Improve The Higher Ed Scholarship Application ROI

Higher education costs too much, that’s a given.

The preferred solution to the problem of paying for the extraordinary cost of higher education is scholarships. Because free money is the best kind of money. 

The central problem with scholarships, however, is maximizing your return on investment. Investment of your time, and investment of your effort. 

Sallie Mae, the national private student loan company, recently purchased scholarship search-engine Scholly specifically to address the problem of improving families’ return on investment of time and effort.

As Brian Babineau, Chief Brand Officer for Sallie Mae told me, “We found that efficiency is the problem. The biggest barrier to applying (for scholarships) is that kids don’t think they can win, so they might believe the ROI of their time is terrible. We want to make it easier for them to win, and also make them feel like winning is a possibility.”

Houston

At the Greater Houston Community Foundation website, high schoolers and their parents can efficiently seek opportunities that may be available specifically for them. 

Courtney Grymonprez, Scholarship Manager at the GHCF, points me to the 48 listed scholarships on their site. 

Most are narrowly focused on children of certain employers, or from a particular school or community, or who suffered from a medical condition, or who seek to pursue a specific course of study. That specificity means that for those students who qualify, the scholarships themselves may not be overly competitive to win. 

“There are years when certain scholarships are not awarded, because nobody applied. 

Sometimes there are scholarships for one particular high school. Local scholarships are the best way of having really good chances,” she says. High school guidance counselors, she says, are a good resource for finding these types of scholarships.

Outside of the GHCF scholarships she oversees, she recommends all Texans look at the Houston Livestock and Rodeo site, where funds raised from the event are available for higher education. 

Grymonprez is quick to point out that not all scholarships there are targeted to agriculture or “rodeo themed” in any way. 

San Antonio

Meanwhile, the San Antonio Area Foundation offers over 120 scholarships totaling $9 million for local students. 

Their flagship opportunity, called “Legacy Scholarship,” is merit-based and worth $40,000 over 4 years, for 80 students from Bexar County planning to attend public or private university in Texas. That application is due during junior year. 

Between December first and February 24th this year, however, is the most efficient way for current seniors in the San Antonio area to apply for scholarships from the SAAF. Through a single application, prospective students can make themselves eligible for dozens of scholarships. Actually, at SAAF, there are currently two applications.

According to Jennifer Ballesteros, the Executive Director of Scholarship and Relief programs at SAAF, students can submit both a “universal” and a “common” application through the SAAF. Some scholarships are administered solely by SAAF staff, while other scholarships are awarded in consultation with outside committees, which explains the difference between the two categories of awards. But students should absolutely apply via both methods to increase their odds of landing money. Just two applications, to put oneself in the running for over a hundred scholarships, seems efficient to me.

As with the Greater Houston Community Foundation, many scholarships through the SAAF are highly targeted to a student’s family background, choice of major, intended career, or a specific campus. As a result of this narrow targeting, some scholarships are less competitive and more easily won. Every year, Ballesteros says, “There is money left on the table, and we do want that money to be spent.” Bellesteros mentioned money for archeology majors, to cite one example, has gone unclaimed in the past. In terms of ROI, an uncompetitive scholarship is the best kind of scholarship!

Over at the scholarship search engine Scholly, sponsored by Sallie Mae, Babineau echoed this same theme. Some money is just out there waiting to be claimed. 

“We want to change the narrative that scholarships are only for students with a 4.0 GPA and 1600 SATs,” says Babineau. “There are scholarships available for the person you are, the things you want to be and do, your hobbies. There are local scholarships available in your town. We are trying to create awareness around that.” 

Accessing regional foundations, plus a scholarship search engine, feels like an important way to increase your student’s return on investment of time and effort. 

I spent 6 minutes to create a profile on Scholly as a parent, after which the app returned with $131,250 in 11 “potential scholarships” for my child. After I inputted some more data – another 5 minutes – based on my oldest daughter’s extracurricular activities, academic interest and personal background, the app upped the amount to $151,750 in potential scholarships. 

Scholly is just one of a number of scholarship search engines that parents and students could use to quickly identify plausible scholarships. While the “best” search engines may change over time, a Google search will quickly give your student a few places to begin.

$100 million unclaimed scholarships!

The National Scholarship Providers Association, an advocacy group, claims that $100 million in college scholarships goes unclaimed each year. 

