How can we do higher quality early childhood programs in Ohio?

One provision in the Ohio Senate’s new $75 million budget passed last week that has garnered plenty of attention has to do with Step Up to Quality, the state’s system for promoting quality in early childhood programs in Ohio.

The Senate budget removes the Step Up to Quality child care standards mandate, allowing child care providers to continue to get more money for meeting higher quality standards but not stopping payments for programs that don’t meet standards.

The Columbus Dispatch reports that the Step Up to Quality mandate removal is a step to reduce costs for the state, which Senate President Matt Huffman’s staff estimates will cost the state an additional $640 million by 2024.

The strange thing is that Step Up to Quality is currently saving the state money — but not in the way you would think. The same Columbus Dispatch article quotes Allen County Job and Family Services Director Joe Patton. He says the number of child care providers taking public funds has dropped from 60 to 17 in the past decade, something he attributes to the mandate to participate in Step Up to Quality.

This means that the requirements in Step Up to Quality could be leading providers to stop taking public funds so they don’t have to deal with these requirements.

The evidence that we have suggests quality in early childhood education matters. We’ve seen positive examples of the impact of early childhood like the Perry Preschool Project and the Abecedarian Project. We’ve also seen the negative impact of expanding child care without quality controls in Quebec, leading to higher aggression and illness and lower motor and social skills among children and worse parenting relationships and health among parents.

That being said, the evidence for the effectiveness of programs like Step Up to Quality are mixed.

A 2019 evaluation of New Mexico’s “Step Up to Quality” equivalent conducted by the New Mexico Legislative Finance Committee found no evidence child care assistance led to improved educational outcomes. It did find that family income and child well-being improved among providers that participated in the program, but the specific ranking didn’t have any bearing on these outcomes.

What this means is that, while it helped families to be a “one-star” program, they couldn’t find any difference between “one-star” and “five-star” programs. These programs, at least in this case, were likely measuring and requiring the wrong things.

So what can we do better? One option is to focus more on outcomes than outputs. The New Mexico study above recommends creating evaluation plans for child care based on “measures of child health and social-emotional development, family economic improvement, and parental employment.”

Another option is to put the state in charge of assessment of quality the same way it is in charge of assessing health conditions. Having early childhood assessors who go on-site to assess conditions would reduce reporting costs borne by providers and could tie assessment to widely-used measures like the Early Childhood Environment Rating Scale.

While we have good reason to believe early childhood education can grow the economy, reduce poverty, and improve lives, we still have a lot to learn about how to best foster it from a public policy standpoint. This is a system that will likely endure some substantial tweaking in the coming decade.

This commentary first appeared in the Ohio Capital Journal.

Ohio's growth was sluggish even before COVID-19

This morning, Scioto Analysis released Genuine Progress Indicator (GPI) calculations for 2019 for the state of Ohio, providing the most comprehensive economic activity estimate for that year to date. Results show that GPI grew 0.9% from 2018 to 2019, Ohio’s slowest growth rate in three years, and about a third of the growth rate suggested by Gross Domestic Product (GDP) estimates made by the Bureau of Economic Analysis.

“While GSP measurements only estimate the value of traded goods, GPI calculations we make also include the cost of environmental damage and the value of goods such as unpaid housework to the state economy,” said Scioto Analysis Principal Rob Moore.

While total economic indicators were up 1.6%, environmental damage was up 3%, driven by increased nonrenewable depletion and carbon emissions. Social indicators were also up 0.8%, driven by increased value of housework and parenting and higher education.

The report also includes recommendations for improvement of the Genuine Progress Indicator, an indicator that four states (Hawaii, Maryland, Vermont, and Washington) have statutorily endorsed. These recommendations include calculating value of government expenditures and net exports and medical costs associated with food insecurity.

Detailed estimates of the Genuine Progress Indicator’s 26 indicators are included in Appendix B of the report.

Bail reform could reduce disparities and save money

Last month, state Sens. Rob McColley and Steve Huffman introduced a bill to reform the bail system in Ohio.

