In Case You Missed It Rural Opportunity Zones could slow or reverse the decline of Oklahoma’s rural population.
A state lawmaker wants to require high schools to reimburse colleges for students placed in remedial courses.
Jason Bedrick asks: Why do the people running the public schools predict a mass exodus if parents were given a choice? And what does that tell us?
More states are working to eliminate the income tax.
In the Oklahoma Gazette, OCPA’s Brandon Dutcher makes a case for parental choice in education.
OCPA president Michael Carnuccio recommends licensing reform for former offenders.
It’s time for budget-conscious policymakers to allow the State of Oklahoma greater flexibility in how it contracts with health-care providers and how it incentivizes and rewards employees.
OSU professor Vance Fried discusses “nonprofit” hospitals and the $987 cortisone shot.
Citing OCPA distinguished fellow Andrew Spiropoulos, The Oklahoman says moving the date of local elections could temper the sway of special-interest groups.
State Sen. Ervin Yen, M.D. and OCPA’s Jonathan Small say direct-care arrangements can reassure patients that they will be affordably cared for, not just covered.
PERSPECTIVE OCPA Staff
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
Steve W. Beebe • Duncan
Lloyd Noble II • Tulsa
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.
For 13 years, I’ve been a researcher in the school choice movement, and from day one the most important part of the job has been mythbusting. Ask any other researcher in this field and he’ll say the same. There’s no other issue in American politics where one side has built its case so thoroughly upon untrue factual statements. It seems like no media story on this topic can get by without repeating these myths as facts. It never stops. Here are a few of the more important myths, drawn from recent debates in Oklahoma:
Research is mixed on the outcome of vouchers in other states. Think tanks supporting vouchers have found that they make a huge impact. Under scrutiny, the methodology of those reports usually falls apart. -Rick Cobb, okeducationtruths
The research is not “mixed,” it is remarkably consistent. School choice is supported by a large body of high-quality empirical studies. A total of twelve studies have examined choice programs using random assignment – the gold standard method used in medical trials. Out of these 12
studies, 11 found that choice improved academic outcomes for participating students and one found no visible difference. And 22 of 23 studies, using a variety of methods, find that choice programs improve outcomes in affected public schools, while one found no visible difference. No empirical study anywhere in the country has ever found that school choice had a negative effect on the academic outcomes of participants. No empirical study has found that it harmed public schools. If that’s a mixed result, I’d like to know what consistency would look like. The bogus claim that findings are “mixed” originates from several sources. One is the differences between the studies in such secondary questions as the size of the positive effect or which students experience the positive effect. Also, the mere existence of a single study that found no visible effect is used to justify saying that the evidence is “mixed.” But the existence of a small number of outlier studies is unavoidable in all scientific fields. These studies were conducted by researchers at Harvard, Princeton, Stanford, Cornell, Georgetown, Johns Hopkins, other universities, the Federal Reserve Bank, the Urban
continued on page 4 >>
Institute, private research firms, and, yes, also at a couple of think tanks that support school choice. If you dismiss the research showing that school choice works on grounds that it was all conducted by researchers who think school choice works, you might just as well dismiss the research showing that smoking causes cancer on grounds that it was all done by researchers who think smoking causes cancer. Part of the beauty of the scientific method is that when a study follows sound methods, the identity of the researcher becomes irrelevant.
We [in Oklahoma public schools] welcome ALL children unconditionally! -Rob Miller, Oklahoma educator, A View from the Edge blog
Especially for poor children, more often the school is the one making the choice, not the parents. -Brett Dickerson, Oklahoma educator, Life at the Intersections blog
It is a lie that public schools accept all children. Over 100,000 students are expelled from public schools each year. Many more are removed from regular classrooms and shunted off into “alternative” programs, where the system doesn’t care whether they get an education. It is also a lie that private schools in choice programs are highly selective and make it difficult for at-risk students to get accepted. Participating parents – of all races, income levels and even disability statuses – consistently report that they had little difficulty finding a school that served them. This shouldn’t be surprising. Most of these private schools are indigenous to the community and exist precisely to serve these student populations. The typical choice school is an inner-city Catholic school that has always wanted to serve more, not fewer, at-risk students. The choice program allows it to do so.
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Yes, some choice programs do permit private schools to deny admission to particular students they don’t think they can serve well. This is a good thing. The whole point of school choice is that all students are unique and have their own needs. The idea that every school should try be the right school for every student is the whole problem with the government school monopoly in the first place. When the parents themselves start reporting that they’re having difficulty finding a school to serve them, that is something I’ll take very seriously. What I will never take seriously is the fictional complaints invented by the public school unions and put in the mouths of parents to protect their unjust monopoly.
