WashACE Blog

New WASL Report: Mixed Reviews

Release of the latest round of WASL scores provides some good news and some, well, needs improvement marks. As Debby Abe writes in The News Tribune, "It's not all gold stars for  WASL test results." She has a good discussion of the test - and the inevitable political implications - in a story worth reading in its entirety. Here are the bullets.

ƒ› This fall?s incoming 12th-graders are setting a slightly faster pace at meeting new graduation testing requirements than last year?s seniors did.

ƒ› Scores in science, the most recent addition to the WASL, rose 3 to 6 percentage points in the three tested grades. At least 40 percent of fifth-, eighth- and 10th-graders passed that section.

ƒ› Reading and math scores appear to have?stalled outƒ� in most grades.

Linda Shaw's Seattle Times story also provides good context for understanding the latest results. She also get the Partnership for Learning reaction.

... the Partnership for Learning, a business-backed group that's long been a WASL supporter, said that even though most scores remained flat this year, improvements are in the works that will change that, especially the plans to significantly shorten the test in all grades but grade 10 next spring.

As Shaw notes, Superintendent of Public Instruction Terry Bergeson also celebrated Washington's top ranking on SATs. Here's Education Week's story on the SAT results - mostly flat with some questions.

The SPI web site has more on both here.

Second Thoughts in NY (family leave) and Wisconsin (health care)

At Olympia Business Watch Don Brunell takes note of the New York legislature's adjournment without passing paid family leave. It was a matter of dollars and sense.

There were many versions of the paid leave circulating around Albany. They were all very costly.  Here is a sample of the proposals:

• One would impose 12 weeks of disability insurance benefits for family leave on ALL businesses for employees of newborns, families adopting children and caregivers of sick parents, spouses and children.
• Another would provide 13 weeks of leave and would have increased the maximum disability benefit from $170 to $550 per week by 2010 and would have permanently indexed the benefit to one-half of the state's average monthly wage.

As for the proposal to pay for it.  Workers would have to pay a mandatory 45 cents per week payroll tax...

In Wisconsin, support for the so-called "Healthy Wisconsin" program proposed last legislative session also seems to be waning. The State Policy Blog reports candidates are in "full retreat" on the pricey "universal health care" plan. Dollars and sense again. The blog links to this story in the Wisconsin State Journal.

"The issue is money and right now, not many legislative candidates are talking about big, broad programs simply because we all understand that practically speaking, there's no money," said Jim Holperin, a new Democratic Senate candidate who praised the Healthy Wisconsin plan but said his focus was on reviving the economy.

Few would deny the importance of improving health care access and affordability, or for helping employees work through difficult times, but the lessons being learned in Wisconsin and New York (they're not the only places) should be heeded here.

"WA Business Climate: Contradictions & "All Over the Map""

As we've written before, this "best state for business" business is complicated. Others have reached the same conclusion. In the September Washington CEO, Aaron Corvin provides a good rundown of what he dubs a "state of contradictions." And the Washington Policy Center's small business expert, Carl Gipson has a Puget Sound Business Journal op-ed headed "Washington's business climate is all over the map."

WashACE readers will recognize many of the reports cited, but both articles are worth a full read.

Corvin blends data with interviews.

Don Brunell, president of the Association of Washington Business, says there is little room for comfort in competing with other, lowercost states. And the cost of doing business in the state could go up in a number of new ways, he says, including by way of the Paid Family Leave Act...

Additionally, Brunell doesn't see the state's advantage in low electricity costs lasting for long: Initiative 937, approved by voters statewide in 2006, requires utilities to increase their use of renewable energy. But pre-existing hydropower, which provides about two-thirds of the state's electricity, doesn't count.

And this.

Scott Carson, CEO of Boeing Commercial Airplanes, says high unemployment and workers' compensation rates, coupled with rising taxes and energy costs and problems with traffic and education, "make it increasingly difficult for Washington state businesses to compete." No one should assume "Boeing or any other company will remain here just because of history," he says, which makes it imperative to control costs.

Corvin does a great job of touching on all the points business leaders we talk to cite regularly: business taxes, energy costs, regulation, workforce (especially engineers, scientists, and skilled tradespeople), and  more. It's good to see the WashACE 2008 Competitiveness Redbok used as a data-rich source to back up the anecdotal evidence.

Gipson's op-ed reviews the data from several studies and does a good job of sorting through the disparate tax ratings. And he asks the right question:

In 2007 the state's business community paid almost $15 billion in taxes - an increase of 36 percent since 2002. At what point does the business community look for better, cheaper options and friendlier states?

I'm glad to see leading business publications giving competitiveness this much attention. It's timely.

How Much Would You be Willing to Pay to Combat Climate Change?

Not much if you're a typical Californian. And are they so much different from typical Washingtonians?

Here's the Reuters story on a recent survey.

Most Californians won't support the state's ambitious efforts to fight global warming if they lead to sharply higher energy costs, according to a survey commissioned by a pro-business group released on Thursday.    

