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Thursday, March 18, 2010

Que the Torch and Pitchfork Crowd!!!


THE TORCH AND PITCHFORK CROWD - COMING SOON TO A NEIGHBORHOOD NEAR YOU!!!

I just love stories like this. It's a local story. But this is and has been developing nationally for years. So we're back for further review of the landscape.

Schools debate if students should bear full cost when they pay to play

http://www.dailyherald.com/story/?id=365919


School board members learned last week that the cost of running the interscholastic sports for the district's middle and high schools averages $417.58 per athlete per sport.

At least two board members - Roberts and Jack Hinterlong - thought the fee hikes weren't enough. Hinterlong said a fee should cover at least 50 percent of the cost of the activity.

"I'm of the mind we have our backs pushed against the wall," Roberts said, noting the Batavia teachers union had just agreed to give up part of its raise and insurance benefits for next year, to avoid laying off up to 60 teachers.

If it comes to spending money in the classroom or on a club, the decision is a "no-brainer" for her, Roberts said. She'll favor the classroom.

Like it or not, since the beginning of the 20th century, extra-curricular activities and sports have been considered to be a vital, integral part of a well-rounded education.

This whole tactic of figuratively holding a gun to the head of extra-curriculars and sports in order to extract property tax increases from the electorate has been going on for many years and it was repulsive when it was done.

Now the shift is to use the programs to augment diminishing revenues and avoid cuts that strike at the fatty portions of the budget--which is very clearly salaries, benefits and spiraling, out of control administrative costs within the budget.

How logical is it to cut muscle and leave fat untouched? Or to attack a segment of the school that actually has demonstrable, proven positive effects on the health and well-being of kids?

We can't fire teachers who act criminally within the system and harm kids with any reasonable speed, but we sure can take a knife to what works pretty quick, can't we?

It doesn't make any common sense.

Average Total Spending per pupil has surpassed $9K each and is heading towards $10K nationally.

According to the Census Bureau, it was approaching $9K in 2007
http://www.census.gov/Press-Release/www/releases/archives/education/010125.html


Average Spending on Extra-Curricular Activities (ECA) is about $450 each.

According to Encyclopedia Brittanica via Wikipedia:
http://en.wikipedia.org/wiki/Extracurricular_activity

So we are looking to correct budget deficits by demanding payment from a segment of the curriculum that currently only commands 5% of the budget!!

Are you kidding me? Again, this is like someone who is drowning in debt suggesting that all they need to do is cancel a couple of channels on his cable bill or switch his cellular phone plan.

Compound stories like these, with the history of shell-game maneuvers like:

-- The "Pass a State Lottery to Benefit Education" shell game that was perpetrated on Florida voters years ago. Little or none of the funds went to benefit education

-- The property tax shell game that many municipalities play today--whereby property appraisals that are the basis for determining tax revenues sent to the schools are kept artificially high by basing them on inflated pre-housing bubble levels. They change the rules or methodology from recent sales (which are currently deflated) to a three-year average (to lock in the inflated values longer) in order to lock in higher revenues. Funny how when the market was moving higher they couldn't re-assess houses fast enough.

-- The prior history of "extra-curricular hostage taking" strategy to extort property tax increases via referendum.

And now this current strategy shift to off-loading of expenses is nothing more than a selective tax increase on parents whose children are involved in ECA.

It's done because administrators and politicians cannot properly budget and control costs and expenses in an efficient manner.

So they kick the can down the road instead of taking proper steps to controlling the part of the budget that is bloated and out of control and responsible for the deficits. Nothing but a bunch of cowards, thieves and charlatans.

When the "torch and pitchfork" crowd comes knocking on their door, I hope they don't act too surprised. What we really need is a politician who confronts corrupt, out of control monopoly power of government in the same way the trust buster Teddy Roosevelt (the better Roosevelt) did when the abuse was on the private side of the ledger. Public abuse of power and control is just as bad.

Urban Dictionary definition of "torch and pitchfork" crowd:
A group of angry or vocal opponents who regularly come out against something, usually prognosticating dire consequences.

I guess the shoe fits.

However, it's not enough to complain and not offer constructive solutions. Here's a story of a district--Towanda School District (PA)--that is taking on the difficult steps necessary to tackle the problem in a common sense way.

http://thedailyreview.com/news/towanda-school-board-decides-to-not-eliminate-extracurricular-activities-1.630162

While the Towanda School Board had said in mid-January that it was going to look at the school district's extracurricular activities and possibly eliminate some of them, the board has since decided to keep them all in place.

