Perspective - April 2015

RURAL OPPORTUNITY UNIVERSAL SCHOOL CHOICE IS THE GOAL Page 10

BUDGET ‘SHORTFALL’ PRESENTS A VALUABLE OPPORTUNITY Page 12

In Case You Missed It Is meat really ruining the environment? Agricultural economist Jayson Lusk, who serves as OCPA’s Samuel Roberts Noble Distinguished Fellow, addressed the question on FOX Business.

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OCPA president Michael Carnuccio says it’s time for the separation of unions and state.

Oklahoma’s per-pupil available revenues are actually at an alltime high.

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OCPA’s Trent England says we shouldn’t force Oklahoma taxpayers to provide a duescollection service for a schoolemployee labor union.

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OCPA’s Jonathan Small says cigarette-tax hikes are a bad idea.

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OCPA distinguished fellow Andrew Spiropoulos reminds us that the goal isn’t merely to reduce Oklahoma’s incarceration rate, but rather to reduce our high crime rates.

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A high school English teacher at a top-ranked “Blue Ribbon School of Excellence” says her high school juniors can’t read.

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The state’s largest newspaper recently cited Trent England’s call for better scrutiny of “free” federal dollars.

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Tulsa mom Jennifer Doverspike says there’s less to universal pre-K than meets the eye.

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PERSPECTIVE OCPA Staff

OCPA Trustees

Brandon Dutcher ...........................................Editor

Blake Arnold • Oklahoma City

David McLaughlin • Enid

Robert D. Avery • Pawhuska

Lew Meibergen • Enid

Lee J. Baxter • Lawton

Ronald L. Mercer • Bethany

Alex Jones .............................................Art Director

OCPA Researchers

Steve W. Beebe • Duncan

Lloyd Noble II • Tulsa

Lauren Aragon.................................................................Intern

G.T. Blankenship • Oklahoma City

Mike O’Neal • Edmond

Michael Carnuccio ...................................................President

John A. Brock • Tulsa

Bill Price • Oklahoma City

Clint Colbert ...................................Special Projects Manager

David R. Brown, M.D. • Oklahoma City

Patrick T. Rooney • Oklahoma City

Brandon Dutcher .................................Senior Vice President

Paul A. Cox • Oklahoma City

Melissa Sandefer • Norman

Trent England ..........Vice President for Strategic Initiatives

William Flanagan • Claremore

Thomas Schroedter • Tulsa

Dacia Harris ..................................Communications Director

Josephine Freede • Oklahoma City

Richard L. Sias • Oklahoma City

Ann Felton Gilliland • Oklahoma City

Greg Slavonic • Oklahoma City

John T. Hanes • Oklahoma City

John F. Snodgrass • Ardmore

Ralph Harvey • Oklahoma City

Charles M. Sublett • Tulsa

John A. Henry III • Oklahoma City

Robert Sullivan • Tulsa

Henry F. Kane • Bartlesville

Lew Ward • Enid

Robert Kane • Tulsa

William E. Warnock, Jr. • Tulsa

Hannah Wallis ............................Communications Associate

Gene Love • Lawton

Daryl Woodard • Tulsa

Teresa Yoder ........................................Director of Operations

Tom H. McCasland III • Duncan

Daniel J. Zaloudek • Tulsa

Rachel Hays .........................................Development Director Alex Jones .....................................................Creative Manager Renae Page ................................................Executive Assistant Afton Paris ........................................................................Intern Jonathan Small ................................Executive Vice President

Steven J. Anderson, MBA, CPA Research Fellow Tina Dzurisin Research Associate Jayson Lusk Samuel Roberts Noble Distinguished Fellow Matt Mayer, J.D. Research Fellow J. Scott Moody, M.A. Research Fellow Andrew C. Spiropoulos, J.D. Milton Friedman Distinguished Fellow Wendy P. Warcholik, Ph.D. Research Fellow

Perspective is published monthly by the Oklahoma Council of Public Affairs, Inc., an independent public policy organization. OCPA formulates and promotes public policy research and analysis consistent with the principles of free enterprise and limited 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.

Oklahomans Strongly Favor Moving Local School Board Elections to November Some Oklahomans vote only in November of even-numbered years.

Others, usually fewer in number, participate in elections year-round every year.

In an effort to increase turnout and participation in the electoral process, a proposal has been made to move local school board elections to the general election date in November. According to the most recent quarterly poll from SoonerPoll, Oklahomans strongly favor this idea—with 64.8 percent favoring the idea and 49.5 percent strongly favoring it.

Interestingly, the divide among Republicans, Democrats, and Independents was not significant.

Fifty-one percent of Republicans strongly favored the move, yet 47.1 percent of Democrats also strongly

favored as well as 48.8 percent of Independents. The proposal was also equally strongly favored by liberals, moderates, and conservatives.

Younger voters—those under the age of 44 who might be busier with family, work, and children—were slightly more likely to favor the proposal than those 45 and older. Married poll respondents were 12 points more likely to strongly favor the proposal than those who were not.

