Saturday, October 17, 2009

How Much is Being Stolen in Abbott DIstricts?

I am completely frustrated with Christie’s campaign but there really is no good alternative to him.

One issue that he hasn’t addressed effectively is school costs in the Abbott districts. Basically, the problem is very simple -- You have school operations and school construction funded by the state and the decisions on spending the money being made by local school boards. So its not surprising that Abbott school spending is out of control and the school construction money is spent on rooftop sports stadiums with Astroturf (Union City).

Let’s look at some of the massive waste. The administrative cost on the 2007-2008 school report card for Newark was $1,567 per pupil. This was more than 15% higher than the state average. And, because Newark is a larger system, it should have certain economies of scale that would enable it to have a lower than average cost. But it doesn't.

And, its costs for support services (attendance and social work, health services, guidance office, child study team, library and other educational media) were more than $4,000 per pupil, about twice the state average. How can this legitimately occur?

Then it costs $2,600 per student for buildings and maintenance. This is more than $1,000 higher than the state average.

And, then you have an issue with respect to just how many students Newark has. Average attendance at 2 Newark High Schools was 83%. Let's put it this way. Attendance of 90% means that a student has missed 18 days during the year. Attendance at 83% means that the average student has missed 30 days during the year.

My guess is that this extremely low attendance results from many students simply having dropped out but being kept on the attendance rolls because its big money. Its disadvantageous for Newark to drop a student from the rolls because of funding. So they keep the student on the rolls to keep the money. Should the state pay funding for a student who is missing class more than one out of every five days? This is absurd.

So, what can Chris Christie do? He can start blasting the ridiculous costs of Abbott funding and say that vouchers will correct this. If you give the parents a choice to send their children to a private school, and this will save the state substantial money, then why not do it? Otherwise, you are just operating the government for the benefit of some corrupt insiders in Newark and other Abbott districts.

Wednesday, October 14, 2009

So Chris Christie Doesn't Have a Plan

This is Jon Corzine's plan for property tax relief from four years ago:

Jon Corzine will use his management skills and business experience to deliever property tax relief that is REAL-Responsible, Effective, Accountable and Lasting

Responsible-Jon Corzine has a plan to grow state revenues from a growing economy, and make specific spending cuts. This is the only responsible way to make more state funds available for direct property tax relief without raising other taxes.

Effective-Corzine's plan gives direct rebates to homeowners and renters who need them; rebates are guaranteed to grow 10% a year - or 40% over 4 years.

Accountable-Corzine will hold local governments and schools accountable for their spending. He will push for a new elected State Comptroller with jurisdiction over local government; and expand incentive programs for smart management and reduced spending by local governments. He will end the corruption tax at all levels of government.

Lasting-Corzine's plan advocates for a Citizen's Convention on property taxes. Corzine will put his idea to grow rebates before the convention. Corzine will insure relief by hard wiring relief into the state budget, and by keeping NJ's economy competitive and growing.

Anyway, when Jon Corzine says that Chris Christie doesn't have a plan-does he have a plan?
Jon Corzine chose to increase funding for pre-k and the earned income credit and decided to scrap his promises about property tax relief. The bigger problem is that he wasn't even sincere about keeping his promises.

Sunday, October 4, 2009

Failure of Pre-K Programs-Fade Out Effect

Three years ago, Governor Phil Bredesen zealously pushed to expand Tennessee’s existing government pre-kindergarten program. The Governor hoped to turn a program serving a limited pool of low income, at-risk children, into a full-scale universal Parental Replacement Plan. At the time, the Tennessee Center for Policy Research warned against the idea.In a 2005 report, the Tennessee Center for Policy Research predicted the state’s Pre-K program would suffer from “fade out” effects – the rapid disappearance of Pre-K’s benefits after children leave the program – and would fail to produce long-term benefits for students. After all, every other large-scale government Pre-K scheme, including the Georgia program Tennessee used as a model, and the federal Head Start program, has fallen victim to fade out.Unfortunately, an independent study of Tennessee’s Pre-K program, reveals that the scheme is, indeed, failing parents, students and taxpayers. The taxpayer-funded report, performed by the Ohio-based Strategic Research Group, found that “by the Second Grade there was no statistically significant difference [in educational performance] attributable to Pre-K participation.” The initial gains in student achievement associated with Pre-K fade away within three years, leaving no lasting impact for students, according to the study.The failed Pre-K program has cost taxpayers more than $250 million. It has also cost children precious time that could have been used far more productively.Troublingly, Governor Bredesen knew the Pre-K scheme wouldn’t work before he ever proposed to inflate the program. When Tennessee’s Pre-K expansion was considered, over 300,000 children had attended the Georgia program on which Tennessee’s was based. Despite a cost of $1.15 billion to Georgia taxpayers, the Pre-K students’ test scores were no better than children of the same socioeconomic background who did not attend the program.This knowledge did not prevent Bredesen from using half-truths and impossible expectations to sell state legislators, the media and the public on Pre-K expansion. At the height of the Administration’s campaign of exaggerations and misinformation, they released a statistic stating that “every $1 invested in early learning returns $7 in societal and community benefits in the long run.” The figure was based on a discredited study of 56 at-risk children with “retarded intellectual functioning” conducted from 1962-1965. Oops. If the Administration and many state lawmakers knew government-controlled Pre-K wouldn’t help children in the classroom, and would cost taxpayers outrageous sums of money, why did the state government insist on getting in the business of raising, educating, babysitting and indoctrinating four-year-olds?Because Pre-K isn’t for the kids. It’s for the teachers’ union.Governor Bredesen and Pre-K advocates in the state legislature don’t care that the scheme doesn’t work. The state’s Pre-K expansion was designed as a jobs program to create more teaching positions eligible for membership in the Tennessee Education Association, the state’s teachers union. Pre-K is nothing more than a payback by politicians to the teachers’ union – a quid pro quo from the Governor and other lawmakers who have given the union more members in exchange for the union’s votes, campaign volunteers and political contributions.It may disturb parents, voters and taxpayers, but, hey, what’s a quarter-billion dollars of taxpayers’ money when state leaders can use four-year-old kids as political pawns to garner teachers’ union votes and campaign donations?