The decision to preserve all extracurricular activities was made at the school board meeting on Tuesday, when the board also approved a school calendar for the 2010-11 school year and heard from a financial advisor on the state of its swap agreement.

In addition, Towanda schools Superintendent Diane M. Place announced that, under Gov. Ed Rendell's proposed budget for the 2010-11 fiscal year, the Towanda School District would receive a 9 percent increase in its basic educational subsidy, which is the primary form of state assistance to school districts.

Extracurricular activities

As the school board works on the school district's budget for the 2010-11 school year, it has been looking for ways to cut expenses, as it will be facing increased health insurance, pension, and salary costs in the coming year.

At its Jan. 11 meeting, the school board had asked school district Business Manager Doreen Secor to draw up a list of the school district's after-school sports programs and other extracurricular activities, which would include the amount spent on each program and the number of students who participate in each program.

The school board had planned at the time to look at the list to see which programs to eliminate.

The school board reviewed the list on Tuesday, and then accepted the school district administration's recommendation to keep all the extracurricular activities in place for the coming year.

The school board also accepted the administration's proposal to pare 2 to 3 percent from the school district's budget for after-school sports and other extracurricular activities, which would save the district $10,000 to $15,000.

"I'm not sure we could go much above (2 or 3 percent) without adversely affecting the quality" of the extracurricular activities, Secor told the school board.

By not eliminating extracurricular activities, the school district will "continue to offer the diverse opportunities to students that set us apart," Place said.

Place said that students do better academically if they are involved in extracurricular activities, and high school Principal Dennis Peachey said the activities also result in higher school attendance rates by students.

The main expenses related to extracurricular activities are stipends for coaches and advisors and transportation costs to meets, school board Vice-president Pete Alesky said. "The rest of the costs are not that much," he said.

Swap

In December, Pennsylvania Auditor General Jack Wagner had sent a letter to every school district in the Commonwealth, urging them to refrain from using interest-rate swaps and to terminate any swaps agreements they may have. Wagner has said the swaps are "risky financial instruments."

But Les Bear of Robert W. Baird & Co. in Exton, who is a financial adviser to the Towanda School District, said the school district's swap has worked out very well for the district.

So far, the district has earned $214,000 from its swap, he said. The district entered into the swap several years ago.

The swap is currently tied to the district's 2007 bond issue.

As the bond is paid off, the risk that comes from being in the swap agreement and the cost of terminating the swap early decreases, he said.

The exposure to risk and the cost to terminate the swap early "will reduce dramatically after 2012," he said.

While the swap is scheduled to end in 2023, the district could end it at any time before then, he said.

The cost of terminating the swap early, which is based on market conditions, would be $300,000 today, he said.

"Potentially, by 2015, it could be a lot less," he said.

He said the district should look at ending the swap well before 2023, after the early-termination cost decreases.

It is interesting to note the use of interest rate swaps as part of the budgeting process.

Because on the one hand--at the grass roots level--we have parents and kids selling coupon books or cookies and conducting car washes to help the schools balance their budgets while in the ivory tower we have administrators playing a game of poker with complex financial instruments.

THAT'S INTERESTING.

NOTE ON INTEREST RATE SWAPS from www.investorprotection.com:
Interest-rate swaps are complex financial instruments and tied to variable interest rates. If interest rates remain favorable, purchasers like a municipality benefit. If market conditions create an unfavorable interest rate environment, however, the bank responsible for initially selling the swap receives higher payments from the purchaser.

BECAUSE IT CAN LEAD TO THIS:

http://www.investorprotection.com/jpmorgan-chase.php

JPMorgan Chase & Co. is a global financial services firm with assets of $2.1 trillion and operations in more than 60 countries. For years, the company made big profits by arranging complex investment deals involving credit derivatives for states, cities, hospitals, school districts and other entities that sell debt in the municipal bond market.

In 2007, the collapse of the subprime market and the subsequent liquidity squeeze caused many of these financing arrangements to sour, forcing countless public agencies and municipalities to come up with billions of dollars to pay for increased interest payment costs.

WOW!!! Billions of dollars??? That's a lot of car washes, dude!!!

Get educated folks. And get involved!!

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