AUGUST 2017
OKLAHOMA COUNCIL OF PUBLIC AFFAIRS
Putting Patients First Freed from the bureaucratic constraints that too often impede and bog down traditional medical practices, Edmond physician Jeffrey Davenport now has one focus.
In Case You Missed It Has Medicaid made the opioid epidemic worse? bit.ly/Opioid-Problem
According to a Brookings Institution study, 61 percent of Oklahoma families have a private school within a five-mile radius of their house. bit.ly/Five-Mile
The Oklahoma Education Association (OEA) has lost nearly 20 percent of its active members over the last five years.
Oklahoma’s state government can learn a lot about how to handle economic downturns from the oil-and-gas industry.
bit.ly/OEAsDecline
bit.ly/Tale-of-two-sectors
New policy rankings from the American Legislative Exchange Council (ALEC) show where Oklahoma can improve.
It’s time we realize that the state Legislature is not responsible for funding and running Oklahoma public schools.
bit.ly/ALECranking
An NPR/PBS/Marist poll finds that Americans trust the Trump administration more than they trust the media. bit.ly/MediaVsTrump
bit.ly/Local-Control
In many Oklahoma school districts moving to a four-day week, superintendent pay has increased. bit.ly/4DaySchools
OU president David Boren and UCO president Don Betz should correct the record on their higher-ed spending claim.
Oklahoma state government spending is higher than ever. shar.es/1BMoIn
OCPA joined The Heritage Foundation, ALEC, and 10 other organizations in sending a letter to Secretary of Education Betsy DeVos praising her commitment to educational choice and emphasizing the need to remain true to the tenets of federalism. bit.ly/Letter-to-DeVos
bit.ly/Boren-Betz
PERSPECTIVE
Brandon Dutcher, Editor
OCPA Trustees
OCPA Researchers
Glenn Ashmore • Oklahoma City
Patrick T. Rooney • Oklahoma City
Robert D. Avery • Pawhuska
Melissa Sandefer • Norman
Lee J. Baxter • Lawton
Thomas Schroedter • Tulsa
Douglas Beall, M.D. • Oklahoma City
Greg Slavonic • Oklahoma City
Inc., an independent public policy
Susan Bergen • Norman
Charles M. Sublett • Tulsa
organization. OCPA formulates and
John A. Brock • Tulsa
Robert Sullivan • Tulsa
David Burrage • Atoka
William E. Warnock, Jr. • Tulsa
Michael Carnuccio • Yukon
Dana Weber • Tulsa
analysis consistent with the principles
William Flanagan • Claremore
Molly Wehrenberg • Edmond
of free enterprise and limited
Josephine Freede • Oklahoma City
Daryl Woodard • Tulsa
Perspective is published monthly by the Oklahoma Council of Public Affairs,
promotes public policy research and
government. The views expressed in Perspective are those of the author, and should not be construed as representing any official position of OCPA or its trustees, researchers, or employees.
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PERSPECTIVE // August 2017
Ann Felton Gilliland • Oklahoma City
Steven J. Anderson, MBA, CPA Research Fellow Tina Dzurisin Research Associate Trent England, J.D. Dr. David and Ann Brown Distinguished Fellow for the Advancement of Liberty Jayson Lusk, Ph.D. Samuel Roberts Noble Distinguished Fellow J. Scott Moody, M.A. Research Fellow Andrew C. Spiropoulos, J.D. Milton Friedman Distinguished Fellow
John A. Henry III • Oklahoma City Robert Kane • Tulsa
Wendy P. Warcholik, Ph.D. Research Fellow
Frank Keating • Oklahoma City Gene Love • Lawton
EMERITUS BOARD
David Madigan • Lawton
Blake Arnold • Oklahoma City
Tom H. McCasland III • Duncan
Steve W. Beebe • Duncan
David McLaughlin • Enid
David R. Brown, M.D. • Oklahoma City
J. Larry Nichols • Oklahoma City
Paul A. Cox • Oklahoma City
Lloyd Noble II • Tulsa
John T. Hanes • Oklahoma City
Mike O’Neal • Edmond
Henry F. Kane • Bartlesville
Andrew Oster • Edmond
Lew Meibergen • Enid
Larry Parman • Oklahoma City
Ronald L. Mercer • Bethany
Bill Price • Oklahoma City
Daniel J. Zaloudek • Tulsa
Larry Arnn
Arthur Brooks
William F. Buckley
George W. Bush
DENNIS PRAGER “One of America’s five best speakers.” — Toastmasters
Jeb Bush
October 19 • Tulsa
Dinesh D’Souza Mitch Daniels
J. Rufus Fears
Brit Hume
Steve Forbes
For more information, contact Rachel Hays at 405.602.1667 or rachel@ocpathink.org.
Tommy Franks
John Fund
Jim DeMint
Charles Krauthammer
Art Laffer
Russell Moore Stephen Moore Peggy Noonan Marvin Olasky
Sarah Palin
Ed Meese
Star Parker
Dana Perino Michael Reagan
Clarence Thomas
Artur Davis
Newt Gingrich David Horowitz Mike Huckabee
Laura Ingraham Frank Keating Brian Kilmeade Jeane Kirkpatrick
Rich Lowry
Cal Thomas
Dick Cheney
Scott Walker
Paul Ryan
Joe Sobran
John Walton
J.C.Watts
Past OCPA speakers are pictured above.
