Oh….wait! You actually thought helping cities and towns was a priority? The incredible story of Connecticut and its casino revenue.

Or “We are from the (State) Government and we are here to help”;

In the fall of 1992, discussions between Governor Lowell Weicker and Pequot Tribal Chairman Skip Hayward led to a landmark agreement in which the Pequot Tribe would share 25% of its annual slots revenue with the state of Connecticut in return for the exclusive rights to have slots within Connecticut’s borders.

The agreement, which was expanded to include the Mohegan Tribe when it opened the Mohegan Sun, was the most generous revenue sharing agreement in the country.  For Weicker the deal was especially beneficial since it provided the state with a major new revenue stream and gave him a new and effective weapon in his on-going effort to stop other casino operators from coming to Connecticut.

Having been in and around those negotiations and discussions, I can attest to the fact that political players recognized that the “icing on the cake” was that the new funds would be distributed to Connecticut’s hard-pressed cities and towns to help support local services and provide property tax relief for Connecticut’s overburdened middle-income families.

Initially ALL OF THE MONEY was to be used for municipal aid, but even as the program was introduced the state needed to skim off about $30 million or so to help balance the FY1994 budget.  That said, Connecticut’s elected officials proclaimed that a new day had arrived, that they were (in fact) serious about property tax relief and from that day forward 85% of the slots revenue would be passed on to the municipalities via the newly created Pequot Slots Fund.

Since then, the Pequot and Mohegan tribes have more than fulfilled the state’s wildest dreams and transferred more than $5.3 billion to the state’s general fund.

However, each year, as slot revenues grew, Connecticut Governors and legislators determined that it was necessary to keep more and more of the incoming revenue at the state level rather than pass it along as promised.  The unspoken rationale was that since the state needed additional revenue to pay for existing and expanded programs it was better to utilize the slot funds rather than increase taxes – even if the net impact was that local property taxes would need to go up even more sharply.

Whereas 85% of the slot funds were passed on to the cities and towns in 1994, that percentage has tumbled year after year after year.

This year, the budget approved by the Democratic legislature and allowed to go into law by Rell allocates a paltry $61 million of the tribal slots revenue to Connecticut’s cities (An amount that equates to 16% of this year’s slot revenues).

So when politicians (of both political parties) talk about their deep commitment to municipal aid and reducing the pressure on local property tax payers, it would behoove everyone to remember that of the $5 billion that has come in via the Pequot/Mohegan Fund over the past 18 years, less than $1.5 billion actually made it to the promised destination – Connecticut’s cities and towns.

The story will remind the old timers among us of Ella Grasso’s famous promise that the Lottery revenue would go for education.

Or in other words – never forget that old adage – “Fool me once, shame on you; fool me twice, shame on me”.

But no really, providing sufficient municipal aid will be a TOP priority for Connecticut State Government.  I know because I heard them say it would be.

More on the issues underling Connecticut’s State Employee Pension System

Here is the problem:  Connecticut’s State Employee Pension fund is significantly underfunded. 

 

Back in 2000 Connecticut had put enough money aside to meet more than 63% of its state pension obligations. 

 

However, repeated decisions by Governors Rowland and Rell with help and support from the Connecticut General Assembly and SEBAC (the state employee bargaining coalition) not to make necessary pension payments or reduce the level of pension payments that were made (along with early retirement incentives that pushed more people into the pension fund) reduced Connecticut’s funded pension ratio down to 44%.

 

Today, the State’s unfunded pension obligation is over $11.7 billion. (Or roughly a debt equal to $3,333 for every Connecticut resident).  Connecticut owes that money.  It will have to pay that money and it has not put aside the funds necessary to make those payments.

 

Connecticut’s system is one of them of the most underfunded systems in the nation. 

 

Despite this situation, much of what we hear about Connecticut’s state employee retirement system is so laced with partisan rhetoric and false statements that makes it almost impossible to have a meaningful debate about the problem and it’s vital that the state engage in an honest discussion about the pension system and its problems based on the facts and not the hype…

The real facts are these.

Connecticut has 57,825 state employees enrolled in the state’s employee retirement system.  Within that system are four separate pension program.  The old Tier 1 state employee pension program, which was closed to new enrollees in 1984.  Next the state adopted the Tier 2 program that began in 1985 and was then replaced by the revised Tier 2A program.  Finally, the Alternative Retirement Program provides a retirement system for faculty and selected staff at Connecticut’s public colleges and universities.  Instead of a pension these state employees receive what is in essence a 401(k) contribution that they can then take with them as their careers take them to other universities around the country.  Members of the Alternative Retirement Program do not receive a Connecticut state pension.

Of Connecticut’s active employees, the distribution of retirement plans is as follows;

 

Tier 1       4,569

Tier 2     19,298

Tier 2A   26,345

ARP         9,613 

 

Meanwhile there are 48,127 state retirees that receive some sort of pension and/or health benefits that they earned by fulfilling their legal requirements when they served as active state employees.  The following breakdown lists retirees by the retirement program the participate in;

 

Tier 1      29,888

Tier 2     10,986

Tier 2A       862 

ARP            391

 

As I reported in an earlier blog post, it is fair to say that the old Tier 1 pension program was pretty generous.  It is also vital to understand that of the 34,457 people participating in the Tier 1 system, 87% of them have already retired.  Only 13% or 4,569 active state employees remain in the Tier 1 system.

