Cranston Pensions to be focus of Task Force organized by the Center for Freedom

Providence, RI – Representatives of several major policy organizations today announced the formation of a collaborative effort to provide research and analysis that may be useful to local officials as they work to design pension reform options for Rhode Island’s underfunded municipal retirement systems.

New! Cranston Police & Fire Retiree Data Posted @ www.RIOpenGov.org

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For Immediate Release; February 13, 2012

Providence, RI – Representatives of several major policy organizations today announced the formation of a collaborative effort to provide research and analysis that may be useful to local officials as they work to design pension reform options for Rhode Island’s underfunded municipal retirement systems. Cranston is the first municipal pension plan that the team will analyze. Cranston, one of many localities in Rhode Island which has an independent pension plan, has a pension funding level below 25 percent and reported unfunded liabilities of $245 million, placing it among the worst-funded in the state.

Following the successful task force assembled last fall regarding statewide pensions, the collaboration is organized by the Rhode Island Center for Freedom and Prosperity’s Special Pension Task Force. Task force members will provide transparency data, research, and policy analysis, including for Cranston’s actuarial report and funding plan, both of which are required of all independently managed municipal retirement systems by the Rhode Island General Assembly this year.

The Task Force also announced that pension data for some 1714 Cranston retirees, both in the local and state administered plans for teacher, police, fire, and other retired personnel, is now available to view via interactive displays on the RI Center for Freedom’s transparency website, www.RIOpenGov.org. This website will serve as the home page for all future work published by the Task Force.

Central Falls, Rhode Island recently filed for bankruptcy, and its retirees have agreed to sharp pension cuts as part of the reorganization. The state of Rhode Island in November passed comprehensive pension reform legislation implementing the defined contribution model of compensation and canceling cost of living allowances for state-run plans. The task force members hope to provide useful information that may guide other municipalities to make preemptive adjustments to their pension fund management to avoid the difficult consequences that Central Falls is currently experiencing.

The Task Force members, who will provide commentary and analysis and who may participate in statewide forums or committee hearings in the General Assembly, include Eileen Norcross of the Mercatus Center, Rich Danker of American Principles Project, Bob Williams of State Budget Solutions), and Mike Stenhouse from the RI Center for Freedom & Prosperity.

“This task force is set up to get the best economic, legal, and policy analysis on how to deal with a pension shortfall at the local level,” Rhode Island Center for Freedom and Prosperity chief executive officer Mike Stenhouse said. “This is a national crisis that must be solved from the ground up through the principles of fiscal federalism.”

“This collaboration is a great opportunity to advance best practices in pension reform at the local level,” Rich Danker, project director for economics at American Principles Project said. “We hope that the task force’s transparent pension fund analysis will foster responsible decision-making.”

“The Mercatus Center is pleased to offer its analysis on public pensions to Cranston as it has to other cities and states,” senior research fellow Eileen Norcross said. “Fixing the structural problems embedded in these retirement systems is crucial to our nation’s fiscal health.” Norcross has done leading research on public pension deficits in Rhode Island, Illinois and New Jersey as part of the Mercatus Center at George Mason University’s State and Local Policy Project.

 Additional bio information for Task Force members can be found on the Center’s website at www.RIFreedom.org/pension-reform.

 For over 25 years, the Mercatus Center at George Mason University has been the world’s premier university source for market-oriented ideas-bridging the gap between academic ideas and real world problems. A 501(c)(3) tax-exempt organization located on George Mason University’s Arlington campus, Mercatus works to advance knowledge about how markets work to improve our lives by training graduate students, conducting research, and applying sound economics to offer solutions to society’s most pressing problems.

American Principles Project is a Washington-based 501(c)3 organization. Founded by Princeton Professor Robert George in 2009, last year it became the first public policy organization to sponsor a presidential debate, which was shown on CNN. APP works across three areas: economic policy, education, and Hispanic outreach. It’s economic initiatives are public employee pension reform and monetary policy reform. It has worked to promote awareness of the public pension crisis and proactive reform ideas.

State Budget Solutions, a non-partisan organization advocating for fundamental reform and REAL solutions to the state budget crises, is a non-partisan, positive, pro-reform, proactive organization that is anchored in fundamental-systemic solutions.

