Posts filed under ‘Special Rants’

Spend Education Dollars Wisely – Invest Private Equity Funds in Real Economic Capacity

This should be a no-brainer. The $500 billion dollar elementary and secondary education market needs to be fiscally responsible. And our economy needs to expand through investment in real productive assets. Yet private investors are seeking to skim profits off of the poorly administered public education money instead of going for new economic capacity. They misinterpret the difference between a stimulus package steeped in short-term spending on employment and infrastructure improvements in education and long-term profit-planning through economic growth.

Private firms eyeing profits from U.S. public schools: “…Now investors are signaling optimism that a golden moment has arrived. They’re pouring private equity and venture capital into scores of companies that aim to profit by taking over broad swaths of public education.”

This excerpt from a Reuters press release yesterday tells us that US “job creators” still don’t get it. They continue to do profit planning based on eating our young. Building a renewed private sector based on extending government spending on PreK-12 education will not make this nation stronger economically. Nor will it make sense to crowd out other investments in productive assets by developing a shadow industry for private investment money in alternative education services.

In the recent past election, the US economy was a key issue. It remains so. However, we continue to see private investment in the very public goods that conservative politicians sought to curb. Cutting healthcare spending and privatizing education were targeted as solutions, but we still need to see evidence that our great economic visionaries can see past their next short sale. The private growth opportunities cannot be healthcare and education. They crowd-out investments for the future.

Healthcare spending already consumes as much of GDP as should ever be reasonable in a stable economy. The $1 trillion investment in college loans to kids is already too high. New private dollars going into public education will continue to dampen the job opportunities for the children once they finish high school and college.

Yes, the brick-and-mortar infrastructure in education is crumbling and needs to be reinforced. And, yes, the children in the classroom should be protected from the feast and famine of economic cycles. However, compensatory money spent in either area must be seen as short-term spending.

In addition, existing private companies that serve this industry need to follow the market from paper to digital media. They must do this to survive – not expand. New players may emerge because they do this better, but the overall industry should not grow faster than the economy in the long run.

$500 billion may be enough to fund public education. We are not sure, but we need to find out what we are buying with our money. However, as long as our financial data system in education lacks transparency, the looters will come.


November 27, 2012 at 8:14 AM Leave a comment

Fact-Checking the Washington Post on Governors Patrick and Romney

Comments below were posted on the Washington Post site to correct the record for Deval Patrick and support the validity of his comments in his speech at the Demoncratic National Convention. The erroneous fact-checking as reported by the Washington Post can be found here. The Washington Post had suggested that Governor Patrick’s claim that he had to pick up the pieces after Governor Romney left crumbling roads and bridges across Massachusetts was debatable because the evidence was subjective?!?

TRUE on Romney’s crumbling bridges and roads in Massachusetts…

During his first year in office, after the Minneapolis bridge collapse in August 2007, Deval Patrick ordered that all bridges in Massachusetts be assessed for safety, and hundreds were found to be in serious need of repair or replacement. Patrick has delivered on a large number of bridge repair/replacement recommendations so far in his administration, and the work continues. On the roads…The Big Dig consumed the vast majority of funds for road repair projects through the many Republican administrations in Massachusetts from 1990-2006. Highways and surface arteries were is severe disrepair. Patrick has restored the roads to far better condition.

In response to a reader comment suggesting that road work was just a timing thing…

The Big Dig was not completely over…the project had been poorly managed, taking years more than planned and cost overruns resulted in about twice the original budget. A daunting punchlist remained with no money, fatalities from falling ceiling tiles, flooding, and use of dry concrete in bridge work. Patrick was the first governor to try to hold contractors accountable.

In response to the same reader suggesting that Martha Coakley was responsible for a settlement…

Martha Coakley and Deval Patrick serve together. Ms Coakley does the legal work as Attorney General. In cases where a contractor screwed up, that firm was given the 1st option of setting things right. Then the suits were filed, if necessary. 

September 6, 2012 at 10:26 AM Leave a comment

A Time for Unity

There has never been a more important Democratic National Convention. As educators, we cannot get hung up on resolving our pet issues this week. Rather, we must support the election of the political leaders we consider most ready to serve us for the next four years. If we are looking for a presidential candidate who will continue to serve all Americans, we must rally around President Obama under a big tent.

Is Barrack Obama your best choice for President as a US citizen and an educator? If so, it is time to set aside your personal agenda and rally around the President in unity. Is it odd that Chelsea Clinton will be interviewing Michelle Rhee, both life-long Democrats? Yes. Will it be awkward to cheer Democratic Party leaders while sitting next to antagonists in the debates over pedagogy, teacher contracts, or accountability? Sure. Do you have unresolved issues with the short list of policy imperatives in the party platform? Of course…No national exigency can be adequately addressed in a campaign designed for voters with short attention spans and infinite needs.

