Alabama Must Deal With The Coming Pension Crisis

Update:  ATR’s Joshua Culling and point out that pension problems have been a popular topic of conversation on the gubernatorial campaign trail across the U.S.  Both Alabama gubernatorial candidates have acknowledged the problem and agree that something will have to be done.

States across the union, already faced with a steep decline in revenues, are facing yet another economic crisis–public employee pension funds.  Nina Easton points out some of the more egregious cases in Fortune magazine:

California is at the forefront of this voter revolt. In Los Angeles County, the summer of 2010 was defined by populist heat over the disclosure of salaries being collected by officials of the working-class city of Bell. Some of them, including chief administrative officer Robert Rizzo — who stood to collect a $600,000 pension after allegedly writing himself a $1 million-plus compensation agreement — have been arrested on corruption charges.

Even more widespread are troubling legal pensions. In Northern California,Contra Costa Times columnist Daniel Borenstein reported the salary of the city manager of San Ramon (pop. 63,000) at $344,200, and then calculated the pension due this 65-year-old government official: $261,000 a year. And a local fire chief was able to “spike” his base pension to $284,000 a year.

But Alabama has its own share of the pension problem.  As of September 30, 2007, the unfunded liability for the Teacher’s Retirement System (TRS) Pension Fund was 5.2 billion.  That’s in addition to the 12.6 billion in unfunded liability for the Public Education Employees Health Insurance Program (PEEHIP) program.  Total tax revenues are down 22.9%, the education budget is in proration, and the projected budget shortfall for 2011 is $586 million or 8.3% of the total budget.

The bottom line is that our next Governor and Legislature are going to be facing some very tough decisions. They’re going to have to be realistic about where we are and what we must do.  We trust they will be willing and able to work out a solution.

Public Schools Are Failing…Could Complete Privatization Be The Answer?

David Warren argues that privatization is precisely the answer to our epidemic of failing schools.  He points out that the concept of public education has long been engrained in the minds of Americans, but it didn’t start out that way.  In fact, the Constitution says nothing about public education…

In the case of education, we are confronting an immense prejudice, inculcated by the education system itself. There is a long history of political intervention in schools in North America, and an even longer ideological history from the Reformation; the Scottish one, especially. Books could be written, and have been: But, in a single phrase, the notion that “education is too important to be left to chance” is so universally accepted, that the public at large is capable of overlooking universal failure. Our state schools, which were (contrary to myth) never all that good, have degenerated into dysfunctional propaganda mills.

We easily accept the associated notion that “in a democracy, public schooling is necessary to assure minimum standards for citizenship.” That schools should provide the machinery for the indoctrination of the masses follows naturally from this. Think it through. The proposition actually reverses the first principle of democracy: that government should answer to citizens, and not citizens to government. And remember, that all “progressive” educational proposals require political compulsion.

The question is, “how do we get there?”  Most conservatives favor privatization of education on some level, but have different opinions on how we achieve that goal.  On one side, you have charter school advocates who believe that public schools are so engrained in the American psyche, we need charters as a middle step.  The argument is that the public will be reluctant to go from completely public education to completely private education in one step.  Authorizing charter schools will, theoretically, demonstrate to the public that privatization can improve the quality of education, and make them more willing to do away with public education all together.

On the other side, you have those that argue that because charter schools are still public schools, you will have the same indoctrination of students, and same bureaucratic nightmares in a charter.  They believe we must take the big step to complete privatization in one fell swoop.  The time wasted on the middle step with charters comes at the expense of the children who could be getting a better education.  They also point out that charters don’t give much more control to parents and students than the public school system.

Despite the differences, we all agree that education reform is necessary.  I’m glad that movies like The Lottery and Waiting For Superman have opened the debate, and brought the issue to the attention of many Americans who weren’t engaged.

‘Waiting For Superman’ Not What We’ve Been Waiting For?

Neal McCluskey points out the producers of Waiting For Superman have their own agenda, beyond charter schools.

Unfortunately, Waiting for “Superman” doesn’t just seem to want to make people wait for good schools by promoting charter schools and not full choice. On its “take action” website, it prominently promotes the very opposite of parent empowerment: Uniform, government-imposed, national standards for every public school in America.

Rather than let parents access the best curriculum for their unique children, the Waiting for “Superman” folks want to give the federal government power. Of course, the website doesn’t say that Washington will control “common” standards, but make no mistake: Federal money has been driving the national standards train, and what Washington funds, it ultimately controls. And there is no better way to complete the public schooling monopoly — to let the teacher unions, administrator associations, and other adult interests do one-stop shopping for domination — than to centralize power in one place.

Ethics Reform Should Be A Priority For Alabama Legislators

Alabama’s ethics law was last updated in 1992.  Since then, we’ve had multiple legislators indicted, and reportedly one of the largest investigations into public corruption in the country. The BGA Integrity Index ranks Alabama 4th in the nation in terms of public corruption.  If ever there was a need for ethics reform, Alabama has it.