 The Rhode Island Center for Freedom and Prosperity, a non-partisan public policy organization, is the state’s leading free-enterprise think tank. Firm in its belief that freedom is indispensable to citizens’ well-being and prosperity, the Center for Freedom’s mission is to restore competitiveness to Rhode Island through the advancement of market-based reform solutions.

Media Coverage:

GoLocalProv: NEW: Pension Task Force to Focus on Cranston

Cranston Patch: Pension Task Force Sets Sights on Cranston’s $245 Million Black Hole

Tax hikes will cause a loss in jobs

Governor’s proposed Tax Hikes will Harm already Fragile Economy

Tax Increases Will Cost Jobs and Return Far Less than expected

Tax Plan Analysis

Download the entire Policy Analysis here … including detailed tables and additional information.

In late January 2012,Rhode Island’s Governor proposed a new budget that included a number of tax and fee increases, with the goal of balancing the state’s chronic budget deficits. In order to properly assess the impact of such hikes on the state’s economy, the RI Center for Freedom & Prosperity conducted a detailed, economic analysis, utilizing the Center’s dynamic tax modeling tool, RI-STAMP.

The Governor’s plan attempts to address the perpetual budget deficit by cutting some spending and raising some taxes. As demonstrated by RI-STAMP, this path will produce negative consequences.

 Analysis

To best simulate the Governor’s tax proposal, the following revenue targets were entered into RI-STAMP.

  •  $69.7 million increase in Sales Tax revenues via expansion of the base, with tax increases in some sectors
  • * $13.6 million increase in motor vehicle registration fees was input as a Fuel Tax increase
  • $7 million increase in revenues from smoking products and other items entered as a Cigarette Tax
  • $3.8 million in other misc. taxes & fees were not included in the projection

After running these inputs through the RI-STAMP algorithm, the negative economic consequences of the proposed tax and fee increases become clear. Full details can be found in the table on the following page, but in summary:

  •  The expected total revenue increases of $95 million are not attained, as tax increases depress overall economic activity … the state will see only a $35 million increase in revenues.
  • Over 1400 private sector jobs will be lost
  • Municipalities will lose $9.75 million in revenues due to lower commercial property taxes, as a consequence of lower overall economic activity
  • The State will lose almost 1% in overall Gross State Product
  • Investment in the State will drop by $27 Million

Because a sales tax increase would makeRhode Islandeven less competitive with its regional neighbors, and nationally overall, consumer and entrepreneurial behavior would be significantly altered, resulting in lower economic activity and actually worsening the state’s economic plight. Municipalities, all too often overlooked, will also suffer a loss in revenues from this unintended consequence.

 Balancing the budget is the wrong goal; and tax increases are precisely the wrong solution!

 Recommendation:

Conversely, if the OceanStatewas to cut its sales tax to 5%, a very different scenario is projected to occur, because our state would suddenly become a more attractive place to purchase goods and services, meaning economic activity would increase. (See the Policy Brief, Dynamic Effects of Tax Policy)

 If instead,Rhode Islandwants to address the larger economic picture, by looking to produce more jobs and a brighter economic future for our citizens …

 … cutting taxes and cutting spending will produce a more vigorous economy!

Download the entire Policy Analysis here … including detailed tables and additional information.

Media Coverage of this Analysis:

Warwick Beacon: Chewing over a 10% meal tax

Providence Business News – URI Professor Lardaro supports RI-STAMP economic modeling tool

630WPRO – Conservative think tank says new taxes will hurt RI

Boston.com – Think tank criticizes RI Gov.’s tax plan

Collective Bargaining Reform could Save R.I. $252 million per year

Collective Bargaining CostsExcessive Government Worker Compensation Doubles the State Budget Shortfall, Reform would Disrupt the Union-Policymaker quid pro quo.

A study released this week by the Goldwater Institute details the crippling financial impact of public-sector unionization. The study projects that a ban on collective bargaining and contracts could save Ocean State taxpayers $252 million per year in excessive government worker compensation. These savings are more than double the estimated state budget shortfall currently facing Rhode Island.

