January 7, 2006

Passage of the Day: John Tierney on the SCOFLA’s “Separate But Uniform” Ruling

Filed under: Taxes & Government — Tom @ 2:00 pm

SCOFLA = Supreme Court of Florida

In a Times Select op-ed slid under the digital door, Tierney rips SCOFLA’s Democrat justices, who voided the state’s voucher system, for caring more about party and politics than good education:

Black Students Lose Again

Democrats once went to court to desegregate schools. But in Florida they’ve been fighting to kick black students out of integrated schools, and they’ve succeeded, thanks to the Democratic majority on the State Supreme Court.

The court’s decision on Thursday was a legally incoherent but politically creative solution to a delicate problem. Ever since Florida’s pioneering statewide voucher program began, Democrats have been struggling to deal with the program’s success.

Most of recipients have been black students like Adrian Bushell, whom I wrote about last year. Without a voucher, he would have attended Miami Edison, a big public high school in a poor area with a 94 percent black student body and a total of six non-Hispanic white students.

Instead, he’s now a 10th grader at Monsignor Edward Pace, a Catholic school that is 24 percent black. His experience is typical. In other places that have tried vouchers, like Milwaukee and Cleveland, studies have shown that voucher recipients tend to move to less segregated schools.

Besides helping Adrian (who’s got a 3.1 average and plans on college), the Florida program has also benefited students in public schools like Miami Edison. Because each voucher is worth less than what the public system spends per student, more money is left for each student in the public system. And studies have repeatedly shown that failing Florida schools facing voucher competition have raised their test scores more than schools not facing the voucher threat.

A program that desegregates schools and improves test scores wasn’t easy to attack in the Legislature, but the courts offered a more promising battleground for the teachers’ unions trying to stop it.

….. (The judges) ruled that the voucher program violated a state constitutional requirement to provide a ”uniform” system of public schools.

The majority’s decision was eviscerated in a dissent by two Republican judges who use adjectives like ”nonsensical” to describe the legal reasoning. The dissenters argue persuasively that nothing in the Constitution forbids the Legislature from setting up other programs beyond the public school system.

The decision has disillusioned Adrian and his grandmother, Ramona Nickson. ”I just don’t even want to think of sending him back to public school,” she said. Other parents in Florida worry that more programs are in jeopardy, like the scholarships given to thousands of disabled students in private schools. Or the many charter schools in the state, which may not suit the judges’ personal vision of a ”uniform” system.

….. Adrian was supported by the Urban League of Miami and other advocacy groups for blacks and Latinos, but not the N.A.A.C.P. It abandoned him — and the majority of African-Americans, who favor school vouchers — and sided with the teachers’ unions.

The group that once battled the segregationists’ fiction of ”separate but equal” schools signed on to the legal fiction that there’s something admirably ”uniform” about a public school monopoly that keeps students in Adrian’s neighborhood trapped in a segregated, inferior school.

It’s sad to see the N.A.A.C.P. working to keep them there, but it’s not surprising now that the group is virtually an arm of the Democratic Party. The unions dominating that party have no qualms about sending Adrian back to a segregated school that has just lost its chief incentive to improve. The party now has a new educational motto: separate but uniform.

Florida’s public schools now have less incentive to improve, and they probably won’t, thanks to the scofflaws from SCOFLA.

UPDATE: Lots of heated reaction from school-choice supporters here and here at Champion.org.

UPDATE 2, Jan. 9: From Andrew J. Coulson, Director of the Cato Institute’s Center for Educational Freedom, in The Wall Street Journal (requires subscription):

Every other state with a school choice program and a uniformity clause untested in its courts can expect to feel the heat. Arizona, which has education tax credits and charter schools, is apt to be a prime target. Minnesota, Colorado, Oregon and North Carolina, among others, all have uniformity clauses and at least one school-choice program vulnerable to attack.

Meanwhile, come this June, the more than 700 mostly low-income students currently in Florida’s Opportunity Scholarship voucher program may be herded back into the very public schools that vouchers allowed them to flee. Unless the Constitution of Florida — and other states — is amended, they may not be the only ones.

Seriously, Does the Sirius-Howard Stern Deal Make Sense?

Filed under: Business Moves — Tom @ 11:45 am

Radio shock jock Howard Stern got his big payoff Thursday:

NEW YORK (AP) — Sirius Satellite Radio Inc. will give Howard Stern 34 million shares of stock — worth about $220 million at today’s prices — because the company has met agreed-upon targets for gaining new subscribers under its 2004 deal with the shock jock.

In a regulatory filing Thursday, Sirius said its subscriber count as of Dec. 31, 2005, exceeded the target it had agreed upon with Stern in October 2004, when it made a five-year deal with him.

At the time, Sirius said its deal with Stern would be worth about $100 million per year beginning in 2006. The 34.4 million shares were worth about $110 million then, but the stock has roughly doubled since then.

Stern begins his new show on Sirius on Jan. 9, having left his longtime employer Infinity Broadcasting, which has been renamed CBS Radio, a unit of CBS Corp.

Stern now owns about 2.5% of Sirius.

