The Education Gadfly Weekly

Thomas B. Fordham Institute President Chester E. Finn, Jr., Tuesday, hailed President-elect Barack Obama's pick for education secretary.

Obama tapped Arne Duncan, who has headed the Chicago school system for the last seven years. Duncan, 44, earned a reputation for pushing hard for better schools, including charter schools, in Chicago while at the same time reaching out to teachers, parents, and the business community (see here).

"Arne Duncan is a terrific pick, and not just because he's close to the President-elect and speaks Chicago-ese. He's a proven and committed and inventive education reformer, not tethered to the public-school establishment and its infinite interest groups, nor bedazzled by blandishments and commands from Washington," Finn said (see here).

Duncan will need all his experience to resolve the disagreements among education advocates, teachers unions, and civil rights groups concerning improving America schools (see here).

The Gadfly likes many of Duncan's initiatives. Under his leadership, charter schools in the nation's third-largest school district were expanded (while also held accountable for results) and performance-pay was introduced. He also supports recruiting people as teachers who have little classroom experience but solid academic backgrounds. In 2006, he called on Congress to substantially boost funding for the No Child Left Behind Act. Under Duncan, more Chicago students are taking challenging courses and student results on the Illinois state achievement tests have gone up.

The fifth in the series of biennial national and state-by-state report cards for higher education is out this month. Ohio, like much of the nation, is doing better, as usual, but not good enough.

Technically, it's called National Report Card on Higher Education but we like the short version-Measuring Up 2008 (see here). The report is issued by the National Center for Public Policy and Higher Education.

Much of the report seems same-old, same-old, although, like a really frightening horror movie it still scares the stuffing out of you each time you read it. It certainly ought to be scary reading for Ohio Board of Regents Chancellor Eric Fingerhut, who has ambitions of expanding enrollment in the state's colleges and universities by 230,000 students (see here). The new report reveals plenty of roadblocks a very able Fingerhut will have to circumvent, including an already prostrate state budget for the next biennium. 

For Ohio (see here), the report finds that eighth graders perform well in science, math, and reading but don't write well at all; blacks still lag substantially behind whites in high-school graduation rates, college enrollment, and in attaining college degrees. We get a B-minus for student preparation.

Overall college-enrollment rates for Ohio high schoolers are at the national average. The chances of a high-school freshman enrolling in college by age 19 are fair but adult enrollment is low. What's really disturbing, although not surprising, is that college is completely out of reach for a poor family in Ohio, which, according to the report, must devote 57 percent of its income to college expenses, even with tuition assistance and other financial aid. For families generally, the share of income needed to pay for college has risen substantially in Ohio.

Tuition and fees at Ohio State University, for example, have increased 98 percent since 2000-2001, according to the Board of Regents. At Ohio University, they're up 75 percent. In Ohio, students and families also pay more than families in the best-performing states. So we get an F for affordability, although so does Massachusetts, who earned an A for student preparation. The state is looking at such a deep budget hole it, likely, will be impossible to maintain even inadequate levels of help to needy college students.

The Measuring Up reports were inaugurated in 2000 and this year's edition has a number of new data sources and compares results over time. All this measures more accurately what is becoming the mantra of the results of American K-12 education-we're getting better at preparing our children for college but other nations are getting better even faster and we're falling behind-just as we were in the 2006 report.

One of the best parts of the Measuring Up reports are the graphs, which are done well and provide a huge amount of quick and pertinent information. Here's what the 2008 report tells us overall: American students are more likely than in previous years to take courses that prepare them for college but too many students are still graduating high school unprepared to be first-year college students. In the last decade, the likelihood that a high-school freshman will enroll in college by age 19 (roughly four years later) has increased only from 39 percent to 42 percent. And the proportion of 18-to-24 year olds enrolled in college has increased even less. College enrollment for working age adults is declining nationally. Once enrolled, the actual completion rate for American students is poor, according to the report. See a table listing all the index scores used in the report here.

There's a healthy economics lesson in this issue. As has been reported extensively in recent press accounts (see here), colleges and universities are pricing students out of the market. Higher-ed costs, on average, are rising faster than family incomes, food, medical care, and housing. The increase has made it more difficult for many students to attend college and could very readily explain the drop in adult enrollment. More students also are borrowing to attend higher ed institutions.

