Tag: Deloitte

School Funding System Not Broken… It Just Doesn’t Work

We do not claim that the school funding system… is fundamentally flawed, only that there is no correlation at all between the level of per pupil funding and educational outcomes. —Deloitte

Hahahahaha! Ha! Haha! Haaaaaah. Okay. Now a little context.

Last November, the British government “published” a study of its state school system that it had commissioned from the accounting firm Deloitte. Maybe “published” is too strong a word, since there was apparently no press release, no news conference, no effort of any kind to make the public or the media aware of its existence. Perhaps that’s because the study found no correlation between spending and achievement in Britain’s state schools, and the current government’s policy is to increase spending on state schools in an effort to be seen to be doing something.

The sad thing is, the same fundamentally flawed funding systems and dysfunctional political incentives exist in the United States, too… and with much the same effect:

Chart of trends in U.S. public schooling

Hat tip: Joanne Jacobs.

Deloitte Survey: Concerns about Government

A Deloitte Growth Enterprise Services survey of 527 executives at mid-market companies (annual revenues of between $50 million and $1 billion) found “tempered optimism” that the economic recovery will continue. However, the survey also found significant concern over government fiscal and regulatory policies.

A whopping 50 percent cited federal, state, and local debt as the greatest obstacle to U.S. growth in the coming year. Lack of consumer confidence (39 percent) and rising health care costs (33 percent) came in second and third. Lest anyone construe the executives’ concern about government debt as implied support for tax increases, high tax rates came in fourth at 30 percent. Government austerity, which can include tax increases, and infrastructure needs came in at 15 and 9 percent, respectively.

When asked to choose up to three items that represent their company’s main obstacle to growth, only 21 percent cited government budget cuts. I’m frankly surprised that the figure isn’t higher considering that a number of these companies probably “do business” with government. Increased regulatory compliance was only a tick higher at 22 percent. Health care costs came in third at 30 percent, and uncertain economic outlook was first at 41 percent. I would pin that uncertainty on government policies. It is likely that a substantial number of the respondents would agree given other survey results.

Reducing corporate tax rates (33 percent) was the clear winner when the executives were asked to choose up to two measures by the U.S. government that would most help mid-size businesses grow in the next year. Keeping interest rates low (32 percent) was close behind, followed by rolling back health care reform (23 percent). Keynesian measures that are popular in the White House, supporting increased infrastructure investment and stimulating private consumption, came in at 19 percent and 14 percent, respectively.

Finally, many, if not the majority, of respondents expect regulatory costs to increase next year, particularly in the area of health care reform. Respondents expect the president’s Affordable Care Act to sharply increase costs (33 percent) or slightly increase costs (33 percent). A majority (56 percent) expect tax compliance costs to increase. A near majority (49 percent) expect both economic and occupational health & safety regulatory costs to increase.

In sum, the good news is that optimism is on the rise in the business community. The bad news is that the heavy hand of government is still a dark cloud hovering over the recovery.