Crisis averted?

It appears that the state legislature is about to take action that will defer the worst of the pain that was about to hit school district budgets as a result of the underfunded state pension system for school employees (PSERS).

Even more remarkably, a compromise was reached – approved in the House by an astonishing vote of 199-0 - that at least begins to address some of the long-term issues. (For new members of the state retirement plan, the “multiplier” will revert to 2% from 2.5%, vesting will occur at 10 years instead of 5, and new members would be prohibited from withdrawing lump-sum contributions at retirement.)

Although I am surprised at the speed with which this deal was struck - in the thick of the annual budget debate - I always considered it politically inevitable. There was never any possibility that the legislature would allow the 29.3% increase in the employer retirement contribution that was projected for fiscal year 2012/13 to go into effect. School boards and taxpayers would have revolted (and blamed the legislature).

More to the point, without legislative action, the Commonwealth – which is responsible for half of the employer cost of PSERS and for all of SERS – would have had a hard time producing balanced state budgets given the projected increases of 10.6%, 29.2% and 32.1%. The corresponding increases are now expected to be 8.7%,12.2%, and 16.7%. (Next year’s rate is still up in the air.)

But before we get too happy, it should be noted that under this proposal, most of the pain will be diverted until sometime after most current legislators have left office. That’s a fair criticism - but it’s not quite as bad as its being made out to be.

(a little math..)

Some of you business/finance majors will recall the concept of “present value”. In short, what that means is that $10 in your pocket today is more valuable than having it 10 years from now. The reason is that you could invest your pocket money at 2% annual interest, and in 10 years you would have about $12.20. So the “present value” of having $12.20 10 years from now is: $10.00. Of course, this calculation depends entirely on what interest rate is used.

In the case of a school district that is likely to borrow hundreds of millions of building construction dollars over the coming decades, the better analogy is this: having 10 dollars in your pocket today is 10 dollars you won’t have to borrow. Assuming a conservative borrowing rate of 4%, $10 today is worth $14.80 ten years from now – and $30.80 thirty years from now.

What are the implications? The proposed changes to the retirement contribution rate would result in districts spending considerably less in the “near years”, but considerably more in the out years. When you add up all the numbers, under this legislation, State College could end up spending an additional $44 million dollars in retirement costs over the next 30 years.

But that doesn’t take into account present value. When you do the math, assuming a conservative 4% borrowing rate, the difference between the savings in the early years and the additional costs in the out years is about $3.3 million in 2041 dollars, or about $1 million in current dollars. (I did this by converting each year’s savings/costs into 2041 dollars, and adding them up.)

It’s not $44 million, but a million dollars is still real money. With a little more “front-loading” we might have broken even.

Alert Citizens ... and the Budget

I appreciate that the Centre Daily Times thought to print a couple of the on-line comments concerning their story on the property tax refunds that were recently awarded to the Village at Penn State.

One writer wondered how it was possible that said property could be assessed for less than it cost to build it.

Another got more to the point: "Why would Penn State ever pay its fair share of taxes?"

I feel compelled to say: it has ever been thus. (Recall SCASD's ill-fated attempt in 1997 to tax the profit-making components of the Penn State empire? A futile effort, to be sure.)

The obvious should be noted, however: the difference comes directly out of your pocket, dear taxpayer.

But it's good to see that someone's paying attention.


About the budget..

For a process that resulted in over $3.4 million in cuts, I thought the development of next year's budget went remarkably smoothly. And considering that my only significant disagreement represents less than 1% of that total, it can't be considered more than a quibble. However...

The $30,000 in question represents the required school supplies that the district will no longer provide to elementary school students.

My first argument against eliminating this from the budget is that there won’t be any actual "savings" - more accurately, this is a cost-shift from district taxpayers to parents. In fact, since the district can buy supplies in bulk, parents will end of spending more, in total, than the district would have. Not to mention the environmental impact of a couple of thousand additional trips to Wal-Mart. (Though I suppose one could argue that this would be a stimulus to the local economy..)

Second, although the amount involved is modest, there will be a few families for whom this will be a hardship. Since it has long been our practice that 'inability to pay' should not be a barrier to students, making sure that doesn’t happen will become an administrative chore for somebody.

Finally, there's the philosophical argument: If the community has a civic obligation to provide an education to its children - which it does, both constitutionally, and, I believe, morally - that ought to include required supplies.

For what it's worth.

A framework for a 21st-century education

So what is the framework for a 21st-century education? As it happens, for the past eight years a group of business leaders and educators known as the Partnership for 21st Century Skills has been working on this very question. (You will note some real heavyweights on this list.) Here’s a synopsis of what they've come up with.  

Their work is based on the growing recognition that a mastery of course content (such as is measured by your typical standardized test) is no longer sufficient for success in the 21st century. This is because most of the jobs - including, increasingly, many 'white collar' jobs - that used to be the gateway to a successful middle-class life involve routine work that has, or will soon be, automated, computerized or out-sourced.

So the next generation of graduates will need more than mastery of the ‘3 Rs”. When the Partnership asked employers which skills should receive additional emphasis in school, this is what they heard: Economy
•    The ability to communicate effectively, both orally and in writing 89%
•    Critical Thinking/Analytical Reasoning Skills 81%
•    The ability to apply knowledge and skills to real-world settings 79%
•    The ability to analyze and solve complex problems 75%
•    The ability to connect actions to ethical decisions 75%

Similarly, another survey, referring specifically to high school graduates, identified these deficiencies:
•    Written Communication 81%
•    Leadership 73%
•    Work Ethic 70%
•    Critical Thinking & Problem Solving 70%
•    Self-Direction 58%

This lead the Partnership to identify the following framework of essential thinking skills (the “four C’s”)
•    Critical thinking and problem solving
•    Communication
•    Collaboration
•    Creativity and innovation

Of course, mastery of core subjects - reading and language arts, world languages, mathematics, economics, science, geography, history, government, civics and the arts – continues to be important. “Critical-thinking” and collaboration don’t occur in a vacuum.

But in addition, students need to develop life and career skills such as: Flexibility, Adaptability, Initiative and Self-Direction, Social and Cross-Cultural Skills, Productivity and Accountability, Leadership and Responsibility. It will also become increasingly important for students to develop literacy in Global Awareness; Finance and Business; Civics; Health; the Environment; and Information and Media

It should be noted that very little of this is currently “tested”.

The good news for State College is that we have long recognized the importance of 21st century skills, as evidenced by the “10 characteristics of a State High grad”:
•    a responsible and involved citizen
•    a clear and effective communicator
•    a competent problem solver who thinks critically and creatively
•    a productive individual who works independently and collaboratively
•    one who demonstrates respects for self and others in an increasingly diverse society
•    a user of evolving technologies
•    a knowledgeable practitioner of wellness behaviors
•    an informed consumer and effective manager of personal and family resources
•    a responsible steward of the environment
•    a participant in the arts

The challenge for us continues to be: how do we go about this admirable goal in an intentional and deliberate way?

The key is integration. There isn’t time in the school day to teach a course in critical-thinking, so schools will need to find ways to intentionally embed these skills within the core curriculum.

And here’s the question for school leadership: will we commit ourselves to helping students develop the capacity for critical-thinking, citizenship and creativity - even if these skills are not measured on The Test?