Month: July 2017

Let Parents Wield School Spending Power

By Kathryn Hickok

Are we missing the trees for the forest in Oregon school funding and education reform debates?

Media reports, school districts, and political leaders usually focus on the big picture: reaching a 100% high school graduation rate so all children have the best chance in life. That’s a great goal. Frequently lost, however, is the fact that every child is an individual. The focus of real-life Oregon parents is helping their kids reach their potential in light of their specific needs and gifts.

These two perspectives shouldn’t be at odds. In fact, the second could drive the first―if more parents were empowered to make meaningful choices for their children’s education.

According to the National Education Association’s Rankings and Estimates report for 2016 and 2017, counting local, state, and federal funding, current expenditures per Oregon student in Average Daily Attendance are estimated to be $13,230, more than 33 other states. Adding in spending for capital outlays and interest payments, that number increases to $14,911 per student.

Yet, the National Association of Education Progress reports that only 34% of Oregon fourth-graders tested “proficient” in reading in 2015; and Oregon has the third-worst high school graduation rate in the country.

No one disputes the need for improvements to public schools. But children who need help today—first to learn the basics (like reading and math) and then to graduate from high school—should get the help they need now. What we ought to do is give Oregon students the power of choice to find their own paths to success.

For lower-income parents, the stakes are high. Nearly half the children born into poverty will stay in poverty as adults. Key to changing that outcome is an education that leads to high school graduation and future employment. Unlike parents with greater means, who can move to another neighborhood or pay out-of-pocket for private schools, lower-income parents often find their children trapped in public schools that do not meet their kids’ needs. Education Savings Accounts could change that.

Six years ago, Arizona became the first state to pass an Education Savings Account (ESA) law for some K-12 students, and it recently expanded eligibility to eventually include all Arizona children. Florida, Mississippi, and Tennessee also have ESA programs limited to certain students, such as those with special needs.

An ESA is analogous to a limited-use debit card for qualifying education expenses. It gives parents who want to opt out of a public school a portion of the per-student state funding to spend on their child’s education in other ways. ESAs can fund a wide variety of education-related expenses, including tuition, tutoring, and supplemental materials. Money not used in one year can be rolled over for future education expenses, even college.

But if ESAs let parents spend education funds outside the public school system, would ESAs drain money from public schools? Not necessarily. Schools are funded by local, state, and federal money. ESAs would be funded by only part of the state component. The amount of the ESA deposits is negotiable and would be the biggest driver of their fiscal impact.

Legislators can design an ESA program so that it would be revenue neutral to public schools, or even create a net increase per student who remained in the system. If students leaving public schools took less funding with them than would have been spent if they had remained, schools could reduce their class sizes without a negative impact on per-student funding.

No one can craft a school system that meets every child’s needs. Statistical data analysis and bureaucratic goal-setting can’t ensure that any particular child makes it to high school graduation or excels in a career. But most parents are keenly aware of their own children’s needs. Giving parents power to find the right fit for their kids would make a world of difference, as any parent knows.

Focusing on the forest (the public school system), Oregon is missing the trees (kids). We should expand the role of parents in achieving better educational outcomes for their children. We’ve tried everything else. Parental choice is the future of education reform, and Education Savings Accounts are a fiscally responsible policy solution that can give all kids options now.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization. She is also Director of Cascade’s Children’s Scholarship Fund-Oregon program, which provides privately funded, partial tuition scholarships to Oregon elementary students from lower-income families. A version of this article originally appeared in The Portland Tribune on July 18, 2017.

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Moving Beyond Symbolism

By John A. Charles, Jr.

Last week Governor Kate Brown gave a speech to Portland activists promising to secure carbon-pricing legislation in next year’s one-month legislative session. A few days later, she met with Interior Secretary Ryan Zinke and urged him to maintain or expand the Cascade-Siskiyou National Monument in Southern Oregon.