Requiring mandatory ethics training for all elected officials, mandatory disclosure of all money spent lobbying [Currently, we only require lobbyists to report anything over $250.], and giving the State Ethics Commission subpoena power would be a good start.  Increased transparency should also be a goal for the next legislature.  A ban on PAC to PAC transfers would bring some clarity to campaign contributions.  It is almost impossible to trace the source of donations to candidates when they have been washed through multiple PACs.  Additionally, Governor Riley has commendably put the state’s checkbook online, but the system is difficult to use and understand, and doesn’t always have up to date information.   Improving this site in a searchable format would also be a step in the right direction.


Here are a few things you can do to make sure the legislature passes real ethics reform:

1.  Call your legislator and let them know you want ethics reform.

2.  Call Governor Riley and let him know you’d like a special session called on ethics reform.

Rolling Reserve Budget Act Key To Solving Alabama’s Problems With Education Funding

For the past two legislative sessions, Rep. Greg Canfield (R-Vestavia) has introduced a budget reform measure entitled the Rolling Reserve Budget Act.  The proposal would cap education spending based on a rolling 15-year average growth rate.  The state currently bases the education budget on a projection of Education Trust Fund revenues.  Extreme revenue fluctuations make forecasting revenues difficult.  For example, actual revenues in 1982 were down 3.4 percent from projections, while revenues in 1983 were 13.7 percent higher than projected.  In order to deal with the extreme variations, Canfield’s bill would average the growth rate of Education Trust Fund revenues for the last 15 years and cap the state’s education budget at that amount.  Any surplus revenue would go into a savings account (Budget Stabilization Fund) to cover years where there is a shortfall.

When the Budget Stabilization Fund reaches an amount equal to 20 percent of the current budget, funds would roll into a capital fund for education and the PEEHIP and Pension (TRS) Liability Funds.  As of September 30, 2007, the unfunded liability for PEEHIP was 12.6 billion and 5.2 billion for TRS.  This 17.8 billion is a threat to Alabama’s future financial stability.

Rep. Canfield had the Legislative Fiscal Office model a rolling reserve budget for FY1996-FY2009.  Under the rolling reserve model, the state could have avoided the 3 years of actual proration and prevented the state’s borrowing from the Constitutional Rainy Day Fund in FY2009.   The model allowed a sustainable increase in education spending while setting aside reserves to prevent proration.

Given the revenue projections for 2011 and the continued economic uncertainty, the state is going to have to find ways to cut back spending.  The next Governor and Legislature face tough challenges where the state’s budget is concerned.  Passing the Rolling Reserve Budget Act is one way to make those hard times a little less challenging in the future.


Your action is the key to passing the Rolling Reserve Budget Act.  Here’s how you can help:

1.  Ask your legislator to co-sponsor the Rolling Reserve Budget Act and work to get it passed.   You can find your legislator’s contact information here.

2.  Write op-eds or letters to the editor:  Many Alabamians are not familiar with the Rolling Reserve Budget Act.  You can help get the word out by writing your local paper and/or weekly papers in your area.

Entitlement Nation

The Chicago Tribune has a good article today re: the growth in federal entitlement spending.

The bad news:

Reports The Wall Street Journal, “Nearly half of all Americans live in a household in which someone receives government benefits, more than at any time in history” (our emphasis). In 2008, that group encompassed 44.4 percent of the U.S. population, and the weak economy has undoubtedly increased the number as people are thrown onto unemployment benefits, early retirement and food stamps.

The really bad news:

As if that trend were not worrisome enough, it coincides with another one: The number of households that pay taxes to finance all that assistance is declining. The Tax Policy Center says that in 2005, 39 percent of households paid no federal income tax. Today, it’s 45 percent. Most of those do contribute to Social Security and Medicare, but not all: 13 percent of households pay neither income nor payroll levies.

As Alexander Tyler said:

A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury.

Common Core Standards For Public Schools: A Bad Idea

by Phyllis Schlafly

The No Child Left Behind Act, which allowed states to set their own public school standards for “proficiency,” is opposed and considered a failure by all factions in the education world. Therefore, we obviously should force all kids in every state to be held to uniform national standards of proficiency. Right?

No; wrong. But that bad idea is being aggressively promoted by the Obama Administration. The mailed fist in the velvet glove is the extraordinary river of taxpayers’ money used to force compliance.

Having taken over major parts of the banking industry, the mortgage industry, the auto industry, the college student-loan industry, and the health-care industry, the Obama Administration is now taking over the $600 billion public-school industry with taxpayers’ money from the Stimulus package. The White House concedes that “stimulus” is a negative word and avoids its use because it obviously didn’t stimulate jobs, but Stimulus dollars will stimulate the takeover of our children’s minds under Common Core Standards, the moniker for forcing national curriculum standards on all public schools.

Imposing common-core national standards sounds so alluring to those who look to the Obama Administration to solve all our problems. We would get rid of our messy, different 50-state variations of standards, and make our kids smarter by incentivizing them to aspire to a higher bar of achievement, make them all college-ready, enable them to rank higher on international tests, and enable them to better compete in the new global economy.

