Pa School Districts Reserves Are $4.4 B

Pa School Districts Reserves Are $4.4 B

By Leo Knepper

The amount of money held by school districts in “reserve” has more than doubled over the last 10 years according to a new report by the Commonwealth Foundation. At the end of the 2015-2016 school year, district reserves were over $4.4 billion. According to that same report, there were 13 school districts who held more than 20 percent of their budget in reserves and requested property tax increases well above the limit established by the Department of Education. Not only did they request higher taxes, they did it between eight and ten times in a ten year period. In other words, the school districts could operate on their savings accounts for more than 20 percent of the year, but still wanted taxpayers to pad the accounts even more.

One of the names on the list, Lower Merion School District, has been sued by local taxpayers for their budget practices. A Commonwealth Judge found their budget practices so egregious that the district was ordered to roll back their 2016 tax increase. despite a $56 million reserve fund, Lower Merion is seeking a tax increase again this year that exceeds the state cap.

The worst offenders among schools seeking unnecessary tax increases are not confined geographically. Rather, it seems that there is a systemic problem among school boards. It is hard to argue against keeping a rainy day fund in reserve. At some point, the reserve fund becomes an insult to taxpayers. Although school district finances do not garner the same attention as national, or even state-level scandals, understanding how they are spending your money is vital.

To see how your local school district stacks up, take a few minutes and review the financial data collected by the Department of Education. You will probably be surprised by what you find.

PS-The Senate will begin working to advance pension reform legislation later this week. Their legislation does not include funding reform at this point. Please, take a moment and contact the General Assembly about this important issue.

Mr. Knepper is executive director of Citizens Alliance of Pennsylvania.

Pa School Districts Reserves Are $4.4 B

Pa School Districts Reserves Are $4.4 B

Donald Trump Can’t Do Right For Some

Donald Trump Can’t Do Right For Some

By Chris Freind Donald Trump Can't Do Right For Some

Paul Revere would have it easy today. Instead of a wild midnight ride to alert his countrymen, he could simply post on social media:

“The Russians are coming! The Russians are coming! One if by land, two if by sea – and three if via the Oval Office.”

But admittedly, there’s a key difference.

The Brits were unwelcome. Yet for some reason, this White House feels compelled to roll out the red carpet for the Ruskies. And not only do they get the royal treatment, but, courtesy of President Trump, they also get classified secrets. Only in Amerika!

We’ve said it here before: You can’t make this stuff up. From the president’s insane accusations about being wiretapped, to off-the-wall tweets, to this latest doozy – betraying some of America’s most trusted allies and jeopardizing the lives of intelligence assets – the presidency of Donald Trump has become farcical.

And the lack of results bears that out.

Despite enjoying Republican majorities in Congress, the president has accomplished virtually nothing; in fact, he has conceded to Democrats on a host of issues. Yes, Congress must bear some blame, but responsibility for such failure ultimately rests with President Trump himself. And things are only getting worse, as his un-presidential antics and lack of discipline keeps the White House mired in crisis mode, to the detriment of his policy agenda. As his approval rating continues to plummet – the result of no victories – an increasing number of Republicans are openly moving away from him, wary of association as next year’s elections creep closer.

Here’s a look at the major developments of Mr. Trump’s first four months in office – and his self-inflicted failures:

1. Obstruction of Justice? In what could prove the most stunning development to date, a memo has surfaced from former FBI Director James Comey, written after a February meeting with President Trump in the Oval Office. In the memo, Director Comey stated that the president asked him to drop the Bureau’s investigation into former National Security Adviser Michael Flynn. “I hope you can see your way clear to letting this go, to letting Flynn go,” Mr. Trump told Mr. Comey, according to the memo. “He is a good guy. I hope you can let this go.”

While more facts will undoubtedly emerge, a president asking the FBI to kill a high-level investigation would seem to fall into the obstruction of justice category. For it that doesn’t meet the definition of obstruction, what does?

2. The classified information giveaway: Was it within Mr. Trump’s purview to share highly-sensitive information with the Russians, obtained from sources close to ISIS? Sure. But his cluelessness to the ramifications was bewildering. The Russians are smart cookies, and will undoubtedly figure out the source. So given that betrayal of trust, and the president adamantly defending his decision, why would other intelligence assets still take America at its word? Why continue to incur grave liability to themselves and their networks after Mr. Trump acted with such recklessness? They won’t – so our fight against terrorists just got that much harder.

Let’s get this straight: You share classified information with the Russians, give them a free pass for meddling in our election, get nothing in return – and somehow that’s a win? Makes you wonder if Putin is really that smart, or if President Trump is just that politically challenged.

3. Firing FBI Director Comey: The decision by President Trump to fire Jim Comey is just as baffling. Should Comey have been canned? Absolutely, as this column pointed out a year ago. By becoming a political pawn and injecting himself into the election, Comey impugned the reputation of the bureau and destroyed his own credibility.

Comey should have been fired on Day One, but instead, the president slapped his back and repeatedly sang his praises, as recently as last month. So what changed? What was the president’s epiphany that made him suddenly realize that Mr. Comey wasn’t up to snuff?

Was it that Comey refused to pledge his loyalty to the president? Or that the director, that very week, had sought additional resources in the FBI’s Russia-Trump collusion investigation? Or was it that “Russia” was on the president’s mind, as he freely admits?

Regardless of the reason, it should’ve been a no-brainer to put away the ax until the Russia investigations were concluded. How did the president not know that firing Comey right in the middle of those investigations would generate comparisons to Nixon firing the special prosecutor investigating Watergate? In politics, perception is reality, and President Trump just cemented the perception that he is trying to quash something ominous. Being identified alongside a crooked president who set the standard for paranoia is not helpful.

But the crème-de-la-crème was the president tweeting a warning to Comey that he not leak “tapes” of their conversations, which immediately prompted members of both parties to state that subpoenas would likely be issued if any such tapes exist.

