Truthiness, adequacy, and the New Jersey way

Chris Tessone / May 24, 2011

New Jersey's Supreme Court ordered Chris Christie to cough up another $500 million in funding for the state's schools in a 3-2 ruling today. Very few people (aside from the three justices in the majority and Mark Zuckerberg) would argue that NJ's worst-performing schools can be fixed with more money, however.

So-called "Abbott districts," which get more money under another NJ Supreme Court ruling that deemed education in those locales inadequate, are among the highest-spending districts in the country. Newark, which is one of them, tops out at $23,000 per student using the state's new accounting method. Education in these districts is indeed inadequate and horribly shortchanges the youngsters who live there, but after 25 years of receiving extra resources, it seems clear that the problem goes deeper than money. Unfortunately, the question of what constitutes an "adequate" education in New Jersey has largely revolved around funding issues rather than processes and outcomes for children.

Nevertheless, I agree with Bruce Baker that the court's rather narrow decision was the correct one. (This may be one for the record books.) Bruce found in a recent analysis that while New Jersey's funding system is fairly progressive, giving more state aid to poorer districts, Gov. Christie's recent cuts hit high-poverty districts the hardest. Today's decision is a perfect example of checks and balances functioning correctly, with the court restoring support to the poorest and most challenged residents of New Jersey.

Hopefully these

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Truthiness, adequacy, and the New Jersey way

Who's to blame for the pension shortfall?

Chris Tessone / May 5, 2011

Unions are not to blame for the severity of public pension shortfalls, but that doesn't mean that taking a hard look at collective bargaining is a bad idea. Matthew Di Carlo at Shanker Blog called yesterday for pols and commentators to stop blaming the nation's public pension issues on collective bargaining. He has a point, but I can't run with his conclusions here:

I find little evidence that the unionization of public employees has any effect ? whether positive or negative ? on the fiscal soundness of state pension plans. This, along with the fact that we already know why pensions are in trouble, and it has little to do with unions, once again represents strong tentative evidence that the push to eliminate collective bargaining is misguided, and the blame on unions is misplaced. States with little or no union presence are, on average, in no better shape.

Pensions are far from the only issue at hand. The Pew report cited by Matthew shows that, in addition to the $660 billion gap in pension systems, there is a $604 billion shortfall to pay for generous health benefits for public-sector retirees. This gap has little to do with the financial crisis, because states didn't have much savings to lose in the markets to begin with.

The absolute level of health care liability per person ? not the gap, but the dollar amount states will have

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Who's to blame for the pension shortfall?

Maintenance of effort requirement too expensive for Montgomery County

Chris Tessone / May 3, 2011

Montgomery County, Maryland, one of the wealthiest and highest-performing large school districts in the country, is likely to reduce its level of per-pupil spending, in violation of a state maintenance of effort requirement. This means giving up an estimated $29 million in state aid in 2013:

The county's elected leaders have rescinded a request made last month seeking to be excused from a state formula for funding education.

The decision would allow the county to reduce the amount of money it gives to Montgomery County Public Schools in the next fiscal year ? and potentially every year thereafter.

In a letter Thursday to the Maryland State Board of Education, County Council President Valerie Ervin (D-Dist. 5) of Silver Spring and County Executive Isiah Leggett (D) said they do not plan to seek a waiver from Maryland's maintenance-of-effort law.

The county spends roughly $15,000 per pupil, according to the Maryland Report Card, and found itself unable to cover the increased cost from enrollment gains in recent years.

The most interesting part of the story to me is the battle between the County Council, which sees an unsustainable budget, and the school board, which has been demanding that more county resources to be diverted to the already-flush schools. The Council seems to have tied the hands of the district with this move, committing Montgomery County to lower spending for the foreseeable future.

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Maintenance of effort requirement too expensive for Montgomery County

Political risk and pensions

Chris Tessone / April 26, 2011

We don't often talk about the political risk borne by public-sector workers in traditional pension systems, but that risk is now very real for cops and firefighters in Detroit. The city has twice as many retirees as workers on the job, and that coupled with a decline in population is making it tough for them to pay modest pensions ($28,501 a year for the average retired police officer). The city is looking for ways to reduce those already meager benefits.

Conventional wisdom and the laws and constitutions of many states have long held that the pensions being earned by current government workers are untouchable. But as the fiscal crisis has lingered, officials in strapped states from California to Illinois have begun to take a second look, to see whether there might be loopholes allowing them to cut the pension benefits of current employees. Now the move in Detroit ? made possible, lawyers said, because Michigan's constitutional protections are weaker ? could spur other places to try to follow suit.

?These things do tend to be herd-oriented,? said Sylvester J. Schieber, an economist and consultant who studies pensions.

Governments are simply very prone to mismanaging pension funds, over-promising in good times and underfunding in bad. Latin America learned this the hard way prior to pension

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Political risk and pensions