The average annual pension for Tier 1 employees is $34,917. 

However, since the benefit is calculated on the total number of years worked multiplied by the employees’ highest three years of income, some employees have managed to acquire large pensions either because they actually had high salaries or they used over-time to push up their salaries prior to retiring.  There are a total of 1,780 retirees with state pensions of $75,000 or more and 365 enjoy pensions of over $100,000.

Of the total 30, 284 people who are in the Tier 2 retirement program, 64% have retired and 36% remain in active service.   The average annual pension for Tier 2 retirees is $21,335.  The way Tier 2 pension is calculated it is more difficult for artificially pushes up one’s pension.  As result, there are 76 Tier 2 retirees with pensions of $75,000 or more and 15 with pensions of over $100,000.

The Tier 2A, the present retirement program for new state employees includes an even more limited pension program.  As of now, only 3% of the 27,207 Tier 2A employees have retired and the annual pension for these 862 individuals is only $11,289.  Of the Tier 2A retires one has a pension of over $75,000 and none have a pension of 100,000.

The bottom line is that new state employees and the vast majority of present state employees will not be receiving so-called “excessive” pensions when they retire. 

And while the state may want to explore creating yet another – Tier 3 – pension category, the real issue facing Connecticut IS NOT “reforming” the level of pension benefits for incoming state employees but how to deal with the obligation the state created under its older and now closed pension categories.

On a related front, there are some who want to explore the possibility of Connecticut reneging on its legal obligations by retroactively changing pension benefits or somehow defaulting on future payments. 

However, it is highly unlikely that the federal courts would allow a state to do that. Legal rulings to date are pretty clear.  While a private company can use bankruptcy to modify or avoid debts, states, with their taxing powers, do not have the ability to do that. (Although some states like California are or may seek ways to put that question to the test). 

Putting aside the moral question, the reality is that Connecticut will not be able to modify pension levels for those who have already retired and so we return to the fundamental problem of the fact that Connecticut obligated itself to future pension payments and then failed to set aside the funds to meet those obligations.

Furthermore, even if the state and unions could agree on legally allowable changes for present employees (and that is something the new Governor and the bargaining process can definitely explore) the bulk of the future obligations for retirees and future retirees are already in place. 

The failure of Connecticut state government to put aside the necessary funds simply can’t be undone.  The pennywise and pound foolish decisions of our elected officials have come to haunt us and separate of any discussions on “reforming the system”, the State must act by dramatically ramping up the level of funds it sets aside for obligations that are and will continue to come due.

When it comes to blame, there is certainly enough blame to go around but the burden now rests on Governor Malloy and the Connecticut General Assembly to respond to those mistakes and set things right.

Never underestimate the value of a good lawyer (just ask Lisa Moody and Jodi Rell)

On October 13, 2009 – more than fifteen months ago – an extremely serious complaint against Governor M. Jodi Rell, his senior staff and her campaign committee was filed with the State Elections Enforcement Commission alleging that they knowingly violated Connecticut’s campaign laws by receiving illegal campaign contributions and that her campaign illegally used public resources for political purposes. http://www.scribd.com/doc/21009985/seec-complaint-101309

The day after tomorrow – on Wednesday of this week – the SEEC is finally scheduled to take action on that complaint I filed 15 months ago;

In the Matter of a Complaint by Jonathan Pelto, Storrs File No. 2009-104

Proposed Findings and Conclusions, Proposed Consent Agreement and Order

 The controversy received widespread media coverage in the fall of 2009 after Ted Mann of the Day broke the story in series of investigative reports.  The Courant, JI and other papers also revealed key facts about the issue and a number of editorial boards weighed in against the Governor’s apparently illegal activities.

The allegations that a public official broke the law and used public resources for political purposes are among the most serious charges that can be raised against a sitting Governor.  State employees have lost their jobs for such action.  If true, Governor Rell would have become only the 2nd Governor in history to be forced to pay a fine for violating the Connecticut law. (Rowland’s earlier use of basketball tickets and other items earned him that honor).

In addition to the SEEC investigation, parallel investigations were begun by the Office of State Auditors, the Attorney General’s Office and the University of Connecticut.  It was never quite clear if the Ethics Commission was also involved or if they have been waiting for the other agencies to act.

 One would reasonably think that responding to charges such as these would be a top priority – but the wheels of justice move slowly – at least for some.

The record seems to indicate that the investigation phase moved forward fairly quickly, but official action was “delayed” for months.  According to their minutes, the Elections Enforcement Commission did take up what appeared to be a final report in executive session last fall but a final vote was delayed. 

Now, with Jodi Rell no longer Governor and her staff no longer working in the Governor’s Office File No. 2009-104 (my complaint) is on the agenda for a final vote this coming Wednesday.

