Since Donald J. Trump announced his candidacy for president in June 2015, there have been many commentaries on his financial history — particularly because he has refused to release his tax returns.

In 2016, David Barstow, Susanne Craig and Russ Buettner of The New York Times obtained Trump’s 1995 tax returns, and for their article published on the front page of The New York Times on October 3, 2018, they worked together for over a year to investigate the wealth that the president inherited from his father.

The narrative in the NY Times investigative piece is compelling.

Like most rules and regulations, U.S. tax law assumes that people will voluntarily comply in the interest of equity and fairness across the board.  If the laws are not fair, they should be amended, not circumvented.

Having worked in the real estate and financial services industry for many years, I am familiar with many of the strategies exposed in the article, particularly the rather arbitrary and capricious use of independent appraisals to determine market value at a point in time.

Where many — if not most — wealthy families and individuals pay their fair share of taxes (perhaps grudgingly), the Trump family has notoriously and conspicuously fought against taxing authorities, continually challenging assessments and levies as a part of their overall family business plan.

Note a recent kerfuffle in Westchester County, NY where a Trump National Golf Club is located.

With a 65,000 square foot club house, private gourmet restaurant, swimming pool, tennis pavilion and courts, the 18-hole, 7,261 yard Jim Fazio designed course is situated on 140+ acres of prime real estate in the Town of Ossining, NY.

This ultra-exclusive private club demands a hefty 5-figure initiation fee from new members, with minimum annual dues of $19,400.

In his 2017 Executive Branch Personal Financial Disclosure Report (filed 6/14/2017), Donald Trump revealed the value of his ownership interest in Trump National Golf Club – Westchester at ‘over $50,000,000.’ with annual personal income attributable to the Club of $9,771,428.

Yet, in 2015, the Trump Organization sued the town of Ossining to lower its assessment from the 2014 value of $13.5 Million to $1.4 Million in order to reduce property and school taxes.

After the feud with Ossining became public, Trump’s lawyers raised the dollar value of the golf course, but it was still nowhere near the official 2015 assessment of $14.3 million and 2016 assessed value of $15.1 million.

The moves are consistent with repeated efforts by the Trump Organization to challenge property valuations in an effort to win massive local property tax reductions, not to mention the potentially illicit impacts on federal, state and local income tax obligations which in many cases are directly linked to these local assessments (valuations).

Over the past several years, Trump has lauded himself as “one of the most successful businessmen in the world,” who paid “no more tax than legally required.”

“I have brilliantly used [the U.S. tax] laws,” Trump said at a campaign event in October 2016. “I was able to use the tax laws of this country, and my business acumen, to dig out of the real estate mess — you would call it a depression — when few others were able to do what I did.”

It was a reported $916 Million net operating loss in 1995 which gave Trump the ability to avoid paying taxes on more than $50 Million in annual taxable income over the following 18 years.

Make America Great Again? Only if others are willing to cough up the tax revenues needed to pay the freight.

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Constitutional Conflicts

August 11, 2018

We frequently hear from advocates of the 1st amendment, the 2nd amendment, the 4th amendment, et al.

We don’t often hear about one of the key concerns of our ‘Founding Fathers’, perhaps best voiced by James Madison who said, “The truth is that all men having power ought to be mistrusted.”

Indeed.

Madison and his colleagues made sure that one of the basic precepts of the U.S. Constitution was to ensure a separation of powers enforced through a series of checks and balances to prevent a single person (or branch of the federal government) from becoming too powerful, thus thwarting the potential for fraud, self-aggrandizement and to encourage timely correction of errors or omissions.

The system of checks and balances is intended to act as a circuit breaker over the separation of powers, balancing the authorities of the separate branches of government.

It assumes honest and impartial actions by each department charged with the responsibility to verify the appropriateness and legality of actions initiated by the others.

Never before Donald Trump have we had a senior elected federal official who refused to disclose the details of his finances.  And, in U.S. history there has never been a president for whom it was more important that we know the details of his finances.

