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August 19, 2014 standard

The good news for reformers, and ultimately, for the children of Louisiana, is that Gov. Bobby Jindal’s effort to halt implementation of Common Core reading and math standards has been kiboshed by a state court judge. But reformers, especially Common Core supporters, must keep in mind that there is hard work ahead to make the promise of the standards a reality for all kids, especially those in the Bayou State long stuck with the worst American public education offers.

Earlier this evening, Nineteenth Judicial District Judge Todd Hernandez handed down a preliminary injunction in Navis Hill v. Jindal, preventing the governor from enforcing the executive order issued in June ending Common Core implementation. Writing that Jindal provided no evidence for justifying his move, Hernandez also determined that the governor offered no basis for his claim that Supt. John White and other state education officials illegally contracted with the PARCC consortium to implement tests aligned with the test. Hernandez then noted that Jindal’s move was causing havoc within the Bayou State’s districts, charter schools, and private schools because of the consequences for kids, families, and teachers (the last of which gain bonuses based on performance improvements measured by the exams).

Most importantly, Hernandez noted that Jindal didn’t have any constitutional authority to even interfere with Common Core implementation because the state legislature (at Jindal’s behest) has authorized the state education department to proceed. In the process, Hernandez also laid out Jindal’s flip-flopping on Common Core, showing how he supported implementing the standards before he decided to oppose them. Wrote Hernandez: “The Louisiana Constitution is clear… [the state legislature and education department] supervise and control the public elementary and secondary schools in the state.”

For Jindal, who has already declared that he would appeal Hernandez’s ruling, this is the latest loss he has suffered in his anti-Common Core tirade. Earlier this year, state legislators refused to go along with his effort to halt implementation of the standards, only offering a compromise measure that would allow the Bayou State to amend aspects of the standards it desired. [Jindal rejected that measure.] Last week, his amended motion in Navis Hill asking for the court to cancel the state’s memorandum with PARCC was tossed out of court. Then on Monday, a suit filed against White and the state board of education by a group of legislators allied with Jindal on opposing the standards was also thrown out of court.

In the process, Jindal has destroyed what was until recently a strong legacy on advancing systemic reform during his seven years in office. He also ended up losing allies among reformers and school choice activists, including the Black Alliance for Educational Options (who helped back the Navis Hill suit). By engaging in his political jihad — which has included attempting to destroy the career and reputation of White and state board president Chas Roemer — Jindal has exposed for national display his longstanding penchant of being petty and vindictive in dealing with opponents and otherwise allies. And reformers at the national level are angry with Jindal because his antics have wounded efforts to overhaul how states govern public education (especially in Arizona and Indiana), weakening arguments for placing control of policymaking into gubernatorial hands.

Meanwhile Jindal hasn’t even succeeded in his goal of boosting his likely bid for the Republican presidential nomination: The Bayou State governor is attracting support from only two percent of Republicans and one percent of independents in this month’s McClatchy-Marist University Poll, trailing 10 other likely candidates, including former Florida Governor Jeb Bush and New Jersey Gov. Chris Christie (both Common Core supporters) and Common Core foes such as Texas Gov. Rick Perry and his colleague in Wisconsin, Scott Walker (who is facing a tough re-election bid).

As your editor noted last month, Jindal’s gambit hasn’t won over movement conservatives otherwise uninterested in education because they know that Jindal has flip-flopped his position on Common Core, and thus, see him as just another cheap-suit politician, Meanwhile Jindal has gained no ground with moderate Republicans and independents, who just don’t see him as a compelling representative of the party. And the antics of late are concerning to those movement conservatives who are already complaining about what they consider to be acts of executive overreach by President Barack Obama; Jindal’s behavior rightfully makes him unsuited for the presidency in their minds.

All in all, Jindal’s future political prospects are likely done. This isn’t to say that Jindal won’t continue his vindictive ways. School choice activists should expect the governor to do nothing on their behalf next year when it comes to the budget for the state’s voucher program. This means they must continue building the already-strong support for expanding choice and continuing the program, including reaching out to U.S. Sen. David Vitter, the likely Republican nominee and Jindal’s probable successor in the governor’s office.

Jindal’s defeat is good news for Bayou State children — and for those working hard to address its longstanding failure to provide all kids with high-quality education. The challenges are definitely tremendous: Thirty-two percent of Bayou State eighth-graders read Below Basic, according to the 2013 National Assessment of Educational Progress, 10 percentage points greater than the national average; only 24 percent of eighth-graders in the state read at Proficient and Advanced levels (read: have been successfully prepared for success in higher education and career), trailing the national average by 12 percentage points. The average Bayou State eighth-grader is a grade level behind his peer nationwide.