Firing Jim Comey at the worst possible time: dumb. Canning him in the belief that Democrats would support the decision: really dumb. Not foreseeing that confirmation hearings for the new FBI Director will dredge up every aspect of the Russia investigations Mr. Trump has been desperately trying to avoid? Mindbogglingly obtuse.

But tweeting Nixonian-like statements about secret tapes? Insane.

4. No one home: The Trump Administration has been wholly incompetent in installing a functioning executive branch of the government. The president’s transition – slowest in history – is so inept that GOP senators are begging for nominees. Trump diehards love to say that Democrats are to blame by blocking nominations, but that’s ridiculous for two reasons: A) nominees only need 51 votes, and there are 52 Republican senators, and B) there are virtually no nominees. As of today, no nominees have been submitted for 479 out of 557 “key” administration positions. Since it’s going on seven months, it’s fair to ask what the hell they’ve been doing.

5. Derailed Agenda: Donald Trump has created a vicious circle. He acts like a horse’s patoot, causing his approval rating to sink. Then he tries to achieve policy victories, but fails – due to his low approval rating. Paradoxically, the only way to raise his approval – and thus his effectiveness – is to achieve success on policy initiatives. Yet just when Congress looks amenable to that end, the president exhibits the same reckless behavior that got him into the hole in the first place. And the cycle continues.

The president’s shrinking base correctly points to Supreme Court Justice Neil Gorsuch as a victory – and it is – but that was as much the Senate acting in its own self-interest as it was a Trump win. And sure, onerous regulations have been slashed, but they are behind-the-scenes executive orders that win no votes.

So where do all the other big promises stand?

No Obamacare replacement; no border wall; no withdraw of funding from sanctuary cities; no ripped up Iran nuclear deal; no re-vamped “America-first” trade deals; no withdrawing from NAFTA; no hard line with China; no tax reform; no adherence to staying out of Middle Eastern conflicts; no infrastructure package; no reduction in government spending (or size); and no voter fraud investigation.

Bottom line: the “Trump is better than Hillary” line isn’t cutting it anymore, as even some of his most ardent supporters are sounding the alarm. If things are to change, and the trajectory is to be re-directed, the Trump base must stop turning a blind eye, and understand that giving the president a free pass every time he goes off the rails is counter-productive.

No more blaming the Democrats. No more excuses that “Trump is new, so give him a chance.” No more platitudes that he must first drain the swamp. And please, no more insulting arguments that Donald Trump, as master deal maker, is light years ahead of everyone else, every action of his being a carefully orchestrated chess move that will produce incredible results.

“Just wait,” we’re always told.

Well, Mr. President, we’ve been waiting. And we ain’t seen nothin’ yet.

Donald Trump Can’t Do Right For Some

Re-Testing Is Not A Right

Re-Testing Is Not A Right

By Chris Freind Re-Testing Is Not A Right

Villanova shouldn’t have been crowned National Champions last year. Not because they weren’t the best, but because North Carolina wasn’t given the opportunity for a do-over after Kris Jenkins’ winning shot. And that wasn’t fair.

Maybe the Tar Heels were too euphoric after nailing an incredible game-tying shot with 4.7 seconds left. Maybe they didn’t get back on defense. Or maybe they just assumed that, as the nation’s most storied team, they were predestined to win in overtime.

But whatever the reason, they deserved the chance to correct their mistakes.

Right?

Don’t laugh. That’s becoming the new American reality.

No, we don’t have re-dos in sports. Yet. But they can’t be far off, given that the exact same mentality — getting an automatic do-over whenever a result isn’t to our liking — has been creeping into our schools, including some in Delaware County. Proponents of so-called “request to retest,” where students continually take tests on the same material until they’re satisfied, are warping an entire generation. Instead of teaching our children timeless lessons — life is a series of pass/fail tests, and actions have consequences — we are instead sending them out the door with massively unrealistic expectations and, by extension, dooming them to failure.

Let’s look at retesting’s negative impacts on teachers, parents, and, most of all, students:

1. It seems that small, but vocal, groups of entitled parents are front and center in pushing re-testing, along with school administrators either hell-bent on social engineering, or appeasers trying to placate the loudmouths.

And why? Several reasons, but all rooted in entitlement: “Since I’m paying high school taxes, my kid should damn well be entitled to good grades.” Or, “I pay teachers’ salaries, so that entitles me to not lift a finger. Educating my kid is the teacher’s job, and if Johnnie comes home with a bad grade, it’s the teacher’s fault.” Or even, “This is America, where we’re entitled to have things handed to us — without putting in any blood, sweat and tears to earn it.”

No matter the reason, re-testing sends the unmistakable message that repercussions for not prioritizing school have gone out the window.

2. When school officials implement re-testing, human nature dictates that students will make a mockery of the system.

Hell, there have already been cases where students request re-tests — before the first test has even been given! Talk about a slap in the face to teachers who have invested so much time in planning lessons, instructing the class, and creating tests to measure students’ mastery of material over a given period.

And why the need to re-test? Sickness? Extenuating circumstances at home? Nope. It’ll be for much more “important” reasons: The ballgame was on; binge-watching Netflix; had an appointment with my personal sports trainer; got stoned; and, surely, most common: I just didn’t feel like studying. Fact is, students don’t need a reason, because re-testing will soon become second-nature.

3. As part of their job, most teachers must be available to students outside of classroom hours. Truth is, many regularly exceed this requirement because of their innate desire to help children — the very reason they chose teaching. They are voluntarily working overtime for free, but re-testing negatively changes that equation, akin to smashing a gift horse in the mouth.

