Getting School-ed Again

This week, the local Community Section of the Des Moines Register reported that my school district, the Johnston School District, ended its most recent fiscal year with a $2.1 million budget deficit.  A huge screw up by administration, right?  Heads are going to roll, right?  I mean.....um.....hold on.....I'm being told in my earpiece that apparently the school board thinks it's.....OK?

Said the school board president, "I think my takeaway would be these (numbers) look OK.  But we wouldn't want them to go any lower.  We'd really like to turn the direction around."

Now you might be thinking, give them a break, there are understandable one-offs now and then.  After all, the article said the shortfall is partly the result of having to pay over $800,000 to implement and purchase textbooks for a new math program.  If you're wondering, there was no word on whether giving everyone an iPad made a difference.

The thing of it is, besides the unanswered question of why that math stuff wasn't already budgeted for in the prior year, this is no one-off.  This is the second time in the last 4 years the school district has exceeded its budget.  And this is the group that's going to be in charge of building a brand new, multi-million dollar high school.

I guarantee that if something like this happened in the for-profit world, there would be VERY serious consequences.  Budgets would be immediately slashed, as would jobs. Who knows, there might even be a going-out-of-business outcome.

But in the not-for-profit, governmental world, backed by the unlimited deep pockets of taxpayers, there is no panic.  According to the article, the soon-to-be retired school superintendent offered no specific action.  The district finance director said that, other than deferring the purchase of new social study textbooks, perhaps next year they'd have to maintain current staffing levels without increases.

Gosh, don't sacrifice too much.

As a taxpayer, I'm on the hook for this spending and mismanagement, but unfortunately, I have no choice nor power to invest my money elsewhere.  Sure, I can vote for new school board members, but the problem is the governmental model, not the people running it.

Unless school districts, or other government entities, face consequences for overspending, it's just going to continue.

Getting School-ed

On June 25th, for the second time in nine months, voters in my school district, the Johnston Community School District (JCSD), will be voting on a $41 million bond referendum to primarily build a new $81 million high school.  Unlike the last time, it'll probably pass, and if not this time, then there will be another time.

That's still no reason to vote yes.

As with virtually all such tax increase proposals that require voter approval, I heartily oppose this one.  I'm not denying that there may be a current / future overcrowding issue in some school buildings, but I am denying that it should take $112 million of taxpayer money to solve that.

(There's one of the many head-fakes that voters get on deals like this - the bonding covers $41 million, but other taxpayer funds / levies will cover the other $71 million.  That equals $112 million of our money, and I tabulated that without needing a new school facility to help me do it.)

If you want to know all about the referendum, and how the money will purportedly be spent, and the estimated cost to property owners, there's plenty of electronic or print information available, of course paid for by us JCSD taxpayers.  But if you simply want to know about how ironic-to-borderline-dumb it would be for Johnston school district taxpayers to support it, just read this:

1) After failing to pass the referendum nine months ago, JCSD changed the bonding amount from $51 million to $41 million - but not by cutting anything, only by deferring the $10 million to other taxpayer funded pools.  In other words, they cut absolutely nothing.  They apparently take us taxpayers for fools.

2) The $112 million doesn't include some very large ancillary future expenditures that are admittedly part of the long-term plan, such as a new football stadium.  You know, for educational purposes.  Are we just supposed to forget about that little item?

3) Voting to increase your own taxes is never a good idea.  Let's face it, it's a little bit crazy.  It's a lot crazy when you consider.....

4) School districts are often poor stewards of our money.

5) Given the current and future age of technology, what sense does it make to build expensive, huge, new brick-and-mortar schools?  Shouldn't we be planning on ways to bring classrooms to students via on-line and digital means?

6) More than a decade ago, with the support of JCSD, our own Polk County passed a local option sales tax (LOST) to increase sales taxes from 5% to 6% for a 10-year period to fund new school infrastructure.  That was the deal, ten years only.  Liars!  Less than ten years later, they and every other school district were already lobbying to extend the time, and ultimately in 2008, the state of Iowa simply went to a permanent 6% sales tax.  Why should we believe anything the JCSD tells us now about taxes, when they had no problem lying to us taxpayers a few years ago?

7) Did I mention that school districts are often poor stewards of our money?

Here's a final thing that gets to me about this goofy referendum - it's being largely supported by a very Republican-leaning district.  These folks want to tax others to benefit them and or their school children, regardless of whether those taxpayers will receive any direct benefit from the school.  In other words, thousands of folks who claim to hate the so-called socialistic ideology of the Obama administration, seem perfectly willing to support this socialistic measure.  It's another example of how some people only oppose taxes and government spending unless it's good for them, and they ought to be required to forfeit their Obama-bashing cards.

Fellow citizens of the JCSD - don't be duped!  A 'no' vote doesn't mean you oppose education, it means you support not letting others unnecessarily spend your money.  The tax-and-spend monster that is JCSD doesn't need to be fed, it needs to be starved.  We can do far better with far less than over $100 million.

Iowa Fund of Dummies

Over the past month, another taxpayer boondoggle in has been made public in Iowa.  It involves a state-created source of seed capital for companies interested in doing business in Iowa.