Maybe this opens up the concept to a college junior or senior that hustling to apply for college scholarships is a very worthwhile use of time. Can 30 minutes of online work qualify them for $500? Can 2 hours of essay writing and filling out forms get you $2,000? A high schooler is unlikely to earn that much on a per hour basis in any other (legal) activity they could engage in.

A version of this post previously ran in the San Antonio Express News and Houston Chronicle.

Please see related posts:

San Antonio student who figured out the scholarship game

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Recycling Part III – Bottom Line For Cities

reuse_reduce_recycle

In the past decade most cities have benefitted financially from developing robust recycling programs, helping cities financially in two ways. First, by diverting tons of waste away from landfill, cities reduce their landfill costs. Second, by hiring recycling processors who can resell and share profits from the resale of secondary commodities like metal, paper, and plastic, cities have earned positive revenues from their programs.

A slump in commodity prices as well as other market factors, however, have fundamentally shifted this second factor in the municipal economics of recycling. A snapshot of San Antonio and Houston contracts illustrates the market change over just the past three years. 

Houston has seen a swift financial change in their recycling deal. 

Houston

Before 2016, Houston had enjoyed a contract with Waste Management in which the processor would not charge anything to haul recyclables, and would split the upside of revenues as it sold recovered materials into the secondary commodity markets. Recycling made money for Houston, with no financial downside.

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Houston skyline

At the end of that contract in 2016, however, Houston endured temporary contracts and exposure to faltering markets. Between 2016 and 2019, the city paid $92 per ton for hauling and processing, a cost per ton that ended up costing the city an average of $120,000 per month. Also, under temporary contracts, there was no predictability to what the program could cost. 

Houston’s new contract with Spanish processor FCC went into effect in March 2019, requiring the city to pay $87.05 per ton of recycled waste. Like most municipal contracts, Houston can share in the revenue that FCC generates through secondary sales, and use that revenue to offset the costs of hauling and processing. 

Says Sarah Mason, Division Manager of Recycling at Houston’s Solid Waste Management Department “We were aware that the commodities market was on the downside at the time we were working out the [present 2019] contract.” 

Given that exposure, Mason says, they negotiated a maximum net cost of $19 per ton, even if recovered commodity revenues remained weak. Houston has hit the $19 cap every month the contract has been in effect. This cost cap has cut recycling costs to about a third, or an average of $41,000 per month. Still, it’s a contract that reflects the new altered dynamics of the recycling market in 2019. A former revenue source has become a net cost to the city budget.

Meanwhile, a three hours’ drive west on I-10, San Antonio has a few years remaining on its contract, one negotiated in better times. 

San Antonio

Costs to haul and process recycled materials are just over $36 per ton through 2024, according to their contract with Republic Services, which by comparison with Houston seems quite low. An additional “contamination” fee for non-recycled waste that gets mixed in with the recyclables typically raises the costs by another $12.50 per ton. San Antonio’s experience is that contamination fee typically kicks in every month.

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San Antonio skyline

In good years, prior to 2017, San Antonio expected secondary commodity revenues to more than offset its costs. The city enjoyed a 50/50 split on revenues above costs. If revenues brought in $72 per ton, the entire program would be paid for. 

Recovered revenues above $72 per ton ended up as a net revenue-generator for San Antonio. In addition, Republic agreed that if recoveries didn’t fully match costs, the city could roll over its net costs, with a promise of owing nothing if recoveries over the life of the contract proved insufficient. That’s how confident Republic must have been in its ability to make money from recovered paper, plastic, and metal, under the old contract, negotiated in the 2013/2014 period.

Financial data shared by Josephine Valencia of recycling manager of the Solid Waste Management Department of San Antonio show net revenues have on average been negative in 2018 and 2019. Net 2018 revenues from recycling averaged negative $2.60 per ton in 2018, and worsened to an average of negative $9.45 per ton, reflecting declining commodity markets. The average recycling costs would be over $60,000 per month in 2019, although Republic will eventually absorb those monthly losses if commodity markets do not recover. San Antonio’s contract lasts through 2024, but if present conditions persisted the city could expect that kind of cost would factor into any new negotiated contract.

In other words, future municipal recycling contacts – if commodity market conditions do not change – will lock in recycling as a loss-maker rather than revenue-generator for cities in the future. Valencia confirmed that Houston and San Antonio’s shift from monthly gain to monthly loss are probably happening nationwide, at least in cities that employ the popular “single bin” method of household recycling. 

Don’t forget landfill-cost comparison

The contracted costs from Houston and San Antonio simplify the total financial picture somewhat, because they do not reflect at least one big factor. Recycling lowers waste management costs overall by redirecting waste away from landfills. The City of San Antonio estimates 2018 and 2019 savings from reduced landfilling at approximately $1.5 million and $1 million respectively, according to Valencia, on a total waste management budget of $150 million. That’s not nothing, and provides a compelling reason to continue the programs, even as they do not produce the positive cash flows of the past.

A version of this post ran in the San Antonio Express News and Houston Chronicle

Please see related posts

Broken Recycling Markets Part I – The Plastic Ban and Commodity Swoon

Broken Recycling Markets Part II – Commodity Market Prices

Recycling Part IV – Best Household Practices

Organic Recycling – Green to Green

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Broken Recycling Markets – Part II Commodity Prices

Industrial recyclers of household products such as paper, plastics, metal and glass are having a terrible, horrible, no good, very bad year.

Typically they get paid by cities to haul and process recyclable waste. But they also earn money from selling valuable commodities they extract from this household waste to industrial users. These commodity markets are in a slump.

A China policy change announced in 2017 – called the “National Sword” – banned a number of types of recyclables from importation. Mixed, and otherwise difficult-to-recycle paper, plastics and metals which US recyclers previously shipped across the Pacific Ocean nearly ceased, by 2019 dropping to about 1% of their previous volume. Without an easy market to sell to, parts of the US commodity markets have been in price free-fall, a period of re-adjustment, or just broken.

The effect of this slump for secondary commodity market is both financial and environmental. 

Although much of the reporting on the China ban has focused on plastics, the biggest effect financially for the nation’s second largest recycler Republic Services has been on paper products, according to Peter Keller, Vice President of Recycling Markets for Republic.

Paper makes up 75% by volume of what Republic receives from household bins and traditionally sells to wholesalers.  Partly because of China’s changes and other factors, this market has tanked in the past two years.

republic_services

Recycled cardboard used to sell for $200 per ton but now goes for $30 per ton. In addition, households now recycle small cardboard boxes from Amazon, which many recyclers are ill equipped to process, compared to the flow of larger cardboard from retail stores just ten years ago. They recover less, and get paid less, for cardboard than in the past.

“Mixed paper,” a catch-all product that used to sell for $110 per ton in 2017 now costs negative $5 per ton. In other words, a recycler like Republic has to pay a wholesaler to take the tons off mixed paper they process off their hands. What used to be a source of profit is now a source of loss.

Interestingly, a third paper product used to be newsprint. With the national decline of the newspaper business, demand for newsprint has dried up. Your soon-to-be recycled newspaper – perhaps the paper you’re reading from now – now goes into the “mixed paper” stream, with limited-to-negative monetary value today.

I puzzled for a while over how to make a grim metaphor combining the challenges facing the newspaper industry, something about training your new puppy as the best secondary use of my newspaper columns, and overlaying that with the declining value of newsprint as a commodity. I couldn’t manage to make it funny though, so let’s move on.

Secondary metal continues to be a solid B+ student of an otherwise failing recycling class. Bundles of clean soup cans that contain steel command secondary prices like $120 per ton, down from $150 per ton a few years ago. Bundles of clean soda cans that contain aluminum command secondary prices like $1,050 per ton, down from $1,400 per ton in 2017. At these still-relatively high prices, even though soup and beverage cans do not make up the majority of your recycling bin, they can be a significant driver of the overall profitability of a recycling program.

puppy_training

Finally, there’s glass. For a long time now, glass has been the class trouble-maker of the four materials in a recycling bin. While glass is somewhat infinitely recyclable, producing new glass from scratch (well, sand) is generally cheaper than using recycled glass materials. 

From a commodity-markets perspective, it is puzzling then that the City of Houston reintroduced curbside glass recycling after a three-year hiatus, to some fanfare, in the beginning of 2019.

Glass that comes through a traditional curbside bin has a negative value of $10 per ton, according to Keller. 