Instead of spending that extra, personal time with students, teachers would be forced to cut back. Re-test after re-test would have to be created, since offering the same test — where answers from the first go-round could be memorized — would be an insult to a teacher’s dignity. Yet that’s exactly what has occurred, as some students, confident that they aced the re-test, in fact bombed it because the teacher had the “nerve” to change the order of the questions! It’s bad enough that students think they deserve a re-do, but to be so arrogant as to expect the same test shows just how out of touch they are.

Bottom line: Teachers’ time both after school and at home will be consumed with creating and grading countless re-tests, to the detriment of daily lessons and one-on-one interactions, all because some students, and their clueless parents, think they automatically warrant unlimited chances.

4. Re-testing is an innately unfair system, penalizing those who do things the right way. How is it fair to attentive students who do their homework and study for a test, only to see some classmates bomb with a smile? Knowing that others can get unlimited cracks at the material is demoralizing to diligent students, and will ultimately lead them to conclude, “If others aren’t studying but eventually get the same grade, why should I put in all that effort?”

Being just as lazy as the next guy because there’s no incentive to do your best is the quickest way for a society to collapse.

5. And how is it fair when some schools re-test and other don’t? So if two eighth-graders are competing for limited slots at a private high school, and only one enjoyed a re-testing policy, then, by definition, the other is at a distinct disadvantage. Ditto for high school seniors trying to impress colleges. Obviously, those with better grades, courtesy of an “I-can’t-fail” policy, will have a huge leg up. Will they crash and burn upon the realization that their fake education hasn’t prepared them, and that other entities don’t give second chances? Absolutely. But that’s no solace to those who got shafted.

6. Re-testing isn’t limited to those who perform poorly. Grade-grubbers craving the 4.0 can take full advantage, re-testing until they hit the 100 mark. If applied across all subjects, that means that a perfect GPA can be achieved every year. Hyperinflated, artificial (and ultimately meaningless) grades, to be sure, but from the perspective of high schools and colleges, it would be a perfect GPA nonetheless.

7. Fortunately, re-testing is not in every school (yet), so people have an opportunity to demand that such policies be avoided, rescinded, or, at the least, qualified. For example, rules could stipulate one re-test only, and taken within one day of the original test; the final grade would be an average of the two tests (incentivizing against bombing the first one); if the re-test results in a lower grade, that would be the one counted; all classwork and homework must be completed prior to the original test or no re-test is permitted; and parents must be notified that their child is re-testing.

Short of abolishing re-testing, common sense reforms to open-ended testing should be mandated.

We have become a society where “everyone gets a trophy.” Individual achievements are whitewashed so as not to hurt feelings. Everyone and everything must be homogenized, a “spread the wealth” mentality whereby accolades are doled out not by merit, but by who hasn’t won yet. Far be it for a student to be top in the class, as that is deemed “unfair.” There’s a term for mandating equality: communism. And all along I thought we beat the Soviets.

The longer-term effect is more chilling: A dysfunctional generation, expecting everything, yet prepared for nothing. When faced by that thing called The Real World, they respond dismally without the benefit of their crutch. Business suffers as jobs are outsourced to those not expecting entitlements. And college graduates, expecting six-figure salaries, find themselves adrift, lost because of an inability to cope with life’s challenges after discovering that the “trophy days” are over.

Life is a series of tests, passing or failing in your job, sports, marriage, as a parent, and yes, in school. But those lessons are being sidelined in favor of artificial “victories,” without regard for the devastating effect they are having on our children.

Re-testing earns an “A” only in breeding massive resentment and incapacitating our children. It’s time we give re-testing the failing grade it deserves. And on that, we need no re-test.

Re-Testing Is Not A Right

Pennsylvania Corruption Has Accomplices In The Courts

Pennsylvania Corruption Has Accomplices In The Courts

By Lowman S. Henry

Pennsylvania has a well-deserved reputation for being one of the worst states in the nation when it comes to corruption among elected officials.  In just the last few years both the elected state treasurer and attorney general have pled guilty or been convicted of crimes and forced to resign.

This is, unfortunately, nothing new.  Entire books have been written detailing the sordid history of official corruption in state government.  We even witnessed the spectacle of two former speakers of the Pennsylvania House of Representatives – one Democrat and one Republican – occupying the same prison at the same time.

Scandals ensnared a long list of powerful legislative leaders making household names of John Perzel, Bill DeWeese, Robert Mellow, Vincent Fumo and Mike Veon to name just a few.  Not to be outdone, the judicial branch chipped in with two justices of the Pennsylvania Supreme Court being forced to resign in an e-mail scandal and another convicted of using public resources for campaigning.

To the degree there is any good news in all of this it has been that these wayward public officials have been caught, indicted, prosecuted, convicted and most sent off to prison.  But the story has not stopped with prison sentences with some emerging from the jailhouse armed with lawyers seeking to regain their pensions, reduce or vacate fines, or even overturn their convictions.

Unfortunately the courts have become willing accomplices in allowing these convicted felons to escape parts of their punishment.  Recently the Pennsylvania Superior Court ruled that former Speaker DeWeese, who has already served his prison time, will not be required to pay $116,000 in restitution. This based on the astounding theory that the commonwealth was not a “direct victim” in the case.

Keeping in mind that we the taxpayers are the commonwealth; that DeWeese’s actions in office resulted in the misuse of our money by having state workers illegally perform political work on government time; and that our tax dollars were used to investigate, prosecute, and confine DeWeese it is an appalling act of judicial jujitsu to claim we are not “direct victims,” because we have clearly suffered financial loss.  That same court also left former Speaker John Perzel off the hook for $1 million in restitution ordered by the lower courts.

In another case, former Senate Democratic Leader Robert Mellow has petitioned the state to restore his state pension which was ordered forfeited upon his corruption conviction.  Mellow is now arguing that he is entitled to a $20,000 per month pension payment from the state’s public employee pension fund.  It might be some time before Mellow’s appeal is decided.

