CPD IN THE NEWS

New York/Washington. Efforts to fill top positions at some US Federal Reserve regional branches are casting a spotlight on a decades-old process that critics say is opaque, favors insiders, and is ripe for reform.

Patrick Harker took the reins as president of the Philadelphia Fed this week, in an appointment that attracted scrutiny because he served on the committee of directors that interviewed other prospective candidates for the job he ultimately took.

The Dallas Fed has been without a permanent president for more than three months as that search process stretches well into its eighth month. And the Fed’s Minneapolis branch abruptly announced the departure of its leader, Narayana Kocherlakota, more than a year before he was due to go, with no replacement named to date.

The delays and reliance on Fed employees in picking regional Fed presidents can only embolden Republican Senator Richard Shelby to push harder for a makeover of the central bank’s structure, which has changed little in its 101 years.

A bill passed in May by the Senate Banking Committee that Shelby chairs would strip the New York Fed’s board of its power to appoint its presidents. And it could go further, given the bill would form a committee to consider a wholesale overhaul of the Fed’s structure of 12 districts, which has not changed through the decades of shifting US populations and an evolving economy.

The bill is part of a broader conservative effort to expose the central bank to more oversight, and some analysts saw the Philadelphia Fed’s choice as reinforcing the view that the Fed needs to open up more to outsiders.

Nine of 11 current regional presidents came from within the Fed, a proportion that has edged up over time. Twenty years ago, seven of 12 were insiders.

“The process seems to create a diverse set of candidates in which the insider is almost always accepted,” said Aaron Klein, director of a financial regulatory reform effort at the Bipartisan Policy Center.

Since it was created in 1913, the central bank’s decentralized structure was meant to check the power of Washington, where seven Fed governors with permanent votes on policy are appointed by the White House and approved by the Senate.

The 12 Fed presidents who are picked by their regional boards usually vote on policy every two or three years, and they tend to hold more diverse views.

Former Richmond Fed President Alfred Broaddus told Reuters the regional Fed chiefs have more freedom “to do and say things that may not be politically popular” because they are not politically appointed. “On the other hand, there is the question of legitimacy since they are appointed by local boards who are not elected.”

“Tone deaf”

Two-thirds of regional Fed directors are selected by local bankers, while the rest are appointed by the Fed’s Board of Governors in Washington.

Critics question how well those regional boards — mostly made of the heads of corporations and industry groups meant to represent the public — fulfill their mission.

Last year, a non-profit group representing labor unions and community leaders organized by the Center for Popular Democracy, urged the Fed’s Philadelphia and Dallas branches to make the selection of their presidents more transparent and to include a member of the public in the effort.

Philadelphia’s Fed in particular proved “tone deaf” in its head-hunting effort, said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey.

Harker was a Philadelphia Fed director when the board started looking to replace president Charles Plosser, who left on March 1, and he was among the six directors who interviewed more than a dozen short-listed candidates for the job, according to the Philadelphia Fed.

But on Feb. 18, Harker floated his own name, recused himself from the process and a week later his colleagues on the board unanimously appointed him as the new president.

While the selection follows Fed guidelines and was approved by its Board of Governors, it raised questions of transparency and fairness.

“The Philadelphia Fed’s search process might have made perfect sense in a corporate environment, but is obviously problematic for an official institution,” said Crandall.

The board’s chair and vice chair, Swathmore Group founder James Nevels and Michael Angelakis of Comcast Corp, respectively, declined to comment, as did Harker.

Peter Conti-Brown, an academic fellow at Stanford Law School’s Rock Center for Corporate Governance, and an expert witness at a Senate Banking Committee hearing this year, proposed to let the Fed Board appoint and fire regional Fed presidents or at least have a say in the selection process.

In the past, reform proposals for the 12 regional Fed banks have focused on decreasing or increasing their number and their governance.

Changes to the way the regional Fed bosses are chosen could strengthen the influence of lawmakers at the expense of regional interests.

For now, delays in appointments of new chiefs force regional banks to send relatively unknown deputies to debate monetary policy at meetings in Washington, as Dallas and Philadelphia did last month when the Fed considered raising interest rates for the first time in nearly a decade.

The Minneapolis Fed still has time to find a new president before Kocherlakota steps down at year end.

“For now the Fed criticism is just noise, mostly from Republicans,” said Greg Valliere, chief political strategist at Potomac Research Group. “But once the Fed begins to raise interest rates … then the left will weigh in as well.”

Source: Jakarta Globe

This episode, we take a look at a campaign that focuses on the Federal Reserve System and its impact on working people and people of color. We take you to a rally in front of the Federal Reserve Bank of New York where we spoke with two protesters about how the Fed impacts their communities. Then, we sit down with the Director of the Center for Popular Democracy’s Fed Up! Campaign to hear about the fight to put working people and communities of color at the center of the Fed’s decision-making process.

Read the full article here.

Campaign for America's Future - March 11, 2015, by Isaiah J. Poole - At the office of Illinois Gov. Bruce Rauner, more than 2,500 demonstrators, most wearing white “We Rise” T-shirts, staged a protest against cuts in Medicaid and other social services. In Albany, N.Y., more than 2,000 people marched to the state capitol to protest education funding cuts. In Denver, dozens of activists came out in support of immigration rights measures, including driver’s licenses for undocumented workers.

These are just a few of the dozens of actions that took place in 16 states today as part of “We Rise: National Day of Action to Put People and Planet First.” Local and national progressive organizations mobilized around different aspects of a common agenda that stood in opposition to the right-wing and corporatist policies pushed through state legislatures in these states. The actions were all broadcast under the Twitter hashtag “#WeRise.”

“What we saw today was a stirring of the democratic spirit,” said Fred Azcarate, Executive Director of USAction. “People are upset at elected officials who spend more time working for big corporations and wealthy campaign donors than representing the people they were elected to serve. Today, people rose up to reclaim government and demand that legislators work for them and their families.”

The states where We Rise demonstrations were organized also include Arizona, Georgia, Idaho, Kansas, Massachusetts, Minnesota, New Jersey, Nevada, New Hampshire, Ohio, Pennsylvania and Wisconsin. The events were led by groups affiliated with National People’s Action, Center for Popular Democracy, USAction, and other allies.

“Apparently conservatives believe they have a mandate to give big corporations another free ride on the backs of everyday people,” said George Goehl, Executive Director of National People’s Action. “But they’re wrong. They have no such mandate. Instead, as we can see in the resistance to draconian policy or Chuy Garcia’s campaign to unseat Rahm Emanuel as Mayor of Chicago, there is a new brand of populism taking root in America. People are fed up with politicians doing the bidding of big money. They’re ready for leaders who will work for, not against, people and the planet.”

“Politicians working primarily on behalf of big corporations are making it harder and harder for families to get by,” said Ana María Archila, Co-Executive Director of The Center for Popular Democracy. “Our families won’t stand for this, and today thousands of workers and families raised our voices in state houses across the country to demand that elected officials join us in leveling the playing field so that each and every family can thrive.”

The Campaign for America’s Future is working with two of the organizations behind today’s “We Rise” events, National People’s Action and USAction, in sponsoring the “Populism2015″ conference in April, with the Alliance for a Just Society. One goal of that conference is to build political momentum from today’s events around a populist progressive agenda “for people and the planet.” Register for the April 18-20 conference in Washington through the Populism2015 website.

Salon - March 2, 2015, by Jeff Bryant -What fun we had recently with North Carolina’s recently elected U.S. senator, Republican Thom Tillis, who insisted we didn’t need government regulations to compel restaurant employees to wash their hands in between using the toilet and preparing our food.

His solution to proper sanitation practices in restaurants – “the market will take care of that” – was roundly mocked by left-leaning commentators as an example of the way conservatives uphold the interests of businesses and moneymaking above all other concerns.

Fun, for sure, but it’s no laughing matter that the Tillis plan for public sanitation appears to increasingly be the philosophy for governing the nation’s schools.

Rather than directly address what ails struggling public schools, policy leaders increasingly claim that giving parents more choice about where they send their children to school – and letting that parent choice determine the funding of schools – will create a market mechanism that leaves the most competent schools remaining “in business” while incompetent schools eventually close.

Coupled with more “choice” are demands to increase the numbers of unregulated charter schools, especially those operated by private management firms that now have come to dominate roughly half the charter sector.

As schools lose more and more students to the charter schools, parents then “vote with their feet,” choice advocates argue, and the market will “work.”

Why the “Tillis Rule” that seems so wrong for public health has been declared the wave of the future for the nation’s schoolchildren and families seems to hardly ever get questioned.

Tarheel School Choice Extravaganza

The Tillis Rule is certainly now the driving force behind new education policy in North Carolina, as rapid charter school expansions and a new voucher plan have opened up public schools to various “market forces.”

How’s that working out?

So far, not so hot. For instance, in Charlotte, at least three charter schools abruptly closed down this year alone, some after having been in operation for only a few months. The most recent shutdown was particularly noticeable.

That school, Entrepreneur High, focused on teaching students job skills, so they could be financially independent when they graduated. Turns out the school had its own financial problems with only $14 in the bank and $400,000 in debt. In fact, the school never even really had a financial plan at all.

In other news from the front of “school choice” in the Tarheel State, left-leaning group N.C. Policy Watch recently reported about a state auditor who checked the books of a Kinston charter school and found the school overstated attendance–thereby inflating its state funds by more than $300,000.

