the opportunity gap than anything we have done in a long time.”

HB 2377 has now moved to the Senate for consideration.

###

For interviews or more information:

Early Start Act summary

Early Start Act news release

Rep. Ross Hunter, 360-786-7936
Staff: Andy McVicar, 360-786-7215

Print-quality photo:http://www.leg.wa.gov/house/representatives/publishingimages/hunter.jpg

Photo credit: Washington State Legislative Support Services

For broadcast-quality audio or to arrange TV or radio interviews:

Dan Frizzell, 360-786-7208

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How much do dropouts cost us? The real numbers behind ‘pay now or pay later’ | Education Lab Blog | Seattle Times

 

How much do dropouts cost us? The real numbers behind ‘pay now or pay later’ | Education Lab Blog | Seattle Times.

Good piece about quantizing future costs of kids dropping out of school. Makes me want to read the study they reference. So many studies, so little time…

It’s worth subscribing to the Seattle Times’ Education Blog. There’s a link in the story to get a daily email update on recent stories.

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Suing schools when kids can’t read?

Interesting piece in the Seattle Times that questions if suing schools when students can’t read will work. My guess is no, it will not.

Suing schools when kids can’t read?.Suing schools when kids can’t read?

The law that defines basic education requires that schools provide a reasonable opportunity to acquire the knowledge and skills necessary to succeed, but does not guarantee a particular outcome. A large number of children coming out of a specific program not meeting rational expectations should lead to real questions, and a systemic inability to help kids attain reasonable goals seems to be behind the Supreme Court’s McCleary decision, but I can’t see how it could apply to an individual kid.

 

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Resisting the Urge to Judge the Affordable Care Act

http://www.commonwealthfund.org/Blog/2013/Dec/Resisting-the-Rush-to-Judge-the-Affordable-Care-Act.aspx

A super-interesting (and brief) overview of how all the moving parts of the ACA have affected us, including the bad (website rollout) with the good (additional coverage, bending cost curve, rebates for excessive adminstrative spending, etc.)

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Transportation

I made some remarks at the Bellevue Rotary yesterday that seem to have been misinterpreted by some people, so I’m clarifying:

Passing a transportation package this session is incredibly important for the Puget Sound region. I support a well-designed package.

  • Metro Cuts

    Starting in January King County Metro will start reducing service to make up for an expiring car tab fee the state authorized them to charge several years ago. You can see the proposed reductions here. The Eastside cuts will result in significantly increased congestion as commuters shift to single-occupancy cars.

  • Arial view of 520 bridge

    The 520 bridge project will stop planning for the next phase. They will lay off the design team, making it difficult to re-start the project, costing millions and adding years of delay. If no package is passed we will have a bridge that has 6 lanes all the way to Foster island, which turns out to not be all that helpful. The exit to Montlake will be dysfunctional and highly congested as buses and HOVs cross three lanes of traffic to get off and on. The vulnerable parts of the bridge will remain – the hollow pillars on the west approach to Montlake and the Portage Bay Viaduct, and could fail in an earthquake or by being struck by a barge. (This happened a few years ago and did serious damage to one of the pillars.)

  • The Seattle metro area has some of the worst congestion in the nation. In 2012 our area was the 4th worst in the nation, according to the Tom-Tom data company. (Link here.) This is a deterrent to businesses locating here, and fixing it has been a major ask of the Boeing Company, Microsoft, and a host of other major employers. As I’m sure you have figured out by now it’s also quite painful to live through.

I support a large transportation investment package to improve this situation and will vote for a package that makes sense.

However, I don’t support just ANY transportation package – it needs to be good for the central Puget Sound. (Other parts of the state care about the impact on their area, which makes putting together a package an incredibly difficult balancing act.) A good package will have a number of key elements: Continue reading

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Pay It Forward

Pay it Forward: Debt-Free Access to Higher Education

Pay it Forward: Debt-Free Access to Higher Education

Recently a number of people have written to me about the “Pay it Forward” concept for funding higher education in Washington. The basic idea as described on the Economic Opportunity Institute website: (www.eoionline.org)

Pay It Forward: A Debt-Free Degree 

  • Students attend college with no upfront tuition or fees. Instead, students contribute a small, fixed-percentage of their income for a predetermined number of years.
  • Contributions are placed in a public higher education trust fund that funds education for the next generation of students, giving each new cohort the same opportunity to attend college

It’s a cool idea that provides upward mobility for more kids and doesn’t expose them to debt that many will have difficulty repaying. The implementation is a little more difficult. To make this work you have to forego tuition and fee revenue (over 60% of our higher education budget today) for a significant period of time, until the revenue from the payment stream catches up. This would be, most likely, at least a decade of covering well over a billion dollars a year. We don’t have this much money and are not likely to given our current obligations.

Continue reading

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Early Learning

Thomas The Tank Engine

Thomas The Tank Engine

I visited a family child care provider in Bellevue last week. I’ve been working with Representative Ruth Kagi on trying to figure out how to improve both the reach and quality of our early learning system for at risk kids, and seeing how stuff works in person is pretty valuable.

This wasn’t a facility for at-risk kids. In fact, it costs over a thousand dollars a month for preschool kids, more for infants and toddlers. (They require a higher staff ratio.) This isn’t an out of whack price – it’s what it costs to provide preschool here. We were looking at Washington’s new quality ranking system in action. The provider Bijay Singh has been working on getting rated, which is a long process. She’s been in the business for 30 years and it looked like a great place. I’d show pictures, but I always feel awkward taking pictures of other people’s kids and there are legal issues with legal releases. I have included the picture of Thomas the Tank Engine above, instantly recognizable to anyone who has had kids in the past 20+ years. (More people read posts with pictures – who knew?) I sat on the floor with a three-year-old and played with the boy and his trains for at least 10 minutes.

Continue reading

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