Interest in moving school board elections to November increases as the frequency of religious attendance decreases, meaning those who generally participate in less group or civic activities favor or see the value in having more consolidated elections at one time in the year.

No significant differences were

observed among voters of various levels of education or household income.

The poll of 506 likely voters in Oklahoma, which was commissioned by OCPA, was conducted from January 5 to January 22, 2015, by live interviewers and included 113 cellphone and 349 landline users. The margin of error is plus or minus 4.34 percentage points.

Poll results were weighted by age and congressional district, and stratified by a model of Oklahoma likely voters statewide. This poll conforms to the Standards of Disclosure of the National Council on Public Polls. A complete description of the methodology, as well as the poll’s Call Disposition and Rate Calculation report, can be viewed at SoonerPoll.com.

A proposal has been made to move local school board elections to the general election date in November. Some people favor the idea; they say that many people currently are not sure when these elections are held, which results in low voter turnout and makes it easier for education interest groups to influence the outcome. Other people oppose the idea; they say that moving these elections to November would place them on a crowded ballot where they would get lost among other races, and would make the school elections more partisan. Do you

Bill Shapard Bill Shapard is the founder of SoonerPoll.com and Shapard Research, a full-service market research firm based in Oklahoma City. He has lectured at Oklahoma State University on developing polling methodologies, data collection

FAVOR or OPPOSE the idea of moving school elections to the general election date in November?

[PROBE: STRONGLY/SOMEWHAT] 1. Strongly favor

49.5

2. Somewhat favor

15.3

3. Neutral/DK/No opinion [DNR]

6.3

4. Somewhat oppose

9.6

5. Strongly oppose

19.3

processes, and advanced likelyvoter sampling techniques. He also serves as an on-air political commentator for Oklahoma television stations.

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Unleashing

Rural Opportunity in Oklahoma

Steve Anderson Steve Anderson (MBA, University of Central Oklahoma) is an OCPA research fellow. A Certified Public Accountant with more than 30 years of experience in private practice, he is currently a partner at Anderson, Reichert & Anderson LLC. Anderson spent two years as a budget analyst in the Oklahoma Office of State Finance, and most recently served as budget director for the State of Kansas. At one time he held 17 state teaching certifications ranging from mathematics to physics to business.

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PERSPECTIVE • April 2015

State finances are a complicated morass of federal, state, and local revenues and expenditures interacting in ways that almost no journalists understand and very few political leaders can explain. In my tenure while serving two governors (Oklahoma’s Frank Keating and Kansas’s Sam Brownback) and consulting with many more, I have found that decisionmakers and the citizens who elect them need to be provided a clear view of those interactions. Citizens deserve to understand the relationship between the actions (or inaction) of government and the outcomes.

In Oklahoma, the most glaring example of a lack of understanding is the view from the state capitol

building of the rural areas of our state.

This understanding gap has resulted in government policies which have not been successful in helping rural Oklahoma maintain its infrastructure, much less stanch the flow of people and resources from those rural counties.

When I first met Sam Brownback, we had a conversation that could be repeated almost verbatim if we were talking about Oklahoma instead of Kansas. I told him when you look at the state’s assets as a balance sheet, and look at people and resources as the primary assets on that balance sheet, the rural areas are the most undervalued and hence low-performing.

The key part of that statement is “undervalued.” The statistics for Kansas

and Oklahoma are fairly similar.

Who would think that, when looking at revenue from crops, Oklahoma would be 30th in dollar value of crops produced—trailing states like North Dakota (11th), Minnesota (6th), or Idaho (20th)? Oklahoma does better on livestock production, but at 12th it still lags behind Kansas (5th), Arkansas (9th), Wisconsin (8th), and California (2nd).

On top of those discouraging statistics is a steady reduction in population in many rural counties and the resulting reduction in services available locally. Largeticket sales items had already mostly been transferred to metro areas, and the Internet has continued that movement of sales-tax dollars out of the local communities.

The trend in modern agriculture has been mechanization and economies of scale. Nowhere is that effect more pronounced than in the bulk crops like wheat, corn, and cotton that dominate Oklahoma’s crop output. Of Oklahoma’s 77 counties, 23 lost population in the first decade of this century, continuing a pattern that has left some counties with constantly declining revenue bases for county and city services.

Oklahoma policymakers have struggled with how to help rural Oklahoma replace those lost revenues that support basic infrastructure.

Programs like the Rural Economic Action Plan (REAP) and Community Development Block Grants (CDBG) have attempted to replace some of those lost revenues from sales and property tax receipts. While these policies have no doubt helped on some level with maintaining infrastructure, they have not changed the dynamics that created the need for them.

When Governor Brownback and

I looked at these very similar issues in Kansas, we knew the status quo was unacceptable. Changing the course was not going to be done by any typical government program, nor was it going to happen without a viable short-term and long-term approach. In the short term, we looked at empowering locals and their economic development directors by creating Rural Opportunity Zones (ROZ). These initially applied to counties who had lost population over the prior decade, but we soon discovered the idea was so popular that additional rural counties were added in successive legislative sessions.