"State leaders face a crucial option for higher education policy as they balance their budgets," said Patrick M. Callan, president of the National Center, summing up the new report. "They can respond as most states have in the past, by continuing to allow tuition to rise dramatically and passing the brunt of the financial distress onto students and families. Or they can establish state policies for tuition and financial aid that balance the financial burden among the state, the institutions of higher education, and students and families. This second option protects educational opportunity at a time when the states and the nation need a better-educated citizenry."

State Rep. Larry Wolpert, R-Hilliard, is completing his fourth term in the Ohio House and will leave the General Assembly because of term limits. Fearful of what looming public pension fund deficits would mean to future state budgets, he introduced House Bill 645 (see here) requiring that new public employees be enrolled in so-called defined-contribution pension plans, rather than the defined-benefit plans that are dominant now for teachers and school administrators. Wolpert shares his case for this change below. These comments do not necessarily reflect those of the Ohio Education Gadfly and the Thomas B. Fordham Institute, but we think they are important to share with our readers. In fact, we recently issued a report on the State Teachers Retirement System and have commented on this issue in the past (see here).

In the last century at the height of the Industrial Age, it was common for employers to provide workers with pension benefits. Most of these pensions were based on a defined benefit: that is, a specific pension amount was based on years worked and salary earned. Now, in the 21^st century, it's becoming apparent that a defined-benefit pension program creates major liabilities for employers (including public-sector employers) and, in many instances, these liabilities cannot be met (see New York City as an example here). To remain competitive and still provide workers with a pension benefit, many private-sector pension plans have been converted to defined-contribution plans-plans in which the retirement benefit is based on contributions made to the pension plan by the employer and the worker. Since benefits are keyed to contributions, these plans are unlikely to have unfunded liabilities.

Around 70 years ago Ohio created a defined-benefit program for all state and local government workers. At the time, Ohioans were relatively well off and earned about 10 percent more than the average American. These government employee plans remain some of the best pension plans in the country-public or private. According to the Ohio Legislative Services Commission, Ohio government employee compensation now exceeds Ohio private-sector employee compensation by six percent, mainly because of the benefit of a defined-benefit pension.

However, Ohio, unfortunately, is not economically as rich as it was. We are, in fact, becoming poorer and grayer. Our economy is stagnant, we have lost hundreds of thousands of manufacturing jobs, and the state is barely maintaining its population level. Even before the current housing bubble burst, Ohio's per capita income was 10 percent below the national average. Out of the 50 states we rank 46^th in personal income growth. On average 1.5 percent more people move out of Ohio than move in. Ohioans who remain in the state are becoming older. The only reason we are not seeing population decline is births exceed deaths.

With the crash in the equities and real estate markets, there are even more concerns about preserving the commitments made to Ohio's government workers. If our state pension systems cannot make their financial commitments, ultimately Ohio's already hard-pressed taxpayers must make up the shortfall. State pension benefits are guaranteed under Ohio's constitution and taxpayers are ultimately on the hook for meeting these commitments. Increasingly, Ohio's taxpayers are either retired (often before they want to be) and living on limited fixed incomes, or they're working in lower-paying jobs that have replaced higher-paying industrial jobs. If state pension systems run out of money because they cannot continue to pay these generous government pensions, Ohio taxpayers could easily be stuck with a bill for billions of dollars in pension promises.

I introduced House Bill 645 to short-circuit a looming financial disaster for the state that would be far greater than what we face now. The idea is to protect both the incomes of retired Ohio government workers and Ohio's taxpayers. The bill simply states that any new entrant into a state pension system must be under a defined-contribution plan instead of a defined-benefit plan. The intent of the bill is to reduce any future unfunded liabilities in the pension systems. There is no time in the 127^th General Assembly to pass this pension reform bill and I am leaving public service at the end of 2008. But I hope that this bill will be used in the next General Assembly as the basis for reform as financial pressure continues to grow on these generous government benefit programs.

by Larry Wolpert

The fifth in the series of biennial national and state-by-state report cards for higher education is out this month. Ohio, like much of the nation, is doing better, as usual, but not good enough.

Technically, it's called National Report Card on Higher Education but we like the short version-Measuring Up 2008 (see here). The report is issued by the National Center for Public Policy and Higher Education.