Thomas Stafford John Stossel
Allen West
Walter Williams
Direct Primary Care Puts the Focus on Patients
By Mike Brake
Doctor A, a family physician, arrives at his office shortly after 8 a.m. on a typical day. He has 27 patients scheduled today, and by noon he’s seen 16 of them, spending at most 20 minutes with any one patient. He’s also fielded or made a dozen phone calls and signed stacks of insurance forms. He gobbles a quick lunch at his desk as he processes more paperwork and returns more calls. Three patients with sinus infections call to be worked in that afternoon, so it’s 5:20 before Dr. A sees the last of them. He spends the next 90 minutes on paperwork and phone calls, in one case debating for a half hour with insurance bureaucrats over the pre-authorization of an MRI for one patient. Doctor B also has a family practice, but he’s one of at least 15 fellow physicians in Oklahoma who have adopted a revolutionary new practice model called Direct Primary Care (DPC.) He’ll see just six patients in the office today and quickly return calls from a half-dozen others. He won’t handle a single insurance form and he’ll be done with office hours at 4:30, in time to make an actual house call for a shut-in elderly patient.
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PERSPECTIVE // August 2017
Dr. Jeffrey Davenport, one of those 15 Oklahoma DPC physicians, practices in Edmond and says the DPC model is “one that is really gaining steam over the last four or five years.” A second family practitioner has recently joined his practice, and he said he frequently hears from other doctors seeking to escape the paperwork monster that modern medicine has become. Here’s how Direct Primary Care works. Whereas the typical primary care doctor (like a family physician, internist, or pediatrician) might have between 2,500 and 3,500 patients on his or her panel of people who call them “my doctor,” a DPC physician limits the total patient load to between 600 and 900. Each of those patients pays a fixed monthly fee. For Dr. Davenport, that amounts to $10 monthly per child in a family, $50 for adults up to age 49, $75 up to age 64, and $100 for those over 65 (on the theory that the older one is, the more medical care one requires). So a typical family of four might pay $120 monthly. In return, he provides any and all primary medical care at no additional cost. He files no insurance, so there are
no copays involved. He spends the time needed with each patient—sometimes up to an hour or more—and promptly responds to phone calls, emails, or text messages from patients who are given his direct cell phone number, 24/7. When patients need lab work, Dr. Davenport can usually draw the sample in his office and submit it to a local lab, then bill the patient at a fraction of what the same test would cost from an outside source. He also maintains a stock of frequently prescribed medications, purchased wholesale, which he can dispense as the patient leaves, often at a fraction of what he or she would pay at the neighborhood pharmacy. It’s no accident that the name above the door at his Edmond office is “One Focus Medical,” the focus being on the patient and not the medical/insurance bureaucracy that impedes and bogs down traditional medical practices. Of course when patients need specialized care, like surgery or major tests that a primary care office cannot provide, they must revert to the traditional fee-for-service/insurancebased model in their dealings with that
provider. That’s why Dr. Davenport urges patients to continue to carry major medical insurance. But, he notes, “85 percent of medical insurance claims are for basic primary care services. Direct Primary Care can help medicine break its unhealthy addiction to insurance in most cases.” He said some businesses are also exploring the DPC model as a simpler and less expensive way to provide health services to employees. A business with, say, 40 employees could carry major medical insurance on them and their dependents and then enroll them in a DPC practice at considerably less in combined expense than it costs to fund more traditional comprehensive medical insurance. Dr. Davenport said it was serendipitous that he discovered the DPC model. A 2003 graduate of the University of Oklahoma College of Medicine, he completed his residency in family medicine in Kansas and then practiced both independently and as an employee of the OU physicians
medical conference and while waiting for a technical session, quite by accident, stumbled into a presentation on the Direct Primary Care model. He returned home to research it and on April 1, 2014, he became the first primary care doctor in Oklahoma to implement it in his practice. Many of his patients eagerly followed him from his previous fee-for-service, insurance-based practice to his DPC office, he said, while some were reluctant (since few patients are familiar with the new DPC model). But he said patient response has been good. “This model puts the patient first,” he said. “They love it.” He noted that one patient who needed frequent lab studies for thyroid issues had been paying $600 per test. When she joined his DPC practice she paid no copays for office visits, and he was able to trim her per-test expenses to $27. Dr. Davenport was also instrumental in winning passage in 2015 of model Oklahoma legislation that prohibited insurance regulators from treating the
Before embracing the Direct Primary Care model, Dr. Davenport says, insurance paperwork was “the bane of my existence. I was exhausted. My wife and kids wondered when I would come home at night.” network. He soon found paperwork, especially that associated with insurance, “the bane of my existence. I was exhausted. My wife and kids wondered when I would come home at night.” Dr. Davenport noted that Medicare required doctors to answer four questions on every patient’s paperwork one year, nine the next, and 13 in the year following. “What is it going to be next year?” he wondered. “I had already begun to ask myself, sitting in that office at 6:30 or 7 at night, could I really do this for the next 30 years?” Then in 2013 he attended a national
monthly DPC fee like health insurance. Similar legislation is pending at the federal level. Not only do patients in a DPC practice have faster, better access to their doctor, they also experience better health outcomes as well. A study in the American Journal of Managed Care found that DPC patients were less likely to be hospitalized, with 56 percent fewer non-elective admissions. While the DPC model is tailored to primary care physicians and could not be applied to specialists like surgeons who tend to see patients only once in their lives, Dr. Davenport said it could
easily be adapted by specialists in fields like cardiology, gastroenterology, or pulmonology, where doctors also tend to carry a longer-term patient panel. As he described his experience with DPC at 11 on a Friday morning, his office waiting room was empty, the last morning patient having left after a cordial, relaxed chat with her doctor. He would have time before his first afternoon patient to review his chart and to return a few phone calls. Meanwhile at an unrelated medical office to the north, patients of another physician were shuttling in and out of a crowded waiting room like cattle, hoping they wouldn’t have to wait more than 45 minutes for their 13 minutes with the
Photos: Red Stilettos Photography
doctor. When they arrived the very first thing the receptionist said was “Insurance card please!” They devoutly hope they won’t need the kind of tests or procedures that require a long wrestling match with their insurance carrier. Different models, different doctors, but similar patients, all hoping for quality, personal medical care. They’re getting it from the DPC model. Mike Brake is a journalist and writer who recently authored a centennial history of Putnam City Schools. He served as chief writer for Gov. Frank Keating and for Lt. Gov. and Congresswoman Mary Fallin, and has also served as an adjunct instructor at OSU-OKC.