The issues behind the complaint are certainly very interesting, but the fact that official action (thanks at least in part to the work of her attorney) was delayed until after she left office seems particularly noteworthy.

I know from previous experience that agencies like the SEEC prefer to go the route of a “Consent Agreement” when dealing with major complaints because it prevents the need for going to court since it includes an acceptance by the accused party that some type of violation took place.  Consent Agreements both resolve the situation and make good “case law” for future cases.

The problem with consent agreements is that it requires both sides to agree and you know how it is – the wording of a particular paragraph can take months to negotiate and work out.

Of course, maybe it is just a coincidence that the consent agreement wasn’t ready for action until Rell left office. 

Oh, and who represented Governor Rell and her campaign before the State Elections Enforcement Commission?

It was none other than Ross Garber, who readers will remember as the person Governor-elect Malloy selected to serve on his Transition Committee reviewing the names and resumes of potential appointees. 

[Funny side note, I never did hear back from the Transition Committee or its Personnel Committee when I sent in my cover letter and resume.  Maybe they are still reviewing my materials].

For those who are really interested in the issue and the charges, below are some of the highlights and links to more detail.

“Democrat accuses Rell, committee of ‘significant violations – A Democratic political consultant filed an elections complaint Tuesday against Gov. M. Jodi Rell and her political committee, charging “serious and significant violations” of state campaign financing laws in relation to Rell’s use of a University of Connecticut pollster to help craft her budget and political messaging.” (The Day Oct 14, 2009) http://www.scribd.com/doc/21053052/Democrat-Accuses-Rell-Committee-of-%E2%80%98significant-Violations%E2%80%99

 “Complaint Claims Rell Broke Election Laws – Rell and her administration have been under fire since last week, when news broke in the Day of New London that Dautrich’s $220,000, taxpayer-funded contract with Rell’s budget office – for a government efficiency study – has produced controversial political research and advice for how Rell should tailor her stances to please voters.” (Courant, Oct 13, 2009) http://www.scribd.com/doc/21051752/Complaint-Claims-Rell-Broke-Election-Laws-in-Prof%E2%80%99s-Study

 “Paying for Rell Message –At best the use of state money by the governor’s office to help frame a political strategy for managing the budget crisis shows a lack of leadership. At worst it could be a violation of law.” (The Day October 9, 2009) http://www.scribd.com/doc/21051781/Paying-for-Rell-Message

“Our view: Top Rell aide must step down – Gov. M. Jodi Rell should instruct her gubernatorial exploratory committee to immediately reimburse the state for any expenses related to the political research conducted — with taxpayers’ money.” (Norwich Bulletin Oct 9, 2009) http://www.scribd.com/doc/21051767/Norwich-Bulletin

“Taxpayers Paid $220,000 For This?  – COSTLY CONSULTANT  – Taxpayers will pony up for UConn professor’s partisan political advice to the governor …Consultants’ bills for such advice are usually paid by candidate committees out of voluntary contributions, not by taxpayers. The state treasury shouldn’t lay the groundwork for a re-election campaign if Mrs. Rell decides to bid for a second full term.” (Courant Editorial, Oct 9, 2009). http://www.scribd.com/doc/21051772/COSTLY-CONSULTANT-Taxpayers-Will-Pony-Up-for-UConn-Professor%E2%80%99s-Partisan

“Gov. M. Jodi Rell’s account of when her administration abandoned a plan to use public funds to poll voters on budget issues is directly contradicted by correspondence between officials at the University of Connecticut. “(The Day Oct 13, 2009) http://www.scribd.com/doc/21051745/Documents-Disprove-Rell%E2%80%99s-Timeline-on-Polling

“Gov. M. Jodi Rell has insisted that her staff rejected an adviser’s suggestion to use public funds to conduct a poll of voters on budgetary issues soon after the suggestion was made, and that the issue was ever discussed after the administration conducted a focus group instead in December 2008. But e-mail correspondence between University of Connecticut officials indicates that the proposal was still alive as late as Jan. 21, 2009, long after Rell has said the issue was discarded for good.” (The Day Oct 14, 2009) http://www.scribd.com/doc/21053055/E-Mails-Contradict-Governor%E2%80%99s-Contention-That-Survey-on-State-Budget-Never

“Questions continue to surround the governor’s hiring of a University of Connecticut professor who is working to streamline government but also provided the administration with possibly inappropriate political advice during the budget battle.” (Stamford Advocate Oct 17 2009) http://www.scribd.com/doc/21759303/The-Advocate

“Rell’s UConn Consulting Project Worth Investigating The highly secret project — unearthed through open-records requests — turns out to be, in part, partisan political research that could help her re-election bid if she decides to run for a second full term.” (Courant Editorial Oct 18, 2009) http://www.scribd.com/doc/21759294/Rell%E2%80%99s-UConn-Consulting-Project-Worth-Investigating