Clearly, the Governor is getting bad advice about environmental priorities. Carbon dioxide is not a pollutant; it’s a beneficial gas that is essential for plant growth. If the Governor continues Oregon’s “war on carbon,” she will impose great costs on the economy with no offsetting benefits.

Similarly, there was no need for the Governor to lobby on behalf of national monument expansion when Oregon already has plenty of federal land in protected status. She should have used her time with Secretary Zinke to argue for improved management of BLM lands in Oregon, including forest thinning and increased timber harvesting. Without active management, all public lands—including parks, wilderness areas and national monuments—will continue to be threatened by Oregon’s top environmental risk: catastrophic wildfires.

Holding photo ops to tell her supporters exactly what they want to hear is not leadership. The Governor needs to get serious about environmental problems.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon’s new minimum wage law will hurt the people it aims to help

By Lydia White

Just prior to Oregon’s July 1 minimum wage* increase from $9.75 to $11.25 (Portland Metro Area), a team of researchers from the University of Washington produced a study, published by the National Bureau of Economic Research, that measures the effects of Seattle’s $13 minimum wage. In just nine months, Seattle wages rose substantially, from $9.47 in 2014, to $11 in 2015, to $13 in 2016 (an increase of 37.3%), and again to $15 on the first of this year.†

Unique to this study is a data set collected by Washington’s Employment Security Department which tracks hours worked in addition to earnings, making this particular study the first of its kind. Washington and Oregon are among four states that track these data.

The study‡ found that the city’s mandates resulted in 5,000 fewer jobs around Seattle. The average low-wage employee saw 3% higher hourly wages, but 9% fewer hours worked, resulting in a net loss of $125 per month. For low-income households especially, an annual loss of $1,500 is significant.

Jacob Vigdor, one of the study’s authors, said, “Traditionally, a high proportion of workers in the low-wage market are not experienced at all: teens with their first jobs, immigrants with their first jobs here.”

Wages are prices, or market signals, that indicate the value of labor productivity employees create. Low-skilled, low-paying jobs provide the opportunity to acquire knowledge and experience they were previously without, setting up workers for their next, potentially higher paying jobs. Henry Hazlitt, author of Economics in One Lesson, wrote:

“The more the individual produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees.”

The least skilled are further disadvantaged when artificially high price floors are implemented. As described in the UW study, when the cost of employing a worker exceeds the value that worker creates, employers are forced to reduce hours or eliminate positions within their business by laying off employees, who are often replaced by automation. These alternatives harm low-wage employees.

Additionally, employers are less likely to take a chance by hiring an unskilled worker and instead will search for only the most qualified candidates. Since teenagers are naturally less skilled due to lack of work experience, these policies create higher youth unemployment. A study last December by Cascade Policy Institute examined these and other “unintended consequences” of the minimum wage on youth.

Instead of, or in addition to, cutting costs of labor, employers increase prices of their goods or services. Consumers may choose to forgo such products or reduce their levels of consumption, in turn decreasing the need for labor. When the price of goods inevitably catches up to the employee’s higher wages, they find the purchasing power of their earnings has diminished.

Furthermore, large businesses can more easily absorb wage increases by operating within thinner profit margins or relocating to a region with a lower minimum wage. Local mom-and-pop stores don’t enjoy that same flexibility and must close their doors. With less competition, larger businesses have more power to raise prices.

When economists warn against the costs associated with the minimum wage, it’s not to protect greedy capitalists; it’s to protect both the worker and the small business owner from being priced out of the market.

For the benefit of all Oregonians, political leaders should learn from our northern neighbors and create an environment that doesn’t punish low-wage workers and the businesses that employ them. They can start by repealing the state’s onerous minimum wage law.

*Oregon’s and Washington’s minimum wages vary depending on region, population, benefits, tips, and business size. The minimum wages discussed here refer to those of Seattle and the Portland Metro Area.

†The latest 2017 increase was not included due to incomplete data.