While the appellate courts have gone soft on punishing these criminals, the state legislature is moving aggressively to close the pension loophole.  Current law only makes about a dozen offenses subject to pension forfeiture.  As a result, many of the accused plead guilty to lesser offenses in order to preserve their pension benefits.  The state House of Representatives this past week – in a rare show of bipartisan unity – voted nearly unanimously to make all felony convictions subject to pension forfeiture.  Similar legislation is pending in the state Senate.

Given the recent sordid history of corruption in Pennsylvania’s judicial system it is outrageous to see our appellate courts weaken the penalties for those convicted of committing crimes in office.  These recent rulings further erode the credibility of and confidence in our courts at the exact time the judiciary is still reeling from its own scandals.

Those convicted of abusing the public trust deserve not only prison time, but they should not benefit from lifelong public pensions after having committed crimes while in office.   As well, taxpayers deserve to be compensated for our financial losses through the payment of restitution and prosecution costs.

Prosecutors and the lower courts have done their job in cleaning up the state of corruption that is Pennsylvania.  It is a miscarriage of justice to see the appellate courts chip away at penalties that must justly be paid by those who have flagrantly violated the public trust.

What can you as a citizen and a voter do about this?  Here in Pennsylvania we elect the judges and justices who serve on our statewide appellate courts.  This November we will elect a Supreme Court Justice, four Superior Court Judges and two Commonwealth Court Judges.  Make an effort to learn which candidates will hold those who violate the public trust accountable for their actions.

Mr. Henry is chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal

Pennsylvania Corruption Has Accomplices In The Courts

Convict Mellow Wants $240 G Pension Back

Convict Mellow Wants $240 G Pension Back

By Leo Knepper

In 2012, former Senator Robert Mellow was sentenced to 16 months in prison, three years parole, and ordered to pay nearly $150,000 in fines and restitution. Now he wants his $20,000 per month pension back.

Although one lawmaker having a pension of $240,000 per year is one of the causes of the pension system’s $74 billion unfunded liability, lets focus on Mellow’s legal argument. According to Pennsylvania state law, a state employee forfeits their pension if convicted of any one of 23 specific state crimes. The law also stipulates, “no public official…shall be entitled to receive any retirement or other benefit or payment of any kind except a return of the contribution paid into any pension fund without interest, if such public official or public employee is convicted or pleads guilty or no defense to any crime related to public office or public employment.” (Emphasis added)

According to an article published by the Philadelphia Inquirer, Mellow’s lawyers are arguing that since he was convicted of the federal charge of conspiracy and conspiracy is not one of the crimes listed, he should have his pension restored. According to the same Inquirer article:

“A similar argument has worked before. In 1999, Commonwealth Court reversed the pension forfeiture of a corrections officer who pleaded guilty to a federal charge of making a false declaration before a grand jury, finding that SERS was wrong to conclude the crime was “substantially the same” as the Pennsylvania crime of perjury.”

With this legal precedent in hand, Mellow’s lawyers would be negligent not to argue that he should have his pension restored. However, that doesn’t mean that they have a good case. As with most things legal, the devil is in the details. According to the press release from the FBI announcing Mellow’s sentencing:

“Mellow, in his capacity as a state senator and the Democratic Leader during 2006 through 2010, conspired with others to misuse the staff and resources of the Pennsylvania Senate for political fund-raising and campaign purposes.

“As part of the scheme, Mellow caused and knowingly permitted, through willful blindness, the submission to the chief clerk of the senate of false job classification and reclassification forms and memos for senate staff who performed political fundraising and campaign work while being compensated by the senate.

“Mellow conspired with others to misuse senate staff and resources to raise hundreds of thousands of dollars for an organization known as the Friends of Bob Mellow and the Democratic State Senate Campaign Committee and to support political candidates and causes throughout Pennsylvania.”

Based on the emphasized text, it sounds like Mellow clearly violated the clause in the forfeiture law highlighting crimes “related to public office.” The state employee pension board will vote on whether or not to restore Mellow’s pension. Regardless of that decision, someone will be appealing it to the courts and judges will ultimately decide the fate of Mellow’s pension.

We will keep you posted as the process moves forward, but you should not expect a speedy resolution.

Mr. Knepper is executive director of Citizens Alliance of Pennsylvania.

Convict Mellow Wants $240 G Pension Back

Convict Mellow Wants $240 G Pension Back

Paycheck Protection Simple Justice

Paycheck Protection Simple Justice

By Rep. Bryan Cutler
During my time serving the 100th District, a handful of well-meaning residents have walked into my taxpayer-funded Lancaster County district office and requested campaign lawn signs. They have always walked out empty handed. In fact, if I tried to conduct campaign activities from my legislative office, I’d end up in jail—as other politicians have. And that’s how it should be.

Likewise, just think if I requested that the House payroll system be used to deduct voluntary campaign contributions for my re-election campaign from my staff’s paychecks. You can imagine the response: Absolutely not.

The objection would not be over the staff’s desire to contribute, or the cost of deducting the money. Instead, the request would be denied as a matter of ethics: Public resources cannot be used for politics.

That’s because taxpayer-funded government resources should not be used for politics. Unfortunately, there’s a big loophole in state law.

State and local governments across Pennsylvania regularly use public resources to collect campaign funds for a special group of political players: Government union leaders. These funds are used for lobbying and political fundraising and even given directly to candidates. And government unions are the only organizations in Pennsylvania that can use public resources to raise their political dollars.

This is an insult to Pennsylvanians who deserve better from their government.

That’s why for the past few sessions I have introduced and championed legislation called paycheck protection, which would restore the integrity of public resources by ending the use of government systems for political fundraising.

As commonsense as this reform is, some still oppose it, relying on myths and scare tactics to misrepresent what this legislation does—and does not—do.

I believe Pennsylvanians deserve the truth.

The truth is Pennsylvania government union leaders use taxpayer-funded payroll systems to collect money from public employees for three purposes:

  1. Union dues and fees used for representational activities
  2. Union dues used for political activity such as lobbying and radio/TV ads
  3. Political action committee contributions given directly to candidates

The latter two are explicitly political.

The truth is, since 2007, Pennsylvania’s government unions have spent nearly $100 million on politics—most of which they collected via automatic deduction from workers’ paychecks using public resources.

The truth is this immoral practice, which would land any elected official in jail, has gone unchecked for years.

If we care about ethics and integrity in government, we cannot let this continue.

My bill would transition the collection of political money back where it belongs—outside the scope of public resources and into the hands of government union leaders.

These unions would still be free to use public resources to collect non-political union dues and fees used for collective bargaining and representational work. However, government unions would no longer enjoy the special privilege of using public resources to collect money used for political activity. Just like every other private organization in Pennsylvania, they would begin collecting political money directly from those who donate it, without using taxpayers as their middleman.

Opponents of this reform claim they are fighting to protect workers’ voices, but the truth is this reform will give public workers greater voice in how their money is spent on politics. Because government unions will collect their political dollars directly from members, they will be more accountable to members regarding how those dollars are spent.

Opponents also argue they are working to preserve government unions’ ability to collectively bargain, but this reform does not affect collective bargaining rights or prevent unions from engaging in political activity. It simply separates taxpayer resources and electoral politics.

The state Senate passed similar legislation in February.

It’s time my colleagues in the House also make this good government reform a priority.

The law should apply equally to everyone. Paycheck protection would be a major step toward making this principle a reality.

Rep. Cutler (R-100) is the Pennsylvania House Majority Whip.

Paycheck Protection Simple Justice

Paycheck Protection Simple Justice

SERS Lowers Estimated ROI But Not Enough

SERS Lowers Estimated ROI But Not Enough

By Leo Knepper

Last week the State Employee Retirement System (SERS) took a baby step toward reality and lowered their estimated return on investment (ROI). SERS moved their estimated ROI from 7.5 percent to 7.25 percent. The SERS change matches a move made by the other state-managed retirement fund, PSERS, last year. Adjusting the estimates added about $3 billion to Pennsylvania’s unfunded pension liabilities. These changes don’t go far enough, unfortunately.

A 2014 “Blue Ribbon” report from the Society of Actuaries stated that the rate of return for public sector pension funds would be closer to 6.4 percent for the next 10 years. Actuarial assumptions may sound dull and boring. However, the assumptions that the state-run pension plans make in valuing their assets have real world consequences for taxpayers and reflect a major problem with the defined benefit (DB) model.

Because the assumptions used to determine the value of the pension plan assets and liabilities are influenced by politics, it is easy for politicians to make generous promises and then make legal whatever flawed assumptions they want to use to improve the outlook. Furthermore, they can change the laws to purposely underfund pension contributions (something they’ve done twice in the last 15 years) to pass a “balanced” budget.

By assuming an unreasonable ROI, SERS and PSERS are hiding over $15 billion in additional unfunded liabilities from taxpayers and lawmakers. An accurate picture of how challenging the pension funding situation is is a necessary part of discussing how to solve the problem. Imagine having a broken leg but asking a doctor to fix the problem using an x-ray of your arm, and that is what the state pension funds are doing by being overly optimistic about their ROI.

Mr. Knepper is executive director of Citizens Alliance of Pennsylvania.

SERS Lowers Estimated ROI But Not Enough

Student Loan Debt $1.5 Trillion

Student Loan Debt $1.5 Trillion

By Chris Freind Student Loan Debt $1.5 Trillion

Ahh … spring. The time of year for renewal, flowers, baseball games – and sheer panic for many parents.

Why? Because May is college-decision month.

Sadly, instead of marveling about the possibilities that lay ahead, parents are left fretting about their children’s future – and their own.

While college has always been sold as a path to success, its staggering costs have resulted in a far different reality.

Truth is, the current system has outlived its usefulness, being directly responsible for increasing despair, destroying the earning capital of young people, and demoralizing an entire generation of college graduates living in their parents’ basements because of insurmountable debt – their liberty and dignity stripped away.

The numbers bear out the crisis:

• Student loan debt now stands at nearly $1.5 trillion (that’s trillion with a “T”). By the end of the next decade, that figure will be almost $3.5 trillion. The amount owed is now more than the total debt on credit cards, auto loans and mortgages.

• The average debt of 2016 graduates exceeds $37,000. And that’s not including graduate/law/medical school debts, which can easily be six figures.

• Not surprisingly, the default rate is skyrocketing. The balance defaulted on exceeds $137 billion – for which the taxpayers are on the hook, since the federal government subsidizes many of those loans. The similarities to the housing crisis are eerie.

Naturally, many are wondering if college is worth the investment. The majority believe otherwise, largely because so many college grads face a significant underemployment problem. Yet parents and students continue taking the plunge. To what end?

All their lives, children are told that they can achieve the American dream, with college playing a big part in that equation. But for so many, the truth crashes down hard after graduation, with massive debt and mediocre job prospects crushing hopes and dreams, often for decades.

It goes something like this: Work hard to impress colleges (get good grades, play three sports per season, pay for individual coaching, volunteer 30 hours a week, join 17 clubs, and open a nonprofit making flipflops for the world’s poor); graduate with a boatload of debt; discover that you need an advanced degree, which incurs more debt; realize that your expensive MBA landed you a job at a 1990s salary level; get married – but no kids until you move out of the 700-square-foot apartment; spend years paying down the debt, then several more building up equity for a house; be cash-poor for years thereafter; and end up having just one child despite wanting more – all while watching your marriage dangle precariously from the cliff (if you’re not already divorced) because of the stress trying to make ends meet.

Welcome to the generation with the dubious distinction of not doing better than their parents. And it’s only getting worse, as incomes are growing more slowly than the rate of tuition increases.

