TAB’s Bill Hammond published an op-ed piece in the Morning News today on how to deal with the budget crisis, which is a $15 billion gap between available revenue and current services–in particular, the proposed cuts in public education. Hammond is one of the few members of the business community (Charles Butt is another) who cares about public schools and understands their importance for the future of Texas business. Unfortunately, the sacred tenet that thou shalt raise no new revenue — a view that Hammond shares with the state’s leaders — leaves no room to address the long-term problem that Texas faces a structural budget deficit of $10 billion in future biennia. Still, Hammond deserves great credit for laying out a blueprint for how to get through the session without a catastrophe. This is the plan Hammond lays out in his article: (1) Tap into the $1.9 billion Available School Fund (which represents the increase in the value of the Permanent School Fund) to pay for the following allocations to school districts –Technology allotment….. $270.9 million –Pre-kindergarten…..$223.2 million –Teacher incentive pay…..$385.1 million –High school completion initiative…..$51 million –Virtual school netword…..$20.3 million Total from Available School Fund…..$950.6 million (2) Defer payments (AKA “smoke and mirrors”) by one day to the next biennium….estimated savings $3B to $4B for payments to schools, Medicaid, and the two state retirement systems (3) Maintain Texas Grants college scholarships at current funding levels ($614 million; an additional $172 million was requested for the current biennium) (4) Provide $550 million for new textbooks (the main purpose of the ASF) (5) Allow video lottery terminals at racetracks ($850 million to $1 billion) * * * * I respectfully disagree with maintaining the teacher incentive program. The fundamental problem is that it is hard to define what “merit” is. Is it something measurable, such as higher student performance on standardized tests? How do you equalize conditions for all teachers? Or is it desirable behavior, such as staying after school to help struggling students? Without a clear definition, many studies of such programs have not found positive results. For example:

The Project on Incentives in Teaching (POINT) was a three-year study conducted in the Metropolitan Nashville School System from 2006-07 through 2008-09, in which middle school mathematics teachers voluntarily participated in a controlled experiment to assess the effect of financial rewards for teachers whose students showed unusually large gains on standardized tests. The experiment was intended to test the notion that rewarding teachers for improved scores would cause scores to rise. It was up to participating teachers to decide what, if anything, they needed to do to raise student performance: participate in more professional development, seek coaching, collaborate with other teachers, or simply reflect on their practices. Thus, POINT was focused on the notion that a significant problem in American education is the absence of appropriate incentives, and that correcting the incentive structure would, in and of itself, constitute an effective intervention that improved student outcomes.
By and large, results did not confirm this hypothesis. While the general trend in middle school mathematics performance was upward over the period of the project, students of teachers randomly assigned to the treatment group (eligible for bonuses) did not outperform students whose teachers were assigned to the control group (not eligible for bonuses).
The trade publication Education Week commented on this research, which was designed to study the hypothesis that a large monetary incentive would cause teachers to seek ways to be more effective and boost student scores as a result. Said EW: “But it yielded only two small positive findings, limited to 5th graders in the second and third year of the experiment. No effects were seen for students in grades 6-8….”

Especially in the economic circumstances that Texas faces, the state cannot afford $385.1 million for an ideologically based program that does not show proven results. The money allocated to incentive pay should be redirected to the Foundation School Program. Let’s get back to Hammond’s numbers: * $950.6 million from the Available School Fund (technology allotment, pre-kindergarten, incentive pay, high school completion initiative, virtual school network) * Approximately $4 billion in deferrals to the next biennium * $614 million for maintaining current level of Texas Grants scholarships * $550 million from the Availale School Fund for new textbooks * $1 billion for video lottery terminals at racetracks * $500 million for mandatory probation and treatment instead of incarceration of first-time drug offenders * $1.2 billion in savings for expanding Medicaid managed care statewide These actions account for around $8,814.6 billion. * Spend $6 billion from the Rainy Day Fund, bringing the total revenue to  $14.8 billion, accounting for all but $200 million of the $15 billion gap between available revenue and the cost of current services. While there is a long way to go before the budget is written, Hammond’s proposals ought to tamp down the panic that prevails in the Capitol. I want to address one other issue raised by Hammond. He writes, “It will take grit and courage to address the shortfall without raising taxes, creating new fees or increasing existing ones.” My question is this: Since when did raising fees become off-limits? The answer is, since Rick Perry decided to take his political ambitions to the national level. Perry was governor in 2003, the Legislature raised fees, and nobody raised a ruckus. There is a big difference between raising taxes and raising fees. From the standpoint of an ordinary citizen, his tax dollars disappear into something called the state treasury, from whence they are sent goodness-knows-where. But when you pay a fee, you get something in return. You get the right to drive on public roads for the next four years. You get the right to hunt the state’s deer. You get the right to take the state’s fish. Presumably, these are activities you want to engage in, but first you must pay the state a fee. Why shouldn’t the state increase its fees in hard times? It still has to pay state troopers to provide safety on public roads. It still has to buy gasoline for those troopers. It still has to maintain those roads. It still has to pay game wardens to prevent illicit hunting. It still has to staff state parks. When I turned fifty, I bought a Golden Eagle Passport for $20. It provides free access to national parks for life. Do you think I resent paying that fee? No way. It’s the best value I have ever purchased. At some point we have to come to terms with the obvious truth that our revenue stream is insufficient to provide the services our citizens want. Otherwise, we will just go on digging the hole deeper. Let’s raise fees and set about addressing the structural deficit.