Tag Archives: education

Billionaires 38 – College Students 0

Senators for BillionairesWould it be acceptable if we allowed the refinancing of student loans, if this were paid for by slightly increasing the tax “burden” on billionaires?  Should we even be able to bring the measure to the floor for debate and vote?

According to Senate Republicans, the answer would be no.  The motion to invoke cloture failed and the Senate GOP continues to filibuster the bill.

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Filed under education, Nevada politics, Politics, Republicans

More School Daze

Test PencilIt’s all too simple to gag and giggle at such right wing ideological idiocy as the attempt by two Missouri legislators to allow parents to pull their kids out of science classes in which evolution is taught. [C&L]

“Missouri’s House Bill 1472, introduced in the House of Representatives on January 16, 2013, is the third antiscience bill of the year, following Virginia’s HB 207 and Oklahoma’s SB 1765. If enacted, the bill would require “[a]ny school district or charter school which provides instruction relating to the theory of evolution by natural selection” to have “a policy on parental notification and a mechanism where a parent can choose to remove the student from any part of the district’s or school’s instruction on evolution.” Parents and guardians would receive a notification containing “[t]he basic content of the district’s or school’s evolution instruction to be provided to the student” and “[t]he parent’s right to remove the student from any part of the district’s or school’s evolution instruction.”  [NCSE]

And, we wonder WHY the kiddies aren’t doing well on Science examinations? Do we really expect youngsters to be taught watered-down, religiously oriented “science,”  and then do any better than a place in the top 22 countries? [WaPo]

However, the situation could be worse.  For years advocates of home-schooling have pushed back against reports of child abuse and endangerment associated with parents who opt out of any schooling, public or private, for their children.  And, no, merely because a child is home-schooled doesn’t mean a red flag needs to flap in the breeze.  This doesn’t mean that we shouldn’t be reasonably vigilant either.

“Despite its explosive growth, home schooling is still a remarkably deregulated enterprise. Half of all states require parents to simply register their intent to home school, and 11 states have no regulations at all. It’s hard to do a comprehensive count of home-schooled students, when in many places, they don’t have to notify anyone that they exist.”  [AJAM]

That last sentence is troublesome.   It’s one thing to advocate for parental control over curriculum, and another to propose that parents who want to avoid all standard curriculum  have the option of  home schooling.  But, it’s really something else entirely to create a situation in which parents are not required to demonstrate the child has learned basic skills, or not even required to let local agencies know the child exists.

Idaho, Alaska, Texas, Oklahoma, Missouri, Illinois, Iowa, Indiana, Michigan, Connecticut, and New Jersey statutes allow just such an environment.

Nevada is categorized as one of the states with minimal regulation — at least the parents have to let local authorities know the children exist — along with California, New Mexico, Arizona, Utah, Montana, Wyoming, Nebraska, Kansas, Wisconsin, Mississippi, Alabama, Georgia, Kentucky, and Delaware.  These states require parental notification of home-schooling only.  They do not require any testing or professional evaluation of progress.

Some states do require notification, testing or evaluation: Washington, Oregon, Colorado, North Dakota, South Dakota, Minnesota, Arkansas, Louisiana, Tennessee, Florida, Ohio, West Virginia, Maryland, Virginia, North Carolina, South Carolina, New Hampshire, Maine, and the District of Columbia.

A few states pay even closer attention, requiring notification, testing or professional evaluation, curriculum approval, and possible home inspections in New York, Pennsylvania, Massachusetts, and Vermont.  [HSLDA]

Nevada appears to be on the cusp of “minimum” to “moderate” regulation.  NRS 392.700 does mandate an educational plan:

“The parent of a child who is being homeschooled shall prepare an educational plan of instruction for the child in the subject areas of English, including reading, composition and writing, mathematics, science and social studies, including history, geography, economics and government, as appropriate for the age and level of skill of the child as determined by the parent. The educational plan must be included in the notice of intent to homeschool filed pursuant to this section. If the educational plan contains the requirements of this section, the educational plan must not be used in any manner as a basis for denial of a notice of intent to homeschool that is otherwise complete. The parent must be prepared to present the educational plan of instruction and proof of the identity of the child to a court of law if required by the court. This subsection does not require a parent to ensure that each subject area is taught each year that the child is homeschooled.”