Back in October 2004, when the deal was announced, the company’s press release (2nd last para) said that “SIRIUS estimates that Stern only would need to generate approximately 1 million subscribers in order to cover the costs of the deal. Total production and operating costs for the Stern show, including compensation of the show cast and staff, overhead, construction costs for a dedicated studio, and a budget for the development of additional programming and marketing concepts, is estimated to be approximately $100 million per year.”

If the company is “Siriusly” taking on another $100 million a year over and above the stock they just paid Stern (which presumably includes Stern’s salary), it’s hard not to think they are in “Sirius” trouble:

  • The company had operating losses of $811 million during the last four reported quarters ending Sept. 30, 2005, on revenues of $188 million (you read that right).
  • If the company somehow gets to the 4 million subscriber level, a roughly 20% increase over where they are now, total annual revenue, based on $13 a month per subscriber, would only be $624 millon. And don’t forget the $100 mil in new costs from the Stern deal. They’re still hundreds of millions short of breaking even.
  • Any subscriber gains from the NFL deal announced two years ago have probably already been realized. So where are the huge numbers of new subscribers going to come from? Especially considering that archrival XM has about 6 million subscribers (noted near the end of the USAT Stern stock announcement link), are there really more than 10 million people out there willing to pay $150-plus a year for radio programming?
  • A price increase might help, but I would think there would be significant subscriber attrition if they tried to go above $14.95 a month, especially if XM doesn’t change its pricing.

I don’t see how Sirius gets over the top. Its best bet would be to somehow get within striking distance of break-even, and hope someone’s interested enough to buy it while the stock is at its current bubbly level (This company is worth $8.7 billion? Please). In the meantime, they’d better hope Howard Stern hangs on to his shares, because a large sale by him, if known (and he may be considered an “insider” who has to disclose his trades) could tank the stock.

WRKO Interview and Debrief

Filed under: General,News from Other Sites — Tom @ 10:09 am

The WRKO Interview is supposed to start at 10:30 (back to original plan) after the President’s weekly radio address and other programming ahead of my slot.

UPDATE: The Prez was short and sweet. Starting REAL SOON.

UPDATE, 11:30 AM: Well, that was fun. I think the biggest points got made (AP coverage, NYT Bush-bashing, new media points). Especially for being part-timers, Kevin and Greg are really good hosts.

I don’t expect to get an mp3, but will ask.

This Weekend’s Single Unanswered Question (010706): Do you know your bankruptcy risk score?

Another installment in a nearly-regular series of mysteries and pseudo-mysteries (usually 3-4, but in this case just one) this inquiring mind would like to have answers for (some links included may require free registration):

QUESTION: Do you know your bankruptcy risk score?

If you do, you’ve managed to learn about something most people know nothing about, and you’ve figured out a way to get something you aren’t supposed to have:

You probably already know about your credit score. That’s the number that helped increase your credit card limit or perhaps prevented you from purchasing your dream car. Well there’s another influential scoring tool you should know about: It’s called the bankruptcy risk score.

According to financial experts, this score is used secondarily to the credit score when financial institutions scrutinize a consumer’s credit history.

Kept tucked away from consumers for nearly 20 years, this number differs from the credit risk score, because it’s a little more specific. It measures how likely a person is to file for bankruptcy.

It is used by credit reporting agencies and geared specifically to lenders.

….. Analysts at credit reporting agencies say advanced mathematics and data analytics are used to determine the complex score.

However, they say, some variables come directly from your credit report, such as how the credit is used, how often a bill payment is late and the number of inquiries made.

“For a conventional credit score, you want a high number,” Gross says. “For a bankruptcy score you want a low number. And to increase the complexity, the range of the numbers is not the same. The credit score has a range of 350-850. The bankruptcy score range starts in the negative numbers and increases to possibly 2,000.”

So, why is it kept from the public?

“The argument is that people spent time and money researching the scoring model, and no one wants to disclose the model because they are giving away the value of the research that they’ve conducted,” says Gross.

However, Experian is considering making its score available to consumers.

This is so irritating to me. The intent of the Fair Credit laws through the years, up to and including the Fair and Acccurate Credit Transactions Act (FACTA) of 2004, has been transparency — that is, to ensure that consumers have access to the same data used to grant or deny them loans, credit lines, or insurance as the credit or insurance grantors do when they make their decisions. To me, the bankruptcy score is a credit bureau and lending industry end-run around all that. It appears that even if you have a good credit score, you may be denied credit, have your credit line reduced, or be considered a high-risk driver or homeowner, simply because of this mysterious bankruptcy score. That automatically makes the bankruptcy score information consumers should be entitled to have.

So of course the bankruptcy score should be available to consumers. I would argue that a strict reading of the FACTA law might lead you to believe that its availability is already required, even without new legislation.

I’ll go further: The whole idea should be to help consumers better manage their credit, and especially avoid bankruptcy, which not so coincidentally has been made more difficult and more expensive by the Bankuptcy “Reform” law that went into effect back in mid-October (The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, or BAPCPA), not merely to help the lending industry manage risk (an important issue, but not the ONLY issue). A properly explained and understood bankruptcy score might do more to help consumers get on track and stay on track than all the credit report and credit score information they currently have access to. So why not make it available?

Positivity: Son Saves Father’s Life in Heart Attack

Filed under: Positivity — Tom @ 7:13 am

There’s a message here too–Make sure the people who live with you know what to do in an emergency. This 7 year-old did: