On Saturday, McHenry County Blog published a thoughtful analysis by Cary Grade School Board President Scott Coffee about the situation facing those wishing to consolidate Crystal Lake High School District 155 with its four feeder grade schools. You can read it here.
Under that article was a thoughtful comment by Lakewood bond analyst Steve Willson, which is posted below:
Bigger Is Not Better in Government
People often argue from analogy,
“businesses achieve economies of scale as they grow; so should government.”
The problem with this statement is, of course, that the incentives of business and government are diametrically opposed.
Steve Willson
Businesses have an incentive to save money.
Governments have an incentive to spend as much as possible.
Think about it from your own experience:
have YOU found that big governments are less bureaucratic or more bureaucratic than smaller governments?
And this is true of school districts.
If you consolidate four school districts, you lose three superintendents.
You gain six assistant superintendents, assistant principals, assistant curriculum coordinators, etc.
Now, if my contention is true, then it should show up in the data.
And it does.
I’ve examined the data on expenditures for all the school districts in Illinois.
I’ve performed this analysis for several years’ data.
I always leave out Chicago because it is such an outlier, although if I include it, it simply reinforces the conclusions.
And here are the conclusions:
There is no statistically significant correlation between expenditures per pupil and outcomes as measured by graduation rates and test scores.
Some schools spend $9,000 per pupil.
Some spend up to $28,000.
Here in McHenry County, the range is around $9,000 to $18,000.
Zero correlation.
None.
There is no statistically significant correlation between teacher wages and outcomes.
There is no statistically significant correlation between teacher experience and outcomes.
There was only ONE statistically significant relationship:
bigger districts spend more per pupil than smaller districts.
And in addition to the wage issue, which will almost always be resolved in favor of the higher wage scale, the bureaucratic factor is overwhelmingly against consolidation.
What is the source of the statistics for bigger districts spending more per pupil than smaller districts?
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The Illinois State Board of Education has spreadsheets listing various expense categories per school district per year, including per pupil and per average daily attendance (ADA).
http://www.isbe.net > Division & Program Areas > School Business Services > School Financial Services > Historical Archive — Financial Reports > OEPP-PCTC-ADA (2009-2015)
http://www.isbe.net/finance/verification.htm
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Those spreadsheets tell a different story.
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The main problem with consolidation in Illinois right now is the consolidation rules don’t favor the taxpayer.
The rules were made by politicians who are greatly influenced by lobbyists and special interest groups, with unions typically at the top or near the top of the list.
That’s not surprising because unions fight for higher pay and benefits for their members.
There is no effective taxpayer counter to the unions in Illinois right now.
+++++
Democrat State Representative Jack Franks is a friend of organized labor.
His primary contributors include labor unions.
He reinforced that position when he called Republican Governor Bruce Rauner a union buster.
“Bigger is not better…..”
Hence why we have so many layers of government in Illinois.
You can’t complain about property taxes unless you are willing to begin addressing those layers.
@DMAC57: Using Steve’s analysis, you lower the cost of government, and hence your property taxes, not by combining units of government, but by eliminating them altogether, along with the functions they serve.
The only way to get lower cost government is to demand less government.
Are you willing to go back to volunteer fire departments and gravel roads?
To the post:
That’s because businesses are subject to the rules of the market, which presuppose competition and new entrants into the market.
Government is a monopoly and has no such restraints.
“The only way to get lower cost government is to demand less government. Are you willing to go back to volunteer fire departments and gravel roads?”
Bad logic.
That is not the binary choice we have (similar to prospective power plant argument that unless special zoning variances are allowed and the use of 30% of landlocked community drinkable groundwater is given for free to for-profit venture, we will all freeze to death in the dark).
Doesn’t the answer lie somewhere in the middle?
@susan: Of course the answer lies somewhere in the middle. But to get to the middle, you oftentimes have to advance your argument to its logical conclusion. Your analogy of the power plant is hyperbole, pure and simple, but it served its purpose in forcing people to focus on the issue, and forced them to decide whether that argument made sense or not.
I’m merely pointing out that Steve Willson’s analysis was predicated on one critical distinction: that companies in the private sector do not have the luxury of monopoly power held by government, and that their incentives are completely different.
The layers can be traced directly to the 1870 State Constitution.
Because of having issued too much debt to dig canals, those Constitutional fathers limited local governments’ debt to 5% of assessed valuation.
