About a month ago, we raised the point that the $21,600 Portland Public School Superintendent Carole Smith paid to research firm Davis, Hibbits and Midghall was a waste of money. After all, that was the firm that advised the school board to inflate the recent school bond issue by $178 million, so all the schools would get something, whether they needed it or not. As the bond issue fell to defeat, I thought that perhaps the reason that the research firm made that recommendation was because they're making so much money to know that the rest of us are climbing out of the worst recession since The Great Depression.
Last week, while discussing the fact that the City of Portland spends 36% of its budget attempting to achieve equity for 14% of its citizens, I neglected to cite the findings of another study at the heart of the $88.5 million (over 90% of the money we spend to achieve equity) Portland Housing Bureau. City Commissioner Nick Fish substantiates this expenditure by citing a study revealing that 66% of our 14% minority population "face discrimination when they look for a place to rent in Portland."
That would put us on par with Mobile, Alabama in the early 1960s.
While Commissioner Fish finds this situation "appalling," I find the fact that the Commissioner refuses to make the study public more appalling. Basically, he's saying, "Believe me."
Is it because he's read the study? No. City officials paid $13,000 for the study, but have not actually read it.
Okay. He's not saying, "Believe me." He's saying, "Believe them."
"Them" is the Fair Housing Council of Oregon. Commissioner Fish has chosen not to ask for the study because that would, according to Willamette Week, "jeopardize its ability to do future audits by revealing its methods."
In summary, the city paid $13,000 for a study that is clearly statistically unsound with a conclusion that has been grossly exaggerated that has not been read by city management in order to justify spending $88.5 million of our $2.797 billion budget.
Do you want the best job in Portland?
Do research studies for the city. You don't have to be right and you don't have to show anyone your work All you have to do is conclude that the city should spend more money. And make sure and bill them for your work.
kittyok@earthlink.net
Sunday, June 26, 2011
Thursday, June 16, 2011
Portland budget to be adopted today
The Portland City Council will adopt our new budget today on June 16. With a couple of candidates announcing their run for Mayor, this is a good time to see whether we agree with how our money is spent.
In this series, we’ll review the city budget and discuss one goal per article, whether that goal was achieved, and how much was spent on it.
The Numbers
The total budget is $2,797,348,621. It’s up $21 million, about ¾ of one percent, from last year.
Where we get the money
27% ($751 million) - money that was left after the city paid last year’s expenses (“Beginning Balance”)
20% ($574 million) - borrowed money (bonds)
19% ($520 million) - fees and service charges
16% ($452 million) - taxes
10% ($280 million) - paid to the city through government programs
6% ($154 million) - license and permits
2% ($66 million) - other sources
The amount the city is getting from other government programs is down considerably, as lower tax revenues have necessitated spending cuts during the economic slowdown.
Where we spend the money
Expenses are just over $1.7 billion
25% ($425 million) - Public Utilities (water and sewage)
24% ($423 million) - Public Safety (police, fire and emergency communications)
18% ($301 million) - Community Development (zoning, permits, erosion control)
13% ($229 million) - City Support Services (city attorney, management and finance)
12% ($217 million) - Transportation & Parking
6% ($113 million) - Parks, Recreation, & Culture
1% ($18 million) - Elected Officials
The remaining $1 billion of the budget is allocated to:
Contingency $626 million
Ending Fund Balance $ 68 million
Debt Service $416 million
Cash Transfers $592 million
Intra-city Transfers -$780 million
Economic Assumptions
Slow growth, low inflation and a stabilized housing market
This budget assumes that we will not fall back into recession, and that inflation will not grow uncontrollably. The city presumes that the economy and the revenues it produces will grow, but very slowly. Both national and local economic indicators support these assumptions, but if unforeseen circumstances cause either a recession or high inflation, money the city collects from revenues will fall short of this budget’s projections.
The budget assumes “some much needed stabilization of the local housing market by the summer of 2012.” According to the real estate Multiple Listing Service, both average and sales prices in Portland have recently improved from falling by 29% from 2007, to falling by 27%, in other words we’ve recently recouped 2% of the nearly 30% we’d fallen. To conclude that recent local data are a sign of stabilization in the coming year is premature, particularly since local property values fell in the later stages of the housing correction.
Robert Shiller, co-creator of the S&P/Case-Shiller Home Price Indices, stated on June 9, 2011, "Statisticians deal with things that repeat themselves. This housing boom and bust is so historic and unprecedented, you can't forecast the future because you have no comparison."
Therefore the risk that 2012 housing related revenues will fall short of budget projections is significant, since the basis for the anticipated housing recovery is anticipated is, at best, a “shot in the dark.”
Funding the library will be more expensive
A levy that provides some of the money used to operate the library expires next year. Portland property owners will be asked to renew the levy, which will cost more because interest rates are projected to rise. Virtually every reputable economist agrees that interest rates are likely to rise soon.
