Friday, April 25, 2014

ICCSD: School Boundaries Simple Three-Step

April 25, 2014, 8:15 a.m.

Note and Summary: This blog essay was first posted two years ago. As Iowa City School District school boundary lines are once again in the news (e.g., Holly Hines, "Parents Want Kids Walking to School; Concerned Proposed Longfellow Boundaries Would Limit That Option," Iowa City Press-Citizen, April 25, 2014, p. A1), it seemed worthwhile to post it again. In brief, it's a suggestion that (1) to ease stakeholders' buy-in to any proposal the changes' effective date might better be six to seven years in the future, and (2) rather than regularly returning to these divisive and disruptive boundary issues when changes are needed, the School Board might be well advised to adopt a flexible boundary policy (with two, rather than one, boundary lines for each school), giving the Board, and its superintendent, the ability to respond to modest changes in population over time that only affect parents and children who are new to the District.

School Board Alternatives to Procrastination and Frustration

Who goes to which K-12 schools and why?

There are 15,000 school districts and school boards across the country confronting those questions.

[Photo of prior, not current, ICCSD Board. Photo credit: Nicholas Johnson.]

Apparently the Iowa City Community School District (ICCSD) school board is now doing so again.

Here's a three-step process for easing everyone's pain.

Step One. Decide to do it. You. The Board members. Not a community committee or a consultant or the Superintendent. Not a series of open forums prayerfully in search of what one board member called "a solution that satisfies the whole community." Alesha L. Crews, School board members talk about next steps; Say portable buildings a short-term solution, should not be permanent," Iowa City Press-Citizen, May 17, 2012, p. A3.

You are the buffer among the District's stakeholders -- students, parents, administrators, teachers, staff, property tax payers, and citizens. Face it, you'll never satisfy them all.

Only you can create "fairness" for the poor and working poor and lower middle class District parents, when the contests arise in which their interests are pitted against those of our most economically and political powerful families.

Remember, this is a public school system. No one but you has a right to dictate policy. Dissatisfied students and parents who want more absolute control over the details have options, from private schools, to other school districts, to home schooling.

Consider their wishes? Of course. But to think, as one board member put it, that it is "absolutely critical that we don’t ignore anyone’s needs," is a classic example of the triumph of hope over experience. It will inevitably produce the K-12 equivalent of the line that "a camel is a horse built by committee."

Nothing against camels mind you, but only the Board can create a rational, efficient, school system in which all the pieces fit, work together, and optimize the desired output -- increased numbers of students graduating closer to their academic potential.

As Nike says, "Just do it."

Step Two. Think specifically about District goals, not generally about drawing lines.

This is where "if you don't know where you want to go, the odds are very high that you'll never get there" comes into play.

Here are some of the destinations you might want to think about:

(a) Are you willing to take your time, or do you have to do it right now? You could announce a new approach to redistricting that will take effect six or seven years from now. That would eliminate most of the emotional opposition from students and parents affected by a shorter time in which to accommodate change. Most of those who will be affected by a future plan don't yet have kids in school -- or haven't even yet moved to Iowa City.

(b) How much flexibility, or rigidity, do you want? Flexibility is a variable that can be turned up or down, like a rheostat controlling the lighting in a dining room. Do you want fixed, immovable lines -- until the next time you have a redistricting crisis? Or would you like to give the Superintendent, and yourselves, some flexibility?

For example, you could provide (and, if (a) is adopted, not until, say, seven years from now) that (1) once assigned to an elementary school a student could finish at that school, but that (2) there would be two, not just one, geographical areas feeding that school. [i] One would be immediately contiguous to the school, a small enough area that virtually no projection of increased population would result in more students living there than the school could properly hold. The children of families living in, or moving into, that area would be assigned to that school. [ii] The other, larger area, would give the Board and Superintendent the flexibility to assign students living there to any one of three or four closest schools. (Of course, once assigned, under principle (a) the student could finish there.) Thus, as new families moved into that larger area they might know the probabilities of where their children would be assigned, but they would not have a firm commitment of a school from the District. (For more discussion and detail, see, e.g., "Disparity in Class Sizes: Simple Solution Rejected," October 13, 2010.)