Called the Iowa Fund of Funds, it really just invests in other venture capital funds, using state tax credits to back its commitments.  However, there is no requirement for those funds to actually invest in companies doing business in Iowa.  (Huh?!)

Regardless, it's done a horrible job of getting any return on investment.  So horrible, in fact, the state had to negotiate a settlement that resulted in the loss of $26 million in tax credits.

I happen to personally know the chair of the board that manages the Iowa Fund of Funds.  He's a blowhard who has never worked in the private sector, and who loves to spend other people's money.  That board had a lengthy piece published in the Des Moines Register the other day, defending their actions.   I couldn't let it go, so I sent a letter to the editor about it.  Sadly, it wasn't published, but here it is:

In defending the Iowa Fund of Funds' current $26 million loss of tax credits (Read: taxpayer money) in his December 28th Iowa View article, administrative board member Tim Urban notes, "Since we began, our board of directors has never received one dime of compensation, taken no junkets at Fund of Funds expense and volunteered thousands of hours directing the Iowa Fund of Funds." So you see, fellow Iowa taxpayers, we're simply getting what we paid for - minus another $26 million.

Another Nonprofit Lie - Follow Up

A quick follow-up: The Des Moines Register did publish my letter to the editor mentioned in the last post, without edits. The on-line version allows for comments, of which there were only a few, and they all completely missed the point about how non-profits, especially taxpayer-funded ones, are poorly managed.

Those responses actually fit my profile of someone who would comment on-line to such letters - they must sit around a computer all day with nothing to do, thinking up new conspiracy theories and swatting away imaginary bugs.

Another Nonprofit Lie

Below is the text of a Letter to the Editor I sent today to The Des Moines Register:

By increasing room and board fees at state universities by 3-5% (April 29 article, "Regents OK Room, Board Increases for Fall"), the Board of Regents cited inflation as the main reason. A similar excuse was used only a month ago to justify tuition hikes for next year.

Yet using our country's most recent core measure of inflation, the March 2011 Consumer Price Index, inflation has actually risen less than 3% in the past twelve months. And excluding food and energy costs, the CPI has risen only 1.2% since March 2010.

The fact is, inflation doesn't justify increasing fees by as much as 5%. No for-profit services organization would be able to survive in this economy by raising prices like that, so why should it be OK for a non-profit, taxpayer-subsidized organization to do so?

If we want to keep higher education affordable in Iowa, we need more intellectual honesty - not to mention budget accountability - from our state academic institutions and their governing body.

The Nonprofit World

If you follow the news closely enough, you're bound to read almost weekly about a case of financial scandal and/or embezzlement. And if you're keeping track, it doesn't usually involve the Enrons of the world. While the national media gives notoriety only to the biggest, the reality is that 4 out of 5 times these scandals invlove nonprofit institutions.

According to a 2008 New York Times report by Stephanie Strom, fraud and embezzlement in the non-profit charitiable sector account for a loss of $40 billion a year. It's an eye-opening read at:
http://www.nytimes.com/2008/03/29/us/29fraud.html?_r=1&scp=1&sq=strom+light&st=nyt
Before I get back to that article, let me say that I worked at a not for profit organization for 12 years. It was not a charitable organization, but it still relied on the kindness of strangers ('members') to provide the operational compensation and infrastructure. These 'members' were not individuals, but rather other organizations that banded together in the name of sharing services. Those other organizations, of course, got their funding from either end-use customers and/or taxpayers.

While this sounds like a great money-saving idea, in practice it doesn't work so well. Whether it's a nonprofit charittable entity, or a not for profit trade association, or (egads!) a governemntal entity, it lacks two things that matter the most to successful organizations: Competition and oversight. Without competition, no one has any external motivation to be above average, and eventually the organization will be run based on jumping over the lowest bar possible.

But to get back to the New York Times report mentioned earlier, it's oversight that's the real problem. Even though I was directly involved in more than one annual audit each year as a benefits/finance director, I could identify many instances where the wrong person in the right place could have misappropriated or embezzled funds. Even if that didn't happen, on many occasions I witnessed our executive director allow member dues to be used for questionable expenditures. The best example was always sending him or his favorite friends/employees to resorts for all-expense-paid conferences at which no one had any business attending. The board of directors either wasn't told or didn't care about this, after all, they got to go to some of those conferences, too. Take my word for it, this happens frequently at nonprofit/govermental institutions.

I was reminded of this again over the weekend when a financial scandal was revealed at the Iowa Association of School Boards. It's a classic case of lack of oversight in one of the most non-competitive worlds out there, public schooling. And it makes me ill, because it's another waste of my tax dollars. (Follow the trail....I pay property taxes, which go to my school district, which uses them to pays dues to the Iowa Association of School Boards, which misappropriates them.)

Anyone living in central Iowa will also remember the CIETC scandal of a few years ago, when a state jobs training agency was exposed to have misspent millions in Iowa taxpayer dollars. At least people went to jail for that, although I don't recall getting my tax money refunded.

Let's all wake up and smell the coffee. We don't need better oversight of nonprofits/associations/governments - we simply feed fewer of them and the noncompetitive, non-oversight world in which they exist.