What can be done? Here are some ideas:

1. The college tuition/student debt situation, just like the nation’s $20 trillion debt, is a house of cards that will, with mathematical certainty, collapse. It’s not a question of if, but when, as the system is unsustainable. But since these problems are always pushed off to future generations, that point serves only as a harbinger of what to expect.

2. The problem lies in basic economic theory. The more something is subsidized, the more its price increases. Therefore, until the federal government’s gushing student loan spigot is turned down, colleges have no incentive to hold the line on tuition. And obviously, they haven’t. Since 1978, college tuition costs have risen 12-fold – more than 1,200 percent, compared with just 250 percent for food. Tuition even outpaced medical costs by a factor of two, which is really saying something. Between 2008-2010, public universities jacked up their rates an average of 15 percent, with some private colleges increasing even more. Time to break universities’ addition to the federal trough by restricting how much is loaned.

3. Since most colleges are nonprofit, and thus tax exempt, their lavish endowments should lose tax-free status unless two provisions are met: A) tuition costs do not increase by more than 2 percent per year, and B) the endowment does NOT grow by more than 6 percent in a given year. If either requirement is not met for that specific year, they would pay taxes on all gains and income – thereby creating an incentive to use such funds to control costs.

4. If colleges banded together to lower tuition, it would be illegal, with administrators likely prosecuted. Time to revisit that law so that collusion doesn’t apply to price reductions.

Without that reform, almost no school will reduce tuition for fear of being labeled “inferior.” Sure, applications would surge in the first year or two, but would decrease soon thereafter. How ironic. Despite our anger about college costs, we would feel that a lower-priced college wouldn’t be up to snuff. Don’t believe it? Gauge people’s reactions to the lowest-priced Mercedes or Porsche – right or wrong, many sneer (even if they can’t afford one), viewing them as a diluted “poor man’s” luxury car.

5. More college-level courses, both online and in high schools, should be offered, and colleges should be pressured to more readily accept the results. Yes, many high schools offer AP courses, but colleges, fully aware that they reduce a student’s tuition, often create needless obstacles for students to gain credit. And colleges should offer more competency tests to incoming freshmen so that they can “test out” of courses not related to their field, such as math courses for English majors. Striving for well-roundedness is one thing, but mandating pointless standards as a thinly-disguised money grab is unacceptable.

6. How about making highly compensated professors teach more than just a few hours per week? Seriously, how much “research” can they possibly be doing? It’s salt in the wound for parents paying $45,000 per year to learn that their child is being taught by a boring teaching assistant simply regurgitating slides, with students learning nothing except how to best sleep in classroom chairs.

7. Time to control the purse strings. This author is not a big advocate of federal mandates, but since virtually every college in the country accepts federal aid – in addition to federal student loans – there should be common sense stipulations. No federal loan should be used for a university’s capital projects. Dorms and salaries are one thing, but unlimited taxpayer money should not be spent on lavish, and often unnecessary, pet projects – costs that are then passed on to future students. Colleges must always improve to compete, but making them do so with non-federal money would generate a heretofore nonexistent accountability.

8. Tax breaks should be offered to companies sponsoring students specializing in fields beneficial to that business; in turn, students would commit to working for that company for a pre-determined time. Everyone wins: company, university, economy, and most of all, student.

Numerous other areas should be explored: Tuition-free community college; public universities selling assets not related to their core business; outsourcing services to the more efficient private sector; capping salaries and administrative costs; and employing graduates in public service programs to forgive debt. We could even consider a program where universities that fund students’ education would be entitled to a future cut of a graduate’s earnings – thus motivating the school to produce a superior product.

Congress has thus far earned an “F” when it comes to reining in exorbitant college tuitions. If our children, indeed our future, are going to have any shot at realizing the American dream, reforms must be implemented. And you don’t need a college degree to understand that.

Student Loan Debt $1.5 Trillion

Philly Taxed City And Why Can’t We Save The SS United States?

Philly Taxed City And Why Can’t We Save The SS United States?

By Chris Freind Philly Taxed City

In 1979, Chicago’s streets weren’t adequately plowed after a snowstorm. As a result, Mayor Michael Bilandic lost his bid for re-election. After similar snowstorms in Philadelphia, where the streets were deplorable for days, almost 80 percent of voters said “job well done” to then-Mayor Michael Nutter, and rewarded him with another term.

That type of passive neglect has been pervasive in Philadelphia for decades, cementing the city’s reputation as one with virtually no promise of a renaissance-like turnaround. And the numbers bear that out.

A study by the Pew Charitable Trust found that many with the means to leave the city do, as almost 300,000 white residents (one-third of that population) have fled over the last 25 years. Another Pew study showed that, by a large margin, more families with children are leaving the city than coming in. Those who can’t flee get further crushed by an incompetent government.

This is Philadelphia, birthplace of America. It doesn’t, and shouldn’t, have to be this way.

An acquaintance from London recently arrived in Philadelphia for the first time. Like any good tour guide, this author whisked him off for cheesesteaks at both Pat’s and Geno’s in South Philadelphia. They did not disappoint.

But so much else did.

Since it’s human nature to gloss over that which has become all too familiar, it often takes someone else’s perspective to “see” what’s really there. And after driving around the city, what’s “there” was, on the whole, undesirable. Graffiti. Homelessness. Unkempt houses. A dearth of green space. Malfunctioning parking meters. Trash. Poverty. Incompetence. And trash.

It’s downright embarrassing. And quite frankly, people should be sick of it.

Try talking about how “great” Philadelphia is, and truth be told, it feels more like we’re convincing ourselves rather than impressing guests. This isn’t a new phenomenon, but one that has plagued us for years.

We should have boldly emerged from the shadow of our big brother to the north and the nation’s capital to the south to become a unique destination in our own right, not an also-ran town that serves merely as a pit stop on the way to “better” places.

We should be a world-class city. But we’re not.

Will things ever change? Can people jettison their inferiority complex born of perpetual malaise, and replace it with bona fide pride? Hopefully, but not likely, because Philadelphia has, for so long, been victimized by a toxic disease that destroys the very essence of its people: Impotent leadership.

Since London is in a class by itself, let’s look at Boston – another older, East Coast city – to see why it’s a thriving, vibrant metropolis, while Philly remains stagnant. And for the record, you know things are bad when you’re getting whipped by a city that happens to be in the most liberal state in the country.

Above all, Philadelphia kills itself by being the highest-taxed city in America (cumulatively), levying taxes on sales (2 percent higher than the rest of Pennsylvania), amusements, parking, business income and receipts, hotel rooms, cigarettes, liquor, use and occupancy, net profits, vehicle rental, outdoor advertising, trash, real estate, and, of course, the city wage tax. And let’s not forget the new soda tax. It’s already cost hundreds of jobs, with thousands more to follow, because people are now shopping outside the city – not just for soda, but for all their food needs, decimating the city’s mom-and-pop grocery stores.

Higher taxes result in fewer residents, businesses, and jobs, and, therefore, produce less revenue. In turn, that leads to diminished city services, including an underfunded fire department – which, we just learned, was the primary reason why a firefighter tragically died.

Philadelphia owns the highest or near-highest rates of poverty, homelessness, violence and murder; its education system produces abysmal results; its city pension is catastrophically underfunded; and opening a business is fraught with bureaucracy, and, some say, extortion – both “legal” and otherwise.

Philadelphia doesn’t have the luxury of being Washington or New York, where being downtown is a necessity, so the margin of error for Philly’s leaders is extremely small. And for those empty nesters and white-collar types who enjoy living in Center City, they are one mugging away from packing it up and moving back to the suburbs.

But rather than embarking on a course that would revive the city, Mayor Jim Kenney and City Council have done what the politicians always do: Put the screws to the residents who can’t afford to vote with their feet.

Compare that to Beantown. Sure, it has its share of taxes, but it educational product is significantly better, and its crime rate lower. Granted, it’s a smaller city, but comparatively, the rates are light years apart.

Boston has made huge strides in preserving green space and cleaning up pollution (such as the now-pristine Boston Harbor), with parks throughout the city. Its public transportation is top notch, and its infrastructure is being improved at an aggressive pace. And the entire downtown area is remarkably clean.

Knowing that quality of life is critical to maintaining a productive workforce, Boston has made its waterfronts safe meccas for entertainment, dining, shopping, and a host of outdoor activities. Contrast that to Fairmount Park, which while beautiful, is shady in many parts – and not from the trees. And for decades, we’ve heard nothing but empty promises from Philadelphia’s leaders about how both the Schuylkill and Delaware rivers – Penn’s Landing in particular – would be fully developed. The failure to do this has resulted in a colossal waste of prime space. And the bike/walking path that was finally constructed along a stretch of the Schuylkill? Plagued by muggings and violence.

So how is it that so many other cities successfully develop much smaller waterways, making them fantastic tourist magnets, such as in Cincinnati and San Antonio, yet Philadelphia, with not one but two major river systems, hasn’t done squat with either one?

Philadelphia obviously isn’t going to bulldoze skyscrapers to make way for green space and riverwalks. But in areas where its leaders could have exercised bold vision, they failed. One of their biggest blunders was ignoring the immensely successful model of “neighborhood” ballparks, where fans stream into local pubs and shops before and after games, creating a lucrative spinoff effect – such as Wrigley Field, Fenway Park, and newer ones in Baltimore, Cincinnati and Denver. Instead, Philly’s leaders chose to build in the middle of nowhere. As a result, the majority of fans never spend a dime outside the ballpark. A new baseball stadium near 30th Street should have been the goose that laid the golden egg, but leaders were too chicken to do the right thing.

Same for the Navy Yard, which, with its vast acreage, could be developed into a world-class entertainment facility, connected to Center City by monorail or ferry. Yet it sits unused, just another dream floating away while the competition gets it right.

Another missed opportunity is the brimming-with-potential S.S. United States – once the fastest ocean liner in the world. Other cities’ leaders would have done whatever was necessary to make her a first-class attraction, such as the Queen Mary in Long Beach, Calif. She could be a mega casino hotel, or filled with museums, shops and restaurants. But instead, she rusts away on the Delaware, seemingly destined for the junkyard while political leaders do nothing.

It is beyond frustrating to visit other cities that have their act together, knowing that Philadelphia’s potential outranks damn near all of them. But potential doesn’t get the job done. Rolling up the sleeves and putting in the hard work does. Contrary to the fairy-tale fluff spewed at press conferences, Philadelphia is not on a path to prosperity. And because of its failed leadership – and a population that no longer demands greatness – more folks will leave, and Philadelphia will continue its sad decline.

Philadelphia is better than that, and Philadelphians deserve more. It’s time to demand backbone from our leaders so that Philly can be the world-class city it was born to be.

As Benjamin Franklin so presciently said: “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”

Hey City Hall – anyone listening?

Philly Taxed City And Why Can’t We Save The SS United States?

Trump Syria Concerns Expressed

Trump Syria Concerns Expressed

By Chris Freind Trump Syria Concerns Expressed

Dear President Trump:

On behalf of many Americans, I am passing along my hope that you make America’s economy great again – really quickly. Otherwise, the Treasury will have to print trillions more in “funny money” to fund your surprising new interventionism – a “quantitative easing” for foreign policy.

After all, it appears that you, in direct contradiction of your crystal-clear campaign promise, are hell-bent on playing policeman to the world. Given what Secretary of State Rex Tillerson just said – “We rededicate ourselves to holding to account any and all who commit crimes against the innocents anywhere in the world” – that’s going to be an expensive proposition, and an unprecedented political quagmire.