“Rell has insisted that only a single focus group was held last December to help her craft her budget message and weigh the public’s opinion of various strategies to close a looming state deficit. But the existence of two additional efforts to test the public’s opinion on taxes and budgeting will likely raise more questions for Rell, who faces inquiries from state elections officials, state auditors and Attorney General Richard Blumenthal about the scope and purpose of Dautrich’s research, which was publicly funded but included substantial advice on how to best position the governor politically and give her leverage over Democratic opponents in the legislature.” (The Day Oct 22, 2009) http://www.scribd.com/doc/21759283/More-Questions-for-Rell-Likely-Over-Budget-poll-Focus-Groups

“Moody message indicates governor approved survey Hartford – University of Connecticut professor Kenneth Dautrich conducted a $6,000 poll this spring on the orders of Gov. M. Jodi Rell’s chief of staff aimed at weighing voters’ attitudes toward tax increases, borrowing and service cuts as Rell struggled to gain an upper hand over legislative Democrats in a brewing standoff over the state budget.” (The Day, Oct.. 28, 2009) http://www.scribd.com/doc/21759272/E-Mails-Cast-Doubt-on-Rell-in-Flap-Over-Budget-Poll

Wait, What? Connecticut has more public employees than most states?

A reasonable and “grown-up” discussion about Connecticut’s fiscal crisis requires that politicians use data in an honest and appropriate fashion and not seek to mislead the public.

Yesterday New York media outlets were reporting that newly inaugurated Governor Andrew Cuomo is “getting ready to announce layoffs of 10,000 to 15,000 employees.”

Meanwhile, here in Connecticut, the CTMirror ran a story two days ago entitled “For the first time, Malloy talks of cutting rank-and-file workforce”.   The CTMirror was covering a conference in which Governor Malloy reinforced his commitment to reduce the number of state managers but then went on to imply that he may be proposing deeper cuts that would reduce the number of non-manager employees. 

At that same conference, Republican legislative leaders once again made the claim that when it comes to the number of state employees, Connecticut is bloated and way out of line compared to other states.  

The Republicans have been making the same claim during the last few legislative sessions and especially during last year’s legislative and gubernatorial campaigns.

The fact is – their statements are simply not true.

That is not to say we shouldn’t demand and expect greater efficiency, but to suggest that Connecticut’s state government is especially bloated or that we have more public employees than most states is a lie.

The U.S. Census Bureau compiles a wide variety of data including information on the number of federal, state, and local government employees.  The most recent data available is for payrolls as of March 2009.

According to that information, Connecticut  had 57,117 full time employees and 24,139 part time employees for a total of about 66,500 full-time equivalent (FTE) public employees. 

This number translates to approximately 19 state employees per 1,000 population.  Of this number 28% work for Connecticut’s colleges and universities and are thus primarily funded from student tuition and fees.

As observers know, the problem about comparing information state by state is that different states utilize different models to provide government services.  Many states use county governments and regional entities, as well as state and municipal governments to provide public services whereas Connecticut only utilizes two vehicles – state government and municipal government.

To get a sense of the real number of state employees involved in providing government services it is more useful to look at state, regional and local spending.  This data provides a more honest assessment of where Connecticut stands compared to other states.

Using the most recent Census data, Connecticut has a total public employee workforce of about 187,000 FTE positions at the state and local level or about 54 public employees per 1,000 population.

Compare that number to New York which has 64 public employees per 1,000 population, New Jersey with 58 public employees per 1,000 and Massachusetts with 49 public employees per 1,000 population.

While the political rhetoric would lead us to believe that Connecticut is especially bloated when it comes to public service workers that fact is we rank in the middle to lower half of the states.

More honesty and less rhetoric is what is needed going forward.

You can access the public employees information at : http://www.census.gov/govs/apes/

FOOTNOTE:  The key problem with comparing states is that here in Connecticut we don’t have county governments — so we “appear” to have a larger state because most states provide some “state-like” services at the county level – that’s why one really has to look at a combination of state and local units. 

A prime example is public safety – Connecticut would appear to have a lot more state police because we don’t have county sheriff departments like NY, etc.

Another example is correctional officers.  CT has 7,931 FTE correctional officers or about 2.3 per 1,000 citizens.  Compare that to NY who have 33,739 FTE state correctional officers (1.73 per 1,000) but you then have to add in the county/local correctional officers to get the picture of how many correctional officers are needed to run their prison systems.  In this case there are another 24,929 FTEs at the County/Local level so in total NY has 59,000 FTEs correctional officers 3.0 per 1,000.  If you did just the state calculation you’d say CT had way too many but we actually have significantly fewer.  

Interestingly if you do the same calculation or MA and NJ they come out with fewer total correctional officers MA is 1.4 per 1,000 and NJ is 2.0 per 1,000.

Connecticut Charter Schools: The Unwritten Story of Greater Racial and Ethnic Isolation – Funded, in no small part, by Connecticut Taxpayers.

This blog post is intended to shed light and promote discussion and debate about a vital education policy issue facing public education.

Once considered outside of the mainstream, charter schools have become a major player in the national debate about education reform.  The Bill and Melinda Gates Foundation, for example, has already donated more than $450 million to support charter schools around the country and Gates himself has called charter schools “the only schools that have the full opportunity to innovate”.