[Education Savings Accounts] reduce the already limited amount of resources available to public schools and threaten to exacerbate the current teacher shortage! -Press release, Oklahoma State School Boards Association
The problem is, if you take money away from the public school, even if you take one child out, you still have to pay the teacher, the electric bills, buses. You’ve still got all the expenses, but now you have less money. -Linda Hampton, president of the Oklahoma Education Association School choice does not reduce the per-student funding available to public schools. When students leave public schools using choice, the schools lose a share of that student’s funding, but not all of it. What they do lose all of is the costs associated with educating that student. Yes, schools still have lights they have to keep on. You know what else they still have? All of the funding that isn’t
tied to student enrollment counts. Schools get funding from many sources that doesn’t go down when students leave. Fiscal studies consistently confirm that school choice programs don’t harm public school finances, and often strengthen them. As for the so-called teacher shortage, the unions have been inventing stories about a teacher shortage consistently for decades. The number of teachers can go up or down, it doesn’t matter; there’s always a shortage. If so, the best thing we can do is move students out of public schools, where the teaching profession is stymied by numerous union-backed barriers to entry, and into private schools that are free to hire talented young people into the profession.
Some of us think that public schools are dangerous mostly because it’s where children of different races mix together and wear the same uniforms on the sports field. Can’t have that. -Brett Dickerson, Oklahoma educator, Life at the Intersections blog
School choice reduces racial segregation and provides a more racially integrated school experience. Of the eight studies that have examined racial segregation in private choice programs, seven found that choice moved students from more segregated classrooms and schools into less segregated classrooms and schools; one found no visible difference. No empirical study has ever found that private school choice increased racial segregation. Of all the myths about school choice, this one is not only
the most infuriating, it’s the most dangerous. The government school system is very heavily segregated by race because it’s tied to residence. People tend to live in racially homogenous neighborhoods, and tend to go to school where they live. School choice breaks down racial barriers by making it possible for students to go to school outside their neighborhoods. Again, the typical private choice school is an inner-city Catholic school – more diverse, not less, than the nearby public schools. If we care about segregation, the worst thing we can do is indulge these paranoid fantasies about private schooling. There’s so much we still don’t know about education. I’d love it if we researchers could focus our energy on uncovering the facts we don’t yet have. What factors are most important in a high quality teacher? To what extent does a school’s institutional culture make a difference? What policy and social conditions are needed to support more robust creation of new schools? Why do we see some evidence that there may be a tradeoff between good academic outcomes and good moral character outcomes, when we would expect the two to be aligned? What we still don’t know about education is a big deal. But our bigger problem is what we think we know that isn’t so.
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.
Let’s Eliminate the Income Tax for Teachers By AJ Griffin and Leslie Osborn
Workforce recruitment and development are challenges for states. State governments offer many programs to address shortages in particular professions or incentivize expansion into specific industries. Many of these programs, by their existence, acknowledge that a state’s income tax burden—its “penalty on work”—is a hindrance when it comes to attracting jobs, businesses, and workforce talent. In Oklahoma, for a number of reasons, we have a shortage of classroom teachers in some areas. Comparisons are often made between teacher compensation levels in Texas and Oklahoma. But salary differences are only part of the story. Texas also doesn’t penalize the hard, valuable work of teachers by strapping them with a personal income tax. Texas is a no-income-tax state. Oklahoma is not. Oklahoma should level the playing field by eliminating income taxes for teachers and paraprofessionals in prekindergarten through 12th grade. There are benefits to lowering taxes on productive activities. The state of Washington touts its lack of an income tax as an advantage in recruiting tech and aerospace talent. In similar fashion, New York Gov. Andrew Cuomo has placed a moratorium on a host of taxes for new businesses that come to his state. Oklahoma has numerous programs and incentives geared toward industries or professions. The Quality Jobs program pays an incentive to employers who pay a wage to their employees that is higher than the average wage in the area where the business will be located. To compete with Washington and other no-income-tax states, Oklahoma offers an aerospace tax credit worth as
PERSPECTIVE • May 2015
much as $5,000 for qualifying aerospace engineers. Prior to the credit’s existence, aerospace employers had a difficult time luring jobs and development to Oklahoma, in part because of our income tax. To encourage retirees to stay in Oklahoma, the state also offers significant targeted income tax breaks for retirement income, Social Security income, and capital gains income. The principle is the same: Tax incentives, exemptions, deductions and credits serve as an admission that taxes deter economic growth and development. The aerospace industry is important for Oklahoma’s economy. For the industry to flourish here, we need to attract top talent in the field. As a state, we recognize the damage income taxes can have on attracting aerospace engineers. But what kind of message do we send when we continue assessing income taxes on schoolteachers who prepare our children for their lives and careers? Once Oklahoma trains a new teacher, can we compete to keep them when they can opt to move south to Texas and enjoy more of the fruits of their labor? It’s time to eliminate Oklahoma’s income tax on pre-K to 12th-grade teachers and paraprofessionals. This will provide a boost in take-home pay for teachers while efforts are made to address compensation challenges. Let’s remove this barrier to recruiting and retaining the best and brightest in an industry—teaching—that plays a significant role in the prosperity of our great state.