The intent to home school a youngster can be based on any number of parental reasons — ranging from rational to idiosyncratic — most of which are perfectly acceptable.  The problems arise in the cracks.  For example, most home school curricula are almost coterminous with public school offerings, and a youngster who is successful in one regime will no doubt be successful in the other.   However, the citizens of Nevada might be rightly concerned by the lack of any required demonstration of success in the subjects in the educational plan.  The state does provide permission for home-schooled youngsters to participate in the Proficiency Examinations, and college entrance exams.   Additionally, if a formerly home-schooled student seeks to enroll in a Nevada public school the parents must comply with NRS 392.033’s placement (testing) requirements.

If the curriculum used by the home-schooling parents has a testing component, and clear standards for student performance, this is a mirror of the public/private system, and not problematic.  Nevada legislators might want to consider the specificity of educational plans submitted by parents.

The State Department of Education provides a list of accredited home schooling programs, and other helpful information,  but must the local district accept a home-schooling educational plan that does not meet or exceed the requirements of an accredited program?

Nevada’s avoided the Invisible Child trap, but it could do just a bit more to insure that children participating in home-schooling are meeting the standards set for educational achievement in this state.  Most will, it’s the few who may not we should worry about.

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Filed under conservatism, education, Politics

Nickels and Dimes and PPEs

Nickels DimesThere are numbers, and then there are numbers, some of which are of marginal utility.  For example, there’s the much used and abused “per pupil expenditure.”  Nevada’s isn’t a particularly appealing number:

“Nationally, average per-pupil spending was $10,658 during fiscal year 2011. Expenditures ranged from $6,326 in Utah to $20,793 in Washington, D.C.  Nevada spent an average of $8,411 per student in that time frame, $2,247 less than the national average.”  [LVSun]

Generally speaking, the PPE number gets bandied about as though it’s “too high” when it’s above the national median, or “too low” when it’s below.  The point should be that the local situation will determine the financial needs of school districts, and the local financial needs will drive the allocation of the funding available.

About the worst application of the PPE number is to plant it next to a table of numbers showing testing results for K-12 youngsters and then grandly announcing we’re “spending too much,” or “too little” or often from conservative quarters — “we’re not getting enough from our money.”  Here’s why this argument is counter-productive:

1. PPE numbers may incorporate funding which does not directly affect instruction.  Granting that better instruction, and better learning take place in well lit, comfortable, well furnished surroundings,  a district which has major maintenance and construction needs may have “instructional costs” elevated by the expenses associated with upgrading ventilation, heating, cooling, and furnishing projects.   We could further confuse the issues by incorporating extended ARRA funding included in 2010-11 school district budgets and thereby increase the numerator in our fractional result.  About the best we can estimate is reported in the Nevada Education Data Book (pdf 2013)  that on a statewide basis of the $8321 per pupil expended, $4,944 is categorized as instructional expense, $400 is for “support,” $886 is spent for operations, and $734 is spent for administration.

2. The PPE numbers do not illustrate the demographic elements which inform school district spending.   The Data Book (pdf) shows 437,149 children enrolled in Nevada schools.   327,770 are enrolled in Clark County Schools, another 66,137 in Washoe County Schools, and the remainder 51,830 in the rural counties.   We need to scroll further into the report to discover that Clark County’s enrollment includes about 44% Hispanic students, and 13% African American.  By contrast, Storey County records 10% Hispanic and 1% African American students.

No leap is required to conclude Nevada, and Clark County specifically, has a higher number of “limited English proficient enrollment.” (19%)  And, 50% of Nevada enrollees are eligible for free or reduced price school lunches.  Clearly, not all Hispanic youngsters are burdened with limited proficiency in English, and not all African American or Hispanic youngsters come from families functioning at or near the poverty line.  However, it would be the height of naivety to deny that higher percentages of ethnic minority students means that the allocation of resources necessary for a district with an 85% white population will be the same as one which has a 44% Hispanic population.

