Perspective

March 2007 • Volume 14 Number 3

Governor Henry’s pre-K plan hurts

children and expands government.

Speaker Cargill has a better idea.

For the Children?

2

PerspectiveMarch 2007 Vol. 14, No. 3

Brandon Dutcher .................................. Editor

Perspective is published monthly by the Oklahoma Council

of Public Affairs, Inc., an independent public policy organi-

zation. OCPA formulates and promotes public policy re-

search and analysis consistent with the principles of free

enterprise and limited government. The views expressed in

Perspective do not necessarily reflect the views of the

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Tulsa

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Oklahoma City

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Altus

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Oklahoma City

William Flanagan

Claremore

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Oklahoma City

Kent Frizzell

Claremore

John T. Hanes

Oklahoma City

Ralph Harvey

Oklahoma City

John A. Henry, III

Oklahoma City

Paul H. Hitch

Guymon

Henry F. Kane

Bartlesville

Robert Kane

Tulsa

Tom H. McCasland, III

Duncan

David McLaughlin

Enid

Lew Meibergen

Enid

Ronald L. Mercer

Bethany

Lloyd Noble, II

Tulsa

Robert E. Patterson

Tulsa

Russell M. Perry

Edmond

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Oklahoma City

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Norman

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Oklahoma City

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Ardmore

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Cover art: Chuck Asay, The Gazette (Colorado Springs)

Minimum Wage and Common Sense

By Gerald Zandstra

What are we to make of the

case for increasing the

minimum wage? It is important to

begin with a few basic moral

distinctions. First of all, Christian-

ity has always professed that

human beings have dignity and

worth because they are created in

the image of God. All human

beings, regardless of gender,

race, creed, or ability, are deserv-

ing of respect and justice.

Second, human beings possess

creativity. Our needs are met and

our humanity is most realized

when we can

apply our

intellect and

creativity to the

nature of

things. And it is

a biblical

principle that

human beings

be rewarded

justly for their

work. Indeed,

we are called to be productive so

that we can possess wealth to use

in God’s service.

The ultimate goal of the effort to

increase the minimum wage is

certainly a laudable one. The

problem arises in the efficacy of

the proposed solution and some of

the assumptions that it makes.

The first assumption is that the

group most often referred to as the

“working poor” is a static group –

the same people over a long

period of time. Increasing the

minimum wage would increase

their income, which seems like a

good thing.

But is this a sound assumption?

I would guess that the vast major-

ity of the people reading these

words have, at some time and

maybe for a period of time,

worked a minimum-wage job. The

minimum wage does not encom-

pass a particular class of people.

To make this assumption borders

on racism, classism, or gender

bias, depending on which people

you assign to it.

Low-paying jobs, for the vast

majority of people, are entry-level

jobs. They are where we begin, not

where we end. Raising the mini-

mum wage discourages employers

from hiring more people and, in

many instances, removes the entry

point of the job market, which

harms the very people those

backing the increase seek to help.

The second assumption is that

there will be no

economic effect.

But this simply

isn’t the case.

When the

government

puts in place a

certain public

policy, there is

always some

response that

comes from the

marketplace. For instance, increas-

ing the entrance fee to a public

park by five percent might lead us

to conclude that the park would

take in five percent more income

than it did last year. But, in fact,

this is not necessarily the case

because increasing the cost may

cause 10 percent fewer people to

visit the park, resulting instead in a

net reduction in revenue.

The problem with the minimum-

wage solution is that it leads to

negative consequences that are

equal to – or sometimes worse

than – the problem that the policy

sought to remedy.

Legislators ought to think long

and hard before they lead with

their hearts and ignore what their

heads ought to be telling them. ✪

Rev. Gerald Zandstra, an ordained

pastor in the Christian Reformed

Church in North America, is a senior

fellow at the Acton Institute.

Hiking the minimum

wage leads to negative

consequences that are

equal to – or sometimes

worse than – the

problem that the wage

hike seeks to remedy.

3

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Suffer

the

Little

Children

By Bryce Christensen

In his effort to expand non-parental

child care, Gov. Henry is citing the

available research on the subject quite

selectively. By promoting surrogate

parenting for three-year-olds while

disregarding the research exposing its

risks, Henry and his allies are doing

the children no favors.

5

Oklahoma’s three-year-olds

may be too young to debate

public policy. But perhaps more

than anyone else, they feel the

effects of the surest of all public-

policy principles: You get more of

what you subsidize, and less of

what you tax.

For some time now, Oklahoma

policymakers have been subsidiz-

ing – even completely paying for –

non-parental child care, choosing

to fund these child-care subsidies

by taking tax money from families

who have made financial sacri-

fices to keep one parent at home

with their young children.

This subsidize-and-tax

strategy continues to find

advocates despite clear

evidence that it is parental

care that best serves

almost all young children.

Oklahomans would

never know about the

virtues of parental child

care by listening to Demo-

crat Governor Brad Henry,

who actually boasts of the

state’s status as a “na-

tional leader” with 70

percent of all four-year-

olds in state-sponsored

developmental programs.

He now aims to spend an

additional $15 million to

expand such programs by

starting to enroll three-

year-olds. “All of the re-

search,” Gov. Henry ex-

plains, “tells us that the

early years are critical to a

child’s future success.”