AJ Griffin is a Republican state senator from Guthrie. Leslie Osborn is a Republican state representative from Mustang.
Oklahoma Teachers Could Benefit from Income-Tax Exemption
State Rep. David Perryman (D-Chickasha)
By Patrick McGuigan
Proposals at the Legislature will, if passed in both chambers and signed into law by Gov. Mary Fallin, benefit Sooner State school teachers. However, at least one legislator would prefer to limit any tax break by excluding both public charter school teachers and private school teachers. Senator AJ Griffin, R-Guthrie, and Rep. Leslie Osborn, R-Mustang, want to create an income tax exemption for all Oklahoma teachers in pre-K to 12th grade programs. In an article on the facing page, the women write: “This will provide a boost in takehome pay for teachers while efforts are made to address compensation challenges. Let’s remove this barrier to recruiting and retaining the best and brightest in an industry—teaching—that plays a significant role in the prosperity of our great state.” In its present form, the Osborn-Griffin legislation (Senate Bill 624) specifies, “For taxable years beginning after December 31, 2015, there shall be exempt from taxable income one hundred percent (100%) of any income earned during the taxable year for a taxpayer who: a. is under contract as a classroom teacher for the entirety of the calendar year in a public or private school serving children from prekindergarten through grade twelve, or b. is employed as a paraprofessional providing classroom support, direct care for special education students, tutoring or other direct support for classroom instruction for the entirety of the calendar year in a public or private school serving children from prekindergarten through grade twelve.” As for State Rep. David Perryman, D-Chickasha, he supports an income tax exemption limited to certain educators. A Democratic staff release noted he
believes “the state should provide school teachers with a financial incentive to remain in Oklahoma even though surrounding states offer more money.” Perryman pointed to incentive programs aiming to keep doctors in rural areas, a STEM (Science, Technology, Engineering, Math) educational incentive at Tinker Air Force Base, and incentives aiming to encourage in-migration to counties in the state which have experienced population decline. Perryman’s proposal—an amendment to another piece of legislation, Senate Bill 20—says the exemption would apply to any teacher “employed in an instructional capacity by a public school district located within this state.” Perryman garnered television news coverage in making the case for his proposal. However, in response to questions from this reporter, he specified through a member of the House media staff that his proposal to create an income tax exemption for teachers would not include public charter school teachers. “Charter school teachers would not be included,” he said. “Although their supporters typically claim they are public schools, charter schools, as a general rule, do not employ public school teachers, and their schools are exempt from many of the requirements that apply to public schools.” As for private school teachers, this reporter was told, “Private school teachers? No. Their wages are an issue between them and their school’s governing board.” Patrick McGuigan (M.A. in history, Oklahoma State University) is the editor of CapitolBeatOK.com and appears weekly as a commentator on NEWS 9, the CBS affiliate in Oklahoma City.
Why Expanding Medicaid Isn’t Compassionate
Jim DeMint Jim DeMint is president of The Heritage Foundation.
We’ve heard a lot about how Obamacare’s Medicaid expansion will be costly to states in the long run. Yet this hasn’t stopped some governors, who know that taking more money from the federal government makes their budgets look good (in the short term), while making themselves appear compassionate. But we haven’t heard enough about how expanding Medicaid will cause permanent damage to America, our health care system and our citizens. For decades, government plans such as Medicare and Medicaid have typically paid doctors and hospitals less than private plans, and even less than the actual costs of the services in some cases. Health care providers covered their losses by raising prices to patients with private insurance. This “cost shifting” contributed to increases in the costs of employer and individual health insurance plans. As private health insurance became prohibitively expensive for many Americans, more became uninsured or covered by government plans. And as more participants in government plans strained state and federal budgets, the gap between payouts from Medicaid vs. private insurers became even larger. Today, fewer and fewer doctors will even accept new Medicaid patients because of low reimbursement. Medicaid patients in the future may not
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even be able to find a doctor. In Ohio, only around 40 percent of doctors have been taking new Medicaid patients, a number that is likely to fall in light of the “bump out” Medicaid payment ending. This has led to doctors lobbying the state government to cover the payment itself—over half a billion dollar hit to the state budget. As baby boomers expand Medicare rolls and Obamacare pushes more Americans into Medicaid, cost shifting and fewer enrollees will make private plans even more expensive—a vicious cycle that could someday destroy the private health insurance industry. And, as state governments make more of their citizens dependent on government health care, they also make themselves more dependent on the federal government. The Buckeye Institute recently reported that Ohio’s expansion rests upon a particularly shaky funding loophole to tax managed care organization (MCO) premiums while maximizing federal dollars. It’s a loophole on the verge of being closed by
running. When the money gets tight, doctors, patients and hospitals will be hurting. Seniors on Medicare will also have difficulty finding a doctor because of low reimbursement. Indeed, more physicians will eschew insurance plans altogether, opting to limit their practices to those patients who are able to pay directly. Since reimbursement from government programs already favors hospital-based services, more physicians will leave private practice to become employees of large hospital systems. Private physician practices will become increasingly hard to find. If federal and state governments do not change this destructive cycle, America’s health system will increasingly become a two-tier system in which people of means pay for their health care directly while everyone else waits in line for whatever they can get. All the same people who ruined America’s health care system through government intervention will fight to make sure everyone is forced into a government plan.
