Charles Chieppo/Jamie Gass: Legislators do the wrong thing for students

BOSTON After losing the 1958 governor's race, George Wallace, then considered a moderate on segregation by mid-20th century Alabama standards, said he would never get "out-segged" again. Four years later, after his election by the state's virtually all white voters, it was easy for him to declare in his inaugural address, "I draw the line in the dust and toss the gauntlet before the feet of tyranny, and I say, segregation now, segregation tomorrow, segregation forever."

Five months later, it was easy for him to "stand in the schoolhouse door" and attempt to block two qualified African-American students from enrolling at the University of Alabama.

Fast forward more than half a century, and it was easy for Massachusetts state senators to appease the monied interests of the education establishment and reject legislation that would have raised the cap on charter school seats in the lowest-performing 10 percent of Massachusetts school districts from 18 percent to 23 percent of overall enrollment.

It was easy for supposed charter school "supporters" to file poison-pill amendments to the bill, then wait until it was clear that the legislation was going down before casting their votes in favor.

But in politics, what is easy is often wrong.

Despite historic educational improvements over the last two decades, nearly 100,000 largely poor and minority Massachusetts students remain trapped in chronically underperforming district schools.

In Boston, over 15,000 students vied for just 1,700 charter school seats last year. Statewide, there were over 40,000 students on charter school wait lists. For these children and their families, there are no school choices and no way out.

Charters came within two points of closing the 20-point wealth-based achievement gap on 2013 MCAS tests. The year before, 20 charter schools, including many urban charters, finished first in Massachusetts on various tests. Many inner-city charters outperform even affluent suburban schools.

A 2013 Stanford University study found that Boston charter-school students are closing the achievement gap faster than any other public schools in the country. Students learn as much from one year in a Boston charter school as they do in two years in the Boston Public Schools.

The study also found that Massachusetts has the nation's best charter schools. Statewide, charter students gain an additional month and a half of learning in English and two and a half months in math each year compared with the commonwealth's traditional public schools.

These facts build upon the findings of a 2009 Boston Foundation report that the academic impact of a year spent in a Boston charter was comparable to that of a year in one of the city's elite exam schools. In middle school math, it was equivalent to one-half of the achievement gap between black and white students.

Charter schools are also affordable. When students choose to leave a district school to attend a charter, public funding follows the student. A recent Pioneer Institute report showed that raising charter enrollment to accommodate wait-listed students up to the current spending cap of 18 percent in the commonwealth's 17 lowest-performing urban districts would only increase the funds flowing from districts to charters to 5 percent of the districts' $2.5 billion in net school spending.

Districts would get more than a quarter of that back over a decade thanks to generous state reimbursements for students the districts no longer educate.

Massachusetts' s barriers to educational opportunity were not left here by glaciers, they are man-made. Entrenched special interests with nearly limitless bank accounts lobby Beacon Hill to maintain obstacles like enrollment caps, huge wait lists, and needless red tape that deny educational opportunity to underprivileged children, but ensure the continuing comfort of adults in the system.

In the 50th anniversary edition of Simple Justice, Richard Kluger's definitive history of the U.S. Supreme Court's landmark Brown v. Board of Education ruling that struck down the doctrine of "separate but equal," he concluded that "America is a colossus of contradictions… justice of any type cannot materialize… without the binding up of its constituent elements."

In rejecting legislation that would have lifted the charter-school cap, the Massachusetts Senate blocked justice from being done and approved the 21st century version of segregation by preventing more poor and minority children from accessing high-quality educational opportunity.

It was an easy vote; it was also wrong.

Charles Chieppo is a senior fellow of and Jamie Gass directs the Center for School Reform at Pioneer Institute, a Boston-based think tank.

Charles Chieppo: How much do states really owe?

BOSTON When it comes to getting your arms around just how much states really owe, there is no shortage of moving parts. There's bonded debt, and then there are liabilities for pensions and for other post-employment benefits such as retiree health care.

Dig deeper and you find that states set different periods over which they aim to pay down liabilities and that they assume differing rates of return on investments. Some states use fixed annual payments, but many use a gradually increasing schedule that results in payments being backloaded.

A new report from J.P. Morgan performs an important service by showing how states would stack up if all of these major variables were standardized. The study's author, Michael Cembalest, assumes a 6 percent rate of return on investments, level annual payments and a 30-year term for paying down liabilities.

Despite nearly $1.5 trillion in debts and unfunded retirement obligations, the study finds that, overall, state liabilities don't amount to the kind of national crisis that has often been portrayed. That is, unless you live in one of the states that face some very difficult choices because their debt and retirement costs are at or above a quarter of state revenues.