That extra interest (see Debt Service above) will probably increase city expenses by about $5 million. No library cost cutting plan to make up for this additional expense is currently in the budget.
Mayor’s Goals
In building this budget, the Mayor stated five key goals:
1. Return the City to full prosperity and invest in a stronger, more resilient City.
2. Help those hit hardest by the recession and provide support to the most vulnerable in our community.
3. Protect public safety services.
4. Increase the City's focus on equity to ensure that every Portlander has access to the most equal of opportunities.
5. Identify neighborhood nuisances and ensure more responsive City services.
Note that goals 2 and 4 are virtually identical. Since helping the vulnerable in our community is such a priority in this budget, we’ll start with examining how well we’re doing with achieving that goal, and how much we’re spending to do it.
Clearly, Portland is not a terribly diverse city. According to the US Census Bureau, as of 2000, the city of Portland is 78% white, 7% black, 7% Latino, 6% Asian and the rest American Indian and Pacific Islander. The non-white or Asian population is 16%. Achieving minority equity, the Mayor’s fourth stated goal, is laudable. Whether a new city office is the best way to achieve that goal is a debatable question.
New Program
The Office of Equity - $525 thousand
Mayor Adams intends to spend $525 thousand to create a new city agency to provide more equity for minorities.
How will this new department help?
How will this new department help?
Mayor Adams: “Well, we don’t know. So in terms of what is the Office of Equity going to do? Fundamentally, is figure out why Portlanders of color are actually seeing an increasing gap between white Portlanders, why that is and what we can do about it.”
Talk of the Office of Equity has prompted city commissioners to note that other city bureaus already address issues of fairness, equality and opportunity, and correctly so.
In addition to the $618 thousand that funds Office of Human Relations and Diversity Development and Affirmative Action Office, there is an additional $95.057 million in city funding that address minority inequity issues. They are:
1. The Portland Housing Bureau - $88.5 million. Organized on July 1 of last year, the PHB “continues efforts to synthesize programs, consolidate policy and investment approaches, and chart a new and forward-looking path.” In other words, so far, it is thinking up programs and making policy.
“As it continues to chart its path, it is emphasizing equity in its program investments. An emerging equity agenda recognizes the historic and institutional barriers to housing, homeownership, and economic stability experienced by communities of color. PHB seeks to place a greater reliance on community-validated data (such as the Coalition of Communities of Color report) to understand unmet needs, and to more intentionally hold its partners accountable for removing barriers to serving members of minority communities in greater numbers.”
In other words, when it does do something, it will try to promote economic stability and housing for minorities. Perhaps it can tell the Office of Equity how to do this. Better yet, if it does its job, there will be no need for the Office of Equity.
Here’s how the PHB spends its money. $6.8 million for the administration and support staff , $2.376 million for economic opportunity, $5.74 million for homeowner access and retention, $13.47 million for housing access and stabilization, and $60.1 million for housing production and preservation. Programs total $88.5 million.
As mentioned previously, both home median and sales prices are down 27% from 2007, and the Portland price to rent ratio is 22.41. A price-to-rent ratio over 21 indicates the cost of owning a home is far greater than renting. This fact places Portland as the fourth most expensive city in the US to buy versus rent. That is likely the greatest barrier to home ownership in the city, regardless of the minority status of the buyer.
2. The Office of Neighborhood Involvement - $3.9 million The ONI also has a goal of “expanding civic engagement – applying an equity lens. As Portland grows and becomes more diverse, ONI seeks to continue to expand involvement and bring additional people and communities into the public dialogue. The City has also recognized that historical efforts to involve under engaged groups (people of color, people with disabilities, renters, people with low income) in City initiatives have not been very effective. In exploring solutions to this problem, ONI supports the existing neighborhood system's efforts to engage all neighbors. The support is through small grants, outreach, leadership training, and technical assistance…”
The budget allocates $3.9 million to the Neighborhood Resource Center, while recognizing that its “efforts to engage under engaged groups have not been effective.” All programs by the ONI total over $7 million.
3. The Portland Development Commission - $1 million The PDC seeks to “… achieve Portland’s vision of a diverse, sustainable community with … quality jobs and housing for all.”
Under its “Partners for Economic Progress Initiative,” the budget allocates $242 thousand that will “focus primarily on 2-3 economically challenged business areas, outside of urban renewal areas used to seed small-scale neighborhood economic development projects identified and developed by the community.”
Under its “Small and Neighborhood Business Technical Assistance” program, the budget includes $600 thousand to fill gaps in business technical assistance services with a focus on stabilizing and growing small businesses with modest incomes, businesses located in economically challenged areas, and businesses whose owners may need services provided in languages other than English.” This funding will provide “tailored business technical assistance to 100 targeted businesses.”