Hospitals are actually leading the lobbying for Medicaid expansion in every state. Washington, leaving Ohioans with an unaffordable Medicaid system and few funding mechanisms. You might think doctors and hospitals would be sounding the alarm, but think again. Doctors are divided, and hospitals are actually leading the lobbying for Medicaid expansion in every state. That’s because the hospitals think signing more people up for governmentcontrolled coverage will give them easy reimbursement from taxpayers. Those benefits, however, are outweighed by the long-term costs to keep the program
As Ohioans debate Medicaid reauthorization, they face an expansion program 53 percent over budget for the first half of fiscal year 2015. Tying up state finances, raising taxes and further regulating the industry doesn’t solve the underlying problem. There are too many short-term thinkers in the health care debate. It’s time for proponents of Obamacare and the expansion of Medicaid to understand that they are anything but compassionate. They are dooming many Americans to second-rate health care.
Welfare Reform Was Working to Reduce Dependency, But That Trend May Be Reversing The 1996 congressional overhaul of the federal welfare program was widely viewed as a major bipartisan success. When the Aid to Families with Dependent Children (AFDC) program was terminated in favor of Temporary Assistance to Needy Families (TANF), many important reforms were implemented that allowed states to tailor their welfare programs to produce desired outcomes, such as work requirements and ending the cycle of individual dependence on the state. The Heartland Institute produced a report card in 2008 to measure the results, and has now updated that report card for 2015. The results are clear: states that have embraced the spirit of welfare reform—including lifetime benefit limits, work requirements, short-term cash diversion programs, and service integration—have seen the greatest reduction in welfare dependency. The states that have failed to implement these reforms continue to see generational poverty and dependence on state programs, along with dismal results in returning able-bodied adults to the workforce. Now, however, many of the states that had implemented successful welfare reforms are applying for federal waivers in the food stamp program for the time limits and work requirements. At the Foundation for Government Accountability (FGA), we’re documenting an alarming spike in spending on food stamps (SNAP). In some states, such as Nevada, food stamp dependency has risen as much as 219 percent in the last decade. Ironically, the same reforms that have created so many successes in the TANF program are being reversed in the SNAP program, with a corresponding explosion in spending. When House Speaker Newt Gingrich and President Bill Clinton negotiated welfare reform, it ended the New Deal-era AFDC program and created TANF. Under the newly created program there was more flexibility for states to tailor their individual welfare programs as they see fit. It gives us a wonderful opportunity to compare results of different reforms as they are implemented. As the authors of the Heartland study noted: “Successful welfare reform can save lives and produce positive effects on multiple generations. It can save taxpayers billions of dollars and help address such serious social maladies as crime, alcoholism, and teenage pregnancy. And it can demonstrate that government programs can be successfully devolved from the national government to states.” Overall, welfare reform has led to a national reduction in the number of welfare recipients by 70 percent, while evidence shows that most recipients were able to rejoin the workforce and become economically self-sufficient. The
state-by-state results, however, vary widely. The report shows that as states have lagged in their implementation of meaningful reform, they have continued to maintain a culture of dependency and higher poverty rates. At FGA, we are seeing similar results among all welfare programs. As reforms in TANF have reduced the size of the program, other programs have back-filled the void. Overall, TANF is now just a small sliver of all welfare spending. Medicaid, food stamps, and public housing comprise the vast majority of state and federal welfare spending, and meaningful reforms to those programs are non-existent in many states. As we saw with TANF, work-based reform lifts people out of poverty, but lack of a work requirement makes bad policy even worse. FGA suggests three major welfare reforms for all federal programs, including Medicaid, public housing, and food stamps: 1.