Cembalest finds that states with a liability-to-revenue ratio of 15 percent or less are in pretty good shape, and 36 states fall into that category. But eight states are in trouble. Given all the attention its pension problems have garnered, it's no surprise that Illinois is the worst, but wealthy Connecticut isn't far behind. Five of the eight (Delaware, Hawaii, Illinois, Kentucky and New Jersey) would have to more than double their annual payments to get their debt and retirement liabilities under control. The other two states on the watch list are Massachusetts and West Virginia.

The 6 percent rate of return Cembalest assumes on state investments is below historical averages, but it represents a much safer strategy than the 7.5-8 percent that most states assume. Such rosy assumptions result in gaping budget holes during tough economic times when states are least able to plug them.

While it might seem to make sense to increase annual retirement-liability payments each year on the assumption that inflation increases payrolls over time, too high a rate of annual escalation results in backloaded contributions that can understate long-term liabilities.

Perhaps as a result of the attention devoted to public-pension costs in recent years, 29 states made their full annual required contribution (ARC) to their pension funds in 2012. But the cost of other post-employment benefits (OPEB) is an even larger burden than pension liabilities in Hawaii and Delaware, and it is equal to pensions in Connecticut, New Jersey and West Virginia.

Despite the magnitude of the problem, just seven states made their full ARC toward paying down OPEB liabilities that year. Montana and Nebraska contributed nothing.

If the J.P. Morgan report is correct, most states have dodged a bullet. But to avoid a future crisis, they must do a better job of both calculating and addressing long-term liabilities. Massachusetts, for example, uses a debt affordability analysis calibrated to ensure that debt-service costs don't exceed 8 percent of budgeted revenue in any future year.

In addition, state taxpayers can no longer shoulder the entire downside risk for pensions.  They should transition to a system under which employees have a choice between defined-contribution and cash-balance plans.

The majority of states that face manageable debt and retirement liabilities can rightfully breathe a sigh of relief. But unless they get more conscientious about long-term liabilities, they won't be so lucky in the future.

Charles Chieppo  (Charlie_Chieppo@hks.harvard.edu ) is a fellow of the Ash Institute at Harvard's Kennedy School. This originated at the Web site of Governing magazine (governing.com).

Charles Chieppo: Boston convention centers follies

  By CHARLES CHIEPPO

BOSTON

Rarely is Massachusetts state government’s dysfunction on display more than in the waning days of a legislative session. This time around, exhibit A is the rush to approve a $1.1 billion expansion of the Boston Convention and Exhibition Center (BCEC) despite enough red flags to fill the quarter-mile-long building.

Apparently the $620 million the Massachusetts Convention Center Authority claims the BCEC and the Hynes Convention centers pumped into the local economy last year makes it easy to set aside doubts. But a closer look at how the MCCA arrives at that estimate makes you realize why there are no real numbers in the convention industry.

Convention centers are designed to attract people from outside the area who wouldn’t otherwise spend money here. But one thing the industry doesn’t want you do know is that about half of convention attendees — whether in Boston or elsewhere — are generally locals who’d be spending their dollars at a nearby mall if they weren’t eating in a Seaport District restaurant. It’s no accident that the number of hotel room nights generated by the BCEC and the Hynes is less than the number of people who attend events at the facilities; many of the attendees sleep in their own beds at night.

Yet when Pioneer Institute obtained a description of the methodology by which the MCCA derives its economic impact number, we discovered that it includes a “dollars saved” category and assumes “the in-state attendee would have attended the event regardless of location.” Believe it or not, the MCCA actually pretends that every local attendee at a BCEC or Hynes convention would still have gone if it were held in Las Vegas or Orlando, and the authority includes the savings as part of its “economic impact.”

Did that $620 million number just lose a zero?

The economic-impact follies are just the latest in a line of troubling revelations about the expansion proposal. First came word that, contrary to MCCA claims, taxpayers would indeed pay a price for expansion. Receipts from taxes that flow into the Convention Center Fund and support the authority could revert to the commonwealth’s general fund once BCEC bonds are paid off in 2034. Expansion of the facility would keep that money flowing to the MCCA until about 2050, siphoning off at least $5 billion from state coffers.

Next we learned that the expansion bill doesn’t require the MCCA to go back to the Legislature if it wants to take more money from the Convention Center Fund. The waiver is akin to a blank check when it comes to the hefty public subsidy that will be needed for the 1,200 to 1,500 room headquarters hotel that is part of the expansion plan.

Finally we learned that the legislation exempts the project from state procurement and public disclosure laws. That means we might never find out how large a subsidy that new hotel will require.

Thankfully, as the Herald recently reported, Senate Bonding Committee Chairman Brian Joyce (D-Milton) thinks the BCEC expansion question requires more thought and deliberation. Let’s hope this is one time when lawmakers won’t pass a bill to find out what’s in it.

Charles Chieppo is a senior fellow at Pioneer Institute.  He is a former vice chair of the Massachusetts Convention Center Authority.