Much of the report seems same-old, same-old, although, like a really frightening horror movie it still scares the stuffing out of you each time you read it. It certainly ought to be scary reading for Ohio Board of Regents Chancellor Eric Fingerhut, who has ambitions of expanding enrollment in the state's colleges and universities by 230,000 students (see here). The new report reveals plenty of roadblocks a very able Fingerhut will have to circumvent, including an already prostrate state budget for the next biennium. 

For Ohio (see here), the report finds that eighth graders perform well in science, math, and reading but don't write well at all; blacks still lag substantially behind whites in high-school graduation rates, college enrollment, and in attaining college degrees. We get a B-minus for student preparation.

Overall college-enrollment rates for Ohio high schoolers are at the national average. The chances of a high-school freshman enrolling in college by age 19 are fair but adult enrollment is low. What's really disturbing, although not surprising, is that college is completely out of reach for a poor family in Ohio, which, according to the report, must devote 57 percent of its income to college expenses, even with tuition assistance and other financial aid. For families generally, the share of income needed to pay for college has risen substantially in Ohio.

Tuition and fees at Ohio State University, for example, have increased 98 percent since 2000-2001, according to the Board of Regents. At Ohio University, they're up 75 percent. In Ohio, students and families also pay more than families in the best-performing states. So we get an F for affordability, although so does Massachusetts, who earned an A for student preparation. The state is looking at such a deep budget hole it, likely, will be impossible to maintain even inadequate levels of help to needy college students.

The Measuring Up reports were inaugurated in 2000 and this year's edition has a number of new data sources and compares results over time. All this measures more accurately what is becoming the mantra of the results of American K-12 education-we're getting better at preparing our children for college but other nations are getting better even faster and we're falling behind-just as we were in the 2006 report.

One of the best parts of the Measuring Up reports are the graphs, which are done well and provide a huge amount of quick and pertinent information. Here's what the 2008 report tells us overall: American students are more likely than in previous years to take courses that prepare them for college but too many students are still graduating high school unprepared to be first-year college students. In the last decade, the likelihood that a high-school freshman will enroll in college by age 19 (roughly four years later) has increased only from 39 percent to 42 percent. And the proportion of 18-to-24 year olds enrolled in college has increased even less. College enrollment for working age adults is declining nationally. Once enrolled, the actual completion rate for American students is poor, according to the report. See a table listing all the index scores used in the report here.

There's a healthy economics lesson in this issue. As has been reported extensively in recent press accounts (see here), colleges and universities are pricing students out of the market. Higher-ed costs, on average, are rising faster than family incomes, food, medical care, and housing. The increase has made it more difficult for many students to attend college and could very readily explain the drop in adult enrollment. More students also are borrowing to attend higher ed institutions.

"State leaders face a crucial option for higher education policy as they balance their budgets," said Patrick M. Callan, president of the National Center, summing up the new report. "They can respond as most states have in the past, by continuing to allow tuition to rise dramatically and passing the brunt of the financial distress onto students and families. Or they can establish state policies for tuition and financial aid that balance the financial burden among the state, the institutions of higher education, and students and families. This second option protects educational opportunity at a time when the states and the nation need a better-educated citizenry."

Thomas B. Fordham Institute President Chester E. Finn, Jr., Tuesday, hailed President-elect Barack Obama's pick for education secretary.

Obama tapped Arne Duncan, who has headed the Chicago school system for the last seven years. Duncan, 44, earned a reputation for pushing hard for better schools, including charter schools, in Chicago while at the same time reaching out to teachers, parents, and the business community (see here).

"Arne Duncan is a terrific pick, and not just because he's close to the President-elect and speaks Chicago-ese. He's a proven and committed and inventive education reformer, not tethered to the public-school establishment and its infinite interest groups, nor bedazzled by blandishments and commands from Washington," Finn said (see here).

Duncan will need all his experience to resolve the disagreements among education advocates, teachers unions, and civil rights groups concerning improving America schools (see here).

The Gadfly likes many of Duncan's initiatives. Under his leadership, charter schools in the nation's third-largest school district were expanded (while also held accountable for results) and performance-pay was introduced. He also supports recruiting people as teachers who have little classroom experience but solid academic backgrounds. In 2006, he called on Congress to substantially boost funding for the No Child Left Behind Act. Under Duncan, more Chicago students are taking challenging courses and student results on the Illinois state achievement tests have gone up.