The Goldwater study cites information from the U.S. Bureau of Labor Statistics that shows, on average, state employee wages are 44% higher than private sector wages. Further, the study shows that unionized state employees nationwide earn 42% more than state employees that don’t belong to a union. Following the Virginia model, the first state to ban collective bargaining and collectively bargained contracts for government workers, savings for taxpayers nationwide could reach over $49 billion annually, and $252 million in Rhode Island alone.

“The ever-increasing total cost of employment for unionized government labor – annual compensation plus benefits – is a cost item we simply we may not be able to afford. The recent state pension reform crisis, along with our municipal pension disasters, make it clear that Ocean State taxpayers have been squeezed dry by public-sector unions”, said Mike Stenhouse, CEO of The Rhode Island Center for Freedom and Prosperity. “This study reinforces what Franklin Roosevelt told us more than 70 years ago – that the concept of public-sector unions is ‘unthinkable and intolerable’. It is disturbing that the very money taken from the pockets of working Rhode Islanders is used to reinforce the political power of many unions, which gives them added influence so that they can fleece even more money from taxpayers. If policymakers seek to address the long-term structural deficits in our budget, this is one area that must now be considered before we cut into social services.”

“The citizens of Rhode Island have always expressed a strong desire to help the least-fortunate among us; but do government workers fall in that category?” Stenhouse questioned. “With the threat of tax increases and cuts to our social safety net, the idea of paying bloated union wages and benefits is especially poignant. It’s time to face the facts: public-sector unions drain precious resources away from Rhode Island’s sick, elderly, and poor. We’re at the point where we cannot continue our current spending levels; as a state, we’re going to have to prioritize. Difficult decisions must be made; the possibilities from this study add compelling information to the debate.”

More than money is at stake, according to Nick Dranius from the Goldwater Institute, who went on to say that “collective bargaining for public unions is particularly problematic because government sector unions help elect their employers, and their employers often return the favor by raising taxes to pay for the benefits the unions then demand. A ban on government sector collective bargaining helps disrupt this all-too-common quid pro quo. To solve this problem, more than a ban on collective bargaining and collectively bargained contracts is needed. Statesmen must restore and enforce the ideal that the American form of government is a public trust. Reform should be rooted in a legal framework that underscores government officers and employees are public servants, who owe undivided loyalty to the public.”

The study also notes a study from the Kennedy School at Harvard University, showing an increase in interest costs to states with high public-sector union membership:

“The study’s authors note that union strength in a particular level of government…can indicate to bond markets that those governments may not be able to overcome the political pressure to implement budget-conscious measures when necessary.  “Those states with a more heavily unionized government sector tended to have higher borrowing costs relative to other states with a less unionized government sector.”

 The full study is available here: http://goldwaterinstitute.org/sites/default/files/12-01%20Collective%20Bargaining%20PDF.pdf

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Scholarship Program Recommended for Special-Needs RI Students

Senators Ciccone and Walaska are called upon to take action to back up their own “School Choice Week” Resolution. Read the full Policy Brief here … with charts and end notes.

Stephen Hopkins Center supports our Center’s call for the Bright Today Scholarship Program

MEDIA RELEASE:

Bright Today Scholarship Program

Empowering Rhode Island’s Most Vulnerable Children with a Quality Education

Senators Ciccone and Walaska are called upon to take action to back up their own “School Choice Week” Resolution

January 26, 2012, Providence, RI — In recognition of National School Choice Week, the Rhode Island Center for Freedom and Prosperity urges policymakers to adopt a school choice scholarship program for special-needs students. In light of the recent resolution co-sponsored by state Senators Ciccone and Walaska recognizing School Choice Week, the RI Center for Freedom calls upon the senators to follow up their welcome recognition with firm action, and respectfully requests that they provide the leadership necessary to see that legislation is adopted that provides a school choice scholarship program for disabled students in Rhode Island.

As follow up to its recently published education report, Closing The Gap, which demonstrated how recent Florida-style school reforms could aid disadvantaged students in the Ocean State, the Rhode Island Center for Freedom today issued a Policy Brief detailing how adoption of one, particular Florida reform – the McKay Scholarship Program – could empower Rhode Island’s most vulnerable and under-achieving students with new choices to receive a quality education.