Allow states to impose TANF-level work requirements and sanctions for all working-age, non-disabled adults receiving food stamps, public housing and Medicaid (including parents of children receiving Medicaid or CHIP). Allow states to freeze enrollment when changing eligibility requirements for Medicaid, food stamps or TANF. Within one year of freezing Medicaid expansion enrollment, both Arizona and Maine had half of enrollees in the frozen programs cycle off welfare. Within two years, two-thirds had cycled off. Allow states to require mandatory premiums for all Medicaid recipients, including parents of kids receiving Medicaid or CHIP.
These three reforms would promote individual responsibility in welfare recipients and provide them the proper incentive and empowerment to return to the workforce. We all should be championing policies which promote dignity and self-sufficiency, not policies which grow the dependency class.
Kristina Ribali Kristina Ribali is the senior coalitions director for the Foundation for Government Accountability, a nonpartisan think tank equipping policymakers with principled strategies to replace failed health and welfare programs nationwide.
Reviving Rural Oklahoma: The Farm Bill and Oklahoma’s Rural Economy This article is the first in a multi-part series on “Reviving Rural Oklahoma.” —Editor Anyone like me who grew up in rural farm country knows the importance of the federal farm program to local economies. The price of crops and the interaction of the farm program in “bad” years were often subjects of conversation wherever people gathered. It is almost impossible not to be affected directly or indirectly if you were a citizen of a rural agricultural county. Farmers, bankers, and anyone else directly impacted in the community can recite the provisions, limitations, and applications of the farm bill to their particular agricultural commodity almost to the letter. Those provisions, limitations, and applications are relevant not only for the current year but also shaped the future plans of the agricultural community and those who provided goods and services to them. But after more than 80 years of shaping the lay of the land in the rural Midwest, it’s still an open question whether the farm program has brought prosperity to Oklahoma or limited it. No one would recognize the farm bill that started it all in 1933 as part of Franklin D. Roosevelt’s many Great Depression acts. According to the United States Department of Agriculture (USDA), the original intent of the bill was “to stop the production of seven main crops—known as ‘commodities’—in the hopes of decreasing the supply and thus increasing the prices of staple crops.” The act was later declared unconstitutional by the Supreme Court because of the funding mechanism, but the concept lived on and has metastasized since. It is hard for anyone to have knowledge of the many individual niches of the farm bill, much less understand the whole bill and the interactions those niches create politically and economically. It is not all just about farming, as the 2014 farm bill shows. The farm bill renews every five years, with the latest farm bill having 12 sections dealing with commodities, conservation, trade, nutrition, credit, United States rural development, research, forestry, energy, horticulture, and crop insurance—as well as a miscellaneous category. What is even more surprising than the breadth of the numerous sections is the allocation of funds within those categories. When one examines the breakdown of expenditures generated by the farm bill, the politics of 80 years of wrangling start to reveal themselves. Rural agricultural communities are not the main beneficiaries of the farm bill. Even the casual observer can see from the nearby chart the actual application of that age-old cliché that “politics make
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Farm Bill Allocation Food Stamps Crop Subsidies Environmental Programs Crop Insurance Other which includes weather related disaster payments
67% 14% 9% 8% 2%
Source: Congres s i ona l Budget Offi ce
strange bedfellows.” Urban members of Congress found common ground with rural members after certain types of welfare transfers were included. The net effect was the creation of a voting bloc that sustained and grew the program even as rural areas lost population and representation. It becomes obvious that the farm bill has been overtaken by “mission creep” when one considers the prevalence of food stamps. Items eligible for purchase have expanded to include nearly everything but alcohol, non-food products, vitamins, medicines, and food that is eaten in the store. The farm bill now includes the Supplemental Nutrition Assistance Program (SNAP), which is the largest); the Special Supplemental Nutrition Program for Women, Infants and Children (WIC); Child Nutrition Programs (National School Lunch, School Breakfast, Child and Adult Care, Summer Food Service and Special Milk); and Food Distribution Programs (Schools, Emergency Food Assistance, Indian Reservations, Commodity Supplemental, Nutrition for the Elderly, and Charitable Institutions). The early versions of the farm program and food stamps prohibited the purchase of imported food, but that provision no longer applies and is probably unenforceable anyway. The transfers of tax dollars via the food stamp program to large processors and/or foreign producers dims the value of that part of the program to American farmers. In fact, a soon-to-be released study, “Distributional Effects of Selected Farm and Food Policies,” agricultural economist Jayson Lusk shows that “SNAP is a very inefficient form of farm support: for every $1 spent by taxpayers, farmers benefit by only $0.01.” (Dr. Lusk serves as the Samuel Roberts Noble Distinguished Fellow at OCPA.) However, for all the disparity in the distribution of funds and the lack of relevance of most of those funds to the farm economy, farm-state lawmakers still vote for the farm bill. The nearby chart reveals the significance of the farm bill to Oklahoma agriculture. The rural economy is wound around the program in many ways, but the most obvious is the effect on what types of crops are grown. The nearby chart shows that it is the
