Thursday, October 23, 2014

Thursday, October 23, 2014

Louisiana colleges will continue to be underfunded; What’s the matter with Kansas?; James Gill on the Jindal “surplus”; Private fundraising for public schools benefits affluent districts; and Recidivism programs pay dividends

Louisiana colleges will continue to be underfunded

The Board of Regents is asking the Legislature to allocate $504 million for state colleges and universities next year and another $175 million for specialized institutions such as law and medical schools. While that represents a slight uptick from current-year funding, it’s still $266 million less than what’s needed for Louisiana’s colleges to be funded at the average of their Southern peers. As the Advocate reports:


According to a national analysis from Illinois State University researchers, Louisiana chopped higher education funding by more than 34 percent in the five years leading up to this year’s budget — more than any other state. At the same time, tuition prices have been on a steady incline — about 10 percent each year since the adoption of the 2010 GRAD Act.


While state colleges will continue to be underfunded, the same will not be true for Louisiana’s new commissioner of higher education, Joseph Rallo. The Regents gave him a 27 percent raise over his predecessor, to $350,000 per year.


What’s the matter with Kansas?

Kansas continues to have trouble keeping its budget balanced after a disastrous series of income-tax cuts pushed by its governor. As the New York Times reports, the cuts have led to greater revenue shortfalls than lawmakers expected and a downgrading of the state’s credit rating by both Moody’s and Standard & Poor’s. The state collected $330 million less than it had forecast for fiscal year 2014 and $700 million less than it collected the previous year.


Also contributing to the shortfall is the state’s decision to become the first state with a general personal-income tax that exempts “pass-through income” from tax:


Business entities like S-corporations and limited liability companies are not taxed at the corporate level; instead, their income is passed through to their owners, who then pay personal income tax on the profits in most states — but not Kansas. One problem with this policy is that pass-through income and wage income are often fungible. A small-business owner might choose to take less of his income as (taxable) salary and more as (tax-free) profits, reducing Kansas income tax revenues. Estimating how many small-business owners would make such changes was the key to figuring out the cost of the tax cuts.


James Gill on the Jindal “surplus”

The $179 million budget surplus that may actually be a deficit gets the full James Gill treatment in this morning’s Advocate.


The surplus “came as quite a shock to state Treasurer John Kennedy, whose bean-counting abilities have always been held in high regard. Kennedy did not flat-out accuse Nichols of cooking the books, but said he wanted “to make sure we don’t have a manufactured surplus here.” He said that “the methodology we have always used” indicated a deficit, but the administration appeared to have switched from the “modified accrual” accounting that is standard for state governments to “cash balance.” No, I don’t speak the lingo either, but the new method allegedly enabled the administration to count money that was already spoken for. Nichols rounded on Kennedy to suggest he make sure he hadn’t overlooked even more revenues. Legislative leaders, alerted to the new method in a conference call, had given their approval, she said.”


Private fundraising for public schools benefits affluent districts

The New York Times reports a new study shows that nonprofits organized by parents and community leaders for the purpose of fundraising for public schools more than tripled in number and the dollars they raised quadrupled between 1995 and 2010. Not surprisingly, the more affluent a school district, the more likely it is to have this type of private fund raising, and the amount raised per student is much higher.


“The inequities in local philanthropic fund-raising, which is unregulated and tax-deductible for donors, mirror the growth in wealth among the richest 1 percent over all, said Rob Reich, an associate professor of political philosophy at Stanford University. The energy that parents expend raising money for their own children’s school, he said, “comes at the potential expense of their political engagement on a broader basis to actually get public dollars to be enough for all kids.”


Recidivism programs pay dividends

States around the country are experimenting with ways to reduce prison recidivism. California is teaching inmates how to dive and become offshore welders, riggers and mechanics. Illinois is teaching inmates how to cook. Texas has created a radio program to foster better communication within the prison community and between inmates and their families.


As former New York Times editor Bill Keller, who now heads the Marshall Project, told the NationSwell website, “The way the system scoops up young (mostly) men (mostly) from distressed communities, uproots them from family and community, does little to prepare them for a non-criminal life, and then deposits them back in those same communities.”


Number of the Day:

$655.8 million – State dollars in this year’s Medicaid budget that will have to be “partially or entirely replaced” next year. (Source: LFO)