2 posts categorized "Government"

November 13, 2008

A Contract is a Contract

In the midst of a historic economic downturn, New York's Democratic Governor, David Paterson, announced today that he wants the largest public sector union to reopen their contracts and waive a 3 percent pay raise scheduled for 2009.  Daniel Donohue, president of the Civil Service Employees Association, responded in writing "The governor knows, or should know, that reopening contracts is not acceptable.  Any serious businessperson knows that a contract is a contract."  Mr. Donohue may learn that union contracts can be set aside in bankruptcy court, but, in general, he is correct: a contract is a contract, regardless of how ridiculous it might seem. 

Which brings us to the latest adventures of Michelle Rhee, the hugely talented and dedicated chancellor of the Washington, D.C. public schools.  Rhee wants to change the teacher contract to make it  possible to fire bad teachers.  To convince teachers to agree, Rhee proposes raising salaries enormously, e.g. top teachers would get a salary of $130,000.  Rhee can afford this because in addition to her astronomical budget of $24,600 per pupil, she has access to a philanthropic grant of $375 million to lure teachers away from tenure.  Of course, one can't lure the ineffective teachers with a raise if they expect they will be fired shortly thereafter.  And, by all reports, there are many ineffective teachers in the system.  Perhaps to deal with this negotiating challenge, Rhee's plan has that Rube Goldberg feel so common to union contracts, with a "red" plan, a "green" plan, bumping, buyouts, seniority, etc. 

Meanwhile, 30% of the public school students in D.C. now attend public charter schools.  Charter schools are independently operated and, generally, not unionized.  There are no red plans, green plans, bumping, buyouts, seniority, or tenure. The per-pupil funding is $11,154.  Despite the huge funding gap, each of the past several years, more and more D.C. parents are opting for this alternative.  The parents are more satisfied and the schools are out-performing.  I believe that Michelle Rhee will dramatically improve the traditional public schools, but unless she can convince teachers to start from scratch, her system will be less effective and much more expensive than the simple workings of the charter system.  After all, a contract is a contract.

November 08, 2008

Blog Post of the Day

http://gregmankiw.blogspot.com/2008/11/new-draft.html

Make sure to read the "Update" section at the end.  The Obama team continues to alarm me with some of their ideas while impressing me with their execution capabilities.  Perhaps I should be additionally alarmed that they execute so well given my concern about some of their ideas?