But implementing Common Core successfully will be no easy task. There’s Jindal, who will stand in the way of successful implementation (if he cannot stop the effort altogether) by using his budgetary authority. Reformers and Common Core supporters will have to hold his feet to the fire, using every tactic available to keep the dollars flowing and put Jindal into the corner where he belongs.

Beyond Jindal, Common Core supporters must work closely with districts, charter schools, and teachers to ensure that implementation is a success. This starts with ensuring that curricula (including materials used in classrooms) are aligned with the standards. As seen in other states, this can be tricky, especially if teachers use inappropriate or even explicitly political texts in ways that can lead to Common Core foes claiming that the standards are a tool for political indoctrination. Presenting successful approaches used by high-quality teachers in other states in using original texts in their work is key. The move this week by the Bill and Melinda Gates Foundation to launch EdReports.org, which reviews curricula and other materials, will also help. [That it took so long for Common Core supporters to address this issue is shameful, by the way, and is one reason why opponents have garnered support.]

Another key move lies with setting high test proficiency cut scores on the PARCC tests. This is important for two reasons. The first? Setting high expectations is key to reaping the promise of implementing Common Core and, ultimately, helping our children get the comprehensive college-preparatory curricula they deserve. Secondly, high cut scores are necessary because families, communities, and policymakers must know the truth about how well school operators and those who work within them are providing our Bayou State kids with high-quality education. Working with White on communicating these expectations and realities to the public — especially to suburban districts which have long-perpetuated the myth that they are providing high-quality education to the kids they serve — is crucial.

Common Core supporters and reformers have scored an important victory against halting Common Core implementation, both in Louisiana and in the nation as a whole. In the process, they have all but mortally wounded a shameless, immoral politician and helped all children get opportunities for high-quality education. Now it is time to get to the hard work of implementation so the promise for kids becomes reality.

Featured photo courtesy of Getty Images.

August 8, 2014 standard

The last time Dropout Nation took a look at the battle between Louisiana Gov. Bobby Jindal and other state officials over his effort to halt the implementation of Common Core, the governor was engaging in the politics of personal destruction, trying to destroy the reputation of Supt. John White, who is pushing ahead with putting the reading and math standards in place. Since then, as expected, the fracas between Jindal and Common Core supporters has moved into the courtroom.

Last week, the state board of education voted to join the suit filed earlier last month against Jindal’s executive order halting Common Core implementation by a cadre of seven families and charter school teachers (with the help of the Choice Foundation and Black Alliance for Educational Options). Days later, Jindal counter-sued the board, asking a state court judge to invalidate the memorandum of understanding it struck with the PARCC consortium to use its Common Core-aligned tests.

Meanwhile outside the courtroom, Jindal’s hopes that his decision to oppose Common Core (after first backing it) would win allies in the Bayou State fell apart this week when U.S. Sen. David Vitter, the likely Republican nominee to succeed the governor declared his backing for the standards. As with Republicans in the state legislature who opposed Jindal’s effort to halt Common Core implementation, Vitter’s endorsement of the standards further isolates the governor, proving once again that his strategy against implementation is a failure.

Yet Jindal continues to oppose Common Core unabated,, The amended motion submitted by the governor to halt the roll-out of Common Core-aligned tests embraces nearly every faulty argument offered up by opponents of the standards at the national level — and embraces their conspiracy-theorizing to boot. Jindal’s argument for canceling the state’s memorandum with PARCC doesn’t stand even basic legal scrutiny. More importantly for reformers across the country, Jindal’s antics in opposing Common Core implementation is weakening much-needed efforts to revamp state education governance.

The amended brief alone is less a work of legal argumentation than a recitation of every anti-Common Core argument that can be cribbed from the texts of the Pioneer Institute and the American Principles Project. But since Dropout Nation has Ginzu-knifed these fairy tales ad nauseam, I won’t spend more time on it.

The heart of Jindal’s complaint is that the Louisiana Board of Elementary and Secondary Education’s memorandum with PARCC should be cancelled because it violates the state constitution. How? Because PARCC’s governing board (of which Louisiana is a member) is charged with overseeing the development and roll-out of the assessments, and that a super-majority of board members decide on various issues related to the effort, Jindal argues that the state board is essentially handing off its responsibilities to a “private non-Louisiana entity” and thus, illegally “binding” the state’s citizens to education policy that the state won’t decide (and, as far as Jindal is concerned, will ultimately be decided by the federal government, which supposedly “compelled” the state to strike the memorandum with PARCC as a condition of competiting for Race to the Top funding).