The base of the plan from the state’s perspective was to make any individuals who moved to those counties from out of state free from

to include the additional income the doctor would keep in his or her pocket in the package they used to successfully recruit.

We also saw that those economic development directors who understood the ROZ used it as an effective tool in their kit for recruiting businesses. Norton City/County Economic Development executive director Scott Sproul was a great example of how you can use the ROZ to bring businesses to your town.

Sproul cast a nationwide net, letting business owners know that if they were a pass-through taxed entity both they and their employees they brought with them were tax-free. He also journeyed a short distance to the north to directly recruit businesses just across the border in Nebraska. I would encourage those who doubt

Rural Opportunity Zones will help rural hospitals recruit and retain doctors. individual income tax for five years.

What was key in the design of the ROZ was that sole proprietorships, limited liability companies (LLCs), partnerships, and other entities taxed as “pass through” were also by definition tax-free.

I will explain below why this is so important to the long-term strategy. The immediate impact of the tax-free zones was felt primarily by individuals who were recruited by existing businesses. As in any reduction or elimination of tax rates, the higher the income the greater the impact on the recipient. It helped hospitals, such as the one in tiny Ashland, Kansas (population 855),

the short-term impact of the ROZ to talk to the hospital administration in Ashland or to Mr. Sproul to get real stories of success.

Maybe even a better indicator was that in every session since the first ROZ legislators have added counties to the program.

The long-term goal was to bring higher-value crops and livestock production to the Kansas rural areas, along with the processing of rural products in the areas that produce them. Not only do these sorts of agricultural endeavors bring more dollars to rural areas, they also tend

continued on page 6 >>

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Rural Opportunity Zones can help bring higher-value crops and livestock production to rural areas, along with the processing of rural products in the areas that produce them.

to require more employees even without the processing plants. The few opponents who decried even the small estimated impact of the ROZ on state coffers—original fiscal impact was estimated at $2.2 million—failed to understand that every out-of-state resident or business that moved to a ROZ county may not be paying income taxes to the state but they are paying property taxes and sales taxes. Even more importantly, the increased population is needed for the rural areas to sustain the critical mass to continue to support schools, hospitals, city/county services, and infrastructure needs.

Passing the ROZ gave our rural areas a head start on using the advantage of the zero income tax to solicit businesses.

We followed the next year by announcing and then passing the “March to Zero,” which began the elimination of the income tax for all citizens and immediately eliminated the tax on pass-through businesses. This sent a clear signal that if you came for the ROZ you were going to see those benefits extended as we eliminated the tax for everyone. All the passthrough businesses that came for the ROZ benefited from the removal of the income tax permanently.

However, because of the huge fiscal impact that reducing the taxes on wages had on state revenues (the original estimated impact of the first-year reduction from 6.45% to 4.9% was in excess of $800 million), we could only reduce the rate to what is now 4.6% from the 6.45% as we marched toward zero. That left the tax on wages as an additional incentive for businesses to recruit or bring with them employees from out of state. Those out-of-state wage earners who became residents will have five years with no income tax and then join the rest of Kansas residents in watching what will already be a low tax rate in five years completely disappear.

But the long-term thought process also includes a more regional approach to changing rural areas and addressing the issue with the Kansas “balance sheet” in a way that could benefit the entire Midwest.

In the central part of the country, Texas and South Dakota were already no-income-tax states, and Oklahoma was giving us mixed signals on their direction. The biggest play in our strategy for taking advantage of the multiple zero-tax areas (including the Kansas ROZ and the March to Zero) was to try to bring the high-value processors out of California and other areas with longer growing seasons to the Midwest. We can do this by creating a north-to-south zone in which they

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PERSPECTIVE • April 2015

could move up or down as the weather changed with the seasons, giving the processors 12-month growing seasons while maintaining a similar tax and regulatory consistency throughout. These processors would provide a local purchaser who has access to the retail market for farmers. The current lack of a purchaser or access to market has prevented many farmers from moving even a small part of their acreages from the conventional bulk crops to higher-value crops. The ability of farm families to keep more of their children on the farm by increasing the potential returns per acre was very much in our minds.

It needs to be remembered that the ROZ did not merely help bring new businesses but gave existing businesses opportunities to recruit from out of state. In the case of McCarty Family Farms, it also helped with moving their sons from Pennsylvania so they could expand their operations.

McCarty Family Farms is a family-owned LLC which brought a number of employees with them with the milking cows from their sons’ operations. To make their operations more profitable—which just happened to be timed in conjunction with the elimination of the income tax on LLCs—they expanded to processing their own milk. Today if you buy Dannon yogurt there is a good chance the condensate came from the McCartys’ condensation plant.

How big of a deal is one dairy operation to a rural community? McCarty Family Farms now employs 125 people and they have refurbished and provided 77 houses to employees. Just building the condensation plant required more than 50,000 man-hours of compensated time that poured funds in to local contractors and the rest of the rural community. This is all largely in the small community of Rexford, Kansas—which was well on its way to becoming just another ghost town in western Kansas.