Au contraire. For starters, the imposition of national standards isn’t constitutional. Nothing in the U.S. Constitution authorizes the federal government to exercise any control over education, and this limitation is reinforced by a longstanding federal law that forbids the federal government “to mandate, direct, or control … school’s curriculum, program of instruction, or allocation of state or local resources.”

But the Obama Administration isn’t known for checking out its authority with the Constitution or the law. And control of public school curriculum is a very desirable prize for those who seek to control the future.

Even Jimmy Carter’s Secretary of Health, Education, and Welfare Joseph Califano admitted in 1977, “national control of curriculum is a form of national control of ideas.” The bait is use of our money, lots of it.

The Obama Administration plans to do an end-run around the Constitution and the federal law by tying the Common Core Standards to the granting or denying of federal appropriations, both the $4.35 billion Race To The Top money and even Title I funding. That effectively makes the Common Core Standards compulsory because state politicians are not likely to turn down billions of dollars.

So far, at least 36 states plus the District of Columbia have adopted Common Core Standards. Only Texas and Virginia have indicated reluctance to adopt.

Much of the argument for Common Core Standards is that our decentralized, 50-state control of curriculum is so unlike educational systems in most other countries, but so what! Americans honor our exceptionalism and our federalism, and we don’t want to be “fundamentally transformed” into European-style socialism.

Conclusions offered by the research into systems used in other countries are thin, unpersuasive and largely irrelevant to the United States. The countries cited have a long tradition of central government control plus a largely homogeneous culture, whereas the United States has a diverse population and strong traditions of parental authority, limited government, and state (not federal) control of education.

There is absolutely no assurance that parents or the public will approve the content of the proposed Common Core Standards. Many so-called education “experts” openly advocate imposing curriculum standards on content that parents find offensive, such as non-phonics in reading instruction and left-wing and feminist propaganda in social studies, and on methodology such as deliberately not teaching facts or basic arithmetic skills in order to emphasize creativity.

The better way to go is toward what is known as school choice, i.e., allowing parents to choose the school they want for their children, a.k.a. the free market in education. Private choice would sort out the curricula that do the job of making kids smart.

Children will never be adequately educated under a system run by bureaucrats handing out money and the teachers unions (the National Education Association and the American Federation of Teachers) spending the money in the classroom. The NEA and the AFT also have extraordinary millions of dollars extracted from their members to lobby for policies they want to have enacted by Congress, state legislatures and school boards and also to elect their favored political candidates.

Insurance Premiums Rising As A Result of Obamacare

Yesterday, The Heritage Foundation published this piece about how Obamacare would simultaneously cause insurance premiums to rise and prevent companies from raising them.

The Heritage article is extremely relevant given this piece from Monday’s Birmingham News:

In filings with the Alabama Department of Insurance, Blue Cross Blue Shield of Alabama and VIVA Health reported they already have increased some of their premiums for 2011. Some of the increases are directly related to the federal changes, some are not. And they warn that more increases are on the horizon.

The changes in Alabama, while slight compared to some changes in other parts of the country, are being monitored by federal regulators who say the new Affordable Care Act is not an excuse for companies to inflict massive cost increases on consumers…
…A spokeswoman said most of the increase is directly related to the new health care law’s mandate to eliminate the annual prescription drug maximum. VIVA had set its maximum at $3,000 on plans for companies with fewer than 50 employees, as a way to make them more affordable.

The Federal Takeover of Education

Great article in the American Thinker on national education standards and the Common Core Standards Initiative.  Thanks to State School Board Member Betty Peters for prompting the writing of this piece.

The Federal Takeover of Education

by Bill Costello

Federal control over education has been growing since the 1960s despite the fact that the word education does not appear in the Constitution of the United States.

Now, as the current administration pushes for national education standards, federal control over education is about to expand considerably at the expense of state and local control.

Texas Eduation Commissioner Robert Scott described the push for national education standards as “a step toward a federal takeover of the nation’s public schools.”

A little more than a year ago, state leaders launched the Common Core State Standards Initiative to develop a common set of K-12 standards in English and math. The standards they developed, known as the Common Core, are the first and only common education standards.  Read More…

Dems Pull EPA Appropriations Bill Over Cap and Trade Resolution

This flew a little under the radar, so in case anyone else missed it…

Last week the Senate Appropriations Committee was set to vote on an amendment to the Interior-EPA Appropriations bill that would have imposed a one-year ban on global warming regulations.  The amendment would have defunded the EPA’s regulatory program on global warming.  Appropriations are done yearly, hence the one-year ban.  The Obama administration and the EPA have attempted to do what Congress has thus far refused to do, by declaring carbon dioxide a pollutant and regulating it under the Clean Air Act.  Americans have made it clear they don’t support cap and trade legislation, and as a result, Congress has been unable to pass it.  Obama and the EPA are essentially circumventing the democratic process to impose and enforce cap and trade through the EPA…a backdoor method, if you will.

Senate Majority Leader Harry Reid has not yet said when a new vote might be scheduled.