Tuesday, June 8, 2010

Interesting Contrast in Priorities

We are between Vespa rallies, so I have a week to relax and catch up on pontification!

Was interesting having a dozen Yanks in the group that was here the past two weeks. Gave a chance to compare how the US and Greece are addressing their financial woes. Between reading the International Herald Tribune and talking with my US Vespa compadres, it seems that you folks back there are making serious cuts in education and health care programs, amongst other services. Here, the government has explicitly said that education and health care are vital services for today and the country's future, and will be preserved. While there is a focus on eliminating waste, there is no cut and dry massive budget cuts as seen in the US.

In the past few days, both the Minister of Health and the president of the Physicians Union independently issued statements calling upon the national health care (NHC) workers to rise to the occasion and continue to deliver top rate services to the people, even if the workers have seen their "13th" and "14th" month bonuses reduced. This is a very important call to action, as many Greeks have elected to use NHC over private providers during the past year to save on medical expenses.

Equally important has been the commitment to education, to include the universities. The state universities remain free, without a reduction in student admissions, which are on a competitive basis. There's a woman joining our Vespa group in Italy next week. Her school major urban system doesn't know exactly how many people will be laid off this Fall, so everyone was told to take all their personal belongs home so that those who are laid off won't have to come back to pick their things up. Any personal belongings left on school property on 1 July will be trashed.

In short, two very essential national services will not be hamstrung to balance the budget. As the ruling party put it, "We cannot totally undermine our future simply because of mistakes in the past."


  1. Interesting comments, Al.

    As you probably know, the education system is run primarily at the state/local level and health care is a combined state/federal responsibility. The Feds are just getting into the budget cutting game and are doing so very reluctantly and I'll be very surprised if the cuts total even 1% of the budget ($31 billion).

    Each state and municipality is handling things in whatever way makes the most sense to them so the cuts have been wildly uneven and some locations (California is the big one, of course) have yet to decide how to balance the their budget.

    But let's step back a bit and look at this problem from above and it makes the politician's choices very understandable.

    Here in Minnesota, 58% of the state budget is spent on education and medical care. The next biggest cost centers are pensions at 12% (can't be legally cut) and welfare at 9% (which has been cut to the point where the system is on the verge of collapse), and transportation at 7% (most of which is Obama free money, expect it to be cut next year).

    We've talked about about the ridiculous cost of healthcare in this country but we haven't discussed education. Minneapolis is the most expensive school district in the state this year with a total cost of $15,000 per pupil per year. So if you look in a classroom with 33 students in it, you're looking at a total cost of $495,000 per year to provide an education that is inferior in virtually every way to the education provided in the rest of the state.

    The primary reason for the extra cost (more than double what it is for the rest of the state) is the past decisions made by government officials now long retired. I have more to say on this but I'm out of time for the moment.

  2. Al,

    My current state of residence, Ohio, is much like Pluto's. The bulk of state and local money goes to education, social services (primarily health care), and government employee pensions and benefits. It's hard to make cuts without touching those.

    The President's stimulus package gave states a reprieve - much of the stimulus money went to shore up State budgets to prevent serious cuts in essential programs and large layoffs of government workers. Ohio got about $12 billion over two years, IIRC. Since it looks like this economic downturn isn't temporary, the States and localities will face some serious problems next year if they are not assisted by the Feds again.

    Also Al, the press over here is generally pessimistic on Greek's chances and most of what I've read highlights a few points: That about 1/2 the working population is employed by the government (and that's bad), that the austerity measures required to keep Greece out of default will be severe; that the population will probably not accept such severe austerity measures; and that there is so much corruption in the tax system that it's very difficult to raise revenues. Again, not advocating here, just relaying what's reported in the press. I haven't actually followed the Greek debt crisis that closely.

