Want to Start a Private Postsecondary School in California? Good Luck



10226856_MNot everyone wants to attend a traditional four-year college. A lot of people want to learn a trade and start a career immediately out of high school. Vocational schools have served these people in the past and helped them learn a trade in fields such as automotive repair, cosmetology, or nursing.

Other people want more flexibility than a traditional college typically provides and opt for small for-profit colleges, many with evening classes. But government bureaucrats are stifling entrepreneurs who want to start new private postsecondary schools in California.

California’s Bureau for Private Postsecondary Education issues licenses for new private postsecondary educational institutions in California, including both degree-granting academic institutions and non-degree-granting vocational institutions. A new state audit blasts the Bureau for significant backlogs and chronic delays in processing applications to start new schools.

The California State Auditor Elaine Howle found:

  • The Bureau had more than 1,100 applications outstanding as of June 30, 2013
  • Some applications had been sitting at the Bureau for almost three and a half years
  • The Bureau took three times as long as its goal to process the applications it received in fiscal year 2009–10 through 2012–13

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Los Angeles County Board of Education Blocks LAUSD “Blackmail” of Charter Schools



blackmail-e1349540956302In February the Los Angeles Unified School District board revoked the charters of Aspire Antonio Maria Lugo Academy and Aspire Ollin University Preparatory Academy—not because they didn’t perform, but because they did at a fraction of the cost.

LAUSD officials revoked the charters of these two top performing, high poverty schools enrolling 770 (mostly Latino) students because of cold, hard cash. Of course, the official reason board members gave was that they were acting on behalf of “the children,” special needs children to be exact.

The Los Angeles County Board of Education voted this week to restore the schools’ charters and at least one county board member publicly decried LAUSD’s earlier decision. As The Wall Street Journal reported:

The [LAUSD] board’s only beef was that the Aspire schools had contracted out their special education to an agency in El Dorado County, which is used by 300 other California charters. According to Aspire, the El Dorado plan is cheaper and more effective than the district’s Special Education Local Plan Area. In any event, state law doesn’t require charters to subscribe to the public option.

According to L.A. County Board of Education member Doug Boyd, the district arguably acted illegally when it rejected Aspire schools on these grounds. ‘We were shocked that LAUSD would turn down the charters,’ he says. ‘The pretext that they used was ridiculous.’

...So why did the board vote to close the schools? ‘They want the money that the state attaches to each kid,’ Mr. Boyd says.

But more fundamentally, teachers unions and their allies on the board are opposed to offering parents educational options, especially if those options expose the failure of public schools. ...While the county board which hears charter appeals has issued a resounding rebuke to L.A. Unified’s school board, Mr. Boyd says district officials have been threatening to close other charters that refuse to sign up with the district’s special-education plan. ‘How many of the charters will succumb to the blackmail?’ he muses.

Charter schools are public schools, which receive taxpayer dollars and administer the same state-approved tests as traditional district-run public schools. Two of the main charter school advantages from a taxpayer perspective are first that charters don’t have any taxing authority, so they must live within their annual budgets.

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More on Obamacare’s “Bailout” for Health Insurers



Money-Spiral-Image-for-PostWe have written a lot about the so-called “risk corridors” in Obamacare. Risk corridors are one of three mechanisms whereby health insurers that lose more money than they expected in Obamacare exchanges get reimbursed for part of their losses.

We covered the details of the mechanism in this post. As the administration kept changing the rules, we covered it here, here, and here. The reason people are upset at this provision is that it contains an undefined taxpayer bailout of insurers’ losses under Obamacare.

Although there is another method whereby taxpayers subsidize insurers who lose money in exchanges (“reinsurance”), this has a limited liability. A third method (“risk adjustment”) moves money from insurers who profit more than expected from Obamacare to their competitors who took more risk than they had expected. It is revenue neutral for taxpayers.