Under its “Economic Opportunity Initiative,” the budget includes $158 thousand to fund workforce development service to 148 low-income youth.”
Total expenditures under the Neighborhood Economic Development department are $1.689 million.
4. Office of the Mayor - $685 thousand The Mayor’s budget includes $450 thousand “to support youth initiatives that drive the city towards greater equity and economic stability.”
Under its “Cradle-to-Career Implementation,” the budget includes an additional $235 thousand “to address the chronic educational challenges and prolific disparities in our schools.”
5. Office of Management & Finance - $804 thousand This budget includes $129 thousand toward its “Minority Evaluator Program Staff” to “require that all evaluation panels for Requests for Proposals include at least one minority community member.”
Its “Future Connect Scholarship” program allocates $500 thousand to “create a pathway to an Associate's Degree by helping our youth with financial burden of attending college. It also serves as an incentive for the youth who are most at-risk of not graduating college on time.”
Its “East Portland SUN School Equity” program allocates $100 thousand for “programs to improve student’s academic success.” Since “Douglas High … is the only high-poverty index school in the region without a SUN program,” these funds will provide the start-up amount for a SUN High School.
Its “CASH” Oregon program provides $75,000 for “free tax preparation service” for “low income individuals … (many of whom) are challenged by language barriers and lack basic financial literacy. In addition … CASH also assists people to get their financial houses in order by connecting them to educational resources and related community services.
6. Special Appropriations - $168 thousand
“Regional Arts and Culture Council Equity & Diversity Initiatives” provides $48 thousand to “expand its outreach to minority communities … to invest in more cultural diversity training; translate guidelines and application materials into Spanish, Russian, Chinese, Somali and Vietnamese … and increase … to one full time employee the staff … dedicated to coordinating these diversity outreach activities.”
Its “Black Parent Initiative” provides $100 thousand which “inspires and mobilizes black parent to ensure their children achieve educational excellence” through “one-on-one training … using the Effective Black Parenting model, individualized service plans, classes and support groups.”
Its “Cully-Concordia Adult ESOL Classes spends $20 thousand to “continue the English for Speakers of Other Languages Classes” tailored to the needs and desires of each student.”
Conclusion
Mayor Adams’ $525 thousand Office of Equity will be added to the $95.675 million already spent on attaining equity for the Portland population that is non white or Asian. In other words over 36% of $1.7 billion budget expense is allocated toward attaining equity for 14% of the Portland population.
Again, by no means am I suggesting that equity is not a laudable goal. I am simply pointing out that the problem does not appear to be the amount of money that is spent on achieving the goal; rather, how effectively those funds are being spent.
Generally, successful public policy to achieve financial equity involves two types of investment: Education and jobs. Government cannot create jobs in the private sector, but can make policies that are friendly toward business creation and job expansion.
The types of jobs that are likely to flourish amid our current economic climate of outsourcing and computerization are those that require physical presence (janitors, gardeners, teachers, nursing-home aides, etc.) and those that exchange information in ways that email and teleconferencing don’t accommodate (software development).
As you can see, these jobs are at the low end (janitors, etc.) and high end (software engineers) of the economic spectrum, causing some to describe both our local and national economy as a “barbell,” with jobs on either end of the spectrum, and few in the middle.
Clearly, our current policies have not achieved economic equity in the city. It requires a much more targeted approach than is being taken with our $96 million currently allocated to achieve this objective.
As to equity in home ownership, Portland home median and sales prices are down 27% from 2007, and the price to rent ratio in Portland is 22.41. As mentioned previously, a price-to-rent ratio over 21 indicates the cost of owning a home is far greater than renting. This fact places Portland as the fourth most expensive city in the US to buy versus rent.
The greatest barrier to home ownership in the city, then, is the cost of home ownership vs. renting. The $88.5 million Portland Housing Bureau, with its agenda to recognize “the historic and institutional barriers to housing, home ownership, and economic stability experienced by communities of color,” cannot further its agenda without recognition of the fact that the barrier to home ownership exists for all citizens in the community.
In our next discussion, we’ll review city policy and expenses in the area of public safety. I welcome your comments and encourage you to discuss these issues both here and with your neighbors and City Council representatives.
kittyok@earthlink.net
Friday, May 20, 2011
An open letter to PPS Superintendent Carole Smith: why we said no
Dear Superintendent. Smith,
After publicly stating that it was your goal to persuade voters to approve new construction "until all the schools have received the overhauls the district says they need," it must have been quite a shock when a your well advertised campaign resulted in a resounding "no." How could that have happened?
Who does NOT heart Portland Schools?
Does that mean that you wasted the $21,600 you paid research firm Davis, Hibbits and Midghall to tell you voters would say "yes" if you added something for ALL schools (not just the ones that needed it)? What's another $178 million, when EVERYBODY gets a little something?