Secondary glass is only financially viable as a recycled commodity when sorted carefully by color and somehow cheaply transported to a nearby glass manufacturer, if one exists. According to Keller, if the glass could be cleaned, color-sorted, and delivered to a manufacturer, it could fetch as much as $100/ton.  But getting to that result costs too much money. 

When glass comes in mixed from a household bin, by contrast, it’s not saleable for a profit, it costs a lot to move because of its weight, and it often contaminates other recycled materials. Think paper products with tiny glass shards. Now how much would you pay? So it’s a loss maker.

Sarah Mason, the Division Manager for Recycling at Houston’s Solid Waste Management Department, defended Houston’s decision to reintroduce glass to me, saying the City’s new recycling partner has custom-built its facility to handle glass more efficiently, hopefully reducing the contamination problem.

And then there’s plastics, which have garnered 95% of the headlines but which constitute about 7% of Republic’s revenue stream. 

Even after the China policy change, three types of plastic still have a viable wholesale commodity market, and these markets track the plastic number you’ll find marked on your household plastics. In brief, numbers 1, 2, and 5 still command decent prices as long as they can be separated and processed cleanly.  Plastic #1 – your basic single-use water bottle, can be sold for $250 per ton now, down from about $325 a few years ago. Plastic #5 – consisting of heavier plastics – has stayed steady at $150 per ton, while plastic #2 made up of milk jugs and detergent bottles is actually up slightly in some markets.

Other plastic numbers are virtually un-saleable at any price as a secondary commodity following China’s policy change, and will go to a landfill.

All of these prices should be understood as varying geographically as well as varying by purity. A recycling processor that can produce a homogenous ton of product will command high prices, while a mixed or contaminated product will sell for less, if it will sell at all.

Everyone I’ve spoken to in recent weeks expresses the hope that as technology and markets change, some of the broken parts of the recycling market can improve and heal. New and better sorting technology at the recycling processing plant can turn previous trash into viable secondary commodities, although it may take a combination of capital investments, time, and improved engineering to get there.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Please see related posts

Recycling Commodity Market Slump Part I – The China Ban

Recycling Commodity Market Slump Part III – The Price of Commodities (upcoming)

Recycling Commodity Market Part IV – What is a Household to do? (upcoming)

Organic Recycling in my city – My new obsession

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Cash Transfers and Hurricane Relief

rose_city_underwaterIn response to the extraordinary needs of their city after Hurricane Harvey, Houston philanthropists John and Laura Arnold first gave $5 million to the “Greater Houston Community Foundation’s Hurricane Harvey Relief Fund,” aka the “Mayor’s Fund.”

Following that gift, however, the couple made a second $5 million gift to an atypical organization named GiveDirectly one that had neither previously operated in the United States, nor had worked on natural disasters.

Through their philanthropy, the Arnolds are posing an important question – what’s the best way to deliver resources to a hard-hit community after a natural disaster like Hurricane Harvey? We won’t necessarily all agree, nor is there just “one way,” but it’s an important question to keep asking.

Before Harvey, GiveDirectly had only worked in East Africa. Their mission is to give money, unconditionally, to the most poverty-stricken people in the world. They don’t do “development work” the regular way by building clean-water wells, or houses, or hospitals, or give goats or chickens or food or clothing or solar-powered generators. They do “unconditional cash transfers” (UCT), and they trust the recipients know best how to use it to alleviate their own poverty.

GiveDirectly’s operation in Texas following Harvey is a test of whether that theory of “unconditional cash only, not stuff” could apply to disaster-relief in the United States.

As John Arnold explained to me, he and his wife’s thought process for supporting GiveDirectly was as follows:

First, the private sector can do a great job with the logistics of delivering needed goods and services to Texans, even in the face of catastrophic flooding, as occurred following Harvey. He marveled at watching ten fully-stocked Wal-Mart tractor trailers arriving early after the rains, ready to supply Houstonians.

give_directlySecond, the missing piece for many people hurt by the storm is simply: money. Wal-Mart, Arnold reasoned, will figure out how to provide the right stuff, as long as people have money in their hands to pay for that stuff.

Third, the best relief is probably a group that can just deliver money into the hands of people who need it.

“Everybody’s highest priority is different,”

Arnold told me.

“Some people’s car was damaged and they can’t get to work. Others had their work interrupted and they just need temporarily help to cover next month’s rent.”

So the Arnolds chose GiveDirectly for their $5 million.