Jindal’s argument would be convincing if not for some inconvenient facts. For one, as Dropout Nation noted last year, PARCC doesn’t set the test proficiency cut scores that are key to ensuring that standards are reinforced; this is a job that is done by the state board and the superintendent. There’s also the fact that Louisiana can still require PARCC to make adjustments to the tests, including add questions that may result from amendments to Common Core’s reading and math standards; this is going to be done for Massachusetts, which amended Common Core as part of adopting the standards four years ago.

This means that the state board still controls the testing and assessment aspect of education policymaking — and that the PARCC is doing is essentially no different than what every testing company does on behalf of the states for which they work. [The consequences of this reality, by the way, is why your editor expressed skepticism to the transparency-as-accountability approach advocated by many Common Core supporters as a replacement for the No Child Left Behind Act's accountability provisions.]

A bigger problem with Jindal’s argument is that the state’s memorandum with PARCC is perfectly legal based on the wording of the state’s own Competency-Based Education Program law, which was amended two years ago (at the governor’s own behest, by the way) to charge the state board of education with implementing tests based on Common Core, the only set of”nationally recognized content standards” available in any form. As Jindal’s attorneys admit, the law gives the state board of education plenty of leeway in selecting any testing regime or vendor it so chooses. Not only can the state board choose to work with PARCC, Jindal isn’t allowed to use his role as the state’s chief budget administrator to interfere with any of its assessment decisions.

Jindal’s brief, in short, is merely political posturing in legal type. It will likely be tossed out of court — and the governor (along with his attorneys) already anticipate that. But for Jindal, the legal maneuvering, like his decision to oppose Common Core after first supporting it, isn’t based on any first principles legal or ideological. It is less about winning a legal victory than about convincing movement conservatives opposed to Common Core — especially those who wrongly believe that education is akin to indoctrination — that he is truly committed to opposing them After all, they know Jindal is engaged in flip-flopping on an epic scale just so he has a chance to win the Republican presidential nomination.

At the same time, the legal wrangling also gives Jindal the chance to further his scorched earth effort to ruin the reputation of Supt. White and muddy the future political aspirations of state board chair (and political scion) Chas Roemer for having the temerity to stand up against him on behalf of Louisiana’s children. By the time this battle is over, Jindal will have ruined his once-stellar reputation on systemic reform as well as limited his possibilities for higher political office. But he may not mind those losses so long as he also damages his foes.

But for reformers, the tactics Jindal is taking to halt Common Core implementation is a problem — and not just because he may actually succeed. It is also because his antics are giving traditionalists and others ammunition for opposing any overhaul of state education governance that involves placing decision-making solely in the hands of governors.

One of the reasons why systemic reform can be arduous to achieve is because of the byzantine structure of the districts, ed schools, and other clusters that make up public education within states. Most of the time, the governors who are the ones best-positioned to advance systemic reform have the least amount of power over it. Only 15 states allow for governors to appoint chief state school officers on their own or with consultation from state boards of education, while only 35 governors can appoint all or the majority of members on state boards of education. This means that in many cases, the governors must either hope for state boards to appoint reform-minded superintendents or can convince the public to care enough about education to elect the right people to oversee public education.

Reform of state education governance would empower more state chief executives such as former Indiana Gov. Mitch Daniels to use more than their bully pulpits to transform education. But Jindal’s antics in opposing Common Core may make such overhauls impossible to undertake.

As a result, governors who who don’t have a governance structure that places education under their control will struggle to make things happen unless they either have the political capital (and leadership ability) to make reforms reality, or are in states where the conditions for overhauling public education are already in place. More importantly, byzantine education governance ends up becoming captured by the very politics the 20th century Progressive Era reformers who crafted these structures were trying to avoid. Competing bureaucracies end up in turf battles to justify their existence even when, as in the case of teacher licensing agencies, they shouldn’t exist independent of state education agencies in the first place. As seen in Indiana (where Supt. Glenda Ritz is battling with reformers who control the state board of education), policymaking can end up devolving into senseless sparring matches. And because of such diffusion of authority, no one can be held responsible for policies and practices that continue an education crisis that damages far too many kids.

Reformers have long ago recognized that moving away from byzantine education governance to structures under which the governor is solely in charge of policymaking would both help reform-minded chief executives advance their efforts and lead to coherent, unified decision-making. Most importantly, gubernatorial control means one person can be congratulated for smart decisions and held responsible for bad ones. Some good steps towards that have begun to happen. Last year, Wyoming Gov. Matt Mead succeeding in essentially taking over control of the state’s education bureaucracy, while once-and-future Oregon Gov. John Kitzhaber (a subject of a Dropout Nation profile three years ago) is essentially the state’s chief school officer. Last week, the Foundation for Excellence in Education, the outfit run by former Florida Gov. Jeb Bush, editorialized in favor of ending Arizona’s election of superintendents and making the top education post a gubernatorial appointment.