www.ocpathink.org
5
Oklahoma’s Private Sector Boosts Household Income
By J. Scott Moody and Wendy P. Warcholik
To boost families’ economic prosperit y, state political leaders must reverse the public-sec tor crowd-out of Oklahoma’s private sec tor.
In the June issue of Perspective (“Oklahoma State Budget Crisis: I Should Say So”), we measured the extent to which the public sector has crowded out the private sector in Oklahoma (see Chart 1). This is important because the evidence is clear that it is the relative size of the private sector that accounts for much of the difference in families’ economic situation across the states. We have delved deeply into the factors that account for family prosperity across the 50 states in our annual Family Prosperity Index (FPI). The FPI, available at familyprosperity.org, is the first and only index to measure the behavior of the whole person— both the economic and social choices a person makes. The FPI takes objective, public data organized into six major categories of 60 variables, boils them all down to one number for each state, and then ranks the states. Overall, Oklahoma ranks as the 21st best in the country in the 2017 FPI. One of the things we analyze is the relationship between the size of a state’s private sector and the size of per-household personal income. We have found that there is a significant positive correlation between per-household personal income and the private-sector share of personal income. Put simply, the larger the private sector, the greater the per-household personal income in that state. As shown in Chart 2, when examining the lower 48 states, on average, a one percentage point increase in the size of the private sector yields an increase in per-household income of approximately $3,300. (We exclude Alaska and Hawaii, which is common practice in state analysis, due to their unique economic characteristics.) Of course, correlation does not equal causation. However, there are two states that allow for a very strong natural comparison to better show causation—New Hampshire and Maine. These two states are similar in many ways—geography, climate, demographics, and culture—but they diverge
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PERSPECTIVE // August 2017
significantly in their approach to public policy. As shown in Chart 3, between 1929 and 1950, Maine and New Hampshire had similar inflation-adjusted per-household incomes (dotted lines) and private sectors as a percent of personal income (solid lines). In 1951, Maine enacted a sales tax, which led to increased public-sector spending and crowded out the private sector. Consequently, New Hampshire’s per-household income began to steadily pull away from Maine. This trend accelerated in 1969 when Maine enacted its income tax—a few years after the federal government enacted Medicaid. With this new source of revenue, Maine was able to dramatically expand its welfare system, especially Medicaid. In fact, as of fiscal year 2010, Maine had the third highest percentage of the population on Medicaid, at 31 percent. In stark contrast, New Hampshire remains the only state in the nation not to have enacted a state or local sales tax or state or local income tax. This difference in public policy has resulted in dramatic differences in the size of each state’s private sector. Between 1929 and 2016, Maine’s private sector shrank by 29 percent—to 65.6 percent from 92 percent—and now has only the 41st largest private sector in the country. By contrast, New Hampshire has seen its private sector shrink by a much smaller 15 percent—to 77 percent from 90.4 percent—and now has the 2nd largest private sector in the country. As a result, New Hampshire’s private sector in 2016 is 17.4 percent larger than Maine’s—77 percent and 65.6 percent respectively. Consequently, New Hampshire’s per-household income in 2016 is 40 percent higher than Maine’s—$142,747 and $101,602, respectively. This relationship matters because personal income is an important economic measure of a family’s well-being. Higher
Oklahoma State and Local Government Compensation Outpaces Growth in Private Sector (Calendar Years 1929 to 2016)
CHART 1
30 Private Sector Index State and Local Government Compensation Index
Index Value
23
15
8
0
1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 Sources: U.S. Department of Commerce: Bureau of Economic Analysis; Oklahoma Council of Public Affairs
Relationship Between Private-Sector Share and Per-Household Personal Income
CHART 2
(Calendar Year 2016)
$155,000
Per Household Personal Income
levels of personal income mean that a family is able to buy more goods and services, such as a home, a car, education, and health care. Overall, state leaders know that there are both economic and social costs that harm society, but they struggle to craft policies that will mitigate these costs. With the FPI, leaders no longer have to guess which policies are better than others. In the case of economic family prosperity, they now have a crystal clear roadmap to effective policy solutions—reverse the public-sector crowd-out of the private sector.
