Education reforms in state budget could narrow achievement gap

Last Monday, members of the Ohio House and Senate finally reconciled their respective versions of the state budget, passing it with bipartisan support in both chambers. While a $1.6 billion tax cut and funding for broadband and brownfield development will make headlines, the most historic provision of this budget is likely its change to the school funding formula.

The school funding formula in Ohio is incredibly complicated. I know: I briefly worked for the legislative research group that focuses on the formula. A broad range of different factors determine how much state funding goes to each school.

It is hard to tell whether a single reform, even one as substantial as that included in this year’s state budget, will have a big impact on educational equity. What we can do, though, is look at other states’ school funding reform and see what their impacts have been.

A study conducted by leading poverty policy researchers Julien Lafortune and Jessie Rothstein of the University of California, Berkeley and Diane Schanzenbach of Northwestern University gives us some insight into the impact of this reform.

What these researchers did was examine the times state school funding reforms were put in place, seeing how schools fared before and after school funding reforms were implemented. The two outcomes of interest the economists focused on in this study were (1) increases in funding and (2) increases in student achievement.

According to the results, school funding reforms tend to lead to quick, large and long-lasting increases in funding for low-income school districts. Their findings were that not only did per-pupil funding increase on average for a decade out from the reform, but that progressivity of the funding system increased for decades into the future. The average low-income district per-pupil funding amount increased by $1,200 after reforms, $700 higher than in higher-income districts.

But spending alone is only one outcome: What does this mean for student achievement? 

No immediate effects of student achievement were found in the study. This is to be expected: While you can turn a dial and inject cash into a system, it will take more time to use that cash to improve student outcomes. The long-term results from this study, however, are more promising.

Ten years out, student achievement in low-income districts had improved so much that reforms had closed one-fifth of the gap between low-income and high-income districts. Notably, this impact is twice as large on an achievement-per-dollar basis as the impact of the Tennessee STAR experiment, a high-profile study that estimated the impact of class size on student achievement.

This means that funding equity can be twice as cost-effective as reducing class sizes at closing the achievement gap between low- and high-income districts.

Will we see these impacts in Ohio? It’s clearly too early to tell. Certainly some reforms are more effective than others and the devil can be in the details when it comes to a complex reform such as this. This study found that late-90s school funding reforms in Ohio brought considerably more resources to low-income school districts. Only proper evaluation of this reform will tell us the impact of this round of reforms.

This commentary first appeared in the Ohio Capital Journal.

The numbers behind Ohio's natural gas boom

Ohio’s transformation into a natural gas state is truly astonishing. The best way to see this is to look at data from the United States Energy Information Administration, a federal agency and part of the Department of Energy charged with collecting, analyzing, and disseminating energy information in the United States.

Looking at energy production in Ohio, we can see that total energy production in the state was steadily declining from the 1970s to the 2000s. Then, something amazing happened in the 2010s: fracking. New ways were found to tap into natural gas in the state, and energy production shot up to a rate twice as high as Ohio has ever experienced before.

The incredible thing is that this happened over less than a decade. Natural gas production went from only 8% of total energy production in the state in 2012 to nearly 80% in 2018.

It may seem here like natural gas is crowding out coal, crude oil, nuclear and renewables, and in one sense, it is. Natural gas production in 2018 accounted for more energy production than most single-year total energy production of all energy sources combined in Ohio. But nuclear and nonrenewable production in Ohio was also at its highest in 2018 compared to any other year, and coal and oil was down to a quarter of its peak in the 1970s.

While these numbers help us understand the energy breakdown of Ohio, it does not tell us much about costs borne to society, which is the relevant statistic for policymakers. Natural gas tends to emit much less carbon than coal and oil, but more than nuclear and renewable energy. However, higher production means more carbon emissions even if cleaner options are being used.

Some analyses tend to say that Ohio has reduced carbon emissions in production, even if it has not on the consumption side, since so much of this energy is exported from the state. Research we conducted this year has suggested that renewable portfolio standards, cap-and-trade, and carbon taxes could all be effective in reducing carbon emissions in the state. Interesting to policymakers, too, should be the impact of local emissions on public health and productivity, a topic we would love to delve into at another time.

18 of 23 Ohio economists believe rural broadband will grow economy, reduce inequality

In a survey published by Scioto Analysis this morning, 18 of 23 Ohio economists agreed that rural broadband programs funded with income taxes will lead to higher state economic growth and lower inequality.

Rural broadband is currently a point of contention in state budget talks. The Ohio House budget included funding for a program, while the Ohio Senate version omitted it.

Economists agreeing with the statements emphasized the role of broadband as a utility and its purpose in a modern economy. Those who were more skeptical wondered how funds would be spent and the degree to which they would help with production. Those who agreed the program would reduce income inequality emphasized how rural broadband could bolster rural areas and Appalachia in particular.

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.

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.