But citizens and policymakers are only willing to move to gubernatorial control if they can trust that the chief executive in office will behave properly. This means a governor can’t go around using his political office to wage vendettas against those who oppose his efforts;  cannot engage in policymaking that is geared solely toward advancing aspirations for higher office; and cannot embrace Hofstadter-like paranoia when being a leader calls for cool, sensible, thoughtful decision-making. Governors who misbehave both lose the ability to make the case for greater control over education policymaking and hurt the efforts of the movement to advance governance reform in the rest of the nation.

Which is why Jindal’s antics in pushing for the halt of Common Core implementation are so troublesome for governance reform.  By using state agencies and even the courts to engage in a witch hunt against White and his allies on the state board, Jindal has made it much more difficult for reformers in the Bayou State to make a compelling case for giving governors greater power over education policymaking. The fact that Jindal issued a legally-questionable executive order to halt Common Core implementation even after the state legislature rebuffed his legislative efforts promotes the old Progressive Era perception that governors will simply act as dictators (and ignore the separation of powers clauses in state constitutions) just to get their way.

It is hard for reformers to argue that governors should be in charge of education decisions when a currently-seated chief executive shows that he won’t respect either law or engage sensibly in the policymaking process. In the case of Jindal, his actions are undercutting his own demands through his opposition to Common Core that he, not the state board or White, should have the final say over state education decisions. In fact, Jindal’s misbehavior has given White more influence on education policymaking, both at the state and national levels (and thus more credit for the efforts undertaken over the past few years), while obscuring the strong and sensible leadership on systemic reform the governor has shown for most of his tenure.

For both traditionalists and others who are concerned with expanding executive branch power, Jindal’s antics are the best argument against any reform of state education governance. This is a shame. Byzantine educational governance does nothing good either for kids, taxpayers, or even governors. But Jindal may have wrecked education governance reform for the next decade. Thanks for nothing, Bobby.

 

 

July 23, 2014 standard

When Louisiana Gov. Bobby Jindal issued an executive order last month attempting to end implementation of Common Core reading and math standards, he probably thought it was a good idea. Even when the preponderance of the evidence showed this wasn’t so.

Sure, Jindal knew that the public knew that he was opposing the standards after he enthusiastically supported them. Yes, his executive order ending Common Core implementation was opposed by his allies in the state legislature, friends at the state board of education, and even Supt. John White, who have previously backed his efforts on the education front. Jindal even understood that the executive order itself was legally questionable because in the absence of state legislation, only the state board of education and education department (which he did not control) could end implementation.

But as far as Jindal was concerned, it was all worth it. After all, by opposing Common Core implementation, he thought he would win support for his run for the Republican presidential nomination from movement conservatives who oppose the standards. Jindal also thought that by abandoning the standards, his allies among school choice activists within the reform movement (many of whom oppose Common Core out of a misguided fear that the standards would hamstring their ability to provide high-quality education in ways they see fit) would also rally around him; since a large portion of the school choice activist community vote Republican, opposing implementation would also win him some votes.

But as both opinion polls and a lawsuit supporting Common Core implementation filed yesterday by a group of seven families (along with two charter school teachers) along with the Choice Foundation (with help from Black Alliance for Educational Options), Jindal was clearly mistaken. Which should be a lesson to all politicians with aspirations for higher office (especially Wisconsin Gov. Scott Walker, who is looking to kibosh the Badger State’s implementation of the standards). Abandoning systemic reform and damaging the futures of children are not strategies for electoral success.

Even before the move to stop Common Core implementation, Jindal wasn’t exactly best-positioned for the Republican presidential nod. This past February, polling outfit Public Policy Polling determined that Jindal was the nation’s least-popular governor, with just a 32 percent approval rating after nearly seven years in office. Certainly the Indian emigre’s son is unpopular with traditionalists within the Bayou State, who opposed his sensible efforts to overhaul teacher evaluations and expand school choice. But Jindal’s penchant for high-handed behavior and viciously settling scores with rivals through the use of his line-item veto powers, along with a fecklessness on state finances that makes California Gov. Jerry Brown look like an old-school fiscal conservative, has also hurt him at home.

Meanwhile on the national level, Jindal finds himself in a crowded field of Republicans who either have stronger movement conservative profiles or better records on both school reform and government reform. This includes Texas U.S. Sen. Ted Cruz (whose instigation of last fall’s government shutdown has won him support from the rabble), his colleague in the federal upper house, Rand Paul (who has bolstered his prominence over the past two years with his opposition to further military efforts in the Middle East, as well as taking strong stances on sentencing reform), former Florida Gov. Jeb Bush (whose record as a strong reformer cannot be questioned), and the aforementioned Walker (who will likely win a second term despite being dogged by a corruption probe).