Ohio has already had some counties dip their toe in the bail reform water. Toledo’s Lucas County released twice as many defendants in 2015 in its first year using a new bail-setting system based on risk assessment.

Why do we have bail in the first place? According to the American Bar Association, “[bail] is not supposed to be used as punishment. The purpose of bail is simply to ensure that defendants will appear for trial and all pretrial hearings for which they must be present.”

Judges set bail based on a variety of factors, including risk the defendant will not show up for trial, the crime the defendant is accused of committing, how “dangerous” the defendant is considered to be, and how much of a risk the defendant poses to the community during the release period.

The problem with the current system is that there is strong evidence for bias in it. Last year, researchers at the University of California, San Diego, Harvard University, and the University of Chicago released a working paper at the National Bureau of Economic Research tackling this question. They found that about two-thirds of the average release rate disparity between white and Black defendants in New York City is due to racial discrimination.

These findings echo an earlier study by these researchers that found evidence of racial bias among bail judges in Miami and Philadelphia. The researchers found that this bias was driven by racially-biased prediction errors, using race as a proxy for more salient bail considerations. They also found bias more common among inexperienced and part-time judges.

Over the past decade or so, racial justice advocates have increasingly partnered with social conservatives on criminal justice reform, realizing that high levels of incarceration in the United States are both exacerbating racial disparities and costing taxpayers a lot of money. Bail reform is an important front in this alliance of strange bedfellows.

Other states have taken steps to change the way bail is done in their justice systems. Earlier this year, Illinois became the first state in the country to end mandatory cash bail. Other states have been slow on the uptake. Alaska and New York instituted bail reforms that have been rolled back or amended. Voters in California rejected an effort to reform bail in their state.

It can be easy to be swept away by single stories when it comes to bail reform. Inevitably, someone who is released under Illinois’s cash bail system will commit a crime and it will make headlines. Opponents of bail reform will happily jump on such a story as evidence that the reforms were a mistake.

This is why evaluation is so vitally important for a reform such as this. Researchers across the country will have their eyes on Illinois as it implements its bail reform this summer. Hopefully if Ohio passes bail reform, it, too will be following the impact of the program on disparities, public safety, and local finances. Let the data bear it out and policymakers judge the worthiness of tradeoffs: That is the stuff of good policymaking.

This commentary first appeared in the Ohio Capital Journal.

Vax-a-Million: Is it worth it?

Last weekend, the Ohio Capital Journal reported that a state representative is considering introducing legislation to halt the “Vax-a-Million” campaign, a public outreach campaign that is famously giving $1 million to five Ohioans who have been vaccinated and registered for the program.

The Journal has also covered the consternation with the program among legislators, with some arguing the state should be doing nothing to promote vaccination and others arguing that the campaign is “untested” and a “misuse of money.”

How do we test these claims? Are there more “tried and true” ways to spend federal covid funds? How does this constitute “misuse?”

One of the most thoughtful analyses I’ve seen on the program has come from Julie Washington at Cleveland.com. She estimates that the cost of the program would equal the cost of about 40 severe hospitalizations. So if the program increases vaccination rates to the point where it prevents 40 cases of severe hospitalization, the program would “pay for itself” under this logic.

If a federal regulator were analyzing a program like Vax-a-Million, she would privilege the lives saved as a central consideration of the effectiveness of such a program. Since most valuations of the value of a statistical life place the value of risk reduction of death at around $10 million per life saved, if Vax-a-Million saves one life through spurring vaccination take-up, it pays for itself in social value under standard cost-benefit methodology.

As an additional consideration, when conducting cost-benefit analysis, an analyst also does not count the “sticker price” of a program as the cost, but rather distortion of the economy caused by the price. So, for instance, the Washington State Institute of Public Policy, the leading state institute for use of cost-benefit analysis in analyzing state programs, places the marginal excess burden of taxation at 50% of the cost of the program. This is a conservative assumption since it is on the high end of the range of estimates for how much taxes impact the economy.