The governor is right: a child’s

early years are critical. However,

despite his implicit claim that he is

drawing on “all the research” in

drafting his child-care policy, the

governor and his child-care allies

are actually reading the available

research quite selectively.

True, those wanting to spend yet

more state money for non-parental

care can point to studies linking

high-quality preschool instruction

to some long-term educational

benefits. In particular, some

studies do indicate that preschool

programs can reduce a child’s

later need for special education,

can lower the risk that a child will

repeat a grade, and can reduce

the likelihood that a child will drop

out of school before completing

high school.

Somehow, though, advocates of

more public spending on pre-

school programs never get around

to acknowledging studies showing

that virtually all of the cognitive

benefits of such programs wash

out by the time participants reach

third or fourth grade.

What is even more telling, when

these advocates of enlarged

preschool programs push to get

more and more young children

involved, they ignore the over-

whelming body of evidence

indicating that these programs are

of benefit only to children from

impoverished and severely disad-

vantaged households. Indeed,

even a very favorable Michigan

study of the much-lauded Head

Start preschool program con-

cludes with an admission that the

authors were “unable to provide

evidence of the program’s efficacy

for nonblack children.”

Of course, concerned policy-

makers will want to do what they

can do to help desperately needy

children, black and non-black. But

policymakers are misleading their

constituents when they justify yet

more non-parental child care for

the general population on the

basis of research that simply does

not apply to them. Worse,

policymakers are actually

hurting children when they

expand funding for non-

parental child care while

disregarding research

exposing the risks of such

care.

Anyone who is truly

attentive to “all the re-

search” on child care will

take note of studies show-

ing that young children in

non-parental care are

distinctively vulnerable to

epidemic jaundice, child-

hood meningitis, giardia-

sis, otitis media, hepatitis

A, and various other

diseases. Anyone willing to

learn from “all the re-

search” will also pay close

attention to an exhaustive

study by the National

Institute of Child Health

and Human Development

showing that putting young

children in day care makes them

more aggressive and belligerent –

even when that day care is of high

quality.

Those willing to investigate “all

the research” on child care will

also want to attend to a 1994 study

concluding that maternal employ-

ment – regardless of the mother’s

occupation – translates into a

reduced likelihood that children

will graduate from high school or

“Bye bye, sweetie. Daddy and I will pick

you up when you’re eighteen.”

©Cartoonbank.com

6

college. Likewise deserving atten-

tion is a 1996 study concluding

that “the more hours a mother

works, the lower [her] children’s

grades and the poorer their work

habits.”

The suspicion grows that Gov.

Henry and others pushing for more

public spending on non-parental

child care actually do not want to

look at “all the research.” They are

interested only in research that fits

their political agenda. How else

can Oklahomans explain a willing-

ness to subsidize non-parental

child care with tax money collected

from households with a stay-at-

home parent?

A Better Way

Fortunately, one prominent

Oklahoma lawmaker – none other

than Lance Cargill, the Speaker of

the Oklahoma House of Represen-

tatives – does seem disposed to

craft child-care policy that takes

into account “all the research.” His

approach to child care reflects

real understanding of the poten-

tially harmful effects of paying

subsidies for non-parental child

care out of taxes collected from

families caring for their own

children. Speaker Cargill has

introduced a measure (HB 1295)

that would allow households with

a stay-at-home mom (or dad) to

claim tax credits equivalent to

those now claimed by Oklahoma

parents who put their children in

daycare.

The Speaker’s explanation of

his initiative is compelling: “I’m a

firm believer in parents being able

to stay home with their children.

It’s something we should be

encouraging in Oklahoma, not

discouraging through unfair tax

policies. Stay-at-home moms

should not be excluded from being

able to get tax credits similar to

parents who put their children in

daycare. This is an issue of basic

fairness.”

Oklahoma’s babies and toddlers

may be too young to join in the

debate over this issue, but no one

has more at stake. It is past time to

end subsidize-and-tax policies that

push young children out of the

loving care of a parent and into

the bureaucratic care of a

stranger. ✪

Bryce Christensen (Ph.D., Marquette

University) is an assistant professor of

English composition at Southern Utah

University. He is the author of Utopia

Against the Family (Ignatius, 1990)

and editor of several other volumes,

including Day Care: Child Psychology

and Adult Economics. His latest book

is Divided We Fall: Family Discord and

the Fracturing of America (Transac-

tion, 2005). His article “Early Child-

hood Education in Oklahoma: Cui

Bono?” appeared in the September

2004 issue of Perspective.

Nanny-State Expansion Dies in Senate; Henry Vows to Fight OnGov. Brad Henry’s plan to create a prekinder-

garten program for three-year-olds died February 21in the Senate Appropriations Committee. The legisla-tion, Senate Bill 518, failed to advance on an 8-to-8vote.

State treasurer Scott Meacham, for whom the jobis apparently not a full-time one, took time out of hisschedule to argue in favor of Henry’s plan for furthergovernment involvement in the lives of toddlers. Alsoin favor of the measure were Democrat senatorsJohnnie Crutchfield, Tom Adelson, Randy Bass,Kenneth Corn, Mary Easley, Charlie Laster, SusanPaddack, and Nancy Riley.

To their great credit, voting against the plan wereRepublican senators Mike Johnson, David Myers,Patrick Anderson, Randy Brogdon, Brian Crain,Clark Jolley, Owen Laughlin, and Jonathan Nichols.