With low popularity numbers at home and unable to stand out in a crowded field of candidates, Jindal had to do something. So he seized on the opposition to Common Core among the motley crew of movement conservatives, hardcore progressive traditionalists, conservative-leaning school choice activists within the overall school reform movement, and teachers’ union bosses opposed to the use of standards-aligned tests in teacher evaluations. Betting that movement conservatives and choice advocates would rally around his cause (and bolster his presidential aspirations), Jindal reversed his support for Common Core and became part of the opposition.

Over the past few months, Jindal unsuccessfully pushed more-sensible state legislators to pass legislation to end implementation, and even vetoed a measure that would have kept the Bayou State’s Common Core implementation efforts in place while slightly amending the standards as Massachusetts and other states have done. Having failed by June to get his way, Jindal went nuclear. He issued the executive order canceling the state’s memorandum of understanding with the Council of Chief State School Officers and the National Governors Association to implement the standards, as well as demanding White and his staff at the state education department account for every dollar spent on implementation.

Jindal probably figured that White would continue implementing Common Core implementation — and even file suit against the governor for overstepping the limits placed on his role overseeing education policy. He also likely knew that both state legislators and the board of education would also visibly oppose him. Jindal even anticipated that one of his foes, Lt. Gov. Jay Dardenne a strong Common Core backer who was already sore with Jindal over his high-handedness (especially in stripping out of the budget $2 million in state tourism funding Dardenne oversaw) would also come out swinging. But Jindal figured that it would all work out to the benefit of his ambitions.

This hasn’t happened. Public Policy Polling’s latest survey of Bayou State preferences in presidential aspirants ranks Jindal in fourth place. Not only does Jindal’s 12 percent rating, trail Cruz (who gets 19 percent of voters surveyed) and Bush (with 17 percent), he even trails former Arkansas Gov. Mike Huckabee, who isn’t even likely to run for the Republican nomination. Jindal likely couldn’t even carry his own state in a Republican primary. It’s no better on the national level: Jindal trailed eight other aspirants — including Paul, scandal-tarnished New Jersey Gov. Chris Christie (a Common Core supporter who has been a strong leader on the reform front), and Bush — garnering just four percent of prospective New Hampshire voters in an NBC-Marist College poll. In Iowa, Jindal came in dead last.

All of Jindal’s grand-standing against Common Core has done nothing to win him support. Movement conservatives, who know that Jindal has flip-flopped his position on the standards, see him as just another cheap-suit politician, while moderate Republicans (who are divided over implementation) just don’t see him as a compelling representative of the party.

Even those movement conservatives who are also Jindal fans thought he overstepped his legal authority. Declared American Spectator writer Quin Hillyer in the Advocate: “[Jindal's] unilateral abridgement of Common Core runs roughshod over Madisonian principles of executive restraint.” Especially for these conservatives, the goal of quashing Common Core implementation doesn’t justify the means. And for the more-principle minded within the conservative movement, Jindal becomes even more unattractive as a candidate because he is acting like their bete noir, President Barack Obama, who they loathe in part because of his penchant for using executive orders to go around Congressional opposition

Meanwhile Jindal hasn’t exactly won over school choice activists (along with Parent Power advocates) in his own state. In fact, they have thoroughly embarrassed Jindal over the past month by calling him out for opposing standards that can help provide Bayou State children — especially those from poor and minority backgrounds — with the comprehensive college-preparatory learning they deserve. Particularly for charter school operators such as the Choice Foundation as well as school choice advocates such as BAEO, implementing Common Core (and ensuring high-quality education for the vast majority of kids attending traditional district schools) is as important as expanding high-quality options so that families can escape failure mills.

Now, comes Navis Hill v. Jindal, the tort filed yesterday by the sevenBayou State families (along with Choice Foundation with help from BAEO) against Jindal and his staff to stop the governor’s effort to halt Common Core implementation. By working so hard to oppose the standards, Jindal has found himself opposing the very school activists and families (including those from poor and minority households) on whose behalf he has claimed to be working in his more-sensible school reform initiatives. Jindal has essentially turned his allies into opponents — and that won’t bode well for him politically.

But for Jindal, the problem isn’t just that choice advocates are opposing him on an issue on which he thought they would back him. The plaintiffs legitimately argue that Jindal’s executive order and efforts to quash contracts the state education department has already struck to roll out Common Core-aligned tests violate the state constitution, and that his decision has created chaos within the state’s public education system. Because Bayou State legislators have opposed Jindal’s efforts to quash Common Core implementation (and, in fact, have supported the standards), Jindal can’t even claim to be faithfully executing state law. As a result, the Navis Hill families likely have a far stronger shot of halting Jindal’s effort to quash Common Core than their allies in Oklahoma, whose similar suit against the halting of Common Core implementation was unsuccessful because that state’s supreme court ruled that they couldn’t legally question the policymaking privileges of the legislative branch.

