Germantown School District less than honest with taxpayers

The Germantown School District recently sent a survey out to residents to presumably assist them in planning for the future.  At the beginning of the survey they indicate that in the past two years the district has reduced the budget by more than $2.2 million and eliminated 13 staff position which equated to 8 FTE.  For next year the district is forecasting a budget shortfall of $2.3 million.  They then go on to tell us, in this impartial survey, that:

·        Fringe benefits are some of the very lowest in our region, 42 of 45 area districts

·        Starting salary ranks 37 of 45 area districts

·        Average salary ranks 37 of 45 area districts

·        Administrative cost per student is the bottom 8% of all school districts in Wisconsin, ranking 396 of 431 districts.

All numbers reflect 2010-11 data as this year’s information is not yet available.

We are then asked to respond to a number of leading questions that I am sure they will try to use to show taxpayers support more spending.

While those statements, from the survey, sound impressive, it is tough to evaluate without some context.  So, being the inquisitive type, I went to the Germantown School District web site and the Department of Public Instruction to uncover some facts.  Here are some of my findings:

Budget reduced by $2.2 million over past two years

While a budget is nice and important for managing expenses, I find it most helpful to see what they actually spent.  And no, surprise expenses in the year ended 2010 were 4.0% higher than 2009 and expenses in the year ended 2011 were up another 3.4% over 2010.  So, instead of the more than $2.2 million they claimed to have reduced from the budget, in the last two years, they actually spent $3.5 million more!!  How’s that for truth in advertising.

Starting Salary ranks 37 of 45 area districts.

Notice they didn’t say salary, they said starting salary.  So they bring in new teachers at rates significantly lower than other districts, ranking them 266 out of 424, with a low salary of $31,913, but you have to also consider that they also get avg. fringe benefits of $15,505.  What the district failed to point out is that they have one of the highest top salaries in the state.  Germantown ranks 44 out of 424, with a high salary of $78,104.  This is significantly above the median high salary of $62,740.

Average Salary ranks 37 of 25 area districts

While this may be true, what they fail to tell you is that the average salary is $56,017, significantly above the average for the state which is $50,627 and well above the per capita income of $34,698 earned by residents in Germantown according to the 2010 census.

Administrative cost per student is the bottom 8% of all school districts in Wisconsin

While admirable, let’s look at the facts, not the hype.  According to the Administrative salary report from the Department of Public Instruction, the total salary and benefits for the 15 administrators in Germantown totaled $1.6 million   This is an average of over $106,000 in salary and benefits for this group.

 

The one thing I have learned in my 52 years is numbers don’t lie, but liars use numbers.  There is any number of ways to use the same information to try to make your point.  I just wish these governmental entities would respect the intelligence of the electorate and be more straight forward and honest in their disclosures to taxpayers.

I want to make it clear that I am not anti-teacher.  I am frustrated that the teacher’s union does not recognize that most taxpayers have suffered the past few years and most of us have less income than we did 3 years ago, many more of us are out of work, our retirement nest egg is significantly smaller than it was three years ago and our home is now worth less than it was three years ago.

It is now time for the school districts to examine the cost of education and to find creative and innovative ways to deliver a better product.  Buying overpriced insurance from a union owned company can not be tolerated.  The school districts owe it to the taxpayers to find ways to cut costs.  There are ways to reduce expenses and not impact the quality of education.  If any school district doesn’t think they can find any cost savings, I would be happy to sit with them and go through their books to find opportunities for them.

TAX SYSTEM EXPLAINED IN BEER

I couldn't resist sharing this.  Hope you enjoy.

Finally, a way to understand class warfare in real world terms.


Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.  If they paid their bill the way we pay our taxes, it would go something like this...

     The first four men (the poorest) would pay nothing
     The fifth would pay $1
     The sixth would pay $3
     The seventh would pay $7
     The eighth would pay $12
     The ninth would pay $18
     The tenth man (the richest) would pay $59

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.  "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20".  Drinks for the ten men would now cost just $80.


The group still wanted to pay their bill the way we pay our taxes.  So the first four men were unaffected.  They would still drink for free, but what about the other six men ?  How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33.  But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using.  He proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man,
     The first four men still paid nothing.
     The fifth man, now paid nothing (100% savings).
     The sixth now paid $2 instead of $3 (33% savings).
     The seventh now paid $5 instead of $7 (28% savings).
     The eighth now paid $9 instead of $12 (25% savings).
     The ninth now paid $14 instead of $18 (22% savings).
     The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before.  And the first four continued to drink for free.  But, once outside the bar, the men began to compare their savings.