When unit school districts ran out of that borrowing authority, grade and high school districts were authorized, giving 10% assessed valuation.
The state legislature was not allowed to issue debt without voter approval.
With the 1970 Constitution borrowing limits disappeared for the state. Local limits were also loosened.
I see the point now.
Can the answer be to remove temptation, and possibility of coercion out of the equation by creating hard ceiling limits on the powers and amounts of money available to monopoly governments?
Wouldn’t that force governments which exist to expend (limited) power and money on only those choices which more accurately represent the peoples’ interests?
In answer to:
ABSOLUTELY!
Along with the elimination of all ‘Housing Authorities’ and all Public Aid other then General Assistance (GA)!
GA administered according to existing law.
Get ready for this:
http://publicagenda.org/pages/research-and-evaluation-of-participatory-budgeting-in-the-us-and-canada
“Participatory-budgeting”
I’m wondering about how the McHenry County judge that requires everyone in his courtroom to stand and recite the pledge of allegiance is feeling today.
Did anyone in the school district ever do this?
Mark, the raw data comes from the Illinois State Board of Education.
The statistical analysis is mine.
The raw data includes total expenditures for each district, total enrollment, average teacher salary, average class size, ISAT scores, high school graduation rates, percent low income and a host of other categories.
As a practical matter, it seems there is no hope to eliminate or restrain government spending–whether units are consolidated or many-and-diverse.
Therefore the only logical solution is to limit the amount which is available to spend relative to the means of the community.
Hard limits in the form of tax RATE caps.
The Illinois Policy Institute paper released the Spring of 2016 offers a way to consolidate school districts without hiking costs.
One major problem in the past is special interest groups have used consolidation as a means to hike taxpayer costs.
One example, equalizing collective bargaining agreements (labor union teachers in lower paid districts receive an automatic pay hike just because the district consolidated).
Another example, building new schools (building and construction trade labor unions, those involved in issuing bonds, architects, etc.).
IPI advocates focusing on reducing administrators, consolidating districts not necessarily schools in the district, and retaining existing collective bargaining agreements (don’t equalize the agreements).
In the past when school districts consolidated, the existing teacher unions and thus collective bargaining agreements were scrapped, a new teacher union formed, and a new collective bargaining agreement negotiated, with the teachers in the lower paid consolidated district(s) receiving an automatic pay hike to match that of the teachers in the high paid consolidated district.
Thus the teachers in the lower paid consolidated district received a pay hike for no good reason, meaning there was no educational benefit to the children; the pay hike had nothing to do with teacher performance in the classroom.
Since this proposal runs counter to the interests of some powerful special interest groups, it faces political obstacles.
This is the same document in the comment found in the link in the above article.
—-
Illinois Policy Institute
Too Many Districts: Illinois School District Consolidation Provides Path to Increased Efficiency, Lower Taxpayer Burdens
by Ted Dabrowski, Vice President of Policy,
and
John Klingner, Policy Analyst
Spring 2016
http://www.illinoispolicy.org/reports/illinois-school-district-consolidation-provides-path-to-efficiency-lower-tax-burdens
The political problem with implementing new tax rate caps is that strategy has apparently been preempted by, once again, the power brokers and special interest groups who want higher taxes.
They have created a system with traps so many vulnerable people are among the first to suffer from reigning in taxes.
So we are left in a very difficult political place to reign in costs, where the practice works in theory but is politically difficult to implement.
The Illinois Policy Institute has policy experts, labor experts, and economists on staff so they are able to sort through some of these issues.
Their rise along with a variety of organizations have helped to raise awareness of what has been happening in the various forms of government in Illinois: Better Government Association, Truth in Accounting, Open the Books / For the Good of Illinois, Taxpayers United of America, Wirepoints, Edgar County Watchdogs, Citizen Advocacy Center (Elmhurst), the Dan Proft affiliated organizations and radio shows and newspapers (Upstream Ideas, Illinois Rising, Chicago’s Morning Answer AM 560 with Amy Jacobson, McHenry Times, Lake County Gazette, DuPage Policy Journal, North Cook News, West Cook News, Chambana Sun, East Central Reporter, Kankakee Times, Metro East Sun, Rock Island Today, Sangamon Sun, Southwest Illinois News aka SW Illinois News, West Central Reporter), Civic Federation of Chicago, Sunshine Review, Illinois Review, and the more traditional media and press outlets such as Jake Griffin with the Daily Herald, Jason Grotto’s past series with the Chicago Tribune, etc.