    Pluto brings up a point on the cost of education. We keep spending more on a per-student basis but we aren't getting any better outcomes. I have two school-age children and I'm heavily involved in my local school. I serve on the PTO board, do a lot of volunteer work, etc. Frankly, looking at my school, I'm not sure where all that money is going. The teachers certainly aren't overpaid. We don't seem to have an excess of administrators. The facilities are in decent shape but not grandiose.

    There are still funding problems as well. My school has not been able to afford new computers for years - most of them are original iMacs purchased in 1999 - so the PTO bought new computers for the school this year. It seems that curriculum is a big expenditure. Teachers don't make their own curriculum anymore, at least in Ohio. Most of it is purchased because it meets state and federal requirements.

    Spending on a per-pupil basis has more than doubled on a constant dollar basis since I graduated high school, yet, from what I can see, not a whole lot has changed. Teachers are still underpaid and the quality is about the same as I remember. Where's the money going? I'm not sure, any ideas? Since I don't see anything obvious at my local school, maybe it's getting spent at the district level or higher up?

  3. Andy,

    A large percentage of school funding goes to pay pensions for retired teachers and VERY nice medical benefits. Teachers are frequently allowed to retire with full pension benefits fairly young so there is a high retired to active teacher ratio. Plus, at least in MN, the medical benefits apply to retired teachers as well as active teachers.

    This means that the school district has to pay medical benefits for people (and their dependents) who retired from teaching 30-40 years ago. And we all know the last couple of years are medically the most expensive part of a person's life. Remember the big surge in teachers for the baby boomers? We're still paying the price in our school district costs.

    That's part of what I was commenting on when I said that decisions made by long-retired government officials frequently lock us into situation where all the options are unacceptable.

  4. Pluto,

    I understand pension costs have risen dramatically for government employees across the board, but can that account for most of the roughly 250% increase in spending per pupil over the past three decades?

  5. Pluto: and VERY nice medical benefits. Can you define "VERY nice"? That's a value judgement. Does "VERY nice" mean most of one's medical costs are covered? Then "nice" would mean only 75% is covered, and "OK" would mean only half is covered? Let's see. I'm a Medicare beneficiary. My preventative and well care is not covered, if I lived in the US, and nothing is covered by Medicare if I live outside the US. Is that "Nice", "OK" or "who cares"?

    Andy: Actually, we are seeing a serious crackdown on tax evasion and politically granted exemptions - to the tune of billions. In the past, tax collectors looked the other way by political direction to get votes. Similarly, loopholes and exemptions were created that would make GWB look like an amateur. Now they are gone.

    Yes, the foreign press is painting a picture of gloom and doom, but the Greek people realize the piper must be paid, and the majority accept the "austerity measures".

    The government payrolls are bloated, and some 18% of salary costs have been eliminated by reducing the so called "13th & 14th Month Bonuses". Additionally, there have been hiring freezes in non-health, public safety and education sectors, as well a some layoffs. Thus, rather than lay off teachers and health care workers, they will simply lose their bonuses, which were grated to gain votes. And, increased tax enforcement will raise revenues dramatically.

    The problem in the US is that no one is willing to pay the true cost of education, so since tax funds are not available, layoffs are the only answer. Penny wise and pound foolish. The states are doing less with less, because the residents became addicted to Uncle Sap paying their bills - with debt. NO different from what is now being rejected here, just a different accounting system. Local school districts were able to run up bloated budgets because the feds poured in money that wasn't as transparently out of the pockets of local taxpayers. Your local district probably ran up millions in debt, it was just on the federal books, not the local ones.

  6. Al,

    Thanks for the perspective on Greece.

    What is the "true cost" of education? As I noted before, we're paying over twice what we paid in the 1980's per child and it still doesn't seem to be enough. I'm also not sure the states are doing more with less. Spending at the state and local level has increased considerably over the past several decades.

    Play around with the charts here for some numbers.

  7. "What is the "true cost" of education?"

    Depends on what you want.

    Let's think of it this way.

    A U.S. infantry fire team is four guys.

    One of those four is a sergeant.