(c) Settle upon your position with regard to the demographic balance represented in the assignment of "free and reduced lunch" students to the schools. You may want greater disparity than we now have, less, about the same, or have no position, leaving the outcome to chance -- the latter in all probability a policy that will produce an increase in the disparity. Just make up your minds; hopefully with specific numbers.

(d) There are many other variables you can think about, resolve, and announce. Do I have personal preferences on some of these District goals? Of course. But that's irrelevant. These are the Board's decisions to make. My focus at the moment is not on what you decide but what it is you decide about.

By laying out your own very specific metrics for where you say the District is headed, and providing that they will have little to no impact on today's students and parents, because they won't take effect immediately, you provide stability for the future, and virtually eliminate the emotional opposition.

Step Three. Evolve toward your goals. With a little advance individual reading and thinking, Steps One and Two should be capable of resolution with one or two weekends of Board-member-only workshops. Remember, it's your decisions we're talking about, not those of some consultant. Once you announce the outcome, where the District is headed, it will be possible -- without forcing decisions, but as needs for tweaking arise (like now!) -- to make those decisions consistent with your longer range plan (without imposing it wholesale ahead of schedule).

When I confront computer frustration, which seems to happen with some regularity, my computer consultant son, Gregory (http://ResourcesForLife.com) usually advises, "Well, Dad, there are three steps," following which he puts in simple, three-step language what it is that his cyberlaw professor father should do to get on with his personal life in our digital world.

I thought this "Three Simple Steps to School Redistricting" might be helpful for our local School Board as well. We'll see.
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Sunday, April 13, 2014

Tussling Over TIFs: Pros and Cons

April 13, 2014, 8:25 a.m.

Tough TIF Talk
Introduction: For years, TIFs have been controversial. ("Tax Increment Financing," by reducing a developer's property taxes, or directing them solely to his or her project, has the effect of transferring taxpayers' money to the bottom line of private, for-profit ventures.) Proponents cite a "benefit" -- essentially the existence of the developer's project -- while skeptics list a rather substantial list of the costs and burdens they believe more than outweigh any such benefit under any rational benefit-cost analysis.

The Gazette for Sunday, April 13, 2014, led its "Insight & Books" section (editorials, guest columns) with two guest columns taking opposite sides regarding the merits of TIFs: "Weighing the Pros and Cons of Tax Increment Financing; Talking TIF" -- found on the Opinion Page of The Gazette's Web site, and in hard copy as: Nicholas Johnson, "Costs Outweigh Possible Benefits," pp. A9, A12, and Chad Heiman, "TIF a Necessary Tool for Growth" pp. A9, A12.

Talking TIF: Costs Outweigh Possible Benefits

Nicholas Johnson
The Gazette
April 13, 2014, pp. A9, A12
http://thegazette.com/costs-outweigh-possible-benefits-20140413
[Submitted as: TIFs’ Multiple Costs Outweigh Any Possible Benefit]

There are many reasons why further enriching the backers of for-profit, private ventures with taxpayers’ money is a really bad idea. [Photo credit: Patrick McDonough.]

In 2006 I began a blog. Dozens of its 1000 essays deal with reasons to oppose TIFs. See “TIFs: List of Blog Essays,” http://fromdc2iowa.blogspot.com/2014/03/tifs-links-to-blog-essays.html.

Any one of them is reason enough to reject a TIF. To approve it, proponents need to show why none applies.

The issue is not whether a TIF has a single benefit. Benefit-cost analysis requires we total all the costs and burdens of that TIF and weigh them against its individual benefit.

Few if any can pass that test.

Ideological hypocrisy. How can those supporting free private enterprise, capitalism, and marketplace forces, who think “government is the problem” and want it “off their back,” justify taking money from the public collection plate?

Anti-democratic. City councils need voters’ approval of bonds for legitimate government projects. Yet they can give our money to their friends’ private projects on a whim.

Lowered credit rating. TIFs can impact credit ratings. Coralville went from a Moody Aaa credit rating, the highest, to a “lower medium grade” Baa2 in two years.

Opportunity costs. Spending money on one thing costs the lost opportunity to spend it elsewhere. Johnson County Supervisor Rod Sullivan once found a diversion of $700 million of property off the tax rolls. As a result, either we pay more taxes or Supervisors cut needed programs.