$133,750
$112,500
$91,250 Oklahoma $70,000
58%
63%
68%
73%
78%
Private Sector Share of Personal Income
Sources: U.S. Department of Commerce: Bureau of Economic Analysis, Census Bureau; American Conservative Union Foundation's Family Prosperity Initiative (Excludes AK & HI)
OCPA research fellow J. Scott Moody (M.A., George Mason
CHART 3
University) is a senior fellow at the American Conservative Union.
New Hampshire's Larger Private Sector Leads to Higher Income vs. Maine
(Calendar Years 1929 to 2016)
Formerly a senior economist at the Tax Foundation and a senior 100%
economist at the Heritage Foundation, he has twice testified
Maine Sales Tax Enacted 1951
before the Ways and Means Committee of the U.S. House of popular “State Business Tax Climate Index.” His work has appeared in Forbes, CNN Money, State Tax Notes, The Oklahoman, and several other publications. OCPA research fellow Wendy P. Warcholik (Ph.D., George Mason University) is a senior fellow at the American Conservative Union.
Percent of Personal Income
Representatives. Moody is the co-creator of the Tax Foundation’s
$145,000
Maine Income Tax Enacted 1969
90%
$113,750
80%
$82,500
70%
$51,250
She formerly served as an economist at the U.S. Department of Commerce’s Bureau of Economic Analysis, and was the chief forecasting economist for the Commonwealth of Virginia’s Department of Medical Assistance Services. She is a co-creator (with J. Scott Moody) of the Tax Foundation’s popular “State Business Tax Climate Index.”
60%
1929
1936
1943
1950
1957
1964
1971
ME (Private Sector Share) NH (Private Sector Share)
1978
1985
1992
1999
2006
2013
ME (Personal Income) NH (Personal Income)
Sources: U.S. Department of Commerce: Bureau of Economic Analysis; American Conservative Union Foundation's Family Prosperity Initiative
www.ocpathink.org
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$20,000
Blue-State Blues By Jonathan Small
Throughout the entire 2017 legislative session, we heard sky-is-falling rhetoric from politicians and lobbyists. We were told Oklahoma must increase revenue or state agencies will face dire consequences. But despite all that noise, Oklahoma state government is now on track to spend more money next year—more than $17.9 billion—than at any time in state history. Yet some still demand more attempts to increase taxes on Oklahomans. Their argument is simple: More revenue will make it easier to fund state government. All we need to do is bring in more money. Problem solved. Lessons from Connecticut Not so fast. The state of Connecticut offers us a cautionary tale when it comes to tax increases and state budgeting. According to The Connecticut Mirror, the state now has a “$5.5 billion budget crisis, looming over every government agency and legislative decision like a tidal wave.” Keep in mind, Connecticut is one of the most heavily taxed states in the country. Besides all the ordinary taxes, it has a death tax and the nation’s second-highest cigarette tax. How can a high-tax state be in such a corner? One reason is income tax collections in Connecticut dropped this year for the first time since the recession due to lower earnings. And, many productive residents retreated to lower-tax states when politicians raised the top individual rate. In the past five years, more than 27,000 Connecticut residents have moved, and seven of the state’s eight counties have lost population since 2010. This population flight has depressed economic growth as well as home values and
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PERSPECTIVE // August 2017
sales-tax dollars. Simply put, Connecticut state government has refused to make cuts and live within its means. Instead, it has adopted the quick fix of raising taxes. Higher taxes can lead to deeper budget holes, and before too long, people and businesses will simply vote by moving to lower-tax states. Lessons from Illinois Which brings us to Illinois, where lawmakers face deficits that total $30 billion or more—and that’s before they even start discussing a $250 billion pension debt. Illinois lawmakers have failed to balance the state budget every year since 2001 and annual tax increases have failed miserably to keep the state afloat. Illinois has made the same fatal mistake we saw in Oklahoma this year. They keep raising revenue while refusing to implement most cost-saving reforms. The Illinois fiscal picture is the stuff of budgetary nightmares. Total state pension debt has been estimated by the Illinois Policy Institute at $250 billion. There are currently more than $14 billion in unpaid state bills, with a deficit for the fiscal year now ending of $6.2 billion. Next year’s deficit is projected to top $7.7 billion. Illinois is in such bad shape that Moody’s Investors Service recently downgraded the state government’s credit rating to Baa3, just one notch above the rating for junk bonds. All this despite a record tax increase in 2011. The four-year income tax boost was supposed to bring in $30 billion by raising the personal income tax rate from 3 to 5 percent. It actually yielded $32 billion, but the state’s bill backlog still stood at $6.6 billion and the pension debt increased by another $25 billion. What happened? Lawmakers simply refused to stop spending. That sent a pretty persuasive message to Illinois residents. The message was, “Don’t let the door hit you on the way out.” Between 2013 and 2016, 78,000 people abandoned Illinois. In 2016, another 114,000 bailed out. Chicago is the only major American city to lose population in recent years.
