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The Four Horsemen of the Apocalypse
OR, Why do our legislators fiddle while their districts are burning
Dr. Chuck Ormsby

Want a depressing experience? Attend a meeting of your local Board of Selectmen or School Committee. By the time you leave, you will know with certainty that the end of the world is just around the corner.

The bottom line is that the revenues projected for next year are not sufficient to continue providing the same services that are being provided this year. Projected costs significantly exceed projected revenues.

Local officials would have you believe that there are only two choices: cut services through layoffs or increase revenue by raising taxes.

How silly! This is the same as saying, after being diagnosed with cancer, “I can either go to bed and waste away or I can take pain killers and make believe all is well.”

How about a third way? Shouldn’t we identify the underlying cause of the disease and correct it? Now that would be a novel approach!

Costs aren’t rising much faster than revenue for no reason. Yes, Proposition 2 restrains the rate of revenue growth, but not unreasonably. On the other hand, costs are rising unreasonably. Why is that? Maybe, skyrocketing costs are merely the symptom of underlying problems that need to be corrected.

We need to identify these problems, not cover them up with higher taxes. In fact, raising taxes would be counter-productive. Like morphine, more revenue would make the pain go away for a brief period, but it would also undermine any incentive to cure the disease.

Which brings us to the four horsemen of the apocalypse. No, I’m not referring to War, Famine, Pestilence and Death. Nor am I referring to any of our local legislators, although, through their inaction and neglect, they bear substantial responsibility for the havoc being inflicted.

The four horsemen are hard at work and the apocalypse is nearly upon us. Putting our heads in the sand ensures calamity. The only way to escape the apocalypse is to confront the horsemen head on.

Let’s take them one at a time … the biggest and toughest first.

1. Lack of school choice. Prescription: Education Stamps (vouchers).

This analysis is not focused only on the failings of our government educational model. However, since education costs eat up roughly two-thirds of the budgets of our cities and towns, it is not surprising that failure of our strategy to educate our children will bring down the house. Being grossly inefficient with two-thirds of our resources is like having two-thirds of our arteries clogged and wondering why we are feeling under the weather.

Choice and competition are central to the efficient delivery of almost every service you can imagine. While there may be some opportunities for greater competition in the delivery of municipal services (e.g., road repairs, ambulances, flag details, water treatment, libraries and, maybe, even fire suppression services), education is by far the most glaring example of a service that should be privatized. (See last month’s article: Education Stamps.)

Offering Education Stamps is the proper first step to address the lack of competition in education. Give every child a coupon worth a large fraction of the cost currently incurred in our schools that their parents can spend on education at the school of their choice. Those educators who provide the most responsive services will win and prosper. Those who are inefficient and/or ineffective in educating children will have to correct these deficiencies quickly or find a different vocation.

We shouldn’t care which schools win or lose in this competition. In every case, the children win. As the unions have been fond of saying, “It’s for the children.” You’re damn right it is.

2. Compulsory collective bargaining. Prescription: Eliminate the requirement for municipalities to engage in collective bargaining.

Any policy that begins with the word “compulsory” should be suspect. “Collective” is another red flag. Put them together and your hand should be either on your wallet or your holster.

Compulsory bargaining is the result of special interest lobbying at its worst. Unions have bought and paid for a majority of our state and federal legislators, not to mention the bureaucracies that regulate public employment. Public employee unions want the power to extract economic advantages for their members at the expense of BOTH the taxpayer and any other workers who might want to offer their services. Unions are not designed to protect all workers. They are designed to give special advantage to their own members. Other potential employees be damned.

Compulsory bargaining undercuts the ability of municipalities to hire the best workforce for the revenues that are available and it violates the rights of potential new employees to compete for public jobs.

Just consider: What if our schools could advertise for an opening and negotiate directly with applicants for the job … just like 90 percent of companies do in the private sector? The process would inherently reward merit. Top teachers and especially those with uncommon skills would command much higher salaries.

Unions will tell you that workers would be exploited if it were not for union “protection.” Nonsense. Ninety percent of employees in the private sector are employed as “employees at will.” They are neither union members, nor are they exploited. Prospective employees with good skills would have a wealth of employment options, both public and private, both as educators and in other fields. The market would determine the terms of employment we would have to offer. Neither our whim nor union threats would be the determining factor.

#3. Healthcare costs. Prescription: Eliminate mandated employer-provided health insurance benefits and the tax-deductibility of health benefits provided by employers.