Unfairness to neighbors. The TIF-granting body’s neighbors often lose out as well – other communities and school districts with less money in their budgets.

Unfairness to competitors. TIFs tilt the playing field. They unfairly upset a free market, punishing honest competitors and benefitting no one except the TIF recipient.

Risky business. Money’s always available for good deals. If an entrepreneur, family, friends, investors, venture capitalists, and banks aren’t willing to fund a project, maybe taxpayers shouldn’t either.

TIFs complicate taxes. We don’t deserve more tax complexity and even less transparency.

“Money can’t buy love.” Why compete with bribes? A business that needs port access to the Pacific Ocean isn't coming to Iowa. If it did, it would leave for a bigger bribe. Maytag, offered $100 million to stay, left anyway.

TIFs are unnecessary. The Corridor is one of the fastest growing, lowest unemployment areas of Iowa. We already have what businesses want: skilled labor, transportation and communication infrastructure, quality education, cultural attractions and outdoor recreation.

TIF grantors’ poor skills, record. The subsidy-grantors' record is not great. Elected officials are more skilled at keeping contributors and constituents happy than at evaluating taxpayer-funded business proposals. TIFed projects have gone belly up, missed deadlines, and new jobs goals. With reasonable follow-up and transparency we’d know about many more. But TIFs in Iowa have more lenient provisions, and less oversight, than in most other states.

“Need” is unknowable. Many projects will go ahead without subsidy. If tax breaks are available, of course developers will say they need them. Maybe this is blackmail. Maybe they need to look harder for funding. There’s no way to know.

At a minimum, here are questions to ask before approving TIFs:

What is this government’s past record, when we compare promised results with ultimate return or loss?

Why is this project needed?

Why does that need exceed all conventional needs for public funds?

What will other government units lose? How much more will their taxpayers have to pay?

Of all possible TIF projects, why is this one a top priority?

Who benefits: all citizens, a small segment or primarily the recipient?

How much money is involved?

Why are those who will profit unwilling to invest what is needed? Are their reasons equally applicable to taxpayer funding?

Does the business plan indicate financial success, or reveal risks of failure?

If and when the recipient fails, skips town, goes bankrupt, or misses deadlines, how will taxpayers be protected?

What relationships are there between the potential recipient and the officials approving the funding?

How will the recipient’s unfunded private competitors be harmed?

TIFs shouldn’t be used at all. If used anyway, let’s do the wrong thing better:

Leave the tax code alone. Taxes are taxes, gifts are gifts – through appropriations, fully disclosed and audited.

Don’t privatize profits and socialize losses. It’s our money. Don’t give it. Loan it or invest it. Earn us some interest – with a City or State Bank. Invest our tax money; take an ownership share. Give us at least a gambler’s chance at occasional profit. Publicize the details.

We don’t have a fascist state, just a fascist economy, government and private enterprise blended to more resemble a purée than a stew with identifiable ingredients.

In Washington, D.C., it’s billions of tax dollars; in Des Moines hundreds of millions; in Iowa’s cities, TIFs. Without a taxpayer revolt, it’s unlikely to change.
_______________
Nicholas Johnson of Iowa City maintains www.nicholasjohnson.org and http://FromDC2Iowa.blogspot.com.

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TIF a necessary tool for growth

Chad Heiman
The Gazette
April 13, 2014, pp. A9, A12
http://thegazette.com/tif-a-necessary-tool-for-growth-20140413

The 21st century global economy we live and work in is consistently evolving. The rapid pace by which business owners must adapt to meet market demands has never been more challenging.

As a community and region it is critical that we promote public policy that allows companies the option to not only operate their business under the status quo, but create an environment that promotes capital investment, company expansion and job creation.

MISINFORMATION

On the local level, the key tool to aid in doing this is Tax Increment Financing (TIF). There has been misinformation about TIF; specifically, how it works and the side effects of the tool being used. Marion has chosen to be forward thinking and responsible in using TIF as an incentive for companies to do business in our community.

It has been written that TIF incentives are awarded by a City Council without any public approval process; this would violate Iowa Code. A public hearing before the City Council is required for any new TIF project before it gets approval.