"I only got a dollar out of the $20 savings," declared the sixth man.  He pointed to the tenth man, "but he got $10!"

"Yeah, that's right," exclaimed the fifth man.  "I only saved a dollar too.  It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man.  "Why should he get $10 back, when I got only $2?  The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all.  This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.  The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.  Tax them too much, attack them for being wealthy, and they just may not show up anymore.  In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.



David R. Kamerschen, Ph.D.
Professor of Economics

Government vs. Soup Kitchen

At Thanksgiving, the poor pay for dumb regulation.


Just another example of excessive government and lack of common sense on the part of public officials. 


By WILLIAM MCGURN

This Thursday, in a parish hall not far from the New Jersey town green where George Washington once made his winter headquarters, as many as 300 people will gather for their Thanksgiving meal. Some will be homeless, some will be mentally ill, some will be old, and some will be folks and families who have just hit a hard patch. For all of them, Morristown's Community Soup Kitchen and Outreach Center is one of the few blessings they can count on.

In many ways, this soup kitchen illustrates Tocqueville's point about the American genius for voluntary association. Having started out in a local Episcopal church, it has grown into a network that links restaurants, corporate sponsors and community groups with volunteers from nearly three dozen church congregations, including this reporter's. The result is a hot meal to anyone who comes to the door each noon, no questions asked.

This the men and women of the Community Soup Kitchen have provided for 26 years, not once missing a day. Now comes a challenge greater than any snowstorm or power outage. Earlier this year, the Morristown Division of Health ruled that henceforth the soup kitchen would be considered a "retail" food establishment under New Jersey law.

From that single word far-reaching consequences have flowed. In a column for a local blog, Ray Friant, a volunteer from the Morristown United Methodist Church, called the rule "crazy." Over Sunday breakfast at a local diner, Mr. Friant, his wife, Emmy Lu, and another church couple who also volunteer at the kitchen, Barbara and Jim Morris, spell out what they mean by crazy.

Most obvious is the higher cost: at least $150,000 more a year. To meet this increase, the kitchen is asking each participating church to up its own contribution. Some congregations don't have the money. For those that do, it will mean less for some other need.

Much of this cost results from a new prohibition on people donating food they've prepared at home. For those on the giving end, often this was the only way they could participate, so eliminating their contributions means eliminating volunteers. For those on the receiving end, it means no more homemade meat loaf, lasagna, cakes and so forth.

All, of course, in the name of food safety. Still, one suspects that when a co-worker brings a tin of Christmas cookies to a friend inside Morristown's Division of Health, those cookies are not forbidden because they do not come wrapped from a supermarket or approved restaurant. Yet this is precisely the restriction these officials have imposed on men, women and children whose only hope for a home-baked cookie might be at the soup kitchen.

Finally, there's the utter soullessness of the thing. For example, many of the women would bring their own aprons from home. No more. Now it's all latex gloves, throw-away aprons, and a ban on food servers even entering the kitchen. In short, more institutional cafeteria than Grandma's house.

Teresa Connolly, the soup kitchen's director, did not return phone calls. No doubt her top priority is keeping the kitchen going, and many appear to have concluded that the best option is getting along with the government. The senior pastor of the Friants' church, Neill Tolboom, notes that the soup kitchen appreciates that the town continues to let it do its work right near the main square, and he says his hope is that by adapting to the new government rules the result will be healthier meals for those whom the kitchen feeds.

Mr. Friant and his fellow volunteers say no one opposes reasonable measures to improve cleanliness. The question is whether this is a solution in search of a problem. In the 26 years this kitchen has been open, there seems to be no case of food poisoning. Maybe Morristown officials would do better to seek out those who actually eat there, and put to them this question: Do you feel safer and better off now that we've protected you from home-baked apple pie?

So what's the solution? It may be as simple as getting the Division of Health to reconsider. Unfortunately, Darlene O'Connell, the town's health officer, refused to comment, directing a reporter to her superior, Thomas Alexander, who did not return several calls. If, on the other hand, it turns out the push is from the state, surely Gov. Chris Christie and state lawmakers would be happy to work out a resolution that advances health while preserving the more personal elements that make this kitchen such a gift to those in need.