Why New Jersey Is Near Bankruptcy

Imagine a local school district being able to spend as much as they wanted for their new school. No expense spared for the cafeteria, athletic fields, media center, auditorium and all the latest features. How much could be spent? Try $200 million dollars for the new Union City High School.

And why were the locals so generous towards funding the new school. Because all of the money was put up by New Jersey. How much does the $200 million dollars translate per pupil? Assume an interest cost of 4% (the money was borrowed) and a life of 50 years. That equals $12 million dollars per year! For a school with 2,000 pupils, that is $6,000 per pupil for the facility cost. And, of course the facility has to be maintained.

Saturday, May 30, 2009

The Idiocy of the Glassboro to Camden Rail Line

I remember as a graduate student, I took a class in Economics of the Public Sector. I had a hypothesis that rail lines were a good thing for government to be subsidizing. However, when I did a study of rail lines, I was very quick to learn that the rail subsidies are staggering and that, it would probably be better to get rid of those lines and switch to bus transportation.

A current example of a rail lines that doesn't serve the public well is the River Line. (An even more drastic example is the Philadelphia to Atlantic City Rail Line). The River Line runs from Camden to Trenton. The River Line attracted about 9,000 passengers a day (probably closer to 4,500 passengers when you consider round trips) in 2008. The operating subsidy for the River Line was $22,500,000 because the ridership generates very little revenue. Thus, the operating subsidy, which doesn't include the cost of building the line is about $5,000 for each round-trip passenger per year.

Then we add the capital subsidy. The line cost $600,000,000 to build. If we depreciate this over 25 years, our depreciation cost is $24,000,000 per year, which comes to another $5,000 or so per passenger per year. Then we add the interest cost of $600,000,000 at 4% or whatever the state's long-term borrowing rate is. That is another $5,000 per passenger per year. That amounts to a subsidy of about $15,000 per passenger per year.

And Corzine wants to build a Glassboro to Camden Rail Line which may even be more idiotic. Projects like the River Line are among the reasons that the state is in such fiscal trouble. We don't need any more of them.

Friday, May 15, 2009

Can Lonegan Beat Corzine?

I like what Mayor Steve Lonegan has to say about school funding, eliminating COAH, eliminating pre-K, eliminating the homestead rebate and some other issues. The question is whether he is electable. I am not sure that he could get elected even against Corzine.

The thing that concerns me about Mayor Lonegan is that he will never avoid an issue. And, he never goes half-hearted on an issue. If its the income tax, it has to be a flat tax, no exemptions, no deductions. If it is global warming, its that there is no global warming. And, if other NJ pols support Christie, he challenges whether those fellow party members are conservative enough. In other words, he just won't tap dance around an issue. And, is that the best way to get elected?
I don't think so. You look at politics and those who got elected are those who can tap dance around an issue.

As far as I am concerned, if he limited his issues against Corzine to school funding reform, opposing COAH, opposing pre-K, opposing the homestead rebate, opposing boondoggle transportation projects and reducing income taxes (without a specific proposal), he would win easily. But he won't do that. He has to make his point about the flat tax, he has to bring in Joe the Plumber, he has to attack those pushing for carbon dioxide and he has to push for offshore drilling in NJ. He has to discipline himself and say this is what I have to do to beat Chris Christie and this is what I have to do to beat Jon Corzine and limit his proposals to those which will accomplish those goals. And, if he doesn't do that, he won't get elected.

Monday, December 29, 2008

Power of Yes-Not So Funny in Real Life

I liked Jim Carrey's latest movie "Yes Man" in which a bank employee changes his life by always saying "Yes."

The real life picture of always saying yes isn't so amusing. Washington Mutual's slogan was the "Power of Yes." (

And, they were true to their slogan! They always said Yes to loan applicants just like Jim Carrey's character. Unfortunately, they were one of the largest mortgage lenders in the country and the effect of this policy was to bankrupt the company. The losses from the "Power of Yes" policy have been staggering.

Some of Wamu's personnel now say that the company's loan officer's didn't want the bank to check as to whether loan applicants had the income and assets that they claimed because their salary was based on how many loans that they wrote. And appraisals were false as well. These were criminal acts and should be approached from that perspective. It's time to put these clowns in jail where they belong.