Trump has a well-documented history as an incompetent and perhaps corrupt businessman. After election, he refused to divest himself of his holdings, providing an open window of opportunities for bad people to entice him – and his family – with unimaginable advantages.  Why?  Trump’s income comes from an incredibly complex web of companies that are impossible for outside observers to comprehend.

We know from public information that the Trump Organization is not just one company, but a very complex assemblage of pass-through entities.  In a March 2016 letter from his tax lawyers, Donald Trump’s financial situation is described as “inordinately large and complex for an individual” because he holds “interests as the sole or principal owner in approximately 500 separate entities (which) are collectively referred to and do business as The Trump Organization.”

Now, more than 18 months after Trump was inaugurated, The Trump Organization continues to bring in money from deals involving potentially questionable characters and foreign governments possibly looking to influence POTUS. We have no idea who his partners in those hundreds of pass-through companies are, and whether they might have compromising information on him.

How can it be that we have allowed Mr. Trump to get away with keeping his tax returns secret?

Why?

Members of Congress have abdicated their role as arbiters of Executive Branch ethics by refusing to demand release of current (2014 – 2017) business and personal federal income tax returns from Donald Trump, The Trump Organization, and any relevant and/or related entities.

We can only conclude that this is clear evidence of dereliction of duty by these officials whom we elected to represent the interests of the American people.

Economically and financially competent American voters must demand full and immediate disclosure of current tax returns by senior elected officials, particularly at the executive and legislative level.

If they who wish to serve don’t wish to disclose, they shouldn’t run for public office.

If they who are elected refuse to disclose, they should automatically be removed from public office.

No exceptions. No excuses.

The headline comes directly from Steven Mnuchin, our U.S. Treasury Secretary, who recently penned an op-ed piece which appeared in print in the Tampa Bay Times (July 3, 2018).  https://www.whitehouse.gov/articles/trump-tax-cuts-strengthened-u-s-economy/

Mnuchin’s opinion piece seems to consist primarily of fluffed-up puffery related to the Tax Cuts and Jobs Act (TCJA) of 2017.

Mr. Mnuchin omitted several critical issues which most economists agree must be included in any analysis of the U.S. economy.

First is the ‘business (economic) cycle’.  The National Bureau of Economic Research (NBER) has been tracking the U.S. economy for 160+ years.  NBER defines one business cycle as: A period of economic expansion; followed by a contraction (recession); ending at the next point of recovery.

NBER’s 160+ years of records reflect that (over that time) the U.S. economy experienced 66 business cycles. Since 1945, we have experienced 11 business cycles with an average length of expansions of 5 years, followed by an average length of recessions of 1 year.

We can’t forget that the U.S. economy almost collapsed in early 2008 following a period of ebullience and expansion apparently accompanied by loose regulatory oversight of the financial sector.

Quick intervention in 2008 by our federal government saved the U.S. economy from the deepest and longest downturn since the Great Depression.  NBER data reflects the point of recovery (beginning of expansion) of the U.S. economy occurred in June 2009, and has now entered its 10th year (109th month) of growth.

Our current economic expansion is now the second-longest expansion on record, exceeded only by the expansion from March 1991 to March 2001, which lasted a full 10 years.

History tells us we are very close to the point of contraction (recession) of the U.S. economy.

Second is the ‘Skills Gap’.  When Mr. Mnuchin tells us that “…there are enough job openings in America for every unemployed person in the country” he fails to explain that the majority of open jobs require skills which the majority of unemployed people lack. In other cases, the unfilled jobs are located hundreds – maybe thousands – of miles away from the location of potential job seekers.

One solution to filling the open jobs is to encourage migration – or immigration — of skilled workers.

Another solution is to recruit, educate and train currently underemployed or unemployed U.S. residents who live in near proximity to the open jobs.

Third involves a dangerous combination of tax cuts and deficit spending to finance those tax cuts.