Also, you made the bond issue sound positively miniscule by not including that pesky $77.5 million interest and insurance costs we'd have to pay. $625.5 million does sound like a lot more than $548 million. Voters won't notice.
You even went to the trouble to underestimate the real interest cost by promising to do the very thing guaranteed it high. You would finance the long term bond by renegotiating interest rates every few years, when every economist under the sun is warning that interest rates are going up. I guess you thought that, if voters didn't notice that you didn't include the interest or insurance they'd pay, they certainly wouldn't notice that the terms of the deal were bad.
The plastic surgeons in Portland probably loved your co-chair's quote, "Anyone needs a face-lift after 65 years," but apparently some of the other voters didn't. Talking about elective plastic surgery when 9.6% of the city's workers are looking for a job may have been a bit of a misstep, but maybe you thought that if they don't work, they may not vote.
But, it turned out, even the Portland voters with jobs notice that the value of their homes was down 29% from its peak, while their property taxes were rising up at least 3% a year. Of course, you tried to soothe homeowners by saying that, the average voter would only be paying $300 more. You didn't expect them to know the difference between median and average. You couldn't have known that they'd figure out that half of them would be paying more than $300. You relied on the voters, who paid out money for salmon and elephants to pony up for the kids.
All you needed to do is show the poor little kids with ceiling tiles raining down on their heads, pointing to signs that read "asbestos," and entering through warped, unpainted doors. Surely the voters would heart schools.
On the other hand, maybe it was the older voters that killed it. They may not have liked that "everybody needs a face-lift after 65 years" comment as much as the plastic surgeons. And they may have listened to local professor Dr. Eric Fuits, with two young children in Portland schools, that recommended a "no" vote. Based on census data and Journal of Urban Economics, he estimates that "approximately 4,500 people age 50 and older may be driven out of Portland if voters approve the higher property taxes." That may have upset them more than you thought.
After publicly stating that it was your goal to persuade voters to approve new construction "until all the schools have received the overhauls the district says they need," it must have been quite a shock when a your well advertised campaign resulted in a resounding "no." How could that have happened?
Who does NOT heart Portland Schools?
Does that mean that you wasted the $21,600 you paid research firm Davis, Hibbits and Midghall to tell you voters would say "yes" if you added something for ALL schools (not just the ones that needed it)? What's another $178 million, when EVERYBODY gets a little something?
Also, you made the bond issue sound positively miniscule by not including that pesky $77.5 million interest and insurance costs we'd have to pay. $625.5 million does sound like a lot more than $548 million. Voters won't notice.
You even went to the trouble to underestimate the real interest cost by promising to do the very thing guaranteed it high. You would finance the long term bond by renegotiating interest rates every few years, when every economist under the sun is warning that interest rates are going up. I guess you thought that, if voters didn't notice that you didn't include the interest or insurance they'd pay, they certainly wouldn't notice that the terms of the deal were bad.
The plastic surgeons in Portland probably loved your co-chair's quote, "Anyone needs a face-lift after 65 years," but apparently some of the other voters didn't. Talking about elective plastic surgery when 9.6% of the city's workers are looking for a job may have been a bit of a misstep, but maybe you thought that if they don't work, they may not vote.
But, it turned out, even the Portland voters with jobs notice that the value of their homes was down 29% from its peak, while their property taxes were rising up at least 3% a year. Of course, you tried to soothe homeowners by saying that, the average voter would only be paying $300 more. You didn't expect them to know the difference between median and average. You couldn't have known that they'd figure out that half of them would be paying more than $300. You relied on the voters, who paid out money for salmon and elephants to pony up for the kids.
All you needed to do is show the poor little kids with ceiling tiles raining down on their heads, pointing to signs that read "asbestos," and entering through warped, unpainted doors. Surely the voters would heart schools.
On the other hand, maybe it was the older voters that killed it. They may not have liked that "everybody needs a face-lift after 65 years" comment as much as the plastic surgeons. And they may have listened to local professor Dr. Eric Fuits, with two young children in Portland schools, that recommended a "no" vote. Based on census data and Journal of Urban Economics, he estimates that "approximately 4,500 people age 50 and older may be driven out of Portland if voters approve the higher property taxes." That may have upset them more than you thought.
Sunday, May 8, 2011
Give your mother a gift that's worth something
Maybe your mother isn't an online gamer, but in case your sweet little mom is one of the more than one hundred million people whose personal information was recently hacked, here's how to teach her to protect herself.
You've already told her not to download anything ridiculous like "never before seen pictures of bin Laden's corpse." If she's on facebook, you've told her not to click on "I won a free iPad and you can, too!" - even if it has a picture of her adorable child next to it. Now you need to teach her to monitor her credit reports and her credit score, and you love her so much, you'll show her how to do for free.