An additional public hearing must take place before an amendment to the Urban Renewal Area (designated area in which TIF project occurs) is approved. The process is public and allows for citizen involvement.

How do cities protect their investment? TIF incentives are financed through new property taxes that are generated by the development; current public funds are not used to finance the TIF incentive. An estimate is provided in the development agreement, but the actual TIF award is determined by the assessor. Taxpayers are protected because whoever has title to the property will be subject to pay the associated property taxes. With new development, no existing revenues are lost because of TIF.

ESCO GROUP’S TIF

The ESCO Group in Marion was awarded a TIF incentive package for construction of its new corporate headquarters in Marion’s Tower Terrace Road corridor. The ESCO Group is a Marion-based company that provides plant automation, electrical construction, power engineering, testing and safety training. The City of Marion provided ESCO with a $200,000 grant and an annual 60 percent rebate on their property taxes starting in 2013 and expiring in 2022, The total rebate will not exceed $1 million, per the agreement.

Because of this incentive package, ESCO chose to locate in Marion and brought a capital investment of $5.8 million for the community. The expansion is leading to the creation of 25 new, highly technical, quality jobs in the corridor. A law of economics states that people respond to incentives. The ESCO Group responded by building in a newly developing region in Marion and the commercial property tax base is expanding because of it. Many projects would not have happened without the economic development tool of TIF.

Before the development of the ESCO headquarters, the 2.85-acre piece of ag-land that ESCO now sits on would bring an estimated $4,000 in property taxes. Following development of this land, the estimated property tax bill will stand at an estimated $130,000 annually. I think we can all agree that a 1,315 percent increase in assessed value is a quality return on investment for Marion, our schools and our citizens.

The return on investment is magnified when one considers that new employees in the community will need places to live, stores to shop and restaurants in which to dine. Existing private business benefits because of TIF. The positive impact of this economic development tool is felt well beyond the brick and mortar involved with new construction.

ESCO CEO Ray Brown told us: “By opening up this valuable development area, Marion has great opportunity to expand its tax base to more commercial-light industrial, helping ease the tax burden of residential while also creating quality of life opportunities within this development.”

FAIR PLAY DEALS

Positive community development is everyone’s goal. One recent opinion was that “trying to move businesses from one community to another with competing TIF bribes is a lose-lose game,” and I would agree with that assessment.

That is why the communities in the Cedar Rapids metro area have signed fair-play agreements with each other establishing guidelines for communities when creating TIF incentive packages in the Corridor. When Marion experiences expansion, the Corridor as a whole benefits; the same can be said about business growth in the entire Cedar Rapids metro area.

Marion is one of the fastest-growing communities in Iowa, and that presents challenges, but we are growing our commercial and industrial tax base in a responsible manner. Making policy decisions or sweeping generalizations about TIF without facts, and based on one occurrence or anecdotal evidence, is dangerous.

TIF is anything but a lose-lose tool — it is the tool that allows private enterprise to flourish while giving communities the opportunity to realize its true economic potential. It’s a win-win for everyone.
_______________
Chad Heiman is Communications Manager for Marion Economic Development Company. Comments: chad@medcoiowa.org

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Tuesday, April 01, 2014

April 1 Update: Early Deloitte Efficiency Proposals

April 1, 2014, 9:50 a.m.

Early Revelations Shock UI Faculty, Staff

Edward Snowden's revelations regarding NSA abuses have pretty much sucked all the oxygen out of the attention that was formerly focused on Julian Assange's documents.

But a couple of encrypted emails last evening, that had obviously been routed through a number of countries, make me think we're about to hear more from him -- especially locally. [Photo credit: Getty Images; multiple sources.]

Why Assange would care about the Deloitte efficiency study is, frankly, beyond me. He's never before indicated much interest in Iowa, its universities in particular, or higher education scandals in general. Something he wrote suggested he may have seen my blog essay of March 29th, "UI Says, 'Deloitted to Meet You,'" but I think that's unlikely.