Mr. Mnuchin touts benefits to U.S. workers as a result of repatriation of hundreds of billions of dollars from off-shore corporate subsidiaries to the U.S.  In fact, companies thus far have paid out dividends and other withdrawals of $305.6 billion from foreign receipts which far outstripped the amount of this cash which was reinvested domestically.  By some estimates, corporations have spent 72 times as much on share buybacks as they have spent on one-time worker bonuses and raises.

The U.S. ‘current account deficit’, which measures the flow of goods, services and investments into and out of the country, widened by $8.0 billion to $124.1 billion, or 2.5 percent of national economic output in the first 3 months of 2018, virtually all of which seems to be attributable to the repatriation tax holiday.

To make up for the loss of tax revenue, the Trump administration is relying on a combination of debt financing and mystical economic growth which they expect to occur at the end of an extended business cycle.

Mnuchin tells us that U.S. economic growth is on steroids.

Some observers have noted that the appearance of economic growth is highly influenced by the infusion of repatriated cash – somewhat similar to feeding 2nd graders sugar before sending them out onto the playground.

The energy is intense, but it won’t last very long, and it is just not sustainable.

A recent report (6/21/2108) from the U.S. Office of Government Accountability (GAO) warns that responsible action is needed on the nation’s growing federal deficit, which grew to $666 Billion in FY 2017 (10/01/16 to 9/30/17) and is projected to surpass $1 Trillion by 2020.

According to the GAO’s 2017 financial report, the federal deficit in FY 2017 increased by 13.5% from $587 Billion in FY 2016 and $439 Billion in FY 2015. Federal receipts in FY 2017 increased by $48 billion, but that was outweighed by a $127 billion increase in spending.  (Note that Deficit is an annual measure; National Debt is aggregate, an accumulation of annual shortfalls.)

The aggregate (gross) amount that the U.S. Treasury can borrow is limited by the U.S. debt ceiling. As of April 30, 2018, our National Debt was $21 Trillion, about 78% of GDP.

Since its passage in December 2017, the non-partisan Congressional Budget Office has warned that TCJA will add $1.84 Trillion to the federal deficit over the next 10 years, which they estimate will push the National Debt to an unprecedented 152 percent of GDP by 2028, significantly increasing the odds of a new financial crisis.

Interest rates are rising, and National Debt is increasing, thus interest on National Debt will consume an ever-increasing amount of future federal budgets.

And, of great concern is the flattening of the ‘yield curve’.  Traditionally, interest rates on short-term debt are lower than rates paid on long-term obligations.

The spread between the yields of the 2-year Treasury note (2.55 percent) and 10-year Treasury note (2.89 percent) was 34 basis points on June 23. That’s less than half of what it was in early February and the narrowest it’s been since August 2007.

An inversion of the yield curve — when long-term rates fall below short-term rates — traditionally predicts a looming recession.

—————————————————————————-

It’s not clear why Mr. Mnuchin – a seasoned financial services sector professional with a clear expertise in fixed income securities – would omit such important information in his assessment of the U.S. economy.

I am drawn to conclude Mr. Mnuchin is using his position as a high-ranking federal official to ‘butter his own toast’, likely through complex – and undisclosed — derivative positions.

We’ll have to see if the Walrus is correct…..

Another branch of our armed forces?

I just can’t imagine an Industrial Engineer who would look at the current structure of the Pentagon and the U.S. military and not conclude that we have an extraordinarily inefficient approach to defense.

Air, land and sea.  Sounds good, right?

Except that we have 5 branches which overlap, compete with each other directly and indirectly, and don’t always communicate well.

Now, the Master Obfuscator and Distracter-in-Chief wants to start a 6th branch!

I can only conclude that The Donald is running wild trying to divert attention away from some of his self-created demons: Immigration; His war on Canada; His new love affair with Kim Jong Un; A ‘tax reform’ plan which will leave America bankrupt; The deterioration and ultimate disintegration of the American health care system; The ‘Russia thing’; Cyber security intrusions and risks across the entire U.S. public and private sector; Rapidly deteriorating physical infrastructure across the U.S.; Escalating gun violence, the NRA and 21st century gun control; Mueller and his ‘Russian Witch Hunt Hoax’; Stormy Daniels; and Dozens of other critical issues which need to be addressed in an honest, responsible and strategic fashion.

