Kentucky Teachers Have Had Enough

There’s a banner that pops up occasionally around the Kentucky Capitol that seems to work for virtually every protest. It says, “WE’VE HAD ENOUGH” in all caps. It’s really kinda brilliant. It works for virtually any protest. If I had a sign-making business in Frankfort, I’d make sure to have a couple “WE’VE HAD ENOUGH” banners ready for any given protest group. Why yes, we do have various sizes and colors. Step into our showroom. What group did you say you’re with?

It’s worth taking stock of precisely what Kentucky teachers (at least the ones protesting in Frankfort today) have struggled to endure.

They’ve had enough of presiding over an education system that consistently ranks near the bottom for academic achievement while receiving pay that’s the 7th highest for teachers in America (when adjusted for cost of living). That’s well above the median household income for the commonwealth.

They’ve had enough of lawmakers and a governor insisting that the best time to reform pensions was twenty years ago and the second best time is now.

They’ve had enough of being told by financial economists that the pension promises of the past are putting a rather large hole in the Kentucky ship of state that won’t be alleviated for decades even with a substantial reform.

They’ve had enough of any efforts to give low-income parents in Kentucky any choice among schools.

They’ve had enough of the growing realization that there’s not much moral or constitutional justification for compelling their fellow teachers to support a union, and that the practice may come to an end this year.

In short, I suspect the protesters have had enough of the complaints from people who just don’t want what they’re selling. Lawmakers, parents, taxpayers, and even presumably many of their own colleagues, I believe, have had enough.

Public Pensions: Risk Finds A Way

What’s missing from almost all discussions about pension reform is the idea that every time the market goes down, taxpayers are on the hook. Unfortunately, given the current structure of state pensions, that outcome is unavoidable and likely to be repeated.

The case for keeping public pensions in their current form hinges on, among other things, the idea that a portfolio weighted heavily in stocks provides something of a “free lunch” to taxpayers and it makes some sense. Taxpayers pay a relatively small amount into pension funds for each government worker, the market will very likely go up over that worker’s career, and taxpayers don’t have to pay the difference between their contribution and the benefits paid to the worker.

But there ain’t no such thing as a free lunch.

What has happened in Kentucky and other states is this: Lawmakers watched as markets boomed in the 1990s and chose to pare back contributions in order to fund more immediate spending desires. Lawmakers also found small ways to boost benefits for public workers because, after all, look at all the money in that fund! When markets tanked, as they inevitably sometimes do, taxpayers suddenly found themselves in the position of responsibility for the gap. The money that should have gone to maintain pension funding levels had already been spent elsewhere.

This kind of grasshopper thinking might not be much of a problem if that retirement plan were owned and funded by the same single individual. If you choose not to contribute to your own retirement fund, that’s your choice and I wish you the best of luck. No one else should be on the hook for your shortsightedness. But that’s very different from how public pensions operate. In short, the pensioners must be paid as a matter of contractual obligation.

Commentators and would-be reformers are almost entirely focused on getting that funding back to the exclusion of changing the system. The problem is that this time, decades later, the costs can be absorbed by precisely two groups: taxpayers and pensioners.

The Wall Street Journal notes that public pensions are still heavily weighted in stocks, and at least one of the biggest funds in Kentucky is more heavily into stocks than most pension funds.

The $19.9 billion Teachers’ Retirement System of Kentucky now has 62% of its assets in equities, close to the 64% it had in 2007. It sold $303 million in stocks Jan. 19-20 to rebalance its portfolio following gains. From Feb. 6-8, as U.S. markets plunged, the fund bought another $103.5 million of stocks.

“We are definitely a long-term investor and look to volatility as an investing opportunity,” said Beau Barnes, the system’s deputy executive secretary and general counsel.

Lawmakers are giving precious little attention to the idea that getting taxpayers out of the public employee retirement business should be the overriding goal.

Kinsley on Citizens United

This is a well-considered analogy from Michael Kinsley, one I wish more people would consider when they cry foul when (some) corporations decide to spend money advancing their preferred ideas or candidates:

The analogy I like (as did the Supreme Court in its ruling) is to a newspaper. Suppose Citizens United were reversed and President Trump decided one day that he was sick of The New York Times. So he proposes a law setting a ceiling on the amount any individual or organization can spend putting out a newspaper. Constitutional? I hope not. But it’s hard to see the difference in principle between this and a law limiting the amount a corporation or union may spend promoting a political candidate.