A quick read of risk corridors suggest that they are also revenue neutral. But this is not the case. Payments are based on premiums paid, not claims incurred. At the risk of oversimplification, if the average premium (over all insurers) is $10,000, and the average of all claims is $10,000, the reimbursement will be revenue neutral. However, if the average of all claims is $12,000, taxpayers will be on the hook for the difference. If the average of all claims is only $8,000, the Treasury will keep the difference.

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Common Core Makes Simple Math as Complicated as the Tax Code



1922508_10152143072400914_313210801_nThose of us recovering from tax day should be more than ready to answer a simple subtraction problem:

What’s 427—316?

If you mastered elementary math sometime before the onset of Common Core national standards and after “new math” had fallen out of fashion, then you can solve this problem in about three easy steps, moving from the ones column to the 100s column...six from seven is one; one from two is one; and three from four is one. Viola! The answer’s 111.

Thanks to a Facebook post from Frustrated Parent Jeff Severt and the subsequent media attention it’s getting, more Americans than ever are realizing the perils of government-run schooling—including the disastrous impact on mathematical skills when process becomes more important than accuracy.

Consider Severt’s Facebook post. It includes a page right out of the Common Core math lesson. The lesson asks students to find the error fictitious student Jack made in solving the subtraction problem above using a number line. The lesson then asks students to write Jack a letter explaining how he should have solved the problem. Severt writes a letter of his own to Jack urging him not to feel bad. Severt explains that he has an advanced engineering degree and that even he:

...cannot explain Common Core mathematics, nor get the answer correct. In the real world, simplification is valued over complication. ... The answer is solved in under five seconds—111. The process used is ridiculous and would result in termination if used.

And there’s the rub: nothing about Common Core math standards has anything to do with the real world.

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Global Poverty and the Tyranny of Experts



tyrannyRecovering former World Bank economist William Easterly has a new book on the folly of top-down development aid, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor.

As its title suggests, Easterly emphasizes the pernicious role played by technical “experts” from international development agencies in crafting policies that encourage authoritarian regimes to trample on the liberties of their most impoverished populations. The massive rights violations are themselves morally objectionable, he notes, but by the standard of economic development, they are also wholly counterproductive.

“The technocratic approach,” Easterly writes, “ignores what this book will establish as the real cause of poverty—the unchecked power of the state against poor people without rights.”

Easterly attributes the “tyranny of experts” pathology partly to the legacy of imperialism and racism, and partly to a “top down” mindset that is ambivalent about a country’s history and ignorant about the potential for economic development driven by local entrepreneurs.

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Why Won’t Medicare Pay for Medical Tourism?



medical-tourismIn a working paper published by the Mercatus Institute at George Mason University, Marc D. Joffe notes that Aetna, Blue Shield, and HealthNet offer health insurance in California that gives beneficiaries access to Mexican providers. The U.S. insurers rent a provider network from a Mexican insurer.

The costs of health care in Mexico are 60 percent to 80 percent lower than in the United States. Cash-paying Americans travel to Mexico for many medical procedures. Joffe cites estimates of around half a million Americans annually visiting Mexico for medical care (although the number travelling only to fill prescriptions is not reported).

Joffe notes that 25,000 Americans living in Mexico in 2011 were receiving Social Security deposits. Unlike half a million other Americans who travel to Mexico for treatment, these retirees and their spouses return to the United States for treatment. The reason is that Medicare does not pay for their treatment out of country.

Joffe doesn’t estimate how much money Medicare would save if it paid for their treatment in Mexico, but a back of the envelope estimate is not hard to figure out.

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Obamacare’s Cost Is Down 8%, but That May Not Be Good News



But so is access to doctors and hospitals in the plans offered on the health insurance exchanges.

A Congressional Budget Office report estimates lower federal spending (see the figure). The reason: Health plans in the exchanges look more like Medicaid than like employer-based coverage. Jason Millman reports:

The CBO report points out that it previously thought Obamacare’s exchange plans would look more like employer-based coverage, but that hasn’t turned out to be the case so far—hence, the cheaper premiums. “The plans being offered through the exchanges this year appear to have, in general, lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers’ use of health care than employment-based plans,” CBO wrote.