For those confused, this means the economic cost of the program is probably $2.5 million (50% of $5 million) or lower. So this means that just looking at the cost of tax distortions of the program (most of them borne outside of Ohio since this is federal money), and the benefits of lives saved at a standard estimate of $10 million per lives saved, Vax-a-Million just needs to have a one in four chance of saving a single life in order for economic benefits to exceed economic costs.

These projections become even more rosy if you think taxes are less distortionary than the Washington State Institute for Public Policy’s conservative estimate or if you think the value of a statistical life is higher than the standard $10 million estimate.

So there it is. Yes, the program is new. It’s untested. But vaccinations were up by 30,000 in the week after the announcement. Can I get my calculator out and estimate if Vax-a-Million curbs Ohioans’ “freedom?” Of course I can’t. Do I think this program has greater than a one in four chance of saving a life? If this is the goal of the program, it seems like a gamble worth considering.

This commentary first appeared in the Ohio Capital Journal.

Ohio economists agree state naloxone spending has economic benefits

In a survey published by Scioto Analysis this morning, 25 of 27 Ohio economists agreed that the economic benefits of state funding for opioid overdose reversal medication outweigh the economic costs.

Economists agreeing with the statement emphasized both the low costs of the medication—about $40 per dose—as well as the high valuation of a statistical life. Some economists went past the simple economic argument, saying the policy was “the right thing to do” or “ethically obvious.” Some were critical of the opinions of detractors, stating the impact of availability of opioid reversal drugs are likely to have little impact on drug use habits.

Of the two that did not agree with the statement, the one economist who was uncertain commented that additional resources would be needed to transition overdose victims into the labor force if drug use leads to unemployment.

The Ohio Economic Experts Panel is a panel of over 40 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists.

State carbon abatement policies could generate $1 trillion in benefits

(Columbus, OH) – On Monday, Scioto Analysis released an analysis of options for reducing carbon emissions in the state of Ohio. Analysts found that renewable portfolio standards, cap-and-trade, or carbon tax approaches could generate up to a trillion dollars in economic benefits for the state through 2050.

Benefits would be accrued in the form of reduced health risks, less spending on infrastructure maintenance, and avoided cases of food insecurity driven by high carbon emissions.

“In this analysis, we found that stronger renewable portfolio standards, a cap-and-trade program, or a carbon tax would all lead to a reduction in economic impacts in the next thirty years by $800 billion to $1 trillion,”  said Aayush Nema, lead analyst for the project. "These numbers are consistent with extremely conservative values for the social cost of carbon and its discount rate. Moreover, each of our policy recommendations are consistent with bipartisan bills and policies implemented or supported by utility providers in states similar to Ohio.” 

This analysis was released just weeks after the Biden Administration released goals to reduce U.S. carbon emissions to 50% of 2005 levels by 2030, the onus for achieving which might fall on individual states.

“If Biden’s plans for carbon emissions will look anything like the Obama Administration’s, requirements to find a way to reduce carbon emissions will fall in the lap of states,” said Scioto Analysis Principal Rob Moore. “This analysis shows the state of Ohio has three great options for abating carbon.”

For more information, contact Rob Moore, principal, Scioto Analysis, (614) 743-1840, rob@sciotoanalysis.com

The vaccination conversation changes

The vaccine conversation is changing, and it’s changing fast. 

Just a month ago, people across the state were tapping “refresh” on their browsers, hoping to book their spot at a local pharmacy for an assurance against infection delivered by Moderna, Pfizer or Johnson & Johnson. Just two weeks ago, I biked down to Grove City from my home in the Brewery District to get the closest shot I could find.

Now, supply is outstripping demand. Pharmacies in many rural areas are practically begging people to get vaccinated. The overriding public policy problem of vaccination shifted quickly from one of rationing to one of public education.

Over a year ago now, I wrote about what Ohio can do to fight COVID-19, and the first strategy I listed was vaccination, understanding it would be awhile before we could implement such a strategy. That’s as true now as it was then: An ounce of prevention is worth a pound of cure, and two pin pricks is well worth reducing someone’s chance of contracting, suffering from, and passing on this deadly virus.