Income Flow to Oklahoma from Farm Payments 1995-2012 Number of Recipients Subsidy Total Wheat Subsidies 70,580 $ 2,825,177,295 Disaster Payments 74,015 $ 1,017,356,070 Conservation Reserve Program 18,705 $ 644,159,823 Cotton Subsidies 14,139 $ 499,419,515 Livestock Subsidies 52,265 $ 341,964,762 Corn Subsidies 8,034 $ 200,042,520 Peanut Subsidies 3,158 $ 189,572,375 Sorghum Subsidies 27,078 $ 173,455,273 Environmental Quality Incentives 11,814 $ 100,503,874 Soybean Subsidies 8,563 $ 80,745,429 Source: http://farm.ewg.org/region.php?fips=40000&statename=Oklahoma commodity crops that are eligible for the majority of the program’s benefits. It has developed into a risk-management tool that limits the incentives to try different crops, even if they are potentially more lucrative. The current farm bill continues to gravitate towards that approach. The current direct payments are removed from the farm bill and replaced with new risk-management options. To protect farmers from multiple-year downturns in cash prices or a decline in revenue, the new bill introduces two new programs. Farmers can choose between a revenue program that covers price and yield losses, Agricultural Risk Coverage (ARC), and a price-only program known as Price Loss Coverage (PLC). When you can protect yourself from “losses,” why would any farmer turn down participation in the program? Even most of those who criticize the current system understand it is the political and economic realities that have created the system, not the farmers. The farmers are trapped in the system, and the emphasis on the commodity crops the system incentivizes is a major driver of the loss of population in the rural areas, including limiting the ability to retain sons and daughters in family farm operations. Rural residents of the United States now account for just 16 percent of the nation’s population, compared to 72 percent in 1910. It comes as no surprise that the reduction in the farm population as a percent of the total population is almost in a perfect correlation with the shrinking of rural America. The following chart brings even more perspective to the changing landscape of agriculture and the rural areas. Year % of workforce in agriculture Agricultural % of total GDP
1930 21.5 7.7
1945 16 6.8
1970 4 2.3
2002 1.9 0.7
Those who live in, have lived in, or even pass through rural areas do not need a study to confirm the impact of the reduction in rural population. The critical mass of population needed to provide enough of a base for adequate schools, hospitals, infrastructure, and other services has come and gone. Some towns were left as ghost towns and others are only shells with a grade school, a shared county hospital, an elevator, and a convenience store. Those cities which are
holding on have seen their sales tax base reduced. Major purchases by their residents have been moved to urban areas where there are large discounts and variety, or to online purchases for convenience. State programs like the Rural Economic Action Plan (REAP) have attempted to return some dollars to the rural area to compensate, but they cannot replace lost sales tax revenues and the reduction in property tax dollars from lost residents. The continuing inflow to the urban areas of each generation of rural youth will only increase the dependency of rural Oklahoma on taxpayers to maintain basic infrastructure. For too long the problems in rural Oklahoma have been addressed simply by putting a Band-Aid on an axe wound. The good news is that there are policy options that can help change these trend lines in farming and in rural Oklahoma. The even better news is that they are options that could benefit all of Oklahoma. These options can increase the income level of farm households substantially and provide opportunities for the next generation to stay on the family farm while simultaneously increasing the rural population geometrically. They do not require more tax dollars nor do they require the farm community to withdraw from the risk-management aspect of the farm program. In fact, the easiest solutions use the farm program as well as other existing programs to create a free-market approach that allows those in the agricultural community to make their own decisions. State lawmakers have an important role to play. In the next article in this “Reviving Rural Oklahoma” series, I will discuss some of these options and explain why all elected officials, urban and rural, should be on board.
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.
What If Grocery Stores Were Like Public Schools? This article appeared in the Tulsa World on March 14. The grocery-store analogy seems to have begun with Dr. Milton Friedman, the great free-market economist who launched the modern school-choice movement. -Editor Think of the grocery store closest to where you live. That is now your store. That is where you will buy all your food from now on. You say we can’t force you to shop there? You’re right, sort of. What we’re going to do is figure out a monthly grocery budget, take the money from you, and give it to the store. Don’t worry, we’re just prepaying for you. Now your groceries are “free.” Of course, you can still shop wherever you want. However, if you go somewhere other than your neighborhood store, you’ll have to pay for that yourself. The money we took for the nearby store? No refunds. If you really don’t like the store where you live, no whining, just move to a different neighborhood. (If we’re in a giving mood, we may let you choose between a few local “approved” choices, something we like to call an “interdistrict transfer.”) This is the “public groceries” system. Food is obviously a public good. After all, it’s a basic necessity for life. So why not provide food the same way we provide education? What might happen in a public groceries system? For one thing, the agency that moves that money from your pocket to the store would have a lot of control over the store. Surely this power would only be used in good ways. They might help you make better choices about what you eat. Of course, helping you make choices really means taking away some of your choices. But if they weren’t the right choices, no big loss, right?