As part of its “Bright Today” set of recommended school policy reforms, the RI Center for Freedom recommends that the Ocean State develop a scholarship program of its own, which would allow families with special-needs children to utilize public funding, in the form of a voucher – based cost of education in the school district they are leaving – to attend a private school of their choice. This recommendation is consistent with RI Department of Education’s (RIDE) strategic recommendations and can be implemented into law by the Rhode Island General Assembly.

The Policy Brief entitled the Bright Today Scholarship Program cites details from Closing The Gap that shows how Rhode Island students with disabilities are declining in achievement and have lost approximately (5) grade levels of learning to their peers in Florida since the Sunshine State implemented its school voucher system for such students, the McKay Scholarship Program, over 12 years ago. The Brief provides information about this program, including national perspectives, implementation details, and fiscal and academic impacts, as well as a summary of how other states have followed Florida’s lead in this area.

Earlier this month the Rhode Island Senate passed a resolution (#2064) recognizing National School Choice Week, citing that ” … Citizens across Rhode Island agree that improving the quality of education and expanding access to highly effective schools should be an issue of importance to our state’s leaders …”. The RI Center for Freedom calls upon the sponsors of this resolution, and all those who supported it, to take active and concrete steps to back-up their own resolution by developing and passing a Bright Today Scholarship Program bill for the Ocean State.

“The freedom to choose is a staple of almost every component of life in America except perhaps the most important area – education. With all the talk about providing for our state’s neediest residents, we challenge our public officials to actually do something about it”, said Mike Stenhouse, CEO for the RI Center for Freedom. “How can we not act to provide a ‘bright today’ for these families who have been left behind by our educational system? With public demand and leadership, by next fall, hundreds or thousands of our most disadvantaged students could be attending a better school”, added Stenhouse.

The non-partisan Rhode Island Center for Freedom and Prosperity is the state’s leading free-enterprise public policy think tank. Firm in its belief that freedom is indispensable to citizens’ well-being and prosperity, the Center for Freedom’s mission is to restore competitiveness to Rhode Island through the advancement of market-based reform solutions.

Read the full Policy Brief here … with charts and end notes.

 

Governor’s Sales Tax Hike will Hike Unemployment

Download the complete Policy Brief here; includes comparative table and reference end notes.

View or Download the Media Release here; includes quotes and additional information about Scott Moody and STAMP.

Lesson in Capitalism – “Dynamic Effects of Tax Policies”

Balancing the Budget via Sales Tax Increases would Cost Jobs for Rhode Island

January 23, 2012; by J. Scott Moody – adjunct scholar

Consider which of two tax-policy scenarios may be more beneficial for Rhode Island:

A) a policy that increases state revenues to sustain current spending, but which reduces the state’s economic output and where jobs are lost; where municipal revenues go down and where investment in our state is reduced.

B) a policy that reduces state revenues forcing cuts to current spending, but which increases our state’s economic output and where jobs are gained; where municipal revenues go up and where investments in our state rises.

This is the vital debate that must take place in the Ocean State during the 2012 legislative session.

2012 will predictably bring a vigorous debate about how to balance our state budget and how to pay for most of the current spending items in the budget – by some combination of increasing taxes and making cosmetic cuts to existing programs. This is the wrong debate and the wrong objective for the Ocean State!

Instead, debate should focus on how to make Rhode Island more competitive with our neighbors and how to grow our economy so as to add more good jobs for our citizens. Increased tax revenues will naturally follow from the expansion of economic activity.

Dynamic vs Static Tax Modeling

There is a common and fundamental miscalculation when it comes to projecting the effects of tax policy on state revenues. Too often, the more short-sighted and simplistic static calculation is utilized, when in reality is the more complex dynamic effect should be evaluated. The downstream effects of tax policy on various aspects of the economy are rarely discussed or quantified, either at the state or municipal level.

Take the state “sales tax” as an example. Rhode Island is expected to derive about $989.5 million from this tax, currently at 7%. In 2011, to balance the budget, the Governor proposed over $150 million in tax increases through an expansion of the state sales tax: reducing the sales tax on some items and charging new sales taxes on other items. For modeling purposes, assuming a overall target of $175 million in new revenues, this would have effectively raised the existing state sales tax rate to about 8.2%. While not an exact apples-apples comparison with the Governor’s 2011 plan, an analysis of the higher 8.2% sales tax, utilizing RI-STAMP, a state tax and analysis modeling program customized specifically for Rhode Island, shows the kind of negative consequences that can be expected to occur when any state sales tax hike is considered.