In 1992, Minnesota and California were the first states to pass charter school laws.  By 1995, 19 states had adopted laws allowing the creation of charter schools and by 2003 a total of 40 states, Puerto Rico, and the District of Columbia had all joined the effort to support the creation of charter schools

Connecticut, home of the largest achievement gap in the nation, has also witnessed the rise of charter schools as an appropriate educational model (along with magnet schools and “Open Choice programs” that allow some students to move within the public education system).

Connecticut joined the Charter School band-wagon in 1996 when legislation was adopted promoting the creation of charter schools.  According to a recent report from the State Department of Education, it was felt that “charter schools could serve as a catalyst for innovation in the state’s public schools. It was also anticipated that charters could serve as another effective vehicle to reduce the racial and economic isolation of Connecticut’s public school students.”

Backed by evidence that charter schools were successfully improving standardized test scores advocates were able to persuade Connecticut policy makers to dramatically increase state support for charter schools.  Through the state’s Charter School Grant, Connecticut has poured over $300 million into its emerging charter schools.  Over the past decade, direct state support for charters has skyrocketed from $14 million a year in 2001 to $53 million this year.

State Support for Charter Schools by Fiscal Year (in millions):

FY 00-01                                 $14

FY 01-02                                 $15

FY 02-03                                 $16

FY 03-04                                 $16

FY 04-05                                 $20

FY 05-06                                 $22

FY 06-07                                 $30

FY 07-08                                 $35

FY 08-09                                 $41

FY 09-10                                 $48

FY 10-11                                 $53

In addition to the belief that charter schools were generating better academic results, support for the charter school model grew because the schools and their proponents (including Achievement First, a major charter school operator in New York and Connecticut) repeatedly told state leaders that charter schools were a vital piece in the ongoing effort to address the racial and ethnic segregation that plagues the Connecticut’s public school system.

However, what has gone unreported is that a review of the data reveals that Connecticut’s charter schools are even more racially and ethnically isolated than the districts the schools are recruiting from.  In fact, faced with court rulings requiring Connecticut to confront its segregated schools systems, charter schools are taking Connecticut in exactly the wrong direction.

When the facts are examined, not only have charter schools failed in their promise to address segregation but as a result of the effective lobbying efforts of the charter schools, scarce public resources are now being used to undermine the state’s own policy goals on racial and ethnic isolation.

The data could not be clearer, Connecticut’s urban school systems are predominantly minority.

Bridgeport Public Schools: 

91.2% Minority                                

47.3% Latino

40.1% of the students come from non-English speaking homes

 

Hartford Public Schools:                             

93.3% Minority

52.3% Latino

43.5% of the students come from non-English speaking homes

 

New Haven Public Schools:

 87.7% Minority

36.6% Latino

28.9% of the students come from non-English speaking homes

Recognizing the reality of these extraordinary demographics, the state turned to charter schools and other alternative education models to create educational settings that were more diverse.

However, as noted, the State Department of Education’s School Profile Reports reveal that virtually all of Connecticut’s charter schools are providing an educational environment that is even more racially and ethnically isolated.

In Bridgeport, where 91.2% of the students are minority; the percentage of minority students in the city’s charter schools are actually higher than in the city as a whole.

School     (Percent Minority)

Achievement First – Bridgeport Academy’s     (98.7%)

The Bridge Academy     (99.5%)

New Beginnings     (98.3%)

Park City Prep     (98.2%)

The same situation is true in Hartford where 93.3% of the students are minority but the population of minority students in the city’s charter schools is 100%

School     (Percent Minority)

Achievement First – Harford     (100%)

Jumoke     (100%)

And in New Haven, where 87.7% of the students are minority only 1 out of the 4 area charter schools seem able to attract non-minority students.

School (Percent Minority)

Achievement First – Amistad     (98.1%)

Achievement First – Elm City College Prep     (99.0%)

Common Ground School     (83.2%)

Highville Charter     (98.3%)

When it comes to serving Latino students, the failure of Connecticut’s charter schools is even more appalling.

Although 47.3% of Bridgeport students are Latino,  the percentage of Latino students in Achievement First’s Bridgeport Academy is Charter Schools is 38.8% Latino, The Bridge Academy has a Latino population of 29.4% , New Beginnings Latino percent is 13.7% and Park City Prep’s Latino population is 31.1%

An even more stark situation exists in Hartford where 52.3% of the students are Latino, but only 10.7% of the students at Achievement First – Hartford are Latino while Jumoke Charter’s Latino population is only 3.2%

New Haven’s charter schools have done a bit better serving the Latino community, but the charter schools there are still falling short.  With a Latino student population of 36.6% in New Haven’s public schools, Achievement First – Amistad has a Latino population of 31.5% , Achievement First – Elm City has 20.2% Latino students, the Common Ground School is 30.7% Latino and  Highville Charter has a Latino Population of 7%.