Funded by the Arnolds and other donors, GiveDirectly set up a plan to deliver pre-loaded Visa debit-cards with a $1,500 value to impacted households in Texas. In Rose City, a badly-flooded town next to Beaumont that I wrote about last week, GiveDirectly arrived in October to deliver $1,500 to each one of the estimated 210 households, without conditions.

Rose City Mayor Bonnie Stephenson confirmed working with GiveDirectly to reach substantially all households in her town, holding town meetings and community gatherings to help get the word out. GiveDirectly reports successfully distributing 180 cards to the intended 210 households, according Catherine Diao, Communcations Lead for the organization.. In a few households, says Diao, they simply could not locate eligible recipients despite multiple efforts to do so.

Laura_john_arnold
Laura & John Arnold

GiveDirectly next expanded its giving to the Lakewood area of Northeast Houston. As of now they have handed out and estimated total of 1,200 pre-loaded cards of $1,500 each, with the intention of distributing up to 3,000 total.

Their methods are still evolving. In Rose City, the cards were meant to be “universal,” meaning that everyone with a household address in town qualified for the funds. In the Northeast section of Houston, GiveDirectly is attempting to target the $1,500 pre-paid Visa cards to only those who have demonstrated property losses.

As John Arnold explained, a classic problem of relief is to design a system that is restrictive enough to prevent fraud, but not overly restrictive that it prevents delivery of resources. It’s safe to say no system is perfect.

The normal model of disaster relief is that a combination of the federal government (primarily FEMA), big organizations like the Red Cross, and state and local officials coordinate major resources, while more locally-focused groups fill in the gaps with stuff at hand, like food, water and blankets.

Problems plague each of these responses, of course. One recurring problem with the smaller “stuff at hand” solution is that the stuff may not reflect what people actually need most, at any given time. The appeal of UCT is that recipients decide exactly what they need, not donors.

At the larger scale, FEMA and Red Cross have far more capacity than local groups to deliver resources. But one recurring complaint about the bigger organizations is whether the big infrastructure and big dollars are efficiently spent. In addition, qualifying for substantial FEMA grants, or even $400 Red Cross payments, involves engaging with a bureaucracy that may seem confusing or overly strict, a bundle of “red tape,” to use a word I heard repeatedly from folks in Rose City, including Mayor Stephenson. GiveDirectly’s attempt with UCT is to make delivery simple.

GiveDirectly, by their own estimation, regards their efforts in Texas as exploratory, but in line with their dual purpose of giving relief and pushing for more efficiency among relief organizations.

As President and co-founder of GiveDirectly Michael Faye wrote me,

“Recipients prefer cash and are frustrated with the opacity and efficiency of the traditional options, and want a direct giving alternative. With donors wanting it, and recipients preferring it, why shouldn’t it exist? At worst, it’ll help people rebuild their lives, and at best, it will force a conversation and potentially shift the [philanthropic] sector.”

John Arnold also explicitly called out the dual purpose of his gifts. First, there’s the charitable reason, which he defined as just providing help to people in Texas who need it the most. Second, there’s the philanthropic reason, which he defines as attempting to be thoughtful about solving problems at their root causes. The combination of charity and philanthropy, I gathered from our conversation, is why GiveDirectly appealed to him and his wife.

 

See related posts:

The Populist Approach to Hurricane Relief

The Red Cross and Other Disasters

GiveDirectly and Unconditional Cash Transfers

Universal Basic Income – A Radical Right Wing Idea?

 

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Need Transparency Taken To Eleven

In my last post I mentioned the terrible scores Houston and San Antonio governments received for transparency in their economic development programs, according to a report by Good Jobs First.

One reason the stakes for transparency are high is because the amounts of subsidy are so big. How big? Well, we’ll soon find out. In 2017, for the first time, cities and counties nationwide will have to disclose how much in total subsidies they provide to private businesses, due to a new accounting standard known as GASB 77.

A study by the New York Times in 2012 found that governments in Texas provided the most economic subsidies to private business of any state in the nation, at $19.1 billion.

Texas Monthly writer Erica Grieder makes the point in her book Big, Hot, Cheap and Right: What America Can Learn From the Strange Genius of Texas, that “free-market capitalism” in Texas has, ironically, long relied on strong government intervention and subsidies for private business.