As of this week, a third of Ohioans are fully vaccinated. Public health experts across the country, though, are worried “herd immunity” will not be achieved. The story of the changing market for vaccines is not just one of supply, it’s also one of demand. While getting an appointment has become easier and easier over the past few weeks, the number of daily vaccinations has gone down over that time period.

What sort of dynamics will drive the vaccination trend in the Buckeye State going forward? She state has some things going for it. As of last weekend, Ohio led all of its neighboring states in number of people fully vaccinated per capita. Gov. Mike DeWine has been a strong and consistent voice for the importance of vaccination and has pushed for increasing access to the vaccine when given the chance.

On the other hand, Ohio has some demographic pressures that may make it hard for it to achieve herd immunity. For one, there is growing evidence that being a Trump voter is associated with passing on a vaccine. This does not bode well for a state where 53% of voters opted for Trump in 2020.

A large demographic of largely non-Trump voters also have been slow to be vaccinated: Black Ohioans. Black Ohioans make up 12% of the state’s population, COVID cases, and COVID deaths, but only 8% of the state’s vaccinated.

These twin problems create a dilemma for the state. It’s hard to imagine the state reaching 70% vaccinated without an uptick in vaccinations among Black and Republican Ohioans.

So what does a public education campaign look like to improve vaccination rates in Ohio? I won’t hazard to pretend I know the answer to this. There seems to be some agreement that public education played a part in the decades-long slide we’ve seen in smoking rates. But this is a problem with a lot of urgency where rapid vaccination could save a lot of lives in the short-term. Let’s hope we have some answers for helping people get vaccinated who haven’t yet decided to.

This commentary first appeared in the Ohio Capital Journal.

All tax cuts are not created equal

At the federal and state level, in governments run by both Republicans and Democrats, policymakers are cutting taxes. The federal American Rescue Plan, passed with no Republican votes, featured one of the largest one-year tax cuts in modern U.S. history. The Ohio House’s Republican-backed state budget bill features a 2% income tax cut across the board.

Part of this bipartisan consensus around tax cuts owes to economic conditions and part owes to ideological considerations. On the rebound from a sharp recession, both parties are interested in jump-starting the economy with cash while also supporting families and businesses struggling due to social distancing measures.

Meanwhile, policy recommendations coming from leading wonks at prestigious research institutions to celebrity political candidates have extolled the virtue of cash as a tool for alleviating poverty and providing flexible support for families in the 21st century.

Looking at these two plans, however, the divide between Republican and Democratic administrations becomes clear. Despite prominent Republicans like Mitt Romney, Marco Rubio, and Mike Lee backing pro-poor cash programs, federal polarization still led them to “no” votes on the American Rescue Plan. At the state level, there is more crossing the aisle: Democrats were split on their votes for the state budget, though many who voted for it were likely more drawn to the inclusion of school funding reform than the income tax cut.

While the American Rescue Plan directs funds to low-income households, the Ohio House tax cuts accrue more heavily to high-income households. This is because the Ohio House’s budget is more interested in reducing state reliance on income tax overall.

This isn’t necessarily bad policy. Income taxes tend to be higher in the United States than in most developed countries, which rely much more heavily on taxes on goods and services. The U.S. in fact taxes goods and services lower than any OECD country. 

This may seem counter to our understanding of Europe since income taxes impact the poor less than sales taxes, but sales taxes distort the economy less than income taxes. Coupled with payments to low-income families, a high-sales tax, low-income tax scheme can balance equity and efficiency goals effectively.

For instance, the Legislative Service Commission estimates the income tax cut in the House budget will reduce revenues by $380 million over the next two years. In 2019, my firm estimated that a 10% federal match refundable state earned income tax credit (a tax cut targeted toward low-income working families) would cost about $210 million a year, which would amount to $420 million over two years.

This is in the same ballpark as the House cut in size, but with an average of $250 going to each low-income worker compared to the $0-1 tax cut cited to accrue to poor and low-income families under the current plan. Thus, an earned income tax credit expansion could reduce income taxation while simultaneously promoting equity goals.