Tragically, this sales tax increase would not raise nearly the amount of revenues statically calculated because it would cause serious harm to our already deteriorating state and municipal economies. In summary, a sales tax hike of $175 million is projected to produce severe unintended consequences for theOceanState:

  • Only a $55 million gain in net state revenues (vs the $175 million gain anticipated)
  • A loss in Gross State Product o $932 million
  • A loss of $22 million in municipal revenues
  • A loss of $64 million in investment in our state
  • A loss of 2,224 jobs

 Because a sales tax increase would make Rhode Island even less competitive with its regional neighbors and nationally overall, consumer and entrepreneurial behavior would be significantly altered, resulting in lower economic activity and actually worsening the state’s economic plight. Municipalities, all too often overlooked, will also suffer from this unintended consequence.

Balancing the budget is the wrong goal; and tax increases are precisely the wrong solution!

Conversely, if the Ocean State was to cut its sales tax to 5%, a very different scenario is projected to occur, because our state would suddenly become a more attractive place to purchase goods and services, meaning economic activity would increase.

The static projection of a 2% sales tax cut would put the loss in state revenues, at 2/7 of the current revenue, or about $282.75 million in lower revenues to the state. But again, this static calculation ignores the true dynamic economic impact of tax reductions. RI-STAMP projects the following positive consequences from this tax decrease:

  • Only a $74 million loss in net state revenues (vs the $283 million loss anticipated)
  • A gain in Gross State Product o $1.9 Billion
  • A gain of $44 million in municipal revenues
  • A gain of $121 million in investment in our state
  • A gain of 4,327 jobs

Just from this single tax reform, economic forces, which have been restrained by a burdensome tax structure, will be unleashed in the Ocean State. If the state can find $56 million in cuts, the Rhode Island economy will be vastly enhanced, resulting in more jobs and more local revenues … and we will balance a lower budget!

The Governor’s office recently stated that it plans to address the upcoming budget deficit by cutting spending and raising taxes. As demonstrated above, this path produces negative consequences.

If instead, we look to address the larger economic picture and look to produce more jobs and a brighter economic future for our citizens …

… cutting taxes and cutting spending will produce a more vigorous economy!

Additionally, from a regional and psychological perspective, instead of suffering the ignominy of charging highest sales tax in New England, Rhode Island would benefit by boasting the second lowest sales tax.

Reality Supports Theory

Some may argue that an economic modeling program is just theory and that the actual world may present a very different reality. However, right here in our own New England back-yard, there is specific empirical evidence that fully supports the core premise of the RI-STAMP projections regarding the effects of sales tax policy.

It is well-known that cross-border shopping exists to the great benefit of the zero sales tax state of New Hampshire, with many Rhode Islanders frequently putting in ‘orders’ with family members and friends crossing through the Granite State to pick up liquor and other items for them … duty free!

In Vermont, a recent study showed that its border counties are losing up to $540 Million in retail sales per year to New Hampshire . In Maine, a similar study showed that its border counties are likewise losing $2.2 Billion, in addition to thousands of retail jobs .

With the close proximity of Rhode Island to many Massachusetts and Connecticut residents, it is clear that Rhode Island can win the southern New England sales tax competition; that our economy can benefit from cross-border shopping and see a pronounced increase in economic activity and jobs for our state and our cities & towns.

WHAT IS RI-STAMP?

Developed by the Beacon Hill Institute at Suffolk University, RI-STAMP is a customized, comprehensive model of the RI state economy, designed to capture the principal effects of city tax changes on that economy. In general STAMP is a five-year dynamic computable general equilibrium (CGE) tax model. As such, it provides a mathematical description of the economic relationships among producers, households, government and the rest of the world. It is general in the sense that it takes all the important markets and flows into account. It is an equilibrium model because it assumes that demand equals supply in every market (goods and services, labor and capital); this is achieved by allowing prices to adjust within the model (i.e., prices are endogenous). The model is computable because it can be used to generate numeric solutions to concrete policy and tax changes, with the help of a computer. And it is a tax model because it pays particular attention to identifying the role played by different taxes.