These sorts of stories are exactly why a Rural Opportunity Zone plan is needed for rural Oklahoma. It is not a comprehensive fix for what ails rural Oklahoma, but it’s a great tool that can help empower locals to take charge of their future without having to come to Oklahoma City to beg for state revenues.

In the long term, to maximize the economic-development impact of the ROZ and to establish the north-south corridor of processors, Oklahoma should continue to pursue a methodical, responsible phase-out of its income tax.

Limits on ‘Local Control’ As they work to protect the property rights and economic prosperity of Oklahomans, state policymakers should not be distracted by cries of “local control” from environmentalists in Norman and Stillwater.

The radical environmental movement favors centralized, top-down control ... except when it doesn’t.

In Oklahoma’s two big college towns, Norman and Stillwater, environmentalists are pushing local regulations against the oil and gas industry. It is a feat of political jujitsu, since conservatives often favor local control. Proposed state legislation to preempt these local ordinances has been met with accusations of hypocrisy.

Indeed, some conservatives seem unsure about using state power against these local proposals.

The controversy shows the danger of bumper-sticker politics, where ideas are reduced to mantras.

Local control is an idea about how government should work, not what government is for. It is a principle about means, rather than ends.

One theme of The Federalist Papers is that structures and processes must always be measured in terms of their purpose. The American Founders believed the purpose of government is justice, not just carrying out the whims of a powerful few or a vast majority. While they believed legitimate government power comes only from the people, this does not mean majorities are always right.

In Federalist 10, James Madison writes about this conflict. The great challenge of “popular government,” what many people today call a democracy, is the risk of people using legitimate means (elections, judicial process, etc.) for illegitimate ends (violating the rights of others). Every expressed limit on government power, each check and balance, the multiple separations of powers, the Bill of Rights—all are designed to frustrate

attempts to abuse government power, whether by a few or many or even a majority.

Local communities are often the best place to make policy decisions.

Local control makes possible greater customization and experimentation in public policy while maximizing the potential for all citizens to participate in decision-making processes. Of course, local control can also permit or perpetuate vile abuses of minority rights.

In the United States, the fundamental level of government is the state. The Constitution was ratified by “We the people,” but the people acted within their separate states. Presidential elections, congressional elections, constitutional amendments—these most seemingly national actions happen only state by state.

States also create local governments.

This is why “federalism” is not simply a synonym for “local control.”

Constitutional federalism is the system of divided sovereignty between the states and the federal government, where the federal government’s powers are “few and defined” and everything else is left to the states.

States policymakers, like the Framers of the Constitution, are responsible for ensuring the organization of local governments leaves as much power with the people as possible while also preventing abuses of justice.

Of course, this brings us back to Norman and Stillwater. State policymakers would hardly sit by if a mob of environmentalist faculty and students decided to storm local oil and gas facilities. Yet the violation of property rights has nothing to do with how it comes to pass. The most

important question is not the means, but the ends. State policymakers should not be distracted by cries of “local control” as they work to protect the property rights and economic prosperity of Oklahomans.

Jonathan Small & Trent England Trent England (J.D., George Mason University) is vice president for strategic initiatives at OCPA, where he also serves as the David and Ann Brown Distinguished Fellow for the Advancement of Liberty. A former legal policy analyst at The Heritage Foundation, England has contributed to two books, The Heritage Guide to the Constitution and One Nation under Arrest: How Crazy Laws, Rogue Prosecutors, and Activist Judges Threaten Your Liberty.

His writings have appeared in The Wall Street Journal, the Christian Science Monitor, and numerous other publications.

Jonathan Small, C.P.A., serves as OCPA’s executive vice president. Previously, he 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. He holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.

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Turn and Face the Strain:

Demographic Changes Coming to Oklahoma

Matthew Ladner Matthew Ladner (Ph.D., University of Houston) is the senior advisor of policy and research for the Foundation for Excellence in Education.

Dr. Ladner has testified before Congress, the United States Commission on Civil Rights, and numerous state legislative committees, and has authored many studies on school choice, charter schools, and special-education reform. He is the author of the 2010 report “Reforms with Results: What Oklahoma Can Learn from Florida’s K-12 Revolution,” which was published by the Foundation for Educational Choice, the Oklahoma Business and Education Coalition, and OCPA.

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PERSPECTIVE • April 2015

Oklahoma has enacted some substantial K-12 reforms in recent years, including parental choice programs and A-F school letter grading. District interests, however, have pushed back fiercely in a variety of ways. How hard should Oklahoma hold on to the K-12 status quo, and where is it taking the state?

Before looking forward to the next 15 years, let’s look back over the last 15 years of K-12 outputs. Consider the percentage of Oklahoma students scoring “Below Basic” and “Proficient or Better” on the NAEP fourth grade reading exam between 1998 and 2013.

In 1998, students scoring Below Basic outnumbered Proficient or Better readers 34 percent to 30 percent. In 2013, Below Basic readers outnumbered Proficient or Better readers 35 percent to 30 percent. That’s a lost decade plus halfway through a second.

