Tuesday, November 3, 2015

Tuesday, November 3, 2015

High stakes for higher education; The cost of incarceration; Tax cuts don’t spur economic growth; and Child care out of reach

 

High stakes for higher education
It is no secret that Louisiana’s colleges and universities have borne the brunt of budget cuts in recent years. On a per student basis, Louisiana has cut state support for higher education more than any other state since 2008. Both candidates for governor–John Bel Edwards and David Vitter–have said they will end the budget cuts, but from there they differ on details. Julie O’Donoghue with nola.com reports:

 

Edwards has said he wants to return Louisiana to a 50/50 funding split between state support and tuition and fees paid by students by the end of his first four-year term. Vitter has declined to  commit to any funding breakdown, 50/50 or otherwise. The Vitter campaign has only said the Senator would find a “realistic and attainable” state funding match for higher education once the overall state fiscal situation was stabilized.

 

As O’Donoghue notes, even when tuition and fees are added in, Louisiana still spends less per student that other Southern states. And when it comes to whether Louisiana should close that gap, there does seem to be disagreement between the candidates:

 

Out of 16 Southern states, Louisiana allocated the lowest amount of state general funding per full time student during 2013-2014 school year. The state provided $3,920 for every full-time in-state college student while tuition and fees covered the other $7,255 spent per full-time student in Louisiana, according to a Southern Regional Education Board report from last spring. Even with the higher tuition and fees, Louisiana still spent less per full-time pupil at a four-year college — around $11,000 — all other Southern states in the 2013-2014 school year. The average amount spent per public university student in the South was just shy of $15,000 total.

 

By moving to a 50/50 funding split — in which tuition and fees only pay for half of a student’s education — Edwards is expecting to boost higher education funding overall. The Democratic state representative believes he can do this by eliminating and reducing some tax credits and exemptions…State budget experts do consider Edwards funding plan for higher education aggressive, particularly since he wants to reach a 50/50 split in just four years. Vitter has all but stated Edwards won’t be able to do this without raising taxes. “Let’s be clear, John Bel Edwards’ plan to fund higher education and solve our budget problems is to tax Louisiana families to death to the tune of hundreds of millions,” said Vitter, in a written statement sent through his spokesman.

 

The cost of incarceration
If you’ve watched TV or cracked open the paper in the last few days, you may have seen a commercial or read about the kerfuffle between gubernatorial candidates John Bel Edwards and David Vitter over criminal justice reform and incarceration. But politics aside, it is worth digging into the numbers. Fortunately, Michael Mitchell at the Center on Budget and Policy Priorities has been doing excellent work on the topic:

 

Most states’ prison populations are near historic highs after decades of extraordinary growth. This growth, which continued even after crime rates fell substantially in the 1990s, has been costly, limiting economic opportunity for communities with especially high incarceration rates and taking critical resources from other important investments, such as education.

 

According to Mitchell, Louisiana’s incarceration rate rose from 179 prisoners per 100,000 residents in 1978 to 847 per 100,000 in 2013. Louisiana has the highest incarceration rate in the nation, at an annual cost to taxpayers of $713 million. Only seven states spent a higher percentage of their budgets on prisons. Other Southern states, like Texas and South Carolina, have begun to reduce their prison populations, as the Pelican Institute has noted.  In a paper from last year, Mitchell recommended four reforms that states could adopt to help reduce the cost of incarceration and increase liberty, without jeopardizing public safety.

 

Tax cuts don’t spur economic growth
It is a notion that just won’t go away, but the evidence is clear that state tax cuts don’t magically lead to economic growth. What they do lead to is less revenue, bigger deficits and budget cuts to education and transportation that could, ironically, harm the economy in the long run. Idaho legislators, in the midst of a tax reform debate, got the details last week from a panel of economists:

 

“There’s no consensus in economics that tax cuts have a boost on the economy in the long run,” said Eric Stuen, an economics professor at the University of Idaho. “I think a few percentage points here or there doesn’t make much of a difference for the functioning of the economy.” But, he said, “It can change the government fiscal picture and budget deficit picture pretty dramatically.” Idaho State University economist C. Scott Benson said he thinks both the previous tax cuts were “inappropriate.” “This mentality that we can keep starving government and have a thriving economy seems to fly in the face of everything we know about trying to prepare our young people for the jobs of the future,” Benson said. He said stability in the tax rate allows businesses to make long-term plans.

 

Child care out of reach
A year of quality child care can cost as much as a year of college tuition. And with wage growth stagnant and more households headed by either a single parent or two parents who both work, families are feeling the squeeze. A recent report by the Economic Policy Institute takes a deep dive into how child care costs fit–or don’t–into family budgets. For Louisiana’s lowest-paid workers, the picture is particularly grim. Child care for a 4-year-old costs the equivalent of 33 percent of earnings for a full-time worker paid the minimum wage, while care for an infant takes 38 percent of pay. Neither situation is sustainable. Yet, Louisiana has cut child care assistance by 60 percent since 2009, leaving families in the lurch.

 

Number of the Day

 

39,298 – Number of people incarcerated in Louisiana in 2013. The state has the highest incarceration rate in the nation (Source: CBPP)