    A squad of 9 has a total of 3 leaders, right?

    Four squads - a platoon - has those 12 plus the PSG and PLT; so 14 instructor/trainers/leaders for a total of 38 people.

    About the same size as a high school classroom, right?

    So right now you're paying for 1 teacher and maybe - maybe - a teacher's aide for your class of 30 some kids.

    And you're paying for 14 "teachers" for a platoon of 30 some grunts.

    If you don't think a high school classroom can be as chaotic as combat, you haven't seen both.

    So you're really paying aboit 1/12th or 1/10th of a school system that would give kids the same amount of direct teaching and supervision as a bunch of dumbass grunts.

    The bottom line on our current system is this:

    The kids whose home and neighborhoods prepare them for an industrial classroom - i.e. they show up with the ability to learn to read and compute quickly, retain and recite information, and, most importantly, sit still, follow directions and stay "on task" - will generally succeed.

    Those who aren't - usually won't.

    Oregon graduates about 60% of its 9th graders. Less than half of our blacks. 62% of our boys.

    Okay. So what if we recalbrated out teaching so that it was more like the traditional sort of human learning, the way humans learned for the first 1.2 million years; 1-to-1, hands-on and imitative?

    We'd go broke.

    So we accept the system we have.

    The spending charts you linked to show federal spending - a relatively small part of education spending - and that rise can be generally linked to the rise in federal education mandates such as NCLB, special eduation, assessment, and access requirements. Likewise state and local spending has increased, not so much because of classroom instruction, but because of

    1. Increased requirements for things like testing, reporting, SPED, and the administrative load these generate,
    2. Things like insurance and health care,
    3. An increase in the "difficulty" of educating kids with the disadvantages I mentioned.

  8. I won't disagree with arguments that we could shift tax money around in different ways, some of which might be "better". But to flat-out claim that we need to "do more with less" when we're paying roughly the same in taxes that we as a nation did in Truman's day...well, that, sadly, is the result of 20 years of having it drummed into our heads that "taxes are bad".

    I wonder who'd say something like that. Hmm...

    Anyway, Greece's problems are ALSO, to a great extent, the problems that practically everyone with a hindbrain pointed out when the eurozone idea was floated - the problem is that while the currency is mobile, the people are not. Here in the U.S. we can respond to economic problems by literally moving; if we're out of work and in debt we can go to Vegas and try to get a job dealing blackjack or something. The Greeks can't - they're stuck inside a larger economic trap and can't devalue their currency so as to escape it.

    The bottom line with these "austerity measures" is that they end up eating the seed corn. That's fine if you're a banker or doctor or arbitrageur and can retreat to your gated community. But for the rest of us, it's poison.

    But John Robb says this better than I can; his trope is that a combination of chicanery, global inequality and insecurity will make it hard for the industrial states to avoid some sort of post-Soviet-like plunge into social chaos and economic hardship.

    Hope not. But not living in the hope...

  9. Chief,

    The chart I linked to is actually local spending. There are buttons for state and federal spending as well spending at all levels. Actually, though, now that I look at it again, I see I had selected total spending at the local level. Here's the chart just for education at the local level. It's a pretty cool tool because you can select a bunch of different options and make comparisons. There's also a sister site for revenue. Here's a chart for total per-capita revenue at the local level in constant 2005 dollars. It's too bad it doesn't break things down for individuals states and localities.

  10. Andy: Like I said; my view of this was mostly from the bottom step of the dugout. But I didn't see any of this goldplating that seems to the primary trope of the "waste-and-abuse" meme in education.

    From the bottom step, what I saw was:

    1. Teaching is 30% science, 40% art, 40% craft. There are ways you can throw money at people to make them better teachers, but this only really works on the the science part. I suspect that part of the problem is that there are just so many people with the art and the craftspersonship to be good teachers.