“Henry said although the bill is dead under Senaterules, the issue is still alive and he will bring it up indiscussions with legislative leaders at every opportu-nity,” the Associated Press reported. “I tell you what,this fight is not over, not by a long shot,” the gover-nor said.

The Tulsa World reported that “Henry said hewould consider other ways to advance the issue,

possibly by executive order.”Which should come as no surprise. As Bryce

Christensen pointed out in these pages in Septem-ber 2004 (‘Early Childhood Education in Oklahoma:Cui Bono?’), there are countless politicians, bureau-crats, lobbyists, and political activists in this statewith a vested interest – political and/or economic –in the expansion of “early childhood education” (i.e.,preschool daycare).

“Despite all of the strengths of at-home mothersas educators, and despite the risks of replacingthose mothers with paid surrogates, Oklahomans willwait a long time before they hear advocates of early-childhood education programs acknowledge thosestrengths or risks,” Dr. Christensen wrote. “Why thisstrange reluctance to address issues truly central toearly childhood education? It is hard not to suspectthe distorting influence of self-interest. After all,mothers who stay at home with their children do notcreate new opportunities for educators or bureau-crats or lobbyists. Those opportunities open up onlyby persuading parents to turn their children over tosurrogates while opening up their tax checkbooks topay other people’s salaries.”

– Brandon Dutcher

7

Limiting Government, Advancing Freedom

By Gov. Mark Sanford

Any read through history demonstrates how essen-

tial limited government is to preserving freedom

and individual liberty. What life experience shows us

is that limited government is equally important in both

making your economy flourish and in enabling citizens

to get the most for their investment in government.

Let me be clear up front that in the long run the only

way to make government truly efficient is to make it

smaller, and this seems to me to be the real clarion

call in highlighting the importance of privatization

efforts. Efficiency and government are mutually exclu-

sive in our system, and if our Founding Fathers had

wanted efficiency I suppose they would have looked

more closely at totalitarian systems. They wanted not

efficiency, but checks on power in our republic.

In attempting to advance limited government,

personal freedom, and free

markets over government fiat,

here are a few things we have

found in South Carolina:

Friedman, not freedom, sells:

So much of why we should

limit government is tied to

freedom, but sadly we have

found greater leverage in

talking about how Thomas

Friedman’s newfound and so-

called Flat World necessitates

limits to government. The point

we have made continually

over the past three-plus years

is that for our state to survive

and thrive in this new competi-

tion of 6.5 billion people across planet earth, we must

make changes to our government cost structure.

Business principles trump ideology in advancing

limited government: In the world of business, when

your business model changes, you change with it.

South Carolina used to institutionalize every mental

health patient in the state on a single piece of prop-

erty, but then the business model changed and the

number of patients our state institutionalized dropped

from several thousand to fewer than 200. Despite the

change, we continued to hold on to the $50 million

piece of property. We made the business case, and

pointed out that if the vastly underutilized property

were sold, there would be three dividends: one to

mental health patients, another to taxpayers, and a

third to children in the local school district because the

property would be back on the property tax rolls.

Similarly, in the business world, you constantly

reshuffle the cards, from low performers to high

performers. Government doesn’t. The case in point for

us was the port in Port Royal, which does less volume

in a year than the Port of Charleston does in a week.

We said let’s reshuffle the cards and after a fair

amount of consternation, the sale is now in motion.

That’s been matched by our efforts to maximize return

on investment to taxpayers through privatization of

things as wide ranging as the state-owned car fleet,

golf courses, and even bait and tackle shops once run

by state government prior to this administration’s

arrival!

There is no substitute for time and focus: Milton

Friedman once said the ultimate measure of govern-

ment is what it spends. This is certainly not the only

measure — but it is a very good place to start. As a

consequence, we have spent a lot of time digging into

the budget. It is said in Washington

that presidents often get diverted

and focused on foreign policy

because it is seemingly a loftier

issue. At the state level, there are a

wide variety of things to take a chief

executive’s eye off budget matters,

but I think we all need to remember

the first real barometer on whether

we are advancing the conservative

cause of limited government is the

budget. It was Paul Kennedy is his

book The Rise and Fall of the Great

Powers who talked about how not

foreign policy but, ultimately, eco-

nomic might was the driver of a

nation’s viability in the long run.

Finally, you can go back to the Ten Commandments

to see warnings on envy — on coveting what someone

else has. Tragically, envy is part of human nature and

in some cases it can be used as a tool in attempts to

limit government. We frequently make the point that

government shouldn’t grow faster than the people’s

pocketbooks and wallets — and what we’ve found is

people, when they compare their wallets with the

growth of government, nearly always agree!

Long story short is that it occasionally gets lonely

holding our position in the struggle between the

growth of government and freedom — and in advanc-

ing market-based solutions in areas such as education

or health care. And, as a consequence, I’ve grown to

appreciate my fellow soldiers in this greater battle for

freedom. ✪

Mark Sanford is the governor of South Carolina. This article

is excerpted from Reason Foundation’s Annual Privatization

Report 2006, available online at www.reason.org/apr2006.

The first real barometer

on whether we are

advancing the

conservative

cause of limited

government is

the state budget.

8

In their never-ending effort to “improve” education,

state legislators – typically at the behest of public

school bureaucrats and special interests – periodi-

cally try to increase regulation of homeschooling

parents. This makes K-12 education a unique en-

deavor: It’s a field in which the failures regularly, and

astonishingly, insist that they should be able to

regulate the successful.