But with that high subsidy comes – I would argue – a heightened duty to keep the public informed of programs and results.

The current way of reporting on economic development subsidies, officials in each of the City of Houston, City of San Antonio, and Bexar County all told me, is that, once a year, the economic development department sends a spreadsheet over to someone at the newspaper, either the Houston Chronicle or San Antonio Express News. Beyond that once-a-year data dump, either an enterprising citizen or more likely a bored reporter on a fishing expedition working on deadline would need to submit a specific request to the economic development department of the city or county.

Since the information is deemed public, this request presumably would be fulfilled with little muss or fuss. All of the officials with whom I spoke reiterated that no formal “Freedom of Information Act” request (a “FOIA” for the cool kids) needs to be filed.

But you can probably see why, although that constitutes a minimum standard of public disclosure, it falls far short of what we should reasonably expect in 2017. What if the reporter or editor at the respective paper had a full plate of stories that week and didn’t really want to make use of the information? What if – as is likely every year – no particular economic development deal jumped out as worthy of newspaper coverage? What if – as shocking as this will sound to all of you reader-types – a citizen doesn’t actually read the newspaper? How would they learn about this? For each of these reasons and more, an annual newspaper data dump isn’t the right level of transparency at this point in time.

good_jobs_firstAll of the economic development officials I spoke with agreed with me in theory on this point, but obviously it will take some effort and resources in their respective departments to improve the situation.

And we can agree that improving searchable websites for ease of transparency can be difficult. Bexar County’s Executive Director of Economic Development David Marquez pointed out to me that certain (not to be named) newspaper websites can be notoriously un-searchable. That’s a fair point, my man. A fair point.

Anyway, I hope they will all take a look at Austin’s searchable database, to see what good disclosure and transparency looks like.

Beyond the amount of money involved, why else do we need a high degree of transparency with respect to economic development deals? Just this. There is nothing quite like conferring a public good – a generous tax break – to a private company that gets my spider sense tingling about potential conflicts of interest. You don’t have to be paranoid or a cynic like me (although I invite you to be) to believe that a natural symbiosis exists between public officials who need money and have the ability to award valuable subsidies and private enterprises who would happily return the favor.

going_to_elevenWe – not just writers, but also citizens – should be able bring up an online database showing, just to pick an example, political campaign contributions, and compare that database to public subsidies of private companies. Are there any connections? Does a company that contributes to a campaign show up as a beneficiary of public subsidy? That’s the very definition of conflict of interest, and we need the tools to prevent that. If there are any dots to connect, everyone should have the power and ability to connect them, from the comfort of their own laptop. If there are no dots to connect, then we all sleep better at night.

This is in no way a Republican or Democratic Party issue. But if you want to see it that way, just consider the importance of making sure officials from that other party (the one you most distrust) can’t get away with it. We need you on that wall, people, guarding against that other party’s nefarious conflicts of interest!

I believe the right volume of transparency for economic development tax breaks for private companies is a “SHOUT IT FROM THE ROOFTOPS, CONSTANTLY” level of transparency. On a scale of one to ten, I want transparency that goes to eleven. Because you see, it’s that one bit louder, isn’t it?

The next best thing to a transparency volume turned up to eleven is an online searchable database. Properly understood, that’s strongly in the interest of public officials and private corporate recipients as well. They also want and deserve the legitimacy that goes with transparent economic development plans, free from charges of influence peddling or conflicts of interest.
Please see related posts:

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Need for Transparency in Economic Development Part 1

Economic Development Subsidies: Turtles All The Way Down

Book Review: Big Hot Cheap and Right, by Erica Greider

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School Finance FrightMare in Houston

choice_between_two_evilsVoters living within the Houston ISD catchment area on November 8th face a “Scylla and Charybdis” vote – and it’s not Clinton vs. Trump – but rather equally terrible public school funding choices.

What’s happening in Houston gives Texans everywhere an insight into a complex problem with no easy solutions, as Glen Read the general manager of budgeting and financial planning for HISD explained to me in a conversation recently.

A “yes” vote on the ballot question in Houston will authorize “the board of trustees of Houston Independent School District to purchase attendance credits from the state with local tax revenues,” which means sending an estimated $162 million from the state’s largest school district to a state education fund, known as the Foundation School Program (FSP). It also means future payments from HISD in increasing amounts in future years, as Houston’s property values increase.