    2. Meanwhile, we're trying to teach more and more people. People who would have been allowed - or forced - to drop out in middle school or earlier are now mandated by law to be educated. So the people with learning disabilities, emotional problems, the people whose family life is so fucked up that they are barely socialized...the public schools HAVE to take them. This is made MORE difficult by

    3. The private and charter schools, who give many of the kids who would otherwise be leaders and role-models in the PS classroom a way out, leaving the lumpen mass behind even more lumpen.

    4. A culture that has become increasingly credulous, ignorant, impatient, transient, and impolite dumps a bunch of increasingly loud, boorish, ignorant and proud of it gomers into the public system and demands they be educated.

    5. And, not to let the educrats off the hook, the business of education hasn't stayed out of the increasing levels of administration common in every other corporate culture...

    And I don't even want to get into the problems inherent in the loss of our national commons in language, expectations and experience. Yes, it was unwelcoming, unfair and often racist. But the notion that you "became American" by wearing a tie and speaking English like the white guys on TV or radio? It helped make Americans out of immigrants from many nations.

    I don't think we have to all become little button-down shirt types...but we all need to be functionally literate and comprehensible in English. Shit, I lost a girl in my community college class because she couldn't - in COLLEGE, mind you - read, speak and understand enough English to pass the course!

    How the hell is she going to move into "mainstream America"? The steel mill? The garment factory? Dead as the dodo, those.

    Nope, public education is supposed to be part of this big acculturation process, but we don't want to make the sacrifices and hard choices - including taxing, really taxing ourselves - to make it so.

  11. Andy-

    There's probably no way to figure the "perceived true" cost of anything at the local level if any federal funds are involved. The school district in the US where we lived last was a good example. The local Navy base brought in millions in federal "impact aid" to the district, to the point where a local support tax was not required for a couple of decades. No one questioned expenditures, because they didn't impact local property taxes, which were at the state minimum for the school portion. When the feds made some serious cuts in impact aid, it took several years to get the locals to pick up the slack with a tax levy. Meanwhile, the turmoil caused by budget uncertainties took a toll on the school district of unnecessary severity.

    I've written before about burden shifting. Education in the US is a classic example. There is a hue and cry for "keeping schools local", while the same crowds line up at the trough for federal funds to keep their local tax bills low. Thus, my comment above that states and local districts are actually running deficit budgets by using the feds are their proxy for borrowed money. As FDChief points out, taxes are bad, so we have learned how to borrow at the local level to keep taxes down, but hide that debt in the federal budget.

    But, my point in the original post was that as a public policy statement, the Greek government has said that certain vital social services would be protected. To do so, we will all have to begin paying the taxes we avoided in the past, along with accepting cuts in other areas. Will it work? Only time will tell. The critics assume that Greeks will shy from their long overdue obligations and refuse to pay the tab they ran up, much like what is happening in the US, albeit in a somewhat different guise.

    As to what is really going on in the US in education, that's a topic deserving of several threads to themselves!

  12. FDChief: "Anyway, Greece's problems are ALSO, to a great extent, the problems that practically everyone with a hindbrain pointed out when the eurozone idea was floated - the problem is that while the currency is mobile, the people are not. Here in the U.S. we can respond to economic problems by literally moving; if we're out of work and in debt we can go to Vegas and try to get a job dealing blackjack or something. The Greeks can't - they're stuck inside a larger economic trap and can't devalue their currency so as to escape it."

    This is true, but it also carried costs. I live in the Detroit area, and whenever I drive down there I can pass square *miles* which are 10% sorta functioning buildings, 20% abandoned and 70% rubble with weeds. We ended up paying for a second Detroit to be built next to the old one (we call Detroit II 'the suburbs'), and many of those areas are suffering.

    In short, we've played the old frontier game. Whenever the soil was exhausted, game gone, wood cut and burned, we'd just more to fresher ground. And if some people were abandoned, that was a feature, not a bug.

    And it was easier this time, since some services were available; it wasn't like people had to cut down trees, pull stumps and plow, all while living in their covered wagon.

    But do we have the money to do that again?