Never mind that homeschoolers consistently outper-

form children institutionalized in government schools

or that the longer a child is institutionalized in a

government school the worse he does in relation to

homeschooled children. Never mind that international

surveys of academic performance show that in the

course of 12 years government schools manage to

turn perfectly capable children into world-class

dullards. Never mind, further, that a study of 7,000

homeschooled adults found, among other things,

much higher levels of civic involvement, participation

in higher education, and life satisfaction among

homeschooled adults than among adults who were

not homeschooled.

None of that matters. From time to time, the same

public school bureaucrats who are normally occupied

achieving previously unknown levels of semiliteracy

and illiteracy among otherwise normal American

children succumb to a compulsion to abandon their

diligent pursuit of intellectual mediocrity in order to

offer proposals for regulating homeschool parents.

Think of it as “the revenge of the failures.”

The latest example comes to us courtesy of Okla-

homa state Senator Jim Wilson (D-Tahlequah). It turns

out there’s an emergency, a swelling crisis, that needs

fixin’ right here in Oklahoma City! How do we know?

Well, in a recreation of the role of “Professor” Harold

Hill in The Music Man, Senator Wilson is in effect

telling Oklahomans, “You’re closing your eyes to a

situation you do now wish to acknowledge.” Trouble,

trouble, trouble, trouble. As “Professor” Wilson puts it

somewhat less lyrically in his Senate Bill 375, which

was introduced in January: “It being immediately

necessary for the preservation of the public peace,

health and safety, an emergency is hereby declared

to exist …”

Now what is this threat to public peace, health, and

safety that constitutes a state of emergency? The

discovery of an Oklahoma-based Al-Qaeda terror

cell? An outbreak of mad cow disease in Tahlequah?

A visit to Oklahoma by Paris Hilton?

No, “Professor” Wilson is apparently lying awake

Right Here

in Oklahoma City!Oklahoma’s crack team of government educators, the folks who spend

billions of dollars a year to achieve heretofore unknown levels of

semiliteracy and illiteracy among otherwise normal children, periodically

take time out from their educational misfeasance to offer ominous warnings

that we’ve got trouble – terrible, terrible trouble – lurking in homeschooling

homes all across the state. But as was the case with the flimflam of a

certain “Professor” Harold Hill, these warnings are just part of a swindle.

By Bruce N. Shortt

Ya Got Trouble

9

nights worrying about the possibility that a home-

schooling mom somewhere might be lounging in bed

eating bon bons instead of educating junior.

But before legislators and regulators try to remove

an imagined speck in the eye of homeschooling

parents, they ought to consider removing the very real

log in the eye of Oklahoma’s highly trained education

professionals. According to the U.S. Department of

Education’s National Assessment of Educational

Progress (NAEP), often known as “The Nation’s Report

Card,” Oklahoma’s professional educators have failed

Oklahoma’s children and taxpayers as follows:

1. Reading: 75 percent of Oklahoma’s 4th-graders

cannot read at grade level, with an astonishing 40

percent not being able to read at even a basic level.

By 8th grade, 75 percent of Oklahoma’s children still

cannot read at grade level, with 28 percent being

unable to read at even a

basic level.

2. Mathematics: 71 percent

of the state’s 4th-graders

are below grade level in

math, with 21 percent

lacking even a basic

grasp of mathematics.

By 8th grade math illit-

eracy is burgeoning in

Oklahoma: 79 percent of

students are below

grade level in math, with

37 percent lacking even

a basic understanding of

mathematics.

3. Science: 76 percent of

the state’s 4th-graders

are below grade level,

with 30 percent lacking even a basic knowledge of

science. By 8th grade, 75 percent of Oklahoma’s

children are below grade level, with an amazing 33

percent lacking a basic grasp of the subject.

Lest anyone be under the impression that the NAEP

has unusually high academic standards, testimony

before the NAEP board of governors indicates, for

example, that the advanced mathematics questions

for the 8th-grade NAEP are at best comparable to 5

th-

grade questions in Singapore’s math curriculum. So,

while the NAEP may not require high levels of aca-

demic competence, it does highlight Oklahoma

schools’ systematic failure to educate.

Note, too, that Oklahoma’s public schools manage

to produce these prodigious levels of academic failure

by spending, according to their own Enron-like ac-

counting standards, roughly $7,200 per student per

year (more than $11,000 per student per year using

accounting standards that would keep regular folks

out of prison). Obviously, these amounts would pay

tuition at many, many excellent private schools in

Oklahoma.

Unfortunately, Oklahoma parents generally don’t

know much about the actual academic performance

of Oklahoma’s public schools. This isn’t entirely their

fault. Oklahoma’s highly trained education profes-

sionals diligently work at making sure that parents

aren’t getting the facts.

Oklahoma’s education bureaucrats, together with

their legislative enablers, have adopted, for example,

a state “accountability test” (the Oklahoma Core

Curriculum Test) with standards so low that parents

can be told that 83 percent of Oklahoma’s 4th-graders

are reading at grade level, rather than the 25 percent

that the NAEP reports. Only Mississippi, Alabama,

and Georgia have been more aggressive in trying to

pull the wool over par-

ents’ eyes about reading

performance.

Oklahoma’s low

academic standards

aren’t limited to reading.