There's only one place where you can get your credit reports without charge, and it's NOT FreeCreditReports.com.
www.annualcreditreport.com is where to take your mom. Each of the three credit reporting agencies, Equifax, TransUnion and Experian, must provide her a free copy of your credit report annually, and this is where they do it. Log your mom on to the website, choose your mother's state of residence in the drop down menu, and hit "Request Report."
Have her complete her name, date of birth, social security number and address, telling her NEVER to release this information to anyone unless: 1) She goes to the website independently (they did not come to her); AND 2) She sees a https: (not http:) in the website address.
Have her check the box under her Social Security number request that all but the last four digits be encrypted, type the word at the bottom of the form in the box provided, and Send.
Select one of the three consumer reporting agency boxes, and click Next. Click Next again to continue. Review the personal information on the credit agency's page, and click Continue.
Have your mom answer the Personal Information questions listed, and hit Continue. Click Submit Order Now. On the last page, you can choose to View/Print your report or Create an Account in order to view it for 30 days. You may wish to choose the former, in order to have a printed copy of her report.
Help her to review the report very carefully, and notify the credit agency immediately if there are any errors.
Since your mom is entitled to only one free copy of your credit report each year from each agency, recommend that she stagger her request by ordering one report every four months. That way she'll help ensure that no one has stolen her identity and opened unauthorized accounts in her name.
Next, you can show her how to check her free FICO credit score by logging on to www.myfico.com This is her number, based on a statistical analysis of her credit report, that evaluates the relative credit risk she represents to a lender. The higher her FICO score, the better a credit risk she is, and the lower the interest rate she will pay. Again, she is entitled to see her FICO score annually, and recommend that she wise so, to monitor her credit and take care of any potential problems quickly.
That's all there is to it. Tell her you'll help her with the next one in four months and put it on your calendar so you won't forget.
What a great daughter you are. Your mom should be proud.
You've already told her not to download anything ridiculous like "never before seen pictures of bin Laden's corpse." If she's on facebook, you've told her not to click on "I won a free iPad and you can, too!" - even if it has a picture of her adorable child next to it. Now you need to teach her to monitor her credit reports and her credit score, and you love her so much, you'll show her how to do for free.
There's only one place where you can get your credit reports without charge, and it's NOT FreeCreditReports.com.
www.annualcreditreport.com is where to take your mom. Each of the three credit reporting agencies, Equifax, TransUnion and Experian, must provide her a free copy of your credit report annually, and this is where they do it. Log your mom on to the website, choose your mother's state of residence in the drop down menu, and hit "Request Report."
Have her complete her name, date of birth, social security number and address, telling her NEVER to release this information to anyone unless: 1) She goes to the website independently (they did not come to her); AND 2) She sees a https: (not http:) in the website address.
Have her check the box under her Social Security number request that all but the last four digits be encrypted, type the word at the bottom of the form in the box provided, and Send.
Select one of the three consumer reporting agency boxes, and click Next. Click Next again to continue. Review the personal information on the credit agency's page, and click Continue.
Have your mom answer the Personal Information questions listed, and hit Continue. Click Submit Order Now. On the last page, you can choose to View/Print your report or Create an Account in order to view it for 30 days. You may wish to choose the former, in order to have a printed copy of her report.
Help her to review the report very carefully, and notify the credit agency immediately if there are any errors.
Since your mom is entitled to only one free copy of your credit report each year from each agency, recommend that she stagger her request by ordering one report every four months. That way she'll help ensure that no one has stolen her identity and opened unauthorized accounts in her name.
Next, you can show her how to check her free FICO credit score by logging on to www.myfico.com This is her number, based on a statistical analysis of her credit report, that evaluates the relative credit risk she represents to a lender. The higher her FICO score, the better a credit risk she is, and the lower the interest rate she will pay. Again, she is entitled to see her FICO score annually, and recommend that she wise so, to monitor her credit and take care of any potential problems quickly.
That's all there is to it. Tell her you'll help her with the next one in four months and put it on your calendar so you won't forget.
What a great daughter you are. Your mom should be proud.
Monday, May 2, 2011
Why to say no to the Portland Public School construction bond
By now, you've been inundated by television ads and direct mail pleading for your to repair our crumbling out-of-date schools that put Portland's kids at risk with leaks, antiquated boilers, overloaded electrical systems and asbestos. The Portland School Bond promises financial accountability.
Here are the reasons to say no.
The bond measure is bloated with unnecessary repairs.
Nearly 1/3 of the bond ($178 million) is NOT necessary repairs, but added construction to ensure that every school will get something. Why?
A research firm which was paid over $20,000 by the school board said that the bond would be more likely to pass if every school got something, whether it needed it or not.
The publicized costs are purposely underestimated.
From PPS, “The estimated bond rate for six years is approximately $2 per $1,000 of assessed property value. It then drops to an estimated 15 cents per $1,000 for no more than 20 additional years.” The median assessed home value in the school district is $147,480, or $300 times 6, plus $22.12 times 20 years, or almost $2,250.