Then there’s the hit Jindal has taken to his reputation as a strong leader on advancing systemic reform. Certainly Jindal’s high-handedness has won him foes. But until recently, he deserved credit for standing up and taking action to transform public education for Bayou State kids. It was his strong stance against the state’s educational ancien regime — going so far as to call out the executive director of the NEA affiliate for declaring that poor and minority families are too incompetent to make smart school choices — along with the strong lobbying of Parent Power and school reform groups, that led to the expansion of the state’s voucher program. He also proved himself ready to do the right thing. This included defending his reforms against lawsuits by the American Federation of Teachers and National Education Association branches there, to finding funding for the voucher program once a state court judge invalidated the use of dollars from the state’s school funding formula for the purpose.

But by reversing himself on Common Core in the hopes of winning higher office, Jindal has tossed his entire legacy into the trash. By acting as a political opportunist instead of as a strong defender of high-quality standards, Jindal has made a mockery of every word he has spoken and every action he has taken against traditionalists. Even worse, by joining Common Cause with the likes of talk show host Glenn Beck and columnist Michelle Malkin (along with those who should know better such as Jim Stergios and Sandra Stotsky of the Pioneer Institute), he has also embraced the worst of their rhetoric.

Simply put, Jindal has behaved shamefully, and exemplifies perfidy instead of leadership. For that, he doesn’t deserve to be president, much less chief executive of a state in need of strong leadership to address its woeful performance in improving student achievement .

Within just one month, thanks to his opposition to Common Core, Jindal managed two spectacular feats: Further weakening his political aspirations, and losing the few allies he had left. Which, in turn, led to a third: Weakening his once-stellar legacy on advancing systemic reform for all kids. Walker and other politicos should think twice before following Jindal’s example.

July 2, 2014 standard

As you may remember, Dropout Nation gave a preview of its analysis of the financial condition of Pennsylvania’s virtually-insolvent pension during Saturday’s report on the School District of Philadelphia. Since then, Keystone State Gov. Tom Corbett has failed to convince Keystone State legislators to pass his plan to increase contributions to the Public School Employees’ Retirement System. On Tuesday, the state’s lower house voted to effectively kill debate on the plan by steering the legislation into a committee chaired by one of Corbett’s fellow Republicans, Eugene DiGirolamo, who collected $19,750 in political contributions from public-sector unions (including $2,750 from the American Federation of Teachers affiliate there, and $1,000 from the National Education Association’s state unit) during the 2012 election cycle, according to data from the National Institute on Money in State Politics. With DiGirolamo proclaiming that he will not hold any hearings on Corbett’s plan, and with the governor himself likely to lose the state’s top executive spot in November, there is no chance that the state government will address PSERS’ insolvency until after the new year begins.

Regardless of DiGirolamo’s unwillingness or that of Democrats in the Keystone State to take action, and no matter what happens to Corbett (whose tenure as governor has been weak, especially on systemically reforming public education), PSERS is still virtually busted. And based on Dropout Nation‘s analysis, the underfunding is increasing at alarming levels.

PSERS officially reports a pension deficit of $30 billion for 2012, the latest year available. That is an 11.4 percent increase over its officially-reported underfunding for the previous fiscal year. But as your editor pointed out in last year’s analysis, the Keystone State pension’s official numbers are not to be trusted. This is because it assumes an investment rate of return of 7.5 percent, which is far higher than the 5.3 percent five-year return rate experienced on the market, according to Wilshire Associates, and much higher than the 2.5 percent five-year return rate PSERS has actually experienced. Thanks to an inflated rate of return, the Keystone State teachers’ pension is understating its virtual insolvency.

Another problem lies with Act 10, the pension law passed four years ago that has exacerbated the pension’s insolvency with such moves as boosting annuities collected by teachers to equal 75 percent of final year’s salary. The law mandates that PSERS recognizes its gains and losses over a 10-year period, instead of an already-ridiculous five years. Because this approach, called smoothing, allows for the pension to not immediately account for losses or gains, it gives the false impression that its financial condition is in good shape.

To get to the heart of matters, Dropout Nation uses a version of a method developed by Moody’s Investors Service that uses a more-realistic 5.5 percent rate of return on investments. [Moody's uses a rolling rate based on the return on a long-term bond index; Dropout Nation uses the 5.5 percent rate Moody's originally used in its preliminary analyses for the sake of consistency.] The result? DN determines that PSERS is underfunded to the tune of $37 billion, a 10.4 percent increase over the pension’s $33.5 billion insolvency as figured out by this publication in last year’s analysis. The $37 billion underfunding is 27 percent higher than PSERS’ officially-reported unfunded liability.