An American Enterprise

Institute scholar exam-

ined the rigor of the

accountability tests

given in each state.

Oklahoma’s tests earned

the distinction of being

one of two states that

received a grade of “F.”

But the bravura

swindle by Oklahoma’s

highly trained education

professionals doesn’t

end there. They’ve also managed to reduce the

number of Oklahoma public schools failing to make

Adequate Yearly Progress under No Child Left Behind

by 85 percent through the simple expedient of lower-

ing standards.

This is a twofer for the educrats. Parents now are

under the impression that 97 percent of Oklahoma’s

public schools are making Adequate Yearly Progress,

the highest percentage of any state in the nation.

Moreover, the education bureaucrats’ student-victims

in low-performing schools are, as a result of this

bureaucratic public relations ploy, denied free tutor-

ing services and the opportunity to transfer to a better

school within their district.

Then there’s the embarrassing problem of

Oklahoma’s dropout rate. Oklahoma is among the

national leaders in underreporting its dropout rate

(Oklahoma ranks 12th out of 47 states in the national

dropout lie-a-thon). So, parents and taxpayers also

Before politicians and regulators

try to remove an imagined speck

in the eye of homeschooling

parents, they ought to remove

the very real log in the eye of

Oklahoma’s education professionals.

10

don’t know that roughly 30 percent

of Oklahoma students leave high

school before graduating.

Interestingly, 57 percent of

dropouts said in a survey that their

schools didn’t do enough to make

students feel safe. Even higher

percentages wanted increased

supervision and more classroom

discipline. Evidently, rather than

being the slackers they are often

portrayed to be, most dropouts

recognize that their schools are

dangerous. Consequently, they’ve

come to the entirely rational

conclusion that they would rather

be safe than be warehoused in

their public school serving as a

revenue unit for the system.

Perhaps State Superintendent

Sandy Garrett’s opponent last

November, Bill Crozier, wasn’t so

far off base when he recom-

mended that thick textbooks be

placed under every student’s desk

for self-defense during a school

shooting.

Why, then, would Senator

Wilson or any other politician think

that homeschooled children would

benefit from more regulation by

Oklahoma’s crack team of govern-

ment educators? Well, apparently

Wilson has been persuaded that

some Oklahoma homeschooling

parents are removing their chil-

dren from Oklahoma’s govern-

ment schools just so they can deny

them an education at home.

Interestingly, SB 375 does not cite

evidence that this is happening or

that it’s an immediate threat to

public peace, health, or safety in

Oklahoma or anywhere else.

A little reflection, however,

would reveal that this worry is

palpably absurd. After all, if you

really don’t want your children to

be educated, perhaps your most

effective, and certainly your

lowest-cost, strategy would be to

institutionalize them in one of

Oklahoma’s government schools.

That obviously requires much less

effort and expense than keeping

your children at home.

Nevertheless, Wilson appar-

ently believes that the same

bureaucrats who daily busy

themselves producing massive

failure in Oklahoma’s public

schools should have more power

over homeschooling parents,

even though homeschooling

parents are already doing a good

job with their own children.

Think of it: The public school

dropout problem alone dwarfs

any difficulties that might or might

not exist among homeschoolers.

In fact, if the provisions of the

Oklahoma law that SB 375

amends were strictly enforced

against public school parents,

Oklahoma would not be able to

build jails fast enough to create

the needed space for incarcerat-

ing the parents of public school

truants and dropouts.

Fortunately, it appears that a

“Marian the librarian” has

emerged to let the professor know

that Oklahomans have figured

out that SB 375 is a con job. The

bill will not be heard in commit-

tee, which means it is dead for this

year.

Nevertheless, we can all agree

with the professor that there’s

trouble right here in Oklahoma

City, but not of the sort he imag-

ines. Oh yes, there’s trouble,

friends – we got trouble that

needs fixin’ right here in Okla-

homa City! With a capital “T” and

that rhymes with “P” and that

stands for Public School.

So now that we’ve identified

Oklahoma’s real education

problem, here is my modest

proposal: Oklahoma’s

homeschooling parents should

regulate Oklahoma’s public

school bureaucrats until

Oklahoma’s public school stu-

dents academically outperform

homeschooled children. ✪

Bruce N. Shortt (J.D., Harvard

University, Ph.D., Stanford University)

is an attorney in Houston.

Oklahoma Democrats♥ Homeschoolers

Oklahoma law is considered bynational home education

experts to be one of the best in thenation. According to the HomeSchool Legal Defense Association,“Oklahoma is the only state with aconstitutional provision guarantee-ing the right to home school.”

According to Article 13, Section 4of the Oklahoma Constitution, “theLegislature shall provide for thecompulsory attendance at somepublic or other school, unless othermeans of education are provided, ofall the children in the State who aresound in mind and body, between

the ages ofeight andsixteen years,for at leastthree monthsin each year”(emphasisadded).

During theOklahomaConstitutionalConvention,delegate J. S.

Buchanan, a Democrat fromNorman, suggested that the “othermeans of education” language beadded. Delegate J. A. Baker fromWewoka, another Democrat,agreed: “I think Mr. Buchanan hassuggested a solution. A man’s ownexperience sometimes will teachhim. I have two little fellows that arenot attending a public schoolbecause it is too far for them towalk and their mother makes themstudy four hours a day.”