In short, the PPE only tells us what has been spent in general terms, and doesn’t tell us a thing about what needs to be spent.

3. Money will not solve educational issues — but it will purchase the resources necessary to meet them.   What we need to decide is what we want the educational system to do.   The answer thereof is “Curriculum, Curriculum, Curriculum.  There appear to be more “stressors” than solutions.

(a) College Prep v. Vocational:  It doesn’t require too many joint meetings between collegiate and secondary instructors to figure out that what the collegiate ranks would dearly love is to have every youngster they enroll competent to pass Calculus 101, U.S. History 101, and English 101-102.  It requires about the same amount of meetings to discover that the secondary instructors are talking about the youngsters who are not among the 120,000 students enrolled in any of the 21 degree granting institutions in the state. [Census pdf]  Let’s use math as a quick example of the stressor: A standard diploma from a Nevada high school requires 3 units of mathematics. What math?  Algebra I, II, and Geometry?  Pre-Algebra, Algebra, General Business Math?   Someone is going to be dissatisfied with any decision.

(b) What constitutes “success?”  Is it getting a “300” on the Reading, Science, and Mathematics exit examination, or a “7” on the writing exam? Don’t get me wrong — I’m all for youngsters being able to identify “tone” in a written piece, and I’m certainly emphatic about young people being taught to recognize propaganda when they read it.  Recognizing dramatic irony is fine, too.  However, what happens if, as an employer, I am primarily interested in hiring a young person who can follow written directions?  Who understand what is required and can fill out an accident report?  Or, who can comprehend what I mean when I say on an application form that the job I am offering requires “particular attention to personal hygiene?”   On the other hand, reading and comprehending a piece of 500 to 1200 words shouldn’t be too much to ask.   The question now evolves into Who is getting What for their tax dollars?

4. The next question is related to both the “success” questions and the demographic issues.  What does the PPE tell us about the connection between the student and the instruction?  Very Little.   A school system with a high number of limited English proficiency students which allocates its best resources toward the development of college prep coursework is probably going to have all manner of graduation rate problems or testing ‘failures.’  If the course-work itself doesn’t meet the needs of the student population it’s hard to imagine any other result.   A school system which allocates scarce resources into remedial coursework will undoubtedly leave some otherwise talented students behind their cohorts in a collegiate setting.

There are some tough questions to be asked and answered, philosophically and practically, and using simplistic references to an equation in which money = quality isn’t helpful.   There are two questions which should be asked: If we say that education is the best gift we can bestow on our children, then how much are we willing to pay for it? Secondly, how do we properly allocate and evaluate the expenditures?

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Filed under education, nevada education, Nevada legislature, Nevada politics, Politics

Ryan’s Time Wasting Titivation

salchowThe latest version of the House GOP budget proposal in Congress looks very much like previous renditions — lower the tax rates for the top 0.1% of American income earners, and replace the current Medicare program with a coupon/voucher plan. [TPM]   “Re-litigation” comes to mind.   The curious part comes as Representative Ryan, who vilified the $716 billion in savings in the Affordable Care Act (Obamacare) during the last presidential election, now incorporates those same savings into his budget proposal — while calling for the repeal of the ACA which contains those savings…  This rhetorical contortion looks less like a 360° turn and more like a quadruple salchow.  [more at Business Insider]

Former House Speaker Rep. Nancy Pelosi, called the scheme “fuzzy math and budget gimmicks.” [TPM] The point of this budget exercise, is not really to address the long term stabilization of U.S. indebtedness — it IS an exercise in sophomoric political economy; simplistic in form and regressive in nature. Ezra Klein nails it:

“Ryan’s budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan’s real point throughout his career.”