A “no” vote – barring legislative intervention this Spring – triggers something that has never yet happened in Texas, which is to separate commercial properties from HISD’s tax rolls and assign them to other school districts. Like I said, neither of these choices feels good.

houston_isdIt’s also an opportunity – albeit a painful one – for Texans to learn more about a financing system which the Texas Supreme court in their May 2016 ruling named “Daedelean,” “Byzantine,” “Augean,” and an “ossified regime ill-suited for 21st Century Texas,” while simultaneously declining to over-rule previous legislative decisions.

These upcoming payments from HISD have been mislabeled “Robin Hood” and “recapture.” But “Robin Hood” is a terrible nickname for this upcoming process, for two reasons, having to do with the definition of “wealthy” and for the specific meaning of “recapture.”

First, labeling HISD a “wealthy” district is odd. The “wealthy” designation that triggers HISD’s payment comes from a math formula – specifically the ratio of total real estate property values to student population, with a few adjustments to the population number for attendance rates plus specific student designations. The “wealthy” label does not take into sufficient account a measure that seems more important to me, like the fact that 76 percent of HISD kids are designated “economically disadvantaged.” Robin Hood – the mythical man in tights – did not after all make a habit of stealing from the poor.

augean

Second, also unlike our mythical Robin Hood that “recaptured” money does not necessarily get redistributed to poorer school districts. Now, this is the point where Texans everywhere should sit up and pay special attention. Right here. Ready?

HISD’s “recaptured” money goes into the state’s primary education fund – the FSP – but that money is not doled out subsequently to poorer districts. This is the key point. The math ratio of property value to student population determines which districts pay money in to the FSP and which districts take money out of FSP, but none of that determines whether the state, as a whole, allocates sufficient money to the FSP. In fact, as property values rise locally – and you, the taxpayer, pay more – you’re not really funding your local district, or even the poorer districts. You are relieving the state of the obligation to pay more for education. More money into the FSP from higher property values means less the state has to pay. That’s the finance trick you need to know.

And that’s really nice if you’re trying to save money at the state level, but not exactly Robin Hood-style redistribution, nor a great plan for funding great public education.

For these reasons, The Houston Chronicle editorial page has twice urged a “No” vote, and which would trigger either the never-before-enacted property-tax-separation method or daring the state legislature to try something different before July 2017 – when property rolls would shifted. To be clear, a “No” vote is a sort of game of financial chicken between the voters of Houston and the state, with unknown consequences.

We can do what we usually do about this type of thing, which is to shut off our brains in order to take comfortable refuge behind pre-existing ideological prejudices, and take potshots at the other side’s idiocy. But if you are under the impression that you could start a conversation about school finance with “All we need to do is…” then you are mistaken. This subject does not admit of easy solutions.

 

Hacking our way intelligently through the overgrown jungle of public school finance, we have to hold a number of contradictory thoughts in our head simultaneously. For what its worth, my process goes like this:

  1. The socioeconomic background of an individual student appears to affect student outcomes far more than funding-levels-per-student at a school or district. As a result, poor performance at poor schools and higher performance at wealthier schools can persist indefinitely, despite roughly equal funding-levels per student. “Social reproduction” – or a society with little economic mobility – can’t be undone easily by throwing more money at the problem.
  2. And yet, just giving up on the idea of economic mobility – our hope that poorer kids have a chance to get ahead in life through a combination of hard work and a good education seems – I don’t know, what’s the word? Maybe: Un-American?
  3. When we talk about public school finance in Texas, really what we’re talking about is educating poorer kids: 59 percent of kids in Texas public schools overall are classified “economically disadvantaged.” The school districts subject to ballot questions that I’m writing about this week and next week, in the Houston and San Antonio ISDs, educate 76 and 92 percent economically disadvantaged kids, respectively.
  4. To which I conclude that we can’t fix this quickly with more money, or by simply equalizing scarce resources, but at the same time, to not try to improve it some how, some way, some day is to resign ourselves to a bleak future of haves and have-nots with no end in sight.

I have no sodaedalean_mazelutions. I’m just trying to educate myself on one of the most complex finance problems out there.

I can see that the HISD ballot question is a terrible choice to make.

 

A version of this ran in the San Antonio Express-News and Houston Chronicle

 

Please see related post

The San Antonio ISD ballot question (upcoming)

 

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