Perhaps most disturbing of all is the fact that despite Connecticut’s urban areas having significant numbers of students coming from non-English speaking homes, charter schools have somehow managed to create learning environments in which virtually NONE OF THE STUDENTS who come from non-English speaking households end up in their schools.

As educators and policy makers know, one of the most significant challenges to educational achievement is language barriers particularly a problem when students take their homework (which is written in English) home to non-English speaking households.  Greater parental engagement in their children’s education is hard enough, but when the students are learning in a language that is not spoken at home it makes it virtually impossible to generate significant parental involvement.

In Bridgeport 40% of the students go home to a non-English speaking home.  That percentage increases to 44.7% in Hartford and in New Haven the percent of students coming from non-English speaking homes is 28.6%

In Connecticut, charter schools are required to ensure equal access to their schools.  Efforts must be made to recruit students from all racial and ethnic backgrounds and admission tests can’t be used.  In fact, entrance decisions must include a blind lottery system.  So that said, compare the percentage of students from non-English speaking homes with the numbers the charter school have reported to the State Department of Education:

School     (% students from non-English speaking homes)

Bridgeport Public Schools     (40%)

Achievement First – Bridgeport Academy     (0.6%)

The Bridge Academy     (14.9%)

New Beginnings     (0%)

Park City Prep     (0%)

HartfordPublic Schools     (44.7% )

Achievement First – Hartford     (0%)

Jumoke     (0%)

New HavenPublic Schools     (28.6%)

Achievement First – Amistad     (0%)

Achievement First – Elm City Prep     (0%)

Common Ground School     (4.6%)

Highville Charter     (0%)

The data is certainly unsettling.  If Connecticut’s publically funded charter schools are supposed to be equally accessible to all and up to 4 in 10 students from those areas come from non-English speaking households then it is pretty unbelievable and completely unconscionable that almost no charter school students come from non-English speaking households.

There is no question that the concept of charter schools is politically very attractive, but the data raises very serious questions about Connecticut’s charter schools and Governor Malloy and the Connecticut General Assembly would do well to call a “time out” when it comes to on-going support for these schools and determine how to proceed considering these schools are creating greater racial isolation while failing to service the breadth of our city’s ethnic communities.

Gas Prices in Connecticut – A Classic Wait, What? Moment:

As Connecticut’s political and business leaders renew their call for dramatic action to rebuild and enhance the state’s economic and job situation, state law continues to promote an exponential growth in gas prices – a situation that disproportionately hurts middle class families while increasing the cost of energy – a major cost factor limiting business and job growth in the state.

Connecticut’s growth in gas prices are a direct result of two factors – the manipulation of supply and demand by big oil and the oil-producing nations and the impact of Connecticut’s ill-conceived gas tax policies. 

As we know, the net result is that consumers are standing at the pump watching in disbelief as their vehicles swallow up more and more of their limited incomes. 

What they may not appreciate is that Connecticut gasoline tax policy is actually designed to promote an increase in gas prices. 

Perhaps even more insulting, and even less understood is that the “extra” money raised from Connecticut’s gasoline taxes do not go to support transportation or mass transit but are instead dumped into the state’s General Fund where they are used to cover other government expenditures.

 How does the Connecticut Tax System Work? 

In addition to the basic 25 cents per gallon state gasoline tax that is posted at the gas pumps, state law levies a gross receipts tax on the wholesale price of gasoline sold in Connecticut.  This tax increases the cost of gasoline by about 7.5% or, at today’s prices, about 19 cents per gallon.  As wholesale prices go up, the wholesale tax increases the retail price of gasoline exponentially.  As a result, Connecticut consumers traditionally pay some of the highest gas prices in the country.

While gas taxes are not classically “regressive” in that the burden does not automatically fall heaviest on the poor (since many urban poor do not have cars or drive greater distances to get to work), the gas tax does fall disproportionately on the working and middle class, especially in a state like Connecticut with its limited mass transit system. 

According to the US Energy Information Agency, the financial burden of gasoline expenditures falls heaviest on those making between $25,000 and $75,000 and those households with children.

With all of that, the real “Wait, What? Moment” comes back to the fact that while the state’s 25 cents per gallon gas tax is dedicated to the state’s Transportation Fund, a majority of the funds raised by the 2nd gas tax (the ever-expanding gross receipts tax) does not go to help pay for transportation related expenses.

The history dates back five years when Governor Rell proposed an expanded transportation initiative.  Rell called for increasing the gas tax by 1 cent per year for a number of years to pay for the new program.  However, rather than add to the very public (and arguably unpopular gas tax), the Democrats decided to dramatically increase the gross receipts tax on gasoline.   This strategy not only provided a revenue stream for the Transportation Initiative but generated “excess” revenues that could be diverted to other expenses.

Since Fiscal Year 2006, Connecticut’s expanded gross receipts tax has brought in more than $1.7 billion dollars but only about $700 million or so has gone to help renew Connecticut’s transportation infrastructure or help support Connecticut’s mass transit programs.  The rest – about a billion dollars – was used to fund non-transportation programs.