The DNC is not the place for policy debate. It is not about the tactical issues that divide us this week…unions, charters, assessments, evaluations, pedagogy, teachers, parents, funding, etc. We all have our political positions and our pivotal issues, but broad-based solutions for public education can only be negotiated on common ground. That starts with electing leaders who will be most likely to serve all Americans for the next four years.

Here’s hoping for a week that ends with a sustainable big convention pop for the President…not another dreary game of Pop Goes the Weasel in the carnival of education debate. Seriously, the real weasels could win, and that would be a lose-lose for all of us.

September 4, 2012 at 8:50 AM Leave a comment

Response to EducationNext on Ryan Healthcare Plan

In response to Michael Petilli’s post of 8/20/2012 in which he misleads the public on the Ryan healthcare plan…

Rep. Ryan has proposed a budget that raises healthcare spending while reducing benefits to the poor and the elderly. Obama has added benefits and reduced payments to providers, creating a net improvement in the healthcare trust fund, which Ryan’s plan further depletes. I have addressed healthcare spending and the remedy with the aging of the population more fully in my blog as a topic of relevance to retired educators, and I concur with the President’s approach through the ACA. Read more here…

August 28, 2012 at 6:12 PM Leave a comment

Restore Federal Reserve Control Over Money Supply

Banks too big to fail? In need of a bailout? Maybe it’s time to help them out…Let the banks sell the Federal Reserve their ATM networks. Then they can get back to being local banks that serve their customers.

I am a child of a Federal Reserve Bank family. My dad worked there, starting on the night shift in the mail room. There he met my mother, who worked in another department with her sisters, one of whom also met her husband there, a bank examiner. Mom was in the now-defunct Check Collections department, the clearinghouse for checks back in the days of the nation’s money supply being defined by cash and demand deposits, i.e., checking accounts. Dad eventually became manager of the Money Department, where they counted each bank’s money on a regular basis to ensure that they met their reserve requirements.

Back in those days, the Federal Reserve Bank had its hands on the money supply, quite literally. While many of its operating procedures would be considered quaint today,* the notion that the Fed could actually manage the money supply should have been a keeper.

Unfortunately, the new money supply and purchasing power might be better tracked through the ATM networks and the credit card clearinghouses…which reside in the private sector. While ATMs nullified the system of float, the useful delay in money transfers due to the Fed’s handling of checks, they could offer an early warning system for issues in the system.

Call me old fashioned, but the next time a major bank threatens to destabilize  the world economy with its imprudent financial shenanigans, Tim Geithner and Ben Bernanke should offer them a deal they can’t refuse: their ATM networks or their life. And if that’s not enough to cover their losses, ask them to throw in the credit card clearinghouses as well.

* As a child, I marveled at all the ladies, each with a million dollars on her desk waiting to be counted, and the furnace where they burned old money. As an adult, I wondered if the fleet of Brink’s trucks carried the same payload of money around the block and back to the Fed each day to be recounted under the banner of a different institution…but, of course, that was after my baby sister went to work in the “Trust” Department.

August 8, 2012 at 9:55 AM Leave a comment

The Case for Lowering Student Loan Interest Rates

The frenzied debate on renewal of interest subsidies on student loans has missed a key piece of the puzzle: interest rates on student loans are too high. Banks are making more profit than they could make elsewhere in the market on job-creating corporate and small business lending… And new lenders are jumping into the market without government guarantees or collections support.

Interest rates on student loans are excessive. In order to help students finance their higher educations, the US government should pursue a combined strategy of lowering overall interest rates for college student loans and subsidizing interest costs for some students based on need.

The high interest rates have triggered over-participation in the college lending arena. Availability of funding has created slack for colleges, which have allowed costs to rise excessively. As a result, students have assumed an unprecedented debt burden during the worst economic conditions in almost a century. Something has to give, but the government cannot afford to carry the total weight of the problem.

The DOE has approached the colleges on the issue of cost containment, and students in financial distress are being assisted with modifications to their loan repayment plans. In addition, the US has picked up half the interest rate costs to students for some of these loans. However, there is a deadlock in Congress on the issue of renewal of interest rate subsidies to students on loans in the future. While the debate has focused on how to pay for these subsidies – via spending cuts or deficit spending – the cost of the subsidies themselves could be reduced without greater cost to students. The solution? Cut the overall interest rates on student loans.