Donald J. Trump has the attention span of a gnat, the moral turpitude of a ‘made man’ and the integrity of a Carnival Barker.  Despite that, he is our POTUS, and he continues to dash along his path toward fooling many of the people most of the time.

April, 11, 2018:  Paul Ryan announced his plan to retire from Congress in January 2019, at the end of his current term, and further stated that he will not run for re-election.

Ryan said that he is proud of the accomplishments which occurred during his 20 years of service in Congress, although he regrets that ‘they were unable to achieve Entitlement Reform’ during his tenure in office.  Despite his vocal regrets, he is planning to leave Washington in January 2019 with some of the most generous and egregious entitlements remaining in the U.S.

It has been said that Ryan’s remaining goal (‘Entitlement Reform’) is razor focused on cutting federal spending on Medicare, Medicaid and welfare programs as a way to temper extraordinary increases in the federal deficit.

These increases in the deficit were willfully enacted as a component of the 2017 Tax Cuts and Jobs Act as a result of rare, curious, wild and crazy tax cuts combined with wild and crazy spending increases, at a point in our economic cycle which begs for caution and restraint.

Paul Ryan said that he is extremely pleased to have played a significant role in the passage of the Tax Cuts and Jobs Act which he considers to be a highlight of his service in Washington.

Background on Jobs:

Since 2010, the U.S. economy has supported the creation of almost 17.5 Million jobs, leading to a November 2017 unemployment rate of 4.1%, a 17-year low. (Perspective: Unemployment reached 15% toward the end of 2009; many economists agree that “full-employment” occurs when the unemployment rate is at 5% or lower.)

Hundreds of U.S companies have been looking to hire workers for skilled positions to help them meet growing demand for their products and services. These jobs are often called “family wage jobs” because they provide compensation and benefits sufficient to support a family in the local economy.

The number of job openings in the U.S. (October 2017) remained at the 6 Million level, marginally lower than at the end of 2016. (Perspective: When the Great Recession was at its worst in 2009, job openings fell to 2.2 million, an all-time low.)

Average hourly earnings had risen just 2.5% over the 12 month period ending in October 2017, helping to support the theory that a significant skills gap continues to impede hiring for family wage jobs which typically require advanced reading, math and computer skills.

In addition to the dilemma of finding skilled workers in shrinking regional labor market pools (“skills gap”), hiring managers and economic development experts also report obstacles cited by job seekers such as: transportation (including long commutes); day care/child care; and noncompetitive wage rates.

Despite these documented facts, Paul Ryan, many members of Congress and President Trump actively and enthusiastically supported “The Tax Cuts and Jobs Act” of 2017, telling us – among other things, “Our legislation is focused entirely on growing our economy, bringing jobs back to our local communities, increasing paychecks for our workers…”

At a point in time when we had apparently reached full employment; when some 6 Million higher-skilled, family wage jobs were unfilled, at least 2 questions remained unanswered:

– Other than engaging in war, or the innovative programs launched in the 1930’s (CCC, WPA, etc.), has the federal government ever succeeded in an effort to create sustainable private sector employment?

– If new family wage jobs are created, who would be available to fill them?

Background on the tax side:

When George W. Bush (POTUS 43) took office in January 2001, he inherited a federal budget from his predecessor.

Fiscal Year Ending (FYE) 9/30/2001 resulted in revenues of $2.39 Trillion and expenditures of $2.23 Trillion, resulting in a budget surplus of $0.15 Trillion. FYE 2001 federal debt held by the public was $3.34 Trillion, representing 31.7% of GDP.

Fast forward to his final full year in office (FYE 9/30/08), Bush watched over a federal budget which included revenues of $2.52 Trillion and expenditures of $2.98 Trillion.