During last year’s gubernatorial campaign Dan Malloy made it clear that while he supports gasoline taxes he believes the funds should be used to improve Connecticut’s out-dated transportation programs.  It will be interesting to see whether the Malloy Administration follows through on those comments and re-directs all of Connecticut’s gasoline related revenues so that they actually support transportation programs.   It would actually be a relatively easy task.  The new Administration could actually shift all transportation and transportation related public safety costs to the state’s Transportation Fund and then apply all gasoline revenue to those activities.  While it wouldn’t change the overall bottom line it would ensure that consumers knew that they gasoline related tax dollars were actually going for their intended purpose.  

Finally, it would be very refreshing if upcoming Malloy budget made middle-income families a priority by dropping the complex gross receipts tax on gasoline and instead bit the bullet and went with a simple expanded flat rate gasoline tax that raised the necessary revenues.  By taking such an action Malloy could ensure that programs were properly funded while ending the state’s role as a factor in promoting the further increase in gas prices.

Learning from Martin Lurther King Jr. on his birthday…

“A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death”.”

 

In honor of Martin Luther King’s birthday we do well to stop our frantic pace and look back on the words and teachings of this great American.  While King’s “I have a dream” speech will always be known as his greatest, A speech lesser know, but just as powerful and important speech was given one year to the day before his death at the Riverside Church in New York City.

Even as a life-time admirer of Martin Luther King (who remembers the moment in April 1968, when I was seven years old when the TV news broadcast that King had been shot), I did not fully understand the importance of his Beyond Vietnam speech until I listened to an episode of Democracy Now a few days ago.

Here is a link to that “Beyond Vietnam” speech that includes both an audio recording and the text.  http://www.americanrhetoric.com/speeches/mlkatimetobreaksilence2.htm

As you listen to the speech and appreciate its incredible timeliness to the world in which we live today, it is important to understand that this speech – his condemnation of a senseless war and his call for the rise of true American Values – was so controversial that it lost King the support of many, including President Johnson who dis-invited King to the White House because of it.

It is said that following this speech King’s favorability among the American public dropped to only 25% and even a majority of African American’s had a negative opinion of him. 

The media also turned on him.  According to an NPR documentary 168 major newspapers denounced him.   Life magazine said the speech was “demagogic slander” and went on to suggest it sounded like a script put forward by the enemy.  The Washington Post said King has “diminished his usefulness to his cause, his country, his people.”

Here we are 44 year later and this extraordinary speech is powerful and true and accurate as the day he gave it.

Here is to the hope that someday this nation will truly open its ears and its heart to the words and teachings of Martin Luther King.

State Employee Pensions: A Pre Pre-View:

With everything “on the table” this year there will certainly be discussions about reforming Connecticut’s public employee pension system.  In the coming weeks we’ll tackle some of those issues here at Wait, What?

One important element is making sure we’re talking about reality and not rhetoric based on made up facts and figures.

First, of the 38,580 or so people who receive a “state pension”, 38% of them get less than $1,000 a month (after taxes).  That means more than nearly 15,000 retirees get take home checks of $12,000 a year or less. 

Second, another 8,600 retirees have after tax pensions of between $12,000 and $24,000 a year.

So, in total, 60% of all state retirees are getting an after tax check of less than $24,000.

That is not to say that there aren’t some retirees who are receiving incredible pensions, including some who managed to “game the system”.

The larger pensions are a result of the old Tier 1 state employee pension program which was, in fact, very generous if you retired with a high salary and a significant number or years of state service.

Although that pension system ended in 1984, a number of state employees, many of whom took one of the recent early retirement incentives, benefited or will benefit from that old pension system.

Since then the state of Connecticut adopted a much less generous Tier II pension program which we was then replaced with an even less generous Tier IIA system.  (More details will be posted about the present state employee retirement program but I think most residents will not think that the pension system for new state employees is overly generous).

However, when it comes to public opinion about state employee pensions, the problem is that the focus is almost exclusively on the small number of people who receive what can certainly be called excessive pensions.  There are about 176 or so retirees who – even after taxes are taken out – receive more than $100,000 a year from the state. 

Of those who take home more than $100,000 a number is medical doctors who retired with relatively high salaries and a significant number of years working in medicine for state agencies.  Of course, there are also a number of non-doctors who receive very high pensions.

In total, of the 176 retirees who’s take home is over $100,000; 35 are retired from the University of Connecticut, 18 from the UConn Health Center, 16 from the Connecticut State University, 13 from the Judicial Branch of government, 11 from the Department of Mental Health, and 10 each from the Department of Transportation and the Department of Corrections.  There are also 9 retirees from the State Police who’s after tax pension is over $100,000.

More to come on this important issue, but it is vital that public officials, the media and the public understand how the state employee pension system actually works before talking about specific reforms.

A Tax By Any Other Name is Still A Tax…

As the Great Storm of 2011 bore down on Hartford (not to mention the big  snow storm that hit on Wednesday night), Keith Phaneuf had a fantastic story in the ctmirror about the massive unemployment tax hike that will hit Connecticut businesses this year.