Anyhow, it appears that somebody has provided him with some of the pre-inquiry proposals being considered by Deloitte. At least I assume it's too early for Deloitte to have suggestions coming from the Iowa universities' stakeholders. There's no indication who his source might have been, but it would seem it would have to have been someone inside Deloitte, the Regents, or upper echelons of the universities' administrators. Clearly the writing is riddled with the usual "consultant-speak": shared governance, transparent, collaborative, open, data-driven analysis, transformational, ongoing process.

What I have so far are two impressively long lists of suggestions, so I won't try to reproduce all of them here, but just provide some illustrative examples. If I get additional emails from that source throughout the day containing anything worth sharing with you, I'll add them.

It came as no surprise to me that the proposed "efficiencies" are not limited to cost savings, but include new or enhanced revenue streams and sales of assets. The Jackson Pollock painting, with an estimated value of $150-500 million, heads that list.

What is more surprising is the proposal to sell off the universities' "Lakeside Laboratory Regents Resource Center" at Lake Okoboji in Northwest Iowa. Why surprising? As mentioned in my March 29th blog essay, the University of Iowa's experts are perfectly capable of investigating and reporting potential cost-saving efficiencies. One recent such effort recommended the total elimination of ten or so programs, and reductions of up to $400,000 in others. One of the programs it recommended eliminating was the 1909 Lakeside Laboratory subsidy. This would have saved the University some $176,000 a year. Notwithstanding that recommendation, what happened? The Regents not only rejected that suggestion, they actually nearly doubled the subsidy! Why is it now back on the death penalty list? Either it's because of the change in the membership of the Regents, or more likely the idea is coming from another source.

One of the more imaginative proposals is the possible sale of the Pentacrest. There are some references to Marc Moen, but it's not clear if he is the one involved, and apparently there is no specific offer yet on the table from anyone. The suggestion is that Jessup Hall, Macbride Hall, MacLean Hall, and Schaeffer Hall would be demolished. Some sources indicate there's a proposal to replace them with multi-purpose towers, but that's not repeated anywhere in the documents I have. The Old Capitol exterior would be preserved, but the interior would be remodeled into $500,000 condo units, with a cocktail lounge inside an expanded dome. As a part of the proposal to sell the Finkbine Golf Course to a housing developer, it's possible a large glass structure will be built there, matching the architectural design of the UI Athletics Hall of Fame and Museum, across Mormon Trek. The new building would provide space for whatever current Liberal Arts and Sciences departments are currently in the four Pentacrest Buildings and are not eliminated for efficiency during future reforms.

One of the more imaginative possible sales may actually be favored by some faculty: the transfer of the football program to what is tentatively proposed to be named "The Budweiser Bullies," with a lease of the former Kinnick Stadium (to be renamed, "Budweiser Field"). "In Heaven There Is No Beer" is scheduled to replace the National Anthem.

One of the most voluminous collections of ideas involve reductions in payroll -- one of the University's most obvious cost centers. One idea is called "flip the instructors." Graduate teaching assistants will be preferred over adjuncts, adjuncts over non-tenured faculty, and non-tenured faculty over those with tenure. This alone will substantially reduce the cost of instructors.

The abolition of any future grants of tenure was to be expected. [Photo credit: Source unknown; appears in James Dean, "Deloitte Fights Back After Phoenix Four Fine," The Times [London]," October 5, 2013 ("The tribunal found in July that Deloitte had deliberately flouted professional standards when arranging two deals for the Phoenix Four and issued the fine — ten times its previous largest — last month.")]

What came as a surprise to me were two cost-saving measures that I had frankly never heard of before: (a) The abolition of benefits, such as health care and retirement funds. Apparently many American workers don't have such additions to their salaries.

(b) Since professors' pay is supposedly sort of half for teaching and half for research and writing, these components are to be treated separately. This alone will further cut pay in half for those who are not doing substantial scholarly writing.

Research and writing that a Regents' review committee considers "practical," and a meaningful potential boost to Iowa's economy, will be compensated on a per-piece basis, similar to what other freelance writers are paid in the corporate marketplace. (Teaching will be paid for at a relatively generous per-classroom-hour rate when compared with current proposals for an increased minimum wage.)

Well, that's all I -- and you -- have time for now.

If any of Assange's emails have come to you, feel free to supplement my list with whatever from them you care to share in the form of a comment, below.

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