On a 1995 trip to New Delhi, Hillary Clinton visited an orphanage run by Mother Teresa's nuns. She came away impressed by the great love and care she found there. With no small irony, she noted it was a place that "would not have passed inspection in the U.S."

At least not in Morristown.

Write to MainStreet@wsj.com

Published in Wall Street Journal 11-22-2011

Federal Spending Simplified

A good friend of mine sent me an email today with the information below. 

I have written in the past about the way the public has become numb to the billions and trillions in spending that our politicians throw around.  This does a great job of putting the governmental spending and debt problem into a format that every individual can relate to.

U.S. Tax revenue:          $  2,170,000,000,000

Fed budget:                $  3,820,000,000,000

New debt:                  $  1,650,000,000,000

National debt:             $ 14,271,000,000,000

Recent budget cut:         $     38,500,000,000

Let's remove 8 zeros and pretend it's a household budget:

Annual family income:                      $  21,700

Money the family spent:                    $  38,200

New debt on the credit card:               $  16,500

Outstanding balance on the credit card:    $ 142,710

Total budget cuts:                         $     385

So to deal with our spending problem, this administration thinks cuts of 1.00% of current spending are the way to solve our problem.  This is like you and I taking a bag lunch to work 1 day a week instead of going out to lunch.


You would not be able to conduct your financial affairs in this manner, so why do we think it is OK for the federal government to do so?  If these numbers were really from an individual or household, they would be filing bankruptcy.  This is a serious situation and we need serious leadership.

The situation we find ourselves in should come as no surprise as the Senate has not passed a budget for the past two years and has no intention of passing a budget for next year.  The House has approved a budget, most families have a budget, so why don't we hold the Senate accountable?

We have already seen from my previous post that taxing companies and people more will not solve the problem.  The Simpson-Bowles report contained a plethora of ideas on spending cuts and revenue improvements, but the President ignored it, even though he commissioned the report.  Paul Ryan has proposed the Path to Prosperity and again all he got for his great work was criticism from the Administration.  All we hear from this President is that no one if presenting solutions to the problem.  The reality is, there are people of both sides of the aisle making recommendations, this President just doesn't want to use them.

Well, we the people, will have a chance to hear our voice heard.  This fall the choice is clear, are you better off now than you were 4 years ago and do you think the country is better off than it was 4 years ago?  It is unfortunate, but for the vast majority of Americans would probably answer no.  We have seen excessive government spending and regulation that has cost businesses trillion in additional expense that will ultimately be borne by use in the form of higher prices.

You need to make your voice heard.  Task a stand and tell your elected representatives that you are sick and tiered of the way this country manages our hard earned money/  If they can't fix this fiscal mess, we will elect others who are willing to make the tough choices and put this country back on the road to fiscal stability.

Record Debt Limit Increase - AGAIN

Only a politician would think the solution to our debt problem is more debt. So instead of dealing with the real issue –excessive spending – they just increase the credit line. What is even worse is the Senate and the President still has not passed a budget. Unless, and until, we get control of spending, we will not solve this crisis. And, we will not get control of this mess if we don’t have a plan – a budget.


The recent debt limit increase is the single largest increase in the debt limit ever and follows the previous largest increase ever ($1.9 trillion) back in February 2010. Since Obama took office the debt limit has been increased 4 times for a total of $5.379 trillion. The total of these increases, in just the last 30 months, are more than the increases to the debt limit from Aug. 1997 to Feb. 2009. So, in 30 months we have increased the debt limit higher than we did for the past 11 years.

Not a surprising result, when you refuse to actually budget your spending.

When you start talking about billions and trillions the number become so large and are a bit beyond our ability to comprehend. So, let’s take a look at this debt crisis and the debt ceiling increase solution and take it down to the household level. Because, at the end of the day, the government has no money, except from we the people.

As of Aug. 1, 2011, the total national debt outstanding is in excess of $14.5 trillion. There are approx. 82 million families in the US. So if we take the outstanding debt and allocate it to every family, this would equate to over $176,000 for every family.

This is like every family in the US having a credit line of $176,000 that is totally maxed out. And what is the political solution? Ask the US taxpayer for a 20% increase in that line when there have been essentially no principal payments ever. What do you think would happen if you walked into your bank and asked for a similar deal?

Unfortunately, most in Washington see nothing wrong with this and think it is totally proper to continue to spend more than we take in each month. They are only interested in getting re-elected and won’t make the tough choices needed to get this country back on track.

Accurate Reporting of Financial Performance

Would you invest in this company? Better yet, would anyone lend money to this company?