Full Story: http://ctmirror.org/story/11150/businesses-say-unemployment-tax-hike-goes-unnoticed-capitol

While some legislators and lobbyists for the business community are pointing to the issue as a reason for the state NOT TO ADOPT mandatory sick leave benefits that would impact a select number of Connecticut businesses, the mandatory increase in the unemployment tax is really a much more significant issue and should be considered as part of the overall tax debate in 2011.

Phaneuf’s article should be mandatory reading for every legislator.

The key facts are as follows:

Businesses pay a tax to the Connecticut Unemployment Compensation Trust Fund for every one of their employees.  The fund is used to pay benefits to any employee who is laid off or otherwise qualifies for unemployment benefits.

Since it is a mandated tax based on the employee’s salary, businesses appropriately consider this as part of the employee’s total wage and benefit package.

Due to the massive rate of unemployment, Connecticut’s Unemployment Trust Fund has been “insolvent” since October 2009.  When a state fund becomes insolvent it has to borrow money from the Federal Government.   

Connecticut has borrowed about $530 million to date to cover unemployment benefits for Connecticut residents. States are required to pay the Federal Government interest on any loans plus, over time,they must pay back the full loan.  In this case, due to the extent of the recession the Federal Government delayed the time period when states were required to start making interest payments on their loans.  The waiver period has ended and interest payments must begin this summer. 

The Connecticut Department of Labor has informed business that a new assessment (tax) will be implemented on August 1, 2011 to raise the funds necessary to start paying the Federal Government the interest Connecticut owes on the funds it has borrowed to date.  The new tax is expected to equal to about $40 per worker. 

As Phaneuf notes the new tax “which doesn’t even reduce the $530 million debt principal, is equal to roughly $53 million when projected over nine months. That’s about $12 million greater than the last tax hike the business community faced, a 10 percent surcharge on the corporation tax first imposed in 2009 and set to expire in 2012.” 

Making matters worse, the story goes on to report “State labor officials estimate the unemployment trust fund will need roughly $500 million more in loans over the next 12 months, despite two existing assessments on business that normally provide enough revenue to fund jobless benefits.”  This means the interest assessment will need to be increased at a later date, not to a significantly higher tax in the future to bring in the funds needed to pay the Federal Government back the $1 billion dollars Connecticut will have borrowed to pay unemployment benefits during this recession. 

Finally, in response to these issues, Phaneuf reports that Governor Malloy has said that he hopes Congress will extend the “interest waiver” since 40 other states are facing this problem.  An extension would allow Connecticut to postpone having to address this problem for year or more but the interest and loan will still need to be paid in the relatively near future.

 The bottom line is that an increase in the unemployment tax is needed – sooner or later – and elected officials, the business community and everyone involved in the budget making process must recognize that the upcoming unemployment tax surcharges are, in fact, very real tax increases and must be part of the overall tax plan to get Connecticut out of this fiscal crisis.

State Government – The Challenge of Facing Reality in These Economic Times…

Christine Stuart has an article today in ctnewjunkie that indirectly highlights the challenge that faces Connecticut.

Yesterday, as California’s new governor announced what could only be described as draconian cuts (along with a plan to raise taxes), Connecticut’s Finance, Revenue and Bonding Committee announced that it will raise a bill to un-due a portion of last year’s budget that undermined Connecticut’s efforts to promote energy efficiency.  The bill would seek to re-allocate funds for an important state program.

As Stuart writes, “Environmentalists and small businesses are hopeful that since the state doesn’t have to borrow as much money as it initially expected when it passed the budget last year that it will restore some of the $28.5 million it planned on taking annually from the Energy Conservation and Load Management Fund.”

The full story can be found using the following link: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/finance_committee_may_restore_conservation_funds/

Legislators and advocates point out that this program was important because “The fund helps pay contractors to visit homes and businesses to conduct energy audits then figure out how to make the structures more energy efficient. It also helps residents receive rebates for purchases of energy efficient appliances.”

There is no question that is program is a prime example of how government can successfully play a role in helping to overcome the challenges that threaten our society, our state and its citizens.  Through programs like this, we can become more energy efficient, become more energy self-sufficient and do more to protect the environment and deal with the growing crisis associated with global warming and climate change.

It is a program that deserves support.

Yet at the same time, Connecticut, like so many other states is moving closer and closer to the proverbial cliff face as our state government races toward fiscal catastrophe.

One need only look to California to see what can occur (while Connecticut’s economic position is not as bad as California’s, the two state’s are facing similar situations). 

In California, despite having a new Democratic progressive governor, the proposed state budget there includes a $1.5 billion cut to welfare programs, a $1.7 billion cut to the state’s health care Medicaid programs, a reduction of $750 million to programs for the developmentally disabled and a half a billion dollar cut to the University of California system even though their public higher education system is already in deficit.  Brown’s budget also CUTS state employee take home pay by 8-10%.

This is not to say that the Finance Committee should not discuss re-funding the State’s important energy efficiency programs, but it is to highlight the challenge the Malloy Administration and the Legislature faces over the next few months.