Sixty-three percent of 1,000 registered California voters surveyed this month said they supported the goal of cutting greenhouse gases, but that support fell to 47 percent when the question included the likelihood of higher energy costs.

Power Line understands the dissonance.

Reducing carbon emissions will be popular until someone actually tries to do it, and the consequences become apparent. It's a bit shocking that, as this survey suggests, a considerable number of people don't understand that reducing carbon consumption means higher energy costs.

Right.

Public Schools Get Lower Grades than the Post Office?

The valuable Joann Jacobs blog recently pointed to the 2008 Eduction Nex-PEPG Survey of Public Opinion report showing that Americans give the public schools a not-so-respectable C on performance. Although the nationwide survey of 2,500 adults and an oversample of 700 public teachers reveals "an abiding commitment to public education," this might hurt.

Local public schools receive lower marks than they did a year ago. More significantly, perhaps, survey respondents claim that their local post offices and police forces outperform their local schools.

The survey contains an abundance of good information. For example,

Though support for No Child Left Behind is dwindling, Americans continue to believe that schools should be held accountable through national standards and tests. No less than
69 percent ofthe public think the federal government should set standards for the country and administer tests in math, science,and reading. (Page 17)

As they did in 2007, a plurality of the overall public and every subgroup continue to support charter schools.Indeed, supporters of charter schools outnumber opponents more
than two to one.The modal response, however,continues to be?neither support nor oppose.ƒ� (Page 20)

The schools seem to be doing better than the nation.

A slight majority of those surveyed, nonetheless, think that the public schools in their community are improving. Fifty-six percent ofthe public say that the local public schools
are heading in the right direction,compared to 44 percent who believe they are on the wrong track.In this respect, Americans? views of the nation?s education system appear to be considerably more optimistic than their views about the affairs ofthe
nation more generally.When Gallup,NBC and the Wall Street Journal,and the Associated Press used the same language to ask Americans about the direction ofthe nation as a whole
while our survey was in the field,less than one-quarter reported that it is on the right track achievement... (Page 16)

Most of that seems to square with perceptions of Washington schools. The national souring on NCLB has not eroded support for accountability. Neither has Washingtonians' growing apprehension about the WASL diminished enthusiasm for standards. The challenge, of course, is that its easier to embrace accountability and standards in the abstract than it is to agree on a particular set of criteria against which to judge. Tossing NCLB and the WASL in hopes of coming up with something better sometime in the future seems self-defeating.

For an excellent account of California's unrealized Scharzeneggerian education reform, see No Country for Strong Men. Daniel Weintraub documents how caution, budget woes, and the lack of a comprehensive and coherent reform vision doomed the governor's plans for major improvements in that state's public schools.

And, to end this on a positive note, George Will writes today of a successful charter school in Oakland, California.

More Paid Leave Mandates Coming?

UP

Canadian Physician Pans Canadian Health Care System

The incoming head of the Canadian Medical Association, no less, has some pretty harsh words to describe the Canadian health care system. (h/t State Policy Blog) The Canadian Press reports on his inaugural address to the association. He says a private system can help where the public system is "overburdened."

He cited a host of statistics to back his case: Canadian health-care costs have quadrupled in the last 20 years; the country's doctor-to-patient ratio has plummeted; by 2011, the number of Canadians over 80 will have jumped by 43 per cent.

Ouellet called the overall state of Canadian health care "alarming."

"We have one of the most costly and least efficient health systems of any industrialized country," he said.

Looks like that's one model we needn't emulate.

Some Post Primary Thoughts on Business Taxes

With nothing to say here about yesterday's election, I thought it might be helpful to sort through some recent news on US business taxes. Steven Malanga, a senior fellow at the Manhattan Institute, uses the New York budget crunch as a peg to offer some helpful perspective on taxes and shortfalls.

Of the approximately $48 billion in accumulated budget shortfalls that the 29 states with projected deficits are facing, $33 billion, or two-thirds of the gap, is concentrated in those five states considered by corporate executives to be the least friendly to business. [Ed. note: He's citing this DCI study.] Meanwhile, among the five states ranked as having the best business environment, Texas and North Carolina have no projected budget gaps, and Georgia, Tennessee and Florida are facing shortfalls amounting to about $4.1 billion, or less than one-tenth of the states? total.

Earlier this year Stephen Moore and Arthur Laffer made a similar case in Rich States, Poor States, though they were not focused exclusively on business taxes.

"States that have controlled spending and taxes are doing better than states that have not done these things," Moore said. "High taxes don't redistribute income; they redistribute people."

A recent GAO study showing that two-thirds of US corporations paid no income taxes ginned up some enthusiasm for tax hikes in Congress and some editorial pages. It also created some embarrassing confusion at the New York Times (read the correction at the end of the article).

Today Malanga clearly explains why the anti-business hype accompanying the GAO report makes no sense.  Read the whole thing, as they say, but here's a taste.