Or, more specifically:

“Here is Paul Ryan’s path to a balanced budget in three sentences: He cuts deep into spending on health care for the poor and some combination of education, infrastructure, research, public-safety, and low-income programs. The Affordable Care Act’s Medicare cuts remain, but the military is spared, as is Social Security. There’s a vague individual tax reform plan that leaves only two tax brackets — 10 percent and 25 percent — and will require either huge, deficit-busting tax cuts or increasing taxes on poor and middle-class households, as well as a vague corporate tax reform plan that lowers the rate from 35 percent to 25 percent.”  (emphasis added)

Now, why would those be “vague?”  First, it is much easier to dodge criticism of a proposal when the details aren’t available.  Offering a “vague” proposition allows for the “I didn’t really mean that” rationalization when push comes to the inevitable shove.  Secondly, when the arithmetic is fuzzy the extrapolations, of necessity, must also grow furry. What should give the audience room for some trepidation is that this offering from Representative Ryan isn’t the first time he’s run this flag up the pole.  Why could not more rational, detailed, and precise numbers be provided as the budget plan moves through its various incarnations?

The answer may very well be that he can’t be more precise without (a) offending major segments of the electorate, and/or (b) demonstrating that the numbers simply don’t add up to what he is claiming for his project.

In Representative Ryan’s blinkered vision of America, government is more to be feared than the level of indebtedness [Ezra Klein] but this ideological perspective obfuscates the very real role our government plays in this mixed economy.   Programs which provide automatic stabilizers in the economy to mitigate the impact of business cycle volatility, and those which provide citizens with opportunities to increase their standards of living have an impact across the economic spectrum.

CBPP concludes:

“As policymakers embark on the necessary work of further reducing long-term budget deficits, their approach could have important consequences for tens of millions of low- and moderate-income Americans.  If policymakers take an even-handed approach, one that combines spending cuts with an adequate mix of new revenues, they can reduce deficits without increasing poverty and the ranks of the uninsured or weakening efforts to ensure that children have more opportunity to succeed in the classroom and later in the labor market.  If, however, policymakers cut deeply into programs that assist low-income individuals and families, we will likely see more poverty and hardship as well as fewer paths to opportunity.”

The essential problem with perceiving government as a threat to “freedom” is that those programs which keep people from becoming dependent on government assistance in the long run, are those which the Meat Cleaver Republicans would assert in the first wave of cuts in the short term.

For example,  there are significant omissions in Ryan’s latest offering:

“It won’t create jobs this year, and will likely cost jobs in the years to come by putting the economy on a steep austerity ramp. There’s no housing policy for the millions of families in foreclosure and no way to read Ryan’s budget without assuming massive cuts to student-loans programs. That may mean fewer families watching student loans pile up, but only because they didn’t get any in the first place.” [Klein WaPo]

Jobs?  Jobs generate income, income generates both consumer spending and tax revenue.  The impetus may come from federal spending, but the results would be seen initially in local economies.  Paychecks get spent on housing, clothing, groceries, and transportation.  A family with an income sufficient to support the purchase of an automobile generates not only good numbers for the automobile manufacturers, but pays state sales taxes on the purchase, pays gasoline taxes to keep the beast running, and pays license fees to keep highways operating functionally.

Housing?  The “housing market” is a mid-stream economic activity.  Building a housing unit, whether detached or communal, requires raw materials, manufactured materials, and financing.  In short, housing is in the midst of the economic stream of activity, and as we discovered to our collective horror in 2007 when things start to go badly in this milieu the ripples can become tsunamic.  That there is not even a passing nod given to the issues associated with current housing market fragility and the continuing foreclosure issues in Representative Ryan’s budget ought to be demonstrative of his detachment from real economic forces at work.

Foreclosed properties wreak havoc on the homeowners, bring down housing values in neighborhoods, cause a loss in property tax revenue for local governments, and create law enforcement issues where abandoned properties are all too prevalent.  One might have thought that Representative Ryan would at least given cursory acknowledgement to the issues associated with the housing market in his budget priorities?

Education?  There is a link between income, unemployment, and education.

Educations Pays

If we truly want to move people out of poverty, or up the economic ladder, the graph above from the Bureau of Labor Statistics shows how the rungs of that ladder are constructed.  Note that when the graph was drafted the national unemployment rate was 14.1% for those with less than a high school diploma, but only 6.8% for those with an associates’ degree.  If we look to the more recent numbers the picture doesn’t change much.

The February 2013 unemployment rate for those with a high school diploma stood at 7.9%; for those with an associates’ degree or some college the unemployment rate was 6.7%.  Those holding a college degree experienced an unemployment rate of 3.8%.  [BLS]

Given this information it would seem logical to conclude that if we want to improve the overall health of the American economy it would be seemly to enhance the opportunities for education, especially post-secondary educational programs.  That’s not what Representative Ryan and his Republican colleagues have on offer:

Ryan would stop increasing the size of Pell Grants to adjust for inflation. Instead, they would stay at the current level, $5,645, for 10 years. Ryan would also change the way the government calculates how much a student’s family is expected to pay to make it less generous.”  [Atlantic]  …

Ryan’s proposal doesn’t spend much time on a key reason Pell Grant awards have increased: rising education costs. Average costs for a four-year institution have risen 250% since 1980 and nearly doubled in the last 20 years. Pell Grant allocations have increased rapidly over the last decade — but that increase isn’t tied to the change for education costs.” [Atlantic]

Education is a labor intensive occupation.  The process can be assisted with technology, but since time out of mind the means by which human beings transmit knowledge — vocational, cultural, economic, etc. — is from human being to human being.  As states cut funding to educational institutions the colleges, tech schools, and universities raised tuition and fees to the “customers.”  The greater the increase in fees, the greater the problem for middle class parents who want to see their offspring move up the educational (and economic) ladder.   Young people are asked to take on a staggering amount of indebtedness to earn a degree, which in turn limits their capacity to participate more fully in the economic life of this nation.  Too much student loan debt means more difficulty purchasing a vehicle, or much of anything else.

The bottom line is that Representative Ryan has simply re-cycled his political document, with its ideological baggage and called it a budget.  While it’s an improvement over the Republican budget document which arrived without numbers in 2009, it’s still an homage to Ayn Rand and her Cult of Selfishness…and very little else, except time wasting titivation.

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Filed under Economy, Federal budget, tax revenue, Taxation

School Days: Reading with Purpose and Understanding?

School Budget CutsNevada Governor Sandoval’s address to the state struck some conciliatory notes, which should be acknowledged a plus in a media environment of dueling drama queens.  As is the case in most states, the education budget consumes a goodly portion of the budget, and therefore got a goodly portion of the Governor’s attention in his address.  (pdf)

All day kindergarten is a welcome proposal.  And, yes, the good news is that we’re talking about it, the bad news is that we’ve known the benefits of pre-K and other kindergarten formats for the last 20 years and haven’t done anything much about it.  Take a look at the dates on the studies cited by Bridgewater State’s research into kindergarten results:

“The studies also show that children who attended full-day kindergarten were less likely to be retained, had fewer Chapter 1 referrals, and had higher attendance during the first three years of school than the half-day kindergarten children (Cryan et al.,1992; Elicker & Mathur,1 997; Gullo, 2000; Hough & Bryde, 1996; Puelo, 1988). It appears that parents approach full-day kindergarten more seriously and are more reluctant to have child miss a day of school, as observed by the better attendance records of full-day kindergarteners than those of half-day (Hough & Bryde, 1996).” [Bridgewater Edu]

And this:

“In researching my focus on the impact of full-day kindergarten on a first graders’ ability to learn to read, I found that the reading performance of first-grade students after full-day and half-day kindergarten programs showed that students who attended full-day kindergarten scored significantly higher in reading achievement (Damian, 1997: Fromboluti, 1988; Harrison-McEachern, 1989; Hough & Bryde, 1996; Pennsylvania Partnerships, 2000). Results showed that children’s knowledge of early literacy concepts increased during full-day kindergarten, and that this improved students’ reading achievement for the next 4 years (Phillips & Mason, 1996; Puelo, 1988).” [Bridgewater Edu]

The Center for Public Education report concludes that a combination of pre-K + half day kindergarten can be as productive as full day kindergarten alone, but adds the caveat that the amount of pre-K time wasn’t part of the study.   Their findings, however, do support the central point that early childhood education means better results later:

“In order to determine what combination of early childhood education programs produced better results later in school, we examined the impact on third-grade reading scores. Research shows that students who are proficient readers by third grade are more likely to be successful later on in school and in life. For example, a study of 26,000 Chicago Public School students found that students’ third-grade reading level was a significant predictor of both eighth-grade reading level and ninth-grade course performance (Lesnick, et al. 2010). Beyond the academic benefits, third-grade reading skills are also a strong predictor of high school graduation and college attendance (Lesnick, et al. 2010). Conversely, another study found that students who were behind in reading by third grade were four times more likely to leave high school without a diploma (Hernandez 2011).”