It’s easy to characterize tax cuts themselves as good or bad, but in today’s current political environment, tax cuts are a consensus tool for improving the economy and promoting equity. The question is what kind of tax cuts we want, and the economic evidence available to us tells us that all tax cuts are not created equal.

This commentary first appeared in the Ohio Capital Journal.

Most Ohio economists agree zoning reform would reduce housing costs

In a survey published by Scioto Analysis this morning, 22 of 26 Ohio economists agreed that less rigid residential zoning codes in Ohio municipalities would reduce future cost of housing.

Economists who agreed with the statement pointed to single-family zoning and minimum acreage requirements as drivers of higher pricing, though said they could lead to higher quality of housing, too. None of the 26 economists disagreed with the statement, though four were uncertain, noting housing costs have many drivers and that reducing zoning restrictions will only drive costs down if there is demand for smaller and multi-family housing.

Economists were split on whether less rigid residential zoning codes in Ohio municipalities would reduce levels of residential segregation, with 12 agreeing with the statement and 13 uncertain or disagreeing. Those who agreed said it could reduce income and class segregation while those who were uncertain wondered about demand, rigidity of current regulations, and whether segregation reduction would extend beyond income.

The Ohio Economic Experts Panel is a panel of over 40 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists.

If you would like to suggest a question for a future Ohio Economic Experts Panel, email your ideas to panel@sciotoanalysis.com.

Equality and Efficiency: Public Policy's "Big Tradeoff"

The summer before grad school, we were assigned nearly a dozen books for optional summer reading. Of course, me being the bright-eyed and bushy-tailed future grad student I was, I read book after book, trying my best to immerse myself in the world of policy analysis before moving to California to study it full-time. 

Some of the books were memorable, some I breezed through. I recall reading Bury the Chains, a journalist’s take on the worldwide movement in the 19th century to end slavery. I also recall the book Exit, Voice, Loyalty, a book about the different ways that consumers can “let themselves be heard” in the marketplace.

The book that had the biggest impact on me that summer, though, was Arthur Okun’s Equality and Efficiency: the Big Tradeoff. Published just five years before his untimely death of a heart attack at age 51, Okun’s Brookings Institution essay ruminates on the challenge policymakers face in balancing the two major goals of economic policy.

One of the things I found most convincing in Okun’s book was his insistence on the importance of balance. At the time I was an organizer and admittedly saw the public policy world as a zero-sum game. Doing high school debate and being the competitor I was, I saw the public policy world as one of winners and losers, where one person’s gain was necessarily another’s loss. Okun saw it differently. He saw the public policy world as one in which competing social goals had merit and the real challenge was figuring out how much of each outcome was “best” combination for society.

His most famous example of this is what he calls the “leaky bucket” thought experiment. He characterizes a redistributive program as taking resources from one person and giving them to another. Along the way, resources will be lost to both parties through administrative costs, deadweight loss, or other costs imposed by the program. So a redistributive program can be seen as a leaky bucket that takes water from one well to another, losing water along the way. 

The thought experiment he poses is as follows: how much water would you be willing to lose from the bucket before you determined it wasn’t worth using the bucket in the first place?

Okun wagers most people would not tolerate 100% leakage (all the redistribution evaporates before it gets to the least well-off) and most people would agree to use a 0% bucket (zero administrative cost, zero deadweight loss, all the money redistributed goes to the less well-off). He says if you don’t agree with both of those, you’re an ideologue and this reasoning will not make sense to you. But most people are somewhere in between.

This reasoning opened me up to the world of policy analysis. It’s a world of tradeoffs, a world where there’s always a hidden cost, an unintended consequence. And it’s up to the policy analyst to help the policymaker understand what those are.

But that latter point matters, too: if we can find situations where there are win-wins, we should implement those policies.

I wonder if we are coming into an era where people are starting to embrace this logic that Okun put forth almost fifty years ago now. I wonder if early childhood and child allowance policies combined with what we’ve learned about child development could be something that could both advance equity and grow the economy. We still have time to find out, but Okun may just be smiling down on us these days.