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Gov. Bobby Jindal’s Health Reform Proposal: Pros and Cons



11935359_SGov. Bobby Jindal (R-LA) has joined the number of Republicans with an alternative health reform. His Freedom and Empowerment Plan doesn’t mince words on repealing Obamacare:

The American people are in favor of repealing Obamacare. But conventional wisdom in Washington holds that the law cannot be fully repealed. I couldn’t disagree more. A country that won two world wars and landed a man on the moon can surely eradicate this attack on our health care system.

Much of what is in his outline is found in other Republicans’ proposals. Jindal would demand that states “guarantee access” to people with pre-existing conditions, through a “high-risk pool, reinsurance, or some other method ensuring those with chronic conditions can obtain needed care.”

Expanding the options for “guaranteeing access” beyond high-risk pools is very promising: “Reinsurance” is what we call “change of health status insurance,” which both protects those with pre-existing conditions and gives insurers incentives to enroll them (as described in John C. Goodman’s Priceless: Curing the Healthcare Crisis, pp. 183-184).

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P. J. O’Rourke on the Baby Boom Generation



18052000In a career spanning four decades and counting, P. J. O’Rourke has written twenty books on subjects as diverse as the antics of Congress (Parliament of Whores), economic development (Eat the Rich), U.S. foreign policy (Peace Kills), and civil turmoil in the world’s hotspots (Holidays in Hell).

On February 13, the humorist and Founding Member of the Independent Institute’s Board of Advisors delighted an overflow crowd at our Oakland, Calif., headquarters with witty insights drawn from his latest book, The Baby Boom: How It Got That Way . . . And It Wasn’t My Fault . . . And I’ll Never Do It Again.

What sets apart the Baby Boomers from other age groups in American history? It’s true that the 75 million born in the United States from 1946 through 1964 reflect the post-war spike in birth rates. It’s also true that they became famous for challenging parental authority and other institutions. But a diagnosis of “demographics and defiance” misses the heart of the matter.

The fundamental defining characteristic of Baby Boomers, according to O’Rourke, is their emphasis on personal identity, an often reckless passion that gave him plenty of material to poke fun at.

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Let’s Start a Tax Revolt with Our iPhones



Screenshot_230Tax Day is upon us and at the federal level we’re told that Washington spends $3.5 trillion a year. The annual federal deficit stands at $514 billion. The national debt has climbed to $17.6 trillion. All of these numbers are staggering, and that’s the problem. Few people can relate to such large numbers because they obscure a more basic question: What does Washington’s spending cost me?

To answer this question, The Independent Institute created the MyGovCost Government Cost Calculator in 2010. And today the Institute has launched an accompanying mobile app for iPhones and iPads called MyGovCost, which allows people anywhere to find out how much money federal spending is costing them. It’s a personalized number based on information you supply regarding your age, annual income, and education level.

After you enter your information, the calculator shows you your share of federal spending, federal taxes, and the national debt. For example, a person age 35, with a college degree, earning $60,000 a year has a share of annual federal spending equal to $13,711, annual federal taxes of $10,380, and a national debt share of $64,604—all astounding amounts.

This person’s total federal tax bill through age 80 will be more than $529,000. If instead they had been able to invest this money at an annual rate of 6.1 percent (an historically attainable rate), they would have had a nest egg exceeding $2.7 million.

The MyGovCost app allows our 35 year old to ask herself or himself: Will I get $2.7 million worth of services from Washington? The wars in Iraq and Afghanistan alone will cost this person nearly $9,000 in lost retirement savings. Are these wars worth it?

People can make more informed decisions when they know individual price tags. The MyGovCost app provides price tags in many areas such as military operations, agriculture, energy, the environment, Social Security, Medicare, Medicaid, and welfare.

The free MyGovCost app is now available for the iPhone or iPad on the Apple App Store.

In the nation’s most populous state of California, more people are deciding they’re not getting their money’s worth from government. A new poll finds that 60 percent of Californians say they pay “much more” or “somewhat more” in taxes than they should. Is a new tax revolt brewing in California? Let’s hope so because it’s long overdue in California and everywhere else.