Most reputable, peer reviewed studies confirm the Governor’s point — we need to emphasize early childhood and primary education.   The problem will be, as always, how do we measure this?

We can “measure” if youngsters know that oral language can be represented in writing, and that the little one knows  in English text the words are read from left to right, which depending on the maturity and experience  of the kiddie may or may not prevent him from flipping the page to see if the back end of the Duck is shown on the back of the page with the front end of the Duck.   We can also measure the youngsters knowledge of words, syllables, and phonemes.  Sort of.  A common problem when giving standardized tests to kindergarteners and first graders is that the results will mainly tell the interpreter whether or not the child was having a good day.

Once our little darling has the symbol + sound code figured out, can make a good stab at predicting whether a vowel has a long or short sound, has a nice repertoire of sight words, and can discern the difference between words that sort of look like other words, he’s off to a good start.  However, measuring whether he is “reading with purpose and understanding” gets us into some new territory.

Here’s where the Back to Basics crowd often gets tangled in ideological rhetoric.  We do want the youngsters to understand basic language and  phonics, and those skills do translate into word recognition.  However, the point of writing is NOT to see if the skilled reader understands the proper application of the word “pervicacious” at any age.

What we do want are children who can understand words in context.  When Mom complains about the pain from a root canal, for example, the youngster shouldn’t associate that with the Panama Canal, Erie Canal, or the Venetian Canals.  We also want them to draw inferences from what they can read.  What does it mean when the storyteller writes, “His hair was as red as fire?”  And, we want youngsters to be able to extrapolate.  This is really handy when addressing such things as — “Does the bear bear a burden?”  Careful, we are slipping into the nefarious land of Thinking Skills!

Should children learn to read with Purpose and Understanding?  Surely, the answer would be a 100% yes.  However, if all we want to measure is word recognition, context, and basic inferences, then we’ve stopped before the real part of understanding begins.  Consider the difference between these two worksheets for little ones — which requires more thought?

kindergarten worksheet 2Or, this:

Kindergarten worksheet 1Concepts like “above, below, and on” are well past the word recognition level.  Unfortunately, some critics of public education are perfectly willing to accept “thinking skills” in the curriculum if the skills aren’t so finely honed as to create a situation in which the child may apply his or her own context, draw inferences different from those of the parent, and Heaven Forefend, extrapolate conclusions at variance with received wisdom.   And, this, from people who gnash and wail when test results don’t demonstrate a child’s comprehension of context, inference, and extrapolation.

We’ll be in a better place when we can agree that the function of education is to create learners who can read with purpose and understanding — and when we place more emphasis on the understanding portion of the formula.  This will require more than lip service to curriculum development, more than the testing of mechanical applications, and much more than on-the-cheap solutions to complicated educational issues.   However, if we’re willing to allocate the necessary resources we’ll have empowered our kids with the best gift we can give them — the power to think independently.

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Filed under education

Reid Suggests Compromise on Student Loan Rates

From the e-mail inbox, Senator Harry Reid (D-NV): “Washington, D.C. – In a letter to Speaker John Boehner and Minority Leader Mitch McConnell, Senate Majority Leader Harry Reid today offered two bipartisan proposals to pay for a one-year extension of student loan rates to prevent them from doubling on July 1st. The first proposal expands an offset that recently passed the Senate on a strong bipartisan vote of 74-22 as part of the transportation jobs bill. The combination offers a bipartisan path forward to break the impasse currently facing the student loan bill.”