Illinois did do one thing right. They implemented audits of state Medicaid enrollment, a move OCPA recommended for Oklahoma this year. As you might expect from Illinois, policymakers there had blindly expanded Medicaid services—only to find immediately they had to cut services to their aged, blind, and disabled populations and their most vulnerable. In Illinois, expanding Medicaid has resulted in the deaths of more than 700 people who were on the waiting lists for those with severe disabilities and severely debilitating diseases. When they instituted file checks, they found 34 percent contained errors, revealing that some 600,000 people were receiving benefits for which they were not eligible. This resulted in a savings of $430 million. Of course, that was the proverbial drop in the bucket for a state as badly managed as Illinois. The lesson is clear: Perpetual revenue increases without disciplined, reformed spending reductions is the road to bankruptcy and depopulation. Hopefully, Oklahoma lawmakers will study the experiences of Connecticut and Illinois. Oklahoma is in a recession compared to 2014, after more than 21,800 energy and manufacturing jobs have been cut, when Oklahomans have lost more than $13 billion in taxable income and reduced their purchases subject to sales and use tax by $4.1 billion. Oklahoma’s budget issues are not due to too few, or too low, taxes. They stem from two clear causes—an extended recession that hit the core oil and gas industry especially hard and the persistent failure of state leaders to truly address the convoluted, wasteful structure of government.
Jonathan Small is the president of the Oklahoma Council of Public Affairs. A Certified Public Accountant, he previously served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes coauthoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden.
QUIZ: Is This a Real Job Title in Oklahoma’s Higher Education System? By Brandon Dutcher
1. Vice President for Community Relations (annual compensation: $147,500)
7. Assistant Rodeo Coach ($50,000)
Real Fake 2. President’s Associates Presidential Professor of Women’s and Gender Studies and Co-Director of the Center for Social Justice ($119,048)
Real
Real
Fake
8. Director of Leadership and Volunteerism ($110,590)
Real
Fake
9. Director of Gender and Women’s Studies ($102,756)
Fake
3. Assistant Director for Strategic Learning Partnerships ($59,400)
Real
Fake
10. Volunteer and Service Learning Center Coordinator ($32,536)
Real Fake 4. Vice President for the University Community ($220,000)
Real
Fake
Real Fake 5. Coordinator of Community Inclusivity ($33,314)
Real
Fake Brandon Dutcher is OCPA’s senior vice president. He is editor of the
6. Associate Vice Chancellor for Government Relations ($150,850) Real Fake
book Oklahoma Policy Blueprint, which was praised by Nobel Prizewinning economist Milton Friedman as “thorough, well-informed, and highly sophisticated.” His articles have appeared in Investor’s Business Daily, WORLD magazine, Forbes.com, Mises.org, The Oklahoman, the Tulsa World, and 200 newspapers throughout Oklahoma and the U.S.
ANSWERS 1. Fake 2. Real (http://bit.ly/OU-1 and http://bit.ly/TW-StateSalaries) 3. Fake 4. Real (http://bit.ly/OU-2 and http://bit.ly/TW-StateSalaries) 5. Real (http://bit.ly/OU-3 and http://bit.ly/TW-StateSalaries) 6. Real (http://bit.ly/TW-StateSalaries) 7. Real (http://bit.ly/OPSU-1 and http://bit.ly/TW-StateSalaries) 8. Real (http://bit.ly/OU-4 and http://bit.ly/TW-StateSalaries) 9. Real (http://bit.ly/OSU-1 and http://bit.ly/TW-StateSalaries) 10. Real (http://bit.ly/UCO-1 and http://bit.ly/TW-StateSalaries)
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9
Is College Worth the Money? If you are prepared for college-level work, and especially if you intend to major in something in demand in the economy, by all means go to college. The price you will be charged will be inflated, but the investment will still pay off. If you are unprepared for college, however, or plan to major in a field with few job prospects, you should really think twice. A factoid you might have heard before—the average college graduate makes around $1 million more over her working lifetime than the average person with just a high school diploma—continues to hold. There are lots of caveats—the greater income does not account for the decreased value of a future dollar, nor that investing what would have been tuition money would likely have produced unaccounted-for gains—but it still exists. On the whole, even with an average four-year undergraduate degree running roughly $40,000 to $134,000 in tuition and fees, depending on the type of school, college is worth the investment. Which is not to say that degrees are priced right. They are almost certainly inflated, fueled especially by federal student aid including Pell grants, loans, and tax-favored savings plans that enable colleges to jack up their prices to capture always desirable revenue, and allow students to pay—and demand—more than they would were they using their own money or funds voluntarily given to them. Numerous studies have found that aid fuels tuition cost inflation, and the “help” it provides is a major reason that for decades inflation in higher education has eclipsed even the infamous inflation rates in healthcare and housing. [See American Enterprise Institute economist Mark J. Perry’s chart on the facing page.] Another crippling unintended consequence of gigantic subsidies—federal, state, and local subsidies to colleges with student aid programs approached a combined $250 billion in 2016—is credential inflation. Basically, more and more degrees that represent less and less learning make having a degree not so much a sign that one possesses valuable skills and knowledge, but rather make it so that not having one is a red flag suggesting you have some sort of deficiency. The hollowing out of degrees has been borne out in research showing declining literacy rates for people possessing bachelor's and advanced degrees, and in stagnant or declining earnings for degree holders during the past 15 years. The big college wage premium is more a function of a high school diploma’s value dropping than a college degree’s rising.