PPS also neglected to include the $75.5 million cost of interest payments and the $2 million bond insurance expenses. So, it’s really costing average; property taxpayer about 2,500.
And that $75.5 million interest cost is very likely understated. Most of the financing, in their own words would be in short-term bonds that mature in one, two or three years. Interest rates are rising, so when the short term financing matures, they will be refinanced at a higher rate.
Is it really only $300 for the average taxpayer?
No. When they said “average,” they meant median home price, which means half of all Portland homeowners will be paying more. Look here to input your street address, and find your Assessed Value, directly under your Market Value. If it is more than $147,480, you’ll be paying more than $2,500 for this bond.
According to Willamette Week the best reasons to vote no are:
”It’s expensive . ., the timing sucks, the plan is to ask voters to renew the construction bond every six years for the next three decades . ., PPS wants to rebuild two schools whose populations have fallen so dramatically that they were at risk for closure last year . ., (and) PPS is not allocating our very scarce resources to protect and educate . . at a time of huge budgetary crisis.”
It will hurt older Portland citizens.
A Portland professor with two children in the Portland Public School system, Dr. Eric Fruits, recently presented findings to the PPS Board based on census data and Journal of Urban Economics.
He estimates that “approximately 4,500 people age 50 and older may be driven out of Portland if voters approve the higher property taxes”
Who is supporting this bond issue?
The vast majority of financial support for this bill is from the construction industry, not concerned parents, teachers or people who “heart” Portland schools.
This is a needlessly expensive, misrepresented, badly financed, expensive bond with terrible timing, and will be only the first of many to come over the next thirty years. It will drive older citizens out of the school district and benefit the construction industry far more than it will improve local education.
kittyok@earthlink.net
Here are the reasons to say no.
The bond measure is bloated with unnecessary repairs.
Nearly 1/3 of the bond ($178 million) is NOT necessary repairs, but added construction to ensure that every school will get something. Why?
A research firm which was paid over $20,000 by the school board said that the bond would be more likely to pass if every school got something, whether it needed it or not.
The publicized costs are purposely underestimated.
From PPS, “The estimated bond rate for six years is approximately $2 per $1,000 of assessed property value. It then drops to an estimated 15 cents per $1,000 for no more than 20 additional years.” The median assessed home value in the school district is $147,480, or $300 times 6, plus $22.12 times 20 years, or almost $2,250.
PPS also neglected to include the $75.5 million cost of interest payments and the $2 million bond insurance expenses. So, it’s really costing average; property taxpayer about 2,500.
And that $75.5 million interest cost is very likely understated. Most of the financing, in their own words would be in short-term bonds that mature in one, two or three years. Interest rates are rising, so when the short term financing matures, they will be refinanced at a higher rate.
Is it really only $300 for the average taxpayer?
No. When they said “average,” they meant median home price, which means half of all Portland homeowners will be paying more. Look here to input your street address, and find your Assessed Value, directly under your Market Value. If it is more than $147,480, you’ll be paying more than $2,500 for this bond.
According to Willamette Week the best reasons to vote no are:
”It’s expensive . ., the timing sucks, the plan is to ask voters to renew the construction bond every six years for the next three decades . ., PPS wants to rebuild two schools whose populations have fallen so dramatically that they were at risk for closure last year . ., (and) PPS is not allocating our very scarce resources to protect and educate . . at a time of huge budgetary crisis.”
It will hurt older Portland citizens.
A Portland professor with two children in the Portland Public School system, Dr. Eric Fruits, recently presented findings to the PPS Board based on census data and Journal of Urban Economics.
He estimates that “approximately 4,500 people age 50 and older may be driven out of Portland if voters approve the higher property taxes”
Who is supporting this bond issue?
The vast majority of financial support for this bill is from the construction industry, not concerned parents, teachers or people who “heart” Portland schools.
This is a needlessly expensive, misrepresented, badly financed, expensive bond with terrible timing, and will be only the first of many to come over the next thirty years. It will drive older citizens out of the school district and benefit the construction industry far more than it will improve local education.
kittyok@earthlink.net
Wednesday, April 13, 2011
Why the Budget Fight Was Meaningless
We just witnessed a potential budget fight that nearly stopped non-essential Federal government spending to a standstill. Why it was a farce, and the reason that women can picture how ridiculous the cuts are.
Our Spending Pie Chart
We've probably all baked a pie. We've certainly all served a piece of pie. We absolutely know how to cut one half. If we cut a sliver from one of those halves, the piece that is left, almost 40%, is about the amount we spend on Social Security, Medicare and Medicaid. That's a very, very big piece.
If we cut the other half of the pie in half again, we have a quarter of the pie. That's what we spend on Defense, including Homeland Security. That's a pretty big piece as well.