That left a FYE deficit of $458.6 Billion, which (combined with prior deficit spending) resulted in total federal debt of $9.99 Trillion at FYE (9/30/08), representing 67.7% of GDP.

The federal budget for FY 2009 was developed by then-president Bush, submitted to Congress, and inherited by Obama (POTUS 44). The actual federal revenues for FY 2009 were $2.10 Trillion; expenditures were $3.52 Trillion. That left a 2009 FYE deficit of $1.41 Trillion, which (combined with prior deficit spending) resulted in total federal debt of $11.88 Trillion at FYE (9/30/09), representing 82.4% of GDP.

Most reasonable people will agree that a newly elected President who inherits a spending plan from his predecessor should not be given credit for its success or failure.

POTUS 44 (Obama) presided over 7 years of steady economic growth in the U.S., and under his watch, the close of FY 2017 budget reflects an increase of total federal debt to $14.67 Trillion, which was a numerical increase, but which represented a relative decrease to 76.3% of GDP.

Not great, but a clear improvement over what Obama inherited from Bush.

Some economists have suggested a 60% ceiling for publicly held debt vs. GDP which seems to make sense.

Although policies enacted during the Obama administration did reduce the ratio for 82% to 76%, we have a long way to go.

The correct way to address this situation is through tax policy reform designed to create balanced federal budgets, focused on reducing federal deficits.

That is not what our Congress has approved, and what President Trump signed into law just prior to Christmas 2017.

Most recent analysis by the Congressional Budget Office (4/10/2018) estimates that the combined effect of the 2017 tax cuts and the March 2018 budget-busting spending bill is sending the annual federal deficit toward the $1 Trillion mark in 2019.

The CBO report says our nation’s current $21 Trillion debt would spike to more than $33 Trillion in 10 years, with debt held by investors spiking to levels that would come close to equaling the size of the economy, reaching levels that many economists fear could spark a debt crisis.

CBO says economic growth from the tax cuts will add 0.7 percent on average to the nation’s economic output over the coming decade. Those effects will only partially offset the deficit cost of the tax cuts.

The administration had promised the cuts would pay for themselves.

Best I can see, only Robert Reich has focused on the Real Facts, and who would listen to a guy like Reich, who has degrees from Yale, Oxford, Dartmouth — clearly a left-wing Liberal Snowflake….

As interim Pres. Trump tweeted today, “We are with you, Paul!”

Bowing to extraordinary pressure from both the Catholic Church and Orthodox Jewish blocs, NYS Governor Andrew Cuomo has put his weight behind an ‘education Tax Credit’ proposal that is just plain wrong.

No matter how you slice this, it is not just wrong, it is also unconstitutional.

Our federal and state constitutions mandate certain services be provided to all residents and citizens, services which include public education.

Sometimes, economists view the shifting a tax burden required to provide sufficient funding to ensure provision of adequate and acceptable services from one taxing entity to another in order to create the illusion of a tax cut or a public cost savings as a “Zero Sum Game.”

This proposed tax credit program is certainly NOT a zero sum game.

The sole beneficiaries of this proposed tax credit charade will be those families – and their allies and supporters – who elect to eschew the free and publicly supported education system which is intended and expected to provide all children in New York State the opportunity for a “sound basic education,” defined as a meaningful high school education that prepares students for competitive employment and civic participation .

When Rhode Island adopted an education tax credit program a few years back, it resulted in a windfall for the state’s two Jewish day schools. Between them, their students received some $400,000 in scholarship money in the program’s first year.

In Florida, tax credit legislation has resulted in nearly $10 million annually for scholarships for Jewish day schools and yeshiva students.

Now New York, which has some 150,000 Jewish day school and yeshiva students — more than all the other states combined — has a chance of getting an education tax credit program that could deliver millions of dollars annually to Jewish day school families.

Another primary beneficiary of this proposed tax credit program will be supporters of private Catholic schools which have been plagued with declining enrollment and decreased core funding from the Church for several decades.