By Neal McCluskey
This is a big reason that having a degree is no guarantee of success. According to 2014 research from the Federal Reserve Bank of New York, about a third of people holding a four-year degree are in jobs that do not require it, and are in such career tracks on a largely permanent basis. And while various types of engineering majors and a few others can make big bucks right out of college, people with softer majors, like psychology or English, can struggle to find well-paying work.
Is college worth the money? Thanks to massive, distorting subsidies extracted from taxpayers, that is a far tougher question to answer than it should be.
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PERSPECTIVE // August 2017
That said, investing in college is far riskier if you are teetering on the margins of preparation, or aren’t motivated to do collegelevel work. Poor preparation or focus are major reasons a little less than half of people who start college do not finish within six years, and many never complete. For these people, the cost of college can be an albatross even with relatively small debt. Indeed, there are higher default rates for student borrowers who owe relatively small amounts, in the $1,000 to $10,000 range, than those paying off larger sums. Defaulters have basically paid for part of college but left without getting the degree essential to increasing their earnings. For millions of such people, the “investment” in college was a significant loss, not a gain. So is college worth the money? Thanks to massive, distorting subsidies extracted from taxpayers, that is a far tougher question to answer than it should be. For those who are truly ready for college and are focused on in-demand fields, it almost certainly is, even if it should cost far less. For everyone else? It is a far dicier proposition. Neal McCluskey (Ph.D. in public policy, George Mason University) is the director of the Center for Educational Freedom at the Cato Institute. McCluskey is the author of the book Feds in the Classroom: How Big Government Corrupts, Cripples, and Compromises American Education, and his writings have appeared in such publications as the Wall Street Journal, the Washington Post, and Forbes.
Price Changes
SELECTED CONSUMER GOODS AND SERVICES (JAN 1996 - DEC 2016)
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Christians and Public Schools: Babylon, Exodus, or Pentecost? By Greg Forster
There’s no one “right” choice for everyone. Parents should evaluate local schools, public and private, and select the one that aligns best with their views and goals. Of course, parents don’t have an equal choice as long as government uses its tax power to offer free schools while alternatives need to charge tuition. We need school choice policies to make real choices available.
As school choice is growing in Oklahoma, the Tulsa World has become ground zero for a new round in an old debate: What should Christian families do in a pluralistic society where the government schools don’t teach Christian doctrine? Are they duty-bound to be students in the pagan city where the Lord has placed them, like the exiles in Babylon? Or should they seek an educational exodus from the Egypt of government schools into a holy land of religious schooling? So far, no one seems to be offering an alternative to this unpleasant choice between captivity and culture war. I believe one exists; our model as Christians is not Babylon or Exodus, but Pentecost. The Babylon faction kicked off the latest controversy with a Tulsa World column in May by Ryan Moore, co-pastor of First Presbyterian Church in Tulsa. Moore demands that we throw more taxpayer money at a government monopoly school system that has already squandered the resources lavishly bestowed on it over the course of the last 50 years, as school budgets consistently expanded and educational outcomes were flat. He expresses concerns about “efficiencies” but nonetheless demands that we cough up more money for the government schools— without setting any benchmarks for how the money will be used, or what results we have a right to expect. Why must we do so? Because Christians have long supported “public” schooling, as evidenced by the fact that churches have a long track record of founding church schools in Scotland and America. Moore seems not to have asked why, if churches were so aggressive in creating schools, government stepped in and used its power of taxation to drive churches (mostly) out of the schooling business. One reason was because the church schools
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PERSPECTIVE // August 2017
taught people to think for themselves and live independently. As industrialists grew more powerful in the 19th century, they enlisted government to create a new school system whose products would provide more submissive and narrow-minded cogs for the factory machine. (Big business and big government colluding to destroy freedom and oppress the poor—it all seems so familiar, almost as if we’ve seen it somewhere before.) However, the more important reason was religious. Massachusetts created the first government school monopoly in America in the 1830s, partly out of submission to exploitative industrialists, but also because the Unitarian Boston Brahmins were horrified at the unreconstructed Calvinism of the Massachusetts countryside. The new public schools indoctrinated students in a religion of good works without the cross, tearing up the cultural roots of puritanism. (One would think this history would be of interest to a Presbyterian pastor.) The tool created to destroy Calvinism in Massachusetts was soon deployed nationwide in hopes of destroying Catholicism. As large numbers of Roman Catholic immigrants came to America, Massachusetts’ newly created government school monopoly began to look less like a quirky idea and more like an essential tool for washing the filthy Romanism out of these immigrants’ heads. Government schools imposed a “non-sectarian” religious instruction that was actually a thinly veiled mainline Protestantism. This is why the majority of state constitutions are disfigured with detestable “Blaine amendments,” which purport (in violation of the U.S. Constitution) to deny private schools equal participation in government programs solely on the basis of their religion. Praise God, our Catholic friends were more true to the spirit