Things don’t look to get any easier over the next decade and a half.

Oklahoma’s student population looks to become increasingly diverse during this period. More worrying still, the state’s total population will age profoundly.

Economists have established that age demography has broad societal impacts.

They have developed a measure of age-demographic strain called the “total age dependency ratio.” The basic idea is that young people are too young to have entered the workforce, and elderly people exit the workforce in large numbers when retiring.

Young people utilize state services (most notably K-12 education but also a variety of others) and elderly people utilize public health spending. At the state level, this happens primarily through the Medicaid program. Elderly

recipients of Medicaid utilize six times more resources than a child and more than three times that of non-elderly adults on average. Medicaid takes up 23 percent of the average state budget, with education spending taking up approximately half.

In broad terms, the total age dependency ratio involves adding together the number of young and elderly people and dividing the sum by the number of working-age people.

Working-age people (ages 18-64 in the U.S. Census calculation) are the primary payers of taxpayer services, while children and the elderly are primary consumers of major state services.

Economists have documented that high age dependency ratios (in other words, small working-age populations) serve as a drag on economic growth, which impacts state revenue growth.

The figure on page 9 depicts the U.S. Census Bureau’s projected total age dependency ratio for Oklahoma between 2010 and 2030. In 2010, Oklahoma had 62 young and elderly people for every 100 working-age people. Every day, 10,000 additional Baby Boomers reach retirement age, and Oklahoma has more than its fair share of them.

The Census Bureau projects the total number of Oklahomans aged 65 and older to increase from under 450,000 in 2010 to more than 750,000 in 2030.

By 2030, all Baby Boomers will be 65 years or older, and Oklahoma’s total age dependency ratio will have moved to 80 young and elderly people for every 100 working-age people.

The age dependency ratio contains the implicit assumption that the working-age population will be, well,

AGE DEPENDENCY RATIO ( 2010 VS 2030 )

Choice Options for a Changing Demography Today’s K-12 reforms do not begin to match the urgency of our growing need for improved results. Now more than ever, it is critical to improve public schools through all possible means.

State government policies, if skillfully leveraged, can incentivize higher levels of achievement and discourage abject failure in education. One of the most cost-effective ways is through educational choice.

Age dependency ratios serve as a measure of societal strain because both younger and older people utilize public services for education and health care. Essentially, it is a measure of the number of people riding in the cart compared to the number pushing the cart. Economists have found dependency ratios to be predictive of economic growth. When ratios are high, you have a high percentage of people out of the workforce and a relatively small percentage of people trying to cover the costs of their education, retirement, and health care.

[The age dependency ratio is derived by dividing the combined under-18 and 65-and-over populations by the 18-to-64 population and multiplying by 100.]

working. Note however that many of the working-age Oklahomans of 2030 sit in Oklahoma classrooms right now. These are the same people who will struggle to pay the taxes needed for health and education spending in the near future. The 2013 fourth-graders mentioned above, for instance, will be in their mid-20s in 2030. The fourth-graders from 1998 will be in their early 40s. Both cohorts had only 30 percent of proficient readers in fourth grade.

Oklahomans should feel the gravest possible level of concern. It is an unambiguous blessing to have multiple generations of Americans alive at the same time, but the American social welfare state is not prepared for it at either the state or federal level.

The most immediate need—and the one thing that policymakers could do now—is to improve the quality of the K-12 system. Another

15 years like 1998-2013 will prove incredibly costly for Oklahoma’s future. Oklahoma’s growing health care spending threatens to strain all other types of spending as the population ages.

Spending on K-12 education is guaranteed by the Oklahoma Constitution and is supported by the public. It faces a terrific strain in what looks to be an era where health needs increase and revenue growth slows, but it is here to stay.

The organization of the delivery system, however, badly needs to change to meet the needs of the 21st century. Changing age demography will require a rethinking of the entire social welfare state, but the most urgent need will be to improve K-12 outcomes.

The challenge for Oklahoma policymakers lies in driving an increase in both the academic outcomes and the cost-effectiveness of K-12 delivery.

Digital and Blended Learning Blended learning models of education leverage the power of technology to accelerate learning and reduce costs.

These models and online learning can provide for greater efficiencies in delivering education to students.

Outcome-based Funding Develop policies to reward schools and teachers for academic success rather than simply seat time. Policymakers should pay for success, not just for promises.

Charter Schools Public charter schools have displayed the ability to return higher levels of return on investment than district schools. Charter schools have also reduced the need for district facility spending on new buildings.

Education Savings Accounts ESA programs give parents choices not just between schools, but also between methods of education.

The New School Choice Greg Forster Greg Forster (Ph.D., Yale University) is a senior fellow with the Friedman Foundation for Educational Choice. He is the author of six books, including John Locke’s Politics of Moral Consensus (Cambridge University Press, 2005) and Joy for the World: How Christianity Lost Its Cultural Influence and Can Begin Rebuilding It (Crossway Books, 2014).

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.