Did we cut anything from these two pieces that are almost 2/3 of the pie? Not a cent.
Instead, we shaved crumbs off of tiny little pieces and called it a victory. It was not, for either side.
The Sacred Cows
It is considered political suicide to discuss changes to Social Security - 40% of our spending, for 13% of our population. No matter that:
The answer, of course, is any politician, whether conservative or liberal. Instead, both sides suggest ideological arguments that play to their base. Both have good ideas, but neither side acknowledges that. Instead, both point at the weaknesses in the other's plans. And neither even brings up social security.
It's not that hard. Take a listen, and see if you can live with this change to Social Security.
"Obamacare"
Much has been made about the repeal of Patient Protection and Affordable Care Act. It's too expensive. Wrong and right. It should not be repealed. It should be made more cost effective. Again, read on, and see if you can live with this change to health care reform.
Everyone knows that health care costs have been rising unsustainably, and our collective medical condition does not reflect the amount we pay. To address this issue realistically, two goals must be accomplished. First, health care coverage must be universal. Romney's Massachusetts plan addressed that well. Second, after universal coverage, costs must be contained.
Those that want to repeal the bill would be far better served by amending it to assure cost containment. Otherwise, the country will continue to have rising costs, either for those who have coverage, or for those who use expensive and inefficient alternatives, such as emergency room coverage. That's clearly unacceptable. So fix the bill. Make it cost effective.
Education
Cutting educational funding is insane. In a highly competitive global environment, an educated work force will assure our economic viability. We all know where we stand in the world rankings for education, and we all know it's not good.
Much has been said about accountability in the educational system, yet the unyielding teacher's union mandates seniority over accountability, saying that a "one size fits all" measurement is impossible. I disagree.
Every person who performs a function in a capitalistic society should be paid on a merit basis. Why would it be so hard to test children at the beginning and the end of the year and measure progress over a period of time? If some teacher's students show little or no improvement, should they not be replaced?
Summary
These suggestions would save far more than have been proposed thus far. No suggestion is mean-spirited, ideological or particularly difficult. They are, however, inconsistent with either major political party. There lies the difficulty.
With politicians so unwilling to compromise, true deficit reduction is likely to be a battle of the ideologues. Most of us are not ideologues. And we are, sadly, poorly represented.
Anyone who knows how to slice a pie can see that.
Our Spending Pie Chart
We've probably all baked a pie. We've certainly all served a piece of pie. We absolutely know how to cut one half. If we cut a sliver from one of those halves, the piece that is left, almost 40%, is about the amount we spend on Social Security, Medicare and Medicaid. That's a very, very big piece.
If we cut the other half of the pie in half again, we have a quarter of the pie. That's what we spend on Defense, including Homeland Security. That's a pretty big piece as well.
Did we cut anything from these two pieces that are almost 2/3 of the pie? Not a cent.
Instead, we shaved crumbs off of tiny little pieces and called it a victory. It was not, for either side.
The Sacred Cows
It is considered political suicide to discuss changes to Social Security - 40% of our spending, for 13% of our population. No matter that:
- In 1950, 16 workers contributed for each retiree; now there are 3
- In 1950, life expectancy was 68 (just over three years payment from age 65); now it is 81 (15 years payment from age 66), yet we moved the full retirement age up only by one year)
The answer, of course, is any politician, whether conservative or liberal. Instead, both sides suggest ideological arguments that play to their base. Both have good ideas, but neither side acknowledges that. Instead, both point at the weaknesses in the other's plans. And neither even brings up social security.
It's not that hard. Take a listen, and see if you can live with this change to Social Security.
- Changes won't affect anyone currently receiving benefits. The age for whom changes will be made can be set at 55, or even 50.
- Full retirement would be raised for those at the set age and below on a step basis. For instance, if you're 50 - 55, full retirement age is 67 (one year older than it is now). For those who are 45 - 50, full retirement is 68. For people who are 40 - 45, full retirement is 69. For 35 - 40, full retirement age is 70.
- Means testing will be in effect for those who's Adjusted Gross Income is $250,000 or more at full retirement age. Hopefully, we can agree that, at some level, we can afford to forgo our benefits for the long term sustainability of the program.
"Obamacare"
Much has been made about the repeal of Patient Protection and Affordable Care Act. It's too expensive. Wrong and right. It should not be repealed. It should be made more cost effective. Again, read on, and see if you can live with this change to health care reform.
Everyone knows that health care costs have been rising unsustainably, and our collective medical condition does not reflect the amount we pay. To address this issue realistically, two goals must be accomplished. First, health care coverage must be universal. Romney's Massachusetts plan addressed that well. Second, after universal coverage, costs must be contained.