of America than America itself. Faced with government schools that were dedicated to cultural genocide against them, they bore the burden of private schooling. Thus the American experiment in religious freedom was preserved, despite America’s own best efforts to stamp it out. (Irony alert: Our efforts to “assimilate” these immigrants to our culture would actually have destroyed America’s culture of religious freedom; their successful resistance to our “assimilation” efforts actually assimilated them to our real culture. God has a sense of humor.) After the Babylon faction produced such a slow, fat target as Moore’s column, it wasn’t long before the Exodus faction took to the pages of the Tulsa World with a rejoinder. Edward Fowler, rector of St. Michael’s Anglican Church in Broken Arrow, argued that any school that isn’t explicitly Christian must be explicitly atheist. Government schools must present students with a coherent account of the universe that doesn’t include God. Therefore, schools that do not explicitly teach that God created the world are inevitably teaching “that God did not create the world.” It is true, as Fowler argues, that there is no such thing as religious neutrality. All human beings have some kind of cosmic worldview, and everything we do presupposes that worldview. Even to assert “2+2=4” presupposes the view that the human mind is rational, and its spontaneous intuitions about the relationships between numbers are sound (and, for that matter, that other minds exist and I can communicate meaningfully with them). All of these premises are religious, or at least metaphysical. However, while there is no such thing as religious neutrality, there is religious ambiguity. To assert “2+2=4” is not a religiously neutral statement, but it does not settle all religious questions, either. A Christian, a Muslim, and a Hindu have three very different metaphysical accounts of what the human mind is, yet each can square “2+2=4” with their view. Thus, a school that is not explicitly Christian need not become explicitly atheist. It need not even become implicitly atheist. It may be implicitly Christian! Or it may be a shared possession, offering an educational discourse that accommodates a diverse population without resolving their religious differences. In this, we are only discussing a specific instance of a much more general challenge. Creating a shared social world in which people of diverse faiths can live together is not only a problem for schools. It is the challenge facing all institutions and civilizations in the advanced modern world. Communication and transportation technologies, but more importantly our increased seriousness about religious freedom, are requiring us to invent new ways of living together. If we believe in religious freedom at all, then we have already conceded that it is possible for people of diverse beliefs to share institutions and, ultimately, a public social world. The Exodus position implies not only an exodus from government schools, but from good citizenship in any society characterized by religious freedom. It is an invitation to endless culture war, in which everything not explicitly Christian must be treated as an enemy until it is “taken captive to Christ,” and we have no shared cultural ground with our neighbors of other beliefs. The culture created by religious freedom is inevitably messy
and unstable, because of the ambiguous nature of the shared social world. We will sometimes have to fight each other to define terms, draw boundaries, and figure out how to live together. But let’s not set up perpetual war with our neighbors as our definition of faithfulness! This is not an argument for sending every child to government schools. This is an argument for parent choice—real parent choice, without captivity either to government schools or to church schools. Parents should evaluate local schools, public and private, and select the one that aligns best with their views and goals. My wife and I send our daughter to the local government school, because we are more satisfied with it on all counts— including spiritually—than the available alternatives. Others, facing other circumstances, may legitimately make other choices. Of course, parents don’t have an equal choice as long as government uses its tax power to offer free schools while alternatives need to charge tuition. We need school choice policies to make real choices available. But policy isn't enough; we also have to understand and affirm as a culture that there’s no one right choice for everyone. Different families can make different choices, and that’s okay. The problem with both Babylon and Exodus as social models for Christianity today is that they both come from the Old Testament, before Christ’s coming. With the Great Commission, Christ has sent his people out into the world; he wants disciples of every nation. Where the Jews were called out of Egypt, we are called into Egypt—our road is an eisodus, not an exodus. But we are not called to live passively, like the exiles in Babylon, merely marking time in a foreign land. The church has a mission to build godly ways of life wherever we go, and that means we can’t simply conform to the world around us or bunker down in Christian ghettos. The model for Christians is not Babylon or Exodus, but Pentecost. The languages (i.e., cultures) of the world all participate in the church’s resurrection power. Cultures that never expressed the gospel before are now transformed. But it is only disciples of Jesus, only those connected to the power of the Holy Spirit through Christ’s death and resurrection, who experience this transformation. They are then sent back to all their nations, to build lives of discipleship and faithfulness in every culture. What does it mean to build a life of discipleship in our nation today? That will be different for people living in Tulsa and Tampa, or even Tulsa and Topeka. It will vary from one household to another, and there is no one-size-fits-all answer. Indeed, “one size does not fit all” is part of the lesson of Pentecost. A good Christian needs to learn to be comfortable with that ambiguity. For if God can be more than one person, we certainly can find more than one way to be Christian. Greg Forster (Ph.D., Yale University) is a Friedman Fellow with EdChoice. He is the author of six books, including John Locke’s Politics of Moral Consensus (Cambridge University Press, 2005), and the co-editor of three books, including John Rawls and Christian Social Engagement: Justice as Unfairness. He has written numerous articles in peer-reviewed academic journals as well as in popular publications such as The Washington Post and the Chronicle of Higher Education.