School choice is reaching a tipping point. With 51 private-school choice programs in 24 states and Washington, D.C., serving hundreds of thousands of students, we have come further than I would have dared to hope. But the more important progress has been in program design. The old models, which offered a little bit of choice for a few people, are being replaced by new models. The new school choice moves us closer than ever to universal choice.

When I started working in the school choice movement almost 13 years ago, the dominant model was vouchers for poor children in the nation’s worst innercity schools. It was a sharply limited model. The most important thing that varied from program to program was the size of the voucher. Breaking out of the box toward universal choice was a dream—a big and exciting dream that my colleagues and I were honored to work

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PERSPECTIVE • April 2015

toward, but a dream nonetheless.

A few states were experimenting with other models, like tax-credit scholarships and special-needs vouchers. But these, too, were limited models. Tax-credit scholarships tend to go mostly toward families who were already in private schools. Almost two decades after the first of these programs was enacted, they remain a boutique service to a limited constituency.

Special-needs vouchers were created on the theory that the sometimes-abysmal failures of the special-education system would make it easier to provide that population with vouchers. Then the vouchers would succeed with those students. And that would pave the way in those states for new programs to serve other populations. All these things did happen, but the third—paving the way for broader program—proved a weaker effect than we all had hoped.

But things have been changing.

The huge wave of new school choice programs enacted in 2011-13 went far beyond earlier programs in expanding student eligibility pools, providing larger vouchers, and reducing unnecessary regulations on participating schools.

Education savings accounts, probably the best program design yet devised, have been enacted in Arizona and Florida; as I write, new programs have just been approved by legislative chambers in Virginia and Mississippi. These programs, while still limited in eligibility, give parents much more control over education dollars than traditional school choice.

There are both civic and educational reasons why universal choice must be the ultimate goal of the movement, however difficult it might seem in the short term.

“My suggestion is to design our school operations around the principle of universal school choice. Completely remove the power of government to dictate where a child attends school. ...

Chaining a child to a school that does not serve them well is a miscarriage of justice. ...

All parties–teachers, parents, students, and the public at large–would benefit from the innovation and creativity inspired by universal school choice.”

—Former U.S. Secretary of Education Rod Paige, speaking on February 9, 2015, at a school-choice forum hosted

by U.S. Sen. Tim Scott (R-SC)

The educational reason is simple: Today’s limited, overregulated schoolchoice programs are better than the status quo, but they’re not nearly good enough. A large body of evidence shows that choice programs improve outcomes both for the students who use them and for students who remain in public

school programs represent less of a break from the government monopoly system because the government still owns the schools, nonetheless the programs are designed to accommodate entrepreneurs. Supporting the creation of new schools is the whole point.

Contrast that with existing private-

equal rights and freedom for diverse beliefs. Neither of these pillars is consistent with a government school monopoly, nor with the educational oligopoly of limited school choice.

A monopoly or oligopoly exists by stamping out the rights of challengers in order to protect the privileges

schools. But the size of the difference is usually modest. Our moribund, 19th-century educational system will never get the revolutionary change it needs from these programs.

The change we really need can only come from educational entrepreneurs who create whole new ways of designing and running schools. We have plenty of these entrepreneurs, but most of them are in the charter-school sector, where they operate under too many constraints to truly reinvent education.

The reason these entrepreneurs are running charter schools rather than private choice schools points to the need for universal choice.

Admittedly, one reason is because many of these entrepreneurs are refugees from the government monopoly system. In some cases, they haven’t fully freed themselves from that system’s ideology. They sometimes view private school choice as illegitimate.

Much more important, however, is program design. While charter

school choice programs, most of which are very poorly designed to support entrepreneurs. Low voucher amounts, student eligibility restrictions, and burdensome regulations in most private choice programs make it almost impossible to start a new private school on the expectation that it will draw students through the program. In many cases, newly created schools are forbidden to participate at all, or must overcome enormous obstacles to do so.

As a result, many private choice programs effectively support only a choice among existing private schools.

Don’t get me wrong; these programs are good and they improve education.

If you were only allowed to eat at one restaurant for years on end, and then suddenly one day you were allowed to choose from among six, you would rejoice in that improvement. But you would still wish you could eat at any restaurant you wanted.

That brings us to the civic reason why school choice should be universal. Two of the great pillars of our country are

of the powerful. When educational entrepreneurs are denied the right to start new schools on equal terms with dominant providers, all of us lose. A society where the education of children is controlled by the few is a society that doesn’t respect equal rights.

And the education of our children is at the very heart of how we all live out our most central beliefs about life and the universe. Our country can never fully live up to its commitment to freedom for diversity until we undo the monopolization of education. Part of the reason we created the government school monopoly in the 19th century was bigotry and a childish fear of religious diversity. It’s long past time we, as a nation, grew up. Let’s leave those fears behind us, in the nursery of our national history.

The march continues. We will keep fighting until every family has school choice. Families need it, schools need it, and our country needs it.

www.ocpathink.org

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Why the Long Faces?