‡The study used a “relatively conservative” $19 per hour low-wage threshold to account for the spillover effect of “miscoding jobs lost when they have really been promoted to higher wage levels….”

Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Coos Bay World on July 10, 2017.

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Stop Health Care Taxes dot com

By Steve Buckstein

The Oregon legislature just passed, and the Governor signed, a bill designed to generate some $550 million in new taxes on health care, hospitals, and health insurance premiums. Ostensibly, this money is needed to help balance the budget, even after strong revenue growth, and to help maintain the controversial Medicaid expansion.

According to an Oregonian editorial, when word got out that someone might refer these new taxes to the ballot, legislative leaders showed “how they’re willing to protect that new revenue at all cost—even hijacking the referendum process at the core of Oregon’s identity.”

“Worse, however, the bill tosses aside the usual process requiring impartial groups to describe the measure on the ballot and in the voter’s pamphlet. Instead, [they gave] all that power to a committee made up of four Democrats and two Republicans.”

They also moved the referendum vote up from November 2018 to a January special election that will cost taxpayers more than $3 million.

The petitioners have just 90 days to collect nearly 59,000 valid voter signatures to refer the most egregious of these new taxes to the ballot.

These allow insurance companies to pass on to many of us, their policyholders, a new 1.5 percent tax on health insurance premiums in the state, at a time when premiums are rising out of sight already.

If you want to vote on the new premium taxes, go to, download, sign and return a Petition sheet today.*

* The Referendum did collect enough signatures, and is now Ballot Measure 101 on the January 23, 2018 Oregon ballot. A No vote will keep these taxes from going into effect.

Steve Buckstein is Senior Policy Analyst and Founder of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Floor Memo Regarding Bond Funding for the Elliott State Forest

TO: Members of the Oregon Legislature

FM: John Charles for Cascade Policy Institute

RE: SB 5505/Elliott State Forest Bonds

DT: July 5, 2017 

SB 5505 includes bond funding for many worthy projects. Unfortunately, it also includes authorization for the sale of $101 million in Certificates of Participation for the purpose of “buying out” part of the Elliott State Forest (ESF), which we already own.

The State Land Board chose this option in May rather than taking a cash offer of $220.8 million to sell most of the ESF, which is losing money for schools.  While this “feel good” measure appeased many environmental interests, what has never been discussed publicly is the long-term opportunity cost of borrowing $101 million and paying $199 million in debt service over 25 years, instead of investing $220.8 million of new money into the Common School Fund.

The graphic below attempts to do that over a 50-year period, using an average total return rate of 5.58% (the actual rate over the past 10 years). The gap between the blue and red lines is the estimated loss to schools in the annual payouts from the CSF. Note that the gap widens over time and can never be made up. Over the lifetime of the Fund – which is infinity – your approval of the bond sale will result in many billions of dollars lost to Oregon schools.



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When Government Gets It Backwards, Reread Jefferson

By Steve Buckstein

Two hundred and forty-one years ago this July 4, the world was gifted with one of the most significant political documents ever written. When Thomas Jefferson authored the Declaration of Independence, he boldly stated:

“We hold these truths to be self-evident; that all men are created equal, that they are endowed by their Creator with certain inalienable rights, among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.”

Jefferson realized that government and society are not synonymous. He argued that government’s purpose is to protect the inalienable rights of the individuals that make up society. He understood that such rights are not granted by government; and that any rights government does claim to grant are really claims on someone else’s right to life, liberty, or property. What would he think of today’s politicians in Washington, D.C. and Salem, Oregon who propose law after law ordaining right after right?

Jefferson also understood that he wasn’t elected President in 1801 to “run the country.” He was elected President to run the executive branch of a limited, constitutional government that coincidentally he helped to create. To reinforce these concepts, why not read the Declaration again this Independence Day and consider the power it had—and still has—to change our world for the better.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He was the 2016 recipient of the Thomas Jefferson Award by the Taxpayer Association of Oregon and the Oregon Executive Club.

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