There is evidence that returns on student loans are higher than the free market would allow. The first clue is that banks have loaned over $1 trillion to students…more than they have loaned to the entire population of adults via credit cards, the former linchpins of usury. This has occurred in an era of supply-side economics, when government policies gave freedoms to businesses and financiers to support industrial development and job creation. The opportunity cost of job creation, instead of student lending, must have been too high; the money went to student loans…not job creation.

In addition, many student loans taken before 2009 carried a government guarantee and government agencies still assist in the collections effort. Despite elimination of the guarantees, banks remained content with the business, especially as interest rates have continued to drop in all other markets. In fact, there has been new competitive entry into the student loan arena of late from financial institutions that are willing to lend to student WITHOUT government guarantees or agencies assisting with collections. This is a sure sign of excessive profit-taking.

The US government should lower the interest rate it allows banks on college student loans.

June 14, 2012 at 10:17 AM Leave a comment

Bully – The Labor-Management Story…by Koch

Boston, San Jose, and Wisconsin…axe taken to worker rights in ballot issues and legislative actions funded by big PACs. This trifecta has filled the void left by passive-aggressive education leadership. So, where’s the impetus for real management in schools?

This has been a tough week for workers. In Wisconsin, the governor, whose mission was the elimination of collective bargaining, has been vindicated in a failed recall election. In San Jose, a city has voted to take away pension benefits from government workers. And in Massachusetts, the mere threat of a ballot issue has driven the powerful Massachusetts Teachers Association to cede tenure and seniority rights in contract negotiations. The 1%, acting on their own interests, have filled a void left by passive-aggressive leadership in education to cripple labor negotiations across the nation. And we are supposed to believe this is about the children?

PAC money is a dysfunctional feature in a nation whose very being is predicated on democracy, balance of power, and market freedom. Within education, that lopsided force has become the Terminator for teachers – assuming the role of prosecutor, judge, jury, and executioner for workers who have been presumed guilty and denied due process. And, it is not a coincidence that the PACs have targeted the one group of workers that cannot be outsourced out of existence.

Ironically, laws that seek to silence workers by nullifying the labor-management dialogue will undermine the vitality of leadership as well. A fair debate yields far better insight than can ever be achieved within a single point of view. While I have never been a good union worker, as a leader and an American, I must support the workers and argue that…

  1. There are two sides to every labor-management dispute.
  2. There is hidden agenda behind the smokescreen of every politically charged issue.
  3. The rights of the people must transcend both for any legal or contractual issue to be valid in the US.

Point 1: Seniority, tenure, and pensions are all terms of engagement that should be subject to labor-management negotiation.  A power struggle between the two is functional and needs a balanced solution, not an external blind-side punch.  Consider that…

  • Unions have always gained strength where management has been weak or abusive.
  • History needs to be undone with good-faith negotiation of the workers’ roles, evaluation criteria, career pathways, and incentive-based compensation.
  • Strong, fair leadership engages in regular employee assessment, mutual goal setting, and periodic review.

Instructional leadership and traditional role-modeling have not and cannot effectively take the place of a full repertoire of people-management skills. A power play to force compliance with a failed management strategy is a form of bullying which will perpetuate the problem. That is how we got where we are today. Let’s set aside the blunt instruments and work on developing a more robust model of leadership and motivation. It is far more clever to see and attend to individuals within an organization than to out-maneuver a mob with a sucker punch.

Point 2: The rights of America’s children…good cause, but not really the objective if you consider that…

  • The money behind the union-busting activities comes from advocates for private schools that tend to be segregated, elitist, and faith-based.
  • The advocates are saying, ‘where’s mine?’…asking why we keep focusing on other people’s children who happen to be poor, under-served educationally, and of ethnic minority…ignoring the fact that the role of government is to protect those who lack the resources to participate effectively in the free market. Apparently they like the achievement gap just fine.
  • The elimination of seniority, tenure, and pension benefits collectively is just a trade-off of rights for the young that are being taken away from the old. Real solutions protect both.

The real story is the 1% trying to eliminate entitlements that protect access to the middle-class while protecting unseen entitlements for the extremely wealthy.

Point 3: The American way is to protect the freedom of the young, the old, and the in-betweens of any culture.

Any action by a legislative body, a government agency, or a private entity must stand the test of legality and constitutionality. Accordingly…

  • We must provide free access to high-quality public education for all.
  • We must not discriminate on the basis of age, sex, color, creed, …
  • We must abide by laws protecting rights for employment, retirement security, and contracts. Federal laws supersede state and local rulings on these issues in many cases.

So far, we only have 1% solutions…The rest of us have limited resources today, but those resources will only shrink and our way of life deteriorate if we are satisfied with solutions crafted out of zero-sum concepts.

June 8, 2012 at 7:58 AM Leave a comment

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