OK, but I’m still not happy.  First, there is really no excuse for putting student loan interest rates up for revision on an annual basis.   Last time I looked it still took four years to get a college degree, and longer if the individual was interested in advanced degrees.  Advanced degrees being the kind that get a person into the 3.6% and below unemployment categories. [DoL]

Secondly, not so long ago it was declared unnecessary to put the cost of military operations in Iraq and Afghanistan  on the books, and thus the Bush Administration ran those activities via emergency supplemental appropriations without any mention of “pay fors.”  Neither was it deemed necessary to subject  the Medicare Part D program to “pay fors,” with some demonstrably budget busting results as of January 1, 2006.   However, when we’re speaking of educating our future work force — now, suddenly it’s absolutely essential we “pay for” every federal expenditure.

Granted, it is more fiscally responsible to know from whence the money is coming to pay for federal expenditures.  However, would it crush the Job Cremators so much to have a loophole for ultra-wealthy hedge fund and lobby shop operators closed? — as was suggested, and as caused Senator Dean Heller (R-NV) to issue his usual  cri de coeur for “small business.”

And thus we continue to tinker, Senator Reid offering the following:

(1)    Reforms to employer pension payment contributions. The proposal outlined by Senator Reid would create a “stabilization range” for employers to compute their pension liabilities. Instead of being forced to use the two-year corporate bond rates in computing their pension liabilities, the new proposal would allow them to compute liabilities using rates for a 25-year period within which the two-year rates must fall.  To the extent that the two-year rates fall outside this range, the company would be allowed to use a rate closest to the two-year rate that falls within the stabilization range to compute its pension funding requirements.  This more flexible approach would narrow fluctuations in computing pension contributions and result in businesses taking fewer tax deductions for contributions.

(2)  Change contributions to Pension Benefit Guarantee Corporation premiums. In addition, Senator Reid proposed increasing premiums paid by employers for the insurance provided by the Pension Benefit Guaranty Corporation.  Currently, employers pay a flat dollar premium of $35 per pension plan participant as well as a variable premium equal to $9 for each $1,000 that the plan is underfunded.  To help improve the PBGC’s finances, these premiums could be increased as part of this proposal.

“The combination of these two proposals will provide sufficient resources to fund both a one-year extension of the current student loan interest rate and re-authorization of the nation’s surface transportation programs.”

OK, if we adopt these proposals then we get a continuance of the 3.4% student loan rate AND the re-authorization of the surface transportation programs.  And, I can hear it now — OMG, a more flexible approach to calculating pension fund contributions will be “a plague upon Capitalism?”  Or, increasing the premiums for the PBGC will be a “onerous burden on job creators?”   The former argument is offset by the fact that BUSINESS groups are the ones asking for the recalculation of the pension funding formula. [WallStJournal]

There are reasons to be concerned about the recalculation of pension fund contributions, none of which have anything to do with plaguing Capitalism.  One major cause for careful consideration is that changing the formula could have detrimental effects on defined benefit plans.  [WallStJournal]

The Pension Benefit Guarantee Corporation is already facing some serious issues, some of which were outlined in a 2010 report from the GAO:

“Plans in the worst condition may find that the options of increasing employer contributions or reducing benefits are insufficient to address their underfunding and demographic challenges. For these plans, the effects of the economic downturn, declines in collective bargaining, the withdrawal of contributing employers, and an aging workforce will likely increase their risk of insolvency. Without additional options to address plan underfunding or to attract new employers to contribute to plans, plans may be more likely to require financial assistance from PBGC.  Additional claims would further strain PBGC’s insurance program that, already in deficit, it can ill afford.”

Economic growth, as we’ve seen in the private sector over the past 27 months, will help these issues, but asking employers to pay increased premiums to backstop an already serious issue isn’t too much to ask.  If the corporations make additional contributions, then the PBGC isn’t further behind the eight-ball when companies fail.

On the optimistic side, both suggestions from Senator Reid have received bi-partisan support in the past.  On the pessimistic side, chucking their previously held positions over the side has become a Republican art form — witness the individual mandate for health care insurance coverage, and “cap and trade” schemes for pollution elimination.

Since it’s been “campaign season” since January 20, 2009 I am a bit leery of Republican cooperation in the U.S. Senate.  Meanwhile, the clock is ticking as students and their parents try to get body and soul together concerning educational expenses for the next school term.

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Filed under Economy, education, employment, Heller, Reid, Student Loans, unemployment