PERSPECTIVE • May 2015
Sometimes, someone with that power might use it to influence what the store sells in ways that benefit other powerful interests (“Mommy, why do all the cereals say HMH?” “I don’t know, honey. Pick out your favorite Pearson’s Flavor-Free Popsicle flavor.”) This is exactly the sort of problem that can be solved by a lengthy committee process where stakeholders come together (no, not you). Another risk of the public grocery system is that it would operate a lot like a monopoly. We know monopolies get away with offering lower quality and charging higher prices. To prevent this, we will apply a lot of regulations and requirements to public grocers. They’ll grouse about it, sure, but in a public system with little competition there is really no other way to create accountability. Trouble is, over time, those who run the public grocery system (and their friends who provide the groceries) might figure out it’s a whole lot easier to provide a whole lot less choices. Why offer every size when you can just offer one-size-fits-all? And while the system of regulations and requirements will seem burdensome, it also creates jobs for a lot of administrative staff. At some point there will be malcontents. Someone will come along demanding to take her own money and buy her family’s groceries wherever and however she pleases. Just remember, it’s not really her money. It’s public money now. And she might go to the wrong store or buy the wrong groceries. Where, oh where, is the accountability? Finally, think of what the approved neighborhood grocery store will mean for your community. By assigning people to their nearest store, the public grocery system will hold us together. Without it, who’s to say if people would get sufficient socialization? Of course, Oklahomans would never
put up with “public groceries.” The suggestion that you cannot pick out your food and choose your own store is elitist. It would be dishonest for someone to take your money to pay for a product and then give you that product and tell you it’s free. Reducing the power of individuals to make choices would lead to a monopoly-like environment, with lower quality and higher prices, while opening the door to manipulations and abuses that would be otherwise impossible. Just as human survival requires food, so sustaining a self-governing society requires an educated public. Yet the importance of the objective tells us nothing, on its own, about how to achieve it. No doubt we could do better at achieving the goal of an educated public if we slipped the bonds of the status quo and determined to empower individuals to make their own choices in an expanding marketplace of educational opportunities.
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.
1 Hutchinson Wichita
Ponca City Woodward
Oklahoma City Seminole Chickasha
Pauls Valley Duncan
@OCPAthink 1. OCPA president Michael Carnuccio discusses state policy with Oklahoma Gov. Mary Fallin during a recent broadcast of “The MiddleGround” television program. The show airs on Sunday mornings at 8:30 on KOKH FOX 25 in Oklahoma City. 2. Lt. Gov. Todd Lamb appears on “The MiddleGround.” 3. Attorney General Scott Pruitt appears on “The MiddleGround.” 4. OCPA vice president Trent England hosts “The MiddleGround” radio program from 7:00 to 9:00 each weekday morning on AM 1640 The Eagle. This map shows the radio station’s daytime coverage pattern.
Golden Rice and the Growing Battle over GMOs According to the World Health Organization, Vitamin A deficiency (VAD) “is the leading cause of preventable blindness in children and increases the risk of disease and death from severe infections.” More than half a million children under the age of five die each year from VAD. The medical solution to VAD is relatively simple: these children need vitamin A as a supplement to their diets. Gardening programs and direct supplements are options, but broadly providing vitamin A to the millions in need, most of whom live in Africa and Asia, requires a more comprehensive solution. Enter golden rice. Fifteen years ago, scientists Ingo Potrykus and Peter Beyer created a type of yellow rice that produces beta-carotene, something the human body needs in order to produce vitamin A. According to a study published in the American Journal of Clinical Nutrition, just one bowl of golden rice provides 60 percent of a child’s daily requirement for vitamin A. While field trials in the Philippines and Bangladesh may enable golden rice to make its way to market this year, golden rice is not currently being commercially farmed or consumed in the countries suffering the most from VAD. So what is keeping such a potentially helpful food from the people who could most benefit from its production? According to Potrykus, golden rice’s status as a genetically
PERSPECTIVE • May 2015
modified organism (GMO) has proven a tremendous hurdle. “If it were not a GMO, golden rice would have been used since 2002 and have saved millions of children from blindness and death,” Potrykus noted. Popular opposition to GMOs is a significant global issue both in terms of food security and international trade. The United States, Argentina, Brazil, and Canada are generally hospitable environments to GMOs, while many European nations have restricted or entirely banned GMOs. The U.S. Food and Drug Administration (FDA) has repeatedly emphasized that foods from “genetically engineered (GE) plants must meet the same requirements, including safety requirements, as foods from traditionally bred plants.” Despite significant marketing and public relations campaigns against GE plants by groups such as Greenpeace, the vast majority of several major American staple crops are genetically modified. According to the U.S. Department of Agriculture (USDA), GE crops accounted for 96 percent of cotton acreage, 94 percent of soybeans, and 93 percent of corn in 2014. Although GMO detractors argue otherwise, the federal government heavily regulates GE crops and food products. It oversees field-testing, production, and consumption through the USDA, FDA, and EPA. The USDA’s Animal and Plant Health Inspection Service (APHIS) authorizes initial
Frolova_Elena / Shutterstock.com
By Cameron Smith
Philippines Filipino farmer spreads out his rice to dry on a road on the island of Panay. Just one bowl of golden rice provides 60 percent of a child’s daily requirement for vitamin A. While field trials in the Philippines and Bangladesh may enable golden rice to make its way to market this year, golden rice is not currently being commercially farmed or consumed in the countries suffering the most from vitamin A deficiency.