Based on a 17-year amortization rate, Pennsylvania taxpayers will have to shell out an additional $2.1 billion a year, 90 percent more than the $2.4 billion in contributions made in 2013. The Keystone State government’s plan to contribute an additional $600 million into the pension this year will do nothing to address the shortfall.

As with other teachers’ pensions, addressing PSERS’ insolvency is critical for Pennsylvania largely because of the number of Baby Boomers retiring from the teaching ranks. The number of retirees (net of deaths and other removals) added to PSERS’ rolls increased by 20 percent (from 168,026 annuitants to 202,015) between 2007 and 2012, while the payouts increased by 38 percent in that same period. Based on the pace of increases in annuitants in that six-year period, the pension will likely add 12,438 new annuitants (excluding deaths  and other removals) to the rolls ever year for the next decade before retirements. With each retiree likely collecting at least $28,501 a year, PSERS will have to pay out at least $354.5 million more in annuities every year, further increasing its insolvency.

Pennsylvania Gov. Tom Corbett will likely end his rather weak tenure without addressing another key aspect of the nation’s education crisis. Photo courtesy of PoliticsPA.com.

Keep in mind that the numbers only cover the pension’s underfunding alone. There’s also PSERS’s unfunded retired teacher healthcare costs with which the state must also contend. PSERS officially reports unfunded liabilities of $1.2 billion. But hold on: Unlike most pensions, PSERS uses the same inflated rate of return for the investments used to cover those costs as it uses for the pension. Using the same method applied to the pension, Dropout Nation determines that the true unfunded liability is $1.6 billion, 27 percent higher than PSERS officially reports. Based on a 17-year amortization rate, Keystone State taxpayers will have to pay $95 million more a year to pay down that shortfall, almost double the $109 million paid out last year.

At some point, given the increasing liabilities, Pennsylvania will have to deal realistically with PSERS’ insolvency. This must start with increasing contributions. But more-aggressive action must be taken.

While teachers officially pay 41 cents out of every dollar contributed last year. But as in most states, it is likely that districts are actually the ones covering the share of contributions teachers are supposed to make (on top of their own payouts to the pension). Embracing the approach taken by Detroit’s main city government to freeze the existing pension (save for paying out remaining contributions to retirees and whatever currently-working teachers are owed), and move current and new teachers to a hybrid pension. This would include a defined-contribution plan to which teachers can contribute as much toward their retirement as they so choose (with a five percent match from districts) along with a smooth accrual defined-benefit element similar to an approach advocated by Josh McGee of the John and Laura Arnold Foundation and Marcus Winters of the Manhattan Institute in a report released last month. As for PSERS itself? The state must end any cost-of-living increases for current retirees as well as reduce promised final-year salary payout percentages in order to get the pension’s financial house in order.

This move would help taxpayers and teachers by ending increases in PSERS’ unfunded liabilities as well as making the pension solvent. These moves woud also be helpful to younger teachers who are often the ones who bear the brunt of most pension reform plans. Given that defined-benefit pensions such as PSERS already do little for younger teachers because half of them are likely to leave classrooms within five years (and thus, unlikely to fully vest in the plans), moving away from the current pension would actually make teaching more attractive, both to those already working in the profession as well as to talented collegians who would otherwise look to gigs in the private sector.

But such a reform can only happen if Pennsylvania’s legislators and other political leaders actually address the long-term burdens facing the taxpayers and children they are supposed to represent. Sadly for the Keystone State, such action won’t happen anytime soon.

Featured photo courtesy of paindependent.com.

 

June 25, 2014 standard

For the moment, once-and-future Gov. Jerry Brown can claim that he has taken some sensible steps in addressing the California State Teachers’ Retirement System’s massive virtual insolvency. Last week, legislators backed Brown’s plan to increase contributions to the pensions by $5.5 billion (from the current $2.2 billion) over the next seven years. [Brown signed the legislation yesterday.] This is an important (if still less-than-satisfactory) step toward addressing CALSTRS’ officially-reported underfunding of $74 billion, which is more likely $93 billion based on a Dropout Nation analysis of the pension’s financial using a formula developed by Moody’s Investors Service.

Whether or not Brown’s plan will survive beyond legislative approval and his signature on the dotted line is another question entirely. Why? Because school districts are none too happy about the move, and they can easily claim that state law is on their side.