Download the complete Policy Brief here; includes comparative table and reference end notes.

Media Coverage:

1/30/2012: Americans For Tax Reform , ATR: Opposed to Rhode Island Sales Tax Increase

1/23/2012: GoLocalProv.org, NEW: Conservative Think Tank Rips Chafee on Taxes

What others are saying about our “Closing The Gap” Educational study

Visit the Closing The Gap home page here …

Our Closing The Gap study has struck a cord with parents and students, as well as organizations either supporting or resisting comprehensive educational reform in Rhode Island.  Below is a sampling:

SUPPORTERS

Rhode Island Statewide Coaltion (RISC) commends our think tank for bringing forth a significant education study

The RI Statewide Coalition (RISC) is commending the RI Center for Freedom and Prosperity, a locally run reform-oriented think tank, for bringing forth the results of a wide ranging education study of Florida public schools which shows significant education gains can be made by non-English speaking, lower income urban students if the right curriculum reforms are enacted. RISC is also citing the study as evidence that the proposal to site two charter run Mayoral Academy schools in Providence deserves the chance to go forward.

“This study reveals that low income and minority students in our own state attending low performing schools in certain urban areas have a true chance at improving if aggressive reforms are supported and alternative options are allowed to grow,” states RISC Executive Director Harriet Lloyd. “If the jumps in test scores and overall performance improvements in key areas can occur for the most disadvantaged students in Florida’s public schools, why can’t they occur here? Improvements are slowly taking hold here under Commissioner Gist but she needs continued support and alternative school options need to be expanded.”

The study, called “Closing the Gap”, traced the gains made by overall low income students and by specific groups of Hispanic students in Florida public schools over the period of a decade starting in the year 2000. A wide ranging series of reforms which brought results included improved teacher performance and accountability; a transparent A to F grading system for individual public schools for better parental awareness; strong support for charter school options; and a ban on social promotion; among other policies. Test scores in core subjects like reading and math improved over the decade by up to 25%. By contrast, according to the study, overall test scores for Rhode Island students improved just 5% during the same time period.

Among other findings, the study’s authors say the gains made by the low income and minority students serve to debunk the conventional view that the socioeconomic backgrounds of students is the central factor in chronically low performing urban schools.

 Rhode Island Tea Party

Our children are our future–are we valuing them properly?

If the essential goal of educating our young children is to help them think more clearly and logically at a young age, to give them a strong foundation in reading, writing and math–and more, to help them attain a love of learning, then why are we failing so many in RI? Why are their reading scores so low, especially when we are pouring money into educating them? Is it because of poverty, or the inability of some students to learn, or lack of parent involvement, or lack of “resources”, or language barriers? Or is there something more insidious and fundamental at play? Is our system based on protecting special interests (e.g., tenured teachers, union bosses, legislators) at the cost of a stellar education?

By contrasting Florida’s free market oriented reforms with RI’s entrenched statist system, “Closing the Gap” offers striking evidence that that RI has failed. And more importantly, it offers specific solutions: a move toward freer markets in education (e.g., school choice), justice and transparency (grading schools and school districts from A-F, rewarding better teachers–merit pay, not seniority, i.e., incentivizing success), a ban on faking success (no social promotion, no automatic tenure), cutting bureaucratic red-tape in teacher credentialing, exploring virtual education, raising academic expectations by setting more rigorous standards.

In the future, we have the opportunity to read newspaper stories about more and more of our children succeeding in school. We can make that happen if parents and concerned citizens and politicians are willing to challenge the current system, which fails so many young children, and learn from the Florida situation. The facts tell an encouraging story.

OPPONENTS

 National Education Association of Rhode Island (Larry Purtell, President)

“We do need to continue in Rhode Island to diligently work to reach out and make sure all children are educated to the highest level possible, but this is nothing more than the same rhetoric from the same people with the same agenda.”