testing, gathers information about the genetic modifications, and ultimately makes a determination regarding moving the crops to non-regulated status for commercial use. If a plant is engineered to produce a substance that “prevents, destroys, repels, or mitigates a pest,” the EPA considers the GE plant a pesticide subject to further regulation. Once the product is ready for commercial farming, the FDA regulates all food uses of such crops to ensure that GMOs are safe for consumers to eat. Where GE plants and animals meet the same safety thresholds as their traditionally bred counterparts, they should be used, especially when they are able to solve significant health issues for vulnerable populations. At the same time, the United States must be more proactive in responding with international dialogue over GMOs if we are to protect our ability to export crops and maintain an agricultural trade surplus that benefits both our domestic economy and access to lower-cost food around the world. Both the U.S. Government and the industry participants benefiting from advances in biotechnology must take steps to clear the air of confusion surrounding the GMO discussion, provide transparency and accountability throughout the regulatory process, and thoroughly respond to reasonable concerns from GMO opponents. The USDA has already started differentiating facts from
fiction. Those opposed to GMOs argue that the engineered crops give multinational corporations the ability to gouge farmers by charging more for GE seeds than conventional varieties. A USDA study released last year did support the argument that the price of GE corn seed grew by about 50 percent from 2001 to 2010. The cost of cotton seed grew even faster. At the same time, because of higher yields, the USDA study also noted that GE cotton and corn “continue to be more profitable, as measured by net returns, than planting conventional seeds.” The battle over GMOs is far from over and the future of golden rice remains uncertain. Rather than relying on biased papers and pontifications that only contain a kernel of truth, the United States would be wise to take the time to have a more robust exploration of the health and safety realities related to GMOs if it is to avoid serious trade, economic, and humanitarian consequences in the future. Cameron Smith is southern region director and senior fellow at the R Street Institute, principal of Smith Strategies LLC, and a regular columnist for the Alabama Media Group.
This piece originally appeared in The Torch, a publication of The Liberty Foundation of America. Find out more at libertyfound.org.
QUOTE UNQUOTE “Every argument against choice made by the education establishment reveals the contempt that establishment has for its own product. School boards, superintendents, and teacher unions are convinced that no one would attend public schools if they had the choice. Like Fidel Castro and former postmaster general Anthony Frank, they have a keen sense of the consumer demand for their product and are fighting a rearguard action to protect their monopoly.” Cato Institute scholar David Boaz
“Liberalism, of course professes to speak for ‘the poor,’ even though, given a choice between the poor themselves and a program whose real effect is to hurt the poor, it will choose the program. ‘The poor’ are to liberalism roughly what ‘the proletariat’ is to Communism–a formalistic device for legitimating the assumption of power.”
“Sports franchises in [no-income-tax] states— including Tennessee, Washington, and Texas–have an incredibly powerful home–field advantage.”
Travis H. Brown, in a new article entitled “Income Tax Makes States Radioactive to Sports Stars”
“This is just the beginning of the college implosion.” Entrepreneur and investor Mark Cuban, after the 114-year-old Sweet Briar College announced it is closing its doors for good. Cuban owns the web domain collegedebt.com.
“If you want to defend closed union shops, so be it. But you’d better be prepared to defend Jim Crow as well, because they’re inseparable... Closed union shops were created by white progressives to keep blacks from ‘stealing’ their jobs.” Sean Davis, co-founder of The Federalist website
School Choice Myths