The motion to add the “othermeans of education” language wasseconded by none other thanconvention president William H.“Alfalfa Bill” Murray.

Delegate Baker, in what has tobe one of the best sentences everuttered by an Oklahoma Democrat,put it well: “People ought to beallowed to use their own discretionas to how to educate their children.”

– Brandon Dutcher

“Alfalfa Bill” Murray

11

By Steve Anderson

A PensionDeficitDisorder

Nearly everyone has known someone – usually a

young person – who has let his or her credit card

charges get out of control. Often the person will make

the minimum payments until he realizes he isn’t

reducing the amount owed and in fact may be going

deeper into debt. By the time he comes to see a

financial professional he often is past the point of no

return. Bankruptcy is the only viable option.

Typically we think of these individuals as being

fiscally irresponsible. Their behavior raises the cost of

doing business for the rest of the consumer base.

What Oklahomans may not realize is that our elected

officials have been acting this way for nearly 70 years.

The framers of Oklahoma’s constitution wisely

included a ban on most forms of state debt so that

politicians could not bankrupt the state with give-

aways. However, our elected officials have found a

big, big loophole. So it is that we now have a

multibillion-dollar unfunded liability accumulating in

the state’s retirement funds.

A March 24, 2006 report from the Oklahoma Pen-

sion Oversight Commission (OPOC) entitled “Crisis in

the Oklahoma State Pension Systems” included this

bit of cheerful news for Oklahomans: “Oklahoma’s

Thanks to a 70-year credit card binge

by Oklahoma politicians, the state now

has more than $10,000,000,000.00 in

unfunded liabilities in its pension plans

– and you the taxpayers will bear the

burden. The current solutions being

proposed – infusing the systems with

cash or diverting certain tax revenues

to them – are not solutions at all. We

need real political leaders who will

state the obvious: We must abandon

our archaic defined-benefit system and

move into the 21st century.

pension systems are in a state of serious financial

crisis. For many years, warnings have been issued,

only to be ignored. In the meantime, the problem has

grown worse and the financial problems have only

accelerated. A crisis state has been reached.”

The report went on to point out that “Oklahoma has

more than $10 billion in current unfunded liabilities in

its pensions” [emphasis in the original] and “four

times more money than is currently provided is

needed to just keep the fund level from dropping

below the current level.”

The bulk of this debt is in the Oklahoma Teachers

Retirement System (OTRS), which has $7.673 billion

in unfunded liabilities, but all of the state’s retirement

systems (with the exception of the judicial retirement

system) contribute to the debt.

Guess who’s on the hook for the politicians’ irre-

sponsibility? Published opinions from the attorney

general (see, for example, No. 96-21 and No. 05-040)

indicate this debt is an absolute obligation of the

state. This means the ultimate responsibility for

paying off this $10 billion debt rests with the Okla-

homa taxpayers.

However, even before Oklahomans directly feel the

12

effect on their pocketbooks there will be a hidden

cost. As OPOC correctly pointed out, “State govern-

ment faces negative impact from the funding crisis

much sooner than the general public. Left unchecked,

the State’s credit rating could be downgraded. The

unfunded status of the State’s pension systems has

become a more and more prominently mentioned

concern of the rating agencies in their rating reports.

A downgrade in the State’s bond rating would lead to

higher borrowing costs and would siphon off funds

that could otherwise be used to fund essential state

services.”

Just how real are these unfunded liabilities? They

are very real. They represent amounts owed to retired

or currently employed teachers, state employees,

firefighters, and law enforcement officers in the form

of promised retirement benefits that are nonnego-

tiable. As OPOC pointed out, “If the problem is left

unaddressed, the systems will eventually require a

cash infusion from the State of staggering proportions

to meet current payment obligations. This could result

in the need for the State to raise taxes or dramatically

reduce funding to vital State programs.”

examples have spotlighted the inherent problems

with defined-benefit plans.

Unfortunately, the flaws of defined-benefit plans

are even more pronounced in the public sector. For

years a perverse incentive existed where Oklahoma

politicians could use the plan to buy votes but hide

their actions from all but the most knowledgeable

financial wizards. For many years this debt was kept

“off the books” thanks to flaws in governmental

accounting rules which allowed politicians to cover

their tracks. However, recent rule changes enacted by

the Governmental Accounting Standards Board

(GASB) have required government entities to reveal

these debts to the public in their annual financial

statements.

Defined-benefit plans are typically funded by

contributions from both the employee and the em-

ployer, but in the case of OTRS taxpayers have been

the victims of politicians’ profligacy from day one.

When OTRS was formed in the 1940s, legislators

chose to grant benefits to teachers who had not yet

contributed towards their retirement. Since that time,

legislators have done things like borrow money from

Incredibly, the amount of the total debt is most

likely understated since the assumptions used in the

calculations to arrive at the estimate of future pay-

ments typically lag the realities of the real world. For

example, the assumptions use an estimated life

expectancy that cannot predict breakthroughs in

modern science that may extend life past the esti-

mated benefit payout life currently used. Additionally,

since benefit improvements for each system’s retirees

are voted on by the legislature, the systems can only

estimate what they believe may happen with future

benefit increases.

How Did We Get Here?