The school shorted its staff by more than $370,000 in payroll obligations, according to reports, while making “questionable payments of more than $11,000″ to the CEO and his wife. And the CEO’s daughter was being paid $40,000 to be the school’s academic officer even though she had zero experience in teaching or school administration.

When the reporter, Lindsay Wagner, tried to contact the school’s CEO to question him about the auditor’s findings, she discovered he had left his position and was working elsewhere in the state – running a different charter school.

Meanwhile, the state has rolled out another school choice venture: vouchers, called Opportunity Scholarships, that allow parents to pull their kids out of public schools and get taxpayer funding to enroll the kids in the schools of their choice. Wagner, again, wondered where the money was heading and found 90 percent of it goes to private religious institutions.

More recently, Wagner’s account of this money found “more than $4,000,000 worth of taxpayer-funded school vouchers have now been paid out to private schools.” Of the top 12 private schools benefiting from this money, all are religious schools.

Also, Wagner reported, voucher funds come with “virtually no accountability measures attached … Private schools are also free to use any curriculum they see fit, employ untrained, unlicensed teachers and conduct criminal background checks only on the heads of schools. For the most part, they do not have to share their budgets or financial practices with the public, in spite of receiving public dollars.”

It’s unfair, however, to single out North Carolina for school choice shenanigans.

Charter Corruption Spreads, Grows

In Ohio, for instance, a recent investigation into charter schools by state auditors found evidence of fraud that made North Carolina’s pale in comparison. The privately operated schools get nearly $6,000 in taxpayer money for every student they enroll, but half the charter schools the auditor looked at had “significantly lower” attendance than what they claimed in state funding.

One charter school in Youngstown had no students at all, having sent the kids home for the day at 12:30 in the afternoon.

This form of charter school fraud is so widespread, according to an article in Education Week, many states now employ “‘mystery’ or ‘secret shopper’ services used in retail” that pose as inquiring parents to call charter schools to ensure they’re educating the students they say they are.

Enrollment inflation is not the only form of fraud charter schools practice. In Missouri, a federal judge recently fingered a nationwide chain of charter schools, Imagine, for “self-dealing” in a lease agreement that allowed it to fleece a local charter school of over a million dollars.

“The facts of the case mirror arrangements in Ohio and other states,” the reporter noted, “where Imagine schools pay exorbitant rent to an Imagine subsidiary, SchoolHouse Finance. The high lease payments leave little money for classroom instruction and help explain the poor academic records of Imagine schools in both states.”

A charter school manager in Michigan is about to go on trial for steering nearly a million dollars in public funds targeted to renovate his charter school into his own bank account.

In Washington, which was late to the game of charters and choice, the state’s first charter school is already under investigation for financial and academic issues.

Investigators in the District of Columbia, recently uncovered a charter school operator who “funneled $13 million of public money into a private company for personal gain.”

A recent report from the Center for Popular Democracy looked at charter school finances in Illinois and found “$13.1 million in fraud by charter school officials … Because of the lack of transparency and necessary oversight, total fraud is estimated at $27.7 million in 2014 alone.”

One example the CPD report cited was of a charter operator in Chicago who used charter school funds amounting to more than $250,000 to purchase personal items from luxury department stores, including $2,000 on hair care and cosmetic products and $5,800 for jewelry.

The report made specific policy recommendations, including financial reviews and a moratorium on new charters, to increase the transparency and accountability of these schools – the type of policy recommendations charter and school choice fans continue to fight at every turn.

Voucher Ventures Expand Across the Country

While charter school operations continue to waste public money on scandals and fraud – all in the name of “choice” – newly enacted school vouchers divert more public school dollars to private schools.

In parts of Ohio, “the state-sponsored voucher program has increased or even doubled enrollment at some private schools.”

In Indiana, which has the largest taxpayer-funded school voucher program in the country, according to a local source, virtually all of the participating schools, 97 percent, are religiously affiliated private schools.

In Louisiana, over a third of students using voucher funds to attend private schools are enrolled schools “doing such a poor job of educating them that the schools have been barred from taking new voucher students.”

In parts of Wisconsin, “private schools accepting vouchers receive more money per student than public school districts do for students attending through open enrollment.”

Despite the obvious misdirection of taxpayer money, more states are eager to roll out new voucher plans or expand the ones they have. As the Economist recently reported, “After the Republicans’ success in state elections in November, several are pushing to increase the number and scope of school voucher schemes,” including Wisconsin, where probable presidential candidate Scott Walker has proposed to remove all limits on the number of schoolchildren who could attend private schools at taxpayer expense.

Of course, not all voucher-like schemes are called “vouchers.” According to a report from Politico, some states are considering voucher-like mechanisms called Education Savings Accounts that allow parents to pocket taxpayer money that would normally pay for public schools to be used for other education pursuits, including private school and home schooling. Two states – Florida and Arizona – already have them, but six more may soon follow.