Why don’t employers provide gasoline insurance or food insurance? Why don’t we drive up to the pump with a $5 co-pay and then fill up with free gas? Or a $10 co-pay at our local market and fill our grocery baskets with free food? If gas or food insurance were tax exempt for employers, that is exactly what we would have.

Assume you are earning $50,000 a year. If food insurance provided by your employer were tax deductible, you and your employer would soon determine that you would be better off if your salary was reduced to $45,000, saving you $1,500 in taxes and reducing your take home pay by $3,500. Why? Because your employer could pocket $500 and give you $4,500 worth of “free food” insurance. What a deal!! Of course, the tax break is just a ploy. The government isn’t going to reduce its take. Tax rates will just be raised on the remaining $45,000 to keep the government cruising along.

Unfortunately, this “great deal” has consequences. With free food, don’t you think you would take home more food each week? And choose more expensive food?  And, of course, you would start receiving statements in the mail outlining your “Summary of Food Benefits” — what was and was not covered by your food insurer — and your “Amount Due”.

Mandated coverage of steak and seefood benefits would lead to greatly enlarged demands and rising prices. No, I didn’t misspell seefood. Seefood means, if you see the food, you can take it! And, of course, if it’s free, you will. The government might try to regulate your choices and quantities, but since consumers, grocers, farmers, and ranchers would like the benefits and the extra business your lust for free food would generate, food lobbyists would flood the nation’s capital to make sure the gravy train continues and expands.

Increased food consumption would lead to higher costs to your employer for food insurance. The result would be your employer reducing your annual raises while increasing the food insurance deduction from your paycheck. In the end, your increased deduction and lower salary would erase whatever free benefits you thought your government had conferred. When you realize that the “tax break” was never real in the first place, you find out that you are much worse off than you were before the government offered to help you with “free” food.

Regulations, mounds of paperwork, higher costs, mounting frustration … sounds a lot like healthcare, doesn’t it?

But there is an additional problem when it comes to public employees … even if employers continue to “provide” health insurance. Public employees pay a much smaller fraction of their health insurance premiums than those who work in the private sector. This is a result of the two problems discussed previously: the union monopoly on labor and the lack of competition. Fix these and a more equitable cost sharing arrangement would result. Unfortunately, the underlying problems associated with making a commodity appear free — when it isn’t free — will continue if the prescription outlined above is just ignored.

4. Special Education costs. Prescription: Provide local autonomy for determining the split of resources applied to fulfilling Special Education needs and the needs of Regular Education students.

Like healthcare costs, Special Education costs have been rising at double-digit rates for decades. Some students cost local schools over $200,000 per year until they are 23 years old … at which point our beneficent legislators warehouse them with minimal funding. Other Special Education students demand dedicated aides in the classroom, adding $20,000 per year to required expenditures.

By law, school districts must fund the needs of Special Education students 100 percent before spending a dollar on Regular Education students. During the 2003/04 school year, 16 percent of students in Massachusetts were designated as Special Education. Their “needs” consumed 30 percent of all available resources – an average of $16,000/student. The remaining 84 percent of students had to make due with the remaining 70 percent of resources – an average of $7,124/student. Unfortunately, the situation gets worse every year. Special Education per pupil expenditures have been rising 38% faster each year than the costs for Regular Education students (7.35 percent/yr vs. 5.32 percent/yr from 1995/96 through 2003/04).

In an earlier article, Specious Education, I outlined five key failings of our current Special Education policies. The lack of local autonomy in determining Special Education spending was the first failing listed and, in retrospect, the key failing. If local communities had the ability to weigh the best allocation of resources, the other problems would cure themselves.

You might ask, “What protection would Special Education students have if a district ‘under-funded’ their needs?” Clearly, if funding decisions were made in an egregious or discriminatory manner, there would be legal redress. The Legislature could devise language that would set a presumption that School Committees would have to act reasonably to proportionately fund needs, taking into account the expected benefits — or progress to be expected — of such funding decisions. This would ensure that resources are reasonably allocated.

The four horsemen have been revealed. They are the underlying causes of our financial woes. We now have a choice: Come to grips with the real causes of our problems — or ask for more morphine.

A tax override only lets the disease progress while depressing the lives of all our citizens. And while we procrastinate, cures for the underlying problems become more difficult.

Why do our legislators, who created these problems in the first place, fiddle while our towns and cities are burning? Don’t they care about their constituents and the children of their districts? Or do they just care about the special interests and their own re-election?

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The February, 2006 Edition of the Valley Patriot
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