How did we get into this mess? The simple answer

is that the state embraces a type of retirement plan

that has shown a tendency to become fiscally insol-

vent. Defined-benefit plans such as the state uses in

each of its systems have inherent flaws that are

almost unavoidable. In a defined-benefit plan the

employer guarantees a certain benefit payment to an

employee for his or her lifetime, come hell or high

water. The collapse of Bethlehem Steel, the continu-

ing crisis at General Motors, and dozens of other

OTRS for pet projects and grant benefit increases

without providing money to fund them – knowing full

well that the bill for these acts would not come due

during their tenure. (With respect to OTRS, more than

one state legislator has been known to quip, “Thank

God for term limits.”)

In effect, politicians have used a “credit card” to

buy votes from the members of the school-employee

labor unions. With minor variations, the situation is

similar in each of the other state retirement systems’

accumulation of unfunded debt.

A recent example was seen during the fiscal “crisis”

from 1999 to 2002 when Oklahoma legislators were

strapped for cash with which to appease the Okla-

homa Education Association (OEA), Oklahoma

Retired Educators Association (OREA), and the

Oklahoma Public Employees Association (OPEA).

Legislators used their “credit card” to run up charges

of nearly $2 billion by giving ad hoc benefit improve-

ments to the members of those groups.

In an effort that was similar in effect to putting a

Band Aid on a gaping ax wound, legislators passed a

law directing four percent (it will increase to five

13

percent in 2008) of Oklahoma’s individual income tax,

corporate income tax, sales tax, and use tax receipts

to go to the OTRS. This means millions of dollars a

year (in fiscal year 2006 it was more than $202 mil-

lion) are diverted from important tasks like locking up

prisoners and fixing roads and bridges.

A similar diversion is used by the Oklahoma Law

Enforcement Retirement System (OLERS), Oklahoma

Police Pension and Retirement Plan (OPPRS), and the

Oklahoma Firefighters Pension and Retirement

System (OFPRS) to finance benefits. Part of the cost of

insurance purchased by hardworking Oklahomans is

a state tax charged to the insurance companies

called the insurance premium tax. Oklahomans may

think these tax receipts are spent regulating the

insurance industry and/or helping the poor afford

insurance, but in 2006 more than $145 million was re-

directed to the aforementioned retirement systems.

OPOC’s Non-Solutions

“The current health of the State public pension

systems is poor,” the OPOC report concluded. “This

report is a call to action for Oklahoma policymakers

similar to the warning of a heart attack. The patient

change the situation that created this mess.

Third, OPOC suggests dedicating a portion of

excess revenue collections to the pension systems.

Again, we have the same fundamental flaw as in

recommendations one and two above.

Fourth, OPOC suggests that policymakers “pursue

other financing mechanisms, such as pension obliga-

tion bonds [POBs], to infuse additional money into the

systems.” On the face of it this idea has some appeal.

But OPOC fails to point out the risk to the state –

millions of dollars per year – if the market were to

take a prolonged dip during the first years of the

POBs. More money would be added to our debt payout,

and at the end of the day we still haven’t done one thing

to address the underlying cause of the problem.

How Then Do We Solve the Problem?

How do we get out of this mess? The answer is

simple but the execution is complex.

We must remove the ability of the legislature to

fund benefits without providing funding. No doubt the

framers of Oklahoma’s Constitution would have

included a provision to limit unfunded liabilities if

they had known they would exist. Without a constitu-

can choose to eat healthier, exercise, and stop smok-

ing and continue to live a long, healthy, productive

life. Or the patient can be stubborn and refuse to

change his ways, thus choosing a path that leads to

an early grave. The choice is up to Oklahoma’s

policymakers.”

OPOC correctly diagnosed that the patient is dying.

Unfortunately, OPOC’s four-part prescription amounts

to no more than hooking the patient up to a respirator.

First, OPOC suggests that policymakers “increase

State revenues to pension systems.” But by OPOC’s

own admission it is not feasible to infuse the amount

of cash needed to fix the current debt. One has to ask:

What in the history of any of the pension funds, most

especially OTRS, leads OPOC to conclude that OTRS

won’t just incur more unfunded liabilities even if it can

pay off the current ones?

Second, OPOC suggests that policymakers “elimi-

nate or ameliorate the effects of transferable tax

credits on the insurance premium tax base.” In other

words, a back-door tax increase. And at the end of

the day you have the same problem as in recommen-

dation number one – you have not done one thing to

tional control, the best hope for Oklahoma taxpayers

is for a change in the type of plan used.

Most private businesses use some version of a

defined-contribution plan in which the employer

guarantees the level of contribution to the plan. The

employee is usually empowered to make investment

choices but is not guaranteed any more than the

amount in the plan at retirement. The very nature of

the plan almost guarantees fiscal solvency for the

provider. In previous issues of Perspective, Naomi

Lopez Bauman has written about defined-contribution

plans in great detail.

The bottom line: It is improper to burden 3.5 million

Oklahomans with billions of dollars in debt just so a

tiny fraction of the population can cling to an archaic

benefit system. It’s time for some true leadership on

this issue. ✪

OCPA research fellow Steve Anderson (MBA, University

of Central Oklahoma) is a Certified Public Accountant with

more than 20 years experience in private practice. He

previously spent two years as an analyst in the Oklahoma

Office of State Finance, where he specialized in Medicaid

and pension issues.

14

Important Things to Remember

By Brett A. Magbee

are essential to a well functioning society; and (3)

that OCPA is always seeking to find new ways to

serve our fellow citizens and policy makers through

our work.