 Examiner.com; Alexander M. Sidorkin, Education Reform Examiner

 http://www.examiner.com/education-reform-in-national/the-florida-miracle-review

 

 

CLOSING THE GAP Education Study Released

Go to: CLOSING THE GAP Home Page

Testimony of Giovanni D. Cicione, Esq., Senor Policy Advisor, to The Board of Regents of Elementary and Secondary Education. Preview of CLOSING THE GAP education study released on January 9. The RI Center for Freedom & Prosperity submitted written testimony to the Board of Regents at their January 5 meeting regarding elementary and secondary eduacation. Giovanni Cicione, senior policy advisor to the Center, expects to be able to testify verbally at the next meeting of the Regents on Janauary 19.

The full testimony (below), also served as a preview of a major study the Center for Freedom, entitled, Closing The Gap. Visit the Closing The Gap home page here.

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Testimony of Giovanni D. Cicione, Esq., Senor Policy Advisor, Rhode Island Center for Freedom & Prosperity

To The Board of Regents of Elementary and Secondary Education (submitted January 5, 2012)

Good Afternoon. My name is Giovanni Cicione and I am the Senior Policy Advisor for the Rhode Island Center for Freedom & Prosperity. The Center is a nonprofit, nonpartisan organization, dedicated to providing concerned citizens, the media, and public officials with policy research and data, and advancing free-market solutions to public policy issues in the state.

Or intent in coming before you today was not specifically to weigh in on the debate regarding Achievement First. Rather, we intended to preview and share a study we will be releasing next week entitled “Closing the Gap.” This study, which I will reference n more detail in a moment, looks at reforms made in the state of Florida over 10 years ago that led to dramatic gains in educational achievement for some of the most challenged student populations in that state.

What is interesting from the perspective of today’s debate, is that much of the success in Florida over the last decade can be directly tied to the type of approaches advocated by Achievement First and similar organizations. And while I’m sure you will hear many criticisms of the mayoral academy model from the special interests who oppose these reforms, what our study demonstrates is that when these and other related reforms are put in place not only do you see overall gains, but that those gains are strongest amongst those students who are the most disadvantaged.

Non-English speakers, students who rely on free or reduced lunch support, and students with disabilities saw the most dramatic gains under the Florida reform model.

Our study will provide more detail and specific data when it’s released next week, but I’d like to highlight the key findings and recommendations.

Closing the Gap shows, for example, that Florida’s fourth-grade Hispanic students have improved so dramatically that they now perform at the same achievement as the average for all Rhode Island fourth-graders. Both states started out equally far behind, but Rhode Island students’ average score has improved by only (5) points since 1998, while Florida’s Hispanic students have improved by (25) points; equivalent to two-and-a-half grade levels’ of progress.

Imagine the impact if we had taken the same route ten years ago, when our own Hispanic children now preparing to graduate were just starting their grade school careers. Hispanics are the largest minority group in Rhode Island and represent 11 percent of the total population and 19 percent of the public school population. Unfortunately, Rhode Island Hispanic students have among the lowest (NAEP) scores in the nation in both math and reading. Closing the Gap shows the way to improve this ranking.

Closing the Gap cites reforms in evaluations and accountability for teachers and schools in the areas of transparency and parental choice. The study documents how the latest NAEP results strengthen the argument that Florida-style reforms should be considered for Rhode Island.

Closing the Gap explains in some detail why Florida’s reforms, while benefiting all students, have been especially beneficial to disadvantaged students. The study details the key components of Florida’s K-12 education reform strategy and makes specific policy recommendations that will provide more young Rhode Islanders with an opportunity to succeed in school and enhance their chance of pursuing and achieving their dreams.

Florida’s reform model includes:

• Public-school choice for students in low-performing public schools.

• Private-school choice for students with special-needs.

• An open door for new charter schools.

• Selective and effective se of virtual education.

• Performance pay to reward teachers who achieve student gains.

• Alternative teacher certification.

• A through F grading of all public schools; and

• A ban on social promotion.

These reforms were passed by a bi-partisan group of political leaders who faced many of the same criticisms you will hear today. They did it without empirical evidence that it would work, but they also new that to do nothing would be to condemn students to failure.

Your choice is a much easier one. I’d like to ask you to consider something – think for a moment about what you will say to a first grade student today who comes back here in a dozen years if you don’t adopt these types of reforms? What will you tell that student who asks why she is graduating with a 9th grade education after twelve years of instruction? Today you could perhaps claim that you didn’t’ know if the reforms would work, but Florida has shown us that they do – we cannot plead ignorance or even uncertainty when that child stands before you.

