Olympia Business Watch

WSJ Looks at How They Put Together the Health Care Connector in Massachusetts

The Massachusetts health care reform, an on-again, off-again model for maybe what we might see here sometime but we're still kind of uncertain, continues to draw national attention.

Today's Wall Street Journal pulls back a few veils to examine the Connector board. It's an interesting read, documenting how the ten-member board worked through compromises to keep the deal afloat. The Legislature punted a lot of tough issues to the ten. And they deserve credit for their efforts.

This still looks like a work in progress that should inspire caution rather than replication. There's a long way to go before we know how this thing will pan out.

Gain-sharing Lawsuit

The Washington Education Association recently sued to keep gain-sharing, the state's costly pension perk that was supposed to be a freebie to certain state employees. Then the Washington Public Employees Association sued, as well.

I wrote about it in a column published by the Spokesman-Review.

Who Spends What in K-12 Education?

Every so often, we get calls from folks wanting to know how Washington education spending compares with what other states are doing. And - wait for it - the answers don't always come easily. One pretty good source of information is the U.S. Census Bureau report released May 24. Follow the link on the press release to access the complete data.

As I read the tables, per pupil spending here amounted to $7,560 ranking Washington 36th. The US average is $8,701. The data are for the 2004-2005 school year.

UPDATE A reader takes a closer look at the numbers.

Note that while Washington ranked 36th among all U.S. states and D.C. in current expenditures per pupil in 2004-05, it was tied for 5th among Western states (excluding Alaska and Hawaii, which have oddities making them hard to compare with others).  Nobody in the West (excluding sparsely populated, natural resources-rich Alaska and Wyoming, which can spend a lot on everything at little tax effort) is anywhere near states like Connecticut, Massachusetts, Rhode Island, Vermont, New York, New Jersey, Delaware and even Maine in per pupil spending.  And are those states' schools all doing better than ours.  Some are, some aren't. 

I included WA, OR, CA, ID, MT, NV, UT, WY, CO, AZ, NM and excluded HI and AK for the purposes of this comparison.  (So continental Western states.)  WY, OR, CA and MT were higher than WA for 04-05.  NM was same.

Good insight. Other comments? E-mail me from the link on the side.

 

Timely Manufacturing Appreciation Column from Bill Virgin

In today's Seattle PI, business columnist Bill Virgin provides a good perspective on the state's manufacturing sector, in anticipation of next week's Manufacturing Appreciation Week.

Washington Manufacturing Appreciation Week kicks off next week (what, it wasn't on your calendar?) with a series of events including the release of some fascinating data on the sector, compiled by the Manufacturing Industrial Council of Seattle in conjunction with the Association of Washington Business and the Kent Chamber of Commerce.

And a lot of that data contains good news. Read Virgin's column for more detail. But here's the crux:

Fortunately, much of the silliness publicly floated in the 1980s about an information economy that neither relied on nor cared about the fate of manufacturing has been flushed away, and manufacturing is getting the attention it deserves. ...

The manufacturing sector has ... proven to be remarkably resilient and innovative in dealing with the parade of challenges. Manufacturers are not just producing energy-saving devices and alternate-energy technology, they are also far more efficient in using energy in what they do. Even on the ever- vexing question of China, some manufacturers have a proven ability to hold their own "as long as they can turn the work around faster than it can be shipped across the Pacific," [executive director of the Manufacturing Industrial Council of Seattle David] Gering says.

In our state, manufacturing is more than holding it's own. And we can never take it for granted.

Brunell Looks at Hidden Costs of Ethanol

The upsides of renewable energy sources, like ethanol, have long been touted by folks concerned about climate change and energy independence. And, there's a lot of upside to commend.

There's also a downside that has come under increased attention lately, as documented in Don's column in today's Columbian.

While those in Congress rail about gas prices, they are virtually ignoring the rising food costs because of their rush to convert from fossil fuels to biofuels. Those ethanol-caused price spikes are also affecting U.S. consumers.

"Everything that uses corn is going to cost more and those cost increases are passed on to consumers," says Wally Tyner, professor of agriculture economics at Purdue University. The impact is already being felt in animal feed, particularly poultry and pig feed, which is about two-thirds corn. The cost to produce poultry - both meat and eggs - has already risen about 15 percent.

There are alternatives and Don reviews some of them.

They include encouraging nuclear energy, clean coal production, or drilling for more oil and natural gas. But regardless of how safe and environmentally friendly these options may be, they are not in vogue today. Currently, our Congress shuns even the thought of those proposals and seems intent on beating up on energy producers.

Setting those solutions aside as too controversial in the present political climate, there is potential to produce commercial biofuels from trees and nonfood plants grown in the woods.

In April, Weyerhaeuser and Chevron agreed to research and develop technology to transform wood fiber and other nonfood sources of cellulose into economical, clean-burning biofuels.

It's an exciting, worthwhile project, with plenty of upside for the Pacific Northwest.

Good Op-Ed on the Consequences of the WASL Waffle

Steve Mullin's commentary in today's Seattle Times puts the Legislature's backslide on the WASL in perspective.

The decision by lawmakers to delay the math and science graduation requirements of the Washington Assessment of Student Learning until 2013 will allow hundreds of thousands of young people to graduate high school without demonstrating they have acquired key skills they will need in the future.