The impression one gets from corporate critics is that many are prospering but exploiting loopholes in the tax code and leaving the rest of us to pick up the tab. But that criticism is based on the mistaken notion that in robust years, such as 2005, virtually all businesses do well. Nothing could be further from the truth.

Even in good times, there are plenty of losers in a dynamic economy. The BLS? Business Dynamics Survey, for instance, shows that in 2005 there were 7.3 businesses that were contracting for every 7.6 that were expanding, including 1.3 that were closing their doors for every 1.5 that were starting up. Large businesses were hardly immune to this kind of tumult. For every 5.8 jobs added by firms with more than 500 employees, other firms that big eliminated 4.9 jobs. Among those hit hard in 2005 was General Motors, which despite $193 billion in revenues wracked up a $10.4 billion loss and cut its workforce.

If you don't make money, you don't pay the corporate income tax, which - unlike Washington's B&O tax - is based on profits. And as Malanga points out, a lot of firms lose money even during a boom.

The Tax Foundation points out that the US imposes the second highest corporate tax rate of any OECD nation (see also here). Alarmed about the declining global competitiveness of US firms, TF has launched the CompeteUSA campaign

...to raise the public's awareness of America's high business tax rates and how those taxes have a "real-wallet" impact on our competitiveness, wages, and living standards.

As part of this look at the "real-wallet" impact of business taxes, the CompeteUSA campaign will also talk about how the American worker shoulders a disproportionate amount of the corporate tax, and the fact that the poorest 20 percent of households pay more in corporate income taxes each year than they pay in individual income taxes. In fact, corporate taxes were 6.3 percent of low-income households' tax bills last year compared to just 4 percent for individual income taxes.

They've set up a campaign website.

Also today, the Wall Street Journal reports on a revived tax revolt in some states, including Oregon, Nevada and Massachusetts. Successful tax cuts threaten to deepen the budget crisis in several states. But, as Malanga concludes in his commentary on taxes and shortfalls,

... any look at the states with the biggest deficits reminds us that governors and legislatures are largely the authors of their own problems, and that the biggest trouble some of them seem to have is that their taxing and chronic overspending have made them toxic to the business community.

As we look toward the fall elections, it's important to let the candidates know that Washington employers already pay heavy business taxes. Increasing that high tax burden will only deepen the state's economic problems.

Budget Red Ink and Public Employee Unions

You've gotta believe it's easier to go into collective bargaining when the coffers are full. In most places, including Washington, that's not the case right now. The Spokesman-Review reminds state workers that the well is dry.

New York faces a substantial budget crisis, as well. Lawmakers there want to cap property taxes. The state's largest teachers union opposes the gap. The Niagara Gazette is fed up.

... the cap may or may not be an answer. The ultimate answer is fiscal responsibility. But since this is New York, that?s probably not going to happen anytime soon. So if the crutch of a tax cap is needed to instill discipline, so be it.

One thing we cannot do is to let the teachers and other public employee unions dictate the terms of our fiscal future. We?ve allowed that to happen in the past. Look where that?s brought us.

The S-R has it right.

State workers lament that pay isn't keeping pace with inflation, but compare that with workers who have been laid off, had their pay cut or haven't had a raise in years. In that context, recent state pay raises of 2 percent and 3.2 percent look pretty sweet.

Since 2004, funding for pay and benefits for teachers has risen 29 percent. For other state workers it's up 31 percent. Some of that is due to new hires. Some is due to compensation increases...

Ultimately, and soon, state leaders will have to apply the brakes to state spending. This round of negotiations sets the stage.

A Little More on the Forbes Ranking

Washington CEO's Bryan Corliss offers a little more on that Forbes ranking. He managed to talk with Kurt Badenhausen, the Forbes editor in charge of the lists. Corliss focuses on the regulatory ranking, where this state does uncommonly well.

For starters, [Badenhausen] said, this category incorporates a broad range of data to get a sense of how well a state government performs on issues important to business. "It's really five factors: rules on the books, how hard it is for companies to cut thru red tape."

Badenhausen said Forbes (using data collected by Pollina Corporate Real Estate) also looks at the incentive environment within the state, and surprisingly Washington scores very high here - No. 6 - despite the fact that it doesn't offer companies incentives for relocating here.

These rankings are "not strictly 'we hand out the most incentives,'" he said. "They look at job training programs, they look at tax abatement, they look at economic development office's - how proactive are they, are they doing anything." And, comparatively, Washington does very well.

However, Washington does pretty poorly on another component of this sector: the tort environment, where we rank 37^th.

But that's off-set by a good Moodie's debt rating, which Forbes considers a "loose proxy for what kind of fiscal shape the government is in," Badenhausen said. Moodie's puts the state at a AA1, which is the second-highest rating.

Finally, Washington scores a slightly-above-average 20^th for transportation. Badenhausen said Forbes isn't trying to measure traffic congestion, but instead judge whether states have the appropriate transportation infrastructure, including highways, rail lines and airports.

Convinced?