Revenue “Shortfall’ Presents a Valuable Opportunity Amid the lamentations and gnashing of teeth surrounding the news of Oklahoma’s $611 million budget “shortfall,” OCPA believes it’s important to provide a decidedly different point of view. Here’s what a few OCPA officials had to say: “Oklahoma policymakers often talk about the need to ‘right-size’ state government. The obvious implication is that they mean to make it smaller.

But in reality, it keeps getting bigger. According to the state’s Comprehensive Annual Financial Report, in fiscal year 2014 state-government spending hit another record high. Before you can address a challenge, you have to honestly identify the problem: in this case, the state has a spending problem. This budget cycle presents a perfect opportunity for conservative policymakers to demonstrate that they can deliver better services at a better price.”

— Michael Carnuccio, OCPA president

“It is unfortunate that some see declines in state revenue only in terms of its negative impact on the state government. What about the taxpayers who are economically suffering (hence the tax shortfall)—the laid-off employees in the energy industry, the waitresses at the diner that fed them, or the salesman at the car dealership that sold them new vehicles?

What about their families? Not only would closing the budget gap with higher taxes add insult to their injury, but would further increase the dependency of Oklahoma’s economy on the public sector and crowd out the private sector. In the long run, that would mean lower incomes and fewer jobs for all Oklahomans.”

— Scott Moody, OCPA research fellow

“I can’t help but notice that the size of the current budget shortfalls in Oklahoma and Kansas appear similar. But there is one crucial difference: Kansans saw their families’ bank accounts increase by the amount of the state budget shortfall. By contrast, Oklahoma families just watched their elected officials continue to overspend on government.

As the former state budget director in Kansas, I can tell you that the Kansas shortfall is actually closer to $400 million (because of a couple of statutory quirks that causes the state to overstate expenditures and revenues since 2003). But even if the dollar amounts were equal, the two are light years apart in the ‘cause’ of the shortfall and the effect on the average citizen of the two states. A working Kansas resident has seen his or her individual income tax rate cut from 6.45% to 4.9% in the last two years, with another cut to 4.6% effective on January 1, 2015. Small-business income and other pass-through income is already not being taxed at all.

Contrast this with Oklahoma. What do Oklahomans have to show for their shortfall? They’re not seeing the increased take-home pay that Kansans are seeing. Oklahoma’s much-discussed individual income tax cut doesn’t go into effect until 2016—and even so it merely reduces the rate to 5%.

This still lags Kansas, which will have another rate cut kicking in at the same time as Oklahoma’s, bringing Kansans’ top rate to 3.9%.”

— Steve Anderson, OCPA research fellow

“Revenue downturns are not simply a problem—they’re also a valuable opportunity. Agency leaders need to emulate their colleagues in private enterprise. Business leaders, when facing a drop in revenue, know they must cut costs without reducing customer service. They seize the chance to make difficult decisions that prosperity encourages you to avoid. Effective leaders know that there is no better time to release unproductive employees, cut underperforming programs, and seek creative ways to provide good service at lower cost. Private vendors, for example, may provide as good or better service for less money. At the very least, the possibility of competition will improve the performance of state agencies. Political leaders can assist agency leaders by ensuring they have the authority to make the hard decisions that will improve agency efficiency.”

— Andrew Spiropoulos, OCPA’s Milton Friedman Distinguished Fellow

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PERSPECTIVE • April 2015

“To their great credit, our friends on the Left have been calling on citizens to have an honest conversation about what we expect from government and how we plan to pay for it. Given that 9 in 10 Oklahoma voters think state government wastes “a lot” or “some” of the money we pay in taxes (51 percent say “a lot”), and given that state government is involved in many areas best left to families and churches and other mediating institutions of civil society, many of us believe it’s time to right-size government.

That means making it smaller, not larger. We should pay for this smaller government by phasing out the income tax over 20 years and replacing it with nothing.”

— Brandon Dutcher, OCPA senior vice president

Why Is the State of Oklahoma Propping Up Unions?

One of the major reforms adopted in Wisconsin under the leadership of Gov. Scott Walker was to get government out of the business of collecting union dues. Oklahoma has a chance to follow Walker’s lead by bringing “paycheck protection” to the Sooner State.

Government does not operate a duescollection service for the Boy Scouts, let alone political interests or campaign organizations. Therefore, why should the government allow unions special political privileges and advantages that no other political organization currently enjoys?

Right now, union officials use our state government as their dues collector.

The benefit is more than just shifting administrative costs to taxpayers.

The process makes these private organizations’ dues seem official—even mandatory. After all, the only things that are automatically taken out of most employee paychecks are taxes, insurance premiums, and retirement contributions. Hiding dues among these line items is a clever way to keep union members from asking questions like, “Am I really getting my money’s worth?”

The Oklahoma Education Association, the state’s largest teachers union, has

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PERSPECTIVE • April 2015

Gov. Scott Walker

a leadership manual that shows how this works. The focus is on recruiting members by any means necessary.