Mullin, president of the Washington Roundtable, has long been a champion of accountability and performance standards in education. And he pulls no punches.

We're letting these kids down despite overwhelming evidence of the consequences. The twin forces of global competition and rapidly evolving information technology are changing the ways we learn, work and live. Future opportunities for young people depend on a strong foundation in math and science.

Yet ...

The policymakers in Olympia argued that the standards needed to be delayed so long because "the system failed the kids," then appropriated lots more money without making any fundamental changes to that system.

And he has some sound ideas about what those fundamental changes should include.

... our outdated education system makes it nearly impossible to attract and reward great teachers or to eliminate bad ones. We expect principals to build high-performing teams, but don't give them authority to hire or fire the teachers they are expected to lead.

Today's seniority-based personnel system serves the adults far better than the students. Teachers with the most tenure enjoy their pick of plum assignments, so the most-challenged low-income and minority students too often get the least-experienced teachers. We need a system that provides incentives for our very best teachers to take on the toughest assignments.

There's more.

While we are at it, let's get serious about performance data, tracking whether each student has made at least one year's progress for each year in school. Then, give parents these data, along with the ability to choose schools that are best for their children. Competition for students — not to mention the state dollars that follow — would provide a huge incentive for schools to ratchet up performance.

He's realistic about how the suggestions will be received.

These and other proposals will spur howls of protest from those who are heavily invested in the status quo. They'll say the changes are too radical.

I say we have no choice.

And I say he's right. Read the whole thing. It's good.

Don Brunell on China's Investment in R&D

In his column in today's Columbian, Don takes a look at China's burgeoning trade surplus and what they're doing with all that cash.

Bloomberg News reports that China's trade surplus with the United States so far this year is $63.3 billion, a whopping 88 percent higher than in 2006. That fact is raising eyebrows in Congress.

Even more worrisome, China is sitting on $1.2 trillion in foreign currency reserves - much of it American dollars - and its economy is scalding hot, growing at 11.1 percent this year.

Much of the money is being plowed back into research and development, building the nation's competitive capacity.

Though specifics of the plan are sketchy, Chinese leaders plan to invest 2 percent of the nation's gross domestic product into the initiative by 2010, rising to 2.5 percent by 2020.

We have obvious strengths - creativity, intellectual freedom, property rights, democracy - that have and will nurture entrepreneurial development and economic growth, but we cannot take our position for granted.

The Chinese system does not stimulate creativity and freedom of thought. Americans are ingenious because our culture encourages people to take risks, be creative and think outside the box.

 

... As long as China's authoritarian government quells free spirits and innovative thinking, America has a chance. However, it will take a unified national effort....

A good start would be for Congress to make R&D tax credits permanent. They are set to expire for the 13th time at the end of the year.

Removing that continued uncertainty would be a good start to matching China's gains, but our elected officials would be wise to remember-that would be just a "good start"!

Read it all.

While I Was Out

A week out of the office sure lets a lot of stuff pile up. I won't attempt a recap, but a few things definitely stand out.

Unsurprisingly, given her strong role in its development, the governor signed the budget bill. And, continuing the no-surprises theme, the Washington Education Association sued to get gain-sharing back. (Kim Bradford of The News Tribune has an excellent, concise assessment of this in the Inside the Editorial Page blog; Richard Roesler in the Spokesman-Review provides good background.) And, Dino Rossi thinks the budget makes Democrats vulnerable.

In Michigan, where I wasn't, budget problems are forcing one part of state government to shut down. Granted, we're in much better shape than they are, but it's a reminder that state revenues can turn on a dime. FWIW, Michigan has an income tax.

The WASL waffling here - this, from The News Tribune summarizes it nicely - has parallels elsewhere. In Texas, folks are concerned that 16 percent of high school seniors are failing the Texas Assessment of Knowledge and Skills, so the House votes to scrap the test. And in Tennessee, where I was, folks are concerned that too many are passing the test.

Health insurance reforms continue to be a mess. Regence raises individual-plan rates 19 percent, the Seattle Times editorial board is irked and thinks there's a role for regulation. (Though they're a bit unclear as that that should be.)

Price regulation is not an ideal answer, but raising prices by 19 percent is asking for it.

Not to stray too far off topic, here's a better answer. And Sally Pipes continues to document the shortcomings of the Massachusetts health care reform.

It's great to be back.

Ultralite blogging

I'll not be posting to OBW while on vacation next week.

This Must Hurt

LeRoy Hood has some harsh things to say about Washington's Life Sciences Discovery Fund, as reported in John Cook's Venture Blog.

Hood also had some choice words for the Life Sciences Discovery Fund, which was created in 2005 to support biotechnology and health care in the state. Hood touted the sharp focus of the stem cell initiative in California, which also includes a board made up of scientists, before ripping into Washington state's efforts.

"Contrast that with our own Life Sciences Discovery Fund, which I think has made every single wrong decision a fund can make. It is a lot smaller obviously, and hence the only way it is going to make any impact whatsoever is if it is focused. It is not focused at all. The two universities that are dominant here, it is to their advantage to have it be diffuse. And the board is a joke as far as science goes.... So, I think California was brilliant in making resource commitments and really focusing," he said.

David Postman provides more context in his Seattle Times blog.