The other thing we attempt to communicate is

that this work exists because citizens like you give

generously to our efforts. While we realize there

are other worthy nonprofit organizations you can

give to, we hope you recognize that when you give

to OCPA you are investing in the future direction of

our state. In Oklahoma’s centennial year what

could be more appropriate? Please let us hear

from you today. ✪

In about 170 words and six photographs, I am

tasked with the responsibility of providing Perspec-

tive readers with a view of the ongoing activities at

OCPA each month. It means capturing succinctly the

essence of what happens here. That process is never

easy because there is always more to report on than

space permits.

The important things to remember are: (1) OCPA is

a place where people congregate to explore impor-

tant and timely public policy ideas; (2) OCPA trustees,

staff, supporters and friends have a principled way of

viewing the world, based on the idea that free enter-

prise, individual initiative, and limited government

At a recent meeting at OCPA,Congressman Frank Lucasupdates a group of citizens onhappenings inside the Beltway.OCPA continues to be Oklahoma’snumber one gathering place forboth state and national conserva-tive policymakers.

OCPA’s newest interns are from top tobottom: Carol Wehe, Rose State Col-lege; Dustin Gabus, University of CentralOklahoma; Paula Burger, University ofOklahoma; and Patrick Gibbons, Univer-sity of Oklahoma. Many of our past in-terns have begun careers in publicpolicy.

State Sen. Clark Jolley (R-Edmond) discusses schoolchoice with one of his constituents, OCPA’s BrandonDutcher. Last month in the Senate AppropriationsSubcommittee on Education, Sen. Jolley voted in fa-vor of a bill – SB 536 authored by Sen. JamesWilliamson (R-Tulsa) – which would have providedschool vouchers or scholarships for mentally disabledstudents. The bill was defeated on party lines.

Lynne Thurman, director of theStafford Air & Space Center inWeatherford, greets OCPA’s Mar-garet Ann Hoenig in front of astatue of General Thomas Stafford.This year’s 2007 Citizenship Awardwill be presented to the Oklahomaastronaut on March 21 (see page 3).

Civic responsibility is not only talkedabout at OCPA but also practiced bymembers of our staff. OCPA’s BrianHobbs helps tutor a 3rd-grade studentfrom Sequoyah Elementary School eachweek, saying it’s one of the most reward-ing experiences he has had.

Members of the OCPA team discuss thebest ways to advance the cause of free-dom in Oklahoma. Pictured here at a re-cent lunch meeting are (clockwise fromleft) OCPA fellow Dr. J. Rufus Fears,former OCPA intern Kyle Harper, OCPAchairman Dr. David Brown, and OCPA vicepresident Brandon Dutcher.

15

There are lots of ways to provide for those you love when

you’re no longer able to be there for them. One way would

be to include a gift to the Oklahoma Council of Public

Affairs in your Will or Living Trust. This enables you to leave

a legacy which advances policy solutions that increase the

economic vitality of our state. Such gifts to OCPA are free

of estate taxes and have other financial advantages too.

Send for our free brochure on ways you can make a

continuing impact on their futures. Call: 1-405-602-1667

or complete the following information and mail to OCPA,

1401 N. Lincoln Blvd., Oklahoma City, Oklahoma 73104.

❏ Please send me your free brochure on estate planning.

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Q U O T E U N Q U O T E

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“To call someone ‘judgmental’ is to

accuse him of disapproving of

something. But the word itself

expresses disapproval. Methinks

this calls for explanation.”

Joe Sobran

“The kind of things homeschoolers

are doing may be the saving grace

of our nation.”

Civil rights activist Martin Luther King III

“Maybe we should subcontract all of

public education to homeschoolers.”

Former U.S. secretary of

education William Bennett

“Heredity and environment are

funny things ... The home environ-

ment can undo a lot you try to do at

school. That’s why we’ve lowered

the kindergarten age year after

year until now we’re almost snatch-

ing them from the cradle.”

The fire captain in Ray Bradbury’s

Fahrenheit 451, explaining the key

to building a totalitarian state

“The National Education Associa-

tion supports early childhood

education programs in the public

schools for children from birth

through age eight.”

From the NEA’s 2006-07 resolutions

So By All Means Let’s Put

the 3-Year-Olds on Campus

“Today’s schoolchildren are defi-

nitely growing up in a world very

different from the one that we were

raised in,” first lady Kim Henry said

February 10 in The Oklahoman.

“Violence on school campuses is

increasing at an alarming rate.”

“The latest political rumor is that if

Hillary Clinton wins the presidency,

she will be replaced in the Senate

by her husband Bill Clinton. When

asked about it, Bill Clinton said, ‘I

dream of replacing Hillary every

day.’”

Conan O’Brien

“The National Education Associa-

tion believes that home schooling

programs based on parental

choice cannot provide the student

with a comprehensive education

experience. When home school-

ing occurs, students enrolled must

meet all state curricular require-

ments, including the taking and

passing of assessments to ensure

adequate academic progress. …

Instruction should be by persons

who are licensed by the appropri-

ate state education licensure

agency, and a curriculum ap-

proved by the state department of

education should be used.”

From the NEA’s 2006-07 resolutions

“If there is one thing upon this

earth that mankind love and

admire better than another, it is a

brave man — it is the man who

dares to look the devil in the face

and tell him he is a devil.”

James A. Garfield

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