But before America’s global gun-slinging commences, I respectfully ask that you consider the following:

1. Where will you start? So you aren’t accused of “continent-bias,” I suggest simultaneously tackling Venezuela, Myanmar, Nicaragua, the Philippines, Chad, Nigeria, Qatar, and Libya. France, too – just because it’s France.

And that’s just on Day One.

Given that around, oh … 80 percent of the world’s nations have people committing crimes against innocents – including not-so-insignificant China and Russia – the initial engagements against those abusers should be wrapped up by June. That’s the “easy” part. It’s American troops being stationed indefinitely “in-country” for nation-building and regime change where things get really complicated.

Caveat: I often implore people to “look in the mirror.” So, in truth, that list of offenders also applies to us. One look at our cities – Chicago, Philadelphia, even your hometowns of New York and Washington – shows the staggering number of innocents slaughtered daily in what are, without question, war zones. The atrocities, including the murder of babies and young children, continue unabated, leading to unimaginable suffering.

Tomahawks won’t work. However, Americans just voted for “regime change,” believing you to be the leader who instills order. Perhaps the president’s time would be better spent solving those escalating domestic problems, rather than creating more quandaries overseas.

2. We’ll have to build a lot more Tomahawk cruise missiles. But at nearly $2 million a pop, they get very expensive. Here’s something to consider: The Syrian attack was more than 1 percent of the cost to build your border wall, so your funding dilemma on that initiative will likely get even dicier.

But when the bombs don’t achieve the objective – actually, what is the objective? – we’ll send military “advisers” into Syria. And of course, troops to defend them. But it won’t end there, because it never does. Never. That’s not speculation, but hard fact. Then come bases, deployed troops, and air wings. (Even more concerning, what happens when we engage the Ruskies in a firefight, shoot down one of their aircraft, or vice versa?)

Mr. President, that strategy hasn’t worked too well for us. As Einstein said, insanity is doing the same thing repeatedly yet expecting a different result.

Further intervention in the world’s most ignitable powder keg, where Mother Russia is firmly entrenched and standing opposed, is insanity.

3. After we further destabilize Syria, culminating in regime change by toppling President Bashar Assad (as some in your administration are advocating), is that when we “declare victory?” And what will that mean? If it’s anything like Iraq and Libya, when America deposed two secular dictators, only to see massive instability and new governments comprised of even worse people, there will be a lot of scratching our derrieres. Being clueless about next steps after creating a dangerous power vacuum is not the path to the presidential Hall of Fame. Just ask W.

4. When will we learn that interventionism and regime change, especially in the Middle East, always produces catastrophic results?

Saddam Hussein was no angel, but an iron-fisted secular leader. He kept extremists at bay; maintained a regional balance of power; was an American ally during the Iran-Iraq war; and, most noteworthy, was a bitter enemy of Osama bin Laden. But we took him out anyway.

Since ousting Hussein, there have been thousands of car bombs in Iraq; yet while he was leader, there were none. Deposing Hussein, the only man capable of maintaining order, was possibly the greatest blunder in a very long list of American mistakes in the Middle East.

Then America took out the non-fundamentalist Moammar Gadhafi, who had been working with U.S. intelligence against terrorists. Alarmingly, it didn’t dawn on us that the rebels we assisted were the same folks who comprised the largest foreign fighting force battling Americans in Iraq. Libya devolved into chaos (remember Benghazi?) after America’s handiwork allowed thugs to gain power.

And now, we are blindly supporting rebels in Syria. True, Assad is a ruthless dictator, but as an avowed secularist, he provided stability by keeping fundamentalists in check. His drawn-out battle with the rebels has provided a safe haven for terrorists in areas captured from the Syrian government. The biggest irony: ISIS fighters in Syria (and Iraq) are using American weapons.

The United States keeps trying to impose its will in the Middle East, and it keeps blowing up in our faces, literally.

5. Not to appear conspiratorial, but what do we really know about the chemical attack? Could a conventional bomb have hit a rebel chemical weapons factory? Definitely plausible. Was it your “Deep State” nemesis, where agents arranged for the attack as a way to drive a wedge between yourself and Vladimir Putin? Or was it Occam’s Razor – the simplest explanation? Were chemical weapons loaded by accident?

Who knows? But clearly, the deliberate use of chemical weapons makes no sense from Assad’s perspective. Just days after the U.S. said it wouldn’t hold him accountable for war crimes, and that the Syrian people would determine their own fate, Assad is then going to gas people and incur the wrath of the world, with amplified calls for his ouster? Seems highly unlikely.

6. Not to insinuate that your military hierarchy and intelligence “experts” are off-target, but A) you have made criticizing them an art form, and B) their trustworthiness leave much to be desired. Many experts think that we actually sunk the USS Maine to spark hostilities with Spain (which in fact led to the Spanish-American War). The Gulf of Tonkin incident, the catalyst for our engagement in Vietnam, was faked. And more recently, the guaranteed claims of yellowcake uranium and WMDs in Iraq – our “justification” for invasion – were totally bogus.

The American people’s healthy skepticism of the intel community’s “findings” is well justified, especially since America has not won a war since 1945.

Minding our own business and not engaging in regime change is not isolationist. It’s common sense.

Americans don’t want another war. Sure, chemical weapons killing 70 are horrifying, but is that worse than conventional bombs killing thousands? Are we, already perceived as “crusaders,” really engaging yet another Middle Eastern country? And after the fact, just as in Iraq and Afghanistan, will we build state-of-the-art infrastructure for another country, while Americans continue to see their bridges collapse, roads crumble and water mains break?

Mr. President, it would be wise to heed the words of Sir Edmund Burke in formulating an exit strategy for Syria before ever entering it: “Those who don’t know history are destined to repeat it.”

Trump Syria Concerns Expressed