www.ocpathink.org
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Oklahoma’s (Missing) $8,872 Teacher Pay Raise By Benjamin Scafidi
Since 1992 Oklahoma public schools have increased spending by 26 percent per student, adjusted for inflation. At the same time, public school teachers received only a 4 percent real increase in purchasing power. Given that public schools have received large increases in taxpayer support but are providing scant pay increases for teachers, it’s fair to ask where all the money is going. In a new report, “Back to the Staffing Surge,” I show that America’s public schools have been on a 65-year binge during which increases in the hiring of public school employees have been
far in excess of increases needed to accommodate student enrollment growth. Specifically, the increase in teachers has been two-and-a-half times as large as the increase in students, leaving us with significantly smaller class sizes. But the increase in non-teachers—district and school administrators, teacher aides, counselors, social workers, reading and math coaches, janitors, bus drivers, cafeteria workers, curriculum specialists, and everybody else—was more than seven times the increase in students. This staffing surge occurred in Oklahoma’s public schools as well. According to data that the Oklahoma Department of Education reports to the U.S. Department of Education, since 1992 Oklahoma public schools have increased the number of non-teachers by 36 percent, while the number of students increased by only 17 percent. I use this federal data because it’s the only source of accurate and complete information on public school spending and staffing for all 50 states. Other data—even data found on official state websites—often excludes entire classes of personnel (such as classified staff) or excludes entire categories of spending. Oklahoma now employs more non-teachers than teachers. A cautious estimate is that the post1992 staffing surge in non-teachers has cost Oklahoma taxpayers $373 million per year. As shown in my report, while the public school staffing surge raged from sea to shining sea, outcomes for students
were largely stagnant. So while the staffing surge was a costly failure, it also deprived Oklahoma teachers of an $8,872 permanent raise. Are federal and state mandates to blame for the hiring of all these non-teachers? If so, we would expect the staffing surge to be uniform across states or across Oklahoma school districts. But it’s not. Some districts (Deer Creek, for example) have prioritized the hiring of teachers, while others (Ada and Tahlequah, for example) prefer non-teachers. What job types are primarily responsible for the increases in “all other staff”? Unfortunately, data reported to the federal government do not allow me or anyone to accurately answer that question. The Oklahoma State Department of Education holds the key; it should post the job files on its transparency website so researchers can perform the necessary analysis. Then Oklahomans can decide for themselves if they think the non-teaching staffing surge is warranted—or if teacher pay raises would be a better use of resources. The staffing surge has been going on for 65 years. Sadly for teachers, there’s no reason to think it will stop.
Benjamin Scafidi (Ph.D., University of Virginia) is a professor of economics at Kennesaw State University and a Friedman Fellow with EdChoice.
WEEKDAYS 7-9 A.M. PRESENTED BY THE OKLAHOMA COUNCIL OF PUBLIC AFFAIRS
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PERSPECTIVE // August 2017
AM 1640 | KZLSAM.COM REPLAY AVAILABLE AT OCPATHINK.ORG/RADIO
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Trent England (right) and journalist Jay Chilton discuss the latest stories published by OCPA's Center for Investigative Journalism. Be sure to listen to The Trent England Show weekday mornings from 7:00 to 9:00 on AM 1640 The Eagle, with the TuneIn app on your phone, or at KZLSAM.com. For more information and exclusive content, sign up for Trent's weekly email at ocpathink.org/tes-email.
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OCPA president Jonathan Small is pictured here at this year’s Resource Bank meeting, an annual event hosted by The Heritage Foundation. Resource Bank is an important networking and professional-development gathering for think tank leaders, policy experts, opinion leaders, donors, and activists from around the country. Photo: Nathan W. Armes
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OCPA president Jonathan Small (right) discusses health-care reform with journalist Lorne Fultonberg of KFOR, the NBC affiliate in Oklahoma City.
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OCPA research fellow Scott Moody is pictured here at the Resource Bank meeting, held this year in Colorado Springs. Photo: Nathan W. Armes
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State Rep. Tim Downing, Robert Ruiz, and state Sen. AJ Griffin are pictured at the July 6 meeting of the Oklahoma School Choice Coalition, held in the Advance Center for Free Enterprise at OCPA. Ruiz, director of the parent organization ChoiceMatters, presented an award to the six co-authors of SB 301, which makes private-school scholarships available to foster children and to children adopted out of state custody. Also receiving awards (but not present on July 6) were state Rep. Jon Echols, state Sen. Anastasia Pittman, state Sen. Rob Standridge, and state Rep. Elise Hall.
www.ocpathink.org
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QUOTE UNQUOTE “Too many in the mainstream media----not
“As Milton Friedman told me more than a decade ago, higher education
“$238,728”
all, but too many----don’t even bother to fake
today has some negative externalities, ones that seemingly exceed the
fairness and lack of bias anymore, which is
positive spillover effects, suggesting maybe we should be taxing rather
bad: Even faked balance is better than none.”
than subsidizing universities in the United States.”
Total annual compensation of Tulsa Union school superintendent Kirtis Hartzler
Peggy Noonan
Economist Richard Vedder, an adjunct scholar at the American Enterprise Institute
“‘Culture war’ is much too tepid a term for what is going on now ... The left is working to undo the American Revolution.” Dennis Prager
“Avoid saying ‘he’ or ‘she.’ ... The safest way for educators to be inclusive of all gender
“I haven’t heard a negative word from my parents
identities is to all together drop the male and female pronouns for students.”
since we started.”
Aaron Baker, an 8th-grade history teacher in the Mid-Del school district who promotes “radical social justice in Oklahoma public schools.” Mr. Baker also advises his fellow educators to “avoid saying ‘mom and dad’” because the traditional family structure “is just one of many family options."
Lori Delay, superintendent of the Caney Independent School District in Atoka County, commenting on the district’s switch to a four-day school week.