Vouchers Hit the Hill

Support for vouchers extends to Congress, as another Politico article reported, where Republican, and some Democratic, lawmakers are “proposing sweeping voucher bills and nudging school choice into conversations about the 2016 primaries.”

According to a report from Education Week, congressional Republicans leading the effort to rewrite the nation’s federal education policy, called No Child Left Behind, are “intent on drafting the most-conservative version of the federal K-12 law possible,” which would include a voucher-like scheme allowing federal money designated as Title I funds, the program for schools with low-income students, “to follow those students to the school of their choice, including private schools.”

In fact, working its way through the U.S. House of Representatives currently is a bill called the Student Success Act that would provide for this “Title I Portability.” In the U.S. Senate, according to Education Week, Title I Portability is also included in a draft bill to rewrite NCLB introduced by Sen. Lamar Alexander of Tennessee.

“Everyone should care and learn about Title I Portability,” warns public school advocate Jan Resseger on Public School Shakedown, a blog site operated by the Progressive magazine.

Resseger points to a statement by the National Coalition for Public Education stating, “This proposal would undermine Title I’s fundamental purpose of assisting public schools with high concentrations of poverty and high-need students.” Resseger also cites, from the Center on American Progress, a brief opposing Title I Portability. “According to CAP,” Resseger explains, Title I Portability would be “Robin Hood in Reverse … taking from the poor and giving to the rest,” ignoring the long-known fact that socioeconomic isolation has a devastating impact, as, on average, “school districts with highly concentrated family poverty would lose $85 per student while more affluent school districts would gain, on average, $290 per student.”

Despite the damage that Title I Portability could do to public schools serving our most high-needs students, charter school advocates appear to back the measure, according to a recent post at Education Week. “By and large, we feel that when the dollars follow children to the school that they select, you create a better marketplace for reform,” the president of the National Alliance for Public Charter Schools Nina Rees is quoted.

What about those charters that continue to commit waste and fraud while they funnel public money into privately operated businesses? Will “the market will take care of that”?

Where Choice Fails

Back to the Tillis Rule, consider another example of leaving public health policy up to individual choice: the recent measles outbreak.

That outbreak made it abundantly clear that where parents have the good fortune to be “safe in the herd” of vaccinated children, they often don’t feel an obligation to vaccinate their own offspring.

One can be sympathetic to parents with religious beliefs, or parents who simply hate seeing their babies being stuck with needles, and still justifiably point out to those parents that their “principles” come at the expense of other people’s potential inconvenience, expense and, possibly, suffering.

If those parents lived in a very different country that didn’t provide safety in the herd – or, in the case of Sen. Tillis, didn’t provide for basic sanitation – they’d probably feel quite differently about imposed health regulations.

Certainly comparing healthcare policy to education is not a false equivalency. The two policy arenas are strongly interrelated. The positive correlation between numbers of years of education to healthcare outcomes is well documented.

Further, parents clustered around schools often may share the same information and attitudes, which also can affect health outcomes.

In the case of the recent measles outbreak in California, University of Maryland sociologist Philip N. Cohen took numbers initially crunched by Duke University sociology professor Kieran Healy and found, “Runaway vaccine exemptions are problems of the private and charter schools … The average charter school kindergartner goes to school with classmates almost five times more likely to be non-vaccinated; and charter school kids are more than 3-times as likely to be in class with 5 percent or more kids exempt.”

As Cohen revealed, charter schools he examined have “fewer kids eligible for free-lunch than regular public schools (43 percent versus 55 percent). … Rich charter schools on average have the highest [vaccine] exemption rates, while poor schools – charter or not – are heavily clustered around zero.”

Cohen concluded, “Because they are more parent-driven, or targeted at certain types of parents, charter schools are more ideologically homogeneous. And because anti-vaccine ideology is concentrated among richer parents, charter schools provide them with a fertile breeding ground in which to generate and transmit anti-vaccine ideas.” (H/T Ron Wile.)

Better Than Choice: A Guarantee

Tillis Rule notwithstanding, most people understand that public health policy should be guided not by desires to maximize personal choice but by the need to guarantee public safety and wellbeing. That guarantee, rather than the maximization of choice, is what makes it possible to have the freedom to conduct commerce, live and work safely in our communities, and move about freely in society.

Why should that guarantee we insist on for public health be any different from what we insist on for public education?

Instead, with today’s school choice crowd, children’s guaranteed access to high-quality public education appears to be no longer the goal – either by policy or practice.

Under the Tillis Rule, it’s assumed some schools will be allowed to remain lousy at least for some substantial period of time (how long is anyone’s guess), while “the money follows the child,” “people vote with their feet” and “the market works.”

Any negative consequences to those students and families unlucky or unfortunate enough to be stuck in the not-so-good schools – after all, it’s impossible for every family to get into the “best school” – seem to not matter one whit.

And that’s really sick.

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