I recently chatted with Kentucky Congressman John Yarmuth about his proposal to remove First Amendment protections for many public discussions of federal candidates. He wasn’t particularly convincing in presenting an argument on behalf of an amendment that would strip away the constitutional protections for media outlets to discuss candidates openly while simultaneously asking that I trust Congress to delicately reanimate the corpse of the McCain-Feingold campaign finance rules prohibiting corporations (but not Trusted Media Outlets) from having their say. I have a hard time thinking that Congress, given the opportunity, would craft a proper balance between the interests of Democratic Government and the rights of individuals to band together and say whatever they think needs to be heard.

Listen here:

RIP Lowell Reese

Lowell Reese was a journalist who cared deeply about the rules that governed the game. His decades in journalism, his sharp mind, and his kind heart all contributed to his engaged, deep, often meticulous data-driven reporting on politics and policy.

More than that, Lowell Reese was a helpful, generous friend to anyone who wanted to understand practical politics on a deeper level. He gave me important information that drove my studies into Kentucky’s pension system, for which I wrote more than a little bit. In the process of writing on this subject, there weren’t many people to talk to, and Lowell Reese was absolutely invaluable as I tried to understand the ground-level realities of the incentives that drive Kentucky’s pension plans.

I came to know Lowell well while working for the Bluegrass Institute, directing the group’s KentuckyVotes.org platform to track lawmakers’ daily activities in Frankfort.

It’s fun to remember how energizing Lowell was to me, Chris Derry, and Jim Waters as we worked to get the project off the ground and bring that all-important daily rundown of lawmakers’ votes to the public for free. His enthusiasm for the project played out through introductions to helpful lawmakers, helpful staff at the Legislative Research Commission and the various people who had either pull or knowledge to help us move the project forward. I can never thank him enough for so gleefully giving me access to his network.

When I moved to Frankfort to run the project throughout the legislative session and write for Kentucky Gazette, Lowell revealed himself to be a great friend, as well. Always interested in what I knew and freely giving of what he knew, we held occasional meetings in the maddeningly beautiful office behind his home. It was, I recall, the perfect perch for an independent journalist: a life’s work on the walls and a relaxed, engaged journalist behind the desk.

The big issue toward the end of Lowell’s life was pension transparency. You’d be forgiven for thinking this meant he was concerned only about abuses perpetrated by Wall Street profiteers on the poor, defenseless managers of billion-dollar pension funds. Private equity’s appeal to pension managers is a big problem, to be sure, and Lowell was concerned about it, but for him this was at most half of the problem associated with a lack of transparency in pension finance.

Lowell was also intensely concerned with the manner in which individual public sector workers could make relatively minor adjustments in their working lives to trigger massive pension payouts. He made various estimates of how a little-known bill, HB 299, passed in 2005, would allow some Kentucky lawmakers to make a few key moves with respect to their employment and pensions to increase their lifetime wealth by a million dollars or more.

It’s a bigger issue than just lawmakers, of course, and the kind of data detailing the size of pension payouts and and various decisions that balloon pensions is also still shrouded in mystery. But thanks in no small part to Lowell Reese, that issue is on the table like never before.

Only since Kentucky Gazette published his obituary have I learned that Lowell was apparently an active Republican campaigner. Personality driven politics were rarely a part of our discussions. What made Lowell interesting to me was his own interest in the consequences of ideas and appropriateness of rules.

Here’s more from Kentucky Gazette and more from Jim Waters, and some more precise details of his later projects with the Bluegrass Institute.

Big Speech in the Kentucky Senate Race

In The New York Times Magazine‘s piece on the U.S. Senate race in Kentucky, I came across this:

This year’s Kentucky Senate race is the latest chapter in this political arms race, drawing contributions from large outside “super PACs” and wealthy individual donors.

Factually incorrect, but not surprising.

It’s typical for media outlets to ignore the important distinction between a direct contribution to a campaign and political advertising that supports a candidate. What’s troubling to me how often the error occurs and the ignorance it demands of reporters and editors. I’d prefer to believe that it’s borne out of a poor understanding of both the First Amendment and campaign finance laws, but it’s very hard to square.