The simple reason governments (and their Boards) tend to spend more rather than less is that it is much EASIER to spend more rather than less.
Cutting expenses requires hard work.
It requires doing difficult, unpleasant tasks like eliminating positions, reducing pay, reducing hours, reducing benefits, increasing workload, closing facilities, outsourcing activities, and a thousand other things to drive down costs.
That’s very hard work.
And most people probably don’t possess the skill set required to participate in that process and/or, more importantly, the Will Power necessary to see that process through to the end (or even begin that process).
No amount of pontifications from the 30,000 foot level by groups like IPI or legislators on how to address costs will ever work.
There is no easy solution.
You can’t solve this problem at 30,00 feet.
It requires people to roll-up their sleeves and get to work in the trenches.
That is the only way to fix this.
There are none in the political class with will, nor the intellect, to attack the real problem as “Coffey” suggests.
The work of several members of our community, presented to the McHenry County Board on 9/15/15, fell on deaf ears. (see the document presented to the county board at … electschuster.com. This document laid out several examples where real reductions in government could begin.
Anyone thinking lower taxes can be achieved without starting here is fooling him/herself. Until we demand elected officials do the jobs they were elected to perform… nothing will change.
It is up to us, folks…..
IPI spent a lot of time and effort analyzing the problem.
Instead of discounting them, take their work and use it.
It is well known that most reformers at the school board level have been obliterated by the special interest groups.
It is very difficult to get a reform majority on a school board.
Cary Elementary School District 26 is the exception.
Just like the pension crisis will not get fixed unless we elect people to Springfield with the will to change the Constitution and quit robbing money destined for the pension funds to pay our bills.
The school, township, other units of government consolidation will not lower government cost unless we elect people to Springfield with the will to pass right-to-work legislation and eliminate prevailing wage laws.
In the interim all we can do is bitch.
Just my opinion.
I’ve been posting this for a few years now.
It’s good to see a couple of you have attempted to make it happen.
I see no other way, but I’m always listening.
We need some government, how much will be debated till the end of the earth.
As tax payers we must take away some of the power/decision making away from our elected officials, spending, setting tax rates, and borrowing.
These three issues were problems that were never addressed properly when the country was formed and Constitution was written.
They should have been, but the partisan nonsense started already way back then with over spending and borrowing to buy votes.
Spending must always match actual revenue available at the time, ie what we are willing to give in the form of taxation.
Borrowing should only be allowed with voter approval.
Individual Income tax rates and Property tax rates should not be roller coasters of ever changing rates, which just leads to insecurity for the tax payer not knowing what is coming next from the elected to buy votes.
That is called: As the wind blows nonsense.
I would propose we force our elected by Petition, which is allowed in the constitution, to enact a Balanced Budget Amendment that has the income tax rate and/or property tax rate control tied to it.
The Congress, State, and Local government agencies will only be allowed to adjust the income or property tax rates after a 2/3 approval vote within its legal boundary.
Our choice, the citizens of the country, state, county, and local government, with a strong majority vote behind changes, not the Pacs controlling the over the top partisan as the wind blows hacks.
Government agencies that use Property taxes should have no levy power or equalizer or ability to raise taxes because of inflation, whatever the home value, up or down, the rate we voted on determines what is paid in taxes. Not enough as most elected seem to keep saying, then come to us with your yearly or two year budget recommendations and let us vote 2/3 for any change from the year before.
No more passing on our debt to future generations should be allowed.
We borrow almost 40% for the Fed Gov now that must stop ASAP.
We can budget a pay back of our various government debts, it’s time we correct our mistakes as lazy sleeping citizens and move on as a country with fiscally responsible government.
I listening for other suggestions, got one?
Why aren’t there charter schools in this county?
Woodstock D200 could sell one or two half (or more) empty buildings to new charter schools which operate at a fraction of the cost of D200 cost per pupil annually.
If we could shrink the size of D200 by introducing competitors, we could reduce tax levy and unfunded pension liability going forward.
The school board must approve any charter school that has an attendance area in the district.
That includes virtual charter schools.
In other words, the monopoly must approve competition.
There is an appeals process if the school board denies a charter school applicant.
Information about charter schools is under Illinois State Charter School Commission section of the Illinois State Board of Education website.