Why does Rhode Island suffer from the largest achievement gap among Hispanic students and other with unique challenges? Is it failing schools, a lack of funding, or is it something much worse … the soft bigotry of low expectations?

The Rhode Island Center for Freedom & Prosperity believes that every student can succeed, and that the only true disadvantage or disability is a rigid and moribund system that stacks the deck against them.

Thank you for the opportunity to be here today.

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Task Force Report used to create Municipal Pension & Debt Map

Based in-part on the work of the Mercatus Center, which published a detailed report on the true scope of the unfunded pension liabilities facing Rhode Island municipalities as part of the national pension Task Force that our RI Center for Freedom formed, a local organization created an online, interactive map that allows you to click on each of Rhode Island’s cities and town to view information about their finances, people, government, and taxes.

Thanks to Richard C Young and EJ Smith for this compelling tool.

Government Edges into Preschool… Expensively

As part of government’s effort to edge its way into the preschool market, and the federal government’s slow usurpation of education more generally, Rhode Island will be receiving $12.5 million annually over the next four years.  As it typically goes with government, proponents begin with the positive objective that they seek to pursue and give the impression that the money simply appears for the purpose.  Not surprisingly, though, much of the money won’t go toward services actually provided to children.  According to the Providence Journal:

The grant requires that states adopt an ambitious plan to expand access for disadvantaged students and to develop high-quality standards across the fragmented early childhood education landscape. A significant portion of the grant will be used to train early childhood educators in these more rigorous standards.

That is, taxpayer dollars will be funding bureaucrats’ plans for how government can claim ownership of preschool and adult-education providers’ services for to teachers (for which, one can speculate, the latter will be compensated, as well).  Never mentioned in such stories is any sort of cost-benefit analysis.

Journalist Jennifer Jordan provides some context for government spending on preschool in a subsequent description of a program already existing in Rhode Island:

This year, 108 students are being served. The state’s education-financing formula calls for $1 million to be added each year for 10 years. Next year, the Board of Regents has re quested $1.45 million for six classrooms of 18 students.

A little bit of math shows that to be $242,000 per classroom and $13,426 per student.  For a “pre-kindergarten program for 4-year-olds.”  Speaking from experience, that’s roughly double the cost to parents of excellent programs available from private providers.  One can drape all variety of good intentions around specific programs, but from an economic-theory perspective, inexplicably high costs are about what one would expect when an organization is able to pay itself for services using money confiscated under force of law.

Little State, Big Spending

In yet more news to file under thank-god-for-pension-reform-but, the Providence Business News reports that while Rhode Island public sector spending is surprisingly lower than the U.S. average, medicare costs are significantly above national averages.

Medicaid-related vendor payments accounted for more than 20 percent of state and local government spending in Rhode Island from 1999 to 2009, significantly more than the rest of the country, according to a new report from the Rhode Island Public Expenditure Council.

“The report from the budget watchdog group found public-sector spending – by both state and municipal government – in the Ocean State rose 68.9 percent over the 10-year period to $8.9 billion per year, a smaller increase than the 77 percent jump nationally.”

While the somewhat slower growth than the national average is welcome, it’s hardly good news. It goes without saying that there aren’t 68.9 percent more Rhode Islanders today compared to ten years ago, and it’s probably fair to say that the Ocean State isn’t 68.9 percent — or half of that? — better or more efficient than it was in 2001. So what justifies the public sector explosion?

And the faster-than-national-average expansion of Medicaid-related payments is definitely a worrying sign. Controlling Medicare and Medicaid cost growth is a major issue nationally anyway, so for Rhode Island to be spending a significantly greater proportion of public funding than the rest of the country – especially in light of the flexibility that was supposed to come with the first in the nation Medicaid global waiver and block grant – indicates that the system here is particularly broken.

Pension reform was a major and necessary step, but it’s becoming clearer day by day that there’s still so much more to be done. Rhode Island may have averted one major crisis in the making, but it doesn’t mean that we’re anywhere out of the woods. Beyond Pensions, Rhode Island still must grapple with its systemic uncompetitiveness.