Reporters, in my experience, broadly support restrictions on free spending on political ads and other advocacy by unaffiliated groups. Establishment journalism has long occupied a special place free from exactly those kinds of restrictions, but there’s no good reason to believe that kind of exemption would have to continue. Newspapers, radio stations and television outlets have served as providers of both information and advocacy, endorsing candidates freely and spending mightily on the bandwidth to broadcast those messages. There’s no clear distinction between the spending of a super PAC on a message and the spending of a newspaper to express the same thing.

If it’s pure ignorance that drives reporters to not clearly understand the implications of tight regulation on “outside” advocacy, it’s galling. If the error is driven by the specious, unstated belief that no future Congress would dare impose those same restrictions on establishment media, it’s dangerous.

Violence in Louisville Revisited

Recent violence in Louisville has thankfully started many public conversations about poverty, education and culture that otherwise be relegated to quiet, resigned laments at the dinner table. That Louisvillians are talking about this publicly is broadly to the good. Unfortunately, one well-worn claim about How We Got Here doesn’t stand up to basic scrutiny.

In a piece that has more to recommend it than indicated here, Tim Druck writes:

We used to pay for real educators and leaders spending the time to teach youth who are currently neglected and forgotten. We used to have career and vocational programs for kids who aren’t necessarily college material – I know plenty of successful adults today who learned a trade in high school, anything from auto mechanics to printing to agriculture. Today, if you’re not college-bound, an athlete, or an entertainer, you are entirely on your own to find a trade or a career – no wonder ‘pro athlete’ and ‘gangsta rapper’ are the only goals of so many children. Kids don’t learn that there is success in working for a living – in our culture, in our education systems, in the media, either you are fabulously wealthy or you are nothing.

I include the latter part about vocational education because I agree with it almost entirely. The median salary for plumbers in America is about $49,000.

On the broader issue of what “we used to pay for”, I responded:

Tim responded:

And I responded with this:

Here’s the relevant chart:

This chart doesn't include the costs of school buildings, btw.
This doesn’t include the costs associated with school buildings, btw.

It’s a powerful testament to the power of public school salesmanship and media handwringing that the most carefully considered, thoughtful answer to basically any problem with public schools must always be, say it with me, More Funding.

It’s past time Kentuckians admitted that More Funding has been tried for decades. The persistent problems of low proficiency in reading and math in Jefferson county (despite decades of More Funding) should be laid squarely at the feet of the public school establishment and its defenders.

Kentucky is among a shrinking number of states with no charter schools and no private school choice. This, too, is a testament to the power of the public school establishment that has fought to keep students in failing schools.

But let’s be clear: School choice is not the silver bullet cure to my hometown’s violence. It is, however, a powerful way to engage parents in making one of the most important decisions on behalf of their children that they’ll ever make. If a robust transfer of power away from public schools and into the hands of low-income parents isn’t on the table, then I think it’s safe to call that intentional oversight yet another testament to the power of the public school establishment.

(Related: KidsCount.org has a darn good website.)

Update: Alas, it appears Mr. Druck would rather punish the wealthy than help the poor

If the betterment of school district performance were the only relevant metric for school choice … Tim would still be mistaken.

Also, does anyone honestly care about school districts? Better to worry about how kids currently trapped in those districts get educated.

Violence in Louisville

My friend Terry Meiners has some very pointed thoughts on the recently high-profile violence in Louisville. I can’t say if I agree with what he says entirely – I haven’t lived there for ten years – but the closed-off nature of much of the media and political establishment in Louisville makes me suspect that we’ve been getting a far-too-rosy picture of the downtown area for some time.

Lynn’s Paradise Cafe Is Still Closed, Still Unknown Exactly Why

A year ago this week, I was puzzling over why one of my favorite Louisville tourist traps, Lynn’s Paradise Cafe, had suddenly closed. I suggested it may have had something to do with the impending regulations that would be foisted upon businesses in 2014 by the Affordable Care Act (ObamaCare). I haven’t lived in Louisville for nearly nine years, so I’ll admit that I don’t understand all the dynamics that went into Lynn’s decision to shut down. I earned only one response I believe was ill-considered. Louisvillian Briana Morgan said that my suggestion was irresponsible. Here are her thoughts. More