Offering a small number of self-selecting individuals the option to designate (Read:  Divert) up to 75% of their NY State Tax Liability to fund private religious schools is just plain wrong.

The news this week included a report from Institutional Investor which tells us that the top 25 Hedge Fund Managers took home a combined $21.2 Billion in 2013, a significant increase over 2012, when earnings totaled just $14.1 Billion, the lowest sum since the 2008 financial crisis.

If I did the math correctly, the average wage of these 25 individuals computes to $407,692.31 per hour, somewhat above our current $7.25 per hour minimum wage.

What is it that Hedge Fund Managers do that makes them the highest paid people in the world?

Do Hedge Fund Managers create economic value?  Do they create jobs?  Do they make products or deliver services which make our world a better place?

Unfortunately, they seem to do none of the above.

Hedge Fund Managers look for opportunities to exploit temporary weaknesses, gaps, flaws or aberrations in the operations of a specific company or in an economic sector overall.

They typically have billions of dollars of resources at their disposal, and by creating and taking well-crafted and strategic financial positions, they have the ability to move markets, generally to their own benefit.

The film “Other People’s Money”, starring Danny DeVito and Gregory Peck, was released in 1991.  Danny DeVito plays the role of “Larry the Liquidator” providing us a crude but quite accurate roadmap of what Hedge Fund Managers do every day.

In the 19th century, we called this sort of activity “Piracy” and we labeled the perpetrators “Pirates”.

In the 20th century, we called this sort of activity “Organized Crime” and we labeled the perpetrators “Mafia” or “Gangsters”.

Here we are in 2014, clearly well into the 21st century.

Our Hedge Fund Managers are out in the open, creating outcomes which seem to have no potential for positive impact on the U.S. or world economy, and we are giving them not just permission to operate (no regulatory oversight), but also preferential tax treatment on their booty (known as ‘carried interest’).

Hedge Fund Managers typically receive their compensation in 2 ways – an overall management fee equal to 2% of assets under management, and a 20% share of any profits on the assets under management.

It is the tax treatment of that 20% fee — categorized as Carried Interest — which is currently taxed at 20% — versus the 39.6 percent rate which business owners must pay on their earned income — that has created somewhat of a firestorm in Washington.

None of this makes any sense to me:  does it make sense to anyone?

I live in Westchester County, NY – the place they say has the highest property tax burden in the U.S.

Our Governor – Andrew Cuomo – also comes from Westchester County — and he has made it his mission to support effective ways to reduce and/or eliminate the government waste which necessitates the high property taxes we pay.

The incredible inefficiency of having 400+ independent government entities operating within Westchester County certainly is a primary culprit for the dubious honor of being named the highest taxed county in the U.S.

The largest portion of property taxes paid is attributable to funding public schools — 41 regular school districts in a county with less than 1 Million in total population.

Each of these districts is ‘self contained’ in that they have their own administration, buildings, and all of the fixed cost infrastructure which gets paid for whether there 275 students served (Pocantico Hills at an average per-pupil cost of $42,000) or 25,000 students (Yonkers at an average per-pupil cost of $19,600).

Contrast this to Montgomery County, Maryland — about the same physical size as Westchester, and with a very diverse population of just under 1 Million, demographically quite similar.

Montgomery County has just one school district which educates all of the 150,000 public school students in the county at an average per-pupil cost of $15,421.

Just about every year, Maryland Public Schools are ranked at the top in the nation. http://www.washingtonpost.com/blogs/maryland-schools-insider/post/maryland-schools-ranked-number-one–again/2012/01/11/gIQA7NEqrP_blog.html

While Montgomery County — perhaps due to its ethnic, racial and economic diversity — is not number one in the state, it seems to consistently score in the top 10, and compares very favorably against the composite Westchester score.

It’s really time for the taxpayers in NYS to put aside the political rhetoric and to find a way to reduce overall costs, whether through actual mergers and consolidations, or through consolidation of services which are not directly related to the classroom.