Those that want to repeal the bill would be far better served by amending it to assure cost containment. Otherwise, the country will continue to have rising costs, either for those who have coverage, or for those who use expensive and inefficient alternatives, such as emergency room coverage. That's clearly unacceptable. So fix the bill. Make it cost effective.
Education
Cutting educational funding is insane. In a highly competitive global environment, an educated work force will assure our economic viability. We all know where we stand in the world rankings for education, and we all know it's not good.
Much has been said about accountability in the educational system, yet the unyielding teacher's union mandates seniority over accountability, saying that a "one size fits all" measurement is impossible. I disagree.
Every person who performs a function in a capitalistic society should be paid on a merit basis. Why would it be so hard to test children at the beginning and the end of the year and measure progress over a period of time? If some teacher's students show little or no improvement, should they not be replaced?
Summary
These suggestions would save far more than have been proposed thus far. No suggestion is mean-spirited, ideological or particularly difficult. They are, however, inconsistent with either major political party. There lies the difficulty.
With politicians so unwilling to compromise, true deficit reduction is likely to be a battle of the ideologues. Most of us are not ideologues. And we are, sadly, poorly represented.
Anyone who knows how to slice a pie can see that.
Monday, April 11, 2011
Which Portland investment bankers gave the best advice in 2011?
Earlier in the year, I gave you this year's forecast given by the strategists from ten investment firms, the advice from which private investors pay dearly. For the third consecutive year, we'll compare the return you'd receive from following their advice with simply buying the Standard and Poor's 500 Index.
Let's see how the quarter ended March 31 stacked up.
Oppenheimer's Brian Belski's advice would have earned you 5.26%, less commissions. You would have earned more with the S and P 500 Index, which earned 5.92% this quarter.
BofA Merrill Lynch's David Bianco's recommendations would have earned you 7.95%, more than 2% above the S and P 500.
Credit Suisse's Doug Cliggott's advice would have earned your portfolio 3.41% in the first quarter, 2.5% less than the S and P 500.
Barclay's Capital's Barry Knapp would have provided returns of 9.24% if you'd followed his advice, more than 3.3% higher than the S and P 500 Index.
Goldman Sach's David Kostin's recommendations would have returned 7.42%, 1.5% higher than the S and P 500.
JPMorgan's David Kelly's advice would have enriched your portfolio by only 3.8%, 2.13% less than the S and P 500.
Putnam's Jeff Knight's selections earned 7.67% in the first quarter, 1.75% more than the S and P.
Morgan Stanley's Henry McVey suggested investments that returned 12.25%, more than twice that of investing in the S and P 500.
Wells Capital Management's James Paulsen's advice would have returned 4.56%, about 1.3% less than the broad index.
UBS's Michael Ryan's advice was worth 7.36%, 1.4% more than the S and P.
Unlike the previous two years, a majority (six out of ten strategists) gave advice that was worth their commissions in the first three months of this year, with Morgan Stanley's advice outpacing index returns by more than 100%.
While impressive, he'd have to repeat this for two more quarters to beat a "buy and hold" strategy for the index since 2009. Nevertheless, it's an impressive feat, and we'll be watching to see if it continues into the next quarter.
kittyok@earthlink.net
Let's see how the quarter ended March 31 stacked up.
Oppenheimer's Brian Belski's advice would have earned you 5.26%, less commissions. You would have earned more with the S and P 500 Index, which earned 5.92% this quarter.
BofA Merrill Lynch's David Bianco's recommendations would have earned you 7.95%, more than 2% above the S and P 500.
Credit Suisse's Doug Cliggott's advice would have earned your portfolio 3.41% in the first quarter, 2.5% less than the S and P 500.
Barclay's Capital's Barry Knapp would have provided returns of 9.24% if you'd followed his advice, more than 3.3% higher than the S and P 500 Index.
Goldman Sach's David Kostin's recommendations would have returned 7.42%, 1.5% higher than the S and P 500.
JPMorgan's David Kelly's advice would have enriched your portfolio by only 3.8%, 2.13% less than the S and P 500.
Putnam's Jeff Knight's selections earned 7.67% in the first quarter, 1.75% more than the S and P.
Morgan Stanley's Henry McVey suggested investments that returned 12.25%, more than twice that of investing in the S and P 500.
Wells Capital Management's James Paulsen's advice would have returned 4.56%, about 1.3% less than the broad index.
UBS's Michael Ryan's advice was worth 7.36%, 1.4% more than the S and P.
Unlike the previous two years, a majority (six out of ten strategists) gave advice that was worth their commissions in the first three months of this year, with Morgan Stanley's advice outpacing index returns by more than 100%.
While impressive, he'd have to repeat this for two more quarters to beat a "buy and hold" strategy for the index since 2009. Nevertheless, it's an impressive feat, and we'll be watching to see if it continues into the next quarter.
kittyok@earthlink.net
Subscribe to:
Posts (Atom)