As your editor pointed out last month, Under Brown’s plan, districts bear most of the burden of increased contributions, paying 75 percent of the increased contributions (along with the nine percent that teachers are supposed to pay themselves, but in most cases, will actually be covered by the districts as part of collective bargaining agreements with NEA and AFT locals); this is greater than the 38 percent districts currently contribute (along with the 39 percent that they often pay on behalf of teachers). This certainly makes sense. After all, Brown’s move last year to end full state funding of education and place the bulk of school subsidizing onto local property taxes effectively makes districts responsible for their fiscal affairs. There’s also the fact that the fiscal fecklessness of districts is a key reason for CalSTRS’ virtual insolvency; this includes the penchant to engage in spiking, or ratcheting up the salaries of teachers and school leaders during their last five years on the job in order to boost annuity payouts upon retirement.

The problem? California’s state constitution bars the state from forcing districts and other local governments to bear what they may consider to be unfunded mandates. This provision, which has been an obstacle to other statewide reform efforts — including the development of longitudinal data systems needed to improve student and school achievement — will also likely prove to be a stumbling block to Brown’s pension plan. Given that districts are up in arms over the contribution increases (and angered at Brown’s teachers’ union-driven plan to limit their ability to build substantial financial reserves), expect districts and their lobbying groups to proceed with litigation to stave off the hikes.

Litigation isn’t the only obstacle to the success of Brown’s plan. As Dropout Nation noted last month, the plan is based on faulty numbers that don’t fully reflect the true extent of CalSTRS’ virtual insolvency. Because CalSTRS assumes a 7.5 percent rate of return on its investments, a rate far higher than the 5.2 percent five-year rate experienced in the market and the pension’s own actual five-year rate of return of 3.7 percent, the teachers’ pension is understating its level of unfunded liabilities. The fact that CalSTRS also engages in actuarial tricks such as smoothing of investment losses and gains means that Brown’s plan is not based on a realistic picture of the pension’s financial condition.

Then there is the fact that Brown’s plan for reducing CalSTRS’ insolvency is based on a way-too-long 30-year timeline. For one, given that CalSTRS will likely add 13,398 new annuitants (excluding deaths and other removals) to its rolls every year for at least the next decade before retirements slow down, and will have to pay out at least $611 million more in annuities every year, a 30-year payment plan will not fully address those growing liabilities. At the same time, by using a 30-year timeline instead of a 17-year plan as originally recommended by Moody’s, the state isn’t being aggressive enough in getting CalSTRS’ financial condition — and that of the entire state — in order.

Finally, there is the fact that Brown’s plan doesn’t reduce the growth in unfunded liabilities at all. That can only happen by moving existing and new teachers out of the defined-benefit pension and putting them into a hybrid plan that features a defined-contribution element into which they can save as much as they choose for retirement. This is a step being taken by Detroit next week as part of its effort to emerge from bankruptcy. For the state, districts, and ultimately, taxpayers and children, this move would immediately slow the growth in liabilities. It is also beneficial for teachers. Particularly for younger teachers, half of whom are likely to leave the profession within their first five years, such a move would actually allow them to reap the full rewards of their work by having a portable retirement savings plan.

Neither Brown nor the state legislature were willing to take any of these steps. But districts may be able to do so, especially if a court ruling next month in the bankruptcy proceedings for Stockton, Calif.’s main city government end up reflecting that handed down in December by the judge overseeing Detroit’s Chapter 9 filing.

Earlier this month, one of the creditors in Stockton’s bankruptcy, Franklin Templeton Resources, challenged the city’s proposed plan to exit Chapter 9. The money manager argues that no proposal can be valid unless CalSTRS’ sister pension, the State Employees Retirement System, is treated like a contractor or creditor under the U.S. Constitution’s Supremacy Clause, superseding the state constitution’s provision treating pensions as a vested right that cannot be tinkered with under any circumstances. Essentially, bankrupt municipalities can voluntarily (or be forced by creditors) to slash annuity payments for retirees, restructure defined-benefit pensions, and even replace traditional pensions with defined-contribution plans. And it is a position already validated by the federal bankruptcy court in Detroit’s case.

Whether or not the judge in Stockton’s case will go along with Franklin Templeton’s argument is an open question, and one that won’t be known until he hands down his ruling on July 7. But given that the judge has already allowed Stockton to slash its unfunded retiree healthcare benefits from $544 million to $5.4 million using the same reasoning, you can bet that he may likely rule the same way on how Stockton’s obligations to CaLPERS. If it happens, it could lead to other financially-strapped municipalities in California (and even in the rest of the country) taking much-needed steps toward addressing their pension insolvencies. And given that CalSTRS is similar in structure to CALPERS, equally cash-strapped districts may force pension reforms that neither Brown nor legislators want to do.

The future of CalSTRS may end up being a matter decided by the courts and not by Sacramento’s mandarins.