We can do better, and we must!

The Walrus recently learned that former Town of Somers Supervisor Mary Beth Murphy was appointed as executive director of the Westchester County Tax Commission by County Executive Rob Astorino, a fellow Republican. The job, which enjoys a six-year term, pays $132,155 a year.

Ms. Murphy told a local media outlet that she was “…very grateful for the opportunity to serve the people of Westchester, I was supervisor for 16 years, and I certainly dealt with tax issues during my tenure there. It brought exposure to multiple levels of government. “

The Westchester County Tax Commission ostensibly serves as the repository for the assessment rolls from the county’s multiple taxing jurisdictions; is tasked to provide advisory services to municipalities concerning assessments and assessment procedures; and produces an annual report to the county Board of Legislators.

Off hand, I’m thinking this person is absolutely unqualified and not fit to serve in this position. But, that is the nature of a system where officials are often elected to office based on a ‘beauty contest’ enhanced by a campaign war chest of dubious origin; then those ‘elected officials’ are free to appoint political hacks into positions which can have dramatic impact on society.

This pretty much says it all, another quote attributed to Ms. Murphy from her tenure as Supervisor in the Town of Somers: “We have a good way of reporting our tax bills, and did not see a desire for it by the constituency. The town has a very good reputation for its tax rate.”

According to what source? And on what standing?

The old “Home Rule” defense rears it’s head again. And, it was a great idea in pre-revolutionary war days. Sometime after the Civil War, Home Rule became obsolete, yet we still follow that logic in 21st century New York State?

Wondering why Westchester County has won the prize to become the highest property tax location in the U.S.? It’s entirely due to Home Rule and the incredible waste and duplication of services which result.

Most egregious? The folks in the wealthy white suburbs who are willing to pay through the nose to fund their quasi-private public schools, town and village police, etc. but who balk at the idea of providing any support at all to County taxes which in turn support social safety net services for their less fortunate neighbors.

We have some 700 public school districts across New York State, and as Governor Cuomo pointed out recently in an interview, “It’s not about more money gets us more results.  Because if that was the case, our students would be doing better than any students in the country, because we are spending more than anyone else.”

No one could successfully argue that the K-12 public education system in New York State is either (a) effective, or (b) efficient.

Designed and governed under assumptions which were likely correct in the 19th century, we continue to operate our schools as though we live in a world where the horse is the primary means of transportation; where oil lamps and candles are used for illumination after dusk; and where young people are needed early and late each day to do chores on the farm.

An article published on February 7, 2014 in The Journal News (http://www.lohud.com/article/20140207/NEWS/302070065/City-rural-schools-say-they-re-underfunded) helps to illustrate some of the complexities in state funding formulas which seem to have disparate negative impact on small city and rural school districts which are more likely to be both ‘high need’ and ‘low resource’.

Digging further into the mystery of school funding in New York State led me to the NYS Association of Small City School Districts, and the December 2013 newsletter, http://scsd.neric.org/newsletters/2013/2013%20SCSD%20Newsletter%20december%202013%20FINAL.pdf.

One of the outcomes of ‘The Campaign for Fiscal Equity’ was a promise made in 2007 by our elected officials in Albany that state funding would be adjusted to take into account both the availability of local resources and the relative “need” of students in each district.

As Governor Cuomo pointed out, we are already spending the most of any state on education, and our overall results are mediocre.

Indeed, it is not how much we are spending, but how the money gets spent.  If our elected officials want to constrain education spending, they need to pass legislation which removes costs from the system.  One way to accomplish that would be through school district consolidation to remove redundancies and spread fixed costs over a broader base.

Another way to accomplish holding the line on spending would be to divert aid from wealthy, high-performing districts and re-direct that aid to low-resource, under-performing districts.

When it comes to educating our young people, there really doesn’t seem to be any “starve the beast” solution on the horizon.

Let’s pay attention to this issue now, because if we don’t fix it now, it will only continue to fester and act as a drag on the economic and fiscal viability of New York State.