• negative net worth of $44 trillion
• operating loss of $817 billion
• $1.3 trillion of negative cash flow

What actions would you take if you were the CEO of this company? What actions do you think a lender would ask that the company take before they would lend to this company?
   
Well, I think we all know that a business would immediately look at ways to cut expenses. By right-sizing and refocusing on the important tasks, most companies come out of these difficult times in a much stronger financial position and it leads to years of prosperity.
  
This is exactly what has happened at many companies since the financial crisis. While the immediate changes might be painful, it is necessary to ensure the long-term health of the company.
  
Problem is, these results are not the results of any company, they are the results for the Federal government.  Bet you've never see the financial performance of the Federal government displayed in such terms. 

So why is the government not asking all agencies to look at the spending and staffing levels and find ways to cut expenses and get the government back on a stronger financial footing? Why, because all they have to do is print more money. They also have the foolish belief that they don’t tax people enough.

No business or household would conclude that they way out of a financial situation like this, is to increase revenues. The first reaction is to control spending, then look at ways to increase revenue.

The house has the formula right, Cut, Cap and Balance. First cut spending and not in government speak, make real cuts. Second, cap spending for the next several years so that all the cuts are not simply reinstated next year. Finally, pass a balance budget amendment. All of our states have to balance their budgets, why should the Federal government be any different?

If you listen to the Obama administration they don’t think we need a balanced budget amendment. If that were the case, why are we having this huge debate about the debt ceiling? This, as well as many previous administrations, and Congress, have proven they can not control spending. It is exactly because these politicians can not live within their means that we must have a balance budget amendment!!

So, back to the original question, would you invest in or lend to this enterprise? Amazingly, many do. The Treasury has had little problem selling enormous amounts of debt to buyers willing to earn record low rates of return. Why? They know we will simply print more money or threaten to tax more. We need limits and we need fiscal responsibility restored to this country.

Not surprisingly, Harry Reid predicts that the House plan to cut, cap and balance has no chance of passing the Senate.  Could it be our elected officials do not want to be held accountable?  Without a balanced budget amendment we will continue to keep raising the debt limit and pushing the burden of fixing this financial mess on to our children and grandchildren.  We are at a pivotal point and the time to act is now!!  We owe to our children and grandchildren to fix this mess NOW.

CUT, CAP and BALANCE

It's the Spending - Stupid!!

Despite what the Obama administration and democrats would lead the public to believe we have a spending problem not a revenue problem. I prefer to use actual facts and not hyperbole like the administration, the democrats and those who have no fiscal responsibility. In fact the data I will present below is actually from the Office of the President of the United States.

So let's examine the facts. In 2001 total revenue collected by the government was just shy of $2 trillion. Spending or cash outlays during 2001 were $1.8 trillion, which yielded a $128 billion surplus. Now let's look at 2008, the most recent year for which we have actual results. Total revenue collected was $2.5 trillion, an increase of $532 billion or 26%. Spending (cash outlays) during 2008 were just under $3 trillion, an increase of 60%, which yielded a deficit of $458 billion.

Clearly, spending grew much faster than revenue between 2001 and 2008 and during that time the government spent $2 trillion more than they collected. While these numbers are depressing, these are all pre-Obama and pre-Obama Care.

For 2009, receipts were $2.1 trillion, a decline of 14% from 2008; however expenditures increased over 18% to $3.5 trillion which yielded a deficit of $1.4 trillion. Unfortunately, the story for 2010 is much the same as 2009. Receipts and outlays were essentially the same as 2009, yielding another deficit of $1.3 trillion. Sad news is that projections for revenue in 2011 are for negligible growth, but over 10% growth in spending. The deficit for 2011 is projected to be $1.6 trillion.

Clearly, this government does not know how to live within their means. The President and democrats suggest we can simply solve the problem by having rich people pay more. So, if you believe this, we would need to collect $1.6 trillion more in taxes which would be an increase of almost 75%.

Let's look at the IRS records to see if this is even possible. In 2008, the last year for which the IRS has disclosed data, taxpayers making more than $200,000 paid $440 billion in taxes nearly half of all the taxes collected in 2008 from just 2.8% of the taxpayers. Total income reported by this group was $1.9 trillion, so in order to cover the gap; we would need to tax this group at 100%. Clearly we can not tax our way out of this problem.

STOP SPENDING!! We the people can not afford the size of government as it exists today.