OEA instructs local union officials to “Be persistent: Contact the potential member in person, one-on-one, when he or she is alone …” People will usually join, OEA says, if they are “asked and asked and asked.” At the same time, there is no section in the OEA manual on retaining members. Government simply takes out the dues from a teacher’s paycheck for the rest of his or her career. Reversing the process is, as we might expect, not as easy as signing up.

The OEA is also a highly political

union. Again, the group’s leadership manual puts it bluntly: “We are involved in the political arena.

Education is politics.” Indeed the OEA passes on a portion of its members’ dues to the National Education Association.

That group, based in Washington, D.C., espouses positions that are not just far from what most Oklahomans believe, but in some cases violate Oklahoma’s State Constitution—including strict gun control laws, bans on many common firearms, and bans on nearly all homeschooling.

Of course, the National Education Association has a right to freedom of speech and assembly. Both the NEA and OEA can take positions that place the unions far to the left of the vast majority of Oklahomans. What union officials should not expect is for Oklahoma taxpayers to prop them up by using state and local government as their dues collection agency. For the benefit of taxpayers and union members alike, Oklahoma legislators should pass and the governor should sign HB 1749.

Mark Costello Mark Costello is Oklahoma’s commissioner of labor.

1

2

3

@OCPAthink 1. OCPA’s Trent England discusses civic responsibility at the Rotary Club of Oklahoma City on February 3. With more than 600 members, the Rotary Club of Oklahoma City is the largest club in Rotary International. Also pictured are OCPA trustee Mike O’Neal (left) and club president Jerome Holmes, a federal judge on the U.S. Court of Appeals for the Tenth Circuit.

2. OCPA’s Brandon Dutcher (at podium) speaks at a state-capitol press conference during National School Choice Week. Also pictured (left to right) are: Americans for Prosperity-Oklahoma director John Tidwell, state Rep. John Paul Jordan, state Rep. Lewis Moore, Attorney General Scott Pruitt, state Rep. Tom Newell, state Rep. David Brumbaugh, state Rep. Jason Nelson, state Sen. Clark Jolley, SoonerPoll.com founder Bill Shapard, and Commissioner of Labor Mark Costello.

3. Work continues on the new Advance Center for Free Enterprise, located to the west of OCPA’s main office. The Center will host lawmakers, executive-branch officials, and policy staffers for training sessions on how to apply core principles to difficult public-policy issues. The Center will also be a valuable resource for students as OCPA partners with schools and nonprofit organizations to host programs teaching students the principles of liberty and the importance of our freeenterprise system.

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PERSPECTIVE • April 2015

538 Electoral Votes* PRESIDENTIAL PARTY WINS SINCE 1992: 1992-2012

1992-2012

DEMOCRATS

REPUBLICANS

4 out of 6

2 out of 6

AVERAGE ELECTORAL VOTE TOTAL FOR 4 DEMOCRATIC WINS

361.5

AVERAGE ELECTORAL VOTE TOTAL FOR 4 REPUBLICAN WINS

278.5

STATES THAT HAVE VOTED WITH DEMOCRATS SINCE 1992 (242 ELECTORAL VOTES)

STATES THAT HAVE VOTED WITH THE WINNER SINCE 1992 (75 ELECTORAL VOTES)

STATES THAT HAVE VOTED WITH REPUBLICANS SINCE 1992 (102 ELECTORAL VOTES)

STATES THAT HAVE SHIFTED BETWEEN PARTIES SINCE 1992 (41 ELECTORAL VOTES)

STATES THAT HAVE VOTED WITH REPUBLICANS SINCE 2000 (78 ELECTORAL VOTES)

*270 ELECTORAL VOTES NEEDED TO WIN

This piece originally appeared in The Torch, a publication of The Liberty Foundation of America. Find out more at libertyfound.org.

www.ocpathink.org

15

QUOTE UNQUOTE “It will never be known what acts of cowardice have been motivated by the fear of not looking sufficiently progressive.”

Charles Péguy

“Maybe it’s time for faculty and staff to start thinking about teaching more classes and doing more work ...”

Wisconsin Gov. Scott Walker, defending his proposed $300 million in budget cuts for higher education

“My suggestion is to design our school operations around the principle of universal school choice. Completely remove the power of government to dictate where a child attends school.”

“The greatest threat to public education in our state today isn’t poverty... The greatest threat to Oklahoma public education is the people elected to represent Oklahomans and Oklahoma’s children.”

Former U.S. Secretary of Education Rod Paige

Oklahoma City school superintendent Rob Neu

“Every year I’m in office.

Arizona Gov. Doug Ducey, discussing when he plans to enact income-tax cuts. His goal is to eventually eliminate the state’s income tax altogether.

“$4,924” The annual salary increase Oklahoma teachers could have enjoyed if non-teaching staff growth had increased merely at the same rate as student growth, according to a Friedman Foundation study

“[Conservatives] should also remember that reducing the size of government is not merely an exercise in the reduction of public expenditure; it is a moral imperative that distinguishes them from their opponents.”

Roger Humber, in a recent essay entitled “A Guide to Proper Conservative Legislating”